National Jeweler - Burmese ruby ban takes effect

National Jeweler - Burmese ruby ban takes effect
Feds issue new codes for non-Burmese stones
By Teresa Novellino
September 30, 2008

Washington, D.C.--A long-expected U.S. ban on gemstones from Myanmar took effect on Monday, 60 days from the date that President Bush signed the Tom Lantos Block Burmese JADE Act of 2008 into law.

Gems from Myanmar (formerly known as Burma) that entered the country prior to the ban can still be bought and sold in the United States, at least as long as supplies last.

The U.S. Customs and Border Protection agency has issued new, harmonized tariff system codes for all non-Burmese rubies and jadeite imported into the United States to distinguish those goods from the ones that have been banned, according to a press release issued on Monday by the Jewelers Vigilance Committee (JVC).

The new codes, which encompass both rough and polished gemstones covered by the act, as well as jewelry containing ruby and jadeite, can be obtained by contacting the JVC.

"The Tom Lantos Block Burmese JADE Act of 2008 has a serious and long-term impact on U.S. jewelry manufacturers who import jadeite and rubies," said Cecilia Gardner, the JVC's president, chief executive officer and general counsel, in the release. "Use of the new Customs codes should begin immediately for all imports from non-Burmese countries of ruby and jadeite."

U.S. lawmakers passed the JADE Act to encourage democratic reforms in Myanmar, where the ruling military junta has a long history of human rights violations. After the junta's violent crackdown against the nation's protesting Buddhist monks last year, news headlines blamed "blood rubies" sold via state-run auctions for funding the regime.

The act also bans gems that originate in Myanmar but are processed, treated or manufactured into jewelry in third-party countries such as Thailand. This restriction closes a U.S. Customs loophole that allowed Myanmar-originating stones into this country, despite a federal ban that dated back to 2003.

One issue that has concerned gemstone dealers is whether or not stones imported before the ban could be exported for cutting or jewelry manufacturing purposes, and then re-imported.

"My best impression is that it would not be wise right now to export Burmese rubies that are now in the United States," Gardner told National Jeweler. "I wouldn't say that [the possibility of being able to export and re-import Burmese rubies] won't happen in the future, but my advice at the moment is that I would not advise anyone in the United States to move rubies out of the country right now."

The Customs office has created codes identifying all rubies and jadeite (such codes did not exist before), and while the codes identify the type of gemstones, they do not include country of origin. That means that even if the stones are shipped from Thailand, for example, it is unclear how a U.S. importer could prove to Customs that the stones were not originally mined in Myanmar, Gardner said.

The U.S. Customs office was supposed to advise the JVC on those details but had not done so as of Friday, she said.

AGTA Chief Executive Officer Douglas Hucker said he has received numerous questions from gemstone-dealer members about the re-importation issue.

"We still don't know specifically what the Customs department is going to require," he said. "We do know there's going to have to be documentation of origination."

Hucker said the information should be coming soon.

"Within the next few days, the White House is supposed to be providing further documentation on how to implement the ban, and what kind of paper trail would be needed to get the non-Burmese rubies and jadeite into the United States," Hucker said.

An estimated 90 percent of the world's rubies are mined in Myanmar, and stones from the Mogok region, especially, are coveted for their clarity and a hue often described as "pigeon's blood red."

But rubies are also mined from other countries, including Madagascar, Tajikistan, Tanzania, Thailand and, recently, even Greenland.

The JVC, together with the American Gem Trade Association (AGTA), have been working with various government agencies, including Homeland Security, U.S. Customs, the State Department and the Office of Foreign Assets Control, to assist them in developing protocols for non-Burmese ruby importers.

Rubies at retail On the retail front, companies such as Tiffany and Co. and Cartier stopped selling Burmese gemstones years ago because of Myanmar's human rights violations, and Jewelers of America has applauded the act's passage, encouraging member retailers to support international human rights by steering clear of the stones.

AGTA retail member Malcolm Koll, owner of Charles Koll Jewellers in San Diego, Calif., says he is not concerned about procuring rubies in the immediate future but thinks the ban could impact retailers later on.

"I think there's a fair amount of inventory in the country already," says Koll, who buys rubies from Chicago-based Fai Dee Inc., which specializes in the high-quality rubies he seeks. So far, Koll says he has not seen prices go up.

But he is concerned that the well-meaning legislation won't really be effective.

"I'm from South Africa, and being from there, I do understand that sanctions don't work," he says. "I'm afraid that we'll be buying Burmese goods that just aren't labeled [as such]."

Still, colored gemstone jewelry overall makes up about 10 percent of his sales, and rubies represent a slim 1 percent.

"If this were a ban on blue sapphires, I would be more concerned," Koll says.

The ban will be a boon for dealers with a deep stock of Burmese rubies, and for those who specialize in estate pieces featuring older stones.

"I have enough goods to last awhile," says William Hakimi of A. Hakimi and Sons in New York. "What is going to happen is that [rubies] are going to become more rare and the prices are going to go up."

The ban could also provide an opening for companies such as Canada's publicly traded True North Gems, which has exclusive rights to mine rubies over an 823-square-kilometer area in the southwest region of Greenland. The plan is to offer rubies that are conflict-free and fair trade, in sizes that range from melee up to as much as five carats.

Josh Hall, vice president of Pala International, based in Fallbrook, Calif., says that some retailers will avoid buying older Burmese inventory, even though it is legal.

"Several jewelers that I work with say it cannot be from Burma," he says. "They want to be in full compliance with [the spirit] of the law."

Pala, which is known for carrying a wide array of gemstones and does not specialize in rubies, has purchased some rubies from Tanzania, but Hall says most of the material tends to be pinkish and included. In other words, it's no match for Burmese red.

"Some location is going to have to fill that void, and let's face it, everybody's going to be losing some sales," he says.

Editor's note: This story first appeared in the September 2008 print edition of National Jeweler and was updated on Sept. 30 to reflect new developments.