April 23, 2024

Changes to EMDG Program recently tabled

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Following a detailed review and consultation process, the Australian Government recently tabled its amendments to the Export Market Develop Grants (EMDG) Program. Read on to find out what the Export Market Development Grants Amendment Rules 2024 (2024 Amendments) mean for you and your business.

What is the EMDG Program?

The EMDG program is a grant program administered by the Australian Trade and Investment Commission (Austrade) on behalf of the Australian Government. The program offers grants to eligible small and medium enterprises (SMEs) to help them export, market and promote their goods and services internationally.

Eligible businesses can apply for a grant during the program’s several annual application rounds for up to 8 years in the aggregate, and there are three different kinds of grant tiers available, being:

  • Tier 1 – Ready to export (SMEs who have not exported eligible products before);
  • Tier 2 –Exporting and expanding (SMEs who are expanding their export promotion activity);
  • Tier 3 –Exporting, expanding and strategic shift (SMEs who are exporting, expanding their export promotion activity and implementing a change in their business strategy).

Representative bodies may also apply for EMDGs, which means a number of businesses can benefit from one grant.

Eligible products must be of substantially Australian origin and can be goods, services, events, intellectual property or know-how, or software – think anything from food, agricultural products and tourism services, to film and television. Applicants may also apply for an EDMG to cover eligible expenses incurred in undertaking promotional and training activities for the marketing of products in foreign countries.     

What are the changes?

The 2024 Amendments commenced on 16 March 2024, incorporating a raft of changes. However, the new Rules will only be implemented when Round 4 of applications is opened, which hasn’t occurred at the time of writing.

The Amendments include the following key changes:

Eligibility conditions

  • “Ready”, rather than “new” to export: Tier 1 applicants now need to demonstrate they have successfully completed export training activities to ensure they can make good use of EMDG funds;
  • Calculation of grant years: Grant years will now be calculated based on entering into a grant agreement, rather than on grants payable. This is to ensure the reduction of grant underspend;
  • Representative bodies can only apply for new marketing and promotional activities: This is to reduce the use of EMDGs for ‘business as usual’ expenses of representative bodies; and
  • Further requirements for fitness for grants: In addition to not having disqualifying convictions or being under insolvency administration, applicants must also be compliant with their tax obligations and conduct their business in a professional and ethical manner;

Eligible expenses

  • Activities must be approved: Training activities for representative bodies must now be approved at the time of application.

Grant agreements

  • 2-year grant agreements: Grant agreements will now be offered to applicants for up to 2 years.

Other changes

  • Decision-making by Austrade CEO: The CEO of Austrade can make various decisions, including those pertaining to the administration of grant rounds and eligibility conditions;  
  • Stricter rules about products of Australian origin: The Rules still allow eligibility for SMEs whose products are not of substantially Australian origin, or of significant net benefit to Australia. However, the Amendments impose further conditions on goods made outside of Australia; and
  • Expenses relating to representatives in foreign countries: Expenses incurred when maintaining representatives in foreign countries do not have to be incurred within the Australian financial year.

What are the impacts of the Amendments?

Whilst the amendments were made with good intentions, changes always mean there can be unintended consequences for some industries.

For example, the new eligibility conditions for Tier 1 grant applicants require an applicant to have:

  • Conducted their business of providing eligible products under an ABN for at least 2 years; and
  • A minimum annual turnover of more than $100,000 but less than $20,000,000.

These changes can affect the ability of film production companies to apply for EMDGs for the purposes of exporting their film and television intellectual property. This is because most productions are produced by a ‘special purpose vehicle’ company incorporated specifically for the purpose of producing and exploiting the relevant IP. This means that under the very traditional eligibility definitions surrounding the establishment and reputation of their business, they have a limited trading history. Industry bodies like Screen Producers Australia are continuing to consult with Austrade on these changes and their impacts.

What should I do next?

You can find out more about the EMDG Program, and whether you might be eligible, at Austrade’s page here. To find out more about the changes and how they might apply to your business or representative body, the Export Market Development Grants Amendment Rules 2024 can be read in full here, and the Explanatory Statement here.

At Digby Law, we’re here to help you with your legal matters regarding intellectual property. If you have any queries or concerns about these changes, please don’t hesitate to get in touch.

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