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15January 2020

WDC Newsletter


DECONSTRUCTING THE KIMBERLEY PROCESS

ABOVE: Representatives of KP-member countries applauding during the organization’s 2018 Plenary Meeting in Brussels.

Regulating the flow of rough goods into the diamond pipeline, the Kimberley Process (KP) is today one of the most powerful institutions in the international diamond sector.  But it is a conflict prevention body without any judicial or legislative authority in any of the countries with which it is associated. This is because KP rules and the Kimberley Process Certification Scheme (KPCS) are administered and enforced by sovereign states, operating according to statutes and regulations that have been approved at the national level, or in the case of the 28 European Union-member states by the European Council. So, from where does the KP derive its strength?

Essentially its power is derived from its members and other participants, or rather from their agreeing, as a condition of KP participation, to operate according to its rules and decisions, which can only be reached by consensus. It is also vested in a self-monitoring system, where countries are obliged to provide data about imports and exports of diamonds, and periodically subject themselves to review visits by representatives of peer countries and official KP observers, which include industry and civil society.

It is a system that can be wieldy and cumbersome, but also effective, having the ability to eliminate the presence of almost all rough diamonds financing civil war within just several years of the KPCS being launched in 2003. On occasion it has even operated outside its mandate, addressing instances of violence that did not clearly fall within the scope of the official definition of “conflict diamonds,” because all participants recognized its authority to do so.

While without voting privileges, which are reserved exclusively for sovereign states and the EU, as an official observer representing the diamond industry the WDC plays a key role in the KP. In fact, the system by which the KPCS operates was developed from a working paper written by a team of WDC experts.

Additionally, since 2013 WDC members have operated the KP’s Administrative Support Mechanism, which provides ongoing logistic and managerial assistance to the KP Chair and officers. WDC representatives are active on all committees and working groups, leading several of them, and also participate in peer review visits to KP member countries.

Kimberley Process participants during a session of the 2019 KP Intersessional Meeting in Mumbai, India.

Much of the ongoing work of the KP takes place within its working groups and committees. These include:

WORKING GROUP OF DIAMOND EXPERTS (WGDE)

Chaired by the WDC, WGDE is a technical working group, charged with providing solutions to technical challenges and problems in the implementation of the KPCS. Among the tasks it has been assigned with are proposing changes to the “Harmonized System Codes” for rough diamonds to the World Customs Organization, the harmonization of valuation methodologies, the transfer of diamond samples from exploration projects, and providing technical information to […]

12January 2020

2019
15TH ANNUAL MEETING
ANTWERP, BELGIUM

Members of the World Diamond Council (WDC) assembled in Antwerp, Belgium, on October 2 and 3, 2019, for the organization’s Annual General Meeting (AGM). The proceedings were dominated by discussions about the pending conclusion of the Kimberley Process’ review and reform process, and the related call by WDC and others that it includes a strengthening of the scope of the Kimberley Process Certification Scheme (KPCS).

The AGM was hosted in Belgium by the Antwerp World Diamond Centre (AWDC), which also organized an industry dinner at the Antwerp Diamond Bourse on October 3 to celebrate the WDC.

Speaking to the gathering, WDC President Stephane Fischler, expressed the organization’s determination that, when the KP Plenary meets in New Delhi, India, November 18-22,  progress be made in strengthening the definition of  “conflict diamonds,” so that it better addresses the assurance that the trade in rough diamonds cannot be used to fund systemic violence being seen in certain diamond-mining areas today.

The WDC is the single voice of the international diamond industry in a tri-partite initiative with governments and civil society known as the Kimberley Process (KP) which co-created the Kimberley Process Certification Scheme (KPCS) that both safeguards the shipment of rough diamonds and certifies them as conflict free. Today trade in conflict diamonds has been virtually eliminated worldwide.

The WDC’s Board of Directors meeting at the start of the 2019 Annual General Meeting in Antwerp, Belgium, on October 2, 2019.

Several amendments to the conflict diamonds definition are currently being considered by the KP, including a proposal tabled by Canada, which had been formulated together with WDC and the Civil Society Coalition, and others by Botswana and Russia.

“We are still far from a final agreement, but I believe that there is now a general awareness that a new and strengthened scope will indeed be of benefit to the KP and all its stakeholders,” Mr. Fischler said in his report to the AGM. “These are extremely complex negotiations, where the North-South divide is apparent, and where different historical contexts must be acknowledged, for they shape perceptions and understandings.”

The WDC President stressed that, with the strengthened scope, it is critical the role of the KPCS remains relevant. The KPCS should not be regarded as a sanctions mechanism, he said, but rather as a system that prevents instances of violence and conflict, and in so doing facilitates capacity building in the mining areas, as well as maintains and grows consumer confidence in diamonds.

A key element in the WDC’s program to support the integrity of the diamond value chain is its updated System of Warranties (SOW), whose scope extends beyond that of the KPCS, covering both the rough and polished diamond trade, and directly referencing international conventions on human and labor rights, anti-corruption and anti-money laundering (AML). Delegates to the AGM discussed a toolkit that currently is being developed to assist members of the industry in their implementation.

We are all […]

11December 2019

WDC Newsletter


GJEPC PLANS FOR THE SUSTAINABLE GROWTH OF INDIAN INDUSTRY THROUGH A SECTOR-WIDE SOCIAL SECURITY SYSTEM CATERING TO FIVE MILLION WORKERS AND THEIR FAMILIES

One may surmise that the health of an industry is directly correlated to the wellbeing of its workforce. This is particularly relevant when it comes to a labor-intensive sector like gems and jewelry. In India, thanks to initiatives spearheaded by the Gem & Jewellery Export Promotion Council (GJEPC), millions of gem and jewelry artisans and dependents can now finally access quality healthcare of choice, and with the support of the global industry the council believes it will be able to scale up operations and positively impact many more lives.

The Indian industry provides employment to more than 5 million people. It is the world’s largest diamond cutting and polishing center, with 93 percent of all polished diamonds by volume being processed there.

The ready availability of skilled workers is a key strength of the Indian diamond sector, and has been a primary factor in the country’s rise to dominance in just a few decades. However, with economic success providing a range of alternative job opportunities to the children of existing employees, the presence of this enormous resource pool could no longer be taken for granted.

Realizing that there is distinct possibility of a severe shortage of skilled workers in the years ahead, GJEPC understood that it needed to take measures that would secure both its current and future workforces. This it believed could be done by developing an industry-wide social security blanket, in the form of healthcare, education and more.

India’s labor-intensive diamond, gem and jewelry industries provide employment to some 5 million people, and process 93 percent of the world’s polished diamonds by volume.

LAUNCH OF ‘SWASTHYA RATNA’ HEALTH INITIATIVE

Some 90 percent of India’s gem and jewelry sector is made up of micro, small and medium-sized enterprises (MSMEs), with the bulk of the workforce employed by small units that function on a job-lot basis. This frequently makes it difficult for them to get access to quality healthcare for their employees.

In India, public healthcare is free and subsidized only for those who are below the poverty line. The public health sector encompasses 18 percent of total outpatient care and 44 percent of total inpatient care. Middle and higher-income individuals are generally required to find other solutions.

To help bring as many as possible diamond workers into a quality healthcare system, GJEPC initiated a group policy called Swasthya Ratna (Gem of Health), to provide insurance to the workforce.

Starting on March 1, 2015, GJEPC called on its member companies to enroll their employees and their families. It worked with an insurance company to create a flexible scheme with different options related to family size, nature of benefits, etc. The premiums offered were affordable, but the GJEPC also subsidized the venture by contributing a percentage of the premium amount. […]

11December 2019

WDC Newsletter


KP PLENARY AGREES TO PROVISIONALLY RESTRUCTURE SYSTEM BY WHICH CERTIFIED ROUGH DIAMOND EXPORTS FROM CAR ARE MONITORED

Among the more notable outcomes of the Kimberley Process (KP) Plenary Meeting in New Delhi, November 18-22, 2019, was a decision to restructure the operational framework structure being used to monitor KP-compliant rough diamond exports from the Central African Republic CAR). Caught up in a civil war that has simmered since 2012, the country is today considered to be the only producer of goods that meet the current definition of conflict diamonds.

During the height of the conflagration, between May 2013 and June 2016, the KP suspended CAR’s membership in the organization, making it impossible to legally export rough diamonds from the country. Then, seven months after the election of President Faustin-Archange Touadera in December 2015, the KP agreed to CAR’s resuming limited exports, according to a program that was supported by the United Nations.

The KP ruled that only diamonds mined in “green” compliant zones would eligible for export with a KPCS certificate issued by the CAR government. These are areas under CAR-government control, and where KP has determined that conditions and operations meet Kimberley Process Certification Scheme (KPSC) operational framework traceability requirements. In these zones, of which there currently are eight, there can be no evidence of armed rebel group activity, persons can move freely in and out of the area, and government mechanisms have to be in place to track diamond production and the diamond trade.

Udi Sheintal, WDC Secretary and General Council, the industry representative on the CAR  Monitoring Team.

The original operational framework structure required that KPCS-certified rough diamonds from the CAR had to be pre-approved for export by a designated CAR Monitoring Team. With its volunteer members spread out across the globe, from a practical perspective this meant that exports took place just one week out of every month.

The current CAR Monitoring Team is chaired by the United States and includes officials from a number of KP Working Groups, the WDC and civil society. The Council’s representative on the team is Udi Sheintal, WDC’s Secretary and General Counsel, and his alternate is Damian Gagnon.

But legal exports from the CAR have remained low, with only a small proportion of the rough goods being mined in the country being submitted for approval to the CAR Monitoring Team. It was felt by some that the bottleneck created by the requirement that shipments be pre-approved may by partially responsible.

It consequently was proposed that the system be restructured on a provisional basis, allowing the CAR government to issue at will KP certificates to rough diamond shipments, for goods being sourced in the eight approved green zones. The CAR government will continue to record all export data, which will be submitted to the Monitoring Team for review. The success of the revised process will be assessed during the course of 2020. If no noticeable improvement in […]

11December 2019

WDC Newsletter


2019 KP PLENARY MEETING REPORTS PROGRESS IN A RANGE OF AREAS

ABOVE: The 2019 KP Plenary Meeting in session in New Delhi, India.

While most media coverage of the 2019 Kimberley Process (KP) Plenary Meeting focused on the discussion around the “conflict diamonds” definition, it was only one of a great many subjects tackled during the five-day gathering in New Delhi, India, from November 18 to 22. Some were related to the KP’s three-year review and reform cycle, which ended at this year’s Plenary Meeting, and others to topics such as the increased efforts being taken to improve the implementation of the Kimberley Process Certification Scheme (KPCS) in artisanal mining countries.  

Over the first four days, members of the sub-teams of which the Ad Hoc Committee on Review and Reform (AHCRR) was comprised gathered together with the goal of chalking up as much progress as possible before their mandates expired.

Among the review and reform sub-teams registering substantial progress was the one headed by WDC Board Member Peter Karakchiev, which was charged with the establishment of a Permanent Secretariat for the KP. Once created, the new body will replace the Administrative Support Mechanism (ASM), which is hosted by the WDC.

The podium of the closing session KP Plenary Meeting in New Delhi, during the speech by WDC President Stephane Fischler.

The task now is to find a home for the Permanent Secretariat, and expressions of interest have been received from Austria, Botswana, the People’s Republic of China, the Russian Federation and the United States of America.

To identify the host country and define how the Permanent Secretariat will operate, the KP Plenary agreed to create a tripartite Technical Expert Team under the Working Group of Diamond Experts (WGDE). It will make recommendations, but the final decision still rests with the KP Plenary.

In the meantime, the Plenary extended the mandate of the ASM for an additional two years, or until the date of setting up of a Permanent Secretariat, whichever comes earlier.

In its final communique, the Plenary described as “significant” the work done by the AHCRR sub-team on a Multi-Donor Fund, which has been proposed as a means of funding those participants with limited financial resources.

A team of experts funded by the European Union presented the results of a needs assessment for a voluntary Multi-Donor Fund. It said that four priorities had been identified. These are capacity building in the KP, technical assistance, the participation of civil society and participation of least developed countries.

The fourth AHCRR sub-team looked at the strengthening of the KP’s Plenary Peer Review Mechanism. Its finding resulted in an Administrative Decision, which aims to improve the provisions of peer review, including annual reporting, review visits and review missions.

During the KP Plenary, the Working Group on Monitoring decided to adopt provisional changes to the operational framework for exports of rough diamonds from the Central African Republic (CAR) and […]

11December 2019

WDC Newsletter


AS KP FALLS SHORT OF CONSENSUS ON NEW ‘CONFLICT DIAMONDS’ DEFINITION, WDC’S REVISED SYSTEM OF WARRANTIES STEPS IN TO FILL THE GAP

ABOVE: Stephane Fischler, WDC President, addressing the closing session of the KP Plenary Meeting on November 22, 2019.

At the Kimberley Process (KP) Plenary at the Pullman Hotel in New Delhi on November 22, 2019, compromise among members on a new definition for “conflict diamonds” seemed tantalizingly close.

But, as it turned out, not close enough. Decisions in the KP can only be greenlighted by across-the-board agreement by all voting government members, and this proved to be unachievable.

The statement released soon after the meeting by the KP Chair was concise and to the point: “The Plenary recalls the extensive work undertaken in the context of the Ad Hoc Committee on Review and Reform (AHCRR) on how to strengthen the scope of Kimberley Process in the core document, and welcomes the in-depth discussions that took place on how best to capture the evolving nature of conflict and actors involved in conflict, on the importance of capacity building and mutual support, and on the positive contribution of the rough diamonds to prosperity, social and economic development. The Plenary noted that no consensus could be found on an updated conflict diamond definition.”

It was an anti-climactic finale to the three-year review and reform process, which had begun at the end of 2016. The conflict diamond definition, which has not been changed ever since the Kimberley Process Certification Scheme (KPCS) was launched almost 17 years ago, was almost certainly the most intractable issue being discussed.

Edward Asscher, WDC Vice President, during the 2019 KP Plenary Meeting in New Delhi.

David Bouffard, Vice President of Corporate Affairs at Signet Jewelers and Chair of the WDC’s Communications Committee.

Feriel Zerouki, Senior Vice President of International Relations and Ethical Initiatives at the De Beers Group of Companies, and a WDC Board Member.

Proponents for a strengthened scope for the Kimberley Process, the World Diamond Council (WDC) among them, argued that the KP’s criteria for defining conflict diamonds, which limits them to being rough stones being used to finance civil uprisings by rebel groups against legitimate governments, is not as pertinent today as it was 2003.

For its part the WDC had formulated a proposal together with the Civil Society Coalition, which was tabled by Canada in 2018, suggesting that conflict diamonds also include rough stones associated with acts of grave violence carried out by both state and privately-run security forces, as well as criminal elements. Other proposals were later tabled by Russia and Botswana. None made it across the finish line.

WDC REMAINS COMMITTED TO STRENGTHENED SCOPE OF KP

Speaking to the Plenary Meeting after it was clear that no last-minute compromise on a new definition would be obtained, WDC President Stephane Fischler said that industry would not give up the fight to strengthen the KP’s scope.

“Even today, with […]

11December 2019

WDC Newsletter


MESSAGE FROM THE WDC PRESIDENT

Dear friends,

This fourth and final edition of the WDC News Update for 2019 is being released some two and half weeks after the close of the 2019 Kimberley Process (KP) Plenary Meeting in New Delhi, India. It provides a well-timed opportunity to wrap up what has been a year of intensive work for the World Diamond Council (WDC) within the KP, and to take look at where we go from here.

As the lead article in this newsletter describes in detail, the Plenary Meeting did not produce all the results that WDC would have liked, particularly as a result of member countries’ inability to reach consensus on a strengthened scope for the Kimberley Process Certification Scheme (KPCS) through an expansion the definition of conflict diamonds. The consequence of this is that the system will continue not to cover all acts of unacceptable violence that are associated with diamond-production today.

But WDC’s takeaway from the Plenary Meeting in New Delhi differs substantially from certain comments voiced in recent days, which have questioned the very relevance of the KP itself. Let us not kid ourselves. There is no alternative to the KP, which historically has shown itself to be an enterprise of unprecedented effectiveness, both in terms of its structure and its ability to prevent violence. By helping bring an end to a string of civil wars, it almost certainly can be credited with saving thousands of lives.

Simply stated, one does not remove a proven safety net because it is not as comprehensively effective as one would like. One works to improve the performance of that safety net, and that is what WDC is committed to doing.

As we have shown throughout the three-year review and reform process that has now ended, WDC will continue to press hard for meaningful change within the KP, and at the same time will work independently to ensure that the safeguards we seek are implemented in the supply chain. Our revised System of Warranties, which has a scope that is significantly broader that of the KPCS, is a key component of this approach.

Another article in this newsletter concentrates on the additional work that took place at the Plenary Meeting in New Delhi, some of which was also related to the process of review and reform, but a good deal more to other pressing matters. There is a tendency by some to focus on criticism of the KP, while overlooking the fact that the body’s various working groups deal with a myriad of issues, from monitoring exports from the Central African Republic (CAR), to capacity building in artisanal mining areas to maintaining the most comprehensive global statistics of rough diamond production. This work, which continues around the clock, is a vital for the wellbeing of our industry and for the literally millions of individuals dependent on the revenues it generates.

A third article in the newsletter considers the implications of the decision taken at the KP […]

2December 2019

Steps you need to take due to the restructuring by Kimberley Process of the Operational Framework System for rough diamonds from the Central African Republic (CAR)

Steps you need to take due to the restructuring by Kimberley Process of the Operational Framework System
for rough diamonds  from the Central African Republic (CAR)

DECEMBER 2, 2019

The Kimberley Process (KP) Plenary Meeting was held in New Delhi, India, on November 18 to 22, 2019. This notice addresses the implications of the agreement at the gathering by KP member countries to restructure the Operational Framework System created for the Central African Republic (CAR), while maintaining the current strict monitoring of exports. This is a provisional modification that is valid for one year. Its effectiveness will be assessed by Kimberley Process during 2020.

The declared objective of the restructuring of the Operational Framework System is to encourage the increase of legal exports from CAR, by improving the efficiency of the Operational Framework System.

Under the terms of the revised Operational Framework System, the CAR government will be allowed to issue KP certificates to rough diamond shipments at will, for goods being sourced in the eight currently approved green zones. This is in contrast to what has been done to date, where KP certificates could only be issued after obtaining approval from the CAR Monitoring Team (CAR MT) prior to each export.

The CAR MT will continue to monitor all legal exports from the country. The CAR Government, which is responsible for securing the local supply chain, including buying houses and cooperatives, remains obliged to provide comprehensive information about rough diamond exports under its purview on a monthly basis. The CAR MT will cross-check copies of all KP export certificates received from the CAR government against the confirmations of imports of the corresponding shipments, which will be supplied by the authorities in the importing countries/trading centers.

It is important to note that the new Operational Framework System shifts some of the burden of verifying the provenance of the goods to the trading centers. While it is government-sanctioned authorities that will be responsible for supplying confirmations of imports of rough diamonds from the CAR, members of the trade are urged to practice enhanced vigilance when handling rough diamonds believed to have originated from the country. This should be done by ensuring that import shipments from CAR only include goods that have been sourced from the approved green zones, and always are accompanied by a duly authorized CAR Government KP certificate. Importers seeking to ensure transparency are encouraged by the KP to provide the CAR MT with confirmation of shipments of diamonds imported from the country.

Please note that a recent UN report provided the identities of foreign diamond traders suspected of operating illegally in CAR. Their names have been forwarded to local law enforcement authorities for further investigation.

Any additional questions about CAR diamond shipments should be directed to the KP Focal Point in the country where the diamond industry member operates.

FOR FURTHER INFORMATION, PLEASE CONTACT:
Udi Sheintal, WDC Secretary and CAR MT Representative
secretary@worlddiamondcouncil.org