Forty-fourth Report of Session 2019–21 Contents

2Northern Ireland Protocol: EU import licensing scheme for cultural goods7

This EU document is politically important because:

  • it establishes new customs formalities under EU law to identify cultural goods, like archaeological artefacts and older works of art, at risk of being smuggled into the EU from non-EU countries (including the UK). The Regulation will fully take effect from 2025; and
  • these new customs formalities, because of the Protocol on Ireland/Northern Ireland in the Withdrawal Agreement, will not only apply in due course to works of art and antiquities traded from Great Britain into the EU, but also those entering Northern Ireland from the rest of the UK.

Action

  • Keep the implementation of the new EU import licensing scheme for cultural goods under review in light of its potential implications for the UK’s art market and for Northern Ireland in particular, and draw these developments to the attention of the Digital, Media, Culture and Sport Committee and the Northern Ireland Affairs Committee.

Overview

2.1Under a new EU Cultural Goods Regulation (CGR) agreed in 2019, the EU is establishing new customs controls when certain types of cultural property—such as Egyptian archaeological artefacts or ancient coins from Turkey—are brought into the European Union, to prevent trafficking and black market sales. These customs formalities are only due to take effect fully in 2025, to give the European Commission and the Member States time to develop a dedicated new IT system for the storage and exchange of information submitted by traders in relation to cultural goods. They will not apply to artefacts being moved directly from one EU country to another, nor cultural goods created or discovered inside the EU itself.8

2.2The UK Government has been sceptical about the effectiveness of this approach to stopping smuggling of arts of work and antiquities, and now it has left the EU the Government has decided not to apply the import licensing system to cultural goods entering Britain.9 However, as the UK is outside the EU Customs Union and Single Market, British exports of cultural items within the scope of the Regulation to the EU will be subject to the new formalities from 2025. This could make the UK less attractive as a place for EU-based customers to purchase works covered by the new customs formalities. Moreover, in December 2020 the Government approved the inclusion of the Cultural Goods Regulation in the Protocol on Ireland/Northern Ireland in the Withdrawal Agreement governing the UK’s exit from the EU.10 This means that the new customs formalities for cultural goods as set out in the CGR will also need to be applied to such goods entering Northern Ireland from outside the EU, including from the rest of the UK.

2.3The Government provided no meaningful opportunity for Parliament to probe the implications of including the CGR in the Protocol before it was consented to. In an Explanatory Memorandum submitted to Parliament on 8 January 2021—nearly a month after the Regulation was added to the Protocol—the Chancellor of the Duchy of Lancaster (Rt Hon. Michael Gove MP) stated that:

“[T]he policy implications of this Regulation being included… are, in practice, minimal, given that there are very few imports of cultural goods from the rest of the world into Northern Ireland, and those imports from non-EU countries that do take place are likely to be covered by exemptions within the Regulation.”

2.4However, while we accept that the overall trade flows between Northern Ireland and Great Britain likely to be affected by these new formalities is small, the impact in individual cases where someone wants to bring artefacts into Northern Ireland could be significant. The UK Government will also need to use a new EU IT system for operation of the licensing scheme in whose development it is not involved. More generally, it is another instance of an EU legal requirement under the Protocol that complicates the ability for goods to move freely between the different parts of the UK. We therefore believe it is important that Parliament continues to keep the implementation of the EU’s import licensing scheme for cultural goods under review, and makes a further assessment of the implications of the CGR for the UK’s art market—and for trade in cultural property between Great Britain and Northern Ireland under the Protocol—where necessary in the future.

2.5The background to the Regulation, and further consideration of its implications for the UK, are set out below.

The Regulation on imports of cultural goods

2.6The EU has had legislation in place to prevent the unlawful export of cultural goods—archaeological artefacts, works of art and manuscripts—from a Member State to a non-EU country since 1992.11 By contrast, comprehensive EU legislation to regulate the import of such goods into the European Union has only been in place since 2019.12 That year, the Member States in the Council and the European Parliament agreed a new Regulation on Import of Cultural Goods (the CGR) on the basis of draft legislation first proposed by the European Commission in 2017.13 It aims to create more oversight of cultural goods brought into the EU, like artefacts from Egypt, Syria or Iraq.

2.7The CGR, which builds on the 1970 UNESCO Convention against Illicit Trafficking of Cultural Property, requires the border authorities of all EU countries to prevent the entry into the EU’s Customs Union of certain categories of cultural goods, if they were “removed from the territory of the country where they were created or discovered in breach of the laws and regulations of that country”. The aim is both to disrupt trafficking of cultural goods generally, and disrupt the alleged ability of terrorist organisations and criminal groups to raise funds from such activities.14 This Committee reported the discussions in Brussels on the Regulation on four occasions, most recently in early 2019.15

2.8Broadly speaking, the Regulation creates the following new customs formalities for at the EU’s external border for trade with non-EU countries:16

2.9In cases where that country of origin or discovery of the goods cannot be reliably determined, or where they were taken out of that country before 24 April 1972 (when the aforementioned 1970 UNESCO Convention came into force), importers may be able to meet the new requirements instead by providing evidence or a declaration of legal export from the last country in which the goods were located for at least 5 years.19 The new formalities will not apply to cultural goods brought into the EU on a temporary basis for a variety of scientific purposes, including for display at museum exhibitions or for restoration. Similarly, archaeological works which are brought into the EU for display at commercial art fairs, and which would otherwise be subject to the import licensing obligation, will only require an importer statement. However, if they are subsequently sold and remain within the EU customs territory they will require a retrospective import licence.

2.10As noted, the requirement to comply with the new import licensing and import statement—depending on the nature and age of the cultural goods involved—will only take effect in 2025. That is when a new European IT system for the “storage and the exchange of information” between EU Member States on such licences and statements is meant to become operational. Until then, EU countries are only subject to the more general requirement to prevent entry of cultural goods that were removed from their country of origin or discovery unlawfully. In July 2020, the Commission published a report on progress made in establishing that IT system. This sets out its project plan for its development, and also links it to the EU’s new proposed “Single Customs Window“ (a proposed digital platform where traders would be able to fulfil various customs formalities to bring goods into the EU in a single application).

2.11The European Commission is planning to publish a formal Implementing Act—a type of EU Statutory Instrument—in the second half of 2021 to flesh out some of the provisions of the CRG. This relates, in particular, to the applicable customs procedures for cultural goods brought into the EU for safekeeping (for example because they were at risk of destruction in a conflict zone), the format of the import licence and importer statement, and the operation of the IT system under the Cultural Goods Regulation. It launched a consultation on a draft of the Implementing Act on 24 March 2021.

Implications of the Cultural Goods Regulation for the UK

2.12The UK Government’s view of the need for the new EU customs formalities for cultural property introduced by the CGR has been consistently sceptical, both with respect to its effectiveness in detecting smuggled artefacts (especially where traders can submit self-certified statements that goods have not been trafficked) and the presumed impact on disrupting fund-raising activities of terrorist groups and organised crime.20 The British Art Market Federation (BAMF) also expressed “strong concern” that the regime—if it had to be implemented at the UK border—could “create an unfortunate perception that the UK is a more complicated place for art sales and potentially hinder our global competitiveness”.21 Other stakeholders have also warned that the new Regulation is likely to complicate cross-border movements of cultural goods, especially for items—like old books—where the ‘country of origin’ is not easily identified.

2.13Nevertheless, in April 2019—less than a year before the UK exited the EU—the Government voted in favour of the Regulation in the EU’s Council of Ministers on the grounds that “there [was] little to be gained from opposing the Regulation […], and that to do so could help to sustain the mistaken and unfair view in some quarters that the UK is more interested in protecting the art market than in tackling the illicit trade in cultural objects”.

2.14The UK’s withdrawal from the European Union has, to some extent, assuaged any concerns about the impact of the Regulation on the British art market. The UK is now formally outside the EU Customs Union and Single Market. The Government has announced that, while it will maintain the general intelligence-led prohibition on entry of trafficked cultural goods (as also required under the EU’s CGR), it will not be implementing the more detailed, and convoluted, import licence and importer statement system that the EU is putting in place for 2025. This is set out in the draft Introduction and the Import of Cultural Goods (Revocation) Regulations 2021, which are currently awaiting parliamentary approval.22

2.15However, that does not mean the EU Cultural Goods Regulation will not have an impact on the UK.

2.16First, from 2025, British businesses bringing cultural goods within the scope of the Regulation into the EU will need to comply with the obligations relating to import licences and importer statements. The impact of this new EU customs regime may be particularly significant for the UK, precisely because of its large art market and extensive trade links with the European Union. As the BAMF has noted, the “British art market is unusual for being a global entrepot market place, and is therefore particularly active in cross-border trade”, including with EU countries.

2.17The new entry requirements relating to cultural goods specifically will need to be applied to cultural goods moved from Great Britain into the EU which are in scope of the Regulation, adding a new layer of bureaucracy that will not apply to similar trade between EU countries, or between the EU and Northern Ireland (see below). This may make the UK less attractive as a place for EU-based customers to purchase art or artefacts that are subject to the new formalities.23 However, the effect is limited by the fact that works of art originating within the EU itself—for example Dutch, French or Flemish paintings, or ancient Greek artefacts—are not subject to the new rules. Even if the Government had decided to maintain the new import licensing system under domestic law, this would not have had the effect of obviating the new formalities on UK-EU trade in cultural goods, as the UK system would be separate.

2.18Secondly, as noted, Northern Ireland is in a different situation in this respect from the rest of the country. Under the Protocol on Ireland/Northern Ireland in the Withdrawal Agreement, the UK is required to continue applying a wide range of EU legislation on goods in and to Northern Ireland. More specifically, to avoid the need for any customs infrastructure on the land border on the island of Ireland following the UK’s withdrawal from the EU, the Government will instead enforce a range of EU customs formalities on goods entering the North from outside the EU, including from Great Britain. The Cultural Goods Regulation was not listed in the Protocol as originally agreed between the UK and the EU in January 2020. However, our predecessor Committee had already noted in early 2019 that “it [was] likely the EU would seek the UK’s approval to add the […] Regulation” to the list of EU laws that would continue to apply under the Protocol, “creating an additional customs barrier between Northern Ireland and Great Britain”. This proved to be correct. In spring 2020, the European Commission tabled a formal proposal for consideration by the UK to add various pieces of EU legislation to the Protocol, and the CGR was among the proposed additions.

2.19As set out in more detail in this Committee’s Reports of 24 June 2020 and 9 April 2021, the Government provided no meaningful opportunity for Parliament to scrutinise the implications of the proposed amendments to the Protocol. In July 2020, the Cabinet Office said that it would “not […] disclose UK positions publicly ahead of any negotiations or Withdrawal Agreement implementation discussions”. In the event, the Government eventually agreed to most of the Commission’s proposed additions—including the CGR—in December 2020, by means of Decision 3/2020 of the UK/EU Joint Committee, as part of a broader suite of agreements relating to the functioning of the Northern Ireland Protocol. It did not seek Parliament’s views in any way before giving its agreement to the expansion of the range of EU laws that apply in Northern Ireland under the Protocol.24 In its initial summary of the decision, the Government did not even explicitly refer to the Cultural Goods Regulation, saying only that “these targeted amendments do not occasion any significant new burdens, and indeed ensure that we are able to fully protect Northern Ireland’s place in the UK’s internal market”.

2.20We have made a more general assessment of the various amendments made to the Protocol by Joint Committee Decision 3/2020 in our Report of 9 April 2021.

2.21However, with respect to the CGR specifically, the Protocol means that there will be no need for import licences or importer statements where cultural goods are brought into the EU from Northern Ireland, or vice versa, even when the Regulation fully takes effect in 2025. Instead, the inclusion of the legislation in the Protocol means the Government will be under an obligation to prevent entry into Northern Ireland of cultural goods from Great Britain (and other non-EU jurisdictions) if they are in scope of the Regulation and “were removed from the territory of the country where they were created or discovered in breach of the laws and regulations of that country”. That may affect intra-UK movements of, for example, coin collections or, paradoxically, paintings by British masters (which are in scope of the CGR, whereas old paintings from the EU itself are not). Moreover, from 2025, that would mean such goods being brought into Northern Ireland may require import licences or importer statements, managed by the UK in respect of Northern Ireland via the new computer system being set up by the EU.25

2.22In an Explanatory Memorandum on Joint Committee Decision 3/2020 submitted to Parliament on 8 January 2021—nearly a month after the Regulation was added to the Protocol—the Chancellor of the Duchy of Lancaster (Rt Hon. Michael Gove MP ) stated that:

“[T]he policy implications of this Regulation being included… are, in practice, minimal, given that there are very few imports of cultural goods from the rest of the world into Northern Ireland, and those imports from non-EU countries that do take place are likely to be covered by exemptions within the Regulation.”

2.23Even if the Government had decided to maintain the effects of the CRG in full in domestic UK law, this would not have obviated the applicability of these new EU customs formalities on movements in cultural goods from Great Britain to Northern Ireland, because the UK—being outside the Customs Union—would have operated those arrangements separately. Similarly, the new UK/EU Trade and Cooperation Agreement (TCA) does not contain any provisions that would waive the need for cultural goods brought into the EU or Northern Ireland from Great Britain to comply with the requirements of the Cultural Goods Regulation, including—from 2025—the import licence and importer statement formalities.26 The Department for Digital, Media, Culture and Sport has told us that “the Government will consider what measures are required to implement the Regulation for Northern Ireland and will discuss with the EU, as appropriate”. It is not clear what the outcome of that process, or any discussions with the EU, have been.

Conclusions and action

2.24Doubts persist about the effectiveness of the EU’s new customs formalities for cultural goods to reduce the risks of them being trafficked, but its impact will only become clearer after the scheme’s full entry into force in 2025. As the UK is now outside the EU Customs Union and Single Market, traders in the British art market will undoubtedly learn to adapt to these new formalities for trade with the EU in due course, although it may reduce the attractiveness of the UK as a place for EU buyers to purchase art compared to purchases made within the EU, where these formalities will not apply.

2.25In our view, the more important consequence of the Cultural Goods Regulation relates to the Government’s decision in December 2020 to agree to the EU’s proposal for its inclusion in the Protocol on Northern Ireland.

2.26The decision to amend the Protocol was taken without the opportunity for effective parliamentary scrutiny of the implications of the amendments, because the Government failed to provide any information on its position—or the impact of the changes for Northern Ireland’s position within the UK internal market—until after it had already approved the Joint Committee Decision. It demonstrates the broader shortcomings in the Government’s approach to scrutiny of the activities and decisions of the UK/EU Joint Committee, which may also affect Parliament’s ability to hold the Government to account for the work of the separate UK/EU Partnership Council (and its supporting bodies) under the new Trade and Cooperation Agreement with the EU.

2.27In this specific instance we accept, as the Government has argued, that the practical impact of the CGR on trade in cultural goods between Northern Ireland and Great Britain under the Protocol is likely to be small, especially because the more onerous import licence requirement only applies to a narrow sub-set of archaeological artefacts which realistically are not moved between Great Britain and Northern Ireland frequently. However, the Regulation is nevertheless another potential barrier to the free flow of trade between the different parts of the UK because it imposes a new, specific customs formality on certain goods moved from Great Britain into Northern Ireland. In individual cases, the impact of the Regulation could therefore be significant. The Government will also in due course be required to use an IT system in whose establishment it is no longer formally involved. In addition, the Regulation may hinder trade in cultural goods between the art markets of Great Britain and customers based in the EU, because the new formalities will also apply to such trade.

2.28We therefore consider that Parliament should keep the implementation of the EU’s new import licensing scheme for cultural goods under review, and make a further assessment of its implications for the UK—and for Northern Ireland in particular—in the future, where necessary.

2.29In the meantime, we draw these developments to the attention of the Digital, Culture, Media and Sports Committee and, given the particular implications of the EU Cultural Goods Regulation under the Protocol, the Northern Ireland Affairs Committee. We trust that this Report chapter will be of use to Members participating in the forthcoming Delegated Legislation Committee on the draft Introduction and the Import of Cultural Goods (Revocation) Regulations, which aim to remove the import licence and importer statement requirements from UK law except with respect to Northern Ireland.

7 Regulation (EU) 2019/880 on the introduction and the import of cultural goods; Council and COM number: 11272/17, COM(17)375; Legal base: Article 207(2) TFEU; ordinary legislative procedure; QMV; Department: Digital, Media, Culture and Sport; Devolved Administrations: Consulted; ESC number: 41443.

8 This means, for example, that the new import rules would not apply—for example—to a painting by Rembrandt or to the Elgin Marbles.

12 However, the EU has had specific import restrictions on archaeological objects from Syria and Iraq that are considered at particular risk of being trafficked because of the political volatility in those countries.

13 The UK, then still a Member State of the EU, voted in favour of the Regulation as recorded in Council document 8375/19.

14 The European Commission has noted that the so-called Islamic State makes money in two ways from antiquities: through selling looted artefacts and taxing traffickers moving items through ISIL-held territory. The UK Government, however, has expressed doubt about the extent to which smuggling of cultural goods is used as a method of fund-raising by such organisations (see in particular a letter from the then-Minister for Arts and Heritage, Michael Ellis MP, to this Committee dated 1 February 2018).

15 See (38915), 11272/17 + ADDs 1–3, COM(17) 375: Second Report HC 301–iii (2017–19), chapter 3 (1 December 2017); Sixteenth Report HC 301–xvi (2017–19), chapter 4 (5 March 2018); Forty-fourth Report HC 301–xliii (2017–19), chapter 3 (20 November 2018); and Fifty-third Report HC 301–lii (2017–19), chapter 10 (5 February 2019).

16 Customs formalities have been completely abolished between EU Member States as part of the Single Market, so the new Regulation does not apply to trade in cultural goods between EU countries.

17 As listed in Part B of the Annex to the Regulation.

18 As listed in Part C of the Annex to the Regulation.

19 This exception does not apply if, during that 5-year period, the cultural property was in a country other than where it was created or discovered “for […] temporary use, transit, export or transhipment”, e.g. held in a warehouse or free-port.

20 The Government also expressed concerns that the self-certification regime for cultural goods deemed at lower risk of trafficking could facilitate, rather than hinder, illicit trade in such goods. It also said that the convoluted approach to archaeological works brought into the EU for display at art fairs—which could require retrospective import licences—“may be unworkable”.

21 Based on developments in the legislative process in Brussels, and the information supplied by the Government, our predecessors on the European Scrutiny Committee considered the implications of the Regulation for the UK on four occasions from 2017 to 2019. See for more information the Committee’s Reports of 1 December 2017, 5 March 2018, 20 November 2018 and 5 February 2019,

22 On 16 March 2021, the European Statutory Instruments Committee (ESIC) recommended that the regulations be made by affirmative procedure, rather than the negative procedure initially proposed by the Government.

23 The new specific formalities relating to cultural goods will come in addition to the other barriers to trade in goods more broadly that apply now that the UK has left the EU’s Single Market and Customs Union, for example relating to general customs formalities—such as import declarations and safety & security certificates—and import VAT.

24 Under Article 166(2) of the Withdrawal Agreement, as implemented by section 7a of the European Union (Withdrawal Agreement) Act 2020, the amendment to the Protocol took effect automatically within the UK’s domestic legal order.

25 Under the Protocol, the aforementioned Implementing Act put forward by the European Commission to supplement various elements of the Cultural Goods Regulation will also apply to the UK in respect of Northern Ireland when it takes effect in 2025.

26 Article GOODS.21 of the UK/EU Trade and Cooperation Agreement does contain a mechanism for cooperation “in facilitating the return of cultural property illicitly removed from the territory” of either the UK or the EU after 1 January 1993, but this does not obviate the need for any customs formalities.




Published: 27 April 2021 Site information    Accessibility statement