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Do tensions amongst Kimberley Process members compromise the scheme's viability?
Do tensions amongst Kimberley Process members compromise the scheme's viability?
 









The Kimberley Process: On the Rocks?

As Australia prepares to become Kimberley Process (KP) chair in 2017, NATHAN MUNN asks whether a boycott of the current KP chair has raised concerns about the long-term viability of the certification scheme.

The KP, which brings together diamond industry representatives, governments and civil society organisations for the overall goal of eliminating conflict diamonds from the global supply chain, appears to be – for lack of a better term – on the rocks.

Tensions between the KP’s Civil Society Coalition (CSC) – composed of international NGOs that have ‘observation’ but no ‘voting’ rights – and current KP chair, the United Arab Emirates, have been simmering for more than a year over what the CSC claims to be a lack of transparency on the part of Dubai when it comes to implementing and enforcing the KP. The conflict came to a head in December 2015, when NGOs that make up the CSC declared they would boycott the nomination of the UAE to the chairmanship for 2016.

According to a report by The Financial Intelligencer (TFI) editor Nick Kochan, the boycott was organised primarily to protest the practice of “transfer pricing”, the purposeful under-valuing of rough stones at the site of import so that they can be revalued at a higher price when being exported. The CSC alleges that transfer pricing is common in Dubai, resulting in supplier nations being shortchanged for diamond exports.

Some industry observers believe that the boycott threatens progress that has been made toward stemming the flow of conflict diamonds. In his TFI report, Kochan also cited unnamed detractors who say that transfer pricing occurs at all diamond trading hubs, including the epicentre of the US retail diamond industry in New York City. Regardless of how widespread the practice of transfer pricing is or the fact that the KP was not established for and does not address transfer pricing, the friction between Dubai and the CSC may be creating an obstacle to the expansion and enhancement of the KP.

United front

One CSC member that might have been prepared to renege its participation in the boycott is CENADEP, a Democratic Republic of Congo-based NGO. Published reports in UAE media indicated that CENADEP had responded positively to KP chair Ahmed Bid Sulayem’s request that CSC members attend the Dubai Plenary, which took place 13 November to 17 November, as a conciliatory gesture. However, a few days after those reports were published, director general of CENADEP Danny Singoma reaffirmed CENADEP’s commitment to the boycott.

According to Kochan’s TFI report, CENADEP may have been under pressure to maintain the boycott from Partnership Africa Canada (PAC), a Canadian-NGO that serves as coordinator and treasurer for the African nations that make up the KP CSC.

PAC communications director Zuzia Danielski has denied the allegation.

“Partnership Africa Canada made no such request of CENADEP. Reports suggesting otherwise are false,” Danielski stated.

“When articles in UAE media were published indicating that CENADEP would attend [the Dubai] Plenary, KP Civil Society Coalition members requested [that] CENADEP clarify its position with regards to the boycott. The steps CENADEP took to decide and clarify its position were decisions made internally by that organisation,” she added.

When asked if PAC would consider participating in a certification process other than the KP in the future, Danielski replied that the organisation was “committed to the success of the KP Certification Scheme”.

Neither the World Diamond Council nor the Kimberley Process chair responded to questions about the ongoing boycott.

KP relevance

While the KP may represent the current best efforts of governments, industry and NGOs to address the issue of conflict diamonds in supply chain, some jewellers say that conflict diamonds are a non-issue with customers and that the KP ultimately has no impact on their business, which might leave the real-world efficacy of the process in question.
“The Kimberley Process is a non-issue with my customers,” Kris Fredrickson of National Jewelry Replacements in Lakewood, Colorado, said. “[I] can't remember the last time someone inquired about conflict diamonds.”

A representative of Certified Diamond House in Minneapolis agreed, saying that when it comes to conflict diamonds, “[Even] saying that the provenance of a stone is important would be way overstating it.”

“Not more than 2–3 per cent [of our customers] ask for a Canadian diamond,” the spokesperson stated, referring to the fact that Canadian diamonds are certified conflict-free.

As previously reported by Jeweller, several Australian jewellery retailers noted similar experiences.

The UAE will relinquish its position as chair of the KP to Australia in 2017, an event that may or may not draw the members of the CSC back into the fold. However, even if Australia manages to entice CSC back to the KP, if the concerns of the coalition aren’t addressed by the industry in the near future, the long-term viability of the KP may ultimately be compromised.

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ABOUT THE AUTHOR
Nathan Munn

Contributor • Polygon.net


Nathan Munn is the content editor of Polygon.net, a gemstone and jewellery trading network. Since joining Polygon in 2013, Munn has written about diamond mining, sustainability, supply chain, cartels, synthetic diamonds, retail sales trends, online jewellery retailing and other industry topics. 

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