ARTISTS' RESALE RIGHTS
Amended draft Directive on the resale right for the benefit of the author of an original work of art.
Article 100a; co-decision; qualified majority voting
12 March 1998
Forwarded to the Council:
13 March 1998
Circulated by the Council in the original language:
19 March 1998
Circulated by the Council in English:
23 March 1998
Deposited in Parliament:
31 March 1998
Trade and Industry
Basis of consideration:
EM of 15 April
None; but see (17202) 7050/96: HC 51-xxiii (1995-96), paragraph 1 (26 June 1996)
Legally and politically important
Not cleared. Information about a Commission fiche d'impact requested
4.1 The proposed Directive
would harmonise the régime for artists' resale rights,
known as droit de suite. This right provides an artist,
and his heirs for 70 years after his death, with a right to receive
a royalty whenever one of his "original" works is resold
in the Community. It applies to any sale, except the first sale
by the artist, when the work is resold by public auction or through
4.2 The right does not
exist in the UK, Ireland, Austria or the Netherlands. The Commission
reports that the other eleven Member States recognise artists'
resale rights in principle, though only eight apply it in practice.
According to the UK Government, in those States that apply it,
it is enforced to differing degrees.
4.3 The text can be summarised
provides that the right cannot be given up even in advance, and
exempts private transactions from application of the right.
stipulates that "original" work means works of plastic
or graphic art made by the artist himself, or copies considered
to be "original".
sets a threshold of 1000 ECU
above which the right must apply, though Member States are permitted
to set a lower threshold (Article 4(2)).
requires the vendor to pay a royalty of between 4% (least expensive
works) and 2% (most expensive works) of the selling price.
applies the royalty to the price net of tax.
provides that royalties are payable to artists' heirs. It also
enables Member States to provide for collective management of
restricts the right to nationals of Member States and to foreign
artists whose countries provide reciprocal treatment.
provides for the right to last for the full copyright term, that
is lifetime of the artist plus 70 years.
provides a three year right to sales information.
requires the Commission to report at regular intervals on the
implementation of the Directive and, if necessary, to propose
requires compliance with the Directive by 1 January 1999.
are standard provisions for bringing the Directive into force.
4.4 This proposal was
considered by our predecessors in June 1996
and debated in European Standing Committee B on 29 January 1997
when the motion agreed to was that the Committee supported the
Government "which is not persuaded that there is a case for
the introduction of this proposal into the United Kingdom."
4.5 The Lords have debated
the proposal on two occasions, 11 December 1996
and 10 December 1997.
The amended proposal
4.6 The Commission has
accepted, in whole or in part, 21 of the 28 amendments adopted
by the European Parliament at First Reading. The substantive amendments
i) the exclusion
of manuscripts from works subject to the right (Article 2);
ii) an optional
lower threshold at which the right begins to bite (Article 4);
iii) an extension
of the period in which sales information may be requested (Article
(or parts thereof) not accepted by the Commission concern:
from the right of sales between dealers or between a dealer and
a final purchaser where the transfer occurs within three years;
ii) basing the
royalty on profit (rather than selling price);
iii) the restriction
of entitled parties to legal heirs;
iv) new price
bands and a reduction in the royalty rates;
v) the inclusion
of glass among the works subject to the right;
vi) the limitation
to 12 copies of works considered to be "original";
The Government's view
and more frequent review of operation of the Directive.
4.7 The Minister of State
at the Department of Trade and Industry (Mr Ian McCartney) has
attached a Regulatory Appraisal and a Compliance Cost Assessment
to his EM in which he makes it clear that his Government, like
its predecessor, remains opposed to the introduction of droit
de suite into the UK. He says that, despite the proposal being
an internal market measure, the Commission has produced no convincing
evidence of distortion of the internal market in works of art.
This raises the question of whether the proposal respects the
principles of subsidiarity and proportionality and is justified.
The Minister quotes figures from the British Art Market Federation
to the effect that:
market distortion could only apply to a limited number of works
falling in the narrow price band between ECU 20,000 and 50,000.
If there has to be harmonisation, it would be far better to do
so by abolition of the right. This would level the playing field
with the EU's main competitors and enable Community art markets
to compete more effectively for a greater slice of global business."
4.8 The Minister comments:
proposal makes no concession to UK concerns that the proposal
would damage the competitiveness of London's international art
market in relation to its main competitor New York
and other third country markets.
"As the compliance
cost assessment and regulatory appraisal show, the risk of introducing
the right into the UK loss of earnings among auctioneers
and dealers of up to £68 million per year and up to 5,000
jobs far outweighs any potential benefit to artists
at most, £9.6 million per year of which an estimated £2
million would go to British artists. Moreover, experience abroad
shows that the majority of artists would get little, if anything.
Royalties would go mainly to well known artists or, more likely,
to their heirs.
could set a precedent by giving artists a right to remuneration
of a kind not available to other intellectual property rights
holders, and could lead to demands for equitable treatment from
creators of other 'goods' which are traded on the secondhand market..."
damaging international competitiveness would disappear, of course,
were the resale right to become obligatory at international level
(new recital 5a). However, the main international copyright
convention the Berne Convention permits contracting
parties (including the UK's main competitor, the United States)
to decide for themselves whether to introduce the right. The proposal,
however, would remove from the UK that freedom of choice.
Parliament recognised the need to maintain international competitiveness.
In doing so, it adopted amendments (rejected by the Commission)
which introduce new price bands and lower royalty rates which
would apply, not to the selling price, but to any profit made
by the vendor. This is not only more equitable (vendors would
not have to pay royalties when they make a loss on a sale), but
would reduce, though not eliminate, the risk of sales switching
to third countries.
"It is unfortunate
that the Commission's original proposal, and now the amended one,
is not accompanied by a fiche d'impact estimating the potential
costs and benefits. This puts Member States in the position of
not knowing what the effect of the proposal is likely to be on
Community art markets and on EU artists. A review of the operation
of the Directive by 1 January 2004 (Article 10) would come too
late to undo the damage: markets once lost would be difficult,
if not impossible, to win back".
4.9 The Minister says
that the CCA and the Regulatory Appraisal were prepared
on the original proposal but are still relevant as the exclusion
of manuscripts from the amended proposal is not expected to make
a significant difference to the earlier estimates.
4.10 On Consultation,
the Minister says:
"When, in April
1996, the Commission published its proposal for a Directive, the
document was circulated to over eighty representative organisations.
This showed views to be sharply polarised. This remains the case.
Most, but not all, artists favour the right; whereas the British
art trade is firmly against it. The trade's representative body
the British Art Market Federation (BAMF) has made
representations to Ministers to express its concern about the
impact the right would have on international competitiveness,
and about the combined effect of the right and import VAT. Officials
continue to liaise closely with the art trade and artists' representatives."
4.11 Finally, the Minister
says that he does not regard the implementation date of 1 January
1999 as realistic. Negotiations in the Council Working Group still
have some way to go and it is not known how the European Parliament
will react to the omission of some of its substantive amendments.
4.12 The Government
appears to be short of allies amongst the other Member States
in its opposition to this proposal, despite the fact that there
appears to be a real danger that the costs of the proposal in
terms of damaging Community art markets would considerably outweigh
the benefits to individual artists.
4.13 We are astonished
that no Commission fiche d'impact has been produced. We
ask the Minister what steps he has taken to insist that one be
made and what further steps remain available to him.
4.14 Meanwhile, we
do not clear the document.
11 £639.20 at 1 ECU = £0.6292. Back
12 (17202) 7050/96; see HC 51-xxiii (1995-96), paragraph 1 (26 June 1996). Back
13 Official Report, European Standing Committee B: Artists' Resale Rights. Back
14 Official Report, 11 December 1996, col. 1160ff. Back
15 Official Report, 10 December 1997, col. 196ff. Back
16 Commission proposal (with Parliament's amendments in parenthesis):
(a) 4% of the sale price between ECU 1,000 and 50,000:
(b) 3% of the sale price between ECU 50,000 and 250,000 (100,000)
(c) 2% (1%) of the sale price above ECU 250,000 (100,000). Back
17 £12,784 and £31,960 at 1 ECU = £0.6392. Back