Friday, December 9, 2011

OK, Cameron. If you're tough enough, now put a stake through the heart of Droit de Suite

It's ironic that the central plank of David Cameron's objection to entry into the new inner circle of European nations now taking shape in Brussels is that it would mean greater financial regulation for all member states. He is now being widely applauded in his own party for defending the very institutions — banks, hedge funds and other speculators — that were largely responsible for the near global financial meltdown.

His decision is perhaps justifiable given that financial services are about all Britain has to offer the world since the decline of its manufacturing base. But if the markets are the main focus of his heroic, General Custer-like stand against European bureaucracy, he should also say "Non!" to the dismal Brussels-born mechanism that has no doubt contributed to the steady decline of London's preeminent status as a centre of the global art trade. I'm referring, of course, to Droit de Suite, or the Artists' Re-Sale Rights Levy.

It may be true that China's inexorable advance to become the world's largest art market (now even bigger than America, according to most econometric analyses) was inevitable given all the other factors at play in its madly accelerating economy.

But unless Britain wants to slide even further into art market irrelevance, as France is in grave danger of doing, Cameron must do all in his power to make London the most attractive place to trade in art. The Brussels-imposed levy known in Europe as Droit de Suite, or the Artists' Re-sale Rights Levy — which grants the artist a small percentage share every time one of his or her works is re-sold on the secondary market — was widely opposed by the UK art trade, and for good reason. It has imposed a stultifying layer of costly administration on every secondary market transaction that qualifies for the levy. Moreover, after 2012 (when its reach is extended to cover transactions for up to 70 years after the artist's death, payable to the artist's heirs) it will drive yet another nail into the coffin of the British art trade.

Contrary to pro-levy propaganda circulated by the Design and Artists' Copyright Society Limited (DACS), and other levy-collecting bodies, it does NOT benefit artists to the extent they continue to maintain. Above all, after the 2012 extension it could well drive art transactions towards those markets where it does not apply (America and China, to name just two). To extend it at a moment when London is already surrendering art market prominence to China is utter madness.

You may be morally against the unconscionable sums that have been made (and are still being made) by those individuals who have benefited from the fiscal deregulation of recent years. But there is no denying that the art market benefits from wealth generation as investors see it as an attractive place to park surplus capital. Britain needs to nourish one of the strongest markets we have left.

It may well be that protecting the City is critical to Britain's future. But Cameron must now go further. He has already said "Nein!" to surrendering more sovereignty to European technocrats. Now he must add "Non!" to Droit de Suite.