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.
Decorative art as a trade commodity The trade commodities included in the definition of "visual art" include the following: painting, drawing, sculpture in various materials, printmaking, photography, maps, performance art, installation art, mail art, assemblage art, textile arts, fashion design, video art, digital art, and product design. These works are non-functional, emotional, social, political, traditional, and cultural statements, and in comparison to other goods, are not greatly affected by commercial-sector constraints. Though visual art is a physical, hand-made good, it is often culturally rooted and created for aesthetic appeal. Therefore, art is considered intellectual property. 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. 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".
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. 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. 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. 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. 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.
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. Today, almost every country in the world has restrictions and regulations on the export of cultural property. Currently, most art auctions are facilitated on online sites such as eBay and Lauritz.com.
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. 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. Comparative advantage is also more difficult to pinpoint in the case of cultural goods. There is a certain degree of cultural nationalism of art, 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. 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: 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.
Determination of prices Traditional trade theory treats art as a homogeneous, non-differentiated good, which is where it fails to reliably predict trade trends. 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. 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.
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