"Made in Canada" or "Product of Canada" claims ("Canadian origin claims") can be a useful marketing tool for companies to differentiate their product and appeal to those consumers who desire to buy Canadian products where possible.
Although these claims are not mandatory for Canadian products (except under certain limited circumstances) under the Competition Act, the Consumer Packaging and Labelling Act, the Textile Labelling Act, the Food and Drugs Act or the Safe Food For Canadians Act (collectively, the "Acts"), if a business voluntarily chooses to make Canadian origin claims, then such claims must be substantiated. Non-compliance with the Acts' false and misleading representations provisions1 may result in investigation and enforcement action by the Competition Bureau (the "Bureau"), which investigates Canadian origin claims on a case-by-case basis.2
This article will provide an overview of the Canadian legal framework for Canadian origin claims in the context of consumer products and food products.
Consumer products
Distinction between "Made in Canada" and "Product of Canada"
There is a distinction between "Made in Canada" claims and "Product of Canada" claims. Generally, the ability to make a "Product of Canada" claim can be seen as more difficult, as these products must have a higher threshold of Canadian content (98%), while products with "Made in Canada" claims are subject to a 51% threshold of Canadian content.3 Additionally, "Made in Canada" claims should be accompanied by a qualifying statement indicating that the product contains imported content. In both cases, the last substantial transformation of the product must have occurred in Canada.
In reviewing Canadian origin claims, the Bureau will consider (1) where the direct costs of manufacturing the product were incurred, (2) where the last substantial transformation of the good occurred, and (3) the representations themselves and the general impressions they create.4 "Substantial transformation" is defined as the goods having undergone a fundamental change in form, appearance, or nature, such that the goods existing after the change are new and different goods from those existing before the change.5 "Cost of manufacturing" is defined as either (a) expenditures on materials incurred by the producer/manufacturer in the production or manufacturing of goods or (b) expenditures on labour incurred by the producer/manufacturer that relate to the production or manufacturing of the goods and can reasonably be allocated to the production or manufacturing of the goods.6
General impression test
When examining a "Product of Canada" or "Made in Canada" claim, the Bureau will also consider the general impression conveyed through a contextual combination of words, visual elements, illustrations, and overall layout that may alter the plain meaning of a representation.7
Summary of requirements
If a product is labelled with a "Product of Canada" claim, then the last substantial transformation of the good must have occurred in Canada and all or virtually all (at least 98%) of the total direct costs of producing or manufacturing the good must have been incurred in Canada.
If a product is labelled with a "Made in Canada" claim, then the last substantial transformation of the good must have occurred in Canada, at least 51% of the total direct costs of producing or manufacturing the good must have been incurred in Canada, and the "Made in Canada" representation must be accompanied by an appropriate qualifying statement. An example of a qualifying statement would be "Made in Canada with imported parts" or "Made in Canada with domestic and imported parts."
Other claims
If a product doesn't meet the criteria for a "Product of Canada" claim or a "Made in Canada" claim, then the Bureau recommends using alternative claims that more accurately represent the manufacturing activity that took place in Canada – for example: "Sewn in Canada with imported fabric."
Penalties
Violations of the requirements related to Canadian origin claims are typically handled under the false and misleading advertising sections of the Competition Act. These offences can proceed by way of the civil track or the criminal track. Under the civil track, the company can be ordered to cease the applicable conduct, public a corrective notice, or pay penalties (which can be up to $10 million for a first offence or three times the value of the benefit derived from the deceptive conduct). Under the criminal track, on summary conviction, a corporation can be ordered to pay a fine of up to $200,000, while the fine is up to the discretion of the court if the offence proceeds by way of indictable offence. There are also penalties that could apply under the Consumer Packaging and Labelling Act and the Textile Labelling Act. We note that due process still applies, meaning that companies have the chance to defend themselves and present a due diligence defence.
Food products
"Made in Canada" and "Product of Canada" claim requirements also apply to representations made about foods sold at all levels of trade, made in advertising, and made by restaurants.8
Similar to Canadian origin claims about consumer products, the use of such claims is voluntary except under certain circumstances. However, once a company chooses to make one of these claims about a food product, the claim must comply with the Food and Drugs Act and the Safe Food for Canadians Act, which prohibit false and misleading claims. All food ingredients and their components are considered when the Canadian Food Inspection Agency ("CFIA") assesses "Product of Canada" and "Made in Canada" claims. Food product claims may also be assessed under the Competition Bureau's Guide to "Made in Canada" claims discussed above.
"Product of Canada" and "Canadian" claims
A food product that is labelled "Product of Canada" must have all or virtually all of its major ingredients, processing, and labour be Canadian. The CFIA considers a claim that a product is "Canadian" to be the same as a claim that a product is a "Product of Canada." This also applies when the "Canadian" claim is used to describe an ingredient within the food product (for example, "Canadian Maple Syrup"). To meet the criteria, all of the significant ingredients in the product must be Canadian in origin and non-Canadian material must be negligible.9
It is acceptable for the product to contain low levels of ingredients that are not generally produced in Canada as long as the aggregate of those ingredients amount to less than a total of 2% of the product.10
"Made In Canada" claims
If a food product is labelled "Made in Canada" with a qualifying statement, then the last substantial transformation of the product must have occurred in Canada even if some ingredients are from other countries. Similar to the test for consumer products, a "substantial transformation" is considered to have occurred when a food product undergoes processing which changes its nature and becomes a new product bearing a new name commonly understood by the consumer.11
"Made in Canada" claims about food products must be accompanied by a qualifying statement that specifies whether the food product is (1) made in Canada from imported ingredients or (2) made in Canada from a combination of imported and domestic ingredients. For example, a food product that is made with ingredients that are all sourced from outside of Canada should be labelled as "Made in Canada from imported ingredients."12
Declaring multiple countries of origin on a food label could be considered false and misleading. Products that contain foreign ingredients, regardless of their source, are not eligible to bear a "Product of Canada" claim even if such claim is phrased as, for example, "Product of Canada and United States." However, products that contain foreign ingredients may be eligible for a "Made in Canada" claim if the last substantial transformation of the product occurred in Canada. Alternatively, making a claim that something is "blended" may be considered acceptable.13
Specific commodities
Additional requirements may also exist for specific commodities that require a Canadian origin statement, such as meat and poultry, fish and seafood, and dairy and eggs, as well as for certain symbols such as the Canadian coat of arms, the Canadian flag, and the maple leaf.14
Footnotes
1. The Competition Act, R.S., 1985, c. C-34, ss. 52 and 74.01; The Consumer Packaging and Labelling Act, R.S., 1985, c. C-38, s. 7; and the Textile Labelling Act, R.S., 1985, c. T-10, s. 5.
3. Ibid.
4. Deceptive Marketing Practices Digest, Volume 4 (June 5, 2018).
5. Frequently asked questions on Product of Canada and Made in Canada claims (Product of Canada FAQs).
6. Ibid.
7. Supra note 2.
8. Canadian Food Inspection Agency, Origin Claims (July 6, 2022).
9. Ibid.
10. Ibid.
11. Ibid.
12. Ibid.
13. Ibid.
14. Ibid.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
