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Due diligence

Position paper on mandatory due diligence

The European Federation of Jewellery supports the idea of an EU-wide cross-sectorial legislative framework on due diligence provided that the future requirements are coherent with the ones already in place and that a level playing field is ensured for EU companies at European and international level.

Key points:

  • The European Federation of Jewellery (EFJ) welcomes the upcoming adoption by the European Commission of a legislative initiative on mandatory and cross-sectorial due diligence and urges the Commission to take into account the specificities of the sector.
  • The European jewellery and diamond sector, which is fragmented and consists mainly of SMEs, has been very proactive in ensuring responsible and sustainable mineral sourcing through the implementation of the EU Conflict Minerals Regulation and the Kimberley Process, as well as the setting up of industry-driven certification schemes.
  • Consequently, the Federation advocates for the adoption of an EU legislation that would:
    • rely on and be consistent with the existing requirements in place for the sector.
    • ensure legal certainty for companies with clear definitions of the risks and duties. 
    • set up an appropriate support mechanism to help companies and in particular SMEs comply with the rules.
    • support European companies’ competitiveness at EU and international level.
  • The Federation is committed to remaining fully involved and active in the ongoing decision-making process.

On the 29th of April, Didier Reynders, European Commissioner for Justice, announced to the European Parliament Responsible Business Conduct Working Group that the European Commission plans to propose a legislative initiative on mandatory due diligence in 2021. Commissioner Reynders further specified that the legislation will be cross-sectorial and will include enforcement mechanisms to ensure compliance and access to justice for the victims. The European Commission launched a public consultation to gather further inputs ahead of the release of its Directive proposal in the second quarter of 2021.

The European Federation of Jewellery (EFJ) supports the idea of an EU-wide cross-sectorial legislative framework on due diligence and is ready to take a proactive role in the decision-making process.

In this respect, the EFJ would like to point out that the European jewellery sector actively prepared to comply with EU Regulation 2017/821 laying down supply chain due diligence obligations for Union importers of minerals originating from conflict-affected and high-risk areas, that entered into force on the 1st of January 2021. The EFJ cooperated with the EU decision-makers all along the legislative process to make sure that the Regulation took into consideration the specificities of the European jewellery sector, a sector mainly composed of Small and Medium-Sized Enterprises (SMEs), with limited human and financial resources.

The EFJ had welcomed the adoption of the Regulation and had noted with satisfaction its alignment with the Organisation for Economic Co-operation and Development (OECD) framework as well as the provisions making it possible for industry / private sector schemes to be recognised as compliant with the European rules. The Federation was also an active contributor in the process that led to the creation of a set of tools aimed at supporting SMEs to comply with the regulation. The EFJ indeed thinks that all the actors in the jewellery sector should comply with the EU Regulation 2017/821 as a medium-term objective.

Furthermore, the EFJ would like to recall that the European diamond sector, which is an essential component of the jewellery sector, is committed to improving transparency and accountability in the global diamond value chain through the Kimberley Process (KP), an international certification scheme established in 2003 to prevent conflict diamonds from entering the mainstream rough diamond trade. Council Regulation 2368/2002[5] sets up a Union system of certification, as well as import and export controls for rough diamonds for the purposes of implementing the Kimberley Process Certification Scheme.  

In light of the considerations above, the EFJ would like to invite the European Commission to build the new due diligence framework on the basis of existing schemes such as the so-called Conflict Minerals Regulation and the Kimberley Process Certification Scheme in order to avoid any duplication of legal requirements which would lead to an increased administrative and financial burden on EU companies or even create incentives to companies to relocate their activities outside of the EU. The EFJ notes that it will be more difficult, or even virtually impossible, for EU companies to comply with the new legislative framework if coherence is not ensured between the new requirements and the ones already in place.

The EFJ welcomes the decision of the European Commission to carry out a thorough impact assessment as well as an analysis of the existing schemes to clearly identify potential compliance issues.

The EFJ would like to invite the Commission to also take into consideration existing third-party’s schemes such as the Responsible Jewellery Council’s (RJC) Code of Practices (CoP). The RJC is an industry-driven body and its CoP integrates the OECD guidelines into a special framework for jewellery companies to handle and trade gold, silver, platinum-group metals as well as diamonds in a way that is fully traceable and responsibly sourced. The CoP addresses human and labour rights, environmental impact and responsible mining practices. The RJC has already applied to have its certification schemes recognised as compliant with EU Regulation 2017/821 and thus represents a valuable example of due diligence for the jewellery sector. Moreover, the World Diamond Council’s (WDC) renewed System of Warranties (SoW) provides assurances relative to due diligence and the protection of human rights and labour rights, as well as to anti-money laundering and anti-corruption practices along the diamond supply chain.

Furthermore, the EFJ urges the Commission to ensure a level playing field for EU companies at EU and international level in order to support European competitiveness. To this end, third-country companies which are not established in the EU but carry out activities in the EU should also be covered by the future Directive. The EU trade policy plays also a crucial role in this area and the Commission should promote the future EU legal framework in international fora, through bilateral and multilateral trade agreements and political high-level contacts.

Commissioner Reynders stressed that the new EU rules would be mandatory and that enforcement mechanisms will also be put in place. In this respect, the EFJ would like to underline that emphasis should be put on rewarding companies as opposed to sanctioning them at first stage. This will positively trigger and motivate companies to implement due diligence practices into their business structure. In addition, any framework on due diligence should be based on an obligation of means rather than an obligation of results. Furthermore, the future Directive should incorporate a supporting mechanism to promote compliance and tools to support EU companies during the implementation phase. EU member states should also be encouraged to develop additional national support measures to help companies fulfilling their due diligence requirements.

To take into account the specificities of the European jewellery and diamond sector, the new legislative framework should apply to all companies with proportionate requirements for SMEs and with the exemption of micro-enterprises (less than 10 employees). In this respect, it is crucial that an agile framework is envisaged for SMEs so that they can incorporate due diligence into their business model without increasing the administrative and financial burden.

The EFJ would like to emphasise that the European jewellery and diamond sector has been very proactive in ensuring responsible and sustainable mineral sourcing through the implementation of EU legislation (EU Conflict Minerals Regulation & EU Council Regulation implementing the Kimberley Process Certification Scheme) and industry-driven certification schemes (such as the RJC Code of Practices and the WDC’s renewed System of Warranties). Since the European jewellery and diamond sector is highly regulated through national and European legislation, as well as industry initiatives, it therefore cannot be considered as a high-risk sector.   

With regard to the value chain, the EFJ believes that due diligence should encompass only the direct suppliers in the company’s value chain, and if possible, all parts of the value chain that companies can reasonably control. Indeed, not all companies within the European jewellery and diamond sector, mainly composed of SMEs with limited human and financial resources, can have control over the whole supply chain. Risks related to human rights, environment, climate change and governance should be covered, but they must be very precise and clearly defined to ensure legal certainty for companies. For example, there could be an exhaustive list of all the different legislations, such as treaties and conventions, that companies have to consider in an Annex of the Directive.    

Finally, the cross-sectorial EU legal framework on mandatory due diligence should include a transition period of at least 3 years before entering into full force to allow national governments and companies to adapt to the new regulation.

The EFJ believes that an EU-wide cross-sectorial legal framework on due diligence has the potential to significantly influence the way EU businesses will conduct their operations in the future and will define an ambitious threshold for countries and companies globally. However, it is essential that the new rules are pragmatic and implementable, and this can be achieved only by fully involving all stakeholders in the discussion and by taking into consideration the challenges and needs of the different sectors as well as their specificities.


Download:

EFJ position paper – Mandatory due diligence – March 2021

EFJ Infographic – Towards mandatory due diligence considering the jewellery and diamond sector specificities

Diamond terminology

Position paper on the New EU Consumer Agenda: the case of diamond terminology

On the 6th of October, the European Federation of Jewellery sent its contribution to the European Commission on the consultation on the New EU Consumer Agenda. By its answer, the EFJ wished to flag the issue of diamond terminology, that can be misleading for the consumer.

Here are the key points:
❖ The EFJ applauds the European Commission’s willingness to reinforce consumer rights by proposing a new EU Consumer Agenda. The Federation considers that consumers must receive full and accurate information on the products they buy in order to make informed choices.
❖ The EFJ is committed to contributing to the current reflection of the European Commission in order to shape an ambitious European consumer policy up to today’s challenges and wishes to flag the issue of diamond terminology in this position paper.
❖ Protecting consumers against misleading and fraudulent advertising practices on diamonds, which own high financial and emotional value, is perfectly in line with the current EU political agenda. To achieve this goal, the EFJ advocates the adoption of an EU legal (or legally binding) definition that would:

  • define the characteristics of a natural and synthetic diamond and the fundamental differences between them.
  • oblige the trade to accurately inform consumers, by means of a certificate, about the jewellery product they are purchasing.

Download:

EJF position paper: new consumer agenda: the case of the diamond terminology

EFJ infographic: Diamond terminology

The European Federation of Jewellery mobilised and ambitious in this year of European elections

The General Assembly of the European Federation of Jewellery (EFJ) took place in the prestigious setting of the buildings of the French Union of Jewellery, Silverware, Stones and Pearls (UFBJOP) in Paris on the 1st of April. An exciting visit to the Haute École de Joaillerie (Higher School of Jewellery Arts) opened this day full of discussions. A few figures suffice to show the history and fame of the oldest jewellery establishment in the world: 151 years of existence, 600 students and 12 workshops.


Under the auspices of Bernadette Pinet Cuoq, President of the UFBJOP and EFJ, the discussions allowed for further reflection about the full application of the mutual recognition principle for European jewellery products. Such an application would significantly facilitate the free circulation of jewels throughout the European Union.


International trade was another topic. The EFJ reaffirmed the importance of maintaining an open European trade policy towards third countries and is currently working to identify the main tariff and non-tariff barriers that prevent the European jewellery sector from reaching 60% of consumers in the world.


2019 will also signify a year of change, as the European elections will substantially modify the political landscape. The EFJ will be equal to this challenge with the development of a new awareness and communication strategy. The members of the Federation will notably meet the newly elected Members of the European Parliament in October in Strasbourg.


At the dawn of the advent of a new European Parliament and a new Commission, the EFJ remains more mobilised than ever. “The European jewellery sector is faced with a growing number of challenges. We decided today to include the issue of synthetic diamond in our mandate. The EFJ will advocate for the implementation of a specific customs code to differentiate synthetic diamond from natural diamond.” concluded Ms. Pinet Cuoq.

Limits for Cash Payments

Position paper for a harmonised cash payement ceiling

The European Federation of Jewellery (EFJ) has been proactive on the issue of cash payment thresholds, notably by providing inputs to the 2018 report on restrictions on payments in cash. The Federation will continue to be a force of proposal in the future discussion and looks forward to working with the European Commission on the legislative proposal aiming to reinforce and develop the EU single rulebook.

The EFJ welcomed the adoption on the 7th of May of the “Action Plan for a comprehensive Union policy on preventing money laundering and terrorism financing.” The Federation fully agrees with the overall objective to reinforce the fight against money laundering notably by addressing “the major divergences in the way [the current legal framework] is applied.” The Action Plan rightly points out that “the current approach to EU legislation has resulted in a diverging implementation of the framework across the Member States and, partly, in the setting of additional requirements that go beyond those implied by EU law. Examples of such measures are (…) the introduction of limitations to payments in cash.”

Key points of the position paper:

  • Different ceilings for cash payments in business-to-consumer transactions go against the internal market principles, have serious economic impact and can be a cause of money laundering.
  • Cash restriction limits often differ also within the Member States creating unjustified discriminations between residents and non-residents.
  • Due to its market structure, the jewellery sector is particularly exposed to the current lack of harmonisation in the cash limit rules within the EU.
  • Cash remains the preferred form of payments in the Euro area: on top of ensuring the protection of personal data, it is universally accepted, costless, flexible and allows the immediate closure of payments.
  • The EFJ urges the European Commission to put forward an EU initiative aimed at harmonising the limits for cash payments in business-to-consumer transactions by proposing a proportionate ceiling which takes into consideration the different necessities and sensibilities of EU citizens.

Download:

EFJ position paper – For a harmonised cash payment ceiling

EFJ note de position – Pour une harmonisation du plafond des paiements en espèce

EFJ infographic – For a harmonised cash payment ceiling

News

Busy and fruitful meeting day in Brussels for the EFJ

On the 21st of April, a delegation of the European Federation of Jewellery (EFJ), headed by its President, Bernadette Pinet Cuoq, had a series of successful meetings with several representatives of the European Commission. The objectives were to raise awareness about the sector and its main challenges as well as to exchange on several key issues: COSME, the European support programme for SMEs, the EU policies in favour of creative industries, conflict minerals, market access and opening of third countries’ markets and cash payment limits.

Regarding the implementation of the newly adopted EU conflict minerals regulation, the EFJ reiterated its commitment to work with the European Commission, the OECD and the other stakeholders to enhance the due diligence responsibilities of its members.

An ambitious and proactive approach was also defended during the high level meeting with the Cabinet of Pierre Moscovici, Commissioner for Economic and Financial Affairs. The EFJ advocated the adoption of a European harmonisation of cash payment thresholds in order, notably, to achieve a level playing field between the economic actors on the European territory.

The representatives of the European Commission welcomed warmly the EFJ and were happy to get information on this high value sector. This first day of fruitful meetings set the foundation for a deeper involvement of the Federation in the European scene.

Due diligence

Position paper on sustainable sourcing of minerals

The EFJ calls for the concerted and coherent implementation of the European regulation establishing a due diligence system for minerals supply. The Federation reiterates the need to build a support system for SMEs to help them adapt to the new EU framework.

Key points:

  • The European Federation of Jewellery welcomes the adoption of the European regulation on a due diligence system for responsible sourcing of minerals as well as the Delegated Act setting the methodology and criteria for the assessment and recognition of voluntary due diligence schemes.
  • The alignment of the European legislation with the OECD framework is of paramount importance for a simple and workable implementation as of the 1st of January 2021.
  • SMEs, which are the backbone of the jewellery sector, should be proactive and show their willingness to adapt to the new framework. However, an appropriate support mechanism needs to be put in place to help them comply with the rules.
  • The Federation is committed to remaining fully involved in the ongoing process designed to create the tools to support SMEs in the implementation.

The European Federation of Jewellery (EFJ) has always advocated ethical and responsible business conduct in the supply chain of the jewellery sector. The EFJ therefore considers the adoption of the European regulation on a due diligence system for a responsible sourcing of minerals as a step forward and advocates broad implementation by all actors provided they are duly supported.

The jewellery sector is fragmented, and consists mainly of Small and Medium Sized Enterprises (SMEs). It is therefore important to draw inspiration from existing private and public certification schemes and to adopt a streamlined approach for appropriate enforcement of the regulation on all levels and branches.

In this regard, the fact that the European Union (EU) opens up the possibility for private systems to be recognised as compliant with the European regulation is key. This is notably the case of the Responsible Jewellery Council’s (RJC) Code of Practices and Chain of Custody Standard, which integrate the OECD guidelines into a special framework for companies to handle and trade gold and platinum-group metals in a way that is fully traceable and responsibly sourced. It should be stressed that the RJC has recently reinforced its activities by launching its renewed Code of Practices, where the OECD’s five-step framework on due diligence has been aligned with the diamond supply chain. Other systems, such as the London Bullion Market’s (LBMA) responsible Gold Guidance, also implement the OECD gold delivery due diligence guidance to the “Good delivery refiners.”

These existing due diligence schemes are largely inspired by the OECD framework, and the EFJ considers as positive the fact that the European regulation and the Delegated Act 2019/429 align with the OECD system. The Federation is particularly satisfied with the uniform approach adopted regarding the criteria and methodology to assess voluntary supply chain due diligence schemes which pursue the same objectives as the European regulation. The equivalence criteria put in place by the EU will allow companies which comply with another due diligence model to obtain a certificate of equivalence. The EFJ also welcomes the future collaboration between the European Commission and the OECD services regarding reports that will seek to assess whether the private scheme fulfils the conditions for public recognition. The alignment between the EU and the OECD system will strengthen the coherence and will ease the steps of the private operators. However, the EFJ will remain vigilant that the implementation of the EU regulation is smooth, understandable, practicable and will not lead to administrative burden for companies. Furthermore, it is essential to protect an equal level playing field.

Moreover, the EFJ hereby reaffirms its commitment to continue to be fully involved in the ongoing process regarding the creation of tools to help SMEs reach the objectives set in the regulation. As the jewellery sector is mainly comprised of SMEs, the current 100kg threshold set by the EU legislation on gold imports, above which the mineral must be traced, means that most companies fall outside of the scope of the current regulation. However, the EFJ thinks that all the actors in the jewellery sector should be proactive and should have compliance with the rules as a medium-term objective. To accompany the sector in this venture, it is essential to put in place solid support measures. The EFJ is therefore happy to be a member of the Advisory Board set up by the European Commission to provide input to the project aiming at creating an online tool to help SMEs implement the due diligence system. This tool will be launched in November 2019.

The EFJ is also convinced that the EU should rely on the numerous actors of the sector, and especially the professional associations in each country. They can play a key role in disseminating the information and answering questions. In turn, it would also allow the European Commission to have active and productive feedback from the jewellery sector, which will eventually lead to adequate and carefully-studied measures being taken. A proactive and collaborative approach between governments and industry has already proven to be very constructive, efficient and successful in the process of the renewal of the RJC Code of Practices and its subsequent implementation, and could serve as a blueprint for future similar undertakings in this respect.

Finally, the EFJ would like to urge the European Commission to refrain from extending the scope of the European regulation on due diligence systems for minerals supply to diamonds as the international trade in rough diamonds is already certified by the Kimberley Process Certification Scheme (KPCS). Although the EFJ recognises that more can be done to make the Kimberley Process stronger and more efficient, we believe that the system has also many strengths that cannot be underestimated. In addition to this regulatory framework, the worldwide diamond industry is proactive in ensuring responsible mineral sourcing through the implementation of several voluntary tools:

  • The RJC’s renewed Code of Practices where the OECD due diligence framework has been aligned with the diamond supply chain;
  • The reinforced System of Warranties (SoW) of the World Diamond Council (WDC), a tool that supports the actors of the diamond industry in complying with the Kimberley Process Certification Scheme[7] and requiring adhering parties to conduct a self-assessment to ascertain whether they meet universally-accepted principles on human and labour rights, anti-money laundering and anti-corruption.

Moreover, the EFJ would like to underline that the diamond trade is highly competitive and internationally organised. Hence, a unilateral application of the European regulation will put the EU diamond industry at a competitive disadvantage vis-à-vis its competitors, which are all located in third countries outside the EU. Furthermore, it should be considered that the diamond supply chain fundamentally differs from other mineral supply chains due to the non-uniform nature of the product. As Europe’s strongest presence in the supply chain is to be found in the midstream, which characterises the uniqueness of the diamond supply chain, a unilateral application of EU Regulation 2017/821 on the diamond supply chain would be detrimental to Europe’s economic interests, but also to the sustainability standards the EU would aim to pursue in case industry players would decide to shift operations away from the EU. Since the EU, both at governmental level and industry level, has always been the forerunner of diamond transparency and sustainability initiatives, the extension of the scope of EU Regulation 2017/821 to diamonds would likely have the opposite effect of the desired policy objective with regard to the global diamond value chain.

Download: EFJ position paper – Sustainable sourcing of minerals

International trade

Position paper on trade relationships with Third countries

The EFJ advocates reciprocity in the trade relationships with Third countries in order to unlock the export potential of the European jewellery sector. 

Key points:

  • The export potential of the EU jewellery sector is hampered by high customs duties and non-tariff trade barriers. Both of them currently prevent European jewels from reaching over 60% of potential consumers in the world.
  • The European Federation of Jewellery (EFJ) calls for the reciprocity in the access to Third country markets.
  • The EFJ strongly supports an ambitious European trade policy with the negotiations of free trade agreements with countries and regional areas. Both OECD and non OECD countries should be covered.
  • The jewellery sector should be systematically included in EU trade negotiations.
  • The adoption of measures allowing free market access would strengthen the competitiveness of the European jewellery

Jewellery is one of the flagships of creative European industries and the European know how is recognized worldwide. Largely based on small and medium-sized enterprises, it generates €30 billion in sales annually. €6.3 billion of the jewels imported in the EU territory are manufactured in Third countries, mainly Switzerland, Thailand, India and China. According to the Eurostat data, in 2015, the EU ranked 5th for the exports of jewellery products and silversmith behind India, US, China and Hong-Kong. In 2016, the EU imported €6.3 billion in jewellery products and exported €10.7 billion.  It is worth noticing that the EU trade balance for jewellery products is generally positive but imports from countries who apply high custom duties such as China and India are growing rapidly and that the trade balance with these countries as well as with Brazil was negative in 2016 according to Eurostat.

The growth of the European jewellery sector on the International scene and its trade potential are clearly hindered by the lack of reciprocity in the trade relationships with non EU countries. It is even impossible to penetrate some countries as such trade obstacles are numerous. In concrete terms, it is estimated that current customs duties and non-tariff trade barriers prevent European jewels from reaching over 60% of potential consumers in the world.

This analysis of lack of reciprocity is truth for both the OECD and non OECD countries.

For non OECD countries, the access to their market is highly hampered by the application of high customs duties, taxes on luxury goods and the difficulties to get authorisations and licenses. For instance, to trade with China, a European exporter has to pay a custom duty of 20% on gold and silver articles and of 35% for platinum and other metal articles. Moreover, the exporter has to pay a luxury tax amounting to 20% of the price of the product. On top of this, non-tariff barriers which differ from one province to another are applied such as the engraving of the weight of stones inside the rings.  The loss of competitiveness of the European sector regarding the non OECD countries is twofold: first, it is extremely difficult to reach their domestic market; second, they have become new producers and as a result, new competitors in several exporting countries. In the US, Canada, Japan and the European countries, they have already acquired significant market shares. This is due to favorable conditions that they benefit for accessing rich markets, namely lower production costs, better supply conditions for gems, pearls and accessory products as well as attractive trade conditions. Countries which benefit from the Generalised System of Preferences can export almost freely to the EU and some EU export markets like the US.

For OECD countries, customs duties applied to EU exports are generally higher than the European import duties. Despite the different rounds of negotiations under the World Trade Organisation, we can notice a deterioration of the situation. For instance, with the US, which represent 30% of the Italian exports, the difference between the two duties amounted to 2,7% in 1995 while it is now 3% – US import duties: 5,5% / EU import duties: 2,5% -.

Comparison between customs duties

Country Import duties on EU products EU import duties
Brazil 18% 2,5%
Russia 10%-18% 2,5%
India 15% 2,5%
China 20%-35% 2,5%
US 5,5% 2,5%

Concrete examples showing the impact of the difference between customs duties on the final price of a bracelet

A European 2000 € bracelet exported to the following countries will cost:

US 2110,00€
China 2400 -2700,00€
Russia 2240,00€

The mentioned prices can further increase if the country applies other barriers such as luxury taxes (e.g. China).

While a 2000 $ bracelet produced in one of these countries, once imported to Europe, will cost:

US 2050,00$
China 2050,00$
Russia 2050,00$

For jewellery products made of gold, the price of the raw material is high compared to the added value brought by the manufacturing part. As a result, custom duties from 5% on the final product shrink drastically the gain of European companies. And in a worse scenario with customs duties above 10%, the legal trade of gold jewellery products is highly compromised.

Table illustrating the impact of import duties on gold jewellery products

Posts Price in euro/gram
Fine gold per gram 36
Fine gold content per product having a fineness of 585 or 14ct (fine gold price x % of gold content in an article of 585/1000 or 14ct) 21.06
Manufacturing (average) 2
Price after manufacturing 23.06
US import duties 5,5 (average) 1.27
Impact of the customs duties on the company’s added value (manufacturing part) 63% (1.27×100/2)

 For European manufacturers and especially SMEs, all these trade obstacles make difficult and even often impossible to penetrate some markets and, when they trade, to operate without economic loss. Unlike famous brands, SMEs can hardly include these additional costs in their final price because they can’t value their name in the same way.

As underlined by the President of the European Commission, Jean-Claude Juncker, in its State of the Union speech delivered in September 2017 in the European Parliament, “Europe is open for business. But there must be reciprocity. We have to get what we give. Trade is not something abstract. Trade is about jobs, creating new opportunities for Europe’s businesses big and small.”

The European Federation of Jewellery (EFJ) fully agrees with Mr Juncker and strongly supports the current EU ambitious trade agenda with the negotiations of free trade agreements with both countries and regional areas. This proactivity is an opportunity to achieve reciprocity in the access to Third countries markets. Furthermore, the EFJ calls on the EU for the systematic inclusion of the jewellery sector in the trade negotiations with Third countries.

The elimination of tariff and non-tariff barriers to trade for jewellery products will bring multiple benefits:

  • More markets opened to European products;
  • Increased competitiveness for the European jewellery sector;
  • Fairer competition among producing countries;
  • More jobs in the EU;
  • Promotion of the European know how.

Download the EFJ position paper on international trade

Mutual recognition

Position paper on the mutual recognition of goods

The jewellery sector is one of the non-harmonised sectors in the EU and thus the free circulation of its products is not completely free. The European Federation of Jewellery demands that the principle of mutual recognition is fully applied to jewellery products and hopes that the future EU initiatives on mutual recognition will help the sector to overcome the existing barriers.

Key points:

  • The jewellery sector is one of the non-harmonised sectors in the EU and thus the free circulation of jewellery products in the single market is not guaranteed.
  • The countries which apply the hallmarking system demand further checks and the application of an additional mark on jewellery products lawfully produced and marketed in another Member State. This creates obstacles to the free circulation of goods and represents a major economic burden for EU economic operators.
  • The European Federation of Jewellery (EFJ) demands that the principle of mutual recognition is fully applied to jewellery products and thus urges the European Commission to intervene in order to standardize and harmonise all technical and methodological rules for jewellery products (fineness, soldering, etc.) in the EU.
  • The EFJ also demands that the fineness and identification marks are directly mutually recognised among EU countries.

The EFJ was founded in 2013 to represent the jewellery sector at the European level. The EFJ supports free trade among EU Member States and with third countries as a mean to increase the competitiveness of the sector while contributing to the creation of growth and jobs. In this respect, the EFJ warmly welcomes the adoption early 2019 of the Regulation on the mutual recognition of goods lawfully marketed in another Member State.

Despite the principle of ‘mutual recognition’ enshrined in Article 28 and 30 of the TFEU, jewellery products are still partially excluded from free circulation in the EU internal market. In fact, the jewellery sector is one of the non-harmonised sectors in the EU and despite the efforts made by the European Commission with the support of some Member States, it has not been possible to reduce the obstacles to the free circulation of jewellery products until now. As a matter of fact, many Member States demand further checks, the so-called preventive control, on their own territory and the placement of an additional mark on jewellery products even when the products have been legally marketed in another Member State.

It must be mentioned that there is no effective ‘mutual recognition’ even among the Member States that decided to adopt the ‘hallmarking’ system while, according to the Court case 293/93 (Houtwipper case), this should not be the case. The hallmarking system requires that all products made of precious metals need to be checked and marketed by a third independent body which received an authorisation by the State, generally the Assay Office, before being put on the market. These operations represent an additional cost for the economic operators as they are supposed to pay to perform these additional checks. Furthermore, the only international recognised method of analysis is a destructive one entailing such damages that the analysed products are completely ruined and cannot be sold. To deal with this problem, verifications are done only on a sample of the presented batch but this system does not have any statistical value.

To partially overcome these obstacles, many countries which adopted the hallmarking system, decided to sign a specific international treaty: the Vienna Convention. The Convention establishes the Common Control Mark (CCM) which allows to market goods among the Members of the Convention without further testing and marking.

While the Convention is sufficient to allow free circulation of jewellery products between the parties, many important EU countries that apply preventive controls are not members of it such as France and Spain. For this reason, the EFJ would rather support the establishment of an EU system aimed at reinforcing the mutual recognition principle in order to overthrow the anachronistic and costly barriers that make jewellery products less competitive on the internal market.

The EFJ generally supports all initiatives aimed at deepening and completing the EU Single Market. With particular regard to the new Regulation on mutual recognition, the EFJ is pleased with the introduction of the ‘mutual recognition declaration’ which should make easier for the economic operators to demonstrate that their products are lawfully marketed in one Member State.

However, in order to allow free circulation of jewellery products in the EU, the EFJ urges the European Commission to intervene in order to standardize and harmonise all technical and methodological rules for jewellery products (fineness, soldering, etc.) in the EU. Furthermore, the EFJ demands that the fineness and identification marks are directly mutually recognised among EU countries.

Finally, the EFJ believes that market surveillance instruments would be much more appropriate to check the products compliance with EU legislation and technical rules than preventive controls. According to the EFJ, a system based on market surveillance would guarantee consistency across the EU and would ensure better consumer protection.