UpFront

FTC PROPOSES LEANER WATCH GUIDES

The Federal Trade Commission has proposed a series of changes to its Guides for the Watch Industry. The FTC asks industry members to comment on the proposals by Sept. 2 and, for the first time, also asks about the need for the guides at all.

The proposed changes include amendments addressing representations about shock, water and magnetic resistance; the minimum requirements for thickness and fineness of goldplating (to update electroplating); markings of watch metal content; the definition of quartz movements; and disclosure regarding used parts.

Among the notable – and potentially controversial – changes, the FTC proposes deleting its requirements regarding foreign country-of-origin markings, preferring to cede these requirements to the U.S. Customs Service. Also proposed is deleting a section advising against counterfeiting. The FTC notes all counterfeiting actions are now addressed in the Anticounterfeiting Consumer Protection Act of 1996.

There also is a proposal to cede many watch standards to those used globally as part of the International Organization for Standardization. The proposal to adopt many ISO standards stems primarily from suggestions by the Federation of the Swiss Watch Industry.

Throughout the proposal, the FTC refers to “safe harbors” – or minimum requirements – to which a watch company could refer when designating certain performance or construction features. Many of these “safe harbors” are those already used as ISO standards, but this would be a first for the FTC Guides for the Watch Industry. These include ISO requirements for the use of the terms “chronometer,” “divers watch,” “shock resistant,” “water resistant” and “antimagnetic.”

Regarding electroplated watches, the proposal calls current ISO standards too restrictive and suggests allowing a minimum gold electroplated coating of one micron of 23k gold (or its equivalent) rather than the ISO standard requiring 19 microns of 10k gold or its equivalent.” However, with electroplated items, fineness and thickness markings would be required to allow consumer comparisons. Still, the term “goldplate” would be allowed on any product that meets “safe harbor” requirements of 14k gold applied by any means with a minimum five micron thickness as required by the ISO. In a move that would add to the lexicon of watch consumers, the FTC recommends gold fineness and thickness (in microns) markings for all goldplated items. The FTC requests additional industry input regarding these changes.

In one of the few additions to the current Guides, the proposal includes a more specific definition of quartz movements to limit “quartz” claims to the movement and no other part of the watch. Another addition would expand coverage of the Guides to include “persons, partnerships or corporations at every level of the trade” who sell watches, including those who sell via computerized images.

At press time, it was too early to determine whether the American Watch Association was prepared to submit comments to the FTC. However, AWA Executive Director Toby Collado says the proposals appear to be a general “liberalization” of rules, allowing members greater capability to comply.

Peter Laetsch, president of the Federation of the Swiss Watch Industry USA, says he is generally pleased with many of the deletions the FTC has proposed, particularly those referring to country-of-origin and counterfeiting. “These issues are determined and enforced elsewhere,” he says. He adds his organization has yet to determine whether it agrees that the remainder of the Guides are needed at all.

A discussion of the proposal was printed in the Federal Register June 18. Comments can be made in writing to “Watch Guides, 16 CFR Part 245 – Comment.” FTC, Office of the Secretary, 6th and Pennsylvania Ave. N.W., Washington, DC 20580; or call Constance Vecellio at the FTC at (202) 326-2966 or Laura DeMartino at (202) 326-3030. Copies of the proposal are available on the FTC Web site at http://www.ftc.com or from the FTC Public Reference Branch, Room 130, Sixth St. and Pennsylvania Ave. N.W., Washington, DC 20580; (202) 326-2222.

AGTA TAKES MYANMAR TO TASK OVER HUMAN RIGHTS

The American Gem Trade Association has taken its first official position in world politics by protesting the human rights situation in gem-rich Myanmar. The protest is in the form of a letter then-AGTA Executive Director Ron Ainsworth wrote on behalf of members to Myanmar’s ambassador to the U.S., U. Tin Winn (for more on Ainsworth, see “Late-Breaking News,” p. 28).

The missive expresses concern over what AGTA says is “the current perceived environment of human rights in your country, and what is believed to be an environment that is sorely lacking in the area of personal and political freedoms … In the absence of human rights and lack of political freedom, American citizens view your country and its products with great suspicion.” Myanmar’s embassy had no official statement at press time.

Many AGTA members buy gemstones that come from Myanmar (formerly Burma). So the strong stand on human rights could have adverse effects on AGTA members’ ability to get Myanmar’s gems. But several AGTA members view the letter as an opportunity to express themselves on a subject that has long made them feel uncomfortable.

“Approaching this issue is long overdue,” says AGTA member Marc Freeman of Freeman Gem Co., Los Angeles, Cal. “I applaud the board and the director for having taken a stand – even before our government took a stand, and I hope this opens things up for dialogue. We need to discuss these issues with cutters and dealers in leading gem centers of the world. Once the trade has worked out its problems, an open and honest dialogue will provide a platform from which we can approach the government of Myanmar to express our concerns and hear their side of the issue.”

Simon Watt of Mayer & Watt, Maysville, Ky., an AGTA board member, concurs. “We knew we would take a stand that would elicit tough questions, but we are a trade group which prides itself in being held to a higher code,” he says. “Burma occupies a special place in our hearts. This is not a boycott or desire to cause a boycott.”

Watt says the letter may upset some dealers. “It’s quite possible, but that’s just too bad,” he says. “We are making a statement about what we think is the right thing.”

Indeed, there are opposing views within AGTA. Dallas Davenport of The Davenport Organization, Hampton, N.H., posted his opinion on the World Wide Web: “I would remind you that what Myanmar is doing is not unethical because they are a country selling its resources and therefore not in our trade, and as such cannot be expected to abide by any trade practices, let alone ones we have embraced in this country. To change our focus to that of a political action organization is not included in why I pay my dues.”

The AGTA letter also struck a conciliatory tone. “The American Gem Trade Association would be interested in establishing a dialogue with someone within your political structure … We acknowledge that each country has the right to self-determination. However, we would encourage the existence of whatever political structure is desired by the majority of the people.”

Myanmar, which some observers say has “opened up” on an economic basis in the past few years, has also been labeled one of the most politically repressive regimes in the world. Ne Win, leader of a military junta that has ruled the country since 1962, failed to recognize a 1990 election in which pro-democracy Nobel laureate Aung San Suu Kyi won the elections. But then she was placed under house arrest for six years. Two years earlier, military troops massacred some 3,000 pro-democracy protesters. According to Amnesty International, more than 2,000 political activists were imprisoned in 1996 alone, and Suu Kyi’s democracy party has been banned.

CIBJO TO LOBBY FOR PRECIOUS METALS QUALITY STANDARDS

The Congress of the International Confederation of Jewellery, Silverware, Diamonds and Pearls (known by its European acronym CIBJO) will take its case for precious-metals quality-assurance standards to the Commission of the European Union.

The decision to lobby the EU directly – rather than leaving it to national delegations – was one of several actions CIBJO planned at its annual conference this summer in Las Vegas, Nev.

The 1997 CIBJO gathering was the most active in years, say delegates. “There was a general feeling that CIBJO is moving into the future,” says delegate Nanette Forester, president of the American Gem Trade Association. Matthew Runci, executive director of Jewelers of America, echoes other delegates in noting a greater sense of purpose and focus this year.

Some delegates attribute this, in part, to more younger members, more Americans and more aggressive leadership. This includes designer Jose Hess, CIBJO’s first-ever president from the U.S., and Executive Director Jack Ogden of the National Association of Goldsmiths, which is contracted to administer CIBJO operations. Hess challenged delegates to make CIBJO more meaningful, to address issues of relevance and to follow up with continued action and discussion at home.

Along with the decision to lobby the EU on precious-metals quality, other results of the meeting include:

  • Delegates agreed for the third year that laser-drilling of diamonds is part of the clarity-enhancing process, not part of the drilling process.

  • Keshi pearls will now be called keshi cultured pearls in CIBJO nomenclature, not simply keshi pearls. The question of whether they are natural or cultured pearls has been an issue of lively debate.

  • CIBJO’s colored stone commission has completed a year-long rewrite of the colored stone portion of CIBJO’s Blue Book (the other two parts cover diamonds and pearls). The final proposal will be submitted for consideration next year.

  • Delegates discussed the relationship between gem labs and the trade, saying each must try to understand the other’s needs.

  • The diamond commission reviewed grading issues.

  • There was lively discussion in the retail sector of the conference about the jewelry industry’s use of the Internet. A number of delegates expressed surprise at the extent of use. Delegates decided to move ahead with creating a CIBJO site on the World Wide Web.

CIBJO is a 71-year-old global organization of trade groups of retailers, manufacturers, wholesalers and gemstone dealers.

JOEL WINDMAN LEAVES JVC

The Jewelers Vigilance Committee Inc. of New York City announced the resignation of Joel A. Windman, executive vice president and general counsel, in late June.

Asked for an explanation of Windman’s resignation, JVC President Michael Barlerin said the announcement that Windman was leaving to pursue consultant work should be taken at face value. “I think he feels he’s done a hell of a good job at the JVC, and he’s ready to move on,” Barlerin says.

Rachel Kaufman, JVC’s assistant to the executive vice president for 21 years, also resigned and will join Windman in his pursuits as a legal consultant to the jewelry industry, the government and consumers.

Windman plans to pursue writing, act as an impartial arbitrator, set up quality-assurance programs and work with the Federal Trade Commission and state attorneys general when necessary, according to a release prepared by JVC.

Abe Shainberg will continue as executive vice president of operations of JVC and will take over some of Windman’s duties, Barlerin says.

Windman had served as JVC executive vice president since 1969. Among his accomplishments were three revisions of the National Gold & Silver Stamping Act, the FTC Jewelry Guides and the Watch Guides. He can be reached at 200 E. 57th St., New York, NY 10022; (212) 826-1068

SASSON BASHA OBTAINS COPYRIGHT ON BABY SHOES

Sasson Basha Designs Ltd., New York City, has obtained copyright and trade dress rights on its line of Aaron Basha Baby Shoe charms and is involved in litigation with alleged violators.

The charms, modeled after baby shoes with straps and bows, are made of 18k gold with diamonds and enamel and are manufactured for the company in Italy. The design, the name and the slogan “It’s Shoe Time” are protected by copyright registration No. VA 767-027, issued Dec. 26, 1996. Sasson Basha Designs is sending letters to alleged infringers and their customers.

President Sasson Basha says the company has already filed lawsuits against “quite a few” manufacturers and retailers. “The court issued a restraining order the week before the [JCK International Jewelry Show in Las Vegas] against products that were infringing upon our copyright,” he says.

Representatives of the company reportedly approached exhibitors who were selling similar designs during the show to inform them of the copyright protection.

Linea Aurea of New York City is one of the companies against whom Sasson Basha Designs tried to get a restraining order in the Fifth District Court of New York, but the case between the two companies is closed, according to Linea Aurea’s Kevin Etessami. “The judge said I had to stop selling two questionable products that we import from Italy, and he still has to make a decision about another one that we manufacture here,” says Etessami. “But with our other eight products, he said there’s absolutely no problem. I’ve been making these shoes for 10 years.”

Sasson Basha Designs sought a temporary restraining order against Linea Aurea before the JCK Las Vegas Show and again afterward, and both times the judge denied the request, Etessami says.

Basha says the other cases are still pending.

CSO SALES INCREASE IN FIRST HALF

CSO ROUGH
DIAMOND SALES
(Figures in millions of dollars)

First half Second half Year
1987 $1,560 $1,515 $3,075
1988 $2,201 $1,971 $4,172
1989 $2,317 $1,769 $4,086
1990 $2,477 $1,690 $4,167
1991 $2,084 $1,843 $3,927
1992 $1,787 $1,630 $3,417
1993 $2,543 $1,823 $4,366
1994 $2,580 $1,670 $4,250
1995 $2,540 $1,991 $4,531
1996 $2,748 $2,086 $4,834
1997 $2,880
Source: De Beers Central Selling Organization

Rough diamond sales by De Beers’ Central Selling Organisation jumped 4.81% to $2.88 billion in the first half of 1997.

About half of that total came from the first two sight allocations of the year, which were the largest in CSO history. These sights reflected a recovery of confidence and a lessening of oversupplies in India since last year. They also reflected lower sales outside the CSO by Russia, Zaire and Angola.

Consumer demand for diamonds in the U.S. continued apace with last year’s growth rate. Demand was up in Japan in the first quarter – many consumers were looking to beat an increase in sales taxes that went into effect in April. Demand in Europe was mixed, with gains higher in the United Kingdom and Germany but slow in France and Italy. De Beers noted a recovery in diamond demand in Taiwan, while sales in South Korea were stable.

BAUME & MERCIER’S KAISER REMEMBERED FOR LEADERSHIP

Benjamin Kaiser, 72, chairman of Baume & Mercier Inc. USA and one of the jewelry and watch industry’s most active members, died June 16 in New York City. Many in the industry remember him for the strength of his own business and the vision he sought for a strong and ethical jewelry industry.

“Ben’s loss represents not only a great personal tragedy to the Kaiser family and to those who loved him, but a deep loss to the industry as well,” says Steven P. Kaiser, his son and president of Baume & Mercier Inc. USA. “We wish to thank all the family, friends and colleagues who have demonstrated their love and support. My hope is that Ben will be remembered by the great passion and integrity for which he lived his life, deeply devoted to both his family and business.”

Colleagues note his passion for the industry and his tireless personal effort. “He cared deeply about what his work meant to the industry,” says Toby Collado, executive director of the American Watch Association, Washington, D.C. “He worked very hard for what he believed in.” Kaiser was chairman of the AWA in 1987-1989.

“Ben was a very generous man who was willing to give his time to help people,” says Matthew Runci, executive director of Jewelers of America. “He was someone who sought to build consensus. He was a joy to work with and we’re all going to miss him.”

Kaiser fought with the Polish resistance during World War II and was commissioned a lieutenant when working with U.S. and British Intelligence Services until 1948. He also attended the London School of Economics. He and his wife, Ita, emigrated to the U.S. in 1949.

In 1955, he was one of the founding associates of David G. Steven Inc. The company was appointed the exclusive U.S. distributor of Baume & Mercier Swiss-made watches in 1962. He became chairman in 1993, and the company changed its name to Baume & Mercier Inc. USA in 1996.

Kaiser also served as president of the Jewelers Vigilance Committee, second vice president of AWA and a member of the New York and Southern California Twenty-Four Karat Clubs and the Boston Jewelers Club. He is survived by his wife, sons Steven and Alan and three grandchildren. Donations may be made to the Holocaust Museum, Tribute Committee, 100 Raoul Wallenberg Place S.W., Washington, DC 20024.

KREMENTZ, COLIBRI ABORT ACQUISITION

Colibri will not buy two divisions of Krementz & Co. as originally planned, Krementz Chief Executive Officer Ted Bonsignore announced in late June.

The Colibri Group, a manufacturer in Providence, R.I., had agreed earlier in the month to acquire the Krementz Jewelry and Shiman Religious Jewelry divisions of Krementz & Co., Newark, N.J., for an undisclosed amount. Negotiations were terminated in mid-June.

At press time, Krementz & Co. planned to continue seeking a buyer for the divisions, which produce the company’s 14k overlay, 18k electroplate and 14k religious jewelry.

(For more on the history of Krementz & Co., see p. 90, this issue).

FRED MEYER TO BUY FOX JEWELRY

Fred Meyer Inc., Portland, Ore., one of the country’s largest retail jewelry chain operators, has agreed to buy the 44-store Fox Jewelry Co., Grand Rapids, Mich., an 80-year-old Midwest chain.

The acquisition is expected to be completed this month through Fred Meyer Jewelers Inc., the wholly-owned subsidiary of Fred Meyer Inc.

The merger will focus on common strengths and eliminate duplications, says Ed Dayoob, president of Fred Meyer Jewelers. Fox’s top officers – Chairman Thomas Fox and President and Chief Executive Officer Jack Bowen – will remain with the company after the merger.

The Fox stores are located in malls, half in Michigan and Wisconsin, and the rest in Indiana, Illinois, Ohio and Iowa.

LATE-BREAKING NEWS: AINSWORTH IS OUT AT AGTA

Ron S. Ainsworth, the American Gem Trade Association’s executive director, was “discharged from his obligations” in June, says AGTA board member Simon Watt of Mayer & Watt, Maysville, Ky.

“He was hired on a probationary basis since October 1996 and it just didn’t work out,” Watt says, “so he’s no longer an employee.”

Contacted at his residence, Ainsworth says: “I confirm that I no longer work for AGTA, but I will not discuss the circumstances surrounding my departure at this time.”

Nanette Forester, AGTA president, has formed a search committee to fill the vacant position.