Despite all the reforms that have taken place in the former Soviet Union, the precious metals and gems market in Russia is still governed by severe "Homo Sovieticus" mentality. And the reigning bacchanalia in terminology used in all sorts of regulatory documents in force in the jewelry industry in this country does not appear to be the least threat to business. Let us examine some current terminology relating to the circulation of gems. What kind of gems? This is just the point to be clarified. For this purpose let us consider what terms are used in this area by various legal documents.
1. Federal Law No. 41-FZ as of 26.03.1998 "On Precious Metals and Gems."
"Article 1. Basic concepts" gives the following interpretation for the notion "gems" used in the law - "natural diamonds, emeralds, rubies, sapphires and alexandrite, as well as natural raw or processed pearls. Unique amber formations are to be regarded as gems in the manner prescribed by the Government of the Russian Federation. This list of gems can be changed only by a federal law."
It is easy to see that the interpretation of this notion - which, incidentally, is also central to Article 191 of the Russian Federation Penal Code – does not contain its clear-cut definition, but just enumerates certain titles mentioning:
- one mineral (diamond);
- some varieties of three other minerals (beryl, corundum and chrysoberyl);
- two organic substances (pearls and amber) and here it is noteworthy that the law makes a reservation for amber saying that only its “unique formations” are to be viewed as gems.
In this case, only the identification of natural diamonds and pearls theoretically excludes a controversial situation. The whole affair turns much worse when it comes to distinguishing emeralds from beryls; rubies and sapphires from corundum; and alexandrite from chrysoberyl. Because there is no single and worldwide-accepted definition for emeralds or for regular green beryls, etc. There are no such definitions in the body of the law even for Russia taken separately. Moreover, there is no consensus on these definitions among various gemological schools in Russia. The important thing is that the law on technical regulation allows you to create not only one, but a number of technical regulations for the same product (or service, etc.). It means that within some kind of technical regulations we shall be able to speak of circulating gems, while another kind of technical regulations will view such stones as something else. And then there is the problem of allowed diversity in certification...
It should also be noted that the Federal Law "On Precious Metals and Gems" does not say anything about its attitude towards enhanced gems, as if these do not happen at all. But if a gem is a NATURAL sapphire (and here we mean both raw and processed stones), it means that it should be recovered from earth exactly as a sapphire, i.e. as an appropriate jewelry variety of corundum, and not just as a “regular corundum.” However, miners very often extract the so-called geodes containing corundum crystals of a quality not at all fit for jewelry purposes, which are NEVER called sapphires by anyone. And then these stones are put to a rather complicated special high temperature treatment, after which they "turn" into sapphires. So what is this then – a natural corundum or a man-made sapphire? For a foreign free-market it is of no importance whether this should be called a sapphire or corundum - it is up to its vendors. And what is to be done with this in Russia? Keep it in mind that we have Article 191 of the Russian Federation Penal Code. Similarly, this is the case with rubies, emeralds and alexandrite.
2. "Regulation on Exports of Raw Minerals from the Customs Union Territory" adopted pursuant to Paragraph 2.11 of the "Unified list of goods Subject to export and import bans or restrictions by the Member States of the Customs Union within the Eurasian Economic Community in trade with third countries and to the provisions on application of restrictions,” approved by the Interstate Council of the Eurasian Economic Community and by Resolution No. 19 of the Customs Union Commission adopted on November 27, 2009.
The Regulation offers a new notion, "raw minerals," which under this document are "restricted to be moved across the customs border of the customs union for export purposes.” These appear to be natural untreated stones described by the customs documents as "precious and semi-precious" in accordance with Code 7103 10 000 0 of the Foreign Trade Nomenclature of Goods. However, the annex to the Regulation contains their names: agate, amethyst, beryl (beryl group), blue turquoise, garnet (garnet group), noble jadeite, Venus’ hairstone, kunzite, lapis lazuli, malachite, jade, opal, rhodonite (orlets), scapolite, topaz, tourmaline (tourmaline group), phenacite, chrysoberyl, chrome-diopside, chrysolite, chrysoprase, zircon, citrine, charoite, spinel and amber (the latter goes under Code 2530 90 980 0).
Thus, the Regulation views the notion of “raw minerals” as a totality of raw materials which include:
- Precious stones (excluding diamonds, rubies and sapphires), since emerald belongs to the above mentioned group of beryl, and alexandrite to chrysoberyl;
- Some "semi-precious stones" (the list of which is provided as it is understood by the Provision);
- Amber.
It should be noted that this list does not include corundum as a group. And this gives rise to concern, because until now in Russia sapphires of all colors (except blue), which are actually corundum, were not attributed to precious stones and were considered to be "semi-precious." Where have they gone?
All that said, there is still one more point arousing interest: speaking of "raw minerals” one should bear in mind the purpose of these objects, i.e. their subsequent use as raw material for certain products: for further faceting, cabochon making, stone carving, etc. But it is well known that none of the countries within the Customs Union has or ever had commercial deposits of a number of stones mentioned in the list. However, as far as the mentioned stones are concerned it should be pointed out that in the countries of the Customs Union (Russia and Kazakhstan) there are very small volumes of collection material that needs to be taken out to international exhibitions, because this is the only way these stones may become world famous, will be sought after and consequently get a decent price. After all, the collectors market in our countries is negligibly weak compared with the global one, and we should develop the collectors’ movement for which it is mandatory to send samples from one country to another, rather than “throw sand in the wheels.”
In addition, the introduction of such a notion for the stones mentioned in this list may mean the worst - a quiet and unobtrusive expansion of the list of "gems" adding there these new names or preparing to add them to the list of precious stones by way of a federal law.
3. Section XIV, Group 71, Foreign Trade Nomenclature of Goods "Natural or cultured pearls, precious or semiprecious stones, precious metals, metals plated with precious metals and their products, jewelry, coins."
As it is implied by the name of this section this document uses the term "semi-precious stones," as is usual, without defining what it means (as if it were clear to anyone). Meanwhile, such respected international organizations working in the global market as CIBJO and GIA strongly recommend in their materials against ever using the term "semi-precious" even in daily trade practice to say nothing of legislative regulations, because this term is misleading consumers.
However, in Russia the situation is absurd: in the course of decades the customs here used to classify virtually anything they like as "semi-precious stones," but the author of this article has failed to find a list of what the Foreign Trade Nomenclature of Goods calls "semi-precious stones" in any legitimate normative act.
4. All-Russia National Classification of Products, OK 005-93. This classification was designed by the All-Russian Research Institute of Classification, Terminology and Information on Standardization and Quality operating under the Russian Federal Agency for Technical Regulation and Metrology in team with many specialized institutes. The document was adopted and put into effect in 1994, after which it was amended dozens of times.
Apparently, there was no one from the jewelry and allied industries to help in its development and as a result now we have such officially accepted terms as "self-colored stones," "color stones,” “ornamental stones,” or even as simple as "natural stones.” All this is contained in OK 005-93, to say nothing of the above mentioned terms “precious stones” and "semi-precious stones" - they are there as well. Of course, there is no explanation of what all these terms mean.
The classification given in OK 005-93 is able to surprise any gemologist and generally any jewelry marketer by its peculiar terminological mishmash; and in some cases, OK 005-93 wrangles with the Federal Law "On Precious Metals and Gems." As an example, let’s take Item 1996 4800 9, which provides classification, among other things, for certain natural stones. Accordingly, at a lower level of this classification there emerge "natural stones (except precious stones).” But precious stones should be seated at the same level, since by law they can only be natural. Besides, we see that at this level the classification contains diamonds and emeralds, but what happened to rubies, sapphires and alexandrite? And amber failed to find its place on this level as well...
5. The All-Russia National Classification of Products by Economic Activities. It is part of the National Standardization System of the Russian Federation. This classification is built on the basis of harmonization with the Statistical Classification of Products by Activity in the European Economic Community (CPA 2002). The All-Russia National Classification of Products by Economic Activities was adopted and put into effect by the Russian Federal Agency for Technical Regulation and Metrology on November 22, 2007.
And here we see the usual terminological muddle and use of terms which are not described anywhere. For instance, look at Item 36.22.14 in the section "Other articles of precious metals; articles of natural or cultured pearls, precious or semi-precious stones” (taken selectively):
36.22.14.132 Diamond products
36.22.14.134 Products made of natural semi-precious stones
36.22.14.136 Products made of ornamental stones
36.22.14.137 Fancy goods with natural color stones
36.22.14.141 Fancy goods with precious stones
There is no hope to find some logical concordance between the items listed in the All-Russia National Classification of Products by Economic Activities and those in the All-Russia National Classification of Products. In most (!) cases no concordance at all may be found between their items.
Conclusion
Having considered the legal and regulatory framework of the jewelry industry in Russia, one may sadly conclude that there is no order there at all. Duality of any of the terms used and absence of their full-fledged description (and more often, absence of any description at all) make meaningless any legal act, since the interpretation of its contents is given at the mercy of authorities or even individual officials.
The idea is that in each such case there should be a reference to the relevant state standard (GOST) or industry standard (OST) or technical regulations. But there are no such standards in the "stone" industry (except the diamond theme). And no one is even developing such standards - this kind of work needs money, but nobody is going to allocate it.
Still, the industry is operating more relying on "understanding" than on the law - in spite of, rather than owing to, the existing regulatory framework. But why does the State continue then to believe that it controls the market of precious stones?
Vladimir Zboikov for Rough&Polished
