US gems group eyes trade links post sanc­tions

The Myanmar Times - - Front Page - CHAN MYA HTWE chan­myahtwe@mm­ – Ad­di­tional re­port­ing by Steve Gil­more, trans­la­tion by Thiri Min Htun

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.”

Photo: EPA

Cus­tomers check un­cut ru­bies at the gems mar­ket in Mo­gok, north of Man­dalay, in April.

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