New Zealand lifts ban on parallel imports - USA objects

Citation

(1998), "New Zealand lifts ban on parallel imports - USA objects", Asian Libraries, Vol. 7 No. 9. https://doi.org/10.1108/al.1998.17307iab.022

New Zealand lifts ban on parallel imports - USA objects

New Zealand lifts ban on parallel imports ­ USA objects

As the world moves toward globalisation of markets, some business interests are trying to use trade negotiations to restrict cross-border trade in goods. So called "parallel imports" occur when goods are purchased in one country and imported into another. (This is not to be confused with illegal counterfeit goods, or goods which infringe patents or copyright.)

Under international law, countries can decide if "exhaustion of rights" (sometimes called the "first sale doctrine") permit such parallel imports. An area of dispute is goods protected under copyright, trademark or patent laws. High courts in Japan http://okuyama.com/c3v01ok.htm , the USA http://laws.findlaw.com/US/000/96-1470.html and the European Union have said that international law permits the parallel imports of goods protected by intellectual property rights. In contrast the United States Trade Representative (USTR) is trying to ban parallel imports, and has placed several countries on the USTR's "watch list" and/or threatened trade sanctions over the issue of parallel imports of music CDs, software or pharmaceutical drugs. Parallel importing also affects the trade in books and journals, CD-ROMs and computer software ­ all of interest to librarians and information managers.

The dispute is largely about the ability of a manufacturer or publisher to set different prices in different countries. A study of music CDs in Australia by the Australian Consumers' Association http://www.cptech.org/ip/pi/acasubcd.html indicated that Australian consumers were paying A$6.33 more than consumers in other countries for popular music CDs. In Japan the Fair Trade Commission has intervened to ensure that consumers benefit from parallel imports of goods such as Steinway pianos, which were priced higher in Japan than elsewhere. This is considered a very sensitive issue with software, often sold at very different prices in different countries, and for the emerging trade in copyright goods over the Internet.

Firms seeking to make parallel imports illegal often assert that parallel imports are related to piracy or counterfeit goods, or undermine a firm's ability to protect the image of a brand. Consumer groups from several countries say that piracy or counterfeit products are illegal in any case, and can be addressed without bans on parallel imports. The following is taken from a news report about New Zealand's recent decision to liberalise rules concerning parallel imports.

From FT.com (Financial Times), Wednesday, 20 May 1996 (distributed as a non-commercial fair use)

Parallel imports: US warns as New Zealand lifts ban

Gwen Robinson in Wellington

The USA has threatened action against New Zealand, for its abrupt move to remove restrictions on parallel imports ­ allowing importers to bring in brand-name goods without a franchise.

New Zealand has become the first country in the Organisation for Economic Co-operation and Development to open its market to parallel imports, after Parliament voted at the weekend immediately to lift the ban. The vote followed the government's announcement of the measure in the national budget late last week.

Charlene Barshefsky, US trade representative, had convened an immediate special review of Wellington's decision, said Josiah Beeman, US Ambassador to New Zealand. Mr Beeman publicly condemned New Zealand's action and warned of "severe consequences" of the move that would go "far beyond the New Zealand market".

New Zealand's decision is particularly sensitive for US car, pharmaceutical and CD manufacturers, which claim large market shares through exclusive marketing deals in the country. However, Mr Beeman said the issue was not a bilateral matter. "Rather, it is a precedent-setting action by an OECD nation that could have an adverse impact on overall world trade", he said. In a sharp response to US protests, Jenny Shipley, New Zealand Prime Minister, warned the USA to stop interfering in New Zealand affairs: "we will not be told how to run our country".

Some domestic business groups have warned the move could trigger a flood of cheap imports and undermine investment and intellectual property rights in the country. But the government insisted that removing the ban would benefit consumers through lower prices and wider availability of goods currently limited through exclusive franchise networks. At the same time the government will increase protection of copyright holders' rights through stiffer penalties for imports of pirated goods, said John Luxton, Commerce Minister. Consumer groups, importers and retailers welcomed the move and the Manufacturers Federation said the "advantages would outweigh the drawbacks", as manufacturers would be able to buy cheaper machinery and equipment.

The Australian government, which has been fighting a similar battle in its Parliament to remove parallel import restrictions on CDs, hailed New Zealand's decision. "The New Zealand decision was taken in support of a more open and competitive economy and in the interests of consumers and local businesses", Daryl Williams, Australian Attorney-General, and Richard Alston, Communications Minister, said in a joint statement.

The Australian government's proposed legislation has been blocked in Parliament's Upper House by opposition parties. The deadlock revolves around claims by the recording industry and artists that the removal of restrictions would flood Australia with counterfeit CDs. The Australian government said New Zealand's move showed such claims were spurious, and provided "a ringing endorsement" of the government's determination to ensure "all Australians benefit from cheaper CDs".