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Harmonisation

Position Paper: Towards a harmonised EU legislation to ensure the free movement of articles of precious metals

The European Federation of Jewellery regrets that European jewellery products do not benefit from the free circulation, as several obstacles remain within intra-EU trade for articles made from precious metals. 

Indeed, the principle of mutual recognition does not allow the free movement of jewellery articles within the EU, due to many exceptions brought forward by Member States for reasons of public safety, public health and protection of consumer interests. These exceptions introduce additional requirements for the imported products to comply with before being placed on the market.  

In that context, the Federation applauds the European Commission’s willingness to fully harness the potential of the single market by enforcing existing single market rules and removing Member States-level barriers, as announced in the Commission’s communication on “the Single Market at 30“.  

  • Introduction to the world of jewellery production  

Each piece of jewellery usually bears two marks, one that identifies the operator (manufacturer/ importer) who first places the goods on the market, the other determines the purity/fineness of the precious metal.  

The fineness can be placed on the piece, either by the operator himself or by an independent laboratory, which, before the piece is put on the market, analyses and marks it. In some EU countries it is compulsory for the purity to be determined by a laboratory. In others, the operator is enough.  

The fineness mark affixed by a laboratory designated by the Public Administration of a Member State is usually called a guarantee mark, and it is a national mark that must be published in the Official Journal of the Member State in question. Each country has its own fineness marks for each precious metal. 

  • Why do we need harmonisation of precious metals?  

There are currently 27 different national legal systems concerning articles of precious metals. This means that an operator who wishes to export to another EU Member State needs to get previous information on the sales conditions in that country. This is a complex and burdensome process as the operator needs to investigate on: 

  • the national fineness marks in the country of destination; 
  • the design requirements, if any, for the producer’s identification mark; 
  • whether or not it is compulsory to have the products sent to an independent laboratory or body for test and marking before being sold. 

In addition, because of the coexistence of 27 different legal systems, there is no effective product surveillance in the market, which prevents, in practice, the detection of infringements. As a result, this leads to fraud channels, unfair competition and lower quality products.   

This also leads to a decrease in intra-EU trade for European jewellery products, as legal uncertainty displaces investments to other countries and other sectors. For example, Spanish exports were traditionally directed towards the EU. The absence of harmonisation has inclined the trend towards third countries, especially the USA, and there is a growing trend towards sales in Israel, which occupies practically the same place as Germany. 

  • Where do the main costs of non-harmonisation lie? 

The direct and indirect costs are due to the following: 

  • Finding information on the laws of the country of destination and any updates. The national authorities of the EU country of origin and the EU country of destination do not have the information available or if it is available, it only arrives after several weeks.  

Indeed, the competent office of the national authority does not know the laws that each country has for each industrial sector. Therefore, they usually contact the jewellery association of the country of destination and obtain the legislation, which is usually incomplete and needs to be translated. This process takes 45 days on average. Besides, in some countries, like in Spain, each consultation requires a prior payment due to the economic situation. 

If the operator is a sufficiently large company, they can also hire legal experts to inform them on the sales conditions in the country of destination. However, small operators are unable to invest in the previous costs and are therefore discouraged from selling in the EU. This often leads to a loss of interest for the jewellery field or to maintain the production at a small, national level instead of expanding to external markets. 

Furthermore, although Product Contact Points (PCPs) have been set up in each EU country, as required by the Regulation 2019/515 on the mutual recognition of goods, this has not improved access to information. In fact, the links provided by EU country are not user-friendly, as it is difficult to find any information on the requirements for articles of precious metals and the information is only available in the language of the country concerned.  

  • Non recognition of precious metals fineness marks that are legal in one Member State by another Member State. Indeed, for some countries, operators cannot sell their products in another country, before their articles are checked and stamped by the laboratories of the country of destination. This generates additional costs and delays in the delivery of the products.  

For example, in Italy, legally manufactured precious metals articles cannot be placed on the market of 18 EU countries unless they have passed an inspection and stamping at laboratories in the countries of destination. This results in additional costs for analysis and marking, costs for delays (several weeks) in the delivery of articles, damages to finished products due to product handling and additional marking. For some product typologies, the cost of this control is estimated to be as high as 10% of the added value. There are also costs for security and product insurance. Furthermore, the sampling of batches of goods carried out at the laboratories is not done on a statistical basis with regard to batch homogeneity. Internationally recognised methods of precious metal analysis are destructive. Often for these analyses, these laboratories do not use the internationally recognised methods (ISO/CEN) but other non-destructive methods, which are therefore less reliable. Finally, the analysis laboratories are in many cases not accredited according to international standards (i.e.: ISO/IEC 17025). Moreover, in the event of non-compliance, there is no possibility for the operator to carry out counter-evidence and therefore the operator must resort to the ordinary justice of the country of destination. An operation that obviously due to costs (also for the immobilisation of the goods) and time is never followed by the operator who prefers to have the goods returned. 

  • Fineness tolerances for precious metals vary from country to country. Being a high-value precious metal sector, even small percentages of variation affect the final cost of the product. 
  • Why do we urgently need an EU regulation ensuring the free circulation of articles of precious metals?  

The lack of harmonisation generates high costs.  

For example, based on a consultation with 250 production units of different types, it is estimated that in Spain, with respect to the EU, there is a loss of 23% of market share due to the absence of harmonisation, which represents some 51,52 million €. Furthermore, if there were imminent harmonisation, Spain would also gain in brand and image which would increase sales in third countries, adding 18% more to Spanish exports. 

In Romania, independent artists and SMEs on the field of contemporary jewellery have a considerably low economic strength due to the difficult and costly procedures to trade within the EU. Having a harmonised legislation at the EU level would lead to a significant increase of up to 20% in their businesses.  

A harmonised legislation for the entire European market, compatible with national trade laws, would allow easier understanding of the legislative framework and more companies to comply with the norms in their activities. It would also enable to decrease the dangers of the illegal/black market of jewellery, as well as reducing the unfair competition for companies complying with the legislation. 

Consumer protection must be guaranteed by market surveillance by the Member States and not by additional certification systems which are unable to provide guarantee, from a scientific/statistical point of view, of the precious metal content, of the presence within the established limits of substances potentially dangerous (e.g. nickel) or of the conformity of the diamonds and stones present on the object with respect to those declared. 

Legal certainty leads to greater economic investment and greater efficiency in the fight against fraud. Harmonisation will result in higher product quality, greater guarantees for the consumer, greater clarity for the operators and fair competition.  

This will favour the growth of smaller companies and thus better distributed economic growth. Therefore, only European legislation, compatible with national trade laws, could solve this situation. 

News

The EFJ supports a cross-sectorial framework on due diligence that is pragmatic and implementable

The EFJ supports a cross-sectorial framework on due diligence that is pragmatic and implementable

On the 23rd of February, the European Commission published a proposal for a Directive on Corporate Sustainability Due Diligence (CSDD). It is now being discussed by the co-legislators. As regards the Council, the Czech Presidency is willing to conduct the bulk of the discussions during their mandate (from the 1st of July until the 31st of December 2022). In the European Parliament, the draft report from the rapporteur of the lead Committee on Legal Affairs (JURI), Ms Lara Wolters, will be released by the end of October. Debates will follow within the JURI Committee, in cooperation with five associated Committees on Foreign Affairs; Environment, Public Health and Food Safety; Economic and Monetary Affairs; International Trade and Employment and Social Affairs.

In this context, the European Federation of Jewellery released its position on this important matter.

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, the new rules have to be pragmatic, implementable and they need to take into account the specificities of the jewellery sector. Given that the European jewellery and diamond sector is fragmented and consists mainly of SMEs, the EFJ advocates for the adoption of an EU legislation that would:  

  • Establish a proportional approach which adapts the burden of the compliance costs to the size and resources of the companies.
  • Set up an appropriate support mechanism to help targeted companies comply with the rules, as well as SMEs that are indirectly affected.
  • Base the due diligence system on an obligation of means rather than an obligation of results.
  • Take into account the existing legislation/certification schemes in the jewellery and diamond sector to ensure consistency.
  • Ensure legal certainty for companies with clear definitions of the risks and duties.
  • Guarantee a level-playing field for EU companies at EU and international level to support EU competitiveness.

The Federation will continue to be fully involved, active and a source of proposals in the decision-making process.

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 European Commission’s proposal for a Directive on Corporate Sustainability Due Diligence.
  • 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 23rd of February, the European Commission released a proposal for a Directive on
Corporate Sustainability Due Diligence (CSDD), which is aligned with the European Commission’s political priorities of ‘An economy that works for people’ and of the European Green Deal. The proposal aims to foster sustainable and responsible corporate behaviour throughout global value chains, by establishing a corporate sustainability due diligence duty for companies to address negative human rights and environmental impacts.

The European Federation of Jewellery (EFJ) supports the idea of an EU-wide cross-sectorial legislative framework on due diligence provided that it takes into account the specificities of the sector.

In this respect, the EFJ would like to point out that the European jewellery sector actively prepared to comply with EU Regulation 2017/821 on Conflict Minerals 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 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. That is why the EFJ helped to develop EU tools to assist SMEs in the proper implementation
of the legislation.

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 2368/20023 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 noted with satisfaction that the Directive proposal on CSDD aims to align with the existing EU legislation such as the Conflict Minerals Regulation and the Kimberley Process Certification Scheme. This is critical in order to avoid any duplication of legal requirements which would lead to an increased administrative and financial burden on EU companies, legal uncertainty for EU companies or even create incentives to companies to relocate their activities outside of the EU. In other words, if coherence is not ensured between the new requirements and the ones already in place, it will be more difficult, or even virtually impossible for EU companies to comply with the new legislative framework.

The EFJ supports the European Commission’s approach to allow companies to rely on industry-driven certification schemes to support the implementation of their due diligence obligations. The Responsible Jewellery Council (RJC) is an industry-driven body and its Code of Practices (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 impacts and responsible mining practices. The RJC represents a valuable and successful example of due diligence for the jewellery sector and has already applied to have its certification schemes recognised as compliant with EU Regulation 2017/821. 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. Consequently, the European Commission should ensure and facilitate the use of both certification schemes while implementing the future legislation.

Regarding the scope of the proposed Directive, the Federation agrees with the European Commission’s proportional approach, which adapts the burden on companies stemming from compliance costs to the size and resources available. Although the new rules will only apply to approximatively 13,000 EU companies, they alone account for 50% of the total EU turnover, according to the European Commission. This means that the targeted companies are the ones with the most influence on the behaviour of other actors in the supply chains and have the largest impact on the Union economy.

However, while SMEs, including micro-enterprises, do not fall under the scope of the proposed Directive, they will be exposed to some of the costs and burden through business relationships with companies in scope, as a result of the effect of large companies’ actions across their value chains. Therefore, we urge the European Commission and Member States to effectively set up supporting measures to help SMEs build operational and financial capacity. This can include practical guidance and supporting tools such as dedicated websites, portals, hotlines, databases, platforms or trainings. It is also important that all EU Member States financially support SMEs, and not only a few, to avoid unfair competition in the internal market. Moreover, it is essential to avoid the passing on of the burden from those large companies to the smaller suppliers in the value chain. The Federation also supports the fact that companies whose business partner is an SME, are also encouraged to support them to comply with due diligence measures, in case such requirements would jeopardize the viability of the SME.

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

Additionally, we are satisfied with the fact that the proposed framework on due diligence is based on an obligation of means rather than an obligation of results. Having a list, in an Annex of the Directive, of all the different legislations that companies have to consider in order to identify, bring to an end, prevent, mitigate and account for adverse human rights and environmental impacts is a step in the right direction, as it provides for further legal certainty. However, because the norms included in the Annex are targeted to governments, it is uncertain and unclear how these rules are applicable to companies, and they should be redrafted to make it so. In addition, the Federation believes that the European Commission should come forward as soon as possible with contractual clause examples that will help companies comply with the Directive.

Nevertheless, while effective enforcement of the due diligence duty is key to fostering sustainable and responsible corporate behaviour, the Federation regrets that the current proposal focuses, at first stage, on sanctioning companies in case of non-compliance with the Directive. On the contrary, we believe that positively triggering and motivating companies to implement due diligence practices into their business structure as a first step, will prevent European companies from de-risking and ceasing their activities in high(er)-risk countries for fear of prosecution. The Federation also considers that the scope of the legal obligations should not be extended to the whole value chain but limited to a supply chain approach focused on first-tier direct suppliers and on a risk-based model. Indeed, the companies in scope cannot have control over the whole value chain and in particular on the downstream part (e.g. clients).

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 keeping fully involved all stakeholders in the discussion and by taking into consideration the challenges and needs of the different sectors as well as their specificities.

The EFJ was founded in 2013 by recognised national associations from Belgium, France, Italy and Portugal, which together represent 89% of all jewellery items manufactured and distributed in Europe. The Federation aims notably at exchanging best practices, promoting the unique European know-how of the sector as well as developing a high level of education and research.

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 over the last years, notably by providing inputs to the 2018 report of the European Commission on restrictions on payments in cash. Being a strong advocate of the introduction of a harmonised ceiling for cash payments in business to consumer transactions, the Federation welcomes the proposed introduction by the European Commission of a Union-wide limit for large cash payments of 10.000€ while leaving the possibility to Member States to adopt lower ceilings and stricter provisions. Although this proposal will not lead to a full harmonisation, the EFJ is convinced that this is a positive step forward. Moreover, as laid down in Article 63 of the proposal, the European Commission will evaluate the situation by three years from the date of application of the Regulation.

The Federation also supports the figure of 10.000€ as ceiling. Given the current significant disparities between Member States, the sector considers that it is a proportional and reasonable figure, which takes into consideration the different necessities and sensibilities of EU citizens.

Furthermore, the proposal should be reinforced by adding in the final text that Member States can not introduce different ceilings for national residents and non-national residents.

Finally, the EFJ is convinced that a regulation will allow for a more coherent and harmonised implementation of the legal provisions, which will reinforce their efficiency.

Key points of the position paper:

  • The European Federation of Jewellery supports the proposal of the European Commission to introduce a Union-wide limit for large cash payments of 10.000€ and welcomes the possibility left to Member States to adopt lower ceilings and stricter provisions.
  • The current 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 within the Member States creating unjustified discriminations among EU citizens 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.

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