Is It Illegal To Own Gold Coins?
Yes, gold coins are legal to own in the United States, but they can be illegal if they come from Saint Lucia. The country is a member of the World Trade Organization, which follows international law and bars countries that fail to meet it from placing restrictions on gold imports.
What is this law all about? Article 403 states that any country that imposes additional duties or other measures concerning articles imported as raw materials cannot restrict such imports as long as they do not place them under domestic control after importation.
A group of investors in the United States filed a request to the U.S. Trade Representative’s office on behalf of Saint Lucia, said Thomas Melito, an attorney with Howrey LLP who represents the investors.
“The purpose of Article 403 is to ensure that imports from countries that are members of the World Trade Organization enjoy treatment no less favorable than imports from other countries,” Melito said. “The basic idea behind the rule is that importing gold from one country should not be treated any differently than importing gold from another country.
“Article 403 has been invoked by the United States to ensure that the treatment of gold imports from countries that are members of the WTO do not differ from those from non-members, like Iraq and Iran,” Melito said.
Melito said that Saint Lucia is a member of the WTO, but none of its trading partners have raised a complaint against it. It adopted Customs legislation on Dec 5, 2004, which includes Article 403, and Saint Lucia could not enact import restrictions.
He said that Saint Lucia began imposing duties on gold in January 2005, which affected U.S. investors who sought relief under Article 403. In April 2005, the United States filed a complaint with the WTO that the act of imposing duties on gold imports violated Article 403, he said.
Saint Lucia agreed in June 2005 to suspend its new duties on gold imports and allow U.S. investors to either repatriate what they had already paid in obligations or apply them as a distribution against future imports of gold, Melito said. The country also agreed to pay $300,000 to U.S. investors for their losses.
“Once the suspension is lifted on July 1 (the new import duty will return), U.S. investors will have to pay the import duties on gold coming into Saint Lucia from countries outside the country,” he said.
Melito said that the U.S. government enacted a law that imposed duties in early 2002 against imports of gold from several countries, including Liberia and Eritrea, that were exempt from duty during 2001. In April 2002, U.S. investors began filing claims under Article 403, claiming that their property was being treated differently than a comparable investment in other products, which they alleged violated their rights under Article 403(a) of the General Agreement on Trade in Services (GATS).
“These cases were resolved in April 2003. Under the settlement terms, U.S. investors were granted relief for the duties,” he said.
In August 2005, Saint Lucia adopted new legislation suspending the domestic laws applying to gold imports and will remove its restrictions on gold imports from all countries beginning July 1, Melito said. “The country did this as a compromise to try and avoid having cases brought under Article 403 by U.S. investors,” he said.
“This legal rule is designed to create a level playing field for products that are traded based on their underlying utility, such as agricultural and industrial goods,” Melito said. “As a WTO member, Saint Lucia recognized that it could not impose restrictions on imports that were inconsistent with Article 403 and in light of this recognition agreed to suspend its act of charging gold duties on imports.”
Melito said the U.S.-Saint Lucia agreement was settled under GATS, which means that the country’s new laws related to gold imports will be reviewed twice by the U.S. Trade Representative’s office and then shelved by Congress.
“This is a good thing for U.S. companies that trade with Saint Lucia from the standpoint that it creates predictability in terms of how the country will treat imports of gold from other countries,” he said. “Consumers, however, might not like this because other countries will be able to impose duties on gold imports, and those duties will effectively create higher prices for consumers.”
Melito said the U.S Trade Representative’s office negotiated a settlement with Saint Lucia under GATS rather than Article 403 because, “by filing a GATS case, we can arrange an agreement including compensation to U.S. investors which satisfies all parties, as opposed to an Article 403 case where there is no compensation.
He said that the U.S.-Saint Lucia agreement under GATS is somewhat similar to the settlement reached in May between the United States and Saint Kitts. “Like the case in Saint Kitts and Nevis, the United States will be reviewing these new laws, and those findings will be sent to Congress for a determination on whether it is fair trade,” he said.