Britain has the biggest art market in the European Union, but that market has been plagued over the years by EU rules — of which by far the most onerous, and destructive of our competitive position has been the Artists’ Resale Right (ARR).
First introduced here in 2006, it is essentially the same as the French droit de suite — a royalty that’s paid to an artist each time a work is resold during the artist’s lifetime, or to their heirs for 70 years after their death. In France this goes back to 1889, when ‘L’Angelus’, a painting by Jean-Francois Millet (who died in 1875), was sold for a vast profit, while the artist’s impoverished family gained nothing.
ARR first crossed the Channel when Tony Blair was prime minister. His government protested against its Europe-wide implementation, but to no avail; Britain was outvoted in the Council of Ministers. The Blair government obtained a derogation until 2012, limiting ARR to living artists, but since then it has applied to dead artists within the 70-year limit, too.
‘The whole thrust of the directive,’ says Anthony Browne, chairman of the British Art Market Federation (BAMF) which lobbied vigorously against it, ‘was that the European Commission paid lip-service to the fact it was important to have a global level playing field, and that they would get other countries to introduce it. Needless to say, that didn’t happen; it doesn’t apply in New York, it doesn’t apply in Hong Kong, it doesn’t apply in Switzerland. Blair argued, quite rightly, that if you had an international agreement that could be achieved by amending the Bern Convention on Copyright… then all countries would have it… It would still have administrative burdens, but wouldn’t act as any sort of impediment to competition.’
A May 2005 Early Day Motion co-sponsored by Jeremy Corbyn and signed by 40 Labour and Lib Dem MPs (plus one Tory) urged implementation of ARR and predicted that it would ‘give a substantial boost not only to thousands of artists and their heirs, but also the whole art market’.
ARR is levied at 4 per cent on sale prices between €1,000 and €50,000, with a sliding scale that reduces to 0.25 per cent on prices of more than €500,000. It is not clear that this has benefited artists much, but what is clear is that the UK art market as a whole has suffered.
According to a 2014 report, The EU Directive on ARR and the British Art Market by Dr Clare McAndrew of Art Economics for the BAMF, the UK’s global art market share in post-war and contemporary (the sector most affected by ARR) fell from 35 per cent in 2008 to 15 per cent in 2013. At the same time our global share of sales of the work of living artists fell from 37 per cent in 2008 to 16 per cent in 2013. Anthony Browne points out that ARR is not the only factor: the relative economic performances of Europe and the US, and therefore the relatively greater buying power of US collectors, are also significant. Nonetheless, he believes ARR has had a pernicious impact.
‘What characterises our art market, as opposed to any other in Europe, is that ours is much, much bigger, and it’s global,’ he says, ‘Our principal concern, at the top end of the market, the internationally traded end, is how we compete with centres like New York, Hong Kong, and to some extent Switzerland. That globally competing art market doesn’t exist in other member states — Europe is very bad about nurturing it and tends to focus on internal harmonisation rather than how this is going to compete in a global world.’
ARR is not the only EU directive to bedevil the British art market. In 1995 the UK was forced to apply import VAT on art, antiques, and collectibles under the EU’s VAT harmonisation programme, although the EU did concede a temporary import scheme, which permitted the waiver of import VAT if a work is re-exported within two years. Since London is an entrepot (trans-shipment) market, this was vital. Import VAT is ‘probably more of an administrative burden than anything else’, says Browne. ‘We import a significant amount of art from outside Europe and we export it. The import tax is not a major disincentive in quantum terms. It is just a further burden on a market that is incredibly dependent on cross-border trade.’
Going back to when the single market was created in the mid-1980s, a Europe-wide export licencing system was introduced above our own, with the result that there are a host of artworks that require a European export licence but not a UK export licence. ‘Again it comes down to an administrative burden more than anything else, but the trouble is that they all add up,’ says Brown. And their cumulative effect represents a further layer of cost for the trade.
The key players in the Britain’s art market would clearly prefer these burdens to be removed. Of course there’s no guarantee that Brexit would result in the abandonment of ARR, even though our own parliament never passed a law to implement it. When it comes to unravelling all the EU directives that have been issued over the past 40-odd years, it’s not clear exactly how that would happen, or in what order.
Journalist Godfrey Barker, who advised successive Conservative governments on the art market from 1982 to 1997, is not confident a British government will ‘behave sensibly’ if voters choose Brexit. He recalls an advocacy group that ‘made an enormous amount of noise on behalf of allegedly downtrodden artists’ and was determined to bring droit de suite to the UK, regardless of whether it came via an EU directive. ‘They did not believe that it would kill the goose that laid the gold egg — but it most certainly has done a great deal of harm,’ he says.
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