New Zealand's import laws promise low prices, but critics say consumers will get less for their money

By SIMON ROBINSON /AUCKLAND

ext month, Auckland car dealer Michael Clark hopes to take delivery of a dozen gleaming new BMW 328i's and two 523i's, all imported from Malaysia. Clark plans to sell the German luxury cars for between $NZ65,000 and $NZ75,000--up to $NZ24,000 less than near-identical cars sold by the official importer, BMW New Zealand. "Selling is easy if you can buy well," says Clark. "With the crisis in Asia, Malaysia is overstocked and underfunded, so we can afford to buy and sell these cheaply."

Besides cheaper imported cars, New Zealanders may soon have access to cheaper CDs, books, clothes, computer software and many other goods. Until recently, the Copyright Act stopped anyone but a copyright holder or an authorized New Zealand agent from importing and selling most products. But a law change announced in the May Budget allows anyone, authorized or not, to import and sell virtually anything. "It will bring us into a global market," says Stephen Tindall, owner of The Warehouse, a national bargain retail chain. "You'll see things on the shelves that you just couldn't get here before." Opponents, however, say parallel importing, as the practice is called, will hurt trade, leave customers with no after-sales service, and aid counterfeiters.

The move to parallel importing is another step toward a true free market in New Zealand, whose isolation and small population have historically restricted choice and kept prices high. A recent New Zealand Institute of Economic Research study found that liberalized import laws would generally benefit consumers. Books, for example, cost up to 30% more in New Zealand than elsewhere, and copyright holders do not supply all titles. Parallel importing should bring prices down as well as broaden the range of books available for sale.

The new law recognizes changes in technology--anyone with a credit card and access to a Net-linked computer can order CDs and books from overseas suppliers. The used-car market has already shown Kiwis how parallel importing can work. Since regulatory changes in the late 1980s, dealers have imported more than 600,000 used cars--a third of all cars sold--mostly from Japan. Until recently, local offices of the major marques, whose cars often sell alongside near-identical secondhand models, have tolerated the situation. But in the past two years some, notably Chrysler Jeep, have questioned the legality of parallel importing. Before the practice could be challenged in court, however, the government stepped in to legalize it.

Official importers--including Microsoft, Columbia Tristar, and Adidas--are crying foul over the new laws. They argue that prices are already competitive (especially in the case of cars; in May New Zealand cut all tariffs on vehicles) and say the law change may cost jobs. Who, they ask, will provide after-sales service for goods bought from parallel importers? "The problem is you get these people with their cell phone and briefcase and they sell the cars and move on," says James Yates, brand manager at BMW New Zealand, which opposes Clark's plans to import BMWs from Malaysia. "We're here for the long term." Asks Pete Jenkins, marketing chief at South Pacific Tyres, owner of the Dunlop trademark in New Zealand: "Why should we honor a warranty if we didn't sell them the tire?"

Kiwi musicians, authors and filmmakers fear a flood of cheap imports will destroy their local industries, too. And, angry that the law change came with little warning or consultation, the U.S. is re-examining New Zealand's rules on intellectual property. American trade officials say parallel importing threatens innovation, investment security and fair trade and will make it easier for pirated products to reach New Zealand's shores. The special review could lead to New Zealand's being placed on a trade watch list and perhaps being subjected to extra tariffs. "We remain hopeful that the [New Zealand] government will reconsider this unfortunate decision," said the country's Trade Representative Charlene Barshefsky.

That is unlikely, says Prime Minister Jenny Shipley, who told parliament in May that New Zealanders deserve freer trade: "We sell our goods and services on the competitive market, and we want New Zealanders to be able to buy on a competitive market." The government denies the new law will help counterfeiters or pirates. In any case, it has tripled maximum fines for importing fake goods to $NZ150,000.

The battle is not over. Some authorized importers in New Zealand say trademarks, patents and the Fair Trading Act may help them protect their patch, while others, including BMW New Zealand, hope failure to meet local design and safety standards will wreck would-be importers' plans. "If I was in their place I'd do the same thing," says Clark, who is busy arranging compliance papers for his new BMWs. "But so long as it's an honest deal and people know exactly what they're getting, well, I can't see what's wrong with that." With more than 50 calls of interest to Clark in the past week, other Kiwis seem to agree.