Parallel importation of books

Compared to the US and Europe books are expensive in Australia. Some reports say Australians pay up to 40% more than US consumers. One reason for this extra expense is Australia’s parallel import restrictions on books. These prevent cheaper foreign books being sold in Australia except in a narrow range of circumstances.  And despite 20 years of federal government reform Australian publishers and some authors have successfully opposed a complete open market on books. They say that cheap imports will destroy the local industry.

There’s a lot at stake. The Productivity Commission says ‘Australians are avid readers’ and that ‘new books sales have recently been running at around $2.5 billion per annum’. While the majority of these sales are made in department stores and major book retailers, a growing slice of the pie is internet sales. The Commission says Australians have been increasingly ‘by passing local ‘bricks and mortar’ bookshops and purchasing online, including from foreign online booksellers such as Amazon.’ (Discussion Draft March 2009, Overview p xv). Growth in online book retailing has been huge. Online book sales in the US already account for just over 20 percent of its book sales. In the UK the figure is 13 per cent. All pundits predict that these figures will grow.

While the Commission acknowledged in its March 2009 Discussion Draft that ‘some of the arguments for abolishing the parallel import restrictions are strong’ (p xxii) it preferred an easing of current restrictions over abolition.  But in the Productivity Commission’s final June 2009 Research Report released on 14 July 2009, the easing of restrictions suggestion lost out to a repeal recommendation.

The current restrictions – which the PC recommends repealing – provide three narrow windows for retailers to parallel import books into Australia. First, Australian publishers have 30 days to publish an Australian version of any book that has been released anywhere in the world. If that happens retailers must purchase the book from the Australian publisher and it cannot be imported, i.e., the 30 day rule. Second, there is also the ‘7/90′ day rule. This allows retailers to import a reasonable number of copies of a book if an Australian publisher fails to respond to a written request within 7 days or fails to supply within 90 days. Third, there are the single use provisions. This allows book retailers to parallel import a single copy of a book if requested by a customer. It’s been unclear whether this allows booksellers to aggregate such orders, but in practice very few retailers do this.

The Productivity Commission first recommended in its March 2009 discussion draft a partial easing of the current restrictions by first, retaining the 30 day rule, but modified so that the parallel importation will be allowed 12 months from the date of first publication of a book in Australia or if the book becomes unavailable during this 12 month period. Second, abolishing the 7/90 day rule. Third, allowing booksellers to overtly offer an aggregation service for individual import orders under the single use provisions.

However, the Commission’s final June 2009 report recommended that the Government repeal Australia’s Parallel Import Restrictions (PIRs) for books’.  A copy of the final report can be downloaded at www.pc.gov.au/projects/study/books/report. The three recommendations that were made were as follows:

RECOMMENDATION 1
The Government should repeal Australia’s Parallel Import Restrictions (PIRs) for books. The repeal should take effect three years after the date that it is announced.
RECOMMENDATION 2
The Government should, as soon as possible, review the current subsidies aimed at encouraging Australian writing and publishing, with a view to better targeting of cultural externalities. Any revised arrangements should be put in place before the repeal of the PIRs takes effect.
RECOMMENDATION 3
The outcome from the repeal of the PIRs and any revised subsidy arrangements should be monitored and assessed five years after implementation. To assist that assessment, the Australian Bureau of Statistics should, as soon as possible, undertake a revised version of its 2003-04 surveys on the books industry and market, having regard to the information gaps and interpretation problems identified in this study and relevant data held by other agencies. It should then update these revised surveys prior to the commencement of the five year assessment.

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