Abolish import restrictions to slash prices for British consumers and the NHS, says new IEA paper
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Brits are paying too much for electronics, beauty products,
pharmaceuticals and books, according to a new discussion
paper from the free market think tank, the Institute of
Economic Affairs. Under current rules, British consumers are
banned from accessing cheaper, branded goods from outside of the
European Union. These rules restrict parallel imports, which are
goods brought into the UK by third party traders, normally without
the consent of the intellectual...Request free trial
Brits are paying too much for electronics, beauty products, pharmaceuticals and books, according to a new discussion paper from the free market think tank, the Institute of Economic Affairs. Under current rules, British consumers are banned from accessing cheaper, branded goods from outside of the European Union. These rules restrict parallel imports, which are goods brought into the UK by third party traders, normally without the consent of the intellectual property rights holder. Parallel import restrictions (PIRs) allow manufacturers to segment markets and maintain higher prices. According to the paper's authors, leading intellectual property barrister Martin Howe KC and policy analyst Matthew Lesh, allowing these imports would lower prices, boost consumer choice, and help security of supply, including for essential medicines. It would save money for both consumers and public services like the NHS. They quote a range of evidence that shows cutting these rules would intensify competition, lower prices, expand consumer choice, and improve supply chain flexibility. One study found that where they are not restricted, parallel imports had saved the NHS €986.2m (£819.3m) over five years through lower prices for pharmaceuticals. Until 2021, the UK was compelled to abide by EU rules that banned most parallel imports from outside the European Economic Area (EEA). This stems from a 2001 ruling by the European Court of Justice that blocked Tesco from importing Levi's jeans to the United Kingdom from the United States for breach of Levi's trade mark rights, even though the jeans imported by Tesco were genuine Levi products. Howe and Lesh say this approach is now anachronistic: post-Brexit, the UK is no longer bound by EU law, yet it persists with a policy that allows parallel imports only from the EEA, excluding the rest of the world. The paper suggests that this may even be unlawful under WTO rules, which generally require the UK to treat imports similarly. The paper highlights several cases of consumer products – such as diapers, Levis jeans, and iPhones – being cheaper in the US than in the UK. Some can cost over 250% more in the UK. Many factors, such as local taxes, can cause these higher prices, but removing parallel import restrictions would go some way to lowering prices for consumers. While the paper suggests possible narrow exceptions — particularly around pharmaceuticals sold at cost to developing countries — the primary recommendation is the full liberalisation of parallel trade. The previous government consulted on the future parallel import regime in 2021 but did not make a final decision before the election. The authors note that abolishing PIRs would align the UK with other major economies like the United States, Japan, and India, that allow parallel imports with limited caveats. Martin Howe KC, report co-author and leading intellectual property barrister said: “Trade mark rights are meant to allow brand owners to stop deception or confusion in the market place. But an EU rule we still haven't reformed 5 years after leaving lets brand owners use these rights to keep their own genuine goods from coming into the UK market from the rest of the world. This allows multinationals to overcharge UK consumers compared with elsewhere and we should not allow our intellectual property laws to be used to suppress a freely competitive market." Matthew Lesh, report co-author and Public Policy Fellow at the Institute of Economic Affairs said: "Brits have been paying far too much for Levi's jeans, Chanel No. 5 and iPhones for too long. Outdated import restrictions act as an artificial tax, inflating prices and boosting corporate profits at our expense. Now, after Brexit, it makes no sense to welcome imports from the EU while blocking them from elsewhere. It's high time we level the playing field, let competition work for us, and put money back in people's pockets."
ENDS
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