Transcript Kimberley Process Certification Scheme

Kimberley Process
Certification Scheme
WDC’s role in controlling the trade in conflict diamonds
KPCS basics
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Negotiations began in 2000, implementation began in 2003 – currently, KP
Chair is China, 2015: Chair will be Angola – Vice Chair will be chosen at
upcoming Plenary in Guangzhou in November: candidates are Australia
and UAE
Currently 81 nations (including the EU countries) (voting privileges)
Observers: Civil Society coalition (PAC and others), WDC, DDI, ADPA (no
voting privileges)
Each country passes legislation to implement the minimum standards
Requires the use of government validated KP Certificate on any export (or
re-export) of a parcel of rough diamonds
Other requirements:
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Minimum requirement for KP certificates: origin, weight, value, exporter, importer,
tamper-resistant features
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Confirmation of good receipt by ultimate consignee
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Internal controls within the country
More requirements
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Quarterly statistical reporting: KPC’s used, carats exported, carats
imported, countries of import and export, value for imports and export
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Annual report - incudes assessments of reports by others
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Receipt of a monitoring visits, by each country, at least every five years to
check compliance (volunteers make up the RV team: participating
country, NGO’s and WDC) – report required to be submitted, including any
corrections, follow up also needed
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Participation on review visits and missions
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Participation on Working Groups
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Much more!
KPCS WORKING GROUPS
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Working Group on Monitoring – monitors compliance with minimum
requirements, organizes review visits and missions, coordinates with UN Panel
of Experts. Chair is EU
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Working Group on Statistics – gathers data, runs statistical web site, manages
quarterly reporting, provides information for review visits. Chair is US
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Working Group on Rules and Procedures – examines all working documents
and procedures of KPCS – drafts any necessary additions and changes in rules.
Chair is Russian Federation
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Working Group of Diamond Experts – examines technical production
information (foot printing, satellite imaging, characteristics of production,
valuation issues, tariff codes, etc. Chair is WDC (Mark Von Bockstael)
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Working Group on Artisanal and Alluvial Production – examines compliance
challenges for small scale mining, sets standards. Chair is Angola
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Working Group on Participation and Chairmanship – reviews application for
admission, requests for suspension based non-compliance, examines
applications for Chair and Vice Chair – Chair is now So. Africa, will be China
(always past Chair)
Other committees
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Committee on Reform - created every three years to review KPCS functions,
and suggest any reforms (recent committee work led to the creation and
appointment of the ASM, review of every working group terms of reference,
orderly rotation of WGM Chairs, methods for joining Working Groups)
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Friends of Cote d’ Ivoire – helped bring CDI back into compliance, lift UN
sanctions, restart their trade
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Innovation Committee – new and pending idea to create a space for
discussions on “blue sky” thinking, including continuing discussion on changing
the definition of conflict diamonds, perceived risks to the diamond supply
chain that KPCS can address and how
Working methods
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All decisions at every level are made by consensus
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Administrative Support Mechanism (hosted by the WDC) handles KP Chair, WG and Committee
logistics GJEPC), communications (IDI), requests for technical assistance (DDI) and Knowledge
Management and Institutional Memory AWDC). Administers the web site (funded by AWDC)
AWDC also functions as focal point for ASM.
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Telephone conference calls for each Working Group several times throughout the year,
organized by Chairs of Working Groups: where issues and decisions called “Administrative
Decisions” (AD) are discussed – in writing, negotiated throughout the year
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Intercessional meeting (June): continued work on each WG’s agenda, open issues,
applications for admission, countries that are suspended, etc. – no decisions taken (hosted
in KP Chair locale)
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Plenary meeting (November): all completed AD’s adopted by Plenary, any decision regarding
admission, suspension, next Chair nomination, etc. (hosted by KP Chair locale)
KPCS fosters trade in rough diamonds
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Success of KP is primarily to control the legitimate trade when rough
diamonds are moved across international borders.
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KP reporting requirements have the effect of “regularizing” business practices
since trade (carats, value, destinations) in rough diamonds must be reported
to participating governments quarterly and are checked for anomalies by the
KPCS to detect non-compliance
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The extension of the KPCS regime into the polished trade is through WDC’s
“System of Warranties” specifically recognized by the KPCS
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Legally defensible express warranty from seller to buyer (not to the end user) the
polished diamonds supplied (loose or set in jewelry) were trade in a manner that is
consistent with the KP.
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Allows retailers to answer consumer inquiries about whether the diamonds are
“conflict free”.
WDC’S role in the KPCS
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Support (financial) and expertise: especially Mark Van Bockstael! But also
others. Insight on how the industry operates, the conditions on the ground,
impact of KPCS requirements on the trade
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WDC’s industry perspective is important in every aspect of the discussions
within every Working Group and committee – it is the only input that
international government regulators get from the entities that are actually
impacted by the KPCS
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Continuity: Industry representation has been consistent since the beginning–
governments’ representatives to the KPCS turn over roughly every four years,
and there is very little institutional memory (this is now being addressed by
ASM)
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Partner to the NGO’s – maintaining a positive relationship often means that
the WDC supports their positions at the KPCS and in public.
Current challenges in the KPCS and for
WDC
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Decision making methods – operates via consensus so one country can block
progress (and neither WDC or civil society coalition gets to vote on anything)
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Disconnect over the definition of “conflict diamonds”
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current definition is “rough diamonds used by rebel movements…to finance conflict
aimed at undermining legitimate governments”
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Many (retailers, manufacturers and ESPECIALLY consumers understand this term to
mean diamonds that have not been used in connection with human right violations
or any systematic violence funded by the diamond trade)
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WDC is on record that the definition should be expanded: “diamonds that finance
systematic violence targeting civilian populations at trading and production
centers” - better meets expectations and reflect more accurately the goals of the
KPCS – this needs to be progressed in the coming sessions.
More Challenges
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FATF report, and letter to the KP Chair dated October 3, 2014 from the
President of the FATF
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FATF is an international institution that sets standards for the global financial
community to prevent money laundering and terrorist financing – garners respect
and reaction from the financial community around the world. All members of FATF
have committed to implementing the standards, and fulfilling suggested changes
that flow from studies and reports that are published (all nations are reviewed)
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FATF issued a report in October 2013 that identifies “considerable vulnerabilities
and risks” for money laundering and terrorist financing in the diamond trade, with
specific recommendations to be addressed by the KPCS
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Letter from President has specifically called upon the KPCS to address steps to
identify risks to the diamond trade that “fall within the mandate of the KPCS” and
has identified specific steps that the KPCS should consider to mitigate these risks.
More challenges
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Risks to the supply chain for diamonds (smuggling, instances of non-compliance,
counterfeit KPC’s, etc.), risks that impact diamond industry’s financial
underpinnings (including transfer pricing and trade practices), need for
enforcement and increased government oversight that levels the playing field for
all trading centers – these are all important conditions that are impactful on KPCS
and its credibility, but I am short on time!
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For the WDC – to increase awareness among our members and the industry at large
about the importance of the KPCS and its important work
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To expand those within the WDC that engage with the KPCS – important for the
WDC, but also for the KPCS tri-partite community – to gain knowledge from a
wider array and from all sectors and communities in our industry
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THANK YOU FOR YOUR ATTENTION AND I CAN ANSWER QUESTIONS AT THE BREAK!