The Australian frames maker who prompted the removal of a 5% tariff concession enjoyed by acetate eyewear importers has detailed its rationale behind the decision, hoping it will make people stop and think about engaging local manufacturing options.
Optex Australia, which manufactures frames from high-quality materials and recyclable acetates at a purpose-built production facility in Port Macquarie, NSW, successfully sought revocation of Tariff Concession Order (TCO) 0315725, gazetted by the Australian Border Force (ABF) on 13 July 2022.
The move, which has affected importation of eyewear from markets like Europe, caught local wholesalers off guard, with one questioning the logic behind the decision, particularly during an inflationary economic climate.
The original tariff concession on eyewear meant importers of acetate frames were exempt from paying a duty rate in Australia. It has been in place since December 2003, and a submission from the Optical Distributors and Manufacturers Association (ODMA) at the time can be accessed here. Interestingly, Optex Eyewear (under different ownership at the time) objected to the TCO being established in 2004, before withdrawing that application.
According to ABF, TCOs are an Australian Government revenue concession that exists where there are no known Australian manufacturers of goods that are substitutable for imported goods. There are around 15,000 TCOs in Australia.
But following a request by Optex Australia, ABF this month revoked the TCO. It now means importers of acetate frames from certain jurisdictions will now need to pay the full 5% duty rate. A similar TCO for metal spectacle frames (TCO 0315708) may also face a similar fate.
“The revocation is effective from 13 May 2022, however provisions apply if goods were already in transit to Australia by that day,” ABF told Insight.
“Once the TCO is revoked, importers will pay the 5% duty rate unless they are eligible for other concessions.”
Optex Australia explains decision
Optex Australia is one of a select few manufacturers of eyewear in Australia, which also includes companies such as Dresden Eyewear that makes frames from recycled and recyclable materials, Ven Eyes that produces 3D-printed frames and a handful of artisan eyewear makers.
Mr Greg French, managing director or Optex Australia, told Insight that manufacturing in Australia had increasingly struggled to remain competitive against many international jurisdictions where products were permitted to be produced under different commercial arrangements to what is required and expected in Australia.
“The proposed tariff won’t make a monetary difference to my business. Australia has successfully negotiated free trade agreements across many eyewear manufacturing regions around the world. In each of those countries, the proposed TCO is not relevant and has no effect,” he said.
“What the TCO does offer a local manufacturer, is it has people stop and think about engaging local options. Like many local manufacturers, we have had to diversify our interests and capabilities in order to compete and remain viable against an increasing backdrop of mass-produced eyewear that is not being produced under the same workplace restrictions and laws that we all expect manufacturing businesses to comply with here in Australia.
“Understandably, the TCO may have an impact on some smaller importers. This is something that does concern me, and it may require further consultation, additional discussion and consideration between [ABF] and the parties affected.”
French said Australia had some amazing artisans, craftsman and talented engineers that should all be able to come together to design, collaborate and produce their ideas locally.
Asked if revocation of the eyewear tariff concession was fair, given that demand for acetate eyewear meant it could not all be met by local producers, he said this was “a very narrow view of the decision”.
“Manufacturing is where science and technology, creative ideas, collaboration and design all meet. The issue is not about fairness or that one manufacturer is expecting to produce all the eyewear in Australia,” French said.
“It’s about understanding, valuing, and supporting local manufacture. Australia has many highly-skilled engineering and manufacturing capabilities across a broad range of different and exciting industries, especially in our rural areas. The jobs and innovation this creates keeps talented minds from being lured overseas and or leaving our industry. These skills are valued in our industry and can all be utilised to contribute to the development of new and exciting eyewear that will enable us to become increasingly independent and competitive.”
Importer questions rationale
Aaron McColl, of Queensland-based eyewear wholesaler Aaron’s Eyewear, brought the issue to light after stock from Europe was recently held up at the border, with ABF personnel considering how to apply the TCO change. It was ultimately released with the TCO applied, however the backdated decision to 13 May now means he will need to pay the 5% duty rate.
He believed revocation of the TCO did nothing to serve the industry. He was also frustrated that the inability of local manufacturers to meet industry demand isn’t factored into such decisions.
“I’ve always said that Optex and anyone manufacturing locally should be applauded, but there is no reason to punish everyone else in the industry in the process,” he said.
“Hypothetically speaking, if I bring in $1 million-worth of eyewear from Europe each year, this would increase my costs by $50,000 per year. Why and to what end? How does that benefit Optex’s business by increasing my import costs by so much? They’ll sell more eyewear as a result? I think not.”
While it affects the smaller players, McColl said it affected bigger players equally, if not more.
“Until a European free trade agreement is established, everyone has to pay more for frames coming from there.”
“Ask any business owner if they will ‘just absorb’ an additional $50,000 in increased costs per year without passing some, if not all, of it along. No one wants or needs this additional cost burden in this inflationary economic climate. Now that we all know who has set about imposing this on us, the question of ‘why’ is, in my opinion, yet to be answered with any real clarity or salient reasoning.”
What happens next?
Under section 269SH of the Customs Act 1901, parties affected by the TCO decision have provision to seek an internal review.
The application for reconsideration must be in writing, include the grounds on which the person objects to the decision and be submitted not later than 28 days after gazettal to the Tariff Concession Order team at tarcon@abf.gov.au.
Further detail on the Tariff Concession System can be found here.
ODMA has been approached for comment but is yet to respond.
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