Memorandum submitted by the British Art
Market Federation
DIRECTIVE 2001/84/EC ON THE RESALE RIGHT
FOR THE BENEFIT OF THE AUTHOR OF AN ORIGINAL WORK OF ART
INTRODUCTION: THE
BRITISH ART
MARKET
The British art market is made up of 10,217
businesses, which provide employment for 37,063.[43]
The British Art Market Federation represents all the major elements
of this sector, from the larger auction houses, employing several
hundred full and part-time employees, to a plethora of small and
medium sized businesses.
The TEFAF survey reported that the British art
market achieved sales totalling £4.2 billion in 2001, giving
it a global market share of 25.3%. The UK accounts for over half
of the entire EU art and antiques market which as a whole generated
expenditure of
l.7 billion on ancillary services, such as conservation,
restoration, specialist shipping and packing, and insurance and
security. The UK art market is particularly dependent on cross-border
trade and in this respect is the only global competitor to the
US. In 2003, antiques and fine art to the value of £1,437
million were imported to the UK from outside the European Union.
Exports totalled £2,155 million. In terms of both imports
and exports, the US is the British art market's major customer:
imports from the US totalled £862.8 million. Exports totalled
£1,379 million.[44]
1. THE SECTOR
OF THE
ART MARKET
SPECIFICALLY AFFECTED
BY THE
RESALE RIGHT
DIRECTIVE
The Artists' Resale Right (or droit de suite)
will apply initially to the resales of the work of living artists.
Later it will extend to sales of the work of artists who died
within 70 years of the date of resale. Together these account
for 32% of the total value of the international fine art market
and 23% of all auction lots sold.[45]
The UK's market share of resales at auction for the four and a
half year period covered by the Kusin study was 23.5% (US 53.8%).
The UK's nearest rival in the EU, France, accounted for 5.8%.
The UK's share of higher valued sales is significantly larger
than any other market place in Europe. Its global share of sales
in the
500,000 to
2 million was 32.9%. Within the EU, only France,
with a 6.2% share, exceeded 1%.
This is reflected in the average price of individual
auction transactions: in the first six months of 2004, the most
recent period analysed, the worldwide average price was £55,870.
The average price in the UK was
78,064, exceeded only by the US at
102,043. These contrast with an average of
16,549 in the six member states that already levy
the Resale Right.
It is Britain's skill in attracting the higher
value sales which accounts for its prominent position in the international
marketplace.
2. BACKGROUND
TO DIRECTIVE
2001/84/EC ON THE
RESALE RIGHT
FOR THE
BENEFIT OF
THE AUTHOR
OF AN
ORIGINAL WORK
OF ART
The Artists' Resale Right Directive was proposed
by the European Commission in 1996 (COM (96) 97 Final) as a "single
market" measure, subject therefore to qualified majority
voting under Article 100a of the EC Treaty.
The European Commission considered that the
harmonisation of the Artists' Resale Right was essential to eliminate
distortions to the EU art market and to promote creativity by
ensuring the equal treatment of artists in all member states.
The Resale Right had earlier been the subject
of discussion in the UK. The Whitford Committee, an independent
committee established in 1977 to review copyright law, decided
not to recommend its introduction, concluding that it was "not
practical either from the point of view of administration or as
a source of income to individual artists and their heirs".
This remained the position in the UK at the
time of the European Commission's initiative and the British Government
therefore vigorously opposed the Directive. So much so, that attempts
to reach agreement under the German and Finnish Presidencies in
1999 met with failure, because of the concerted opposition of
the UK, Ireland, Austria, the Netherlands and Luxembourg, and
support from allies sympathetic to their concerns. In May 2000
a compromise agreement was finally reached in the Internal Market
Council, but a number of key amendments designed to protect the
international competitiveness of Britain's art market were then
reversed by the European Parliament in its second reading. Following
conciliation between the Council and the European Parliament,
a majority agreement was reached on the Directive in September
2001 (2001/84/EC). The United Kingdom voted against.
3. AMENDMENTS
TO THE
DIRECTIVE SECURED
BY THE
BRITISH GOVERNMENT
A number of significant amendments to the Directive
were won by the UK and its allies. These are essential in order
to reduce the cost and administrative burden connected with operating
the levy and to limit the loss of business to market competitors
outside Europe. The principal concessions gained were:
(a) A delay in implementation until 2006
and a derogation to permit those member states not already operating
the right to app1y it only to the work of living artists, until
2012 at the latest
This is a most significant concession for the
British art market, since it is clear that the main impact of
the resale right levy falls on the market for the works of deceased
artists (the resale right extends to 70 years after the artist's
death and is payable to his heirs). The Kusin survey found that
if the resale right had been collected on all eligible auction
sales throughout, the EU in 2003, the heirs of dead artists would
have received 81% of the proceeds. In the UK in 2003, the total
value of auction sales for the work of artists who had died within
70 years was
228,782,518 and for living artists it was
48,172,424 (an 83%/17% split). The extension of the
right to the heirs of dead artists will include work of many of
the masters of 20th Century painting, which London must continue
to attract for sale if it is to maintain its position in the international
art market
(b) A maximum levy per transaction of
12,500
The levy is calculated by applying reducing
percentages to the sale price - the lowest slice being subject
to 4% , the highest (over
500,000), 0.25%. The effect of capping the levy at
12,500 prevents the levy from increasing when sales
exceed
2 million. The maximum levy is intended to limit
the loss of the UK's share in the mobile and price sensitive top
end of the art market
(c) A starting threshold of
3,000 below which sales would not be liable to
the levy
During the negotiations the British Government
argued in favour of a starting point of
10,000, on the grounds that sales below that figure
were unlikely to be diverted from one member state to another.
In the first Council agreement a figure of
4,000 was agreed upon, but this was reduced to
3,000 as a result of conciliation between the Parliament
and Council.
Quite apart from there being no internal market
justification for applying the levy to low value transactions,
doing so would also create a considerable burden and cost, particularly
upon the many smaller businesses that BAMF represents. The DTI's
Small firms litmus test in the initial compliance cost assessment
(7050/96) put the administrative cost at £30 to £40
per sale and concluded that the total administrative cost to the
market would be £0.25 million or higher. Such costs cannot
be deducted from the levy payable to the beneficiary. BAMF remains
concerned that even a threshold of
3,000 will impose a significant administrative burden
on small businesses.
4. POTENTIAL
BENEFICIARIES OF
THE RESALE
RIGHT
Although the EU Directive was promulgated in
order to remove a distortion to the EU internal art market much
attention has been paid to the Resale Right's benefits for artists.
Support for the concept of droit de suite often derives from images
of artists struggling to make a living while the art market profits
from their work. The Resale Right is looked upon as a way of ensuring
that artists participate in the profits from the resale of their
work. (In fact the levy does not apply only to profits, but is
charged on the entire price each time an object is resold, whether
at a profit or a loss). The European Commission went as far as
claiming that 250,000 artists would benefit from a pan-European
system of droit de suite (However the Kusin survey showed that
the work of only 3,876 living artists were sold at auction for
over
3,000 in 47 countries from January 2000 to June 2004).
The experience of countries already levying
the Resale Right confirms that only a limited number of artists
can expect to receive anything at all:
— In Germany in 1998, of 7,454 artists
who had transferred their Resale Right claims to collecting agencies,
only 274 gained anything at all and they received an average of
only DM 1,861.
— In France, which has operated Droit
de Suite since the 1920s only 2,000 artists benefited during the
period 1993-1995, and, of these, 1,950 were paid an average of
only Ffr 3,000.
Artists are divided on the merits of the resale
right, many fearing that it will not be in their best interest
(for a discussion of the potential disadvantages for artists,
see Professor Ginsburgh's commentary on the Kusin survey).
A number of prominent artists, including Karel
Appel, Craigie Aithchison, Georg Basilitz, Anthony Caro, Anthony
Green, Gotthard Graubner, David Hockney, Philip King, Markus Lupertz,
Emma Sargeant and Glynn Williams publicly opposed the Droit de
Suite Directive during its second reading in the European Parliament
("Artists against Droit de Suite").
CONCLUSION
BAMF is in little doubt that the introduction
of the levy here in 2006 will result in the diversion of contemporary
art sales to other markets. As Professor Ginsburg acknowledges:
"The decision to proceed with the introduction
of droit de suite, independently of many countries outside
the EU, represents a clear risk that art sales will be diverted
from the European Union."
Following representations by the European Commission,
the US has indicated that it has no intention of introducing the
Resale Right. With Switzerland also having no plans to follow
suit, it is now clear that the UK will be at a disadvantage in
the highly competitive business of attracting sales of the most
valuable examples of contemporary painting. If the levy is extended
to the work of, artists who have died, as the directive specifies
should happen from 2012, the impact will be very severe indeed.
The result will be the reduction of employment
in the British art market as sales are diverted elsewhere. A study,
based on the directive in its original form, carried out by the
Department of Trade and Industry in 1999, calculated that the
fall in sales might lead to the loss of between 5,000 and 8,000
jobs, based on lost earnings of £57 million per annum. Any
jobs lost by the UK will not be recreated somewhere else in the
European Union, but will be exported to the US or Switzerland.
The evidence strongly points to the fact that
the very modest advantages that the Resale Right might procure
for a minority of artists are considerably outweighed by the damage
that its introduction will do to what is, at the moment, by far
the most successful art market in Europe.
February 2005
43 Source: Kusin & Company (2002), reproduced in
the European Art Market in 2002, published by The European
Fine Art Foundation (TEFAF). Back
44
Source: UK overseas trade statistics, analysed by The Antiques
Trade Gazette. Back
45
Source: The Modern and Contemporary Art Market, a study
conducted by Kusin & Company for The European Fine Art Foundation,
"Kusin Survey". Back
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