Select Committee on European Scrutiny First Report


COM(01) 47

Commission Opinion on the European Parliament's amendments to the Council's common position on the draft Directive on the resale right for the benefit of the author of an original work of art.

Legal base: Article 95 EC; co-decision; qualified majority voting
Department: Trade and Industry
Basis of consideration: Minister's letter of 30 June 2001
Previous Committee Report: HC 28-viii (2000-01), paragraph 26 (14 March 2001)
To be discussed in Council: No date set, but before mid-July
Committee's assessment: Politically important
Committee's decision: Cleared (decision reported on 14 March 2001)


38.1  The proposal would provide an artist, or his heirs for 70 years after his death, with a right, known as droit de suite, to receive a royalty whenever one of his "original" works was resold in the Community.

38.2  We cleared this proposal shortly before the 28 October 1999 Internal Market Council, on the basis of a Presidency compromise text.[58] The Government expected the Council to adopt a Common Position then but a decision was deferred, to allow more time to explore ways of overcoming the concerns of the UK Government, which opposed the proposal in principle.

38.3  The Government is concerned at the impact of the proposal on the competitiveness of the London art market, the most important in the Community. Not only could the large dealers and auctioneers lose business to Switzerland or the United States, but there could be a subsequent loss of business for the smaller galleries in the UK, which benefit from the flourishing market.

38.4  The issue has been a difficult and controversial one for the UK, but it built support from other Member States for modifications and we concluded on 15 March 2000, on the basis of a letter dated 10 March 2000 from the then Parliamentary Under-Secretary of State for Consumers and Corporate Affairs (Dr Kim Howells), that the Government was well on the way to winning some important concessions. On 27 March the Minister wrote to inform us that a compromise was in sight, on the lines set out in his letter of 10 March. Negotiations have been protracted and the proposal was eventually referred to the Conciliation Committee. We cleared the Commission Opinion on the European Parliament's Second Reading amendments on 14 March 2001. We report the outcome of Conciliation here, under that Committee number, as Conciliation Joint Texts are not depositable in Parliament.

The Minister's letter

38.5  The Parliamentary Under-Secretary of State for Competition, Consumers and Markets (Ms Melanie Johnson), in a letter dated 30 June 2001, recalls that the European Parliament (EP) amendments "wrecked the Council's hard-fought Common Position and the basis on which the UK had agreed to it". She continues:

    "The Council rejected the Parliament's amendments; but a joint compromise text ... has been agreed by the Conciliation Committee. This must be approved, formally, before mid-July by the Parliament, acting by an absolute majority of the votes cast, and by the Council, acting by qualified majority.

    "Droit de suite has been a difficult issue for the UK because of the size and importance of Britain's art market. We took a tough stance both in the Council negotiations and in conciliation, and this paid off. Significant improvements have been secured to the proposal originally put forward in 1996 ... and to the Parliament's Second Reading amendments. The implementation period is twice as long as the Parliament wanted; and way beyond the Commission's proposal. The transition period is three times longer than the Parliament wanted; and includes an extra two years for Member States who want them. The minimum threshold is also three times bigger than what the Parliament and the Commission wanted. Moreover, the Directive will not come into force until 1 January 2006 — a full 7 years after the date envisaged by the Commission — and not in full until 1 January 2012.

    "The art trade has paid tribute to the Government's vigorous efforts; and considers the deal a good one which, for the foreseeable future, should secure the competitive position of the UK art market, vis-à-vis Britain's main competitor, the USA, where the levy is not charged, both by the delay in full harmonisation and by the limit on the total amount of the royalty payable.

    "Importantly, the deal provides the Commission with a 10-year slot in which to negotiate an agreement extending the right at international level before the resale right begins to apply to resales of works of dead artists — the most sensitive sector of the UK art market. The minimum threshold, though lower than the Government would have preferred, should still exempt many low-value sales from the levy and significantly reduce the burden on business, particularly on small and medium-size firms.

    "Concessions made to the Parliament in conciliation reduce the implementation period agreed by the Council by 1 year, the transition period by 4 years and the minimum threshold by 1000 euros. This still leaves the common position largely intact; but the Government would have preferred yet more from conciliation, and intends to vote against the text when it comes before the Council. Nonetheless, we expect the joint text to be approved by the Council and the Parliament, and for the Directive to come into force on 1 January 2006."


38.6  The Government certainly worked hard to secure a Common Position which it could accept and it is unfortunate that the Joint Text after Conciliation is less satisfactory. However, we note that it leaves the Common Position largely intact and do not see how, given the European Parliament's views, much more could have been achieved.

38.7  We thank the Minister for providing us with this information and draw to her attention the conclusion we reached on 14 March, when we urged the Government to argue for a review, after two years, of progress being made by the Commission in negotiating an agreement extending the right at international level.

58  (20550) -; see HC 34-xxix (1998-99), paragraph 14 (27 October 1999) and 23-xii )1999-2000), paragraph 3 (15 March 2000)..  Back

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