Professional Jeweler Archive: Kimberley Now Fully Effective

October 2003

Diamonds/News


Kimberley Now Fully Effective

System gives final approval to 53 member countries


A Kimberley Process Certification Scheme committee finalized admittance of 53 countries to the program, which became fully effective Aug. 31. Twenty-three other nations were dropped.

KPCS was created to protect the worldwide trade in rough diamonds and prevent criminals from gaining access to the market to exploit diamonds. Its goal is to transform the international trade to a closed system by requiring participating countries to regulate diamond trading communities, export and import rough diamonds in sealed packages and certify the diamonds are bought from legitimate sources.

Though the Kimberley system was announced as effective in January, many countries had not met the minimum requirements to be included, so the group postponed final implementation of the closed system until all the major diamond-producing and -consuming countries could get on board.

The minimum requirements to be in the closed network include passing national laws or regulations to control the diamond trade and getting Kimberley group approval of the certificates that must accompany each sealed package of rough diamonds exported. The deadline for getting laws passed and all paperwork in to the Kimberley committee was July 31. The United States barely made the deadline, with President Bush signing U.S. legislation on July 29 although the White House reported he signed it in April.

The committee urged nations that were dropped from the program to continue working on the requirements needed for admittance. However, it stressed that after Aug. 31, any country that had not completed its regulations or gained approval for its certificates would no longer be able to trade rough diamonds with the participating countries. (For a complete list of members admitted or dropped by the initial deadline, go to www.professionaljeweler.com, Daily News, July 29.)

U.S. Participation

Since Aug. 31, rough diamonds have not been permitted into the United States unless accompanied by an authentic Kimberley Process certificate from the originating nation. The certificates state the diamonds are handled in compliance with the Kimberley Process Certification Scheme and United Nations resolutions preventing trade in conflict diamonds.

The U.S. rules also require rough diamonds exported from the U.S. be accompanied by a U.S. Kimberley Process certificate, issued through the U.S. Kimberley Process Authority. Each certificate is assigned a unique number by the Automated Export System of the U.S. Census Bureau. USKPA is a jewelry industry entity that licenses shipping and diamond companies to issue Kimberley Process certificates for use with exports of rough diamonds from the United States. Strict procedures for issuing and tracking these certificates are required by USKPA, which also conducts periodic audits to ensure the system’s integrity. USKPA directors are Matthew Runci of Jewelers of America, Martin Hochbaum of the Diamond Dealers Club of New York and Cecilia Gardner of the Jewelers Vigilance Committee.

– by Peggy Jo Donahue

Kimberley and You: Effect on Retailers

Ask for warranties that diamonds are conflict-free

Because the Kimberley system regulates only the rough diamond trade, many U.S. jewelers have been left wondering how the system affects them. Here’s a rundown.

When the Kimberley system was approved in November 2002, U.S. diamond industry leaders agreed to participate in a voluntary international program of self-regulation by asking all industry members to provide ongoing warranties for every Kimberley-vetted diamond. These warranties say diamonds are bought from legitimate sources not involved in funding conflict and are in compliance with U.N. resolutions.

The warranties begin when suppliers of rough diamonds sell their Kimberley-approved goods to diamond dealers and manufacturers. Those businesses pass on warranty assurances to polished-stone suppliers and manufacturers of diamond jewelry, who pass them on to retailers. Retailers can assure their customers a warranty followed every diamond they sell from its source.

“Vital to the success of the voluntary system of warranties is the initiative of retail jewelers in consistently securing from their diamond and diamond jewelry suppliers the appropriate warranty language either on invoices accompanying shipments or in legally binding contractual agreements with those vendors,” says Matthew Runci, president and CEO of Jewelers of America and executive director of the World Diamond Council.

To help ensure this, JA will enlist the active support of all state jewelry associations to get a written commitment from members to use the warranties. State associations that secure written commitments from all members will receive subsidies for education programs as a reward from JA. Recommended guidance and information materials for retail jewelers, including sample language for use with vendors, may be downloaded from JA’s Web site, www.jewelers.org.

– P.J.D.


Is the Kimberley System Enough?

Lingering questions will keep the issue alive with consumers

With the Kimberley Process Certification Scheme in place, perhaps you think you can stop worrying about conflict diamonds. Think again. In a study by the Jewelry Consumer Opinion Council in July 2003, 26% of consumers said they are aware of the term conflict diamonds, up from 16% who said they were aware of conflict diamonds in December 2002, 9% in May 2001 and 7% in October 2000.

“Conflict diamonds are clearly an important and growing issue for the jewelry trade,” says Martin J. Hurwitz, CEO of MVI Marketing Ltd., creators of JCOC. “In just over 21/2 years, consumer awareness of conflict diamonds – or ‘blood diamonds’ – has grown 271%. That means one out of four consumers may base their next diamond purchase decision on diamond origins or ask probing questions about diamond origin certification.”

And when they ask the questions, consumers may be aware of ongoing criticism from a coalition of human rights groups who think the Kimberley system has only begun to address the problem of catching all the diamonds used to fund conflict. Though the coalition, which acted as observers on the Kimberley Process, welcomed the kick-off of the program Aug. 31, they have concerns about its effectiveness. Jewelers need to be prepared for consumers who may have heard human rights groups ask:

Can the system really be effective when there is no regular independent monitoring of participating countries, to see if they are following the rules and regulations – or even if they’re being implemented or enforced? Many countries admitted to the Kimberley system have weak, ineffective, corrupt or chaotic governments that may not be able to assure the world their diamonds didn’t pass through the hands of criminals or terrorists. Human rights groups would like to see observers randomly visit countries and monitor how diamonds change hands.

But some countries participating in the Kimberley Process have resisted such monitoring because of the privacy issues it raises, says Matthew Runci, president of the World Diamond Council and a Kimberley attendee. He says some countries – and companies within those countries – are worried about access to confidential records. The issue is likely to surface again when the Kimberley participants meet next.

While such questions remain about the system, it won’t be possible to reassure every customer every diamond is warranted conflict-free. Some customers concerned with the ongoing illegal exploitation of natural resources in poor countries may still question you. The best answer at this point is that a system is in place and the world’s attention has been focused on the issue. Long-term strategies to help poor countries better regulate their governments and resources is the next order of business for the Kimberley Process. While some well-informed customers may be impatient, you might remind them that Rome wasn’t built in a day.

– P.J.D.

Copyright © 2003 by Bond Communications