New report on ivory trade is statistically unsound, as the author herself notes

COMMENT: I have serious concerns about the new report published by the University of Portsmouth’s School of Law on the UK’s antique trade in ivory.

The Elephant in the Sale Room, as it is titled, is an exercise in futility. The real ‘Elephant in the Room’ here is the study’s vast shortcomings, rendering any solid conclusions at best misguided, at worst dangerous.

First, let’s take the statistics. There are two measures to consider here: margin of error and confidence in accurate results.

Statistically, to be 95% confident that the answers were an accurate reflection of the whole population – in this case the UK art and antiques market – while allowing for a margin of error of plus or minus 4% in the spread of answers – the standard for such studies – the sample size for a population of 20,000 should be just under 600, or 3% of the population.Ivory report copy

The sample size given here – 80 – is approximately 0.4% of the estimated population. Taken as a percentage of the Antiques Trade Gazette readership of 35,000, which I would see as a more accurate reading of the size of the market, that falls to 0.23% of the population, or just 7.5% of the minimum sample size needed to be confident of reasonably accurate results within a reasonable margin of error.

The sample size used in this case leaves a margin of error that allows you to drive two London buses through side by side.

Now add the fact that only around half of the sample actually answered a number of important questions and it gets worse.

For example, question 13 asked: How many of the following goods, either containing or made entirely from ivory, did you sell in 2015? This garnered a total of 39 replies, or 0.19% of the estimated population, rendering the response all but meaningless.

Questions 11, 12, 14, 15, 16, 17, 18, 19 and 21 met a similar level of response.

The researchers are struck by the fact that “none of the organisations that we researched had any specific advice on their websites regarding the laws and regulations on the sale of ivory”. The implication of this is that they are complacent or incompetent. However, at this point the report fails to acknowledge that the Government had removed its own advice from the internet because it was so confusing and misleading. If the Government can’t give accurate advice, how are the associations expected to?

The report does finally acknowledge the problem on page 42, where one of the 12 interviews supplementing the survey notes how “confusing” and “unhelpful” DEFRA’s website is on this.

Additional efforts, such as the 2016 CITES panel at the Art Business Conference, and Antiques Trade Gazette’s recent conference, which could have been added as a late footnote, are ignored entirely.

Perhaps most surprising and disturbing was the assumption made on page 25 of the report that the low response rate to the survey pointed to dishonesty among the trade, with dealers being “sometimes secretive regarding [their] commercial activities”, followed by a reference to Stuart Henry’s The Hidden Economy and “illegality” taking place in settings “which (on the surface) seem completely legal and this, in turn, makes participants disinclined to be open about their activities”.

This is staggering in its arrogance and complacency, blaming the failure of this poorly composed exercise on the “dodgy” trade, rather than looking to its own structure, methodology and execution for the true shortcomings.

How is anyone supposed to trust the authors as dispassionate and unbiased in this light?

At least, on the same page, the report goes on to admit: “with such a small sample it is difficult to make strong assumptions about the universe of the antiques trade”. Nevertheless, the report does just that, and unhelpfully too.

Turn to the next page, for instance, and immediately we are told: “The survey results show that some respondents failed to answer all of the survey questions [a huge understatement] suggesting that some questions were maybe too sensitive…”.

Page 32 makes the ‘astonishing’ discovery that auctioneers tend to sell more pieces than dealers, but this is hardly true of just ivory. If even a small-time auctioneer with only a monthly sale of 500 items and a 70% sell-through rate turns over 4200 lots a year, how many dealers could match that?

So does the report meet its three stated objectives?

  1. To evaluate types of ivory objects being sold in the UK, their source and the buyer’s demographic? (A: To a degree, no and no).
  2. To understand how traders appraise an item before sale to satisfy themselves whether or not it complies with the law (A: Partially, although until the conclusion on page 52, the report utterly ignores the crucial matter of the costs and time delay of carbon dating tests – recently estimated in parliament as averaging between £500 and £1000 per item).
  3. To evaluate the effect a total ban on the sale of ivory would have on the British antiques trade (A: Not even close, based on the sample size, response level and demonstrable lack of understanding of key considerations).

The report does make some sound recommendations – not least those to DEFRA – but none that has not already been mooted by the industry without having to resort to the time and expense of this exercise.

It at least acknowledges its own limitations under the first concluding recommendation: “The study highlighted the difficulties in obtaining information from the antiques trade about the nature of their practices regarding the sale of ivory. We would therefore recommend further research…”

Again the trade is blamed, whereas, in my view, the pointlessness of this study as executed is the real cause for complaint. How much did it cost? How could the money have been better spent?

Did Brexit affect UK art market imports and exports in 2016?

What do the customs figures say?

UK exports of art and antiques fell by 13.6% to £4.95 billion in 2016, while imports declined by 37% to £2.23 billion.

Having just completed my annual analysis of the trade figures, which I compile from from raw customs data, I noted significant drop-offs in values for the first half of 2016, with additional significant falls in fine art imports and exports between July and December.

Sterling declined an average of 5.9% year on year for the first six months of 2016, but the six-month year-on-year average post-referendum fell by 16.3%. So to get a true picture of how the market has changed you have to take this into account.

2016 UK Imports Exports table

Although customs returns fell across the board for the last half of 2016, the two areas where this appeared to be significant were in exports and imports of fine art beyond European Union borders – down 24.2% to £1.68 billion and down 55.2% to £524.5m respectively.

Movement within EU borders is assessed differently by HMRC because of the single market, but its figures showed a widening trade gap for fine art, with twice as many works by value heading across the channel from the UK as in the same period for 2015, while the value of works entering the UK from the EU from July to December 2016 fell by more than 60%. However, the figures are comparatively small in the context of the global market.

This year I conducted additional research to see if any Brexit effect could be detected in the second-half figures, but the picture is not clear.

On the basis of what I have seen so far, I would say that the jury is still out. The fine art side shows significant weakening beyond exchange rate issues, but the global art market contracted in 2016 anyway, so you would expect to see cross-border trade decline.

Frieze Week sales boosted confidence

However, Frieze Week sales at the beginning of October underpinned confidence in the UK market, with Christie’s alone netting over £90 million for Post-War and Contemporary Art, including 19 artist auction records.

With an exchange rate of $1.27 to the pound then – compared to around $1.53 at this time in 2015 – this series would have been a very attractive prospect to overseas buyers. It also shows London’s ability to attract great works for sale.

Having said that, fine art imports to the UK for the second half of the year fell by more than 50% in value on the same period in 2015, possibly reflecting not just the weakness in sterling but also the likelihood that this would make London a less attractive place for consignors in the short term.

Nonetheless, all of this needs to be taken in the context of the long-term trend upwards, and we will have to wait to see how the next two years pan out to see if our changing relationship with the European Union will alter the UK’s global market status.

Drilling down to the detail, not much has changed in the structure of the UK’s trading relationships.

The United States remains the most significant partner (see table above), but the figures show significant market shrinkage: the UK’s fine art exports to the US were down by 20% at £1.85 billion, while imports fell 40% to £552.3m. Exports of antiques to the US dropped by 24% to £431.1m, and imports declined by over 30% to £224.5m.

Fine art exports to Hong Kong remain stable amid global decline

The two great entrepots who dominate trade relations with the UK art market after the US, Switzerland and Hong Kong, also saw dramatic change, with fine art exports to and imports from the former down nearly 40% at £584.6m and £507.8m respectively, while fine art imports from Hong Kong crashed by almost three quarters. However, fine exports there remained very stable at £81.3m, showing an overall healthier trade gap for the UK with the former British territory.

One of the most significant changes in trading partnerships came with South Korea, now acknowledged as an increasingly strong buying base: exports of pictures there rose by more than £450% to nearly £90m.

It is important to remember that the trade figures measure the value of goods crossing UK borders rather than actual sales, but they tend to mirror much of the market’s trends and spheres of influence.

2016-2015 July to Dec comparisons

 

Not impressed: Why Section 40 must go to protect press freedom

The UK faces one of the biggest threats to its democracy right now. It’s time to fight Section 40

Whatever else you are doing at the moment, stop. This is one of the most – if not the most – pressing issue facing us right now, and if we don’t deal with it immediately, it might be too late.

How important? So vital that on December 15, 1791, the Founding Fathers made it part of the First Amendment to the United States Constitution. Not the Second Amendment, Third, Fourth or Fifth, but the First. It even outranks that US holy of holies, the right to bear arms, which had to make do with the Second Amendment.

What I am referring to here is the freedom of the press. And in the UK it is under imminent and dire gaggedthreat.

Section 40, as it is referred to, came in as a result of the Leveson Inquiry into press activity and is part of the Crime and Courts Act 2013 that deals with the award of costs in cases where individuals sue publishers for libel, harassment or other complaints linked to news-related material. In short, it orders courts to award costs against publishers, whether or not the claim succeeds, if the publisher has not signed up to be ruled by a Government-approved press regulator.

So, win or lose, every Tom, Dick or Harry with a grievance, however, unjustifiable, will be able to go to court knowing that they will have nothing to pay, because the bill for whatever costs they rack up in the process will be presented to the newspaper, magazine or website in question.

No publisher can afford to continue in business with such a Sword of Damocles hanging over them.

Where some of the problems lie

The Act became law in 2013, but Section 40 cannot be enforced until there is an approved regulator for the media to sign up to. Soon there will be – which is why the threat is imminent – so why doesn’t everyone just sign up and avoid the issue?

The problem is twofold. First, the introduction of a Government-approved regulator to which publishers must, in effect, sign up to by law also effectively gives the Government direct control over the media. Why is this a bad thing? Well if you consider that recent precedents for doing this are in Zimbabwe under Robert Mugabe and in Turkey under Reccep Tayyip Erdogan, you will begin to get the picture. On January 3, Rachael Jolley, editor of the Index on Censorship magazine, expressed her great fears of this development in the Daily Telegraph.

“There should be a clear distance between any government and the journalists who report on it,” she wrote.

Secondly, the approved regulator in question is IMPRESS, the body set up by Max Mosley, the hugely wealthy former racing driver who has gone after the press, bankrolling the campaign in the process, ever since the News of the World exposed details of an orgy in which he took part in 2008. IMPRESS fields a board of wide-ranging talents, expresses its commitment to press freedom and bills itself as “the first truly independent press regulator in the UK”.

It may be all of these things, but so far no national newspaper has signed up to its rules. Why so little confidence in IMPRESS? Go to their website and click through to IMPRESS Code Consultation for the first clue. This is what it says: “The IMPRESS Code Committee is in the process of drafting a new Standards Code for the press. IMPRESS ran a six week public consultation until 29th September 2016. IMPRESS received over 40 submissions. The Code Committee is considering the draft Code in light of these submissions.”

So, if I understand this correctly, the press must sign up to be ruled by an organisation that has not yet published its binding code of conduct. In other words, they would have no idea what they were signing up to.

Now check what it says under Our Regulatory Scheme on the website: “We have the power to direct the publisher to make a correction or an apology. We also have the power to award financial sanctions (fines) when a publisher has committed serious or systemic breaches of the Code or our governance requirements. We can award sanctions up to 1% of that publication’s turnover, to a maximum of £1m.

“If you believe that you have suffered real harm and you wish to pursue a legal claim for defamation, breach of privacy or harassment against a publisher regulated by IMPRESS, you may ask us to arrange arbitration for you.”

IMPRESS offers no clarity as it adopts sweeping powers

As I read this, then, an organisation that has not yet set out its code of conduct, expects publishers to sign up to that binding code and subject themselves to the whim of anyone who feels that they might have been harassed, without defining what that might be, whilst setting out the powers of enforcement. Don’t forget, the £1m fine would be in addition to the costs, however unjustifiable awarding them against a publisher might be.

Quite frankly, whatever other objections might arise, the lack of clarity across the board here is reason enough to dismiss this scheme out of hand, especially in light of the powers it adopts and the level of potential sanctions.

Section 40 itself is just as woolly. Paragraph 3 (a), for instance, orders that costs must be awarded against the defendant (the press) unless the court is satisfied that (a) “the issues raised by the claim could not have been resolved by using an arbitration scheme…” or (b) “it is just and equitable in all circumstances of the case to make a different award of costs or make no award of costs”.

Sub para (a) is a non starter, because any vexatious claimant would have no incentive to abide by any arbitration, safe in the knowledge that in pursuing an action in court it would be the defendant shouldering their costs regardless of the outcome.

Sub para (b) is so wide and undefined as to be meaningless as reassurance to any publisher hoping to stave off a vexatious claimant’s costs. Quite simply, none would take the risk of publishing in the first place under such circumstances.

The result of all of this? A hamstrung press, which either comes to the heel of those who want to muzzle it, or faces closure because it simply could not afford to continue under such threats and strictures.

Don’t forget, in all of this, that a great deal of other legislation regulates the press already, from the Contempt of Court Act to existing libel laws. When journalists were caught out hacking phones, they went to jail, including Andy Coulson, David Cameron’s former communications director. The law does work already. They won’t be doing that again.

Fighting Section 40 is about defending democratic freedoms

It is vital to understand that freedom of the press is not about protecting dodgy reporters intent on smearing the latest sex scandal across the Sunday tabloids; it is about protecting the very democratic freedoms that you and I have taken for granted as our right for centuries. The Fourth Estate’s most important role is in holding parliament to account and, beyond parliament, in acting as a democratic check and balance that makes the rich, powerful and unscrupulous think twice before acting against the common interest. The press does this by retaining the power to expose wrongdoing and the wrongdoer without fear or favour. Section 40 will remove that check and balance, while introducing fear and favour, and will close the essential democratic divide between the press and Government. It is not in my interests for this to happen, nor is it in yours.

How many times when scandal or tragedy breaks in public life have we heard the words: We must do everything we can to ensure that this never happens again?

MPs expenses; the current football sex abuse scandal; cash-for-questions and many other outrages would never have come to light if Section 40 had applied at the time.

Allow it to proceed and the chances are such horrors will not only happen again, but will continue to do so on a more frequent basis. The real scandal is that, under such circumstances, we, the public, would never get to hear about it. And so the malefactors would know they could act unfettered by the risk of public scrutiny.

As Rachael Jolley says: “If such laws were introduced in another country, British politicians would be speaking out against such shocking media censorship. There’s no doubt that authoritarian powers will use this example to bolster their own cases in imposing media regulation.”

There are peoples across the world fighting for such freedoms, and we are about to give it all up, and oh so casually.

Culture Secretary Karen Bradley needs to remember her responsibility not just to the British public in this, but also to other democracies across the globe; it’s more than a timely reminder for her as one looks out across the West now.

Hacked Off and those supporting Mosley’s stance are extremely well funded and have been making very loud representations to the Government in favour of enforcing Section 40.

You can do your bit to counter this by letting the Government know what you think.

Write to presspolicy@culture.gov.uk NOW, giving your name and address and declaring that you are one of the following:

  • A member of the public
  • A lawyer
  • An academic

and that you want your views to be considered in the public consultation exercise on this matter. Tell them the following:

  1. The Government should repeal all of Section 40 of the Crime and Courts Act now.
  2. That you believe Section 40’s implementation would seriously damage the press’s ability to hold power to account.
  3. That you do not believe Section 40 will incentivise publishers to join IMPRESS.
  4. That you believe there is no need for further investigation following the completion of Leveson One and the criminal investigations.
  5. That Leveson Two should be terminated.

Alternatively, you can write a letter containing all of the above and send it to: Press Policy, DCMS, 4th Floor, 100 Parliament Street, London SW1A 2BQ.

We haven’t got long to put a stop to this potential disaster. ACT NOW.

Why transparency is the Art Market’s – and lawmakers’ – latest obsession

transparencyAnd what the industry can do about it now…

In recent years, global media coverage of multi-million dollar auction prices, combined with the rise of art as an alternative asset class, has focused more attention on the international art market than ever before.

That increase in awareness has brought the issue of transparency to the fore, but what exactly do we mean by it?

To the public – the market’s client base – transparency largely means more clarity about terms and conditions, pricing, and consumer rights when buying and selling.

However, to politicians, interest groups, the media and the many and varied corners of the market itself, concerns over transparency focus on a far wider range of topics: provenance, finance, crime and market manipulation, to name the most obvious. The general attitude seems to be that improved transparency will boost confidence and reduce the risk of things going wrong.

With the trade in antiquities, concern gravitates towards looting and fakes, with money laundering and theft following close behind. With finance around high-end auctions, critics argue that a lack of transparency allows auction houses, dealers and collectors to skew the market to give themselves an unfair competitive advantage or create bubbles to sustain their holdings in artworks that might otherwise decline in value.

For the trade, though, increased transparency can cause problems. Thanks to the internet, it is far easier for potential buyers to find out what a dealer paid for an item, making it much more difficult for them to cover their costs and sell at a decent profit; most people are not interested in the time, effort, expertise, or the restoration, transport or other costs that the dealer has to account for in acquiring the item, as these are not seen as contributing to its value. How justified are concerns, and what should be done?

Focus on the four key variables in any transaction

Let’s deconstruct all of this a little. Every transaction really only has four key variables: the buyer, the seller, the goods, and the money. Each brings its potential to the deal, and its risks. Due diligence on behalf of both buyer and seller can tackle much of that risk, but not all of it. How can you be absolutely sure where the buyer’s money comes from? How robust is the seller’s paperwork? And who exactly are they? Surely the answer is to regulate the art market directly, like the worlds of finance, insurance and the law, so that officialdom can intervene where necessary and public confidence in honest trading does not have to rest on what some view as little more than a person’s word.

The first thing to understand is that hundreds of laws already regulate the market (you can download the list that applies to the UK art market from the British Art Market Federation website), but experience tells us that direct regulation rarely solves the problem.

The establishment of the Conseil des Ventes in France in 2000 to govern the market once France liberalised its auction laws did nothing to prevent the cols rouges scandal at the Drouot auction house nine years later, where the closed shop of portering services masked a criminal network of theft. Nor did the Wine Association’s establishment of a rigorous code of practice in 2003 prevent people from falling victim to rogue funds in the years that followed. Then we have the age-old issue of what exactly art is: if you can’t define something clearly, then you can’t legislate for it effectively.

But more pressing, perhaps, is where questions of art market transparency overlap with debates about public interest and the right to privacy. If politics is to intervene here, then the lawmakers as a whole need a better understanding of how to balance public interest with the practical needs of business. That means consulting trade professionals to a far greater degree than happens now rather than relying on the opinions of academics and others lobbying against art market interests. We also need more consistency on codes of practice across trade associations as well as with legal definitions for cultural property, what constitutes art and other loose terms.

Baroness Neville-Rolfe, the minister guiding the Cultural Property (Armed Conflicts) Bill through the UK parliament, recently declared that creating such passports would breach Article 8 of the European Convention on Human Rights, which covers the right to privacy.

In 2014, in a case involving the auctioneers William J. Jenack, the New York Court of Appeals overturned a New York Supreme Court ruling that an auction contract was null and void if it did not name the seller. The court clearly recognised the damage this would do to auctions and declared that having the auctioneer’s details on the paperwork as the agent of the seller was good enough.

How to use the art of persuasion when it comes to transparency

I have always believed that the most effective way of getting people to change their behaviour is to show them why it is in their interests to do so – and enlightened trade professionals are already demonstrating how and why this should be done.

Online aggregator Barnebys has just published research showing that transparency online at auction, along with ease of bidding and post-sale fulfilment, is the most important factor in building brand trust and improving sell-through rates. ‘The new generation of buyers and sellers expect all information to be easily at their disposal, without any barriers,’ says Barnebys co-founder Pontus Silverstolpe. ‘Withholding information, such as final prices, foments distrust and alienates users.’ Anna-Karin Laurell, CEO of Scandinavian auction house Bukowskis, echoes this sentiment: ‘Transparency and [improved] function increases credibility. Through our new website we have also reached new target markets we previously believed were very hard to reach – the youngest between 18–25.’

The Hiscox Online Art Trade Report 2014 concurs, while its 2016 report highlights the growth in businesses that are improving access to art market information online, while simplifying fulfilment services.

Enhanced condition reports for online auctions, accompanied by excellent images, certificates of authenticity and a clear summary of all charges are the building blocks to buyer confidence and brand trust for sellers and their agents. So you may not know exactly who you are buying from, but if the auction site handling the transaction effectively underwrites it with all of the above, then it is a form of transparency that addresses many buyers’ concerns. This reflects the appeal court ruling in the Jenack case.

Having assessed auction websites professionally for nearly 20 years, my first and most important test is how easy it is to find the buyer’s premium rates. If there is any difficulty at all with this, I simply will not buy from that auctioneer, nor recommend them. Newly launched Forum Auctions have made a virtue of publishing exactly what their charges are at the top of their advice page on buying, and they also promote a set of core values, including a pledge on dealing with complaints promptly and fairly. It’s a simple, cost-free and uncomplicated piece of marketing that immediately promotes confidence. It is also a wise move because the Advertising Standards Authority has just launched an investigation into charges at auction, including whether buyer’s premium rates, VAT and other charges should be reflected in auction estimates.

The transparency issue is not going to go away. The market needs to regulate itself better if it is to keep the legislators off its back. It also needs to be better organised and more proactive in developing relationships with government. If the UK industry is serious in this, it needs to increase funding to its lobbying arm, the British Art Market Federation, by a factor of ten. The US would do well to follow suit.

This article first appeared in the October 2016 issue of Apollo, the International Art Magazine

The birth of the buyer’s premium may shed light on UK/EU trade deals

How the Milwaukee Journal reported the protest against the introduction of the buyer's premium in 1975.

How the Milwaukee Journal reported the protest against the introduction of the buyer’s premium in 1975.

Self-interest among EU member states will prevail in the end, if history is anything to go by

Whatever your views on the big EU vote on June 23, now is the time to deal with its aftermath. Brexit leaders who left the stage almost the moment the fight was over did not do their supporters or anyone else any favours as they failed to provide the direction they had promised.

David Cameron announced his resignation but said he would steady the ship of state until his successor was in place. Having announced this, however, he left it as rudderless as all the others.

Andrea Leadsom let down her supporters by demonstrating instantaneously just how unfit she was to take on the mantle of PM, which fortunately meant that the anticipated summer limbo of the Conservative Party leadership election came to a swift end with the coronation of Theresa May. Like her or not, her appointment means more immediate stability and direction, providing the country with a leader that other European heads of state feel they can negotiate with.

Beyond the politicians, Bank of England Governor Mark Carney has not exactly covered himself in glory. Instead of being the voice of calm reassurance, he has consistently talked the economy down. He should know better than most that the best way to create a recession is to talk your way into it.

As I write, Angela Merkel has endorsed May’s decision not to invoke Article 50 until 2017, so as to allow for the groundwork to be done on the way forward. Both Australia and, most importantly, the US have started talks on trade deals, with Secretary of State John Kerry expressing enthusiasm for getting on with the job and telling the world that leaving the UK adrift now would be a bad idea for all. The German industry association has already called for existing trade deals with the UK to be ongoing without hindrance or penalty.

The FTSE 100 – ok not as good a bellwether on Brexit as the 250, but still – has just risen above 6700, and the pound has climbed back to $1.31 as the Bank of England has announced that there is “no clear evidence” to show a sharp Brexit slowdown and warns against a kneejerk interest rate cut, especially as consumer spending, in general, has held up.

Market researchers Gfk, who specialise in measuring consumer confidence, reported a sharp fall immediately following the vote – the sharpest since 1994 – but only to levels at or above historical averages.

Looking beyond the cloud of gloom

Let’s be clear on this: it’s way too early to declare the bumpy ride over, and potholes along the road may be deep and rocky. But with growth forecasts for the UK outperforming the EU by some margin for the year ahead on top of all the other good news mentioned above, maybe we should spend at least some time looking for the silver lining rather than insisting at pointing relentlessly at the cloud.

Legally, the UK and others cannot sign off new trade deals independently while we are still members of the EU, but as John Kerry stated, that doesn’t mean we can’t start negotiations now. What’s more, we can take those negotiations a long way down the road.

As for the desire to punish the UK for its decision to leave the EU, just how far will Eurozone countries go? Some facts we do know.

We know, for instance, that the UK has the fifth largest economy in the world. We also know that in 2015 the UK accounted for 17% of the EU GDP, second only to Germany at 20%. And we also know that the trade gap between the UK and EU stands at around £24bn and is growing to the EU’s advantage.

All of these facts tell us that punishing the UK over trade deals would do more harm to the EU than to the UK.

However, some argue that for sound political reasons the EU must hold firm and punish the UK on tariffs: let the UK off lightly and others may well follow the Brexit route.

This thinking fails to take account of two factors, however: the rest of the world and national interest.

Let’s take the rest of the world first. Taking the view that Brexit is at least partially about gaining freer access to a much bigger market, it is not unreasonable to assume that the UK’s ability to negotiate better trade deals independently with the US and burgeoning Far Eastern economies will lead to some redirection of both exports and imports. Less favourable terms from our EU neighbours are likely to encourage us to increase two-way trade with these other partners, for instance by importing more Japanese cars than German ones.

The net result is that the EU will be the loser. Punishment of the type that has been mooted only works if the UK has no alternative, but here it clearly does.

This means that it will not be that long before the balance of power on EU trade deals shifts towards the UK, which can then demand far more favourable terms than before.

National interest and the buyer’s premium

Now let’s look at the national interest. For all the talk of the EU being a convocation of nation states working towards a federal union, the evidence shows that national interest among members is as strong as ever. One only has to look at what is happening in Italy, with Matteo Renzi’s stand-off against Brussels over injecting state money in to the economy, to show what the EU is up against.

Interestingly, the art market and its reaction to the introduction of the buyer’s premium in 1975 provides one of the best examples of what can happen when trade interests come together to make a principled stand.

Dealers protesting against Sotheby’s and Christie’s decision to introduce the buyer’s premium at Sotheby’s organised selective boycotts of sales. At a pre-arranged signal, they stood up in the saleroom and tore up their catalogues before leaving in protest. However, self-interest paved the way for the BP’s establishment and survival because, as legend has it, so many of these same dealers had quietly ensured that they had placed someone in the room to bid for them after they left.

So it is likely to be with the EU. Technocrats in Brussels may make a lot of noise, and national leaders may announce firm stands for the benefit of media outlets and their electorates, but be sure that behind closed doors they will all be scrabbling to win the best deals with what remains – for now, at least – the EU’s second biggest economy.

Those who say that such jockeying for position among member states on trade is impossible under EU rules should remember which two countries first broke EU fiscal rules: Germany and France. And they have both continued to do so, with France again predicted to break Eurozone budget deficit rules by some margin this year.

Is this a cynical view of the world? Maybe, but I would argue it is also a fairly realistic one. For all the grandstanding, talk of treaties and unbreakable rules, a lot of the talk coming out of Brussels is little more than demagoguery.

The UK may have a limited time left in the EU, but it will always be part of Europe and thank God for that. The British may dislike bullying from Brussels, but when it comes to individual nations and their peoples, I find that we are pretty big fans on the whole and long may that last.

If individual nations states within the EU attempt to put themselves at a competitive advantage over trade with the UK in future, then they will simply be trying to do their best by their electorates.

In the end, that’s just human nature and we would do well to remember it.

Art brings hope to South Africa in troubled times

Maggie Laubser’s Birds and Boats is a signed oil on canvas laid down on board measuring 15½ x 19½in (39.5 x 49.5cm), which sold for R1.3m hammer – around £59,000 – against an estimate of R700,000-900,000 at Strauss & Co on March 14.

Maggie Laubser’s Birds and Boats is a signed oil on canvas laid down on board measuring 15½ x 19½in (39.5 x 49.5cm), which sold for R1.3m hammer – around £59,000 – against an estimate of R700,000-900,000 at Strauss & Co on March 14.

The art market is a beacon of hope in these troubled times for South Africa, but those who want to be part of the success story need to prepare now

One moment, it was very much a man’s world, the next it is women coming to the fore in the South African art market.

This is the result of the death on Christmas Day of Stephan Welz, the colossus of the country’s art market for the past 30 years and more, and the passing of the baton to the new joint managing directors at Strauss & Co, the country’s leading auction house, Bina Genovese and Vanessa Phillips. Add to their skills, contacts and experience the talents of fine art specialists Ann Palmer and Emma Bedford, and the future vision rests very much on the shoulders of the women in the firm chaired by Elisabeth Bradley.

But back to Welz the man for a moment.

The dominant force for so many years in a way that no other individual can claim to have been in any other art market across the globe, his name added lustre to the works he offered for sale in a way that no one else has ever been able to imitate. The top consignors to auction looked for his personal touch as the magic ingredient, as so often it proved to be.

Such was his competitive spirit that despite ongoing health issues he never lost his edge, even taking R8.5m (£393,520) for the oil and gesso work The Creation of Adam I (1968) by Alexis Preller, the rising star of South African art, in Johannesburg on November 9.

So it was no surprise that the man Strauss & Co described as their “living archive” had two memorial services – one in Johannesburg, the other in Cape Town – and that just about the whole of the South African art market turned out to pay their respects.

Generational change in South Africa’s art scene

Welz’s passing marks not just the end of an era in the terms of his influence. It comes at a time of huge change in the South African art scene as the leading lights of the older generation give way to the new. With that change comes a whole new approach to art and antiques and the way they are marketed. And it all comes as the rand sinks to a new low against sterling amid political uncertainty and the shadow of recession. Five years ago the exchange rate was around 10 rand to the pound; now its sits at around 23.

The mood on the street is negative, as those I talked to in Cape Town and beyond told me at the beginning of February. But strangely, this is not reflected in the art market, where the trade, represented by the South African Antique, Art & Design Association (SAADA) have boosted membership by bringing in the pick of the Contemporary art dealerships to their Cape Town fair with a view to permanent membership of the association.

Having rebranded the association itself in 2013, they moved the fair, now called the SAADA Expo, to The Lookout in the V&A Waterfront last year and packed it out for 2016’s event from February 11-13, no mean feat bearing in mind that it is a considerably larger space than the old venue in the Botanical Gardens.

This was a shrewd move, because the Expo now finds itself right in the centre of the tourist trail for cash-rich evening visitors, who would only be attracted to the botanical gardens during daylight hours.

In turn, the blending of antiques with Contemporary art, and the new policy of marketing traditional objects as pieces of design and sculpture is helping to attract a new and younger domestic audience.

For the Contemporary art galleries, the endorsement of the SAADA brand sets them apart from the mass of other galleries that wouldn’t get past the vetting committee, while the new players help expand the reach and influence of the traditional SAADA membership.

Cape Town and Johannesburg trade adapting their approach

“I no longer market myself as a silver dealer; I sell sculptural artefacts that just happen to be in the form of silver,” says Jeremy Astfalck, former SAADA chairman and owner of The Old Corkscrew, who is the one South African dealer who regularly stands at British fairs (Olympia, LAPADA and the NEC).

“Alongside the Contemporary art this is definitely attracting a younger crowd.”

Some believe that it may also be showing signs of crossing the colour bar. And this is the holy grail for the art market in South Africa: attracting the interest and engagement of the newly prosperous black middle classes who simply do not relate to the traditional collecting fields in South Africa, much of it based on colonial history.

Astfalck, a huge admirer of how his successor at SAADA, Paul Mkrusic, has moved things on, is adamant that taking a new and dynamic approach does not mean compromising where it matters.

“The quality still has to be there for art and objects, including their history.”

He is also finding that his trips to stand at fairs in the UK pay off back home, where contacts he has made turn up at his Franschhoek gallery to make the most of the fabulous exchange rate.

These ‘swallows’, as they are known, because they fly south for winter, have been a staple of the market for years. The trade members among them, from the US, UK and Europe, come to snap up the best of what remains from old family collections for resale at a decent mark-up back home. Although some market watchers, like retired auctioneer Charles Rudd, believe that most of the European heirlooms have already been flushed out from colonial settler families, they still see treasures emerging that make the trip more than worthwhile.

Having closed his own Cape Town auction house in November, Rudd is still very active as an independent valuer and appraiser. Reflecting on the generational shift in the market, he is wistful about the gradual disappearance of the expertise in traditional collecting fields, but says South Africa still has a lot to offer here and believes that many European dealers and collectors are still missing out.

Weak rand attracting buyers to the Cape

“As far as the antiques side is concerned, there are still strong buyers and sellers in the traditional market and I would encourage the international trade to come down,” he says, noting the high level of fresh-to-market items available.

He acknowledges the gap left by Welz but is one of many who warn against writing off Strauss & Co, who, it must be remembered, remain the strongest domestic force in South African art. Also best remembered is that continuity is a strong feature because those now at the helm are not new at all to the company but worked with Welz for years – collectively 48 years, in fact. And they have a record R200m turnover for 2015 to build on. Add to that the strong brand and solid database of clients and their future certainly looks much more positive.

“Contrary to what happened internationally where major auction houses elected to operate only at the top end of the market and are now having to rethink their strategies, Strauss & Co has continued to operate in both the high end and the middle market (this also includes furniture and decorative arts) reaping substantial benefits both ways,” says Genovese.

“The weak rand, along with exceptionally high buyer’s premiums and VAT rates charged, have become a deterrent for local buyers. Conversely, the weak rand is extremely attractive for international buyers that are noticeably on the rise, in particular for decorative arts.”

Strauss are not without their rivals, foremost among them in South Africa itself being Stephan Welz & Co, the company Welz the man sold in 2006 when ill, only to recover his heath and his ambition, which led to the creation of Strauss & Co.

Ironically, despite carrying his name, the firm is still often referred to as Sotheby’s, a legacy of its former incarnation as the auction giant’s South African outpost.

With a new-look website and beefed up media section, as well as a range of specialisms that now includes vintage fashion, its owner Alan Demby clearly has his eye on an even more competitive future, especially now Welz the man is no longer a player.

These two, with Ashbey’s Galleries upping their game on European art but on a smaller scale, are setting the pace domestically.

One thing is for certain: all eyes will be on the next two or three series of sales to see how the rivals perform. The first test has been the March sales in Cape Town, which are still being assessed.

Bonhams continue to dominate international scene

On the international scene, though, Bonhams continue to dominate. It is ten years since Giles Peppiatt established The South African Sale in London and new records for Irma Stern, Vladimir Tretchikoff and others have held sway, even when lesser artists have failed to make their mark.

Here the weak rand is Bonhams’ greatest gift when it comes to consignments: quite simply, they are able to sell them for much more in London than their rivals can in Cape Town, with the caveat that currency rules mean that sellers from South Africa must re-import a hefty slice of the profits.

As for the art itself, Irma Stern and Jacob Hendrik Pierneef have dominated for a long time, but others have been showing strongly in recent years, among them William Kentridge, Alexis Preller, Gerard Sekoto, Maggie Laubser and Stanley Pinker.

“South African artists that should be followed and will in my opinion continue to appreciate are Stanley Pinker, Robert Hodgins and Lucas Sithole,” says Peppiatt. “The one artist who I think that will eventually eclipse all the South African hands is Gerard Sekoto. I would not be surprised if we sell a work by Sekoto for over a £1m in the next ten years.”

Pan-African art the next big shift

The next big shift, though, is likely to be towards the Contemporary artists from South Africa, Nigeria, Ghana and the Cote D’Ivoire, among other African countries, whose work is already being championed by new galleries in Cape Town and Johannesburg.

Africa’s most successful living artist, the Ghanaian El Anatsui, has already crossed over into Western taste. His Gustav Klimt-like bottle-top installations sell for hundreds of thousands of pounds, have won prizes at the Royal Academy and have been on show at the Met in New York and the Venice Biennale.

Events such as 1:54, the Contemporary African art and photography fair that now runs in New York and London each year, are championing new and established African talent, with the art taking on global as well as continental themes, creating mass appeal in their wake.

Names such as Sokari Douglas Camp, a Nigerian in his late fifties, Mali’s Abdoulaye Konaté, in his sixties, and Adeola Olangunju a 29-year-old Nigerian photographer living and working in Lagos, are indicative of the explosion of talent and creativity to be found. This is an unstoppable force.

Names to watch coming out of South Africa itself now include Athi-Patha Ruga, Zander Blom, Michael Taylor and Georgina Gratrix, says Genovese at Strauss.

When the Zeitz Museum of Contemporary Art Africa opens around the end of this year on Cape Town’s Waterfront as the continent’s largest gallery of its type, it should provide a hitherto absent hub for Contemporary African art that has the potential to catapult South Africa onto the international art market, taking it well beyond the modest $35m auction market value it now enjoys to something on an altogether grander scale in a global market valued at around $55 billion. If that happens, those far-sighted enough to be ready for this will be the market leaders of the future. And it will be them, whether galleries, fairs or auction houses, who will also reap the rewards of the new and younger domestic market.

Players line up for market’s next phase

Bonhams, who already hold Contemporary African art sales in London and whose London specialists across several departments can be found in the Cape on a monthly basis, are clearly getting ready for the next phase.

“The growth of Contemporary African art over the past four years has been extraordinary and nominal values have risen by over 200% in some areas,” says Peppiatt.

“In my opinion the art market in South Africa is on the verge of being the key springboard for the larger African market. There has been such growth in Contemporary African art, both from South Africa and further North, and South Africa deserves to be at the forefront of this market.”

He and his colleague Hannah O’Leary keep a close eye on the political scene in South Africa, how the Government and economy are shaping up in that other great African art centre, Nigeria, and how that all plays into the art scene.

“Those lacking a global view are most at risk of missing the boat when it comes to the changing scene in both South Africa and the continent as a whole,” says Peppiatt.

Phillips are now openly preparing to makes moves on the pan-African market and the organisers of the Cape Town Art Fair have clearly taken this message on board too. They moved the event from the Waterfront to the much bigger Cape Town International Convention Centre for its February 19 to 21 run – a bold statement.

Displaying pan-African Contemporary art, its stated aims include showcasing new trends, exposing collectors to new artists and, perhaps most interesting of all, adapting the best international practices to build and sustain an economic platform for the art market.

The challenge for the traditional auction houses and dealers in the country is to make sure they do not miss the chance to join the party when it starts.

Like London, Cape Town has the advantage of being a nice place to do business, which can only add to the mix.

Mortgage rates may be going up and food prices rising, but the art market offers a beacon of hope in these troubled times for the Rainbow Nation.