VZCZCXRO3214
RR RUEHCHI
DE RUEHBK #3207/01 2981002
ZNR UUUUU ZZH
R 241002Z OCT 08
FM AMEMBASSY BANGKOK
TO RUEHC/SECSTATE WASHDC 4815
INFO RUEHCHI/AMCONSUL CHIANG MAI 5750
RUEHGO/AMEMBASSY RANGOON 5334
RUEHNR/AMEMBASSY NAIROBI 0322
RUEHDR/AMEMBASSY DAR ES SALAAM 0317
RUEHLM/AMEMBASSY COLOMBO 3587
RUEHAN/AMEMBASSY ANTANANARIVO 0050

UNCLAS SECTION 01 OF 02 BANGKOK 003207 
 
DEPT FOR EAP/MLS (DRICHELSOPH, LSCHEIBE) 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958, AS AMENDED:  DECL:  10/24/2018 
TAGS: EMIN ETRD PGOV PREL BM TH
SUBJECT: ORIGIN OF THAI RUBY EXPORTS HARD TO DOCUMENT 
 
REF:  A)  RANGOON 61 (Financing the Regime with Jade, Not Gems) 
¶B.  RANGOON 62  (Auctioning off Burma's Riches) 
¶C.  RANGOON 750 (Burmese Gem and Jade Exports on the Rise) 
¶D.  BANGKOK 5927  (Thai Gem Industry Believes Anti-Burma Legislation 
Would Do More Harm Than Good) 
¶E.  BANGKOK 6239  (A Burmese Rock Becomes a Thai Ruby) 
¶F.  CHIANG MAI 114  (Thai Market Turns to African Rubies as Smuggling 
of Burmese Stones Declines) 
 
¶1.  (SBU) Summary. Thai jewelry dealers say that while African rubies 
are increasingly imported for processing in Thailand, the rubies 
headed for the U.S. market have traditionally been higher quality 
stones that are likely to have come from Burma. Rubies are typically 
shipped to the United States in small express-mail envelopes on an 
as-needed basis.  Most of the raw stones currently in Thai 
inventories have no documentation as to their country of origin. 
Ruby prices have dropped 15-20 percent in the past month, but Thai 
dealers believe that drop may largely be due to global financial 
uncertainty.  Once current inventories are sold and the full impact 
of implementation of the JADE Act has been felt, Thai jewelry dealers 
will have a better idea of the JADE Act's effect on prices. End 
summary. 
 
¶2.  (SBU) Comment.  Thai jewelers do not yet seem to have come to 
grips with the implications of the JADE Act for their industry. In 
our conversations this past week with both the Chantaburi Gem and 
Jewelry Traders Association (CGJTA) and the Thai Gem and Jewelry 
Traders Association (TGJT), which together represent the majority of 
large Thai jewelry dealers and processors, Thai dealers seem to be 
clinging to a hope that the JADE Act might somehow be altered or 
struck off the books, instead of focusing on ways to document their 
rubies' country of origin.  The two organizations believe that the 
JADE Act hurts Thailand far more than the Burmese government and that 
fact should cause the U.S. to re-think implementation of the law. 
Once Thai jewelry dealers face strict enforcement of the JADE Act, it 
seems inevitable they will try to ship higher quality rubies to 
non-U.S. markets and sell documented African rubies to the U.S. 
market.  (Note: Gem and jewelry exports from Thailand totaled $5.6 
billion in 2007, Thailand's fifth largest export by value.  Of that 
amount approximately $935 million went to the U.S.  Thai customs data 
is not precise enough to determine how much of that was rubies or 
jewelry that contains rubies.)  End comment. 
 
Where Rubies Come From and Where They Go 
¶3.  (SBU) Sales to the United States account for 25-30 percent of 
Thai jewelers' ruby market according to the TCJTA and CGJTA.  Most 
rubies going to the U.S. probably originate in Burma, but precise 
figures are unknown since to this point no particular attention has 
been paid to the origin of raw stones that come into Thailand for 
treating, heating, cutting and polishing. (See ref E.) This 
processing typically multiplies many times over the value of the raw 
stones, and Thai craftspeople have all but cornered the market on the 
specialized skills involved with Burmese as opposed to African 
rubies.  Mr. Phuket Khunprapakorn, Secretary General of CGJTA, told 
us that Burmese rubies tend to be of higher quality and value than 
African rubies and that quality makes them the ruby of choice in the 
U.S. market.  Currently, African rubies tend to be sold to other 
Asian countries.  Gem merchants along the Burma-Thailand border 
reported similar views. 
 
¶4.  (SBU)  In recent years, African gems have gained an increasing 
foothold in Thailand (see ref F.)  According to Thai customs 
statistics---keeping in mind the numbers do not reflect smuggled 
Burmese goods---Thailand was already importing more gems from 
Tanzania than from Burma in the first half of 2008, before the U.S. 
JADE Act was passed.  Apart from the official customs data, TGJTA 
claims 80 percent of the rubies they import come from Madagascar, 
Kenya, Tanzania, Nigeria, India, and Brazil with the remaining 20 
percent from Burma. 
 
¶5.  (SBU) Mr. Vichai Assarasakorn, President of TGJTA, and Mr. 
Anthony Brooke, First Deputy Director of Public Relations for TGJTA, 
claim most Burmese rubies in Thailand are smuggled across the porous 
Burmese-Thai border and are sold at markets in Mae Sai and Mae Sot. 
However, comments from ruby vendors in these border towns suggest 
that the Burmese government has been tightening control over 
high-quality rubies mined in Burma, reducing both the quality and 
number of stones smuggled into Thailand.  Vendors have told us that 
they are increasingly dealing in African rubies because of lower 
cost. (see ref F.) 
 
¶6.  (SBU) The TGJTA says there is no standard practice with regard to 
how rubies are shipped to the United States.  However, in general, 
dealers mail their goods via commercial airfreight, often using 
 
BANGKOK 00003207  002 OF 002 
 
 
express mail services.  Dealers package unset rubies in business-size 
envelopes and place these envelopes inside larger flat or padded 
envelopes.  TGJTA states that companies mail shipments on an 
as-needed basis.  Larger dealers may ship once or twice a month while 
smaller dealers may ship goods every few months.  Less frequently, 
American buyers come to Bangkok to purchase directly and hand-carry 
the products home.  Rubies exported from Thailand are generally sold 
loose but may be set into jewelry as a finished product such as a 
necklace or ring prior to shipment. 
 
Small Market for Jade 
¶7.  (SBU)  The TGJTA says Thailand is no longer a major player in 
Burmese jade as Chinese have taken over the field.  In addition, only 
a small portion of jade exported from Thailand is bound for the U.S. 
market.  TGJTA claims approximately $12 million worth of jade was 
exported to America in 2007.  The majority of this jade was finished 
jade that originated from Hong Kong.  A large jade dealer in Chiang 
Mai supported this statement, claiming his business is moving away 
from Burmese jade in favor of procuring raw material from Hong Kong. 
 
Thai Dealers say they rarely buy from Burmese Auctions 
¶8. (SBU) While CGJTA and TGJTA claim their members do not as a 
practice purchase rubies at Burmese government auctions, many readily 
acknowledge having participated in them out of curiosity.  According 
to CGJA and TGJTA members, the Burmese auction organizers send out 
invitations by various methods, including advertising the upcoming 
sales in newsletters and sending emails.  Lists of stock to be sold 
are distributed and passed informally among jewelers in Thailand. 
CGJA and TGJTA say that anyone can attend the auctions so long as 
they register in advance and paid a registration fee.  Transactions 
at the auctions are conducted in Euros and to purchase a lot, one has 
to pay ten percent down with the remainder being paid on delivery of 
the goods.  One vendor we spoke with did admit to purchasing at 
Burmese emporiums once or twice a year, bringing back mainly polished 
loose stones. 
 
The Price of Rubies 
¶9.  (SBU) CGJA and TGJTA members say the price of Burmese rubies has 
dropped 15-20 percent over the last month.  However, they believe the 
current global financial crisis may be the main cause for the price 
drop.  CGJA notes that they will better be able to determine the 
effect of the JADE Act on the price of rubies in about three months 
when jewelers hope to have cleared their existing stock of Burmese 
rubies and start purchasing more inventory. 
 
¶10.  (SBU) CGJTA and TGJT claim their members have over $40 million 
worth of Burmese rubies already in Thailand, much of it intended for 
the U.S. market.  They note jewelers have no documents attesting to 
the current inventory's country of origin.  If forced to provide a 
paper trail demonstrating a ruby's country of origin, some members of 
TGJT believe that jewelers may seek to obtain fraudulent documents. 
 
¶11.  (U)  Consulate Chiang Mai and the United States Customs and 
Border Protection cleared this cable.