FTC Staff Comment Before the Department of Treasury, Customs Service Concerning Proposed Regulations on Country-of-Origin Marking of Jewelry

COMMISSION AUTHORIZED
V890048
Comments 	of 	the
Bureau 	of 	Consumer Protection
Federal 	Trade 	Commission
Submitted 	to 	the
U.S. 	Customs 	Service
Department 	of 	Treasury
on
proposed Regulations 	Concerning
Country-of-Origin
Marking of 	Jewelry
(19 	CFR 	134)

54 	Fed. 	Reg. 	6418 	(Feb. 	10, 	1989).
I. 	Introduction
The 	staff 	of 	the 	Bureau of 	Consumer 	Protection 	of 	the
Federal 	Trade 	Commission 	(FTC)1 	appreciate 	the 	opportunity 	to
submit 	these 	comments 	to 	the 	U.S. 	Customs 	Service 	("Customs")
concerning 	its 	proposals 	to 	expand 	the 	labeling requirements 	for
imported Native American-style 	jewelry.2 	The 	proposed
regulations 	would 	require 	the 	country-of-origin to 	be 	disclosed
in 	a 	permanent manner 	to 	avoid 	the 	removal 	of 	country-of-origin
labels 	after 	importation 	and prior 	to 	sale 	to 	the 	ultimate
consumer. 3 	Customs 	is 	proposing.the 	regulations 	to 	address 	the
problem of 	imported 	jewelry being passed off 	as 	Native 	American
products 	by the 	removal 	of 	the 	country-of-origin 	label.
In 	addition 	to 	seeking comment 	on 	the 	Native American-style
jewelry marking proposal 	(option 	1), 	the 	notice 	also 	seeks
comment on two 	alternative 	regulations: 	requiring 	permanent
marking on 	all 	imported 	silver and silver 	alloy 	jewelry, 	and 	all
1 	These 	comments 	are 	the 	views 	of 	the 	staff 	of 	the 	Bureau
of 	Consumer 	Protection of 	the 	Federal 	Trade 	Commission. 	They 	are
not 	necessarily 	the views 	of 	the 	Commission 	or 	any 	individual
Commissioner. 	Questions 	about 	these 	comments 	may be 	addressed 	to
- Elaine 	D. 	Kolish, 	Assistant 	Director 	for 	Enforcement, 	Bureau 	of
Consumer Protection, 	Federal 	Trade 	Commission, 	6th Street 	and
Pennsylvania Ave., 	N.W., 	Washington, 	D.C. 	20580, 	telephone:
(202) 	326-3042.
2
3 	Under 	the 	current 	proposaJ, 	it_~s would 	have 	to 	be
marked by cutting, 	die-s~nking, engraving, 	stamping or
alternatively, 	by permanently 	affixing a 	plastic 	or metal 	tag
indelibly marked with 	the 	country of 	origin to 	the 	item. 	This
proposal would 	replace existing regulations 	permitting country-
of-origin 	labels 	via 	adhesive 	labels 	or 	string tags, 	although
these 	methods 	would 	still 	be 	permitted 	for 	jewelry too 	small 	to
be 	otherwise 	marked.

other 	jewelry 	in 	the 	Native 	American-style 	(option 	2) 	or
requiring 	permanent marking on 	all 	jewelry 	(option 	3). 	The
rationale 	for 	the 	alternative 	proposals 	is 	that 	they 	avoid 	the
issue 	of 	having 	to 	determine 	what 	constitutes 	Native American-
style 	jewelry. 	The Customs 	Service 	states 	its 	preference 	for 	the
"all 	jewelry" 	option on 	this 	basis.
As 	explained 	in 	Section 	II, 	because 	of 	the 	FTC's 	interest
and 	experience with 	these 	issues, 	the 	staff 	are 	pleased 	to
provide 	comments 	on 	the 	regulatory proposal, 	as 	more 	fully
described 	in Section 	III 	below. 	In 	sum, 	we 	believe 	that 	the
proposal 	to 	require 	permanent marking on only 	imported 	items 	in
the 	Native American 	style 	is 	likely 	to 	be 	the 	least 	costly 	to
importers 	and 	U.S. 	jewelry consumers. 	We 	urge 	Customs 	to
consider whether 	the 	costs 	associated with defining 	the 	Native
American 	style 	outweigh the 	burden on 	importers 	and 	U.S. 	jewelry
consumers. 	Section 	IV discusses 	the 	cost/benefit 	analysis.
II. 	FTC 	Staff 	Interest
The 	FTC 	is 	an 	independent 	regulatory 	agency 	responsible 	for
fostering 	competition and 	safeguarding the 	interests 	of
consumers. 4 	The 	staff 	of 	the 	FTC, 	upon 	request 	by 	federal,
state, 	lnd 	.~~al government 	bodies, 	analyze 	regulatory or
4 	15 	U.S.C. 	S 41 	~ ~.
2

legislative 	proposals 	that 	may 	affect 	competition 	or 	the
efficiency of 	the 	economy.
The 	staff 	are 	particularly 	interested 	in Customs' 	proposed
regulations 	because 	the 	Commission 	has 	been 	concerned 	about
misrepresentation of 	Native American 	jewelry 	for 	many years. 	In
1968, 	the 	Commission 	announced 	an enforcement 	policy 	stating that
imported 	simulated American 	Indian products 	should 	not 	be 	sold
without 	disclosing 	the 	country of 	origin 	legibly and 	in 	a 	manner
permanent enough. to 	remain on or attached 	to 	the 	products 	until
sold 	to 	the 	ultimate consumer. 5 	More 	recently, 	in 	1985, 	the
Commission 	staff 	assisted 	the 	Department 	of 	Commerce 	in 	preparing
a 	report 	for 	Congress 	about 	Native 	American-style 	products. 	Our
role 	consisted of 	providing 	information 	to 	the 	Department 	of
Commerce 	about 	the 	law enforcement 	tools 	available 	to 	the
Commission to 	combat 	deceptive 	representations. 6
Staff 	also 	provided the 	Department 	of 	Commerce with
information 	about 	a 	then 	planned brochure 	to 	educate 	consumers
5 	The 	Commission's 	Guides 	for 	the 	Jewelry 	Industry, 	16
C.F.R. 	Part 	23, 	also 	address 	country-of-origin 	issues.
Specifically, 	the Guides 	state 	that 	it 	is 	an unfair 	trade
practice to 	sell 	foreign 	made 	products 	without 	disclosing
conspicuously the 	country of 	origin where 	the 	failure 	to 	do 	so
would be misleading or deceotive. 	~. 	at 	S 23.3.
6 	For example, 	~~.~ staff 	explained that 	under 	Section 	5
of 	the 	Federal 	Trade 	Commission Act, 	15 	U.S.C. 	S 45, 	the
Commission can 	initiate 	law enforcement 	actions 	to 	stop 	unfair 	or
deceptive 	acts 	or practices 	in or 	affecting commerce, 	such 	as 	the
material 	omission of 	a 	product's 	country of 	origin.
3

about 	how 	to 	protect 	themselves 	from 	unscrupulous 	sellers 	who
remove 	country-of-origin 	labels. 	The 	brochure, 	called 	"Buying
Native American 	Jewelry," 	was 	subsequently published 	in 	April
1986. 	This 	publication 	suggests 	ways 	to 	identify 	authentic
American 	Indian 	jewelry, 	gives 	tips 	to 	detect 	counterfeits, 	and
provides 	information 	about 	common 	Indian 	jewelry terms. 	To 	date,
more 	than 	35,000 	copies 	of 	the 	brochure 	have 	been disseminated 	to
members 	of 	the 	public.
In addition 	to 	experience with 	Native American 	jewelry
issues, 	the 	FTC 	staff 	have 	substantial 	experience with other
country-of-origin disclosure 	issues~ 	Pursuant 	to 	statutory
directives, 	the 	Commission 	has 	issued 	regulations 	requiring
country-of-origin disclosures 	for 	textile, 	wool 	and 	fur
products. 7 	In 	implementing 	the Commission's 	responsibilities 	in
these 	and other 	areas, 	the 	staff 	have 	developed 	substantial
expertise 	in 	analyzing disclosure 	issues. 8
7 	16 	C.F.R. 	Parts 	300, 	301, 	and 	303.
8 	For example, 	the 	staff 	have 	used 	their 	eXPertise 	to
submit 	comments 	to 	the 	Department 	of 	Agriculture 	and 	the 	Bureau
of 	Alcohol, 	Tobacco, 	and 	Firearms 	(BATF) 	at 	the 	Department 	of
Treasury concerning 	advertising 	and 	labeling disclosure
regulations 	for 	products 	ranging 	from 	meat 	food 	products 	(Food
Safety and 	Inspection Service, 	Docket 	No. 	86-049P, 	filed 	Nov. 	8,
1988) 	to 	light 	alcoholic 	beverages 	(BATF 	Notice 	No. 	659, 	filed
Nov. 	15, 	1988).
4

III. 	Proposed Regulations
The Customs 	Service 	initiated the 	proposed 	regulatory
changes 	because of 	allegations 	that 	imported Native American-
style 	jewelry was 	being passed off 	as 	authentic 	by removal 	of 	the
required country-of-origin 	label. 	The 	allegations 	were
documented 	by 	the 	Department 	of 	Commerce 	in 	its 	report, 	titled
"Study of 	Problems 	and Possible Remedies 	Concerning 	Imported
Native 	American-Style 	Jewelry 	and 	Handicrafts," 	which was
transmitted 	to 	Congress 	in 	July 	1985. 	In 	response 	to 	the 	report,
in 1986 	the 	Customs 	Service solicited comment 	on 	an 	interpretive
rule 	that 	all 	imported 	Native 	American-style 	jewelry be 	marked
permanently with 	the 	country of 	origin. 9
Customs 	now proposes 	to 	issue 	a 	country-of-origin marking
requirement 	as 	an 	amendment 	to 	19 	C.F.R. 	Part 	134, 	Customs
Regulations. 10 	Because of 	the 	change 	from 	an 	interpretive 	rule
to 	an 	amendment, 	as 	well 	as 	the 	addition of 	two 	options 	that
expand 	the 	scope 	of 	the 	regulations, 	Customs 	is 	again 	seeking
comments.
9
Specifically, 	Customs 	has 	requested comments 	that 	will
51 	Fed. 	Reg. 	25574 	(July 	15, 	1986).
l~ 	This 	change was 	precipitated 	at 	least 	in part by 	the
~ir"~ Trade 	and Competitiveness 	Act 	of 	1988. 	Pub. 	L. 	100-418
(Aug- 	23, 	1988)_ 	This 	Act 	requires 	the 	Secretary of 	the 	Treasury
to 	iss~e, within one 	year of 	enactment, 	regulations 	requiring
"indelible 	and 	permanent 	country-of-origin marking, 	to 	the
greatest 	extent 	possible, 	on all 	imported Native 	American-style
jewelry and 	Native American-style 	arts 	and crafts."
5

help 	it 	weigh 	the 	costs 	and 	benefits 	of 	each of 	the 	options
before 	taking 	final 	action. 11
IV. 	Cost/Benefit Analysis
In our view, 	regulatory 	efforts 	should 	focus 	on 	the 	problem
that 	has 	been 	identified 	relating 	to 	Native 	American-style
crafts. 	Further, 	we 	note 	Congress' 	legislative 	mandate 	is
limited to 	directing Customs 	to 	issue 	permanent marking
regulations 	for 	Native 	American-style 	goods. 	However, 	the
presumption 	for 	narrow, 	focused 	regulation, 	addressing 	the
identified problem, 	might 	be overcome 	if 	it 	could be 	demonstrated
that 	it would be 	more 	efficient 	and 	less 	costly overall 	to
regulate 	more 	broadly under 	either option 	(2) 	or 	(3). 	If 	there
is 	no 	substantial 	evidence 	of 	benefit 	to 	consumers 	from 	the
broader 	regulatory 	options, 	we 	believe 	the 	added 	regulatory
compliance 	costs 	should be 	limited to 	the 	area 	where 	there 	is
documented consumer deception 	and unfair competition 	{Option
1).12 	-
11 	Customs 	also 	seeks 	information 	that 	would, 	in 	a
practical 	way, 	help 	it 	distinguish 	Native American-style 	jewelry
imports 	from 	other 	jewelry 	imports. 	Our comment 	suggests 	asking
for 	assistance 	from 	experts 	in this 	area.
12 	Further, 	because 	of 	the 	difficulty of 	identifying
targets 	and 	bringing enforcement 	actions 	once 	the 	goods 	have
entered commerce, 	we 	favor 	Customs 	focusing 	its 	regulatory 	and
inspection efforts 	on ensuring 	that 	Native American-style 	imports
are 	properly and permanently marked with 	the 	country of 	origin.
6

In considering 	the 	various 	options 	Customs 	has 	proposed, 	we
attemp7ed 	to 	estimate 	some 	of 	the 	costs 	that 	would 	be 	involved 	in
marking 	jewelry permanently. 	We 	also 	tried 	to 	assess 	the
benefits 	of 	each 	option. 	Our 	analysis 	provides 	an 	outline 	of 	the
relevant 	costs 	and 	benefits 	we 	have 	identified.
A. 	Costs 	of 	the 	All 	Jewel~ Option 	(Option 	3)
The 	information we 	have 	obtained 	from 	industry
representatives 	and 	others 	suggests 	that 	permanent 	marking 	is 	far
more 	costly than 	the 	marking methods 	currently permitted. 	Our
understanding 	is 	that 	at 	present many 	importers 	print 	adhesive
country-of-origin 	labels 	in 	the 	United 	States, 	ship 	them
overseas, 	and 	have 	them 	applied 	there. 	Although we 	do 	not 	have
any 	specific 	cost 	figures 	for 	these 	operations, 	it 	appears 	that
this 	marking method is 	less 	expensive 	than permanent 	marking
methods. 	For example, 	dies 	are 	needed 	for 	marking 	jewelry, 	and
such dies 	range 	in cost 	between 	$25 	to 	$250. 13 	Although 	dies
14
also 	could be 	used 	to 	print 	labels, 	the 	cost 	of 	dies 	for 	marking
jewelry are 	likely 	to 	be 	higher 	in 	the 	range. 14 	Further, 	the
number 	of 	dies 	a 	company would 	need 	for 	its 	products 	would
probably vary according 	to 	the 	number of 	different 	shaped 	items
produced by 	the 	company.
13 	Richard Murphy, 	Division Manager, 	M.C. 	Smith Co. 	(a
die-manufacturing company), 	Providence, 	R.I.
For 	simple 	labels 	it 	is 	more 	likely 	that 	a 	less
expensive 	printing process 	photo 	offset 	plate would 	be 	used.
7

15
In addition 	to 	the 	expenditures 	to 	obtain 	needed 	dies,
significant 	co~ts could 	be 	incurred 	in 	applying 	the 	dies 	to
items. 	In 	the 	United 	States, 	the 	labor 	costs 	for 	hand 	stamping
are 	estimated 	to 	be 	between 	15 	to 	25 	cents 	per 	item,15 	although
abroad 	the 	costs 	could be 	higher or 	10wer. 16 	In countries 	with
extremely 	low wage 	rates 	the 	costs 	might 	be 	as 	low as 	one 	to 	two
cents 	an 	item,17 	while 	in 	higher wage 	countries 	the 	costs 	might
be 	higher 	than 	those 	in 	the 	U.S. 	Since 	the 	volume 	of 	jewelry
imported 	into 	the 	United 	States 	is 	very 	large, 	the 	aggregate
costs 	(of 	marking 	all 	jewelry) 	to 	the manufacturers, 	and
ultimately 	to consumers, 	will 	be 	substantial 	even 	if 	the 	costs
per piece 	are 	modest. 18 	Further, 	in 	some 	instances 	the 	act 	of
stamping 	the 	items 	(if 	the 	alternative 	of 	affixing a 	metal 	or
plastic 	tag permanently 	is 	not 	feasible) 	may damage 	the 	item,19
in which case 	its 	value would be 	reduced 	and 	the 	effective 	cost
of 	stamping would be 	increased. 	Finally, 	we 	also 	learned 	that 	at
Alfred M. 	Weisberg, 	Vice-President 	and Chairman of 	the
Board, 	Technic, 	Inc. 	(a manufacturer of 	electroplating chemicals,
and equipment), 	Providence, 	R.I. 	Before 	the 	die 	can 	be 	applied,
the 	item must 	be 	secured 	in a 	proper 	"seat" 	thereby 	increasing
the 	complexity of 	the 	operation.
16 	Although 	adhesive 	labels 	and 	string 	tags 	are 	applied
by hand 	too, 	the 	operation 	is 	simpler and 	therefore 	less 	costly.
17 	See 	note 	IS, 	supra.
18 	Precious 	metal 	jewelry 	imports 	alone 	amounted 	to 	$1.9
billion 	in 	1986. 	Costume 	jewelry 	imports 	totalled 	$:70 	million.
1987 	U.S. 	Industrial 	Outlook, 	Washington, 	D.C., 	U.S. 	~~oartment
of 	Commerce, 	1987, 	p. 	45-3.
19 	See 	note 	24, 	infra. 	(The 	European community contends
that 	some 	jewelry may be 	impaired by marking 	requirements).
8

least 	some 	foreign 	manufacturers 	probably do 	not 	have 	the
equipment 	that 	would 	be 	needed 	to 	mark 	items 	permanently.20
Thus, 	capital 	expenditures 	might 	be 	required 	to 	comply.
B. 	Costs 	of 	the 	All 	Silver 	JewelhY Option 	(OptiQn 	2)
The optiQn 	requiring 	that 	all 	silver 	jewelry be marked
permanently 	also 	appears 	tQ 	increase 	CQsts. 	AlthQugh 	Native
American craftsmen work 	in 	a 	variety 	Qf 	styles 	and 	techniques,
including 	some ~ery modernistic 	styles, 	we 	can expect 	that 	it
will 	be 	the 	more 	traditional 	styles 	that 	sellers 	will 	try 	to 	pass
off 	as 	authentic 	goods. 	AccQrding tQ 	staff 	at 	the 	Indian Arts
and 	Crafts 	BQard at 	the 	Department 	of 	CQmmerce, 	Qnly 	a 	small
amount 	of 	imported 	silver 	jewelry CQuld 	likely be 	passed 	Qff 	as
Native-American 	jewelry. 	Based Qn 	import 	figures, 	we 	can expect
more 	than 	1.3 	milliQn dozen 	pieces 	of 	jewelry to 	be 	affected 	by 	a
r~quirement to 	mark 	all 	silver 	jewelry.21 	We 	estimate 	that 	hand
stamping CQuld CQst 	up 	to 	$3.9 	million annually on 	this 	volume 	Qf
silver 	jewelry 	impQrts. 22 	This 	amount, 	less 	the 	costs 	that 	paper
labels 	would 	have 	cost, 	could 	increase 	the 	prices 	CQnsumers 	pay.
20 	Richard Murphy, 	see 	note 	13, 	supra.
21 	According 	to 	staff 	at 	the 	Department 	of 	Commerce,
1,329,929 	dozen pieces 	of 	silver 	jewelry were 	imported 	in 	1983.
The 	figure 	was 	more 	than 	1.5 	million dozen 	pieces 	in 	1987.
22 	This 	estimate 	assumes 	stamping costs 	of 	$.25 	per 	item
and 	1.3 	million dozen 	items. 	It 	dQes 	not 	include 	the 	costs 	of
dies 	or 	of 	stamping equipment.
9

23
C. 	Other CQsts 	Qf 	the 	BrQader OptiQns
Finally, 	anQther 	factor 	that 	shQuld be 	considered, 	although
it 	is 	difficult 	tQ 	quantify, 	is 	the 	effect 	of 	QptiQns 	(2) 	and 	(3)
on trade 	relations. 	A pQtential 	cost 	of 	adopting 	the 	Qption 	to
require 	permanent 	marking 	for 	all 	jewelry, 	and 	tQ 	a 	lesser 	extent
the 	all 	silver 	jewelry Qption, 	might 	be 	to 	aggravate 	trade
relatiQns. 	Because 	trade 	plays 	a 	major 	rQle 	in 	increasing
cQmpetition and 	keeping prices 	low 	fQr 	CQnsumers, 	increased 	trade
tension, 	which might 	disrupt 	trade, 	CQuid 	severely harm
cQnsumers. 23 	The 	specific 	risk 	is 	that 	fQreign 	cQuntries 	CQuid
In February 	1989, 	Dr. 	David Tarr Qf 	the 	Bureau 	Qf
Economics 	Qf 	the 	FTC 	published a 	staff 	repQrt 	titled," 	A General
Equilibrium Analysis 	Qf 	the 	Welfare 	and 	EmplQyment 	Effects 	Qf
u.s. 	Quotas 	in Textiles, 	AutQS 	and 	Steel." 	This 	report 	cQncluded
that 	tariff 	barriers 	such 	as 	quantitative 	restraints 	(QRs) 	the
U.S. 	has 	impQsed 	limiting 	the 	amount Qf 	imports 	from 	certain
countries, 	result 	in 	substantial 	CQsts 	to 	consumers. 	FQr
example, 	ORa 	impQsed 	in the 	automobile, 	steel 	and 	textile 	and
apparel 	industries 	are 	estimated to 	cost 	consumers 	$20.9 	billion
per year 	(based on 	1984 	values). 	Report 	at 	p. 	1. 	Other
literature 	estimates 	that 	the 	cost 	to 	consumers 	of 	existing 	trade
restrictions 	exceeds 	$55 	billion 	annually. 	Hufbuaer, 	G., 	and H.
Rosen, 	Trade 	PQlicy 	fQr 	TrQubled 	Industries, 	WashingtQn, 	D.C.,
Institute 	for 	International 	ECQnomics, 	1986. 	Moreover, 	costs 	to
consumers 	vastly exceed 	the 	wages 	of 	any 	jobs 	saved. 	In SQme
cases, 	trade 	restrictions 	actually cost 	jobs 	as 	dQmestic 	firms
take 	advantage 	Qf 	trade 	restrictions 	to 	raise 	prices. 	WinstQn,
C., 	et 	al., 	Blind 	Intersection, 	Washington, 	D.C., 	Brookings
Institution, 	1987, 	pp. 	61-67. 	A March 	31, 	1989 	Bureau 	of
Economics 	submission to 	the 	International 	Trade 	Commission 	titled
"Effects 	of 	u.S. 	Import Restraints 	on Manufactured Products:
General 	Equilibrium Results," 	which 	~ssessed the 	effects 	of 	QRs
on 	steel 	(and other) 	impQrts 	esti~ateu, for 	example, 	that 	there
would be 	14,600 	fewer 	wQrkers 	in 	industries 	(not 	counting 	the
auto 	industry) 	that 	use 	steel 	as 	an 	input, 	as 	a 	result 	of 	u.S.
import 	restrictions 	on 	steel. 	Submission at 	p. 	7. 	The
literature 	also 	shows 	that 	consumer 	losses 	are 	not 	evenly
distributed; 	the 	poor 	typically 	bear a 	much 	higher burden 	in
(continued ... )
10

interpret 	increased marking 	and 	inspection procedures 	by 	Customs
as 	an 	effort 	to 	exclude 	or 	increase 	the 	cost 	of 	imported 	jewelry
under 	the 	guise 	of 	a 	consumer protection policy 	at 	a 	time 	when
trade 	tensions 	are 	already 	high. 	Although 	it 	is 	difficult 	to
assess 	the 	likely cost 	to 	consumers 	of 	increased 	trade 	tension 	in
the 	jewelry area, 	it 	is 	worthwhile 	noting 	that 	stamping of
precious 	metal 	jewelry 	imports 	has 	already 	attracted 	attention
from 	the 	European Community 	as 	a 	U.S. 	trade 	barrier. 24 	United
States 	exports 	of 	jewelry, 	which 	amounted 	to 	$225 	million 	in
1986, 	could be 	jeopardized by 	retaliatory 	foreign 	trade
barriers. 25 	It 	is 	also possible 	that 	U.S. 	exports 	of 	other
products might 	be 	affected.
23( ..• continued)
proportion to 	their 	income. 	Hickok, 	S., 	"The Consumer Cost 	of
u.s. 	Trade Restraints," 	Quarterly Review 	(of 	the 	Federal 	Reserve
Bank of 	New York} 	(Summer 	1985), 	pp. 	1-12.
24 	The 	European Community has 	published 	a 	list 	and
description of 	practices 	that 	it 	considers 	to 	be 	trade 	barriers
erected by the 	U.S. 	to 	iRpede 	imports 	from 	Europe. 	The 	1988
Report 	on 	u.s. 	Trade Barriers, 	Washington, 	D.C., 	European
Community Office 	of 	Press 	and 	Public 	Affairs, 	1987. 	This 	report
(at 	p. 	10) 	includes 	a 	discussion 	of 	current 	U.S. 	jewelry marking
regulations. 	It 	states, 	in part: 	"Small 	items 	of 	jewelry do 	not
lend themselves 	to 	marking. 	In many cases 	even 	the 	indication of
the 	gold and 	silver content, 	as 	required by other 	acts 	and
regulations, 	can only be 	embossed with great 	difficulty. 	Further
marking of 	the 	articles 	in question would very often 	lead 	to
impairment 	of 	the 	pieces 	of 	jewelry." 	The 	European Community has
asked 	that 	jewelry be 	exempted 	from 	marking 	requirements 	for 	the
reasons 	listed 	in 	the 	report.
25 	Costume 	jewelry exports 	accounted 	for 	$70 	million 	and
precious metal 	jewelry exports 	accounted 	for 	$155 	million. 	~
u.s. 	Industrial 	Qutlook, 	Washington, 	D.C., 	U.S. 	Department 	of
Commerce, 	1987, 	p. 	45-3.
11

In 	summary, 	it 	appears 	that 	imposing 	additional 	costs 	for
~ 	imported 	jewelry or 	all 	silver 	and 	silver-like 	jewelry,
regardless 	of 	its 	relationship 	to 	the 	Native 	Ame=ican 	style, 	will
raise 	consumer 	prices. 	In 	addition, 	the 	broader options 	risk
increased consumer costs 	from 	heightened 	trade 	friction.
o. 	Benefits 	of 	the 	Broader Options
There 	appears 	to 	be 	little 	corresponding 	increased 	benefits
for 	consumers 	from 	thes~ two 	broader options. 	The documented
consumer problem 	is 	in 	Native 	American-style 	jewelry; 	hence, 	a
regulatory program 	that 	goes 	beyond 	this 	area would 	provide
little 	additional 	benefits 	to 	consumers. 	However, 	there 	could be
benefits 	for 	Customs. 	By 	requiring 	all 	jewelry or 	all 	silver 	and
silver-like 	jewelry to 	be marked 	permanently, 	Customs 	could 	avoid
the 	costs 	of 	defining 	the 	Native American 	style. 26 	Although 	the
number of 	items 	subject 	to 	inspection would 	increase, 	Customs
might 	have 	lower 	inspection costs 	under 	a 	broad, 	more 	easily
interpreted 	requlation. 27 	However, 	to 	ascertain whether Customs
26 	The 	broader options 	also 	might 	benefit 	manufacturers
by eliminating uncertainty about 	what 	items 	need 	to 	be marked
permanently 	(although 	there 	invariably would 	be 	disagreements
about whether 	items 	are 	small 	enough 	to 	be 	eligible 	for 	an
exemption). 	However, 	if 	the 	Native-American 	jewelry option were
chosen, 	manufacturers 	might 	obtain nearly 	the 	same 	benefit 	by
seeking 	advisory opinions 	from Customs 	about 	items 	that 	might 	be
the 	subject. of 	a 	dispute.
27 	If 	determining what 	items 	must 	be marked permanently
is 	a 	difficult, 	time-consuming 	task, 	from 	Customs' 	point 	of 	view,
there 	could be 	inspection efficiencies 	from 	the 	broader options.
12

would actually 	incur 	costs 	or obtain 	benefits 	would 	depend 	on 	the
scope 	of 	the 	inspection 	protocol 	that 	Customs 	adopts.
To 	the 	extent 	Customs 	reduces 	its 	regulatory costs, 	there
could be 	benefits 	to 	consumers 	in 	terms 	of 	tax 	savings. 	We 	urge
Customs 	to 	consider, 	however, 	whether 	its 	savings 	will 	offset 	the
additional 	costs 	to 	importers, 	and 	hence 	consumers.
v. 	Conclusion
We 	recognize 	that 	defining 	the 	Native 	American 	style, 	and
limiting the 	regulations 	to 	this 	area 	may 	require 	additional
effort 	by Customs 	to 	refine 	its 	regulations. 	If 	Customs 	decides
to 	define 	the 	Native American 	style, 	we 	suggest 	that 	it 	explore
whether 	the 	Indian Arts 	and 	Crafts 	Board or other 	experts 	could
provide assistance 	in 	this 	regard.
Finally, 	to 	help control 	potential 	abuses, 	the 	FTC 	staff
intend to 	continue 	disseminating 	the 	brochure 	"Buying Native
American 	Jewelry" 	to 	interested 	individuals 	and 	to 	recommend
enforcement 	actions 	in 	appropriate circumstances. 	The 	FTC 	staff
also 	would be 	pleased to 	cooperate 	with Customs 	officials 	in
preparing 	guidelines 	for 	inspecto=s, 	or 	in other ways, 	if 	it
would be 	helpful.
13