Opinion on the proposal for a Council Directive on articles of precious metal (1) (94/C 148/09)

On 7 December 1993 the Council decided to consult the Economic and Social Committee, under Article 100a of the Treaty establishing the European Economic Community, on the abovementioned proposal.

The Section for Industry, Commerce, Crafts and Services, which was responsible for the Committee's work on the subject, adopted its Opinion on 2 March 1994. The Rapporteur was Mr Douvis.

At its 314th Plenary Session (meeting of 23 March 1994), the Economic and Social Committee adopted the following Opinion by 87 votes to 39, with six votes against (voting by name).

The Committee approves the proposal for a Directive subject to the following comments.

1. Introduction

1.1. The Proposal for a Council Directive on articles of precious metal seeks to harmonize the different legal, normative and administrative provisions in force in the Member States covering certification of the fineness of precious metals and sponsor certification.

1.2. These differences create obstacles to the free movement of goods in the internal market and pose problems with respect to consumer protection, on the one hand, and unfair trading conditions for business on the other.

1.3. The proposal covers the marking of articles of precious metal and certification procedures.

1.4. The Directive covers gold, platinum, palladium and silver, and articles made out of these metals after the entry into force of the Directive.

1.5. The basic features of the Directive are as follows:

a) The standard marked on articles of precious metal must correspond to the true precious metal content (pure or alloy).

b) The Directive restricts the number of standards which may be used for such articles in order to ensure transparency on the Community market and reduce the likelihood of confusion.

c) The Directive takes account of the technical problems of different types of manufacture, such as soldering, assembly and the use of mechanisms.

d) Small, fragile and semi-finished articles are exempted, and it is recommended that such articles should carry a label showing the standard and sponsor.

e) The Directive covers provisions relating to indication of the standard of fineness of articles of precious metal, finished or semi-finished, intended for the ultimate consumer:

- it establishes the essential requirements to be met during manufacture and before the articles are placed on the Community market;

- it lays down conformity assessment procedures;

- it lays down rules on the striking and the content of marks;

- it establishes a set of nominal standards of fineness for each precious metal.

2. Current Situation in Member States

2.1. The practices currently followed in the Member States are as follows:

- compulsory marking by a third party (UK, IRL, FR, NL, PT and ES); however, even within this group, marking methods also vary.

- optional marking by a third party as well as compulsory marking by the manufacturer (B and DA), and

- marking by the manufacturer (DE, GR, IT and L).

3. Gist of the Commission Proposal

3.1. The Directive requires the manufacturer or authorized representative to ensure the conformity of the articles before placing them on the market, giving him the option of:

a) following the procedure for the EC declaration of conformity based on the system of product quality assurance specified in Annex III, or;

b) following the procedure for the EC declaration of conformity specified in Annex IV, or;

c) submitting the articles for the verification specified in Annex V.

3.2. On the subject of marking, the Directive provides for a fineness mark and a sponsor's mark, which must be accompanied by a small letter 'e'.

3.2.1. This letter 'e' distinguishes new articles manufactured according to the provisions of the Directive.

3.3. These marks indicate that the article meets the requirements of the Directive, and therefore, it need not bear the CE mark. The Directive also provides that the shape of the mark should indicate the type of precious metal used.

3.4. The sponsor's mark identifies the manufacturer and the notified body.

a) The proposal for a Directive is based on Article 100a of the Treaty and aims to ensure an appropriate level of consumer protection.

b) Apart from the requirements concerning marking by the manufacturer, an authorized representative or any person responsible for placing articles on the market, the Directive also provides for notified bodies and for the Commission to be assisted by a permanent consultative committee set up by Directive 83/189/EEC.

c) The Directive provides for a transition period to allow existing stocks to be placed on the market.

d) This Directive does not apply to:

1) Articles of precious metal for dental prostheses or for medical use, as defined in Council Directive 93/42/EEC;

2) Objects of precious metal for scientific and technical use;

3) Musical instruments or parts of such instruments made from precious metal;

4) Legal tender made of precious metal and collectors' coins and medals;

5) Ingots or granules of precious metal for banking use;

6) Objects made of metals other than precious metal and coated with precious metals.

4. Economic and Social Dimension

4.1. According to the Commission's findings Community gold production amounted to a total of ECU 5,6 billion in 1989, with the fabrication of fine gold exceeding 630 tonnes.

4.1.1. As for job numbers, the jewellery industry in Europe alone is said to employ over 56 000 people, and an estimated 120 000 persons are employed in the manufacture of articles of precious metal. These figures do not include people involved in the distribution of these articles, who slightly outnumber those working in their manufacture.

4.1.2. The Commission states that in the Member States where precious metal fabrication is most highly developed - Italy, France, Germany, Spain and the United Kingdom - around 1 700 businesses are involved in industrial-scale manufacture while some 13 000 businesses manufacture on an artisanal basis.

4.2. The Committee would point out, however, that the Commission's statistics do not take account of the very large number of small artisanal businesses working in this sector, and that therefore the total number of people employed in the sector is far higher.

5. General Comments

5.1. The Committee endorses the Commission's approach and the involvement at the drafting stage of the social partners, consumers and international organizations representing the businesses concerned.

5.2. The Committee points out that the Directive only covers new products, and not antiques and second-hand articles.

5.3. The Committee has always been in favour of harmonized European standards applicable throughout the Community, as these are a prerequisite for balanced economic development and increased competitiveness. Such standards are useful for tackling distortions in competition and thus help to boost SMEs in particular.

5.4. The Committee feels that it is important to harmonize national technical regulations on certification and marking of articles of precious metal in order to remove obstacles to the free movement of such articles within the Community and to guarantee an appropriate level of consumer protection as well as fair trading

5.5. The three existing methods of certification and marking specified in Annexes III, IV and V, which reflect traditional practice in Member States, are designed to provide the same level of protection and guarantee and are therefore regarded as equally valid.

5.5.1. The Committee feels that taking out Article 8(1)(b) and Annex IV, as some have suggested, will make it impossible for the Directive to be adopted. The procedure specified in Annex IV is the only reasonably practical way to ensure a degree of control in the large manufacturing and exporting countries, and Annex IV is also considered crucial for most of the other Member States.

5.6. The Committee points out that the delay in submitting the proposal for a Directive was largely due to disagreements between the professional associations concerned.

5.7. The Committee appreciates the Commission's attempts to restrict the number of nominal standards of fineness contained in Annex I within reasonable limits, taking account of established tradition and consumer expectations in Member States.

5.7.1. Any further reduction in the number of standards of fineness in the near future, as suggested by operators, may have an adverse effect on established practice.

5.8. The Committee asks the Commission to consider whether antique articles of precious metal, old and secondhand jewellery and articles sold off by pawnbrokers should be explicitly included in the list of exemptions in Article 1(3).

6. Specific Comments

6.1. In Article 1(2)(a) the word ëåõêo÷ñõóoò in the Greek text should be replaced with the word ÐÄATINH. This will bring the Greek text into line with the other languages.

6.2. The Committee feels that Article 4 should contain a further provision making it clear that the three proposed certification methods (Annexes III, IV, V) have equal validity.

6.3. The Committee is assuming that the complaints procedure set out in Article 7 may only be implemented as a last resort in exceptional circumstances and after all attempts to reach an amicable settlement have failed.

6.4. As regards Article 8(1), the Committee feels that the person responsible for placing articles on the market (e.g. in wholesale or export companies) should also be allowed to request the conformity assessment procedures referred to in Annexes III and IV, as well as that referred to in Annex V. This is necessary in order to avoid discrimination against forms of distribution used in this business. Efforts must be made to ensure that no unfair practices can arise with imports from third countries.

6.5. As regards Article 8(3) of the Directive, which states that the manufacturer, his authorized representative or, where appropriate, the person responsible for placing articles on the market, shall select a notified body to carry out the checks prescribed in the conformity assessment procedure, the Committee agrees to any viable procedure which does not cost jobs, hamper production or push up production costs, particularly for small and medium-sized businesses and artisans.

6.6. The Committee recommends that the Commission change the wording of Article 9(4) to make it consistent with Article 7a of the EC Treaty, which refers to completion of the internal market. Generally speaking, applying the principle of mutual recognition is the most effective way to ensure free movement of goods.

6.7. As regards Article 10, the Commission should make sure that the procedure for registering sponsor's marks is on a par in all Member States.

6.7.1. Taking on board the Commission study of different marks used in the EC, (more than 100 000), many of which are presumably quite similar, the Committee emphasizes the need to minimize the risk of confusion.

6.8. As regards Article 13, the Committee considers it excessive to demand special certificates of conformity, as described in Annex VIII, for small and fragile articles, which are often not very expensive. The Committee feels that it would be sufficient to put a declaration on the invoice and on the sales receipt.

6.9. The Committee approves of Annex I, which sets out nominal standards of fineness for articles of precious metal in parts per thousand, doing away with indication in carats.

6.10. Since any coating is merely decorative in nature and has no bearing on the precious metal content of the article, the Committee proposes that the last sentence of Annex II (4) be deleted.

6.11. In the Committee's view, the sponsor's mark is as important as the fineness mark, and therefore the Committee suggests that the Commission should include the sponsor's mark in the essential requirements of Annex II.

7. Summary

7.1. The Committee endorses the proposed Directive in principle, seeing it as an important contribution to consumer protection and to boosting the competitiveness of a sector dominated by small and middle-sized enterprises.

7.2. The Committee endorses the Commission's approach and the involvement at the drafting stage of the social partners, consumers and international organizations representing the businesses concerned.

7.3. The Committee welcomes the fact that the Commission took reasonable account of traditional circumstances in Member States when restricting the number of nominal standards of fineness.

7.4. When this Directive is implemented, it is important to ensure that the competitiveness of small and medium-sized enterprises and of artisans is not prejudiced.

Done at Brussels, 23 March 1994.

The Chairman

of the Economic and Social Committee

Susanne TIEMANN

(1) OJ No C 318, 25. 11. 1993, p. 5.

APPENDIX 1 to the Opinion of the Economic and Social Committee

The following members, either present or represented, voted for the Opinion:

Mr/Mrs/Miss: ARENA, ATTLEY, BAGLIANO, BASTIAN, BELL, BELTRAMI, BERNABEI, BERNS, BLESER, BOISSEREE, BORDES-PAGES, BOTTAZZI, BREDIMA-SAVOPOULOU, BRIESCH, CARROLL, CASSINA, CAVALEIRO BRANDÃO, CHEVALIER, COLOMBO, DIAPOULIS, DONCK, DOUVIS, d'ELIA, EULEN, FLUM, FRERICHS, GAFO FERNÁNDEZ, GARDNER, GAUTIER, GEUENICH, GHIGONIS, GIACOMELLI, GIESECKE, GOMEZ MARTINEZ, GOTTERO, GREEN, GROBEN, HAGEN, von HAUS, HOVGAARD JAKOBSEN, KARGAARD, KAZAZIS, KORFIATIS, KORYFIDIS, LACA MARTIN, LAPPAS, LAUR, LIVERANI, MANTOVANI, MARGALEF MASIA, MASUCCI, MAYAYO BELLO, MERCE JUSTE, MERCIER, MEYER-HORN, MOLINA VALLEJO, MUÑIZ GUARDADO, NIELSEN B., NIELSEN P., PARDON, PASQUALI, PAVLOPOULOS, PELLARINI, PELLETIER R., PETERSEN, PETROPOULOS, PRICOLO, PROUMENS, QUEVEDO ROJO, REA, RODRIGUEZ de AZERO Y DEL HOYO, RODRIGUEZ GARCIA-CARO, ROMOLI, SALA, SANTILLAN CABEZA, SAUWENS, SCHADE-POULSEN, SCHMIDT, SCHMITZ, von SCHWERIN, SCULLY, SOLARI, SPYROUDIS, STECHER NAVARRA, THEONAS, WALDACK, ZUFIAUR NARVAIZA.

The following members, either present or represented, voted against the Opinion:

Mr/Mrs/Miss: ATAÍDE FERREIRA, van den BURG, Vasco CAL, CONNELLAN, DAVISON, DAWSON, van DIJK, DRAIJER, ELSTNER, ETTY, FORGAS I CABRERA, FRANDI, GERMOZZI, GREDAL, HILKENS, JASCHICK, JENKINS, KAFKA, KIELMAN, de KNEGT, LINSSEN, LITTLE, LUSTENHOUWER, LYNCH, LYONS, MADDOCKS, McGARRY, MOBBS, MORELAND, NOORDWAL, RAMAEKERS, REBUFFEL, SÁ BORGES, SANDERSON, SANTIAGO, SANTOS, SEQUEIRA, SILVA, STOKKERS.

The following members either present or represented, abstained in the vote:

Mr: BAEZA, BEALE, BENTO GONÇALVES, DUNKEL, PEARSON, WHITWORTH.

APPENDIX 2 to the Opinion of the Economic and Social Committee

The following proposed amendment (Counter-Opinion), which was endorsed by at least a quarter of the votes cast, was rejected by the Committee in the course of the debate:

Replace the last sentence before point 1 'Introduction' with the following paragraph:

'The Committee supports harmonization of national provisions on precious metals, takes note of the Commission's proposal and comments on it as follows.'

Reasons

It is acknowledged that existing national provisions will have to be harmonized to complete the internal market. But the Commission proposal presents so many problems, some of which are quite fundamental, that we should press for the proposal to be modified.

Point 1.1

Add new paragraph:

'1.1. The intrinsic value of precious metals such as gold, silver, platinum and palladium, combined with the added value these acquire when worked into articles such as jewellery, is so great that there is a serious risk of fraud. It is not generally possible for the purchaser to ascertain the precious metal content simply from the appearance of the article. Therefore the precious metal content should be indicated and some kind of guarantee provided. Being aware of this problem, most Member States have long since passed laws to regulate trade in articles of precious metal.'

Reasons

This addition to the Draft Opinion text is intended to further explain why good regulation is so important.

The numbering of subsequent paragraphs will be amended automatically as far as point 5. The remaining text (point 5 onwards) will be replaced by the following:

'5. General comments

5.1. In principle, the Committee supports harmonization of national provisions on articles of precious metal. Since harmonization in this sector is important if fair competition is to be achieved, while at the same time serving to protect purchasers (consumers), the Committee wonders whether Article 129a should not also be taken as the legal basis for the Directive, in addition to Article 100a, which deals with the internal market.

5.2. The Committee feels that, on the basis of both Article 129a and Article 100a of the Treaty, any proposal for harmonization measures must inevitably incorporate a high level of consumer protection. For this reason the Committee urges the Commission to assess the proposed certification methods against the requirements specified in these Articles of the EC Treaty, paying particular attention to the possibility of tightening up the certification methods detailed in Annexes III and IV.

5.3. The three existing methods of certification and marking specified in Annexes III, IV and V must ensure the same level of consumer protection if they are to be acceptable.

5.4. The Committee was pleased to note that the social partners, consumers and international organizations representing the businesses concerned were involved at the drafting stage of the present proposal. The Committee would point out that the Commission also reported in its Explanatory Memorandum that some objections have been raised by the consumer organization BEUC.

5.5. The Commission proposal is based on current production and verification practices in EC states. In the Committee's view, this approach is only acceptable if such verification practices are seen as equally valid. The Committee feels that the three conformity-assessment procedures proposed by the Commission in Annexes III, IV and V are so different that there can be no question of equal validity. In this connection, the Committee would refer the Commission to a recent specialist study by Prof. A.C. Brombacher of the Eindhoven University of Technology dated 7 March 1994.

The Committee is afraid that implementing the Commission proposal would lead to a reduction in the level of consumer protection in at least the six Member States where third-party verification is currently enforced.

5.6. The Committee has serious objections to the arrangements proposed in Annex IV as these rely too heavily on good organization by manufacturers and do not provide for any effective control by a third party. Although reference is made in the proposal to the possibility of controls, no such procedure is laid down either in the Commission proposal itself or through the relevant European standard.

5.7. The Committee requests that the Commission amend the formulation of Annex III to the effect that the proposed product-quality assurance as detailed in EN 29003 is changed to production-quality assurance as detailed in EN 29002. This could be a solution not only for those Member States which currently use only the method set out in Annex V but also for the other Member States, since Annex III allows the manufacturers themselves to strike the marks.

5.8. The Committee feels that, contrary to the terms of the Commission proposal as it stands, second-hand articles should also be covered by this Directive in addition to new articles. This excludes antique articles. There is a large-scale second-hand market in this sector. Since it is often difficult to tell the difference between second-hand and new articles, some provision for this should be made in the proposal.

5.9. As regards Article 10, the Commission must ensure that national registration of sponsors' marks is carried out by the relevant persons following procedures which have equal validity.

5.9.1. Taking on board the Commission study of different marks used in the EC (more than 100 000, many of which are presumably quite similar), the Section emphasizes that confusion between different marks must be prevented. This can be achieved by making it mandatory for the symbol of the notified body also to be shown on the article.'

Reasons

In contrast to the view expressed in the Section Opinion, my feeling is that the Commission proposal provides insufficient guarantees for producers and dealers working in this field, and also for purchasers (consumers), who are unable to ascertain the precious metal content of a given article without the aid of a clear guarantee. Introduction of the system proposed by the Commission involving a choice between three options which I think provide widely differing levels of guarantee, would eventually lead to a European system of regulation based on the lowest common denominator. This would be inconsistent with Article 100a(3) and the new Article 129a.

Third-party verification is currently obligatory in the United Kingdom, Ireland, France, the Netherlands, Portugal and Spain. In Belgium and Denmark, third-party verification is an optional addition to obligatory marking by the manufacturer. In Germany, Greece, Italy and Luxembourg, only marking by the manufacturer is required.

On the basis of this, I believe it should be clear that any harmonization of regulations in this field must incorporate equivalent third-party verification. This would boost confidence not only among those involved in the business but also among consumers.

Voting

For: 37, against: 95, abstentions: 6.

APPENDIX 3 to the Opinion of the Economic and Social Committee

The following members, either present or represented, voted for the Counter-Opinion:

Mr/Mrs/Miss: ATAÍDE FERREIRA, van den BURG, Vasco CAL, CONNELLAN, DAVISON, DAWSON, van DIJK, DRAIJER, ELSTNER, ETTY, GREDAL, von HAUS, HILKENS, JASCHICK, JENKINS, KIELMAN, de KNEGT, LINSSEN, LITTLE, LUSTENHOUWER, LYONS, MADDOCKS, McGARRY, MORELAND, NOORDWAL, PEARSON, REA, SÁ BORGES, SANDERSON, SANTIAGO, SANTOS, SCULLY, SEQUEIRA, SILVA, SPEIRS, STOKKERS, WHITWORTH.

The following members, either present or represented, voted against the Counter-Opinion:

Mr/Mrs/Miss: ARENA, ATTLEY, BAGLIANO, BARBAGLI, BASTIAN, BELL, BELTRAMI, BERNABEI, BERNS, BLESER, BOISSEREE, BONVICINI, BORDES-PAGES, BOTTAZZI, BREDIMA-SAVOPOULOU, BRIESCH, CARROLL, CASSINA, CAVALEIRO BRANDAO, CHEVALIER, COLOMBO, DECAILLON, DIAPOULIS, DONCK, DOUVIS, d'ELIA, EULEN, FERNANDEZ, FLUM, FORGAS I CABRERA, FRANDI, FRERICHS, GAFO FERNANDEZ, GARDNER, GAUTIER, GERMOZZI, GEUENICH, GHIGONIS, GIACOMELLI, GIESECKE, GOMEZ MARTINEZ, GOTTERO, GREEN, GROBEN, HAGEN, HOVGAARD JAKOBSEN, KAARIS, KARGAARD, KAZAZIS, KORFIATIS, KORYFIDIS, LACA MARTIN, LAPPAS, LAUR, LIVERANI, LYNCH, MANTOVANI, MARGALEF MASIA, MASUCCI, MAYAYO BELLO, MERCE JUSTE, MERCIER, MEYER-HORN, MOLINA VALLEJO, MUÑIZ GUARDADO, NIELSEN B., NIELSEN P., NIERHAUS, PARDON, PASQUALI, PAVLOPOULOS, PELLARINI, PELLETIER R., PETERSEN, PETROPOULOS, PRICOLO, PROUMENS, QUEVEDO ROJO, RAMAEKERS, REBUFFEL, RODRIGUEZ de AZERO Y DEL HOYO, RODRIGUEZ GARCIA-CARO, ROMOLI, SALA, SAUWENS, SCHADE-POULSEN, SCHMIDT, SCHMITZ, SOLARI, SPYROUDIS, STECHER NAVARRA, THEONAS, VANDERMEEREN, WALDACK, ZUFIAUR NARVAIZA.

The following members, either present or represented, abstained in the vote:

Mr: BEALE, BENTO GONÇALVES, BLACK, DUNKEL, KAFKA, MOBBS.

APPENDIX 4 to the Opinion of the Economic and Social Committee

The following proposed amendment, which was endorsed by at least a quarter of the votes case, was rejected by the Committee in the course of the debate:

Add to point 7.1 at end of paragraph:

'It is concerned that there may be a decrease in the level of consumer protection in at least six Member States which currently have independent third party verification procedures.'

Voting

For: 44, against: 75, abstentions: 10.