The Optical Distributors and Manufacturers Association (ODMA) has conceded the fight against the reinstatement of a tariff on imported frames from Europe, after receiving advice that any further appeals would be unsuccessful.
ODMA Chief Executive Officer Amanda Trotman has told mivision that continued appeals “would not be a wise use of member funds” given “none of the advice we received from regulatory experts, legal and customs experts could see a way to overcome” legal precedent.
mivision understands such a legal battle could potentially cost upwards of AU$250,000 with little, if any, prospect of success.
The Australian Border Force (ABF) last year revoked a tariff concession order (TCO) for plastic spectacle frames that had been in place since 2003. This decision was made following an application from Optex, a small Australian eyewear manufacturer based in regional New South Wales.
In May this year, the border authority issued a fresh alert, outlining its intention to revoke a second concession order, this time covering metal spectacle frames.
The effect of the revocations means eyewear wholesalers who import from countries where there is no free trade agreement (FTA) need to pay a 5% duty rate at the border, which they were previously exempt from.
It’s a very competitive market and it (the TCO revocation) is very unfair and something we couldn’t plan for
The move has hit importers of European eyewear the hardest because Australia does not have an FTA with the European Union (EU).
The EU and Australia opened negotiations on an FTA in 2018 and had hoped to conclude talks this week. However, talks have failed to reach an agreement with officials saying “more work is required to address key outstanding issues”.1 It is expected talks will resume next month.
An EU FTA would nullify tariffs imposed by ABF on the large volumes of eyewear coming from Europe. But ODMA is concerned that even if the FTA with the EU is agreed upon, “any relief may take a good 12 months to come”.
The ODMA Board also has decided a broad consumer campaign to explain the situation “would not achieve anything”.
Disappointing Outcome
Lionel Minter, the CEO of eyewear distributor Mimo, which imports the premium Austrian Silhouette brand, said approximately 85% of imported eyewear comes from China and is subject to an FTA, so the new rules favour larger corporate entities that import from there.
He said suppliers have tried to absorb the costs but warned “we will have to pass this on”.
“Whether retailers consider their markups… remains to be seen, but what it probably means is that they will buy less, which means companies like us will struggle to achieve the sales they need to break even, let alone a profit, and it puts the industry at risk.”
The tariff not only increased the costs of European frames, but significantly increased the administrative burden and caused lengthy delays in product coming through customs.
Mr Minter warned the tariff “could be the death knell” for some companies.
“It’s only 5% but we are losing customers because of their intolerance to the delays that happen. It’s a very competitive market and it (the TCO revocation) is very unfair and something we couldn’t plan for,” he said.
Getting On With It
While also expressing disappointment, and expressing much appreciation for the action of ODMA, Max Neubauer from Eyemakers eyewear said he was “not surprised” by the outcome.
“We have a number of factors we need to deal with, like increases in travel costs, shipping, salaries, cost of production, exchange rate variations, and so on. There’s nothing we can do about it. At the end of the day, mathematics is very clear; you have to make a profit to stay in business and that’s what we intend to do.
“Eyemakers provides premium products with very good demand to the market, and I trust consumers will stay with us. We will pass on some of the increase, but not all of it so yes, it will have an impact on our profitability, but it is just something you have to live with.
“It’s part of being in business. Circumstances can change and if you can’t change them, you work around them. We just deal with it, move on, and take opportunities,” Mr Neubauer said.
Reference
- Reuters., EU, Australia fail to conclude free trade agreement – for now, US News and World Report, available at: usnews.com/news/world/articles/2023-07-11/eu-australia-fail-to-reach-free-trade-deal-eu-commission, 11 July 2023 [accessed 13 July 2023].
