	Policies to Halt Trade in Conflict Diamonds

		Regulatory Challenges

Effective policing of the illicit diamond trade faces difficult challenges. The world diamond trade is large, diamonds are a highly fungible and concentrated form of wealth, and the legitimateinternational diamond industry is historically insular, self-regulating, and lacks transparency. Magnitude of the Global Diamond Market

Trade in conflict diamonds, and regulatory proposals to end trade in such gems, are associated primarily with the rough diamond market. (37)
Conflict Diamonds in Global Diamond Markets. Three primaryapproaches for determining the origin of diamonds have been proposed. Physical or "Geo-Chemical" Identification of Diamonds. Tagging of Diamonds. 3. Certificate of Origin Laws. It called for measures toend the conflict diamond trade. For over 2 years, throughconsensus-based negotiation, Process participants worked to create an import/export certificationsystem designed to govern the international trade in rough diamonds. Its efforts centered on the creation of a multi-lateral diamond trade regime backedby international sanctions aimed at curtailing such commerce. International and Multilateral Policy. The Bush Administration has pursued policies to stem the flow ofconflict diamonds that are broadly similar to those of the Clinton Administration, and hasparticipated in the Kimberley Process. Allegations that diamonds may play a rolein financing of international terrorist groups have also drawn congressional attention. (67)
In addition to addressing human rights and conflict-related concerns, conflict diamond hearings n the 106th and 107th Congresses highlighted congressional interest in ensuring thatproposals toregulate international trade in diamonds and any U.S. legislation to implement such proposals beconsistent with relevant World Trade Organization trade rules. 2722 (Houghton); H.R. 107-115 ] was the only onein which diamond-related provisions were included in the final version of legislation signed into law.It prohibited certain OPIC and Ex-Im Bank diamond-related projects in countries not implementinga system of rough diamond export and import controls, as defined in the Act. The 108th Congress, like the pasttwo Congresses, has demonstrated continuing interest in ending the conflict diamond trade. 108-10 ) also contains two provisions related to conflict diamonds.First, conferees stated their expectation that of funds provided to the Council of American OverseasResearch Centers, "necessary funds" would be granted for research to develop a diamondfingerprinting technology to facilitate monitoring of the international trade in conflict diamonds.Second, the Statement, reflecting the language of the Joint Resolution, as passed, recommended the$2,000,000 technical assistance, and noted that the Senate amendment to H.J.Res. 1415 and H.R. 1584. Both would have allowed a waiverof such a prohibition for up to a year if the President determines and reports to Congress that a roughdiamond exporting or importing country is taking effective steps to implement the KimberleyProcess Certification Scheme or the President determines that such a waiver is in the nationalinterests of the United States, and reports such a determination and the reasons for it to Congress.Both bills also included a range of enforcement provisions and policy recommendations, some in"sense of Congress" language, as well as reporting requirements. On April 8, 2003, an amended version of H.R. 1584 was passed by the House. The enrolled bill wassigned into law by President Bush on April 25, 2003, and became P.L. S. 760 appears to be a companion bill to H.R. 239. 108-19 , Representative Watson introduced H.Con.Res. (76)
Some in the diamond trade have generally argued against a more extensive certificate regime.
In several diamond-rich countries affected by armed conflict, notably in Africa, belligerents have funded their military activities by mining and selling diamonds, and competition over the useand control of diamond wealth has contributed significantly to the depth and extended duration ofthese conflicts. Diamonds used in this fashion, labeled "conflict diamonds," were estimated to havecomprised an estimated 3.7 % to 15% of the value of the global diamond trade in 2000. The presentvolume of such trade appears is difficult to estimate. Several diamond-related conflicts have ended,but others have burgeoned. Policy makers' attention has also increasingly focused on the possiblerole that diamonds may play in the financing of terrorist operations.
In response to public pressure to halt trade in conflict diamonds, and due to the persistence of several diamond-related conflicts, governments and multilateral organizations have pursued effortsto end such trade. Several international policy forums, national legislatures, and diverse privateparties have proposed various reforms and legislation to achieve such goals. Effective regulation ofthe diamond trade is difficult. Diamonds are a highly fungible, concentrated form of wealth, and theglobal diamond industry is historically insular and self-regulating. The illicit diamond trade exploitsthese factors. Proposals to end illicit trading generally center on legally identifying the origin ofdiamonds and requiring the registration, identification, and monitoring of cross-border trade indiamond, as is common for trade in other goods. Methods for achieving such ends include thecataloging of unique physical diamond features; the "tagging" of diamonds with minute markings;and the creation of certification-of-origin laws to document the origin of diamonds.
The Clinton Administration worked to create a certificates of origin-based international diamond trade regime, but sought to ensure that such efforts would not negatively affect thelegitimate industry. It also backed marketing reforms and regulatory capacity building in diamond-rich Africancountries, consulted with the diamond industry, pushed for U.N. sanctions to end theconflict diamond trade, and created an inter-agency group on conflict diamonds. The BushAdministration has pursued policies that broadly mirror those of its predecessor.
The United States participates in the Kimberley Process Certification Scheme, a global diamond trade regulation framework. The Administration began implementing the Scheme in the UnitedStates with voluntary interim compliance measures, prior to the passage of H.R. 1584 (see below). Several congressional hearings have addressed trade in conflict diamonds. Potentiallinks between terrorism financing and trade in diamonds have garnered increasing congressionalattention. The 106th and 107th Congresses considered several diamond-related bills. The108thCongress passed H.J.Res. 2 in February 2003; it contained several conflictdiamond-related provisions. Other conflict diamond bills introduced in the 108th Congress include H.Con.Res. 239 (Watson); S. 760 (Grassley), H.R. 1415 (Houghton), and H.R. 1584 (Houghton). The latter three bills shared many goals incommon with H.R. 1584 , an amended version of which was passed by both chambersand signed into law by President Bush, becoming P.L. 108-19 .