Now the European Union has adopted new import licensing regulations for cultural property, what will it mean for the art market?
First, it is important to understand why this measure has come in. Initially, what drove the European Commission import licensing proposals was the belief that ISIS-looted artefacts from conflict zones were making their way onto the European market to fund terrorism and this had to be stopped. The Commission ordered two studies to look into just how bad the problem was. The second has yet to report back, but the initial study by Deloitte, consulting all 28 EU Members States, found no evidence at all of this happening. Despite this, the Commission, Council of Ministers and European Parliament decided to legislate anyway, putting forward new arguments that the proposals would harmonise regulation across the EU and act as preventative measures for the future.
This change in direction is extremely important because it alters not just the premise for adopting the legislation but also the balance of interests between public security and the international art market. As the EU consistently promised, any adopted measures should be proportionate and not unduly damage the legitimate market. It may be reasonable to argue that the art market must accept the burden of highly restrictive legislation in order to stop an existing crimewave of terrorism funding, but, equally, measures to mitigate the risk of something that mightor might nothappen in the future – a lower risk level, in other words – should acknowledge that the balance of interests must fall closer to those of the market.
In scrutinising this process over a long period of time, the International Association of Dealers in Ancient Art (IADAA) together with CINOA argues that while the premise for the measures may have changed, the balance of the proposals has not moved with it and we have been left with regulation that is disproportionate and will, indeed, unduly damage the market. This regulation, that will have power of law in all EU Member states immediately, (overruling local laws), has been rushed through parliament in an unprecedented way in just one reading. The result is an unworkable, costly and flawed regulation that is at odds with international law.
So what will happen?
In brief, once the European Commission has introduced a fully operational, new-built electronic system for administering and recording imports in accordance with the regulation (expected by 2025 at the latest), cultural property encompassing art, antiques, antiquities and other artefacts entering the EU will be subject to a two-tier “licensing” process.
Essentially, items deemed at high risk of having been looted and “funding terrorism”– antiquities and pieces of monuments aged over 250 years and originating outside the EU regardless of value – will have to pass a test to prove that they have been exported legally. While applying for an “import licence”, importers will have to provide paperwork showing legal export from the source country under the laws of that country at the time of export. It should be remembered that this does not just apply to artefacts from ISIS-plagued states like Iraq, Syria and Libya, but also to Asian art, Islamic art and Tribal art of all types, from the Oceanic art of the Pacific to the native tribal art of North and South America, as well as Australia.
For the hundreds of thousands of objects that have been legitimately on the market for decades or even centuries, providing such proof will be impossible because of how far back in time the original export might have taken place, the difficulty in identifying when that was, the likelihood that no information exists on what relevant laws applied at the time and the almost certain lack of paperwork.
Where this is the case and either a valid export licence from the source country or other paperwork establishing legal export are not present, the regulations allow for a derogation in two very limited exceptional circumstances as long as it can be shown that an item was legally exported from the last country where it had been located for an unbroken period of more than five years. The first is where the source country cannot be reliably identified, while the second is where it can be shown that the item in question was exported from its source country before April 24, 1972, the first enforcement date of the UNESCO Convention.
The latter condition ignores the fact that the accession dates of respective countries to the Convention were all years, if not decades, later, and so introduces more restrictive measures than the source countries themselves have ever agreed to. It is likely that most of these countries are not aware of this EU decision. This alone calls the notion of balance into question.
How legal objects could be made unfairly illegal
What this also appears to mean, in effect, is that anything legally exported from source countries after April 24, 1972 would not be recognised as licit for the purposes of import to the EU unless actually accompanied by a valid export licence. Take, for example, Egypt, which continued to export artefacts legally until 1983. Under the new regulations, an item legally exported from Egypt in 1978 accompanied by reasonable paperwork showing this, but not an actual export licence, might still be deemed illicit for the purposes of import to the EU because it was later than April 24, 1972.
Paragraph 7 of the new regulations makes it clear that the definition of cultural property adopted is based on the 1970 UNESCO Convention and the 1995 UNIDROIT Convention. However, while the UNESCO Convention restricts itself to items “…specifically designated by each State as being of importance”, the terms of the new EU regulations are far wider; “Art 2: ‘cultural goods’ means any itemwhich is of importance for archaeology, prehistory, history, literature, art or science as listed in the Annex”.
This will render the import of many licit items uneconomic, while the extensive customs processing period of several months will also prove a problem for dealers standing at fairs or both dealers and auctioneers selling on to clients.
For everything else – items deemed less of a risk – from paintings and drawings to sculpture, historical items, flora and fauna and so on, importers will need to provide importer statements warranting legal export from the source country, backed by the relevant documentation, if the item in question originated outside the EU, is more than 200 years old and valued at more than €18,000. Again, this is likely to have implications for dealers, auctioneers and collectors for the reasons given above.
The sting in the tail for importer statements
Importer statements may seem like a softer option, but the risk in using them could actually be greater. This is because the declarer takes on legal responsibility for the statement they issue and the status of the item being imported. This means that where an importer acts in good faith, providing the relevant paperwork to support the statement, they could still be held liable under the new regulations if it is later discovered that the item had been stolen or illegally exported at an earlier time, before it came into their possession. The authorities have made it clear that sanctions for those who breach the new regulations will be severe. Retrospective liability of this kind is the curse of the modern legislative process across the board these days.
What makes this all so unnecessary is that effective restrictions already apply within the EU when it comes to Syria and Iraq*; it would have been much simpler and cost-effective to extend them to cover Libya, Yemen and any other source countries identified as being at risk, and this would have easily fulfilled the EU’s self-expressed commitment to proportionality when it comes to the legitimate market.
Even after taking all of the above into account, it is not clear how the licensing process will adequately comply with potentially conflicting legislation addressing consumer privacy and data protection, although counter-terrorism measures tend to outweigh other considerations. Still, importers will be understandably nervous of vague reassurances on this front, so whatever the rules, they will have to be absolutely clear.
What is clear is that the paperwork involved is unlikely to be easy or brief. Talk of adopting Object ID – the international standard for identifying items – and adding “appropriate supportive documents and evidence”, including (but not exclusive to) export certificates or licences, ownership titles, invoices, sales contracts, insurance documents and transport documents, is just the beginning, as the final amendment for Recital 10 of the rules explains. Recital 11 refers to a “standardised document”, recommended by UNESCO but does not explain how long or detailed this might be. Experience tells me that it is unlikely to be short and clear.
Assuming the system eventually works, one advantage is that a standardised record will be shared electronically between all EU Member States, which may be of help to
the market when it comes to moving registered goods again in the future (export licensing).
None of the above begins to explore the additional burden on both the art trade and customs and what that might mean in terms of extra cost, starting with a new and complex electronic system for all Member States.
Taking all of this into account, IADAA intends to continue working with stakeholders – including undertaking a legal review of the adopted terms – to ensure that the measures are adapted to a more workable formula prior to enforcement.