The international trade of fine art is most precisely defined as the trade across nations of unique, non-reproducible works by an artist. The art trade contradicts typical international trade models since it is a culturally significant good. It is not treated by consumers the same way any other commodity would because of the aesthetic value that is unique to each piece. Despite existing as a finite physical piece, unique art is still considered intellectual property. This sparks the debate as to whether art exports should be restricted for nationalistic and cultural reasons, or liberalized for the sake of a healthier international market.
The 4-digit Standard International Trade Classification (SITC) classifies "Works of Art, Collectors Pieces and Antiques" under category 8960, which includes paintings, drawings, pastels, original sculptures, original prints, stamps, and antiques over 100 years old. This is the only SITC category that consists of unique, non-reproducible art, which is typically thought of as "fine" art.[2] The 4-digit harmonized commodity description and coding system, otherwise known as the harmonized system (HS) code for "fine" art is 9701, which is classified as "Paintings, Drawings and Pastels, Executed Entirely By Hand".[3]
History of international art trade
The earliest known regulation of cultural property dates to 1464, when Pope Pius II prohibited the exportation of works of art from the Papal States.[4] It was not until the mid-1500s that any sizable amount of formal artwork was transferred between nations in licit markets. Previously, local demand had satisfied the supply of artwork, but it could not keep up as the number of artists increased.[5] Consequently, artists exported their works to foreign markets. Between 1540 and 1670, an average of 144 paintings per year were transported between the Netherlands and New Spain.[5]
Throughout much of the early modern period, if an artist could not domestically sell his art, he sold it instead to dealers who exported the works abroad. Starting in the 17th century, however, most art was traded at the massive auction houses of Christie's and Sotheby's of London, which both still survive today.[5]
Like any other traded good, art has been historically subjected to import duties. For example, in the more enlightened years of the 19th century, art escaped high tariffs in America because the government viewed art as an important cultural good. At other times, though, tariff revenue was considered more important than free intellectual property.[6]
Highlights of Official Treatments of Imported Paintings and Sculpture in the US, 1789–1865[6]
Year
Duty (%)
Context of change, exemptions
1789
5
1790
10
A general increase in duties was prompted by revenue requirements
1800
12.5
Upward revisions were made to "defray expenses in relation to the Barbary States".
1812
30
Duties were more than doubled to finance the war with Britain
1816
15
Imports of "any society incorporated for philosophical or literary purposes or for the encouragement of the fine arts" were placed on the free list.
1824
15
Protectionist pressures generated advances in duties, overall, but duties on imported art were not changed.
1832
0
Tariff Act of 1832: All paintings and sculpture were placed on the free list.
1841–1842
20
Overall increase in rates was driven by needs of an empty Treasury. Though art duties were re-imposed, the "productions of American artists residing abroad" were added to the free list, along with imports of nonprofit cultural institutions.
1846
0
All paintings entered free when imported as an object of taste and not of merchandise.
1861
10
The requirements of the Civil War finance elevated overall rates.
During World War II, neutral Switzerland became the primary trafficker of art on the European continent. Most "degenerate" works of art that the Nazi government purged from German museums were sold there, where they largely entered black markets. Since the war ended, there has been a massive, ongoing effort to recover all of these works. For fifteen years following the war, 45,000 pieces were returned to France, mostly to Jewish owners.[7]
Today, almost every country in the world has restrictions and regulations on the export of cultural property.[4] Currently, most art auctions are facilitated on online sites such as eBay and Lauritz.com.[5]
Economic theory of art trade
Fine art proves complicated for economists to analyze, mostly because trade in unique art is in large part trade between consumers – the "secondary market" – rather than the "primary market" trade between the producer (artist) and the consumer.[2] For example, when a museum buys a sculpture from a private collector, the exchange is between two consumers and considered a transaction in the secondary market because neither of them produced the sculpture. It is more complicated for economists, then, to capture these transactions in their data.[2]
Comparative advantage is also more difficult to pinpoint in the case of cultural goods. There is a certain degree of cultural nationalism of art,[8] making some nations reluctant to part with their cultural property. Additionally, relative advantage cannot simply be calculated by the marginal cost of producing a unit of art, since aesthetic value plays so heavily into its price.[2]
Trade theory demonstrates how much and at what price countries trade goods if they have different endowments or different preferences. But this model is not very useful because of retentive nationalism:[9] a country that is relatively less endowed with art-producing resources will not stop producing simply because they can import art from abroad at cheaper prices.[2]
Determination of prices
Traditional trade theory treats art as a homogeneous, non-differentiated good, which is where it fails to reliably predict trade trends.[2] Unique art is valued precisely because of its uniqueness. Since each piece of art is different, and because each piece does not appear on the market very often, the determination of changes in market value prove difficult to determine.[2]
Economists use the hedonic regression (HR) estimation method to calculate prices in art. This is used to predict prices based on various attributes of the artwork such as its dimensions, the artist, and the subject matter attended to.[10]
Protectionism vs. Liberalization
Protectionism is a nationalistic viewpoint that contends that a healthy cultural industry is necessary to assert national sovereignty and identity.[11] Countries with small domestic markets are often overwhelmed by imports from larger markets in which producers can make up their costs of production by dumping content abroad. America is the largest exporter of artwork in the world, and English speaking countries are especially vulnerable to American imports.[3] Protectionists view this as a modern form of American imperialism, which reduces cultural diversity when national industries are unable to compete.[11]
Protectionism is less concerned with direct economic interest as it is with preserving cultural integrity. Australian economist David Throsby argues that investment in "cultural capital" may be necessary for the sustainability of a culture.[12]Paul M. Bator, who helped negotiate and draft the UNESCO convention on the International Trade of Art, argues that larger countries are responsible for the cultural interests of smaller ones. He explains in The International Trade in Art that "art-rich countries should create tax and other financial and psychological incentives to persuade those with important antiquities and archaeological objects to keep them at home".[4]
Proponents of liberalization in international art markets stress that open markets contribute to efficient production and distribution of cultural products.[11] Reliance on competitive market forces also frees creative individuals from the hindrance of government oversight.[11] Many special characteristics of cultural products – the lack of rivalry in content, economies of scale, and agglomeration economies – enhance the case for opening markets. Protection raises rather than lowers domestic prices, which detracts from consumer welfare.[11]
The "commodification objection" is the reluctance to classify an important cultural good as a simple trade commodity, and is frequently cited by cultural protectionists.[9] Those who advocate openness believe that free-market nations can provide the most effective political force for development of an active market. This argument diametrically opposes Bator's: free-trade advocates contend that large countries are better suited to help smaller nations finance organization of their cultural resources for more effective participation in international trade.[11]
The issue of the illicit art trade also factors into the debate. In terms of value transferred, the illegal trafficking of art ranks in black market activities second only to narcotics.[13] More problematic than the actual theft of the work is its subsequent transport, which proves difficult to prosecute since most paintings are easily concealable. By maintaining an open market, liberalists argue that much of the illicit trade of art can be eliminated.[9]
Largest countries by total trade in art
The following tables list the top world import/export values, according to data from the UN Comtrade database using SITC code 8960. The sums here are greater than those included in HS 9701 (works done exclusively by hand) because the SITC classification includes works such as antiques, stamps, and sculpture that are not captured in the HS definition.[3]
Top World Importers in 2010
Country
Trade Value
United States
6,201,785,637
United Kingdom
4,214,309,059
Switzerland
1,656,723,908
China, Hong Kong SAR
782,230,445
France
562,109,395
Other Reporters
2,881,571,576
Total Import
16,298,730,020
Top World Exporters in 2010
Country
Trade Value
United States
6,344,171,701
United Kingdom
5,178,104,954
Switzerland
1,229,904,687
France
959,773,572
Germany
860,247,165
Other Reporters
2,332,793,409
Total Export
16,974,995,488
Largest exporters and importers of art to and from the USA
The United States both imports and exports the greatest value of art. The following tables use data from HS code 9701 code to rank the USA's biggest trading partners in art.[14]
A tariff is a tax imposed by the government of a country or by a supranational union on imports or exports of goods. Besides being a source of revenue for the government, import duties can also be a form of regulation of foreign trade and policy that taxes foreign products to encourage or safeguard domestic industry. Protective tariffs are among the most widely used instruments of protectionism, along with import quotas and export quotas and other non-tariff barriers to trade.
Protectionism, sometimes referred to as trade protectionism, is the economic policy of restricting imports from other countries through methods such as tariffs on imported goods, import quotas, and a variety of other government regulations. Proponents argue that protectionist policies shield the producers, businesses, and workers of the import-competing sector in the country from foreign competitors. Opponents argue that protectionist policies reduce trade and adversely affect consumers in general as well as the producers and workers in export sectors, both in the country implementing protectionist policies and in the countries protected against.
A grey market or dark market is the trade of a commodity through distribution channels that are not authorized by the original manufacturer or trade mark proprietor. Grey market products are products traded outside the authorized manufacturer's channel.
In Marxist philosophy, the term commodity fetishism describes the economic relationships of production and exchange as being social relationships that exist among things and not as relationships that exist among people. As a form of reification, commodity fetishism presents economic value as inherent to the commodities, and not as arising from the workforce, from the human relations that produced the commodity, the goods and the services.
An export in international trade is a good produced in one country that is sold into another country or a service provided in one country for a national or resident of another country. The seller of such goods or the service provider is an exporter; the foreign buyer is an importer. Services that figure in international trade include financial, accounting and other professional services, tourism, education as well as intellectual property rights.
The terms of trade (TOT) is the relative price of exports in terms of imports and is defined as the ratio of export prices to import prices. It can be interpreted as the amount of import goods an economy can purchase per unit of export goods.
Non-tariff barriers to trade are trade barriers that restrict imports or exports of goods or services through mechanisms other than the simple imposition of tariffs.
A parallel import is a non-counterfeit product imported from another country without the permission of the intellectual property owner. Parallel imports are often referred to as grey product and are implicated in issues of international trade, and intellectual property.
Unequal exchange is used primarily in Marxist economics, but also in ecological economics, to denote forms of exploitation hidden in or underwriting trade. Originating, in the wake of the debate on the Singer–Prebisch thesis, as an explanation of the falling terms of trade for underdeveloped countries, the concept was coined in 1962 by the Greco-French economist Arghiri Emmanuel to denote an exchange taking place where the rate of profit has been internationally equalised, but wage-levels have not. It has since acquired a variety of meanings, often linked to other or older traditions which perhaps then raise claims to priority.
Coffee is a popular beverage and an important commodity. Tens of millions of small producers in developing countries make their living growing coffee. Over 2.25 billion cups of coffee are consumed in the world daily that amounts to 2.5 cups of coffee consumed per person on average. Over 90 percent of coffee production takes place in developing countries—mainly South America—while consumption happens primarily in industrialized economies. There are 25 million small producers who rely on coffee for a living worldwide. In Brazil, where almost a third of the world's coffee is produced, over five million people are employed in the cultivation and harvesting of over three billion coffee plants; it is a more labor-intensive culture than alternative cultures of the same regions, such as sugar cane or cattle, as its cultivation is not automated, requiring frequent human attention.
An import is the receiving country in an export from the sending country. Importation and exportation are the defining financial transactions of international trade.
Economics of the arts and literature or cultural economics is a branch of economics that studies the economics of creation, distribution, and the consumption of works of art, literature and similar creative and/or cultural products. For a long time, the concept of the "arts" were confined to visual arts and performing arts in the Anglo-Saxon tradition. Usage has widened since the beginning of the 1980s with the study of cultural industry and the economy of cultural institutions. The field is coded as JEL: Z11 in the Journal of Economic Literature classification system used for article searches.
In classical political economy and especially Karl Marx's critique of political economy, a commodity is any good or service produced by human labour and offered as a product for general sale on the market. Some other priced goods are also treated as commodities, e.g. human labor-power, works of art and natural resources, even though they may not be produced specifically for the market, or be non-reproducible goods. This problem was extensively debated by Adam Smith, David Ricardo, and Karl Rodbertus-Jagetzow, among others. Value and price are not equivalent terms in economics, and theorising the specific relationship of value to market price has been a challenge for both liberal and Marxist economists.
The revealed comparative advantage is an index used in international economics for calculating the relative advantage or disadvantage of a certain country in a certain class of goods or services as evidenced by trade flows. It is based on the Ricardian comparative advantage concept.
In economics, gains from trade are the net benefits to economic agents from being allowed an increase in voluntary trading with each other. In technical terms, they are the increase of consumer surplus plus producer surplus from lower tariffs or otherwise liberalizing trade.
Used clothing is frequently sold internationally, often in bulk and from developed countries to emerging markets. Until the mid 19th century, second hand clothing was an important way of acquiring clothing. Only through industrialization, mass production, and increasing income, was the general public able to purchase new, rather than second-hand, clothing. Trade in secondhand clothing represents around 0.5% the value of the trade in new clothes, and around 5% by weight.
Comext is a statistical database on trade of goods managed by Eurostat, the Statistical Office of the European Commission. It is an important indicator of the performance of the European Union (EU) economy, because it focuses on the size and the evolution of imports and exports.
The World Integrated Trade Solution (WITS) is a trade software provided by the World Bank for users to query several international trade databases.
The Observatory of Economic Complexity (OEC) is a data visualization site for international trade data created by the Macro Connections group at the MIT Media Lab. The goal of the observatory is to distribute international trade data in a visual form. At present the observatory serves more than 20 million interactive visualizations, connecting hundreds of countries to their export destinations and to the products that they trade.
Trade data, or import and export statistics, consist of statistical data about international trade, typically organized by time period, country, and commodity.
1 2 3 Bator, Paul. (1981). The International Trade in Art. University of Chicago Press.
1 2 3 4 de Marchi, Neil, & Miegroet, Hans. (2006). "The History of Art Markets". Duke University. Ginsburgh, Victor. (2006). Handbook of The Economics of Art and Culture.
1 2 Barber, William J. "International Commerce in the Fine Arts and American Political Economy 1789–1913". De Marchi, Neil, & Craufurd, D.W. Goodwin. (1999). Economic Engagements with Art. Duke University Press.
↑ Ginsburgh, Victor. (2006). "The Computation of Prices Indices". Handbook of The Economics of Art and Culture. Universite Libre de Bruxelles.
1 2 3 4 5 6 Acheson, Keith, & Maule, Christopher. (2006) "Culture in International Trade". Ginsburgh, Victor. (2006). Handbook of the Economics of Art and Culture.
↑ Throsby, David. (1999). "Cultural Capital". Journal of Cultural Economics.
↑ Data compiled from tariff and trade data from the U.S. Department of Commerce and the U.S. International Trade Commission. http://dataweb.usitc.gov/
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