. /.  WORLD TRADE  
ORGANIZATION  TN/MA/W/61 
21 September 2005 
 (05-4174) 
Negotiating Group on Market Access Original:   English 
  
 
MARKET ACCESS FOR NON-AGRICULTURAL PRODUCTS 
 
Tariff Elimination in the Gems and Jewellery Sector
 
 
Communication from Hong Kong, China; J apan; the Separate Customs Territory of 
 Taiwan, Penghu, Kinmen and Matsu; Singapore; Thailand and the United States 
 
 The following communication, dated 20  September 2005 is being circulated at the request of 
the Delegations of Hong Kong, China; Japan; the Separate Customs Territo ry of Taiwan, Penghu, 
Kinmen and Matsu; Singapore; Thailand and the United States.  
 
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I. BACKGROUND 
1. Nature and Potential of the Industry: 
 The gems and jewellery industry includes sev eral stages along the supply chain, which are 
conducted in many countries at differe nt levels of development. The three main stages are: 1) mining 
2) processing (cutting, polishing and setting) and 3) tr ading. The extraction of raw materials (mining) 
is mainly concentrated in South Asia, Southeast Asia, Southern Africa, North Africa and Australia; 
major processing is mostly conducted in developing  countries like India, China, Israel and Thailand 
(but also in certain developed countries such as th e United States and Italy); and trading is mainly 
done in developed countries such as the Un ited States, Netherlands and Belgium.  
  The gems and jewellery sector has experienced continuous growth over the years. In the year 
2000, the sector’s aggregate trade accounted for US  $239 billion, which grew 9 percent to US $261 
billion in 2003.
1  Most importantly, the gems and jewellery sector has high potential for further 
expansion, as there are unsaturated markets in most economies because of trade restrictions. The 
elimination of tariffs will stimulate higher demand in most markets, as well as permit access to imports from countries endowed with rich natural resour ces that were not previously engaged in trade.  
 
2. Economic Growth and Development: 
 Increases in trade can promote economic growth and higher standards of living.  In 
developing countries, the gems and jewellery indu stry provides employment in the various stages, 
including mining, cutting, polishing and setting, wh ich are conducted in both rural and urban areas. 
Therefore, an increase in trade in gems and jewe llery will encourage job creation, as well as preserve 
traditional craftsmanship.  This industry certa inly provides opportunity for small and medium 
enterprises, which will increase investment over ti me, stimulating overall economic development. 
Elimination of tariffs will lower barriers for deve loping countries that are global traders, allowing 
these countries to develop into trading centers. All in  all, the elimination of tariffs will benefit both 
                                                     
 
1 United Nations Commodity Trade Statistics Database. TN/MA/W/61 
Page 2  
 
 developed and developing countries by promoting trade at every stage of the supply chain of the gems 
and jewellery industry. 
3. Quality and Specialization: 
 For the gems and jewellery industry, co nsumers choose products according to many 
preference factors, such as quality, style, trust, a nd before and after sales serv ice.  The elimination of 
tariffs will induce domestic producers to improve th eir productivity, efficiency, and quality of 
products. In the long run, domestic producers will de velop their strength to compete in the global 
market. The elimination of tariffs will also reduce the cost of inputs, which in turn lowers the cost of 
production. As the nature of this industry is co mposed of a complicated supply chain with value-
added products, without tariffs, goods can flow freel y from one step to another and each country can 
specialize according to their comparative advantag e. In addition, the open market will provide 
consumers with a range of produc ts, from expensive hand-crafted pr oducts to less expensive mass 
products. Developed countries with substantial i nvestment capital and retail markets can focus on 
retailing and trading of the finished products.   
 
4. Increase Demand  
 Demand for jewellery in developing countries is relatively low compared to developed 
countries.  The elimination of tariffs will stimulate demand by lowering prices and giving wider options to consumers. 
 
II. PRODUCT COVERAGE 
 The product coverage should be  broad and cover a range of pr oducts within the supply chains 
of the gems and jewellery sector, while taking in to account the diverse nature of these products. 
Therefore, product coverage of this sector shoul d cover articles under Chapter 71 of the Harmonized 
System, which includes pearls, diamonds, precious stones, synthetic stones, silver, gold, platinum, jewellery, and other articles of the products aforem entioned, imitation jewellery, and coin. Additional 
products of interest to participating members could also be included in the product coverage. 
 
III. CRITICAL MASS 
 The participation of key traders and other Members with an economic interest in gems and 
jewellery is crucial to determine successful liberaliz ation.  Therefore, the purpose of the critical mass 
approach is to bring together these Members a nd aim for tariff elimination in this sector.   
 
IV. SPECIAL AND DIFFERENTIAL TREATMENT 
 Flexibility in implementation of the process coul d be employed to suit the need of developing 
countries.  The options may, inter alia,  include the following: 
- Longer implementation period 
   - Limited products exclusion 
   - Zero for X   
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