Imports Are the Way to Lower Prices

Retailers insist, now ministries agree.

Dairy prices may have been getting the headlines lately, but Israelis are also paying much more than European consumers for many imported products. Retailers say they could slash prices on a number of food and toiletry items if certain import barriers were removed. In an attempt to lower prices, some importers and discount chains are pushing the state to revise the way it regulates parallel imports.

Parallel imports refers to goods brought in from abroad by someone other than the offical importer or the manufacturer, at a lower price that is passed on to consumers.

The state, fearing that parallel imports could leave an opening for counterfeit or inferior goods, often requires permits from agencies such as the Health Ministry. According to potential parallel importers, including retail chains, the bureaucracy usually cancels out any possible benefit. They say the Health Ministry and the Customs Authority have set the barriers too high.

Only products that are already registered in Israel can be brought in as parallel imports, and the importers must document all the links in their supply chain. They must show proof that that they purchased the goods from the factory abroad, or from a supplier who purchased directly from the manufacturer.

The goods must be purchased in their country of manufacture, within a year of the date of manufacture.

Without parallel imports, the official importers in Israel have free rein to hike prices for many goods.

For example, Colgate toothpaste is sold at the discount supermarket chains for NIS 13 per tube, while in France a similar product is only NIS 7 (1.4 euros ). AXE deodorant for men costs NIS 25 here and only NIS 15 in Tesco stores in England.

The difference in food prices is also huge: Nestle's Cheerios cost only NIS 16 to NIS 17 a box in England or France, but NIS 27 per box here.

Importers and discount chains say the state protects large local manufacturers and takes no notice of the obstacles they place in the way of anyone who tries to import on their own. "The Health Ministry and the Industry, Trade and Labor Ministry demand proof of purchase from the original manufacturer. But for most big brands, such as Nestle or Procter and Gamble, the manufacturers are also the official importers, and they won't give us proof since we compete with them," said Rami Levi, owner of the eponymous discount supermarket chain.

"The Health Ministry needs to make do with the approval and [list of] ingredients on the package. They say all the documents are necessary for consumers' health, but in reality it is to protect the manufacturers," said Levi.

Other importers said customs officials delays goods unnecessarily, even when they know perfectly well the goods are not counterfeit. One importer accused manufacturers of conspiring with the official importers in filing false complaints and suits, as well as lying about where the goods were purchased.

The Industry, Trade and Labor Ministry said the Health Ministry was responsible for approving parallel imports of food and toiletries, but admitted that some of the demands on importers may be draconian. There may be cause to ease the regulations to enable lower retail prices, Yosef Dankona said. The question is whether food imports need to meet the same standards as for drugs, and it may be appropriate to ease the requirements, he said - and his ministry will raise the issue with the Health Ministry soon.

The Health Ministry said its only goal in supervising imports was to protect public health.