RAPAPORT... To penalize the repressive Burmese ruling junta for its human rights abuses, the U.S. government has embargoed products coming from Burma since 2003. But for gem dealers, the broad language of those earlier sanctions permitted the importation of Burmese-origin gems that were cut or polished outside of Myanmar, the official name of Burma, and imported through third-party countries.
President George Bush on July 30, 2008, signed into law the Tom Lantos Block Burmese JADE (Junta’s Anti-Democratic Efforts) Act, effectively banning the import of all precious Burmese gemstones. The main impact will be on so-called Burmese rubies, but the country also is a leading source of jade and jadeite.
The abysmal behavior of Myanmar’s ruling junta in the wake of recent natural disasters in that country may have been the “last straw” in hastening passage of this bill. According to Irrawaddy News, which covers Burma and Southeast Asia, Adam Szubin, director of the U.S. Office of Foreign Assets Control (OFAC) asserted, “The regime’s refusal to protect and allow relief to reach the Burmese people as Cyclone Nargis devastated their country on May 2 is but another example of the regime’s heartless neglect of its people.”
The new JADE Act ban closes the legal loophole of the previous embargo by applying to all Burmese-origin jadeite and ruby, including those that have undergone “substantial transformation” in Thailand or elsewhere. Because this bill is so expansive, the first order of business for jewelers is to try to understand the compliance requirements of the law. When the regulations take effect on
September 28 — 60 days after the July 30 bill signing — all nonBurmese ruby and jade entering the U.S. must be accompanied by officially validated documentation certifying the country of origin where they were mined or extracted, as well as total carat weight and value. Since these are recent developments, there is no universal document or documentation procedure yet available for professionals to substantiate their ruby or jadeite’s origin.
Check PointsCecilia Gardner, president and chief executive officer (CEO) of Jewelers Vigilance Committee (JVC), said while such a universal document does not currently exist, she believes the government agencies are working on it. “This will most likely be a ‘Kimberley Process-like’ system.” The JADE Act expresses that “the President should negotiate an international agreement similar to the Kimberley Process Certification Scheme” for diamonds, and Gardner is currently preparing a list of the countries that produce jadeite and rubies outside of Burma. “Of course, those countries would have to agree to participate in the negotiation of a Kimberley Process-like system.”
During the 60-day period before the law goes into effect, Peggy Jo Donohue. director of public affairs for Jewelers of America (JA), pledged, “We will ensure that our members clearly understand that when the regulations become effective, no rubies or jade mined in Burma may be imported legally into the U.S. Jewelers should seek written assurance from their suppliers that they will not knowingly supply these banned gems.”
Gemstones brought in for personal use remain exempt from this ban. Also exempt is Burmese ruby or jadeite that was in the U.S. prior to the bill’s signing and then exported from the U.S. and subsequently re-imported into the U.S. by the same person — providing that those stones have not been improved in condition or value while outside the U.S., according to JVC’s website. Burmese goods that can be proven to have been brought into the U.S. prior to this legislation may be sold legally.
“With the new import regulations required by this law, geographic origin determinations take on a new and broader meaning,” cautions Christopher Smith, vice president and chief gemologist of American Gemological Laboratories (AGL). Many jewelers believe that Burmese ruby can be “absolutely identified” by its particular internal characteristics. While that assertion is partially true, it’s not the whole story. “With regard to Burmese rubies, there are three deposits that are the primary producers today: the Mogok Valley, Mong Hsu and Nant-yar-zeik. A number of indicators or ‘signatures’ can be identified that distinguish and separate ruby from these deposits as compared to other ruby sources around the world. These indicators are various inclusion and spectroscopic features, internal growth structures and chemical composition.”
Still, despite some unique characteristics, Smith points out, “the rubies from Burma form in what we describe as a marble-type deposit. Other marble-type ruby deposits exist in Afghanistan, Pakistan, Tajikistan, Tanzania, Vietnam and elsewhere. Depending upon the quality of the ruby, its properties and characteristics, distinguishing these sources from Burma ruby can range from straightforward to very difficult.”
ConsequencesThe next order of business will be to assess the long-term ramifications of this legislation. There is general agreement that some strengthening of the ban was necessary because the Burmese regime was very effective in concealing the origin of its gemstones and in circumventing the intent of the 2003 legislation. The new JADE Act cites as evidence the fact that only 3 percent of the rubies entering the U.S. are claimed to be of Burmese origin, even though industry observers say Burmese rubies account for the great majority of the world’s ruby supply, with some estimates of Burma’s share as high as 90 percent.
Still, there is major disagreement as to whether the JADE Act is a wonderful coup for moral justice or an ineffective gesture. The bill’s obvious intent is to diminish the hundreds of millions of dollars in annual gemstone trade revenue used by the ruling junta to finance its activities, which the legislation says totaled $300 million in 2006. But the ban’s negative impact will also be felt by the artisanal miners and local dealers in Burma, most of whom are women with few income-producing alternatives. Some insiders reject the argument that the junta actually controls “that much of the total output”and suggest that the statistics are slanted to support that stance.
With the stakes so high for everyone along the pipeline, the issue is bound to be galvanizing. Douglas Hucker, CEO of American Gem Trade Association (AGTA), says that it’s too early to assess the impact that this ban will have on all parties. “People are trying to earn a living in a region where few other opportunities exist. In the end, the bill may render devastating consequences for small miners within Burma, at least in the short term. Burmese ruby is not the enemy.” Sanctions are meant to hurt “but my concern,” says Hucker, “is that this bill is going to hurt the wrong people — like the artisanal miners — instead of the junta.”
In a statement by the International Colored Gemstone Association (ICA), Andrew Cody, ICA president, voiced concerns that “Those who will suffer are the very people that the legislation intended to protect.” He observed that the better way to implement these sanctions would have been to involve gemstone associations such as ICA in studying the potential collateral damage to innocent parties. Still, ICA’s statement reiterated that its policies are in line with all national and international associations against the repression of human rights and prodemocracy movements in Myanmar. ICA has asked its members to stop buying Burmese gemstones from any government sources or from entities that support those endeavors.
Speaking from Bangkok, Bill Larson, president of Pala International, offers his view. “Here in Thailand, our Asian friends feel that the ruby act will affect the Thais and not the Burmese government. These are independent miners who supply the Thais and the dealers all come to Thailand unofficially. So it does not enrich the Burmese government. Who will be affected are the thousands of Thais in the cutting and jewelry industry.”
Couture designer Donna Distefano notes that “Our customers are generally not apprised of the human rights violations in Burma, nor are they aware of the recent ban on imports, so it’s up to us to educate the client. Even prior to the ban, we conducted rigorous screening before buying our ruby.”
“While I think the purpose of the JADE Act is noble and just, the legislation itself is not particularly well thought out, nor is it likely to achieve its desired outcome,” says
Pramendra Baid of La Pierre Precieuse Inc., in Montreal. Baid believes that dealers in Burmese goods may be tempted to import them in advance of the ban enforcement, resulting in a temporary spike in Burmese ruby imports and a price increase. The real problem, Baid predicts, will be in serving the upper tier of the market because ruby from other countries lacks the richness of color and clarity of fine Burmese Mogok rubies. Baid foresees a direct impact on Canadian-based importers and manufacturers who sell to the U.S. because “origination documentation for previously purchased rubies — both Burmese and nonBurmese — will be difficult, if not impossible, to obtain.”
In the end, though, JA’s Donohue agrees that “Until genuine democratic reform becomes a reality in Burma, such sanctions are necessary to send a clear message from American jewelers to the ruling military regime.”
Certifying NonBurmese GemstonesTo assure the effectiveness of the ban on Burmese gemstones and the “legitimacy” of nonBurmese jadeite or rubies that reach the market, the legislation specifically requires the following.
With respect to exportation from the country of jadeite or rubies in rough form, a system of verifiable controls on the jadeite or rubies from mine to exportation demonstrating that the jadeite or rubies were not mined or extracted from Burma, and accompanied by officially validated documentation certifying the country from which the jadeite or rubies were mined or extracted, total carat weight and value of the jadeite or rubies.
With respect to exportation from the country of finished jadeite or polished rubies, a system of verifiable controls on the jadeite or rubies from mine to the place of final finishing of the jadeite or rubies demonstrating that the jadeite or rubies were not mined or extracted from Burma, and accompanied by officially validated documentation certifying the country from which the jadeite or rubies were mined or extracted.
With respect to exportation from the country of articles of jewelry containing jadeite or rubies, a system of verifiable controls on the jadeite or rubies from mine to the place of final finishing of the article of jewelry containing jadeite or rubies demonstrating that the jadeite or rubies were not mined or extracted from Burma, and accompanied by officially validated documentation certifying the country from which the jadeite or rubies were mined or extracted.
Article from the Rapaport Magazine - September 2008. To subscribe click here.