News

Oct 04, 2023

Further tariff pain for eyewear frame distributors comes at a 'difficult' time

An Australian Border Force (ABF) decision to reinstate a 5% border tax beyond acetate eyewear to now cover metal frames will likely hurt the independent optical market further, industry figures have

An Australian Border Force (ABF) decision to reinstate a 5% border tax beyond acetate eyewear to now cover metal frames will likely hurt the independent optical market further, industry figures have warned, as the Optical Distributors and Manufacturers Association (ODMA) vows to keep advocating against the move.

It comes after the border authority issued a fresh alert on 24 May 2023 outlining its intention to revoke tariff concession order (TCO) TC 0315708, which covers metal spectacle frames.

Twelve months earlier, the same order was made against plastic frames, in a decision that blindsided the industry. With almost immediate effect, eyewear wholesalers who imported product from Europe – for which there is no free trade agreement – needed to pay a 5% duty rate at the border, which they were previously exempt from.

Responding to the latest ABF decision on metal frames, Safilo Asia Pacific senior director Mr David Pearson said it was “a very poor decision and will only result in putting additional costs on consumers and pressure on the industry”.

“There will be no gain for optical industry or consumers, and it is likely that independent practices will bear the majority of the impact,” he said, noting that Safilo is a major supplier to independent optical practices in Australia.

Mr Mark Wymond, managing director of independent wholesalers Eyes Right Optical, Modstyle and Sunglass Collective, was also disappointed by the move.

“This tariff only hurts the independent frame suppliers, it doesn’t touch some of the multi-nationals, and it is a ridiculous cash grab by a mislead government,” he said.

“Putting my economist hat on, let’s hope that the government has revoked this tariff concession to then use it to bargain an improved free trade deal with the EU.”

Eyecare Plus general manager Mr Philip Rose said the independent optometry network was disappointed by the TCO decisions that came at a difficult time for Australian consumers.

“The 5% will be added to the wholesale cost and ultimately patients will be paying more for their glasses. This has come at a time when inflation and the cost of living is at an all time high, with families struggling to pay for mortgages/rent, food and other everyday goods,” he said.

TCOs are an Australian Government revenue concession that exists where there are no known Australian manufacturers of certain products that are substitutable for imported goods.

The TCO on eyewear meant importers did not need to pay the 5% duty rate in Australia. But that came to an end in May 2022 after Port Macquarie-based Optex Australia notified the ABF that it produces acetate eyewear in Australia.

The move has hit importers of European eyewear the hardest because Australia doesn’t have a free trade agreement with the continent yet. The vast majority of optical frames sold in Australia are imported, with most of these from the European Union.

The industry was bracing for the revocation of the metal frames TCO, after ABF signalled it would do so last year.

“Whilst this news is not entirely unexpected, it is very frustrating and I feel for frames suppliers that are already facing many rising costs,” ODMA CEO Ms Amanda Trotman said.

According to ODMA, the production capacity of the manufacturer who complained to the ABF is thought to be in the low thousands. The association said revoking the eyewear TCO means the $4 billion optical dispensing and eyewear industry – selling more than five million frames each year – is now faced with a 5% tariff on millions of frames imported annually.

This decision, after decades of nil tariffs for the industry, has increased costs for retailers and consumers, exacerbating cost of living pressures on the millions of Australians who use optical products, as well as putting upward pressure on inflation, ODMA stated.

ODMA seeks answers

Now with the TCO revoked for metal frames, Trotman said this was not unexpected given The Customs Delegate took a broad view on what constituted producing substitutable goods when the decision was made to revoke the concession on plastic frames in 2022.

ODMA is still waiting on an update from the Minister of Home Affairs Office despite multiple requests. It was advised that the department requested the ABF explain further the decision it made in 2022 beyond its ODMA appeal response – and that an update would be provided.

“We have been keeping ODMA members updated on the matter and encouraged members to themselves write to the minister’s office. As recent as last week, another letter was sent to the Minister of Home Affairs instigated by an ODMA member via a Federal Member of Parliament,” Trotman said.

ODMA said it would now seek to appeal the latest intention to revoke the metal frames TCO. At the time of writing, interested parties have until close of business 21 June 2023 to provide written reasons why the ABF should not go through with its plan. ODMA will do this, as well as seek further regulatory advice on other avenues to pursue.

“One further avenue to pursue of course is a broader consumer focused media campaign on the situation given costs often have to be passed on to those selling the eyewear and they often need to pass that increase on to the consumer as there are just so many pressures on costs for every business currently,” Trotman said.

Meanwhile, ODMA is continuing to keep tabs on the EU Free Trade Agreement, which would nullify tariffs imposed by ABF on the large volumes of eyewear coming from Europe.

Trotman said there had been progress on this front following recent comments from Prime Minister Anthony Albanese in the UK.

“ODMA is concerned that these revocation decisions create significant additional red tape and uncertainly for our members who are now faced with further administrative burdens when determining which products and countries the tariff applies to. It is ODMA’s view that the reimposition of these tariffs does little to nothing to assist Australian industry and is to the detriment of Australian consumers,” Trotman added.

More reading

Manufacturer explains why it sought controversial revocation of eyewear tariff concession

ODMA vows to continue tariff concession fight

Tariff trouble deepens for Australian eyewear frame distributors