Alex Yearsly – Testimony Before Subcommittee on Trade

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Statement of Alex Yearsley, Campaigner,

Global Witness, London, England

Testimony Before the Subcommittee on Trade

of the House Committee on Ways and Means

Hearing on Trade in African Diamonds

September 13, 2000

Good morning Chairman Crane and Members of the Committee. My name is Alex Yearsley and I am a Campaigner for Global Witness. I am pleased to appear at this hearing and I thank you for holding it. Global Witness are a British based non governmental organization that focuses on the links between environmental and human rights abuses, especially the impacts of natural resource exploitation upon countries and their people. In late 1996 Global Witness began to look at the role of diamonds in funding the tragic conflict in Angola. In December 1998 we published our first report on conflict diamonds called, ‘A Rough Trade: The role of governments and companies in the Angolan Conflict,’ in June of this year we published our second report, which hopefully you will have in front of you and simply entitled, ‘ Conflict Diamonds, Possibilities for the Identification, Certification and Control of Diamonds.’ Since late 1996 my colleague and I, Ms. Charmian Gooch, have traveled extensively to the diamond producing and marketing countries of Angola, Botswana, Belgium, Sierra Leone, South Africa, Namibia, Israel, India and the United States and also to transshipment countries such as Rwanda, Uganda and Zambia in order to see whether a solution is possible to the curse of conflict diamonds. As a result of this work and due to the extensive contact we have had with many of the companies, trade associations, government officials and individuals in the diamond industry we believe that indeed a solution that is practical, implemental, WTO compatible and that will not damage the legitimate trade, but will protect it is entirely feasible.

Four months ago my colleague Ms.Charmian Gooch gave evidence at a Congressional hearing on the issue of conflict diamonds. Today, 127 days later are we any closer to a solution? Whilst we wish that a system could have been imposed many years ago I believe that we are looking at the possible solutions to this deadly trade – I think it is fair to say that we have come along way in a very short time. This I believe is testimony to the gravity of the situation and to some of the expert work carried out by government, industry and civil society individuals.

Currently as I speak the diamond trade as a unified whole, has failed to put recognizable or verifiable controls or certification in place that can reliably attach ‘conflict free’ status to diamonds. However since late 1998 there has been a shift in world opinion on the issue of conflict diamonds, which in itself is a new term. No longer is the ‘soaking up’ of ‘open market goods’ from areas of conflict deemed to be an inevitable consequence of the need to stabilize the world price of diamonds. Governments have ceased to accept this as an argument for non-interference, as and probably more importantly, have consumers.

It is vital that a long-term solution to this very complex problem be found, and that can only work if some of the underlying structures are addressed rather than the commercial sector of the industry dealing with each problem country on a case-by-case basis. This is no way to deal with the atrocities and horrors inflicted upon peoples of affected countries nor to protect the legitimate diamond economies. It is clear that there is a need to create a ‘chain of custody’ within the diamond trade – a verifiable trail from the mine to the consumer that can work with existing structures and patterns of trade.

In response to the growing international concern over the problem of conflict diamonds, the Southern African Development Community (SADC) producer states (Botswana, Namibia and South Africa) initiated an African regional initiative to identify possible solutions. In May 2000, the South African Department of Minerals and Energy organized a Technical Forum in Kimberley, South Africa to address the problem of ‘conflict diamonds.’ It is fair to say that the Kimberley meeting has set new standards in bringing together different stakeholders from government, industry and civil society. Participants were drawn from leading producing nations and the majority of importing, marketing, cutting and polishing centers. A working group made up of the relevant stakeholders was created and has met three times in Angola, Namibia and the UK. This working group will produce a report, which will be presented at a Ministerial meeting in Pretoria, South Africa on September 21st.

The majority of the proposals that I am about to suggest are ideas that are consistent with the suggestions of this working group, of which Global Witness is a member. The problems that these proposals aim to address, is that of illicitly traded rough diamonds being used to finance weapons purchases and fuel wars in Africa. This problem can only be addressed by all the relevant stakeholders in the diamond producing, processing and consuming nations, and all segments of the diamond industry working together to curb the trade in conflict diamonds, whilst avoiding harm to the legitimate trade.

At this point I would like to mention that some initiatives have already begun at the national level. However this has only been due to the intense pressure of international criticism from civil society, the UN and some governments. In Angola, one of the most affected countries by conflict diamonds, the Government has introduced a new administrative system for controlling diamond exports under agreement with the High Diamond Council (HRD) in Antwerp, Belgium. It is stated that an unforgeable Certificate of Origin for the export of all diamonds is in use. The Government of Angola has also stated that it is implementing measures to control artisanal mining and marketing, however, after many repeated requests the Government of Angola have failed to clarify what these measures are and how they are to be introduced. It is these measures that are crucial to the avoidance of conflict diamonds being sold into the legitimate trade and I urge the Government of Angola to publicly clarify their position. In Sierra Leone the government is also developing a new Certification Scheme in co-operation with the governments of Belgium, the United State’s and the United Kingdom. This system has only been in operation for a number of days so it is still too early to report on its success or failure.

It is important to remember though that no system will be 100% watertight and with a commodity as valuable and as fungible as diamonds determined individuals will always manage to get through. However what this system will do is prevent the horrors of the 1990s, when companies such as De Beers, were able to buy up several hundred million dollars worth of rough diamonds, that originated from the diamond mines under the control of the Unita rebels in Angola, on the markets of Tel Aviv, Antwerp, London and New York.

Although conflict diamonds have been sold for nearly the last 15 years the term has only been in use for about a year and a half and a final definition still has to be reached. In Africa it is possible to be clear as to what constitutes conflict diamonds as being diamonds that originate from areas controlled by forces fighting the democratically elected and internationally recognized government of the relevant country. At this point I would like to emphasize that conflict diamonds are not an African problem, they are a problem that effects all those involved in the diamond trade – be they a high street retailer in New York or a diamond buyer in Sierra Leone.


As mentioned in my opening statement the only solution to have been so far identified that is currently both practical and implemental is the creation of an international certification system for all rough diamonds. There are indeed many potential technological solutions, such as laser marking, however these are currently not financially viable or practical to implement. however I would urge this committee to consider the funding of continued research into this field.

How will an international certification system work?

Much thought and deliberation has gone into how this system could work, most notably as mentioned earlier by the Kimberley Working Group. The general consensus reached by the group regarding the creation and implementation of an international system is as follows.

‘No country would permit the importation of any diamonds unless they are accompanied by a Certificate of Origin which is issued by an internationally accepted State or State accredited body in the exporting country for all diamonds lawfully mined, purchased or imported in that country by a person accredited by that authority and that they are exported in a tamper proof sealed parcel from a mutually notified exit site to a mutually notified import site that would issue a matching Certificate of Import after inspection of the diamonds and accompanying documentation.’

Information contained on the certificates would build upon existing national systems currently in place and should certainly not water down any existing national systems. However as a basic international standard, which needs to be agreed to under best practice principles, the certificate should contain the minimum following information relating to the diamond shipment:

The total cartage of diamonds ;

The aggregate value of the diamonds;

The country of origin (extraction);

Global Witness believes that it is necessary to go several stages beyond this certification scheme and that more specific requirements are needed for countries where diamonds are mined, commercially traded, manufactured and re-exported.

All diamond producing and exporting countries should implement the following measures to ensure that conflict diamonds can no longer enter in the global market.

route all diamonds through a government run diamond office;

establish a licensing system for the extraction of any diamonds, whether the extraction is being carried out by a large company or an alluvial digger;

establish a system of countercheck paperwork for extraction licenses and applications for export;

establish a registry for official diamond buyers and exporters;

criminalize the handling of rough diamonds without an official license;

exclude the holders of government office, the military, and the police as well as the close family members of the aforementioned- from being registered to mine or trade in diamonds;

publish publicly on a monthly basis diamond production and export figures.

For countries involved in the trading and importing of diamonds in parallel with establishing the international certification system they should:

amend importation legislation to insist on the country of extraction appearing on importation documents;

insist on all diamond shipment documentation to be checked against forwarded documentation;

enforce penalties such as the confiscation and the seizure of the diamonds if the appropriate paperwork is not or cannot be provided;

physically inspect every parcel of rough diamonds entering their territory;

ensure that customs officials have access to an international database of diamond shipments;

publish on a monthly basis all figures for the import and export of diamonds.

For all diamond traders, polishers, manufacturers and retailers they should:

only trade in diamonds with a verifiably legitimate product trail;

implement the measures agreed to at the World Diamond Council meeting in Antwerp in July 2000.

Will an international certification system be WTO compatible?

Whilst no one within Global Witness professes to be an expert in international trade law or the WTO we have carried out some basic preliminary research into this very important question. If, as is expected and hoped, the recommendations of the Pretoria Ministerial meeting goes to a United Nations General Assembly vote for ratification into a global treaty then there should be no problems with WTO compatibility and hence will be free from any significant challenges.

How the certification scheme could work under WTO rules:

The following are grounds under which the international certification scheme could be justified under WTO rules.

If as just mentioned the international certification system is bought into being pursuant to a UN resolution then a WTO member could invoke an exception rule contained in Article XX1(c) of the GATT to justify its certification requirement. This provision allows a WTO member to take measures that would otherwise be in breach of its WTO obligations provided that it is acting in pursuance of its obligations under the United Nations Charter of the maintenance of international peace and security.

Under WTO rules it could be possible for a WTO member to rely on either of the exceptions set down in Article XXI(b)(ii) or (iii) GATT. These relate respectively to measures taken by a WTO member which it considers necessary for the protection of its essential security interests in relating to the traffic in arms, ammunition and implements of war and to such traffic in other goods and materials as is carried on directly or indirectly for the purpose of supplying a military establishment. Hence in respect of Article XXI.b(ii) it would be possible for a WTO member to justify the certification requirement on the basis that non-certified diamonds from the countries concerned are being used to finance the purchase of weapons and are thus perpetuating wars in areas of the world which may effect its essential security interests. Similarly, in respect of the Article XXI. b(III) exception it could be argued that the situation in several key diamond producing countries gives rise to an emergency in international relations which justified the WTO member concerned introducing its certification requirement.

In conclusion there are still some countries and individuals that believe a sledgehammer is being used to crack a nut. Nothing could be further from the truth. Those with personal vested interests argue that an international system will be restrictive of trade and will impact upon the small miner – again nothing could be further from the truth – all that will happen is that the great majority of ‘illicit diamond’ smugglers and those that benefit will be caught.

Many people talk about the law of unintended consequences and indeed there will be many unintended consequences if this system is successfully applied for as a result, not only will conflict diamonds be taken out of the market place – but so will ‘illicit’ diamonds which are diamonds that are stolen or smuggled from a country. This will have many implications as there are many respectable companies and individuals involved in the diamond trade that make a good deal of their profits from this ‘illicit’ trade and upsetting this particular apple-cart may be too much to handle for some. However one thing is certain – if you have nothing to hide then you will have nothing to fear from this system – it will be interesting to watch who protests the most at the imposition of this system.

Whilst not wanting to end on a pessimistic note I think it would be folly not to raise this issue here. There are many in the press and the diamond trade who believe that a diamond boycott is fast approaching. Whilst I certainly agree with them regarding the devastating negative impact this will have on legitimate producers and my complete condemnation for such action, I can see it gaining ground if concerted action is not taken soon. Conflict diamonds have been in the public eye for nearly 2 years now and in reality, the diamond trade, whilst publicly tackling the issue, practically have done as little as possible to prevent the entry of conflict diamonds into the global market place. Many fine words have been offered but what has actually changed, and if recent reports from the marketing centers of Antwerp and Tel Aviv are to be believed, I’m afraid very little. Consumers and the press are and will ask more questions. In America jeweler retailers have begun to take action regarding education campaigns on the issue and rightly so. The United States accounts for nearly 65% of the worlds diamond jewelry sales per annum and all of those diamonds are have to be imported from somewhere. Indeed two of the major documentary series, 60 minutes and 20/20 both have programs planned for the Fall on the issue of conflict diamonds and when the public and consumers see that the diamond trade as a collective whole have failed to live up to their extremely laudable goals they will judge accordingly – rightly or wrongly. The result is not a position I would like us even to contemplate. As a result I would urge the Committee to support any initiative on the implementation of US legislation, be it from the diamond trade, civil society or your own legislators, that sought to introduce a system for rough controls that is similar to the one I have proposed in some detail earlier. For if we put our trust and faith in the countries of the world to act with speed with one voice it could have devastating consequences for millions of people in Africa.



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