(Rapaport…December 18, 2002) The new Rough Diamond Export Mechanism (RDEM) was the leading topic of discussion at the most recent meeting of the Diamond Manufacturers and Importers Association of America (DMIA).
Association officials and others involved in the Kimberley Process including Cecilia Gardner, executive director of the Jewelers Vigilance Committee, and Shai Anbar, vice president of Brinks Global Services, also tried to dispel myths and misunderstandings about exactly what the Kimberley Process will require.
One common misconception is that polished diamond shipments must be accompanied by Kimberley certificates. Kimberley regulations pertain only to rough diamonds, the experts reiterated. Whenever sold, polished diamonds must be accompanied by the industry’s new “system of warranties,” whether across borders or not. Both systems are designed to eliminate the trade in conflict diamonds. The main difference is that the Kimberley Process will become law enforced by the U.S. government as of January 1, while the warranties are a regulation the industry imposed upon itself.
The DMIA leadership estimates that 700 shipments of rough diamonds leave the U.S. each year, though several members indicated that the actual number is far higher. Under the RDEM, shipping companies such as Brinks and Malca-Amit will be licensed to issue Kimberley certificates stating that a given parcel of diamonds is conflict-free. Diamantaires will be charged $50 for each certificate, though Leon Cohen, DMIA president, said that the price could drop if it turns out there are far more than 700 shipments made each year. The DMIA established the $50 fee to cover the costs associated with the RDEM, which was created under DMIA auspices, but will be a separate entity.
Diamond dealers will not be able to take rough stones out of the country themselves, Anbar explained. The reason is that Brinks and other shippers — as the sole Kimberley licensees — will be responsible for any parcel between the time they seal it and the time it arrives at its destination. Brinks could not certify to the government of the country where the stones are being delivered that a given parcel has not been reopened and had stones added to it if it leaves the company’s hands, said Anbar.
A diamantaire could, theoretically, try to get a Kimberley license from the U.S. Customs Service himself, but “the government has made that so difficult it would never work,” Cohen noted.
There are other Kimberley Process issues that remain unresolved. The American industry and Ambassador J.D. Bindenagel, the government’s special envoy on conflict diamond issues, were so determined to make sure that the U.S. could enforce Kimberley on time that they left some details to be decided after the fact, DMIA officers said. More than 50 nations agreed to implement Kimberley on January 1 but many — including members of the European Union — will not be ready on time.
Among the unresolved issues are how existing rough inventory in the U.S. will be treated. Gardner said diamantaires should label it as pre-Kimberley and be prepared to show that it was in their inventory before January 1. “If you don’t have any problem explaining where it came from, then you’re okay,” added Jeff Fischer, a DMIA director.
Ben Kinzler, the DMIA’s administrator, said the Customs Service is still working on how to handle pre-Kimberley inventory. The government is still deciding how to handle industrial diamonds, especially the difference between natural and synthetic stones, Kinzler added.
The DMIA’s leadership was divided on how second-hand goods should be treated. Cohen said the government has provided “no clear answer” and suggested diamantaires label such packages as “conflict-free to the best of my knowledge,” reflecting the language of the polished stone warranties. Fischer, on the other hand, said second-hand stones are simply pre-Kimberley goods.
Gardner, the DMIA and J. Walter Thompson, De Beers’ U.S. advertising agency, are writing up Kimberley guidelines that diamantaires around the world will be able to use. Jewelers of America (JA), meanwhile, is publishing Kimberley guidelines for U.S. retailers and consumers.