U.S. Agencies Have Taken Some Steps, but Serious Impediments Remain to Restricting Trade in Burmese Rubies and Jadeite
GAO-09-987: Published: Sep 30, 2009. Publicly Released: Sep 30, 2009.
Congress passed the Tom Lantos Block Burmese JADE Act in 2008 prohibiting the import of Burmese-origin jadeite, rubies, and related jewelry and calling for certain international actions. The act also requires GAO to assess the effectiveness of the implementation of this section of the act. This report assesses (1) key characteristics of the trade of Burmese-origin jadeite and rubies; (2) progress agencies have made to restrict imports of Burmese-origin jadeite, rubies, and related jewelry; and (3) the progress agencies have made in pursuing international actions. GAO reviewed and analyzed policy guidance, reports, and trade data and interviewed officials from the Departments of State (State), Homeland Security (DHS), other U.S. agencies, as well as U.S. and foreign jewelry industry representatives and foreign government officials.
The Burmese jadeite and ruby trades are very different from one another and significantly involve China and Thailand. Burmese-origin jadeite is primarily purchased, processed, and consumed by China. Burmese-origin rubies are reportedly largely smuggled into Thailand, yielding little revenue to the Burmese regime, and are significantly processed there. U.S. agencies have taken some steps but have not shown that they are effectively restricting imports of Burmese-origin rubies, jadeite, and related jewelry while allowing imports of non-Burmese-origin goods. Some U.S. jewelry representatives said import restrictions constrain legitimate ruby imports. Agencies published an interim final rule, but DHS has not developed specific audit guidance or conducted any postentry reviews of importers' records. In addition, there is little guidance to importers on what constitutes verifiable evidence of non-Burmese-origin. Although agencies have begun to collect data on ruby and jadeite imports, further efforts could contribute to an understanding of whether restrictions are effectively targeting Burmese-origin imports. Agencies sent a required 60-day report to Congress, but it had little information on progress and challenges related to gaining international support to prevent trade in Burmese-origin rubies, jadeite, and related jewelry. Agencies have made no discernible progress in gaining such international support. Strong support and the cooperation of China and Thailand are important to restrict trade in these items, but highly unlikely. The Office of the United States Trade Representative has not requested a World Trade Organization waiver and State has not introduced a United Nations resolution, noting a number of countries would likely oppose a resolution. Finally, there have been no international meetings to negotiate a global arrangement restricting trade in Burmese rubies and jadeite similar to the Kimberley Process for restricting trade in conflict diamonds. Agency officials cited serious impediments to establishing such a framework.
Recommendations for Executive Action
Status: Closed - Implemented
Comments: DHS concurred with the recommendation. In response to the first part, CBP stated that in April 2010 it completed working on a tasking to develop and implement guidance to conduct post-entry reviews of importers' records. Then, at all ports of entry, it assessed entries of imported items subject to the JADE Act (as identified through CBP's systems) and verified, post release, that the entry documentation included the required certifications. CBP stated that all entries verified as part of this national assessment were in compliance with the importer and exporter certification requirements of the JADE Act. CBP stated that it will continue to enforce the JADE Act prohibitions (and associated conditions in CBP?s regulations) until its repeal. In response to the second part of GAO's recommendation, CBP stated that it conducts outreach to the public (which could include importers) by posting information on importing under the JADE Act at http://www.cbp.gov/xp/cgov/trade/trade_programs/entry_summary/laws/public_law/. CBP stated that it responds to inquiries from the public at that website on a regular basis (which could include responding with guidance to importers). However, CBP stated that under direction from the National Security Council, other agencies of the U.S. government are better positioned to identify what the U.S. government will rely upon for verifiable evidence for this program. Once such standards are established, CBP stated that it will provide improved guidance to importers on the standards of verifiable evidence needed to certify articles are of non-Burmese origin. Until these standards are established, CBP continues to work alongside the other agencies of the U.S. government to implement the JADE Act within its scope of responsibilities and expertise.
Recommendation: In order to effectively implement the sections of the JADE Act prohibiting the importation of Burmese-origin rubies, jadeite, and related jewelry while allowing imports of non-Burmese-origin goods, DHS, in consultation with relevant agencies, should develop and implement guidance to conduct postentry reviews of importers' records and provide improved guidance to importers on the standards of verifiable evidence needed to certify articles are of non-Burmese origin.
Agency Affected: Department of Homeland Security
Status: Closed - Implemented
Comments: State agreed with this recommendation and informed Congress on December 16, 2009, that in response to our report, it had undertaken these efforts and included findings from these analyses in its Semi-annual Report to Congress on Conditions in Burma (sent to Congress December 9, 2009). GAO has reviewed this semi-annual report and determined that in it, State has complied with our recommendation. For example, commenting on the efficacy, challenges, and difficulties faced in implementing measures under the JADE Act, State cautions that most of Burma's jadeite is exported to China, a large percentage of rubies are smuggled into Thailand, and that it is impossible to know how much of these resources are smuggled across its porous borders. In addition, State reports that the fact that heat treatment erases many of the unique geographic characteristics of a ruby, the way in which rubies are used in jewelry, and the low price tag the finished stones command all combine to make it ineffective from a cost perspective and in practical terms to chemically test the origin of the average ruby entering the U.S. market.
Recommendation: To enhance the effectiveness of U.S. policy against the military regime in Burma, State should, in consultation with DHS and Treasury, analyze the efficacy, challenges, and difficulties faced in implementing measures to restrict trade in Burmese-origin rubies, jadeite, and related jewelry in the context of the broader U.S. sanctions provisions in the JADE Act, and report to Congress how these measures will contribute to its efforts to influence the military regime in Burma.
Agency Affected: Department of State