Like most countries, Canada has a cultural property regime designed to protect art and objects of cultural significance.  Inspired by UNESCO Convention (1970), cultural property must get clearance from the Canadian Cultural Property Export and Review Board (CCPERB) before it leaves the country.  Outdated elements of this important system are creating challenges for Canadian art dealers and estates.

Under the Canadian Cultural Property Export and Import Act (1985), sellers and buyers of culturally significant art and objects are obliged to get an export permit.  There are eight categories of objects – which must be at least 50-years-old — on the control list and three grades of permits.  The Permanent Export Permit, which focuses on international sales, is the most relevant for dealers and estate planning.

At a recent forum hosted by the National Gallery of Canada, David Heffel, co-owner of Canada’s largest Canadian art auction house, argued that the current system disadvantages Canadian dealers and auctioneers.  A foreign dealer or auction house can make an application for a Permanent Permit prior to the sale, in expectation that the buyer will be from outside Canada.  The same courtesy is not extended to Canadian dealers.  For example, an American buyer of a Lawren Harris painting at a Canadian auction house must apply to the CCPERB after they paid for the painting.  Buying from a Canadian auction house creates uncertainty that is absent if the same work was purchased in New York or London.

Mr. Heffel’s complaint is commercial in nature, but it speaks to Canada’s cultural and economic ambitions – and fairness for collectors.  Heffel’s international competitors have an advantage in both attracting works and providing confidence to collectors.  If Canada wants to position itself as an international art centre, market players need a level playing field.

There are also implications for collectors and executors hoping to realize maximum value for collections.  As recent record prices for paintings by Jean-Paul Riopelle ($7.4 million) and Lawren Harris ($11.2 million) suggest, Canadian art is becoming an increasingly valuable asset class.  Not all art goes to public galleries.  Increasingly there is interest from international buyers.  Liquidity in the art world is defined by the 3Ds: debt, divorce and death.  Death frees the greatest value and, in fairness, Canadian collectors should be able to deal with Canadian market players to maximize the value of their investments.

The Cultural Property regime was born in a period of defensive Canadian cultural nationalism.  As was appropriate at the time, the Federal Government put measures in protect and support Canadian arts and culture.  There is a growing sense that Canada – like France and the U.S. before it – should have the confidence to export its culture and expand its global influence.  The time has come for CCPERB to rethink its processes for issuing export permits to Canadian dealers and auctioneers in advance of completed sales.