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Lord Pearson of Rannoch: My Lords, I am grateful to the Minister for giving me such a full answer. However, when he says that my question as to whether or not we should be in the European Union is pointless, will he admit that, if we were not in the European Union, we would not be taking part in this debate tonight?

Lord Haskel: My Lords, I do not want to argue with the noble Lord about the European Union. Again about a year ago we had a long debate on the subject and I refer him to that debate.

The United Kingdom is not seeking any special advantages. We are not afraid of the level playing field. We want to see the Community promoted as a centre of the art trade rather than losing business to third countries. My noble friend Lord Strabolgi asked about

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the review. The Government will be concerned to see that the review is realistic and as wide-ranging as necessary. They will seek to ensure that the particular interests of the UK art market as well as the European Community art market in general are properly represented. That will be the case whether the review starts during the United Kingdom's presidency or later.

The noble Lord, Lord Gillmore, asked whether the Government are working hard to establish alliances. Yes, we are, but at the moment a majority of member states favour harmonisation of the droit de suite. We are working very hard to persuade them to change their minds.

About a year ago, when we had our debate, fears were expressed about the impact of the VAT changes. We can still only speculate on this, although the Government are aware that anxiety in the art trade is growing as we get nearer to June 1999, which is when the rules will have to change. The noble Lords, Lord Hindlip and Lord Sandberg, showed their concern and gave the figures. They asked whether we can use the review of the seventh VAT directive to press for a zero rate and also whether we will use our presidency in that way. I believe the noble Lord, Lord Inglewood, asked me about that as well. While the question of a zero rate of VAT for imported works of art may well arise during the review, it may not command much support from other member states. Our major concern will be to attempt to persuade other member states and the European Commission of the Community-wide benefits of the UK's derogated rate of 2.5 per cent. rather than the minimum rate of 5 per cent. set in the directive. That will be the case whether the review starts now or later.

Lord Inglewood: My Lords, I was specifically addressing my remarks to the rate that might be applied on droit de suite. I appreciate that it is not part of the Commission's current proposals that the rate on droit de suite should be zero. However, does the Minister agree that, if it were decided that there should be droit de suite across the entire Community, it is at least a theoretical possibility that the rate at the bottom end could be zero? Therefore, if that is appropriate, does he not agree that it might provide an additional argument for the Government in resisting this pernicious proposal?

Lord Haskel: My Lords, I shall come to the question of a zero rate for droit de suite in a moment. The point I wish to make is that the artists' resale right and import VAT cannot be considered separately. It is the combined effect which is important. We need to know what effect both will have on competitiveness. New measures should not be introduced without knowing the impact.

The DTI has studied the impact of the resale right on the United Kingdom. This study has been made available to the Commission, but a study of equal depth needs to be made for the Community as a whole. The Government will continue to seek to persuade other member states and the Commission of the importance of this. Decisions must be taken only in full knowledge of the facts. Member states must understand the risks involved.

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The warnings contained in the study and in the DTI's study must not, and cannot, be ignored. We shall ask the Community to pause and reflect. It must consider what impact the resale right proposal will have. The Community must ask itself whether this is really what it wants. We shall point out that the United States has already rejected the idea of introducing the resale right. We shall point out that the Swiss have rejected it too, precisely because they want to build up their international art market. Perhaps it would be better, as the noble Lord, Lord Inglewood suggested, to abolish the right altogether. That would level the playing field in Europe with the international playing field. Europe cannot isolate itself from global competition. Nevertheless, the Government would not wish to impose abolition, or any other solution, on our European partners. We respect their culture and traditions. Some countries have had the right for a long time. They attach great importance to it. If they want to continue with the right because it suits them, it is not for us to say that they should not have it.

Equally, the Government see no reason for the United Kingdom to be obliged to introduce the right, simply because others have chosen to do so in the past and want to keep it. Our circumstances are different. As the draftsmen of the Berne Convention well knew, artists' resale right is an area of copyright which, for good reason, is best left for individual countries to decide for themselves in accordance with their circumstances. That is why I think this is a clear case where subsidiarity should apply.

As I said at the beginning, a new proposal is expected shortly. It will take account of proposals from the European Parliament to amend the Commission's original one. The Government will want to look at this very carefully. We shall want to see three things: whether it is accompanied by a fiche d'impact, or, for the benefit of the noble Lord, Lord Pearson, in English, a cost benefit analysis; whether it addresses the issue of international competitiveness; and what changes have been made to avoid damage to the United Kingdom's art market.

Your Lordships will be aware of the Government's positive and constructive attitude towards Europe. There is a better atmosphere and a greater spirit of trust. Our approach to negotiations on artists' resale right will be to explain to our European partners and to the Commission why the Government consider the resale proposal to be so damaging, and why what is proposed is not the right solution for Europe as a whole. I can assure noble Lords that we are in negotiations and we are doing all we can to persuade others of the strength of our argument.

Lord Strabolgi: My Lords, the noble Lord is coming towards the end of his allotted time. He has based almost the whole of his speech on the droit de suite. Will he now tell the House what the Government are intending to do about import VAT, which was the other half of this debate and equally important?

Lord Haskel: My Lords, the European Commission is specifically committed to reporting the conclusions of

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its re-examination of the relevant provisions of the seventh VAT directive on the international competitiveness of the Community's art market to the Council of Ministers by 31st December 1998. It has not yet indicated when the review will begin or how it may be conducted. The Government will be concerned to see that the review is as realistic and as wide-ranging as necessary and will seek to ensure that the particular interests of the UK art market as well as the European Community art market in general are properly represented. That will be the case whenever the review starts. We are waiting for the review to take place. That will be our position. We shall also want to discuss the British Art Market Federation's study with the Commission and also the DTI's own studies which have now been translated into other member states' languages. It is important for other member states and the Commission to understand our position. We shall aim to ensure that decisions are not taken which the Community will later come to regret.

If there are other questions which I have not answered, I shall write to noble Lords. I thank all those who have participated in the debate. Noble Lords can rest assured that the Government will be tireless in speaking up for Britain in this matter.

8.20 p.m.

Lord Hindlip: My Lords, I would like to add my congratulations to the noble Lord, Lord Sandberg, and to my noble friend Lord Naseby for their excellent maiden speeches. I would like to add also a special word of welcome to my noble friend. I was born in the neighbouring village of Hazelbeach. Perhaps I may tell him that there is a published catalogue of the disastrous Cromwell sale. I shall try to acquire a copy for him. I wish particularly to thank my noble friend Lady Rawlings for her kind remarks. It was also a joy to listen to the noble Lord, Lord Strabolgi.

But I hope that the obvious charm with which the noble Lord, Lord Haskel, has addressed this debate can be extended to his discussions in Europe. I say one thing to him: will he please prove the noble Lord, Lord Pearson, wrong? I beg leave to withdraw the Motion for Papers.

Motion for Papers, by leave, withdrawn.

Mink Keeping Order 1997

8.21 p.m.

The Parliamentary Secretary, Ministry of Agriculture, Fisheries and Food (Lord Donoughue) rose to move, That the order laid before the House on 19th November be approved [14th Report from the Joint Committee].

The noble Lord said: My Lords, I beg to move.

Moved, That the order laid before the House on 19th November be approved [14th Report from the Joint Committee].--(Lord Donoughue.)

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