Parallel Imports & Professor Harper’s Recommendation

The Harper Competition Policy Panel Review presented its final report  to the Hon Bruce Billson MP, Minister for Small Business on 6 March 2015.

Recommendation 13 concerning parallel imports is below:

 

Recommendation 13 – Parallel Imports
Restrictions on parallel imports should be removed unless it can be shown that:

  • the benefits of the restrictions to the community as a whole outweigh the costs; and
  • the objectives of the restriction can only be achieved by restricting competition.

Consistent with the recommendations of recent Productivity Commission Reviews, parallel import restrictions on books and second-hand cars should be removed, subject to transitional arrangements as recommended by the Productivity Commission.
Remaining provisions of the Copyright Act 1968 that restrict parallel imports, and the parallel importation defence under the Trade Marks Act 1995, should be reviewed by an independent body, such as the Productivity Commission.

 

Professor Harper’s recommendation to remove restrictions on parallel imports of motor vehicles flys in the face of public statements made by Federal Ministers, following AADA representations to Government. Federal Industry Minister Ian Macfarlane has said: ‘No decision has been taken by the Australian Government to reduce these restrictions and we have no intention of allowing Australia to become the dumping ground for other countries’ old second-hand vehicles.’

Macfarlane was backed by a similar statement by the Hon Jamie Briggs MP, Assistant Minister for Infrastructure and Regional Development referring to ‘other countries’ second-hand lemons’.

The economic theory leading to the Harper Panel recommendation ignores the reality of the new motor vehicle market in Australia, the most highly competitive right-hand drive market in the world. Moves to relax restrictions on the personal importation on new and used motor vehicles will ultimately hurt consumers.

The authorised Dealer network in Australia underpins consumer protection through substantial investment in specialised equipment and workshop facilities, inventories of spare parts, technology and training to support their products and a manufacturer’s warranty and fixed price servicing.

AADA estimates Dealers have invested around $17 billion in facilities to service the brands they sell.

A personal import by a consumer from an overseas supplier or via a faceless internet transaction may initially seem attractive in terms of pricing, but carries risks that must be assumed by the consumer, such as:

  • lack of provenance of the vehicle;
  • no ANCAP safety rating;
  • Lack of Australian Design Rule (ADR) compliance;
  • lack of manufacturer’s warranty and notification of recall;
  • vehicle may not be fit for purpose for Australian operating conditions (poor fuel quality, radiators, air conditioning, suspension, dust protection);
  • lack of spare parts and specialised servicing and repair facilities;
  • limited recourse against supplier and protection under Australian Consumer Law;
  • ability to insure the vehicle;
  • and tradability of vehicle.

AADA has previously raised concerns about consumer risk and safety in its submission to the review of the Motor Vehicle Standards Act 1989 (the MVS Act).

AADA understands Cabinet is to consider the initial findings of the review of the MVS Act in mid-April and has made its concerns known in a letter to all Senators and Members of Parliament. AADA has also written to all Dealers asking them to assist in raising our concerns by contacting their local member.

For more information about this issue or how you can contribute your voice, contact: AADA Policy Director, Michael Deed – email: mdeed@aada.asn.au.

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