VZCZCXRO0585
PP RUEHCHI RUEHDT RUEHHM RUEHNH
DE RUEHBK #3703/01 3540924
ZNR UUUUU ZZH
P 190924Z DEC 08
FM AMEMBASSY BANGKOK
TO RUEHC/SECSTATE WASHDC PRIORITY 5450
INFO RUCNASE/ASEAN MEMBER COLLECTIVE
RUEHAN/AMEMBASSY ANTANANARIVO 0052
RUEHBJ/AMEMBASSY BEIJING 6628
RUEHLM/AMEMBASSY COLOMBO 3607
RUEHDR/AMEMBASSY DAR ES SALAAM 0319
RUEHDBU/AMEMBASSY DUSHANBE 0020
RUEHHI/AMEMBASSY HANOI 7221
RUEHIL/AMEMBASSY ISLAMABAD 3336
RUEHBUL/AMEMBASSY KABUL 0926
RUEHKT/AMEMBASSY KATHMANDU 7454
RUEHTO/AMEMBASSY MAPUTO 0078
RUEHNE/AMEMBASSY NEW DELHI 5410
RUEHCHI/AMCONSUL CHIANG MAI 5993
RUEHHK/AMCONSUL HONG KONG 4881

UNCLAS SECTION 01 OF 02 BANGKOK 003703 
 
SIPDIS 
 
DEPT FOR EEB/ESC/TFS (JMARSHALL) 
DEPT FOR EAP/MLS (LSCHEIBE) 
 
E.O. 12958: N/A 
TAGS: PGOV PREL EFIN ECON ETRD BM
SUBJECT: MOST RUBIES SMUGGLED INTO THAILAND AND COME WITH 
NO CERTIFICATES 
 
REF: A. A. SECSTATE 127059 DEMARCHE REQUEST) 
     ¶B. B. BANGKOK 6239 (A BURMESE ROCK BECOMES A THAI 
        RUBY) 
     ¶C. C. BANGKOK 3207 (ORIGIN OF THAI RUBY EXPORTS 
        HARD TO DOCUMENT) 
 
BANGKOK 00003703  001.2 OF 002 
 
 
¶1.    (SBU)  Summary.  Thailand's ruby processing industry 
does not formally document the country of origin of the raw 
stones.  Industry sources say that most rubies are smuggled 
in from either Burma or Africa.  None of the smuggled goods 
come with certificates of origin, although it may be possible 
for dealers to develop an informal certification system.  The 
Government has expressed interest in creating a certification 
scheme to comply with the JADE Act, but has no concrete plans 
at this time and has concerns about how to certify a country 
of origin for raw stones with confidence absent expensive 
testing.  They have also said that should the U.S. ban the 
import of rubies processed in Thailand, they would "have no 
choice" but to bring a case against the U.S. at the WTO for 
violation of country of origin rules. End Summary. 
 
¶2.    (SBU)  Comment: Thai gem industry sources are 
surprisingly frank about the undocumented nature of their 
inputs.  They continue in a state of denial, despite our 
explanations of what the JADE Act will require of U.S. 
importers and consequently of them. It appears that they 
believe that their frank explanations of how difficult it 
would be to create a paper trail will discourage us from 
enforcement of what in their view is a pointless law that 
will have little if any impact on the Burmese regime.  The 
Government understands better the possible consequences for 
Thai gem exports to the United States, but has a hard time 
imaging how a certification system, absent forensic testing, 
would ever be reliable given the informal, mom and pop nature 
of the industry.    . 
, 
¶3.    Per reftel A, post has gathered information on 
Thailand's ruby industry and keyed responses to reftel's 
queries as follows: 
 
¶4.  (SBU)  Ascertain from local industry representatives the 
typical chain of custody of a ruby from mine to point of 
export, or from import to export, including any controls 
private entities maintain to ensure authenticity and protect 
against smuggling: 
 
Based on conversations with the Thai Gem and Jewelry Traders 
Association (TGJTA) and the Chantaburi Gem and Jewelry 
Traders Association (CGJTA), Thailand,s largest gem industry 
groupings, Thailand no longer mines a significant amount of 
rubies.  Most rubies processed in Thailand come from Burma, 
Madagascar, and Tanzania.  For African rubies, Thai dealers 
or their agents go directly to Africa, purchase the rubies, 
and hand-carry them back to Thailand.  Most of these 
transactions are done under the table.  TGJTA states that no 
strict controls are in place to prevent smuggling.  The vast 
majority of rubies from Madagascar and Tanzania are smuggled 
to avoid paying taxes and because the government of 
Madagascar has restricted the export of rubies. 
 
¶3.  (SBU)  Determine what, if any, documentation for this 
process already exists: 
 
According to TGJTA no formal documentation exists to record 
imports of rubies from Madagascar, Tanzania, or Burma since 
they are often smuggled.  TGJTA believes it is possible for 
the governments of African countries to issue certificates, 
but this rarely happens since the sales would have to be 
reported to the governments.  For rubies legitimately 
imported into Thailand, Royal Thai Customs documents would be 
available to show the rubies entry into Thailand.  However, 
TGJTA believes a significant amount of rubies are not 
declared and are hand carried or shipped via airfreight 
undeclared into Thailand to avoid VAT and duties.  As a 
 
BANGKOK 00003703  002.2 OF 002 
 
 
result of the JADE Act, TGJTA is informing members that they 
should keep records of transactions and be prepared to 
demonstrate country of origin. However, these documents would 
be generated by the smugglers or Thai gem dealers themselves. 
TGJTA believes African dealers will develop some kind of 
certificate of origin scheme backed by the African 
government, but TGJTA says that African rubies are generally 
not bound for the U.S. market due to their lower quality. 
TGJTA is also considering issuing country of origin 
certificates to their members.  However, these would 
essentially be self-certifying and not backed by lab tests. 
Conducting actual gemological tests on rubies would be 
prohibitively expensive according to TGJTA (see reftel B). 
 
¶4.  (SBU)  Report on the major export markets, whether 
intermediary or final, for rubies extracted from or finished 
in the host country: 
 
TGJTA states that 25-30 percent of their ruby exports are 
bound for the U.S. market.  In general, the rubies are in 
finished form and are often embedded in larger jewelry 
pieces.  TGJTA believes most of the rubies bound for the U.S. 
originate in Burma because these stones tend to be of higher 
quality.  The remainder of higher quality ruby exports go to 
the European Union while lower quality rubies from Africa are 
exported to neighboring countries or sold in Thailand. 
 
¶5.  (SBU)  Engage host government officials to ascertain the 
level of government involvement in the gem industry, 
including but not limited to:  control of mines, licensing, 
taxing authority, and issuance of any certificates of origin 
of rubies for export: 
 
The RTG is not aware of significant ruby mining in Thailand 
and does not own or control ruby mines.  The RTG exercises 
basic customs authority over rubies officially imported or 
exported, but does not issue certificates of origin.  Any 
determination of a ruby,s country of origin would depend on 
the individual gem dealers declaration.  The RTG also 
believes most raw rubies to be smuggled into Thailand. 
(Note: The RTG believes Thailand is the country of origin, 
under WTO rules, for products whose last substantial 
transformation occurred in Thailand.  That would apply to all 
rubies processed here.  The Government has told us that if 
Thai ruby exports are banned from the U.S., they will "have 
no choice" but to bring a case against us in the WTO. End 
note.) 
 
¶6.  (SBU)  Discuss with industry and government 
representatives what possibilities exist for creating 
certificates of origin and/or a chain of custody paper trail 
for rubies, particularly focusing on the possibilities for 
credible documentation in which enforcement officers in the 
United States could maintain a high degree of confidence: 
 
The Thai Ministry of Commerce (MOC) and Ministry of Foreign 
Affairs (MFA) are open to the idea of creating government 
issued certificates of origin.  Both MOC and MFA state they 
are concerned about the JADE Act's impact on Thailand's 
economy and are in close contact with Thai gem associations. 
TGJTA also says they have approached the RTG about creating a 
government backed certification scheme.  While all parties 
seem interested in such a system, there are no immediate 
plans for implementing a government certificate.  MFA 
officials have also questioned whether such certificates 
would have to be backed up by laboratory tests to be 
credible. 
JOHN