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The panel, which includes senior Trade figures as well as academics and a legal expert, is expected to report back by the end of November – four months after the parliamentary select committee looking at the same issues reports its findings and makes recommendations on what should be done.

Foremost among the panel’s challenges will be to decide how the Government can best steer a course between new legislation, which might damage the legitimate Trade in certain areas, and effective policies that enhance existing laws without adding to the statute book. Key points of debate will include whether the Trade should be licensed and if it would be viable to make it illegal to deal in works of art that do not have a detailed provenance.

Announcing the setting up of the panel, Mr Howarth said that if the illicit trade problem was as bad as some experts claimed, then the Government was going to have to be very tough indeed in cracking down on it, and in reply to concerns that the police did not have enough officers or resources to enforce any new rules or regulations the Government might introduce, he said: “We will need to have the proper resources.”

The panel, which is chaired by Professor Norman Palmer, Professor of Commercial Law at University College, London and a leading expert on the law as it applies to art and antiques, will first try to establish the extent of the illicit trade. It was explained that it is becoming increasingly urgent to do this because major drug dealers have started using works of art as convenient methods of payment. But the Minister also focused on the need to preserve archaeological sites across the world which he said were being systematically looted.

Most, if not all of the panel have already given evidence to the parliamentary select committee as expert witnesses.

As well as Professor Palmer, the panel comprises: Dr Peter Addyman, chairman of the Standing Conference on Portable Antiquities and director of the York Archaeological Trust; Dr Robert Anderson, director of the British Museum; Anthony Browne, chairman of the British Art Market Federation; James Ede, chairman designate of the Antiquities Dealers’ Association ; Joanna van der Lande, former chair of the Antiquities Dealers’ Association; Professor Lord Renfrew of Kaimsthorn, director of the McDonald Institute for Archaeological Research, University of Cambridge; and Anna Somers Cocks, editor of The Art Newspaper.

Mr Howarth said it was too early to predict the extent of the panel’s findings, but it is clear from the evidence put before the parliamentary select committee already that the panel’s members are likely to be divided on just how far any proposed legislation should go.