Position paper on diamond terminology
The European Federation of Jewellery calls on the European Commission to develop a legislative proposal aiming to differentiate natural diamonds and synthetic diamonds and to ensure consumer protection through full product disclosure at both customs and retail level.
- The European Federation of Jewellery (EFJ) acknowledges the legitimacy of both natural diamonds and synthetic diamonds, but considers them to be different products. Therefore, synthetic diamonds should be considered a separate product category from natural diamonds, and not a replacement.
- The misuse of high financial and emotional value of natural diamonds leads to potential misleading and fraudulent advertising practices which undermines consumer protection.
- The EFJ welcomes any public and private initiatives helping consumers to make informed choices about the purchase of diamond jewellery. However, current initiatives do not provide a full, equal and thus efficient consumer protection.
- Consequently, the EFJ advocates the adoption of an EU legislation that, based on the ISO standard 18323 and existing CEN nomenclature, would:
- define the characteristics of a natural and synthetic diamond and fundamental differences between them.
- oblige the trade to accurately inform consumers about the jewellery product they are purchasing.
Diamonds are a unique creation of the Earth. Their lasting legacy – they were formed deep within the Earth from 1 to3 billion years ago and are not created by nature anymore – make them an exceptional natural product. Symbolism and history around diamonds is an important part of their value: they represent beauty, eternity, strength, love, commitment and they are commonly offered to mark a special personal event. According to a survey conducted in France in 2018, 81% of the French purchase a natural diamond for a special occasion in their lives. Beyond their financial value, diamonds have a significant emotional value since they are passed on from generation to generation, and are an integral part of the European history and culture.
The EFJ strongly believes that laboratory-grown diamonds, commonly also called synthetic diamonds, are legitimate but different products. Even if they have the same physical and chemical characteristics as natural diamonds, they are artificial replicas produced in an industrial and standardised way. The start of their production goes back to the first part of the 20th century. At that time, they were only used for industrial needs mainly in the automotive, aerospace, construction and healthcare sectors. Gem quality synthetic diamonds are a recent phenomenon of which the production has significantly risen over the last five years. This increase in production with potentially unlimited capacity has lowered the average manufacturing cost from €3500 per carat in 2008 to currently €100 per carat, mainly thanks to technological progress and scaling of volumes. The bulk of the synthetic production is being produced in Asia – notably in India, Singapore, China, but also in Russia and the US. Synthetic diamonds currently represent 2% to 5% of the global wholesale diamond market.
Owing to their lack of uniqueness and their mode of production, synthetic diamonds do not benefit from the same authenticity as natural diamonds and therefore cannot be considered substitutes. The fact that natural diamonds are a high value and prestigious product leads to misleading and fraudulent advertising practices. For instance, some operators intentionally use terminologies such as cultivated or above-ground diamonds instead of synthetic. We also notice that some other terms, namely ethical, ecological or sustainable are often wrongly used to qualify synthetic diamonds. These words completely mislead the consumers by making them think that they buy a natural, yet more ethical and environmentally friendly product with no justification of such claims. In reality, it is estimated that synthetic diamonds have a negative environmental impact that is 69% higher than natural diamonds on average mainly due to high emission and energy consumption levels. On the other hand, the natural diamond sector plays a key economic and social role in providing livelihoods to around 10 million people mainly in Africa and in India. It should also be stressed that thanks to the Kimberley Process (KP), 99,8% of the global supply of rough diamonds are traded by KP participants, including the EU, ensuring that they did not contribute to the fuelling of armed conflicts. And last but not least, the 8 largest producers of natural diamonds provide a global net benefit of more than 16 billion USD, infusing more than 6.8 billion USD into local businesses in diamond mining communities and 292 million USD into infrastructure and social programmes in those same communities. In this sense, the development of the EU jewellery industry relies on its reputational values and CSR practices within the global value chain to sustain the credibility of the product that is ultimately sold to consumers.
This confusing terminology can take place because of the current legal vacuum at the European level. The EFJ thinks that on top of the existing Unfair Commercial Practices Directive 2005/29, there is still a lot of potential for improvement of the legislative framework protecting the consumer from misleading advertising practices. The current patchwork goes against creating a level playing field at the European level and undermines the “high level of protection” that each European consumer is entitled to have.
At the International level, the ISO standard 18323, provides a series of descriptors to differentiate natural from synthetic diamonds and obliges the issuance of certificates to consumers. The added value of this standard is limited by the fact that it has to be transposed into national law to become mandatory. For the time being, only France has legislation related to the ISO standard 18323 in place. A 2002 decree requires calling diamonds which are not naturally produced “synthetic” and forbids the use of several words such as “cultivated”, “real”, and “cultured”. This regulation, however, has not defined penalties in case of breach and therefore suffers from a lack of enforcement capacity in terms of consumer protection. In other countries like Germany and Italy, there is no relevant legislative framework. In this case, the international sectorial guidelines,developed under the World Jewellery Confederation (CIBJO) and signed by the leading jewellery industry organisations, can be instrumental, but there is a clear lack of an enforcable legal framework with standardised agreed language that protects consumers.
As a result, consumers are in a vulnerable situation because they often lack knowledge on the difference between synthetic diamonds and natural diamonds in terms of origin and value. The impossibility to distinguish the two products by the naked eye does not help in this regard. While underlining that consumers are free to buy either natural diamonds or synthetic diamonds jewellery, the EFJ strongly advocates the necessity to provide full disclosure. This is key to ensure that consumers can make informed choices and avoid any deceptive purchases for a product offered on a special occasion, having therefore a strong emotional value. It is essential to maintain consumer confidence in diamond jewellery produced by world-renowned European brands.
A step in the right direction is the publication on the 31st of October 2019 of the new European customs code for synthetic diamonds. This code, introduced in the European combined nomenclature (Chapter 71) by the Commission Implementing Regulation 2019/1776, will enter into force as from 1st January 2020. It will be applied until 1st January 2022, when the HS6 customs code, which was adopted by the World Customs Organisation (WCO), will be applied at the European level. This crucial decision will put a halt to a legal loophole where rough diamonds could be illicitly declared as synthetic diamonds, thus circumventing the Minimum Requirements of the Kimberley Process.
While welcoming the acknowledgement of the difference between natural diamonds and synthetic diamonds by the European Commission through the new customs code, the EFJ is convinced that further steps still need to be taken to regulate the rapid emergence of volume- and cost-driven production of synthetic diamonds in the interest of consumers. This is why the EFJ urges the European Union to transpose the already existing ISO standard 18323 on diamond nomenclature into mandatory and enforceable EU legislation, ensuring that consumers will be duly informed. The new legal framework advocated by the EFJ would aim at differentiating natural from synthetic diamonds by clearly disclosing their respective core characteristics and origin by defining the terminology of each product. In this regard, the EFJ is in favour of an obligatory written disclosure of the origin of diamonds sold at both wholesale and retail level. As far as the elements of the definition are concerned, the EFJ is asking to align legislation with the ISO standard, more specifically:
- A diamond comes by definition from the Earth. If not further qualified, a diamond means a natural diamond.
- When selling a synthetic diamond, it is forbidden to use misleading terms such as genuine, natural, precious, cultivated or cultured.
- A synthetic diamond must always be unambiguously defined as synthetic, laboratory-created or laboratory-grown.
In conclusion, the EFJ recalls that with Antwerp, the EU is home to the world’s largest diamond trading centre and equally ranks as one of the largest consumer markets in the world, holding several major jewellery brands. Taking these factors into account, combined with the fact that the EU aims to achieve a high level of consumer protection, the EFJ strongly urges the EU to take legislative action by providing a comprehensive and enforceable framework that protects consumers from malicious trade and sales practices in a European industry that is only able to survive when the true value of and thus consumer confidence in the European jewellery can be maintained.