Enjoy unlimited access: just £1 for 12 weeks

Subscribe now

BAMF made the call last week as it launched a new report putting the spotlight firmly back on the damage that extending the ARR is likely to cause.

“The crunch is now,” said BAMF chairman Anthony Browne. “The derogation is due to end at the beginning of 2012, at which point we will have a quantum disadvantage against our major competitors, the United States, Switzerland and China.”

He painted a gloomy picture of Britain’s current prospects at the official launch of The British Art Market, A Winning Global Entrepôt, a report compiled by Dr Clare McAndrew of Arts Economics, the leading industry analyst and statistician.

And he was backed by Lord Brooke, president of BAMF and former Culture Secretary, who said: “I cannot emphasise too strongly how serious the potential threat of extending Droit de Suite (the ARR) is going to be.”

At present only living artists qualify for the levy, but that will change on January 1, 2012, when it will be extended to the estates of artists who have been dead for less than 70 years.

It is this extension that BAMF fears will do extensive damage to Britain’s art market, which is currently pegged at almost equal first with the United States in the global ranking and accounts for around 60,000 jobs directly and indirectly.

ARR affects Modern and Contemporary art sales, which account for just under 40 per cent of the value of the British art market, the report explains. With the derogation in place, only a fifth of such sales are affected, but if the ARR is extended to the estates of dead artists, it would encompass around 80 per cent of the Modern and Contemporary market.

What makes it worse is that it is exactly this sector of the market that is most mobile, as it is not subject to the export controls that affect Old Masters and other areas.

Only artists from non-qualifying countries, such as the US’s Andy Warhol, would not attract the levy, but the likes of Picasso, Matisse, Bacon and Moore would start to do so.

The new report aims to focus the Government’s attention on the potential dangers and comes as Foreign Secretary William Hague calls for more British influence along the corridors of power in Brussels.

There is no clear picture of exactly how the limited first stage of the ARR – introduced in 2006 – has affected the market because it has been masked by the global boom in art prices, especially for contemporary art, where the levy has applied.

The picture was further skewed when it was revealed that the 2008 independent assessment by the Intellectual Property Office into the ARR’s impact – commissioned to assess the likely impact of the extension of the levy to works by dead artists – failed to include a significant number of countries in its calculations, thereby underreporting the size of the global market.

Of particular concern is the threat the levy poses to the UK’s status as an entrepôt market for international art – especially for works imported from outside the European Union.

“Global cross-border activity has been the key factor underpinning the UK’s dominant position,” argues BAMF. “Because of the scale of its art imports, the UK is the most vulnerable art market in Europe to competition from markets outside Europe.”

Owners consigning major collections for sale from overseas would probably have more works liable for the ARR after January 1, 2012 within those collections.

“If owners of such collections are deterred by the Resale Right [from sending them for sale to the UK], then the knock-on effect will extend to the loss of the whole collection to the UK market, since there is little incentive to split the sale between liable items and others,” says BAMF.

To illustrate its point, in an earlier report, BAMF quote the example of the collection of the Estate of J. Irwin and Xenia S. Miller from the US, which was imported for sale at Christie’s, London in June 2008.

Of the 17 lots, 13 were by deceased artists that would have been liable for the levy had the derogation not applied. The collection also included Monet’s Le Bassin aux Nymphéas, which sold for £40,921,250.

Cork Street print specialist Alan Cristea already pays out the ARR to around 90 per cent of the 35 to 40 living artists he represents. He subsidises his interest in new artists from money made in trading the works of deceased artists, but says that he would not be able to afford to continue doing this if the derogation ends.

“The effects will ripple down to living artists and all the ancillary businesses, such as suppliers and restorers,” he warned. “The drama comes in the next phase.”

By Ivan Macquisten

Link: Directive may prove to be the key