Art MarketInsight [Aug 2009]

The end of the Geneva Free Port: a boon for Asia [Aug 09]

The tightening of Swiss legislation concerning the Geneva Free Ports represents a windfall for the Asian market. And for the French market…?
The company Geneva Free Ports & Warehouses Ltd, which presented itself as a “genuine offshore base at the heart of Europe”, lost its precious status as an extra-territorial zone in May 2009 and become “Swiss regime storage”. According to certain sources of information, the company would now be subject to strict controls and absolute transparency obligations whereas, in Asia, the legislation remains very flexible, notably regarding the non-disclosure of the nature of goods and the identity of owners.
Auction houses, galleries and art dealers regularly use the warehouses located on the outskirts of Geneva. Advantages of the city are triple. Indeed, strategic location in Europe, relative discretion concerning the goods stocked and temporary suspension of customs duties and tax during the storage, use to constitute many strong assets for goods said to be sensible.

The tightening of Swiss Law implies accurate and obligatory inventories giving a full description of each work, its market value, the identity of the owner and detailed traceability in order to avoid the storage of illicit goods, notably works of art pillaged during the second world war and antiques from unlawful excavations. The Art Loss Register, a database listing all stolen objects in the world, has become an indispensable tool for the Swiss customs authorities.

Just a few weeks after these changes were implemented in Geneva, the French authorities reacted opportunistically with an announcement to the following effect: France plans to open a free port on the île Seguin (in Paris) that will exonerate art works from import duties… providing the works do not leave the European Union. This move is clearly an attempt to attract international dealers and to strengthen France’s very weakened position on the international art market. In 2007, France lost its third place to China.
Since 2005, the dynamism of the Asian art market has been attracting dealers and auctioneers from around the world. Indeed, apart from the two main Chinese auction houses, Poly International Auction, China Guardian and Shangai Hosane Auction, the Anglo-American auction houses Christie’s, Sotheby’s and Bonhams, and the French house Artcurial, have all set up shop in Asia.
European restrictions applied to free ports can only have the effect of bolstering Chinese and Indonesian markets. In fact, Singapore is planning to open the largest free port in the world in December 2009, designed specifically for the storage and private viewing of collectable objects, notably, works of art. The geo-political mutation of the art market is continuing … and should be monitored very closely.