US gems group eyes trade links post sanctions
The American Gem Trade Association is in Myanmar to assess the gems sector and re-establish trade links ahead of an end to the US ban on imports.
THE American Gem Trade Association (AGTA) arrived in Myanmar for the first time this week to assess the gems sector and build trade relationships ahead of an anticipated end to the US sanctions regime, which would allow the legal import of Myanmar rubies and jade.
The association’s president, Jeffrey Bilgore, said the mission had been planned before US President Barack Obama’s announcement on September 14 that the US would lift all remaining financial and trade sanctions against Myanmar.
But the fact that a commitment to remove sanctions had been made in advance of the association delegation’s arrival “removes the appearance of crafting a report to meet that goal”, the AGTA said in a release on September 29.
“The efforts [of the mission] are to show what the reality is on the ground in the gem sector,” the statement said.
Once the sanctions are lifted, the US can technically start importing gemstones right away, said Mr Bilgore. “However, it’s going to be a bit of a process in terms of the supply chain, and that’s something we’re here to look at and help develop,” he told The Myanmar Times.
The US president has yet to sign the executive order lifting sanctions, but Peter Kucik, a sanctions expert at US-based consultancy Inle Advisory Group and former senior sanctions adviser at the US Treasury’s Office of Foreign Assets Control, said the move was due very soon.
“We understand the announcement is imminent,” he said. “The president said ‘soon’, and you can read between the lines that there is a degree of urgency.”
In addition to the challenge of building gems sector supply chains, international human rights organisations and NGOs also investigate the activities of US firms operating in Myanmar closely. It is realistic to expect “huge scrutiny” of any US imports of Myanmar gemstones, said Mr Kucik.
The jade sector still “serves as a treasure chest for junta-era figures”, according to NGO Global Witness, which last year estimated that the country’s illicit jade trade was worth up to US$31 billion in 2014 alone.
Mr Bilgore said the AGTA was not focused on the jade sector, which is “not significant in the US”.
But the gems and jade sectors are still conflated, said Mr Kucik.
“Jade is synonymous with gems for many reasons, but one is that the JADE Act lumped the two together,” he said. “There will be scepticism until people are able to show otherwise.”
The JADE Act was passed in 2008 and was designed to prohibit the import of certain gemstones – namely jadeite and rubies – from Myanmar. Although the act expired in 2013, the prohibition was then extended by an executive order.
Mr Bilgore said the US was “very concerned with transparency” and that from meetings with Myanmar businesspeople, this concern was clearly shared across the local gems sector.
The AGTA mission met with the Yangon Region Gems and Jewellery Entrepreneurs Association, and peak business body the Union of Myanmar Federation of Chambers of Commerce and Industry (UMFCCI).
“Myanmar’s fortune is changing,” said UMFCCI vice chair U Maung Maung Lay. “But all business needs to be transparent, official and legal. The US gems market is one of the biggest in the world and Americans like to comply with the law.”
U Aung Kyaw Win, a prominent local jeweller and vice chair of the Myanmar Gems and Jewellry Entrepreneurs Association (MGJEA), said it was crucial the gemstones sector promotes socially responsible and sustainable business.
US importers, meanwhile, will continue to face strong due diligence requirements even when the import ban is lifted.
“There are OECD guidelines that are part of American laws,” said Mr Bilgore.
The Organisation for Economic Cooperation and Development has detailed due diligence recommendations on responsible mineral supply chains to identify potential connections with conflict, bribery, tax evasion and money laundering. The US is one of the countries where the guidelines have been integrated or referenced in the national legal framework, according to the OECD.
In addition to making sure that the gemstone sector promotes responsible and sustainable enterprises, U Aung Kyaw Win said it was important that Myanmar moves up the value chain when it comes to exports.
“The total annual revenue from Myanmar’s high-quality gemstone market is only $20 million,” he said. “It’s around $1 billion in Thailand.”
The previous government gave priority to mining and selling raw gemstones, he added. But his association has drawn up a master plan aimed at developing value-added gemstone enterprises, he said.
“The new government needs to provide help [to develop] value-added gem enterprises so [Myanmar] can compete in the international market,” U Aung Kyaw Win said. “It needs an independent organisation to supervise the gems sector, which includes reviewing the import-export process and taxation to identify practices that could enable illegal trading.”
Customers check uncut rubies at the gems market in Mogok, north of Mandalay, in April.