Trade barriers for jewelry and gems are tumbling down way ahead of schedule among Asian nations.
In fact, tariffs may even be eliminated within the next five years, says a key U.S. trade negotiator. This unexpected, welcome development came about at the Asia-Pacific Economic Cooperation (APEC) forum in Vancouver last November.
At the negotiations, Thailand put jewelry on the table as a top-priority industry, and the other 18 member nations of APEC quickly signed on. For the U.S. jewelry industry, this will mean that lucrative, rapidly growing markets will soon open in countries such as China, Hong Kong, Indonesia, Japan, Malaysia, South Korea, Taiwan and Thailand.
Prospects for the jewelry and gem negotiations are “very good,” says Jane Earley, a trade official with the U.S. Trade Representative’s Office. “Unlike other industries, the negotiations will cover the whole chapter in the tariff code, meaning that virtually every aspect of the jewelry industry will be under discussion.”
U.S. trade negotiators supported the policy for that reason, and also because they were well aware of congressional and industry support. “This is one of the most responsibly active industries I’ve ever worked with in terms of organizing congressional support,” says Earley, who negotiates and develops trade policy for a number of industries.
In particular, she credits the Manufacturing Jewelers and Silversmiths of America (MJSA). “Their organization did a lot of really important work to make us aware of their trade concerns. We consulted with them in September, before we went to the negotiations, about what our position should be; and we are consulting with them closely, along with a number of other trade organizations, about what our policy should be going forward.”
Terms of the APEC agreement are expected to be finalized by June in a detailed implementation schedule. U.S. trade negotiators will then work to pass the same policies more globally through the World Trade Organization.
The anticipated five-year time frame for implementation of the APEC trade policies on jewelry “represents early voluntary sector liberalization,” says Earley. She notes that the organization has already obligated its developed member nations to eliminate tariffs by 2010 for every industry. Developing member nations have similarly agreed to eliminate all tariffs by 2020.
Could Southeast Asian economic troubles affect the negotiations? Earley thinks not. “Conceivably economic problems could slow the process,” she says. “But so far, countries have shown that they are very concerned about giving the right kinds of signals to their trading partners. They want to continue to remain open to trade and investment.”
Political clout. When you consider the scale of the global industries that typically dominate the U.S. trade agenda, it’s amazing that jewelry has become a high priority.
Hard work by MJSA, strong congressional allies, and a change in political attitudes toward free trade each played a role in the industry’s success.
“Legislators have to know where the votes are and that their constituents care,” says James F. Marquart, MJSA president and CEO. “The impact of trade barriers on jewelry manufacturers is devastating. As long as jewelry comes into the U.S. from countries free of tariffs while those same countries impose high tariffs on our jewelry, we will continue to lose jobs. Our best shot for expanding jobs and product sales is opening those markets and exporting overseas.”
Over the past two years, MJSA’s leadership has:
met with congressional representatives in Washington and at jewelry manufacturing plants where employees could also voice their concerns;
consulted with top U.S. trade negotiators and ambassadors; and,
persuaded legislators to join the jewelry industry’s newly formed congressional advisory councils.
Marquart, who sits on the Commerce Department’s Industry Sector Advisory Council on consumer goods, also made sure that jewelry was an active part of that agenda. Until then, the advisory group had focused primarily on industries comprised of huge multinational corporations.
“I know this sounds self-serving,” says Marquart, “but over the last two years, we have been extremely politically active. If you don’t press and press and continue to articulate your position, nothing will ever happen.”
Meanwhile, political support for the industry grew.
A Commerce Department report released in March 1997 covered a wide range of issues, including trade barriers, that affect the competitiveness of the U.S. jewelry industry. The findings on job losses soon caught the attention of elected officials.
Shortly after the report was released, Sen. Jack Reed (D-R.I.) established a Senate Jewelry Advisory Council co-chaired by Sen. Alfonse D’Amato (R-N.Y.). Similarly, Rep. James McGovern (D-Mass.) set up a Jewelry Caucus in the House. (Nearly half of the nation’s 2,720 precious jewelry manufacturers are located in the Northeast; nearly a third of the 1,018 U.S. fashion jewelry manufacturers are located in Rhode Island.)
Jane Earley of the U.S. Trade Representative’s Office met directly with MJSA’s leadership in December to obtain input for ongoing trade negotiations. Participants included Peter Fuller of Fuller Box Co. Inc., Howard Kilguss of Excell Manufacturing Co., Ted Leach and Charles Kiesel of Leach & Garner, Peter Manikas of
P-Craft Jewelry Co. Inc., Gerald Manning of Manning International, and MJSA’s president, vice president and Washington counsel.
Matt Runci, president of Jewelers of America, who two years ago held the top job at MJSA, says, “The credit [for placing jewelry on the U.S. trade agenda] goes to the legislative initiatives of the MJSA, which for two years has been aggressively pushing for a lowering of tariff barriers for U.S. exports, and that’s a position we jointly support.”
As jewelry imports flood the U.S. market, manufacturers may need to look overseas for new sources of revenue. Figures are from the U.S. Department of Commerce.
Current members of the Asia-Pacific Economic Cooperation forum include Australia, Brunei, Canada, Chile, China, Hong Kong, Indonesia, Japan, South Korea, Malaysia, Mexico, New Zealand, Papua New Guinea, the Philippines, Singapore, Taiwan, Thailand and the U.S. Russia, Vietnam and Peru will join this year. APEC has agreed to a moratorium on admitting new member nations in the next decade.
IMPORT PENETRATION OF U.S. MARKET
|Imports of precious metal jewelry||14.2%||49.9%|
|Imports of costume jewelry||14.0||26.3|