Research report

Restrictions on the parallel importation of books

15 Jun 2009

Australia's restrictions on the parallel importation of books result in higher local book prices and should be lifted according to the recommendations in this Productivity Commission report. {C}

The Commission undertook extensive analysis of international book prices and concluded that the current restrictions create material upward pressure on book prices in Australia. The size of this effect will vary over time and across book genres, and can be substantial.

By removing the restrictions, local booksellers would have the option of accessing better value books from overseas. Local publishers would have a strong incentive to make their prices more competitive and to look for greater efficiencies in their operations, the report said.

Some books have important cultural value, but the Commission found that the support to Australian authors provided by the restrictions is poorly targeted. 'One of the Commission's concerns is that consumers pay higher prices for books, regardless of their cultural significance' the Commission's Deputy Chairman, Mike Woods, said. 'A second concern is that these costs to consumers generate greater benefits for overseas authors and publishers than they do for our local writers. In effect, Australian consumers are subsidising foreign book producers.'

Whereas the Commission's draft report had proposed a partial liberalisation of the import restrictions, following further evidence, the final report recommends their repeal, with the industry having a period of three years to adjust before the changes take effect. The report recommends that the current range of grants and other financial assistance be refined to better target the local writing and publishing that adds cultural value to Australian society.


Key points from the report

• Parallel Import Restrictions (PIRs) provide territorial protection for the publication of
many books in Australia, preventing booksellers from sourcing cheaper or better
value-for-money editions of those titles from world markets.

• From the available quantitative and qualitative evidence, the Commission has
concluded that the PIRs place upward pressure on book prices and that, at times,
the price effect is likely to be substantial. The magnitude of the effect will vary over
time and across book genres.

• Most of the benefits of PIR protection accrue to publishers and authors, with demand
for local printing also increased.

• Most of the costs are met by consumers, who fund these benefits in a nontransparent
manner through higher book prices.
• Some of the effects represent transfers from book purchasers to local copyright
holders, but the restrictions also cause economic inefficiencies and a significant
transfer of income from Australian consumers to overseas authors and publishers.

• Consumers of culturally significant books directly benefit from their cultural value. At
the same time, the PIRs make a contribution to the ‘cultural externalities’ of books
that benefit the broader community.

• PIRs are a poor means of promoting culturally significant Australian works.
– They do not differentiate between books of high and low cultural value.
– The bulk of the assistance leaks offshore, and some flows to the printing industry.

• Reform of the current arrangements is necessary, to place downward pressure on
book prices, remove constraints on the commercial activities of booksellers and
overcome the poor targeting of assistance to the cultural externalities.

• The reform option proposed in the discussion draft was for a 12 month territorial
protection within the existing framework. Many participants claimed that it would
cause undue distortions between different genres of books. There was also mixed,
but critical, commentary about its impact on the industry.

• Having considered industry feedback and undertaken further analysis, the
Commission is recommending that the PIR provisions be repealed, and that:
– Three years notice should be given to facilitate industry adjustment.
– Current financial assistance for encouraging Australian writing and publishing
should be reviewed immediately, and any changes implemented prior to the
repeal of the PIRs. The new arrangements should be reviewed after five years.
– To assist in monitoring the impact of these changes, the ABS should undertake a
revised version of its 2003-04 industry survey as soon as possible and update it
prior to the five year review.


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