An Assessment of the European Parliament’s final report on the proposal for a regulation of the European Parliament and of the Council on the import of cultural goods by Ivan Macquisten
Whilst variations exist across the European Commission/ Council of the European Union/ CULT/ INTA&IMCO proposed amendments, certain areas show a degree of consistency. From these, the following would seem to have a significant chance of adoption:
- A fully electronic system of licence applications, importer statements, record keeping and information sharing
- A Commission-backed support system for SMEs to prepare them for the new regulations
- Demands for export licences from source countries OR, where they are not available, documentary evidence that the items in question were exported prior to 1970 and have been held in a third country legally prior to legal export.
- UNESCO Convention Article 5 obligations to set up systems protecting domestic cultural heritage. For the most part (the Commission and others) make this a requirement under the new law, although it is only advisory from CULT
- Minimum age and financial value thresholds: These aim to limit market damage and are largely the same across proposals. At-risk categories, including archaeological items, dismembered monuments, incunabula and manuscripts and archives – all over 100 years old – have no value threshold. Other categories vary in value thresholds between €15,000 and either €50,000 or €150,000 (For pictures under one proposal).
- However, the CULT proposals insist that any assessment as to whether an item meets the value threshold obligations will only be made AFTER an import licence application has been submitted. This would prove burdensome for customs.
- Importer statement rules expose holders/importers to enhanced risk as they take full legal responsibility for claims of prior legal export even when they must rely on others for this information.
- Even if temporary imports cover items destined for fairs, in practice anything imported for a fair or for possible sale would have to have the relevant licensing in advance anyway or risk being subject to seizure at the point of sale. This will prove burdensome for customs.
- European Commission delegated powers are likely to be granted. However, checks on them should mean powers cannot be abused.
- ICOM Red Lists are likely to be included in the vetting process. However, this will prove burdensome for customs.
- Temporary seizures are likely to have a six-month time limit. Extensions could be for up to half that time.
- The time limit for deciding whether an application is complete or not AND for requesting further information is likely to be three weeks.
- The time limit for assessing applications is likely to be 90 days.
- What is not clear is what claim an importer might have if these limits are breached.
The following have a strong chance of being adopted, although opinion is more divided between the various committees:
- Permanent status relating to how long items have resided in a third country remains unclear. CULT demands 10 years, the Council of the European Union 20 years, while others do not include a time period at all.
- Where documentation showing legal export prior to the import application is not available, an appraisal system by experts is suggested as a valid alternative. If time limits are applied here, as proposed, it could create serious problems for customs.
- The EP proposes only allowing for banning and seizure where “the competent authority has reasonable and verifiable grounds to believe that the holder of the goods did not acquire them lawfully”.
- The validity of source country claims as a reason for seizing items remains a grey area as it does not cover vexatious or unjustified claims.
- It would appear that the intention is to enforce the new regulations six months after they become law. What is not clear is whether enforcement could be delayed further in the event of the electronic system not being fully operational.
I have concentrated on significant amendments as they pertain to the art market as well as assessing risk areas for other interested parties, namely the European Commission, Member States, Customs and private individuals.
It is clear from what is being proposed across all committees that although a greater burden is placed on those wishing to import at-risk items using import licences, the burden on those requiring importer statements is heavy indeed.
Unless an item is clearly nowhere near the value threshold for its category, it will still need to be subject to an importer statement application BEFORE being assessed for value to see if it can be excused from the need to supply an importer statement.
Further, although at least one proposal allows for the temporary import of items for fairs, if sold during that period those items will then need importer statements/export licences from export/third countries. As such, in practice they will require these prior to import anyway.
The proposals impose heavy burdens on the Commission and Member States when it comes to setting up and maintaining an adequate electronic licence system that also builds records, manages data and shares information with other Member States and law enforcement.
Heavy burdens are also imposed on customs through the expertise they must add to their service, the time limits imposed for action and the extensive paperwork that must be checked for each qualifying item. As value threshold assessments will only be carried out once an importer statement application has been submitted, it is hard to see how they will alleviate the burden on customs or the art market. These additional burdens constitute a substantial risk to the smooth running and credibility of the international customs effort.
What is not clear from any of the proposals is the liability to which the Commission, Member States or Customs might be exposed in the event that they are found to be in breach of their obligations under any new regulations. For example, if the sheer weight of applications causes undue delay that goes beyond the terms of the regulations, will those who suffer consequent unjustified loss of business or asset value have legal entitlement to compensation? These documents do not address this at all, which is alarming.
Other concerns arise out of the burden of proof when it comes to export licences, as well as the leeway that may be given to source countries launching vexatious claims in order to encourage unjustified seizures.
It is unlikely that any form of amendments adopted under these proposals, as a whole, will offer the protection to the art market promised. If the burdens prove too much for customs and law enforcement, they could well divert attention away from crime prevention towards form filling and crisis management, making it easier for criminals to traffick illicit items. This is a very common problem for law enforcement across the world.
Finally, as new British Government guidance document makes clear*, EU regulations that currently apply to UK-based objects travelling outside the EU will no longer apply once Brexit takes place. The guidance also states that no licensing requirements exist for imports into the UK and mentions no plans to introduce them. This means that the UK, which accounts for around 60% of the entire European art market by value, will be put at a distinct competitive advantage compared to EU Member States subject to these new import regulations when it comes to attracting business from the rest of the world. This is very significant in considering the future prospects of both the TEFAF Maastricht Fair (currently the leading event of its type in the world and a $1 billion+ art showcase annually) and the Paris Biennale. With two TEFAF New York events now well established, the risk to the Maastricht fair is now enhanced. Other major events are also likely to be affected.
*(Exporting objects of cultural interest if there’s no Brexit deal https://bit.ly/2P0xZdl)
CULT: Committee on Culture and Education (European Parliament)
INTA: Committee on International Trade (European Parliament)
IMCO: Committee on the Internal Market and Consumer Protection (European Parliament)
Council of the European Union: the third of seven institutions of the EU (Donald Tusk is president). Whereas the European Commission proposes policy and implements legislation, the Council supervises the strategic direction of the EU based on national interests. It is a different institution from the European Council, although it has a similar remit.