CHANGES TO PARALLEL IMPORT LAWS – A LEGAL VIEW

On 10 February 2016, the Federal Government announced it will relax the restrictions that apply to all imports of motor vehicles (whether new or used), including parallel imports, under the Motor Vehicle Standards Act 1989 (Cth).

The announcement comes in the context of the Government’s review of the Motor Vehicles Standards Act, having regard to (among other things) the end to local Australian motor vehicle manufacturing by 2017 and what the Government considers to be high current regulatory compliance costs.

The Federal Government has said that relaxing the restrictions for new motor vehicles, along with other legislative reforms, will save the automotive industry $70 million in compliance costs.

Parallel imports

In the context of motor vehicles, the term ‘parallel import’ refers to a vehicle imported through private means, without the involvement of an overseas manufacturer’s local distribution and/or Dealer network. ‘Parallel imported’ cars are also known as ‘grey imports’.

Existing laws

Under the current Motor Vehicle Standards Act, it is prohibited to supply new imported vehicles unless they are certified as ‘standard’ – that is, they comply with all applicable vehicle standards (such as the Australian Design Rules and emissions standards) and have a vehicle identification plate (or ‘compliance plate’) fitted with the approval of the Administrator of Vehicle Standards. The identification or compliance plate entitles the vehicle to be registered in Australia and sold. All imported new vehicles sold commercially in Australia by manufacturers come with this certification and the identification or compliance plate.

Vehicles (new or used) without an identification or compliance plate may not currently be imported unless they have a specific ‘Vehicle Import Approval’. A Vehicle Import Approval can take the form, for example, of a Used Import Plate or a Personal Import Plate. Approval can be applied for on a case-by-case basis, according to a variety of eligibility criteria which vary depending on factors such as the age of the vehicle and its use or the applicant for approval.

Obtaining approval is not a simple process and quotas can apply to the number of approvals granted under particular eligibility criteria (for example, such as under the ‘Low Volume Scheme’ for new vehicles on the register of Specialist and Enthusiast Vehicles).

There is also a special customs duty of $12,000 that can apply to the import of used vehicles.

Reforms to existing laws

Existing laws have had the practical effect of heavily restricting the parallel import of both new and used motor vehicles that do not have an identification or compliance plate. There have been strong policy reasons for those restrictions, even though those policies are now the subject of change.

Used cars

In 2015, the Harper Review (an independent review of Australia’s competition law and policy) recommended that restrictions on the parallel import of used motor vehicles be scrapped. However in response, on 24 November 2015, the Federal Government announced that, following a consultation process, it does not intend to reduce existing restrictions on the parallel import of used motor vehicles.

The Federal Government’s consultation process included two detailed submissions from AADA. In its submissions, AADA has been opposed to the de-restriction of parallel imports of used cars, in particular citing the safety and financial risks posed to consumers who purchase imported used cars from overseas suppliers.

New cars

Despite its stance on the parallel import of used cars, the Federal Government announced that it would amend the Motor Vehicle Standards Act to reduce existing restrictions on the parallel import of new motor vehicles.

Precise details of the amendments are yet to be released and the Government has stated that they will be refined through further consultation with stakeholders. However, the headline changes are that the Government will:

  1. no longer require imported vehicles to carry an identification or compliance plate (instead there will be an online register of approved vehicles)
  2. allow consumers to personally import ‘new’ vehicles (without a compliance plate), on the following conditions:
    (a) The vehicle must be imported from a country with ‘comparable standards’ to Australia’s – at present the Government has acknowledged that Japan and the United Kingdom (both right-hand drive markets) meet this standard for cars, and that motorcycles could also be imported from the USA and the EU.
    (b) The vehicle must be less than 12 months old and have no more than 500km on the odometer,
    (c) A limit of one vehicle every two years will apply.
  3. accelerate the process of harmonising the Australian Design Rules with international standards, and
  4. under the Government’s reform plans, imported new vehicles will undergo inspection by an independent third party. Some differences in the ‘comparable standards’ are proposed to be addressed through modification requirements (for example, in the context of child restraints).

Other reforms

While the Government does not propose to change the existing eligibility criteria for the personal import of used cars, the proposed reforms will modify how those criteria are assessed and approvals given. For example, under the proposed reforms the Government will agree to the following:

  1. Remove quotas on the number of vehicles that can be imported by ‘Registered Automotive Workshops’.
  2. Allow imported used vehicles to be entered on the Register of Specialist and Enthusiast Vehicles if they meet any one of the following five criteria:
    a. Performance – high-performance vehicles with specifications (e.g. power to weight ratio) significantly superior to mainstream vehicles in Australia
    b. Environmental – vehicles that offer environmental performance (e.g. emissions of carbon dioxide per km) significantly superior to mainstream vehicles in Australia
    c. Mobility – vehicles manufactured with special features to assist people with a disability.
    d. Rarity – vehicles of which only small quantities have been produced
    e. Left-hand-drive – vehicles originally manufactured as left-hand-drive of which right-hand-drive versions are not available in any other country.
  3. Adjust the ‘older vehicle’ criterion from vehicles manufactured before 1989 to vehicles older than 25 years.

Implementation of new laws

The Government’s planned reforms to the Motor Vehicles and Standards Act are expected to be introduced in 2018. ‘

 

1.Parallel Imports – As per our previous contributions – with Evan’s portrait and title ‘Lead Partner, Automotive Industry Group | HWL Ebsworth Lawyers (see page 24 of the December edition for an example); and please also add the following text at the foot of the article:

This article was written by Evan Stents – Lead Partner and Christian Teese – Associate, Automotive Industry Group | HWL Ebsworth Lawyers.

Evan Stents
Lead Partner, Automotive Industry Group | HWL Ebsworth Lawyers

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