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Launched at TEFAF’s Maastricht fair last week, it tells a tale of political vandalism and red tape that increasingly puts off serious collectors from doing business in the EU and discourages younger generations from taking up a career in trading art.

But the survey’s purpose is positive: to revive the fight against damaging taxes and bureaucracy in an effort to redirect the fortunes of the European art market.

“If this decline is to be halted,” says TEFAF president Willem Baron van Dedem, “European governments must appreciate the economic and cultural benefits that the art market produces. We hope that the report will encourage this.”

Statistics included in the survey show that the UK still commands a leading role on the world stage of the art market, but they also point to some dramatic downturns in Europe since the imposition of restrictive taxes such as Import VAT. In addition, the survey identifies one of the biggest risks to the European and, in particular the UK, trade as the decline in expertise as the art market becomes a less attractive career option. This is heightened by the shift in knowledge to the US, where European dealers have sought to establish themselves with offices.

Market share

Headline statistics show a shift in the market away from the EU towards the US where restrictive taxes such as the artist’s resale levy (Droit de Suite) and Import VAT do not exist. Since 1998, Europe’s share of the global market has fallen by seven per cent; the US share has grown by the same margin. With pictures over the same period, the average price of a painting in the UK has grown by 54 per cent, but in the US it has grown by 75 per cent. As a whole, however, the average price at auction within the EU for fine art has declined by 39 per cent, which indicates that non-restrictive markets such as the US are creaming off works at the top end of the market where what the survey calls “price of flight” economics make it worthwhile for sellers to transfer goods for sale.

If the chief aim of the survey is to raise awareness and support for Europe’s art market on the Continent, it has made a good start on two counts: firstly, TEFAF itself is a foundation run by and for European dealers who are only too keen to plead their cause, and, secondly, TEFAF have persuaded France’s trade lobby group, Le Syndicat National des Antiquaires, to join the group of sponsors for the survey.

Co-ordinated by Anthony Browne, chairman of the British Art Market Federation, the survey was carried out over three and a half months by Kusin and Company, US-based specialists in art economics who have carried out similar research before and who conduct an ongoing programme of consultation and review with a broad base of dealers across Europe. They work from a database of 3600 dealers and 400 auction houses in Europe and the US as well as in-depth interviews with 57 dealers across the US and Europe on a one-to-one basis every 18 to 24 months.

They analyse data ranging from macro-economic to micro-economic and are currently paying special attention to developing a database on furniture and decorative works of art, for which there is less information available at the moment than for pictures.

David Kusin has noted that the co-operation his firm has received this time around from dealers and auction houses in sourcing data indicates that they have developed a far greater understanding of the importance of protecting the art market. He also argues that his analysis shows the art market to be largely supply driven – if you cut off or reduce the lines of supply you will kill the demand. This underlines how important it is to maintain the market for selling works at the top end of the value range in Europe.

Political will

The biggest issue facing the trade across Europe, as Anthony Browne sees it, is creating the political will to defend European interests. The British government have backed BAMF’s initiatives over the years because it has been easy to appreciate the importance of the UK market, second only to the United States. But other European countries do not have such a large share of the global market as the UK (France, the next biggest, has only 9.6 per cent of the global market compared to Britain’s 25 per cent) and so it has not been so easy to persuade their governments to place art market issues higher up the political agenda.

The clearest evidence of this indifference at a European level came with the European Commission’s ruling on Import VAT. “When this tax was first introduced in 1995,” explains the survey, “the European Commission committed to reviewing its impact on the EU art market by the end of 1998. The review was carried out in 1999 by independent analysts who concluded that the tax had indeed led to a decline of EU competitiveness by comparison with outside countries. Inexplicably, the European Commission concluded otherwise, ignoring the results of its own independent review.”

The new TEFAF survey aims to change European indifference and includes statistics to strengthen the call for policy review. “We have a much better understanding of the ancillary businesses (shipping, advertising etc) that depend on the art market than we had just a couple of years ago,” says David Kusin, “and we underestimated the number of jobs dependent on the market by about 50 per cent.” The new survey calculates that the European art market comprises about 28,600 businesses directly employing 73,600 people, accounting for €12bn in sales in 2001 (45 per cent of the global take). But the European market also spent €1.66bn on ancillary goods and services, indirectly creating a further 61,000 jobs.

In the end, for a proper defence of the European art market to be mounted, the options are simple according to BAMF and TEFAF: level the playing field by persuading non-participant nations such as the US and Switzerland to sign up to compulsory use of Droit de suite and Import VAT or get rid of the taxes and associated paperwork in Europe. The UK has another ten years before the full implementation of Droit de Suite – that could be enough time to make the difference, argues Anthony Browne. “The time has come to change attitudes because of the cost to the many people involved if we don’t.”

• The European Art Market in 2002, A Survey, is prepared by Kusin and Company and published by TEFAF with the support of the British Art Market Federation, CINOA, the Syndicat National des Antiquaires and the International Music and Art Foundation. It is available, priced €75, from TEFAF on +31 411 645090.