Research On The Economic Effect Of Parallel Imports

With the continuous development of economic globalization, parallel imports has gradually become high-profile but extremely controversial issue of international trade field. It gets attention from many scholars, and the parallel importation legislation has also been a hot issue to legislative agency. On the other hand, since China joined the WTO in 2001, the trade barriers of various products has been gradual relaxed. The relaxation of barriers results in the parallel importation frequently, which greatly influenced our products, related rights and consumers. However, the parallel imports is a blind spot in international trade because there is no clear legislation and policy-oriented in the current domestic market. Therefore, this paper attempts to analyze the economic effects of parallel imports and make recommendations for Chinese government to make parallel imports policy and firms to deal with parallel imports.Currently, parallel imports mainly perform as re-importing in developed countries, but producing the products under authorized by the developed country and importing the products from the developed country also. This paper tries to make the theory models of parallel imports of developed and developing country to discuss the effects of parallel imports to market competition, society welfare, and consumers of both imported countries and exported countries. The discussion is depended on the different forms of parallel imports between developed and developing countries, and also the abstract model of parallel imports. Finally, propose the recommendations for the parallel imports policy of Chinese government and firms.This paper shows that the two different forms of parallel imports in developed and developing countries caused different economic effects. Parallel imports of developed country can drop the importer country’s market price and increase the consumer welfare. Parallel imports of developing countries only have the same effects when the tariff is low. But it will raise the importer country’s market price and decrease the consumer welfare when the import tariff is higher. For China, the import tariffs of advanced products and luxury goods are higher, and the price of them is quite high. It is serious adverse to consumers. Thus this paper suggests that we should allow parallel imports, and even reduce the import tariffs for parallel imports of the advanced products from developed country. More important, domestic enterprises should strengthen the construction of independent brands, and improve product quality, to improve the recognition and satisfaction of consumer. Then they can promote the competitiveness when facing the challenges of the parallel imports.