Rough Diamond Trade Controls

1. Rough Diamond Trade Controls An Overview of Kimberly Process

2. Diamond Industry Facts • An estimated 10 million people globally are directly or indirectly supported by the diamond industry. • Approximately one million people are employed by the diamond industry in India • Approximately $8.5 billion worth of diamonds a year come from African countries • An estimated 65% of the world's diamonds come from African countries • An estimated 5 million people have access to appropriate healthcare globally thanks to revenues from diamonds • De Beers owns 40% of diamond mines • Main diamond centers: London, New York, Tel Aviv, Johannesburg, Bombay and Dubai • US largest consumer of diamonds

3. What are rough diamonds? • Rough diamond refers to a diamond which has not yet been cut

4. Why need control? • In some countries rough diamonds are used to fund causes such as • civil wars, • fund rebel movements to undermine or overthrow governments, • and contribute to human rights violations. • Diamonds originating from countries committing actions such as these are called conflict diamonds. • Non-transparent industry operations and illicit trade • False declarations by importers/exporters of diamond

5. The Controls • The Kimberley Process Certification Scheme (KPCS) was introduced in 2003. • It is an international certificate based system that controls the flow of the rough diamond trade. • Its aim is to prevent the trade of conflict diamonds. • Today, there are 75 countries, including the United States (U.S.), which have joined together and agreed to participate in the KPCS. • By their involvement, they have agreed to trade only amongst other countries participating in the KPCS.

6. Kimberley Process Participant Voluntary suspension of exports and imports Under UN sanctions Kimberley Process Participants Kimberley Process Participants *Participants account for 99.8% of global rough diamond production Source: http://www.kimberleyprocess.com/structure/participants_world_map_en.html

7. What Does the KPCS Require? • Participants must meet ‘minimum requirements’ • National legislation and institutions • Export, import, and internal controls • Commit to transparency and the exchange of statistical data • Participants can only legally trade with other participants • Shipments must be accompanied by a KP certificate that guarantees the diamonds are “conflict-free”

8. What has KPCS done? • The Kimberley Process has brought together states, multinational corporations, and NGOs to help regulate the trade in conflict diamonds; however, serious problems still remain and can be confronted by stricter enforcement of internal controls, industry regulation, and cross-border smuggling. • KPCS has evolved into an effective mechanism for stemming trade in conflict diamonds: • Conflict diamonds now represent a fraction of one percent of trade, compared to 15% in the 1990’s • It has also helped promote peace and security: • Stabilize fragile countries • Brings large volumes of diamonds into the legal market • $125 million exported from Sierra Leone in 2006, compared to none in the 1990’s • Greater transparency in gathering statistical data that is available to the public

9. U.S. Sanctions Against Sierra Leone and Liberia • January 18, 2001 – EO 13194 was issued • Prohibits the import of rough diamonds from Sierra Leone* • May 22, 2001 – EO 13213 was issued • Prohibits import of rough diamonds from Liberia • July 30, 2003 - EO 13312 was issued • Amends and harmonizes EO13194 and EO13213 in order to implement the CDTA • Maintains prohibition of imports of rough diamonds from Sierra Leone* and Liberia

10. Clean Diamond Trade Act • CDTA was passed on April 25, 2003 • Authorizes the President to take steps to implement the KPCS: • Prohibits importation of any rough diamond that has not been controlled through the KPCS • Requires diamond importers to keep full records relating to the importation of rough diamonds • Requires annual reviews for oversight