Jeffery Fischer – Testimony Before Subcommittee on Trade

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Statement of Jeffrey Fischer, President,

Diamond Manufacturers and Importers Association of America

Testimony Before the Subcommittee on Trade

of the House Committee on Ways and Means

Hearing on Trade in African Diamonds

September 13, 2000

Mr. Chairman and members of the subcommittee, my name is Jeffrey Fischer and I thank you for inviting me to address you today in my capacity as president of the Diamond Manufacturers and Importers Association of America. Our association includes within its membership virtually all of the United States’ major diamond cutting firms. Our membership is unanimous in its revulsion of any connection between diamonds and human suffering, and is dedicated to helping solve the problems, which we address today. I also serve on the steering committee of the World Diamond Council and have been actively involved in its creation.

I have been invited to give a brief overview of how diamonds flow from mine to consumer through what we refer to as the Diamond Pipeline and how diamonds are merchandised along the way.

Please refer to the chart we have provided titled “Simplified Schematic of Diamond Pipeline”.

A single diamond can be sold and re-sold numerous times before it ultimately adorns a retail consumer. Diamonds are frequently traded “upstream” and “downstream” between dealers at marginal price differences in the normal course of business. As the diagram illustrates, while it is not a significant part of the picture, even the consumer can eventually become the seller – after all the diamond “is forever”.

From the outside, the diamond market may appear confusing, fragmented, perhaps even inefficient, but it exemplifies the free market ideals that our American economic system extols.

What is most important to note from the diagram is the line drawn between rough and polished diamonds. Most of the polished dealing, jewelry manufacturing, and retailing is done by people who have had no more exposure to rough diamonds then the typical member of Congress. All polished starts as rough, and once polished, remains polished forever. That transformation is the only irreversible “transaction” in our pipeline.

A single rough stone is commonly polished into two polished diamonds. Often, a piece of rough yields only one stone, sometimes it yields multiple stones, or it may never be polished and sold for industrial purposes.

As we proceed down the pipeline, the frequency of transactions and the number of small businesses involved increases dramatically, while the average size of a typical transaction diminishes in monetary terms. Throughout the pipeline diamonds are constantly assorted, mixed and re-assorted to fit differing commercial requirements.

To complicate matters further, already polished diamonds are frequently “re-cut” for improvement or repair, altering their characteristics to varying degrees. Moreover, polished diamonds are frequently unset and re-set in different jewelry sometimes alone, sometimes with other diamonds.

The place for effective administerable import/export controls is at the rough level. We believe that the system of proposed controls adopted at the World Diamond Congress in July and now being brought forward by the World Diamond Council is the most practical and most effective means to filter out from the pipeline the less than four percent of world-wide rough production which is being misused to fund conflict. By effectively placing this “filter” at the rough level, all resulting polished will comply with “conflict-free” status.

We are practical, realistic, business people and as such are tackling the conflict diamond problem with idealism strengthened by realism.

We do anticipate seeking assistance from Congress in severing the link between diamonds and brutality without delay – but not simply legislation – the best possible legislation. Legislation that will be most effective and enforceable, that will not do serious damage to the legitimate southern African economies so dependent on diamonds, that will not wreak havoc with US Customs procedures, and will not harm the livelihoods of millions of people world wide directly employed by or benefiting from the diamond industry. This legislation must be fully consistent with an international inter-governmental agreement backed by industry.

It would be a shame if this precedent setting constructive collaboration of government, the United Nations, private industry, and the non-governmental organizations result in anything less than the best possible solution.

We implore Congress to consider the World Diamond Council’s proposal before taking action. We reiterate our desire to contribute whatever assistance and expertise we can provide.

Thank you.

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