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being sold, as I said in my testimony, we would require controls in place first in the countries of extraction.
As to the presence of claims by some jewelers that their stones are conflict-free, I believe those claims are now being made by some jewelers based on the assurances they have received from their suppliers. The irony here is that everyone, to my knowledge, in the industry in the United States is acting in good faith out of their, not only a desire to preserve their businesses, but out of true abhorrence to the connection that has, in fact, been established between four percent of the world's production of rough diamonds and these atrocities. Everyone wants that to end.
But the reality is that the retail jeweler, and the majority of retailer jewelers in this country, are small family-owned businesses. The retail jeweler is powerless to provide 100 percent assurance today. But they are making their best-faith effort. They are requiring similar assurances from their suppliers, and I am happy to say that the supply side of the industry in the United States has moved swiftly to offer those assurances and, in turn, to pass those requirements on up to their suppliers overseas. I believe the process is in motion.
Chairman CRANE. Mr. Runci, the retailers are at the far end of the diamond pipeline and they have little control, if any, over the diamonds they import and they have to rely on what rough diamond dealers tell them is the source of their diamond imports. What steps can retailers take to accurately ascertain the mining source of imported diamonds?
Dr. RUNCI. Retailers typically purchase their diamonds, Mr. Chairman, from traders or diamond wholesalers here in the United States. Large retailers may purchase their diamonds from diamond traders or wholesalers outside the United States. Retailers have been enlightened on this issue for the past year as a result of a continuing series of information bulletins that we have issued because this was an issue, quite frankly, that, with all due respect to the civil society community, they were on top of much earlier than the jewelry industry here in the United States. Jewelers have no conception, nor have they ever had to be concerned with the ultimate origin in terms of extraction of the diamonds that they buy and that they sell to consumers.
The very last thing that a jeweler wants is for a consumer to say, "how can you assure to me that this stone is not tainted?” No such absolute assurance could be given. The chain of assurances that has been put in place for the past nine months through our repeated communications to our members and their use of those communications with their vendors, the so-called Vendor Guidance Agreement that the Jewelers of America developed, seems to be working in terms of elevating the level of awareness up within the trade and increasing the level of assurance that any retailer can, in fact, offer their consumer.
We look forward to the day when simple international controls have been put in place, starting in the countries of extraction. That ultimately ensures that the flow of diamonds forward is, in fact, untainted and that if, sadly, there are still conflict diamonds, they are, in fact, being diverted to those markets that have not instituted those controls.
I think the United States and Congress can play an important leadership role in this effort, but hopefully it will be in concert with the international community, through leading the international community, but not with a gun to the retail jeweler's head that he simply cannot accept without his business being on the line. Thank you.
Chairman CRANE. Mr. Boyajian, do you foresee the possibility of practical technology in the near future to determine the country of mining of a cut and polished diamond?
Mr. BOYAJIAN. I do not. As I mentioned in my testimony, we have never been asked, nor have we even contemplated the idea of origin of country of polished diamonds. We ourselves are not experts in rough. We are experts in polished. We grade most of the major diamonds that are bought and sold around the world, especially the larger, more important diamonds. We put quality analyses on them with color grade and clarity grade and cut.
But I just do not see the technology developing to be able to implement a system of being able to identify country of origin, and again, as I mentioned in my testimony, in my written testimony and also my oral testimony, it is extraordinarily difficult to know where the diamond has actually come from. Where it was mined from may not be where it originated.
The sources that have been identified in previous reports that have been submitted perhaps to this group, perhaps to your committee, have identified sources of scientific data back to the beginning part of the 20th century. It is important to remember that when goods were only coming from South Africa, for example, it was much easier to study one mine's production and be able to determine certain chemical or physical characteristics of diamonds that might lead you to be able to determine origin. Such cases have been cited many times in these reports.
My concern is that diamonds are found all over the world today. Russia is a major producer of diamonds, as is Australia and now Canada, all of Southern Africa. It is extraordinarily difficult to distinguish between primary and secondary sources. I just do not see the technical feasibility. I would not know, sir, where to start.
Chairman CRANE. I want to express appreciation to all of you for your testimony this morning. Again, I apologize for the absence of my colleagues, but your written testimony and your response to questions will be made a part of the record and so they will have access to what you said.
I would appreciate it if you would stay in touch with us, though, on an ongoing basis. This is an issue obviously of concern and concern to some of our colleagues who have already attempted to approach it legislatively. I am not sure exactly yet what the answer is, but we appreciate all the help we can get from you. With that, the committee stands adjourned. [Whereupon, at 11:54 a.m., the hearing was adjourned.]
[Submissions for the record follow:] Statement of Elly Rosen, Founder and President, Appraisal Information
Services, on behalf of Gems and Jewelry Reference, and Appraiser's Information Network
Mr. Chairman and members of the subcommittee, my name is Elly Rosen and I am founder of Appraisal Information Services (AIS), an online reference resource
and networking forum for members of the gems and jewelry and other personal property trades, as well as for practitioners in the personal property appraisal profession.
I would first like to commend this subcommittee and the various members of congress who have been working towards finding a solution to the problems inherent in the sale of African diamonds whose proceeds are used to fuel the fires of war. I also commend you for providing this opportunity for trade leaders to present the perspective of an industry whose members are generally honest hard working merchants who should not become further innocent victims of these terrible conflicts. America and its citizenry have a moral obligation to enter into the international dialogue being conducted on this issue and we all owe a debt of gratitude to those members of Congress who are trying to assure such entry at an early stage.
For context of your considering my brief comment, I should add that sections within our site include the Appraisers' Information Network (AIN), the Gems & Jewelry Reference (GJR), the Guide for Personalty Expert Witnesses & Trial Consultants, and the Appraisal Information ClientCenter (AIC). Our membership includes appraisers from the most recognized professional personal property appraisal organizations and practitioners from all segments of the gems and jewelry trade, including wholesale suppliers, retail jewelers, artisans, gemologists,labs, and appraisers. Our forums and reference areas are currently accessed in 5 countries on 4 continents and in 31 U.S. States.
I appreciate the opportunity to submit this statement for the record of your most important subcommittee hearings on "Trade in African Diamonds" and I am submitting it to urge you to support current efforts by the international diamond and jewelry communities to develop meaningful procedures and safeguards as might be needed to resolve the problem of that small portion of mined diamonds being usedto finance African conflicts. Other respected leaders of the gemstone and jewelry industry have appeared before you who can best speak to such efforts currently under way by the World Diamond Council as well as to the subject of gemological realities related to identifying the country of origin of rough and polished diamonds. I will be addressing just a few points related to the realities of manufacturers, retailers, gemologists and appraisers, and how congressional activity might impact daily efforts to conduct their businesses.
The World Diamond Council, established by the Antwerp Resolution, appears to be making a concerted effort to lay out and put into affect plans to deal with this problem at the source; the only place where it can be dealt with most efficiently and in a manner which would avoid needless and unjustified harm to this important industry. We all owe a debt of gratitude to the sponsors of the C.A.R.A.T Act of 2000 as it made clear that the United States will be a leader in resolving this world problem. However, the CARAT Act can not be administered from a practical standpoint and would present an unjustified burden on all segments of the trade. Unfortunately the well intentioned proposals in the Act would also make it a meaningless burden as it would be close to impossible for many trade segments to comply.
Once rough diamonds leave their country of origin they are then bought and sold, and resold, in varying configurations and parcels, in diamond centers all over the world. Once polished it gets even more complex and efforts to track and label every polished diamond (above some relatively low dollar base) would cause total chaos if it could be done at all. It should not be difficult to envision how polished diamonds move from importer to finished jewelry. They are sorted by shapes, sizes and quality grades as well as in melange (mixed) parcels.
Manufacturers and diamond suppliers then do their own sorting based on the needs of their customer base and their in house quality control procedures. Customs laws would have to changed to have country of origin labeling reflect the place of mining, rather than the current designation requirement that it be the country of processing, or polishing. But that is where the problems would only begin. If each diamond had to be labeled based on country of origin, diamond suppliers would have to separate all their current categories of diamonds by as many subcategories as there are diamond producing countries. For jewelry manufacturers and small manufacturing retail jewelers it would be even more complex.
Such smaller manufacturers go through numerous parcels to mix and match qualities and sizes for a particular item. In addition, many retailers buy “semimounts” which are jewelry items containing the smaller stones and then separately buy center stones or maintain an inventory selection of such stones. If such a manufacturer, or manufacturing retailer could somehow manage to keep track of each individual stone, compliance with the CARAT Act could result in one small ring having five designations on it for the countries of origin of each diamond. Even that might have to then be changed if a small diamond broke in setting and had to be replaced. This is just one example of the chaos that could ensue when good and honest folks make a sincere effort at CARAT Act compliance.
Small gemologist and appraisal practitioners will not be able to avoid being dragged into the fray either. Once this snowball starts to roll there will invariably be consumers asking us to confirm that their diamonds are from the country represented at point of sale. We will not have the ability to do so and confusion will reign supreme as fodder for media expose sensationalists always on the hunt for a good story or some free publicity.
It seems to make much more sense, and seems more practical and efficient to nip the whole thing in the bud at the source. If current industry proposals can succeed in sealing and certifying rough diamonds before leaving their country of origin then we could all know from that point on that those diamonds, the overwhelming majority of diamonds mined, are OK wherever they then go. We urge Congress to avoid precipitous action and allow the international trade leadership reasonable time to develop, foster and implement such procedures.
For the Gems & Jewelry Reference and the Appraisers' Information
EMBASSY OF THE REPUBLIC OF LIBERIA
September 12, 2000 The Honorable Philip Crane Chairman, Subcommittee on Trade House Ways and Means Committee 1104 Longworth House Office Building Washington, D.C. 20515 Dear Mr. Chairman:
I have the honor to first thank the Subcommittee for the opportunity to submit a statement on behalf of the Government of Liberia on the issue of conflict diamonds. The issue is critical to our neighbor, Sierra Leone, but it is also of vital importance to my country, also a diamond producer.
I am attaching to my statement a copy of a letter written on August 28, 2000 to United Nations Secretary General, Mr. Kofi Annan, by the President of Liberia, Dr. Charles Ghankay Taylor. A similar letter was also sent to President William Jefferson Clinton. In both letters, President Taylor re-affirms Liberia's unreserved support for Security Council resolution 1300 (2000) which calls, inter alia, for an end to the smuggling of diamonds from Sierra Leone. In addition to our support for the UN resolution, Liberia recently undertook several new initiatives to assist in the international battle against conflict diamonds and the dangerous purposes for which they are traded-namely, arms to fuel civil conflicts in Africa.
We have enacted a statute criminalizing the export of undocumented or uncertified diamonds. We have undertaken the enforcement of legislation requiring the Central Bank of Liberia to issue certificates or origin for Liberian diamonds. We have asked the International Monetary Fund and the World Bank to provide experts who would assist in the development of a transparent certification process. Further, we have called for assistance from the international community to urgently convene a meeting of international experts to focus on the trade and certification process in the Mano River Union Countries (Liberia, Sierra Leone and Guinea).
Liberia has taken these steps not only out of concern for the peace and stability of the region, but also to ensure our territorial integrity as well as the security of our citizens. Liberians are no less impacted by the illegal diamond trade than our neighbors and have the same interests in seeing it halted as the rest of the international community.
Mr. Chairman, I appreciate the opportunity to provide this information that I trust will assist your committee in its deliberations. If I can answer any questions regarding Liberia's views, please do not hesitate to contact me.
Please accept, Mr. Chairman, the renewed assurances of my highest consideration. Sincerely,
WILLIAM V.S. BULL Ambassador to the United States of the
Republic of Liberia
Letter from the President of Liberia
to the United Nations Secretary General contained in UN Security Council I extend compliments on behalf of the people of Liberia and in my own name to you on the occasion of the convocation of the Millennium Summit, where leaders of the world would be expected to define problems besetting our global family and determine solutions the alleviation of those problems, engendering hope in the future of our one world and carving new aspirations for the United Nations. Against this background, I am pleased to acquaint you with the current status of Liberia's engagement in Sierra Leone, a troubled portion of our global village.
You may recall the commitment of the Government of Liberia to remain constructively engaged in the resolution of the crisis in the sisterly country of Sierra Leone. Recently, our involvement, among other things, culminated in the release of over 500 United Nations peacekeepers who were unfortunately held against their will by the Revolutionary United Front (RUF). Our Government will continue to be steadfastly bound to an immediate, peaceful and diplomatic solution to the crisis in the subregion, and will continue to offer public and practical expressions to these endeavours.
However, the apparent silence of the international community to the repeated violations of our territorial integrity by armed insurgents from the area of the GuineaSierra Leone borders, including a third and most recent attack emanating from the Republic of Guinea, which is ongoing, continues to overburden the Liberian Government with unnecessary loss of lives and property and the displacement of a large number of our people. It is the request of the Government of Liberia that you utilize all forms of influence at your disposal to ensure the sanctity of our borders and the maintenance of peace, security and stability within the framework of the Mano River Union.
As the inviolability of the borders between Liberia Guinea and Sierra Leone remains a crucial issue, I recommend the following and request the support of the United Nations in ensuring their speedy implementation:
(a) The Government of Liberia again calls for a monitoring presence of the United Nations at these borders to monitor all crossing points capable of conveying vehicular traffic. We recognize the enormous cost to individual nations of policing the entire length of these borders and suggest the utilization of an airborne multi-spectral service in detection of any unusual movements along the entire border. Intelligence gathered therefrom could be shared by all appropriate authorities. The cost, which is relatively minor, could be borne by the international community; (b) On the status of RUF, as has been previously done, the Liberian Government has again called for the immediate disarmament and simultaneous deployment of troops from the Economic Community of West African States (ECOWAS) under the United Nations Mission in Sierra Leone (UNAMSIL)
in areas recently considered as RUF-dominated. Along these lines, RUF has announced a new leadership acceptable to ECOWAS and has informed EDOWAS through its Chairman that it welcomes our call for disarmament and demobilization and that it has begun the process leading to the transformation to a political entity and subsequent reintegration into society. Additionally, RUF has informed ECOWAS of its wish to return weapons retrieved from United Nations peacekeepers and its desire to establish communication with the High Command of UNAMSIL, to facilitate and accelerate the return of the weapons and the process of confidence-building.
In keeping therewith, it is our recommendation that these initiatives be immediately exploited by the United Nations, leading to a ceasefire; the withdrawal of all belligerent forces to positions as at 7 July 1999; the simultaneous deployment of ECOWAS troops, under UNAMSIL; and the total disarmament and demobilization of the armed factions.
You are doubtlessly aware of our unreserved support for Security Council resolution 1306 (2000), calling for an end to the smuggle of diamonds from Sierra Leone. As evidence of this, we are undertaking several initiatives, including the enactment of a statute criminalizing the export of undocumented or uncertificated diamonds; the enforcement of legislation requiring the Central Bank of Liberia to issue certificates of origin; and our request to the International Monetary Fund and the World Bank to second experts who would assist in the development of a transparent process. Furthermore, the Government calls for assistance from the international com