Update: Chinese Art and Antiques Dropped from US Tariff List

U.S. collectors, art dealers, and museums spared 25% art tariff

  The United States has imposed tariffs reaching 25% in 2019 on $200 billion dollars of Chinese goods, in a dramatic escalation of the Trump administration’s trade war with China. However, there was good news for the art community, as works of art, collector’s pieces, and Chinese antiques were among the very few items withdrawn from the tariff list.

 Over the last months, the Committee for Cultural Policy and Global Heritage Alliance researched and reported on the impact of the proposed tariffs.  Commenting on today’s announcement, Peter Tompa of Global Heritage Alliance said, “This decision shows that the U.S. Trade Representative listened and really understood the issues. The tariffs would not only have seriously damaged the ability of the U.S. art market to compete globally, but also harmed U.S. museum and public access to Chinese art and culture, and hurt hundreds of American small businesses.”

Photo: China Galleries, Metropolitan Museum of Art, New York

“Taking art and antiques out was a good policy move as well as making total economic sense for the U.S.,” said Kate Fitz Gibbon of the Committee for Cultural Policy, whose research showed that China’s art monopoly would be strengthened by tariffs. “This is about more than money. Even at the height of the Cold War, the U.S. government understood that the international circulation of art and ideas promoted peace and positive relations.”

  Mark Dodgson of the British Antiques Dealers Association noted in a submission to the USTR, “The federal government of the United States does not tax the import of antiques. This enlightened attitude toward the art and antiques market has helped the United States to become the largest art market in the world.

 Together with other U.S. and international arts and art trade organizations, including the British Antiques Dealers Association, CCP and GHA provided written testimony to the United States Trade Representative (USTR). Tompa spoke in person to present these views at the hearings on the proposed tariffs; organizations representing over 5,000 art dealers worldwide submitted comments to the reviewing committee.

 Chief among the points made were that a tariff on antiques would please, not punish, the Chinese government and reinforce its global dominance of the Chinese art market. 

U.S. import restrictions already cover virtually all Chinese art and artifacts from the Paleolithic through the Tang period imported from China, as well as monumental sculpture and wall art over 250 years of age. The U.S. market in antique Chinese art is therefore dependent upon sourcing Chinese art from older collections held worldwide, which would also have been subject to the proposed tariffs. 

Although U.S. import restrictions – in place since 2009 – are claimed by China to be for the protection of ancient archaeological sites, in fact, they actually reinforce China’s monopoly on Chinese art. As Tompa told Cultural Property News, “A tariff will only drive more Chinese artifacts back to China, which is exactly what the State Department is doing with its import restrictions.”

The U.S. market for contemporary Chinese art also had a big win, as the proposed 25% tariff would have made it very difficult for U.S. dealers to compete in the global modern art market.

Tariffs of 10%, rising to 25% in 2019, were announced by the USTR on 5,745 of the 6,031 tariff lines on the list of Chinese imports initially proposed. The first tariffs will go into effect on September 24, 2018. The import categories removed from the tariff list included the following items of particular concern to museums, collectors, and the art trade.

9701.10.00
Paintings, drawings (o/than of 4906) and pastels, executed entirely by hand, whether or not framed.

9701.90.00
Collages and similar decorative plaques, executed entirely by hand, whether or not framed.

9702.00.00
Original engravings, prints and lithographs, whether or not framed.

9703.00.00
Original sculptures and statuary, in any material.

9704.00.00
Postage or revenue stamps, stamp-postmarks, first-day covers, postal stationery, and the like, used or unused, other than heading 4907.

9705.00.00
Collections and collectors' pieces of zoological, botanical, mineralogical, anatomical, historical, archaeological etc. interest.

9706.00.00 Antiques of an age exceeding one hundred years.

 All seven of these proposed tariffs were withdrawn. According to a USTR release, the reviewers “engaged in a thorough process to rigorously examine the comments and testimony and, as a result, determined to fully or partially remove 297 tariff lines from the original proposed list.”

China has a billion-dollar annual internal market in art of all periods that includes the same kinds of antiques barred from U.S. import.

A comprehensive study by Artnet and the China Association of Auctioneers showed that after the enactment of the original Memorandum of Understanding imposing import restrictions on ancient and antique Chinese art in 2009, the auction market for art and antiques in mainland China experienced 500% growth between 2009 and 2011. In 2011, the Chinese auction market surpassed all other countries in the world. Even in 2014, the year after the MOU’s first 5-year renewal, the fastest growing import into China was art, antiques, and collector items, which increased at a staggering 2281% rate.

 Clinton Howell of CINOA said of the proposed tariffs that, “Because the flows of antiques are currently into China, and not out of China, the measures will divert these existing old objects from the United States to other markets, such as Beijing or London or Paris. The main beneficiary will consequently be Chinese buyers, dealers and auction houses.”

*Article reprinted with permission from Cultural Property News

ATADA Legal Committee Report - July 2018

By Hoteen Klah 1867–1937 [Public domain], via Wikimedia Commons

The busy show season is a time for ATADA members to be especially alert to legal issues. Please help others to be aware the legal rules and ethical guidelines that make for a responsible art market.

The pertinent ATADA Bylaws state as follows:

• The Members of ATADA undertake not to purchase or sell objects until they have established to the best of their ability that such objects were not stolen from excavations, architectural monuments, public institutions, tribal communities, or private property.
• ATADA shall work respectfully with tribal communities regarding the voluntary return of legally collected items to the tribes. ATADA supports the voluntary return of items known to be of important current, sacred, communal use to the Native American tribal communities from which they came, through the ATADA Voluntary Returns Program and other voluntary projects.
• The Members of ATADA undertake not to acquire, display, or sell items known to be of important current sacred, communal use to Native American tribal communities. The ATADA Board shall establish guidelines with respect to specific items deemed of important current sacred, communal status and make those guidelines available to all ATADA members.
• ATADA does not regard items made for commercial or individual use by Native American artisans as sacred or ceremonial, regardless of age.

See the ATADA Guidelines Regarding the Trade in Sacred Communal Items of Cultural Patrimony.
atada.org/bylaws-policies/

Why did ATADA establish internal guidelines? First, it’s the right thing to do. Second, responsible business behavior makes for a safer, more secure marketplace, and gives consumers the confidence they need to invest. Checking the provenance of objects and asking for their ownership history – in writing - is good business practice and the key to due diligence. No one, collector or dealer, wants to potentially spend years of their lives and hundreds of thousands of dollars defending themselves against a charge of trading in a dodgy object – simply because they did not take the time to investigate it.

The ATADA legal team is proud of its accomplishments. If ATADA was not working hard to protect your interests in Washington, then US Customs could today be asking every foreign tourist coming home from vacation to prove that their Indian art purchases weren’t sacred items. US museums would be worrying that there was a new, completely open-ended ‘standard’ for tribal claims outside of NAGPRA.

We wish we could be spending our energies urging the House and Senate to take positive steps for tribes by funding cultural education, building awareness (and building tribal Chapter Houses for the safety and preservation of ceremonial artifacts). These are positive solutions – and we make that case with legislators each time we meet. Unfortunately, those sensible goals require funding from an unwilling Congress. Instead, we’ve had to fight back against ill-considered legislation that will negatively impact the art trade, damage a vital industry that is key to the Southwestern tourist economy, and harm cultural life as a whole in the United States. Here are some of the pending bills and agreements that affect art collecting and the trade:

• STOP

In May, the ATADA board met in Washington DC in order to meet with legislators to discuss the impact of the 2017-2018 Safeguard Tribal Objects of Patrimony Act (STOP), S. 1400 and H.R.3211. ATADA has outlined the bill’s flaws many times, through testimony and direct contacts with legislators –how it discourages all trade in Indian art, harming artisans and local economies, will destroy value in legally-owned private property, and has a built-in lack of due process that makes it illegal to export objects without identifying what those objects are, and places the burden of proof on individuals to show objects are lawfully traded.

Board members Bob Gallegos, Kim Martindale and John Molloy met with eight legislative offices in person in order to bring home their objections to the STOP Act. They also raised museums’ concerns that STOP would undermine museum protections under NAGPRA. New Mexico Congressman Steve Pearce personally discussed innovative alternatives to STOP with the ATADA board members.

ATADA remains convinced that the best way forward is to work with legislators, tribal communities, collectors, art dealers and auction houses to find alternatives to STOP that will permit continued commerce in legal items not subject to ARPA or NAGPRA. 

Almost all of the legislative staff were responsive. All expressed appreciation for ATADA’s landmark Voluntary Returns Program, which has turned out to be more effective than any federal enforcement actions. ATADA remains focused on bringing realistic, practical solutions to the table, rather than having a politically expedient but unworkable solution forced on collectors and the trade. However, the future of STOP may have more to do with how November elections shift power in Washington than on finding a positive way forward for all constituencies.

ATADA will continue its campaign to raise awareness in Washington of the dangers of STOP, and to inform and educate the public. In June, ATADA Board Member Kim Martindale coordinated bringing letters to legislators from six owners of major Indian shows opposing STOP. Keeping your Senators and Representatives informed is essential!

• MONEY LAUNDERING

via Wikimedia Commons

An anti-money laundering bill now in the U.S. Senate is specifically directed at the art trade. Congressman Luke Messer of Indiana says that HR 5886 is intended to “reduce international money laundering and crack down on terrorist organizations like ISIS.” Never mind that there is no evidence that a single artwork sold in the US has had any connection with terrorist activity.

HR 5886 would apply the Bank Secrecy Act to dealers in art and antiquities. Regulation could require U.S. art and antique dealers with as little as $50,000 in annual purchases/sales to report transactions to the Department of the Treasury Financial Crimes Enforcement Network (FinCEN), to collect personal information from clients, and comply with a variety of burdensome regulations.

Art businesses subject to FinCen anti-money laundering (AML) requirements would be required to establish an AML Program and:

• File IRS/FinCEN Form 8300, Form TD F 90-22.13, and Form 105 to establish an AML program.
• Appoint a Compliance Officer for their business responsible for meeting FinCen AML regulations and rules
• Provide ongoing AML training for employees
• Pay for independent testing to monitor AML program and compliance
• File suspicious activity reports (SARS)

If a business is non-compliant, the consequences could include closure of the business’ bank accounts and even imprisonment.

The regulations for the art industry are not specified in the bill, but a release from Congressman Messer’s office suggests that they will be similar to those applied to the category of dealers in precious metals, stones, and jewels.

ATADA has joined other arts organizations, including CINOA, the largest global art and antiques trade association, in opposing HR 5886.  ATADA has submitted written comment to the House Financial Services Committee contesting the addition of art dealers to FinCEN requirements.

For more, see: Letter from ATADA to Chairman Hensarling, Financial Services Committee, U.S. House of Representatives
https://atada.org/legal-issues/ 

Also see: Update: Art Trade Reacts to Threatened Bank Secrecy Act
https://culturalpropertynews.org/congressman-wants-bank-secrecy-act-to-regulate-art-trade/

TARIFFS

Chang Hsüan, Women making textile, Indian ink and color on silk, Boston Museum of Fine Arts, Wikimedia Commons.

One of the more bizarre episodes in the recent pursuit of tariffs is a plan to impose duties on Chinese antique art and artifacts. The Office of the U.S. Trade Representative is reviewing proposed tariffs on “Collections and collectors’ pieces of zoological, botanical, mineralogical, anatomical, historical, archaeological etc. interest” under HTS Heading 1905, and under HTS Heading 9706, “Antiques of an age exceeding one hundred years.”

One thing that makes this proposal strange is that tariffs on antiques will not punish China. They will actually enable the Chinese government to strengthen China’s near monopoly on Chinese antique and ancient art. The proposed tariff on Chinese art only punishes U.S. collectors, art businesses, and art museums – not the Chinese government. Ten years ago, the Chinese government asked the U.S. to impose import restrictions on art and antiques up to 1912. This request was granted, but only for art up through the Tang period. China has since used these U.S. restrictions to build its art business into the largest in the world, and to expand its domestic market in the same antiquities that currently cannot be imported from China into the U.S.

Placing tariffs on art, antiques, and other cultural materials would also be a major trade policy change for the United States. Almost 90 years ago, Congress exempted antiquities and art objects made before 1830 from duty in order to encourage the free flow of artistic and cultural materials into the U.S. under the U.S. Tariff Act of 1930. A 1966 law confirmed the antiques exemption and added as exempt ethnographic items that were 50 years old or older. Ever since then, books, art, collectibles, and antiquities have entered the U.S. duty free. The proposed China tariff would change that U.S. cultural policy for the first time. 

For more, see: Proposed Tariffs on Chinese Art Will Expand China’s Monopoly
https://culturalpropertynews.org/proposed-tariffs-on-chinese-art-will-expand-chinas-art-monopoly/

STATE DEPARTMENT PURSUES FOUR RENEWALS OF BLANKET FOREIGN IMPORT RESTRICTIONS AND NEW AGREEMENTS WITH ECUADOR AND ALGERIA 

In May 2018, the State Department’s Cultural Property Advisory Committee heard testimony on the renewal of the U.S.-China Memorandum of Understanding mentioned above. It also considered a new agreement on cultural property with Ecuador.

On July 31, 2018, the Cultural Property Advisory Committee (CPAC) at the Department of State will review two more proposed renewals of agreements to bar entry to the U.S. of “cultural property” from Bulgaria and Honduras. CPAC will also review a new request from the People’s Democratic Republic of Algeria. The objects proposed to be barred from import from these three countries are comprehensive. The import restrictions cover a period extending over 9000 years, and include everything from coins to manuscripts, beads and even common tools such as “axes, hoes, picks, and harpoons.”

Right now, there are 20 foreign countries whose art and artifacts are subject to comprehensive blockades. Belize , Bolivia , Bulgaria , Cambodia , China , Colombia , Cyprus , Egypt, El Salvador , Greece, Guatemala , Honduras , Italy , Libya, Mali , Nicaragua , and Peru have bilateral agreements that once implemented, have been renewed again and again every 5 years, so that some, such as El Salvador, have been in place for over 30 years. Iraq (2008) and  Syria (2016) are currently subject to legislative “emergency actions.” (Mexico is covered in another longstanding treaty.)

Proceedings at CPAC are extremely secret. Months after a CPAC review, the American public and US art dealers, auction houses, and museums will learn what the import restrictions will be, through publication in the Federal Register. The restrictions will be effective from that day of first publication for 5 years. Based on the past record of the CPAC and its State Department administrators, the restrictions on artifacts from every country are likely to be extremely broad and renewed every five years through the foreseeable future.

ATADA condemns looting of any kind, from any country, but it does not support overbroad restrictions on the legitimate trade. Blanket restrictions on art from entire regions harm the U.S. public interest while doing nothing to preserve sites. ATADA has stood up for U.S. citizens’ access to art from around the world, and against agreements with source countries that don’t protect their own artifacts.

ATADA is particularly concerned about U.S. support for foreign governments’ absolute control of the cultural heritage of minority peoples and indigenous populations. ATADA is working to alert Congress to abusive U.S. agreements that have given control over the historical records and tangible heritage of exiled Jewish and Christian communities to oppressive regimes in Libya, Iraq, Syria, and Egypt; it has objected to Middle Eastern governments’ claims to all of nomadic Saharan Tuareg and Berber artifacts. ATADA has also demanded that the U.S. cancel cultural property agreements with China, based on its destruction of Tibetan and Uyghur religious sites and monuments.

See: ATADA’s testimony on Algeria.
https://atada.org/legal-issues/ 

See also:
CPAC – building a Wall Against Art
https://culturalpropertynews.org/cpac-building-a-wall-against-art/

Will U.S. Embargo on Art of China and Tibet Be Renewed? 
https://culturalpropertynews.org/testimony-on-renewal-of-us-embargo-on-art-of-china-tibet/

INTERNATIONAL TRIBAL ART AND ANTIQUITIES LEGISLATION

Several ATADA legal committee members have been working with European art dealer organizations and art fairs to combat misinformation that has triggered pending European Commission legislation. These pending EU regulations would restrict import and export of items over 250 years of age by requiring either (1) documentation of lawful export from a source country or second country in which the object has been for a lengthy period (the majority of countries have no such permitting regimes) or (2) a sworn affidavit from the exporter that an item was legally exported. The requirements would depend upon the type of object being imported or exported; antique books and ‘archaeological’ materials are among the items for which proof of legal export would be required. A major problem is that an importer might have no way to know if an item was legally exported, since most cultural items have been in circulation for decades among multiple owners.

Market representatives have presented independently-verified evidence showing that the assumptions on which the proposed EU regulations are premised are wrong. The cost and delay caused by the regulations could seriously damage legitimate art and antique markets, which contribute about €17.5 billion to the EU economy, and provide employment for over 350,000. The six-month delay for import license approval for artworks would keep foreign dealers from attending EU art fairs.

The European Commission’s premise for requiring new regulations was the claim that there was a massive, multi-million euro (or even multi-billion euro) trade in illicit antiquities from the war zones of the Middle East. However, the most recent World Customs Organization’s latest Illicit Trade Report (2016) shows no seizures at all in Western Europe (other than Switzerland) of any looted cultural property associated with the Middle East.

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Important Note: ATADA cannot answer member’s legal questions, and nothing in this article or on the ATADA website constitutes legal advice. If you have a legal question, you should contact your attorney for advice.

Proposed tariffs on Chinese art will have a negative impact on the U.S. market

Chang Hsüan, Women making textile, Indian ink and color on silk, Boston Museum of Fine Arts, Wikimedia Commons.

The Office of the United States Trade Representative (USTR) has included artwork, antiques and historical/archeological collections in the proposed 10% retaliatory tariff on an additional $200 billion in Chinese goods.  

Artworks and antiques can be found at the end of the list of items covered by the tariff. 

As noted in the Cultural Property News article, Proposed Tariffs on Chinese Art Will Expand China’s Art Monopoly (July 19, 2018), almost all of the  artwork from China from the Paleolithic through the Tang period is already covered by U.S. import restrictions. 

From the article:

The restrictions are claimed by China to be for the protection of ancient archaeological sites, but in fact, they reinforce China’s monopoly on Chinese art. Global Heritage Alliance Executive Director Peter Tompa states, “A tariff will only drive more Chinese artifacts back to China, which is exactly what the State Department is doing with its import restrictions.”

These actions will certainly have a negative impact on the U.S. art trade, while benefitting the Chinese government, who have requested import restrictions on art and antiques, not punishing them as intended. 

Please read the full article on the Cultural Property News website for more information and insight on this issue.  

What can you do? Make your voice heard! 

The USTR is requesting comments on the proposed list of imports. Comments must be received by July 27, 2018. 

The USTR prefers electronic submissions made through the Federal eRulemaking Portal.

Insert the docket number USTR-2018-0026 in the Search bar. A new window will open. Click the “Comment Now” button to submit your comment.

There are also instructions on how to submit paper testimony on the request for comments page.