U.S. Department of State, Alan Eastham, Special Negotiator for Conflict Diamonds

Office of the United States Trade Representative, James E. Mendenhall, Deputy General Counsel

Amnesty International USA, Adotei Akwei

DeWine, Hon. Mike, a United States Senator from the State of Ohio

Hall, Hon. Tony P., a Representative in Congress from the State of Ohio

Jeweler's Vigilance Committee, and World Diamond Council, Cecilia Gardner

Wolf, Hon. Frank R., a Representative in Congress from the State of Virginia

World Diamond Council, and Jewelers of America, Inc., Matthew Runci

World Vision United States, Rory E. Anderson

Chairman CRANE. Welcome to this important hearing on conflict diamonds. I especially want to thank the witnesses, many of whom had to reschedule their plans so they could testify.

Last year, we had a hearing to take testimony from many of these same witnesses about the same state of affairs in Africa. I think no one disputes the tragic facts of the illicit diamond trade and how it continues to fund the rebel wars and poverty in Africa. This hearing takes all of that as a point of departure. Our focus is to look at where international negotiations are, what progress has been made in stopping the conflict diamond trade, and what legislation may be appropriate this year.

I am mindful that international relations and negotiations are supposed to conclude this year and in this delicate time of international diplomacy, we must be especially careful not to disrupt the administration's efforts, however well intentioned we may be, 85 percent of the world's rough diamonds pass through Antwerp, Belgium, and then to central selling offices in London and other places for sale to diamond cutters. Experts everywhere agree that once a diamond is cut and polished, it is almost impossible to tell the country where the diamond was derived and mined.

To effectively end trade in conflict diamonds, the countries exporting and importing rough stones, in particular, must work together to make sure that these diamonds do not have a market so that conflict diamond peddlers cannot stay in business. I am pleased that the diamond industry based in Antwerp recognizes this, and I applaud the industry for taking steps toward achieving this goal.

We will hear first from our esteemed colleagues from Congress about their concerns on the progress of solving the problem of trade in conflict diamonds, and then we will hear from the administration for a response and comment on legislation. Finally, representatives from the diamond industry and non-government organizations will testify.

I ask everyone to address the legislative criteria that this Committee is bound to follow. Will legislative proposals be administrable and consistent with our international trade obligations? Will legislation undermine the administration's efforts to reach an international consensus? And if so, how? Will the proposals be effective in curtailing trade in conflict diamonds? And finally, how will these proposals adversely affect the legitimate diamond trade in the countries in Africa that depend upon such trade?

Any legislation must help, not hinder, the solution to this illegal trade. And I would now like to recognize our distinguished ranking member, Mr. Levin, for any statement he would like to make.

[The opening statement of Chairman Crane follows:]

Mr. LEVIN. I thank you, Mr. Chairman, and on behalf of my Democratic colleagues that are not here, only because, as you may have heard the rumors, we have a caucus for the election of a whip, and so I want to enter into the record a few remarks on behalf of Mr. Rangel who is our ranking member on the full Committee and myself.

Chairman CRANE. Without objection, so ordered.

Mr. LEVIN. Thank you for holding this hearing. The issues of trafficking in conflict diamonds is being considered in our Committee because it has trade ramifications. That being said, we think we all agree that the importance of the issue extends beyond its effect on U.S. trade laws and goes more directly to the issue of what our responsibility is to assist the nations of sub-Saharan Africa with bringing peace to that continent.

Diamonds should enrich the lives of the African people. Instead of wealth, however, diamonds in Angola, Sierra Leone and elsewhere are bringing pain and suffering. The two Security Council resolutions calling for United Nations (U.N.) members to prohibit the trade in conflict diamonds from Sierra Leone and Angola are welcome first steps towards preventing rebel groups from financing their civil war activities and human rights abuses through illegal diamond trade.

We are encouraged that the administration has been actively engaged along with a wide range of other governments, industry representatives, and non-governmental organizations (NGOs) in the Kimberley Process, which will develop a system for monitoring the rough diamond trade that will enable governments to restrict trade in illegal diamonds.

Congress has a critical role to play. H.R. 2722 is broadly supported legislation; it demonstrates our commitment as a country to curbing the trade in conflict diamonds, and sends a powerful message to the international community that they need to work as quickly as possible to develop an international system for monitoring the diamond trade.

Time is of the essence. Everyday we delay action will prolong the trade in conflict diamonds and the atrocities associated with it. We look forward to listening to our representatives from the United States Trade Representative (USTR), the U.S. Department of State, the private sector, and representatives from human rights groups as well as our distinguished colleagues in the House and in the Senate.

As you know, last year, the Congress passed and the President signed into law historic legislation that recognizes that the nations of sub-Saharan Africa can be our partners in economic progress and prosperity. In working to pass that legislation, my colleagues and we recognize that the bill would not be a panacea for the African continent. We understood that creating a new framework for closer economic cooperation with the region while a good first step was only the beginning.

So today our Committee and our Subcommittee continues its commitment to the nations of sub-Saharan Africa with this hearing. I hope we will enforce that commitment with passage of H.R. 2722. Thank you, Mr. Chairman.

[The opening statement of Mr. Rangel follows:]

Chairman CRANE. I would now like to recognize our first panel of members from the House and from the Senate. Our first three witnesses will be Senator DeWine, Congressman Hall, and Congressman Wolf, and I welcome you all, and we shall defer to our distinguished colleague from the other chamber, who is on a tight time constraint, and then, Mike, you are excused if you have to run after you have made your statement.

STATEMENT OF THE HON. MIKE DEWINE, A UNITED STATES SENATOR FROM THE STATE OF OHIO

Mr. DEWINE. Mr. Chairman, Congressman Levin, thank you very much. It is good to be back in the Longworth Building. I spent 8 years here. It is good to be home and good to be with my friends. Thank you for holding this hearing on this very, very important topic. Your colleagues and my colleagues Congressman Hall and Congressman Wolf have really been the leaders in this, and they are the driving force behind this bill.

I have tried to take the lead in the Senate along with several of my colleagues to try to complement their efforts. As you know, the diamond trade, and as you pointed out, Mr. Chairman, is one of the world's most lucrative industries. With its potential for extreme profitability, it is not surprising that a black market and illicit trade have emerged alongside the legitimate industry.

Candidly, diamond trading has become an attractive and sustainable income source for violent rebel groups and terrorist networks around the world. In fact, the sale of illicit diamonds has yielded disturbing reports that an associate of bin Laden is involved in the trade, and that there clearly is an established link between Sierra Leone's diamond trade and well-known Lebanese terrorists.

In Africa currently where the majority of the world's diamonds are found there is ongoing strife and struggle resulting from the fight for control of the precious gems. While violence has erupted in several countries including Sierra Leone, Angola, the Congo, and Liberia, Sierra Leone in particular has one of the world's worst records of violence.

In that nation, a nation embroiled in civil war for nearly a decade, rebel groups, most notably the Revolutionary United Front (RUF) have seized control of many of the country's diamond fields. Since the start of the rebels' quest for control of Sierra Leone's diamond supply, the RUF has conscripted children, children often as young as 7 or 8 years old, to be soldiers in their makeshift army.

They have ripped an estimated 12,000 children from their families. This rebel army, child soldiers included, has terrorized Sierra Leone's population, killing, abducting, raping, and hacking off the limbs of victims with their machetes.

We can do something about this. We can begin to change things. We have the power to help make a difference, to help end the indiscriminate suffering and violence in Sierra Leone, Angola, and elsewhere in Africa.

Mr. Chairman, we have this power and we simply must use it. As the world's biggest diamond customer purchasing the majority of the world's diamonds, the United States has obvious clout. With that clout, we have the power, the power to remove the lucrative financial incentives that drive the rebel groups to trade in diamonds in the first place.

Simply put, Mr. Chairman, if there is no market for their diamonds, there is little reason for the rebels to engage in their brutal campaigns to secure and protect their diamonds. Specifically, our legislation would prohibit the import of diamonds and diamond jewelry into the United States, unless the exporting countries have a system in place that includes forgery-proof certification documents as well as a uniform database to track and monitor the global diamond trade.

This means, Mr. Chairman, that every diamond brought into the United States would require a certificate of origin and authenticity indicating that it was not laundered on to the market by a rebel group.

Finally, Mr. Chairman, our bill also stipulates that fines and proceeds from seized contraband will be contributed to the USAID's War Victims Fund. These funds would be returned to the very people, the very people who suffer from the profitable sale of the diamonds. This legislation, Mr. Chairman, represents a turning point, a point of unity among the industry and the international community, and it is our hope that the bill will bring immediate attention to the violence in Africa and add momentum to international promises of action.

Mr. Chairman, I thank the chair, and again thank my two colleagues from the House for their tremendous leadership on this very important issue.

Chairman CRANE. Well, we want to thank you, Mike, and we appreciate your problems with scheduling and all, and so you are free to leave, but we are grateful that you came and testified to open up the hearing this morning.

Mr. DEWINE. Thank you, Mr. Chairman.

[The prepared statement of Mr. DeWine follows:]

Chairman CRANE. You bet. And now we will yield to our House witness Tony Hall.

STATEMENT OF THE HON. TONY P. HALL, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF OHIO

Mr. HALL. Thank you, Mr. Chairman, and Mr. Houghton and Mr. Herger. I have a statement for you. I will not read it. I would just like to refer to it from time to time. I am very glad to be here with my good friend Frank Wolf.

Chairman CRANE. Well, if you will yield a moment, it will be a part of the permanent record, too.

Mr. HALL. And I appreciate Senator DeWine coming over here and being an important part of this legislation, along with Mr. Houghton, Mr. Rangel, Mr. Feingold, and Mr. Durbin. It is a very, very bipartisan bill. I think Mike has outlined it. I think you know the issues. We have a hundred of the best human rights groups in the world that are solidly behind this. We have a diamond industry that is part of this consensus legislation.

We have tremendous bipartisan support. Frank Wolf and I have seen the effects of what it is to trade in conflict diamonds and what it does to countries. The first thing it does it takes money away from the countries, especially the poorest countries in the world, that ought to be going to their treasuries to help their poor people. But because it is smuggled or because it becomes conflict diamonds, it is traded to fund most of the civil wars that are going on today.

And to see the results of that, as Frank and I have seen in various refugee camps, to see all the people who are missing limbs because they just happened to be in the way, and if we can solve this problem of conflict diamonds, we can take the money and the guts out of a lot of the civil wars that are going on in Africa today.

I will never forget visiting Angola a few years ago. I came out of a restaurant at night in the capital and saw about 30 orphan kids, real little kids just living on the street in an alleyway on top of each other like puppies. Their misery was caused by diamonds, caused by war. You cannot walk in Angola or in the Congo or Sierra Leone without seeing people who have been harmed in so many different ways. Their ears are cut off, their noses are cut off, their limbs are cut off. They have suffered wholesale killings and butchery that is beyond anybody's imagination.

And to learn in recent weeks that there is a very, very good possibility that bin Laden is part of this because he is able to use these organizations as one of his moneymaking schemes. I do not know what else I can say to you. I have testified before this Committee. We think we have good legislation. We have worked with the Customs people, with the State Department. We feel that the bill meets our obligation to the World Trade Organization (WTO).

We are open to your ideas as to how you think the bill could be improved. We need to move on this. We really do, and judging by the promise and the commitment that was made by Chairman Thomas, hopefully we can in the next week or two. I think that if we can put legislation on the books, it will help the Kimberley Process. It will move the United Nations' efforts ahead even further. We have lots of allies that want us to pass this legislation.

This is important legislation for all legitimate diamond dealers, whether they be in our country or in Belgium, Botswana, Namibia, or South Africa. This legislation will help them. So with that, I just say thank you for this hearing.

I have here 200 letters from students from the Julius West Middle School in Rockville, Maryland. I understand they were going to be with us yesterday, and I appreciate their teacher being here with us today. Every time Frank and I have ever been able to talk to young people or anybody in the country about conflict diamonds, we hear tremendous support for ending this blood trade.

Why should we pass this bill? Because we buy about 50 percent of all the diamonds in the world every year. We can make a difference. And with that, I thank you, sir, and appreciate testifying.

[The prepared statement of Mr. Hall follows:]

Chairman CRANE. We thank you for your testimony. And now Frank.

Mr. WOLF. Thank you, Mr. Chairman. I will be brief, too. I think Mr. Hall and Mr. DeWine made the case. I think it is important for the industry as their plans develop. Quite frankly, I know people who will not, absolutely will not, buy a diamond today unless they can be absolutely positively categorically sure that it is not a blood diamond. They just do not want to have a diamond on their hands. So for the industry which supports Mr. Hall's bill, it is absolutely critical that you pass this.

Secondly, given the importance of diamonds for places such as South Africa, Namibia, and Botswana, it is critical for them that you act to protect the legitimate trade before it is too late and the image of diamonds is tarnished forever. Once you tarnish an image, it is very difficult, not impossible, but very difficult to ever, ever get it back.

Thirdly, as Mr. Hall said, in this case, and I do not know if you have read it, the United States of America versus Osama bin Laden, it was the World Trade Center bombing in 1993. We will be glad to furnish it for the record. They talk about diamonds helped with regard to funneling and furnishing resources for the operation in 1993. Al Qaeda has financial interests in the diamond trade. Foti Sanco, the RUF in Sierra Leone, Charles Taylor, they have all been trained in Libya. It is almost a loose affiliation with regard to the terrorist operations, and for this Congress not to deal with this issue would be really wrong.

Lastly, you got to pass this before the Congress goes home. This really is not something that can be kicked over to next January. One, if there is an economic boycott, the jewelers on Main Street who really should not be hurt, and I think what is taking place for them, they are feeling the pain, should not be hurt by this. This Congress has to pass this before we go home.

Obviously, with the support of the majority and the minority, you could put it on the supplemental. You could put it on--we would take it on a State, Commerce, Justice Appropriations bill, or anything, but please find a vehicle once you all shape this and work this out.

I think Mr. Hall and Mr. DeWine have worked out a good one. Let it pass before we go home whether it be the first week of November or second week in November, because I am afraid that if it carries over, one, people are going to think we are stupid with terrorists being funded by this operation; and secondly, the diamond industry could be severely hurt; and thirdly, I think a lot of people in Africa will experience tremendous pain and suffering and agony in a way that frankly none of us want.

So thanks for the hearings. Thanks for moving this process fast and hopefully we can make it public law before Thanksgiving. Thank you very much and I yield back the balance of the time.

[The prepared statement of Mr. Wolf follows:]

Chairman CRANE. Well, we thank you both for this commitment to this effort, and we will proceed now. I want to get one thing straight, though, Frank. You did say the first or second week of November, not December; right?

Mr. WOLF. Well, I think we will be out of here; my sense we will be out of here in the first or second week or November. That would be my hope.

Chairman CRANE. That would be.

Mr. WOLF. Yeah.

Mr. LEVIN. Whenever we leave, we should have passed this, and it is a tribute to the two of you and others who have been toiling to get this done, and I think we owe it to you, and you would say, and you are right, to the people of Africa, as well as the terrorist connection. So we will do everything we can.

Chairman CRANE. Thank you. Amo.

Mr. HOUGHTON. Let me just ask one question. Aside from the humanitarian issue, which is enormous, what is the main economic impact here? Because it depresses the price of diamonds so that the people who are producing diamonds can help those people in need in their country? What is it?

Mr. HALL. Well, just take one country, Sierra Leone. Sierra Leone should be one of the richest countries in the world. It has diamonds. It has an abundance of water. It has great soil. It has beaches. It has a lot of fish. They could have all kinds of industry there.

And yet what has happened over the years is they rank last in the world when the United Nations looks at a country's gross national product, infant mortality rates, et cetera. They rank either second to last or last because they do not declare their resources, they have not done that for years because there has been so much killing and smuggling conflict diamonds out in ways other than through the government.

If the diamonds could just go through the government of Sierra Leone, there would be a tax, there would be a license; the money would go to some of the poorest people in the world.

Mr. HOUGHTON. So basically it is a resource for the country.

Mr. HALL. It is a resource for the country.

Mr. HOUGHTON. And it is being sucked out illegally and therefore no benefits come back to the government to be able to do the things they need for their people.

Mr. HALL. That is the first benefit. One of the second benefits is the United States has invested a couple billion dollars in these countries over the past decade, and yet $10 billion has been sucked out of these countries in conflict diamonds. So, the money is not going where it should be going. If that money, if a portion of that $10 billion could stay in the country, it could save us money and help a lot of people.

Mr. HOUGHTON. Thank you very much. Thanks, Mr. Chairman.

Chairman CRANE. Well, gentlemen, again, we thank you, and your written statements will be made a part of the permanent record.

Mr. HALL. Thank you.

Chairman CRANE. And with that, now I would like to call our next panel: Alan Eastham, special negotiator for conflict diamonds at the U.S. Department of State; and James Mendenhall, deputy general counsel, Office of the United States Trade Representative.

And gentlemen, if you can please try and keep your oral testimony to approximately 5 minutes, any written statements will be made a part of the permanent record, and with that we will proceed with Mr. Eastham first.

Mr. EASTHAM. Thank you very much for the chance to come before you today to report on our efforts to deal with the role of diamonds in conflict. I am very grateful to the Committee for organizing what I think will be a very significant event in terms of raising public and official awareness of this problem and of the need to do something about it, as has been testified by the previous panel.

The natural wealth which is represented by diamonds ought to be a source of funds for development and human welfare in Sierra Leone, Angola, and other countries in Africa. Instead, in too many cases, the money produced by diamond sales provides the funding for rebel movements to purchase illicit arms, to support rebel armies, and to prolong civil wars that have terrorized societies and destroyed communities. This is the case in Angola and Sierra Leone.

The Fowler Report in March 2000 and the landmark report by the British NGO Global Witness last year helped to build a consensus within and outside governments that we must confront and break the linkage between diamonds and conflict while permitting the legitimate trade to continue and flourish.

Our objective in these efforts is to choke off the money from diamond sales that fuels violence and to use that money to build peace and stability in the countries which are affected by conflict now.

We have attacked this problem through two avenues: the United Nations Security Council and the Kimberley Process. We recognized in this effort that it will take joint action by all diamond trading nations, producers and traders, to take effective action, and that it will be much more effective than action by one country alone. We are still convinced this approach is valid. It is consistent with our international obligations. It recognizes the inherent nature of the diamond trade and it is a reflection of the interconnected global market realities of today's world.

In the Security Council, we chose to support prohibiting direct or indirect import of diamonds from Angola and Sierra Leone except through controlled certificate of origin regimes.

More recently, we have supported efforts by the Security Council to reduce sanctions leakage to try to dry up funding for these insurrections. The most significant of these efforts was U.N. Security Council Resolution 1343 last May that banned rough diamond imports from Liberia. That was in response to Liberia's support for the RUF.

Outside the formal U.N. processes, we have sought a broader solution to the conflict diamonds problem through what has come to be known as the Kimberley Process. The Kimberley Process has held four meetings this year with over 35 governments participating along with non-governmental organizations and members of industry to establish the details of a certification system as called for by the U.N. General Assembly in its resolution of December 1, 2000.

I am pleased to report that Kimberley has maintained its commitment to the road map which was agreed earlier this year. At the most recent meeting in September in London, delegates revised a draft document that sets out the essential elements of a system including the use of forgery resistant certificates and tamper-proof containers for shipments of rough diamonds, internal controls and procedures to provide credible assurance that conflict diamonds do not enter the legal market, and effective enforcement of the system through dissuasive and proportional penalties.

The London meeting in our view made significant progress. However, we recognized there was not as much progress as we would have liked in coming to conclusions about the obligations that governments and industries would undertake in an internationally agreed certification system.

Some of these questions are quite significant and how we answer them in Kimberley goes to the heart of whether a global system will be effective. I know members are very concerned about the amount of time this is taking. I know you will ask me whether I think Kimberley will succeed. Given where it stands at the moment, I do not have an answer to that question. What I can assure you is that the team that I will take to Luanda and to Botswana later in the year will put maximum effort to achieving a workable and effective system to break this linkage.

We appreciate your interest, Mr. Chairman. The sponsors of the Clean Diamonds Act have realized a significant accomplishment in the reaching a consensus between industry and the non-governmental organizations. With that, Mr. Chairman, in summary, I have run out of time and I will defer to your questions later on.

[The prepared statement of Mr. Eastham follows:]

Chairman CRANE. Thank you, Mr. Eastham. And now Mr. Mendenhall.

Mr. MENDENHALL. Thank you, Mr. Chairman. Thank you for inviting me to testify before you today. The stories that we have all heard and the pictures that we have seen of the atrocities linked to groups profiting from the sale of conflict diamonds are truly horrible. We heard testimony to that effect earlier today, and it is truly moving.

The USTR wholeheartedly supports efforts to deal effectively with this problem and is committed to working with Congress to devise an effective solution. As we all recognize, preventing trade in conflict diamonds is an extremely complicated problem that defies simple solutions. Input and good faith cooperation from all sides is crucial if we are going to succeed in stopping trade in conflict diamonds.

In our view, the types of measures that will make a system effective are the same types of measures that will ensure that the United States and other nations of the world are acting in conformity with their international obligations. These two concerns, effectiveness and international sustainability, go hand in hand.

In designing a regime to prevent trade in conflict diamonds, three important goals must be taken into account. First, the regime should be effective. Second, it should be internationally sustainable and should minimize the impact on the legitimate diamond trade which is crucial to many African countries. And finally, it should not undermine efforts to negotiate an international regime through the Kimberley Process.

As we continue to work with you and your staffs, we should keep these three goals in mind. In addition, it is important to recognize that the diamond trade is very complex and any system that attempts to address the problem of conflict diamonds must take into account several complicating factors.

First, it is very difficult to identify and track diamonds as they move through the stream of commerce. This is not a problem that is unique to conflict diamonds, but is instead a problem that is inherent to the manner in which diamonds are distributed and processed. The diamond trade is fluid and multinational. Diamonds often cross borders multiple times between the point of extraction and the point of final sale.

They are mixed and sorted with diamonds from many sources along the way and it is very difficult and sometimes impossible to trace the origin of any particular diamond by the time it reaches the border of the United States. Due in large part to these difficulties, the origin of diamonds is usually reported as the country of export rather than the country where the diamonds were actually extracted.

Second, conflict and other illicit diamonds often enter the international stream of commerce through smuggling or other illegal behavior which may conceal the actual origin of a diamond. In some cases, governments may be complicit in laundering conflict diamonds. The most notable example of this phenomenon is Liberia, and this is one reason why the U.N. Security Council has called on countries to prohibit the importation of any rough diamonds from Liberia.

The third complicating factor is that any remedy for the problem must be finely tuned to minimize the impact on the legitimate diamond trade. We should not lose sight of the fact that most diamonds are not conflict related. In fact, several African countries are dependent on trade in legitimate diamonds. Disrupting the ability of these countries to bring their diamonds to market could have a potentially devastating and destabilizing impact on these economies. And as a result, well intentioned efforts to stop trade in conflict diamonds could, if not designed properly, be counterproductive.

Multinational efforts to deal with the problem of conflict diamonds have focused on two fronts: United Nations sanctions and the negotiation of an international certification regime in the Kimberley Process. The U.N. sanctions have been imposed on three countries: Sierra Leone, Angola, and Liberia.

In Sierra Leone and Angola, certain areas of the country are controlled by rebel groups that are mining and trafficking in diamonds in order to fund their activities. Consequently, the U.N. Security Council has issued resolutions calling on countries not to import diamonds from these countries unless the diamonds are accompanied by a certificate of origin issued by the internationally recognized authority. A certificate of origin is only issued for diamonds that are mined in areas controlled by the government.

Liberia presented a different problem and called for a different solution. Liberia has a history of acting as a conduit for conflict diamonds coming from other countries. Many diamonds from Sierra Leone, for example, were smuggled into Liberia and exported as if the diamonds originated in Liberia. As a result, the Security Council issued a resolution calling on all countries to prohibit the importation of any rough diamonds from Liberia as I noted earlier.

The Kimberley Process is a much broader initiative. Over 30 members of the international community including the United States have come together to negotiate an effective international regime to eliminate trade in conflict diamonds.

The members of the Kimberley Process are grappling with all of the difficult issues outlined above and we are under a deadline to complete our work and report to the U.N. by December of this year. Thus, there is a developing international framework for addressing the problem of conflict diamonds and this work will only come to fruition with the full cooperation of all relevant actors including governments, industry, and the NGO community.

In fact, without cooperation and international consensus, it may be difficult to resolve some of the apparently intractable problems surrounding the effort to prevent trade in conflict diamonds.

Any attempts to deal with this problem at the national level prior to the completion of the Kimberley Process should be designed in a way to give further impetus to the negotiations and to allow the United States to plug into the international system once it is in place.

Thank you again for the invitation to testify here today, and I look forward to working closely with you and your staffs in the future to address this difficult and complex problem. Thank you.

[The prepared statement of Mr. Mendenhall follows:]

Chairman CRANE. Thank you for your testimony.

Mr. Eastham, there are a lot of statistics floating around about how big the trade in conflict diamonds is. How do you determine how many diamonds come out of rebel mines in Sierra Leone, and is this based upon conjecture or information about specific diamonds being smuggled out and put into circulation?

Mr. EASTHAM. Mr. Chairman, not only are statistics difficult to come by on conflict diamonds, I have found in my 1 month on the job as the negotiator on this subject that it is difficult to come by accurate statistics on the legitimate trade in diamonds, much less to divide out the conflict portion of the trade.

The best estimate that I have seen which is derived from non-governmental sources is that the value of conflict diamonds would be in the neighborhood of $250 to $300 million a year at point of origin where the rough diamonds are originally sold.

That would be as a percentage of the trade something less than 5 percent of the trade in diamonds. Nevertheless, it yields a significant amount of funding. It is very, very difficult to trace the movement of rough diamonds when they are traded in an illicit and smuggled way, and the purpose of the Kimberley Process, Mr. Chairman, is to try to choke off that particular source of revenue for insurgencies, in addition, as I think was identified by Mr. Hall, we want to put the diamonds into a legitimate chain of trade where they can be taxed and where the revenue from that taxation can be used for legitimate purposes.

Chairman CRANE. Would it be helpful to move legislation this year that is both WTO compliant, helpful to stop trade in conflict diamonds, and would not cause problems in the remainder of the negotiations, and if so, what would that legislation look like?

Mr. EASTHAM. Mr. Chairman, we have been studying this issue with a great sense of urgency within the administration for the past several months in close collaboration with the interested Members of Congress, the sponsors of the bills in both houses.

We have in recent weeks since the conclusion of the last round of Kimberley been attempting to take a look at what legislation might be appropriate and have not come to a formal conclusion within the administration about what approach to legislation should be taken.

Let me offer you my perspective as the participant and the leader of the delegation in the last round of the Kimberley talks, and as the prospective leader of the delegation which will go to Luanda in 3 weeks time for a further round.

It is fairly clear to me, Mr. Chairman, that we are very likely to need legislation in order to implement an eventual Kimberley Process understanding on certification of rough diamonds. When we were in London, I told the assembled group that based on my own analysis of the situation, the United States did not have explicit legislative authority to do some of the things which were contemplated in the Kimberley Process agreement.

I asked our colleagues in the Kimberley Process to identify for me as precisely as possible what they felt the obligations of governments would be. We did not get to the point in that discussion, Mr. Chairman, that would lead me to come forward with precise legislative language for you, so my inclination as the head of the delegation would be to say that in the absence of clarity about the ultimate obligations which would be created by Kimberley, it would be very difficult to craft legislation which would be both sufficiently authoritative and sufficiently flexible to give us what we need at this point.

I hasten to add, however, that I am not saying "no" when I say that. We will continue in the coming days and weeks leading up to Luanda to stay in close touch with industry, with the NGOs, and with staff members here on the Hill to see whether we can craft something which would meet the requirements.

Chairman CRANE. Are there links between diamonds and Osama bin Laden?

Mr. EASTHAM. Mr. Chairman, I have heard the mention of that on several occasions already this morning, and I am aware of the one report relating back to the 1993 bombing and to a transaction in diamonds which was contained in the public record of that case. I have not done a detailed analysis of that, and I am not aware of a substantial connection, but if I may reserve on that and go back and consult my colleagues on it. I did not realize that was going to be an issue of such concern this morning, sir.

Chairman CRANE. Thank you. Mr. Mendenhall, in my view, making the system effective and WTO consistent are not mutually exclusive. Can you comment on this, and how can we get at these rebel diamonds and comply with WTO?

Mr. MENDENHALL. Mr. Chairman, I agree that making a system effective and WTO consistent are not, in fact, mutually exclusive. In the view of USTR, in fact, effectiveness is in many ways inextricably intertwined with WTO consistency, and I think it is possible to design a bill, and we are working with the staffs of the sponsors and with some of the staff, some of your own staff, to develop ideas that will allow us to address both of those problems at the same time. Thank you.

Chairman CRANE. Very good. Mr. Rangel.

Mr. RANGEL. Thank you, and thank you Mr. Chairman, for having hearings on this very sensitive and serious issue, and thank both of you for trying to bring me and others up to some degree of expertise. I am going to ask the Chairman's question in a different way. The authors of this legislation that would put restrictions on the importation of certain diamonds have been working very hard to make certain that it is WTO consistent and that we comply with the directions of the USTR, and that is one of the reasons why this Committee has not drafted the legislation.

But if we were to draft the bill based on the input that you will give us, what harm would we bring to Kimberley or to the delegation that you are leading, Mr. Eastham. If some Members of the Congress might believe that if we give you a stated position and legislate America's position and is signed into law, we would like to believe that you are better armed to negotiate a better deal in this area. What harm would we do by not waiting until you decide what we should do? Mr. Eastham?

Mr. EASTHAM. Mr. Rangel, my main concern in that area would be the very real possibility that we would have to come back at a second bite at the apple with the Congress.

Mr. RANGEL. What damage could we do to you in the job that you have to perform and that you do so well?

Mr. EASTHAM. I think damage would be overstating it. The point I am making is that the Kimberley Process is a cooperative one in which all issues are open. And we are not foreclosing one approach or another approach to attacking this problem. We would be obliged to follow the laws of the United States. We all take an oath to do that. And I think that the effect of legislation would be to some extent, and I would say damage might be overstating it, but it would be to narrow down the options that I would have available to put forward to agree to things at Kimberley.

I will give you an example off the top of my head. One provision which exists at the moment in the Kimberley Process is a provision, a guideline, which states that in order to issue a re-export certificate, the guideline states the government would have to rely on an assurance from an exporter of rough diamonds from the United States that that person had the entire chain of warranties in their possession at the time of the proposed export.

To my understanding, that issue is not addressed in the legislation. It is a subject which we will need to discuss at some length, I believe, with industry at this stage so that we are sure that we have a full understanding of industry's position on this. But under the legislation as crafted with the definition of the export certificate, which is contained in it, I would be on shaky ground to ask industry to come forward with a chain of possession of that nature such as is contained in the present Kimberley document.

It is a question not of doing damage, but of retaining the full flexibility to agree or disagree with the Kimberley Process.

Mr. RANGEL. Thank you. Mr. Mendenhall, would there be any objection from USTR if we just moved the legislation in its present form, or after receiving whatever recommendations your office may give? Would there be any objections from the USTR with us moving forward now?

Mr. MENDENHALL. Mr. Rangel, my understanding is that we are continuing to work with the staffs of the sponsors of the legislation and with Ways and Means staff and that the bill will continue to evolve. I think we have a constructive dialogue going on and we are giving our input. We plan to provide further input. We plan to come forward with more specific proposals on how we can address our concerns in any legislation this year.

Provided our concerns regarding effectiveness, international sustainability, and the relationship with the Kimberley Process are addressed, I think USTR would be willing to support efforts to move forward. But we need to make sure that all of those concerns are taken into account.

Mr. RANGEL. Well, that is not exactly an answer to my question. I am satisfied that this Committee is respectful of the reservations you have about the legislation that is before us. I am not satisfied that the authors of the legislation believe that we should wait any longer before we enact into law.

Your response to me, have you shared that with the authors of the legislation and do they agree with you that this is an ongoing process and their willingness to wait until you believe that it is necessary to legislate? Is that generally discussions you have had with them? That is Hall, Wolf, and DeWine.

Mr. MENDENHALL. My understanding is that they are willing to work with us on coming up with a solution that everyone believes is effective and addresses those concerns. I understand the urgency in moving forward with legislation, and we are willing to help in that effort, and that is my understanding from our meetings with the representatives and with their staffs as well. But we do understand the urgency of that.

Mr. RANGEL. Next time you meet with them tell them to share that view with the members of this Committee as well, their willingness to work with you and to be satisfied that we are making progress and that they are willing to wait until you call upon us to legislate.

Mr. MENDENHALL. I can assure you that Ambassador Zoellick fully supports the efforts to work with the sponsors of the legislation and their staff and has tasked me and various members in the agency to make all efforts we can to assist in that effort.

Mr. RANGEL. But it would help me if Mr. Zoellick would reiterate his support for the members that have drafted the legislation before us.

Mr. MENDENHALL. I understand. Thank you.

Mr. RANGEL. Thank you.

Chairman CRANE. Thank you. Mr. Houghton.

Mr. HOUGHTON. Thank you, Mr. Chairman. I am a little confused here. You really want to tighten up--and I am talking to you, Mr. Mendenhall at this particular point--tighten up the process, and yet at the same time I think the greater flexibility that you have, the broader, the looser the process, so that you can get at wherever you need, would be the most effective approach. You do not know what the Kimberley Process is going to produce. You do not know whether the $5 million is going to help. You do not know whether cutting off funds from Ex-Im (Export-Import Bank) and OPIC (Overseas Private Investment Corporation) is really going to be effective or not. Don't you want a sort of a broader, more flexible approach here?

Mr. MENDENHALL. Absolutely. I think a flexible approach is essential to make the system effective for a variety of reasons because I think the situations in various countries differ both in terms of whether they are conflict countries or non-conflict countries and in their ability to implement the obligations that we may ask them to undertake. I fully agree that flexibility is an important part of any regime and should be an important part of any measure that the United States takes.

Mr. HOUGHTON. Yes, but I thought the thrust of some of your remarks was to narrow this process.

Mr. MENDENHALL. I am sorry if I was not clear in my earlier remarks. I did not mean to imply that we should narrow our flexibility in applying measures. That was not my purpose. What I was suggesting is that there are ways to tailor the legislation to make it more effective and to make it internationally sustainable both from a political and a legal standpoint.

Mr. HOUGHTON. Do you have any comments, Mr. Eastham?

Mr. EASTHAM. I agree with my colleague. I think from the point of view of negotiator and from the point of the view of the Kimberley Process, and this is the same point I was making to Mr. Rangel earlier, was that the greater the flexibility in the range of tools we can apply the better.

Of course, Mr. Houghton, the greatest, in one sense the most flexible and most powerful tool that we have applied to conflict diamonds is the tool of the mandatory U.N. Security Council Resolution implemented in this country with the use of the International Emergency Economic Powers Act.

My preference would be to find a way to legislate specifically on conflict diamonds and to keep that as distinct body of the law and implement the process through legislation rather than through the use of those big powerful guns which would provide an opportunity for congressional consultation, but which do not benefit from the specific authorization of the U.S. Congress.

Mr. HOUGHTON. I just have one other question. Legislation passes. Kimberley Process works. Then what is the key to monitoring this? What is going to be the critical element to make this effective?

Mr. EASTHAM. That is a very difficult question, and if you study, Mr. Houghton, the reaction to the London meeting on the part of some of the non-governmental organizations which have been intimately involved in this process from the beginning, you will find that that was a very critical issue to the NGOs as to how the monitoring process would work.

In my view, the Kimberley Process should mandate as much transparency as is possible in terms of production of trade statistics in almost real time, production of statistics on the movement of diamonds across borders so that smart people can study those statistics to detect anomalies which might need to be addressed. We are dealing with a commodity here which is highly valuable and which can move undetected in a way that very few commodities in the world can move.

And the objective of the Kimberley Process is to set up a system wherein the legal trade is legal. We all will know that it is legal and we can see it happening. We will need a very, very good statistical and monitoring system as an outcome of Kimberley in order to be able to detect anomalies. One of the greatest concerns, for example, is the question of transforming rough diamonds, which are the subject of Kimberley, into polished diamonds and entering them into the legitimate trade as polished diamonds in a way which is unconstrained at the moment.

And I think it is very, very important to have statistics to be able to understand very quickly if something like that is happening to circumvent what eventually comes out of Kimberley.

There are some interesting facts which have been shown by the good statistics that the Belgian government maintains on the diamond trade. You can identify certain countries where the capacity for mining diamonds is very small and the movement of diamonds into international trade is very large, and I think that it is that sort of anomaly which we will have to correct in Kimberley.

Mr. HOUGHTON. I am sorry to ask this question, but I feel that I should. So sort of sum that up in a sentence in terms of the key monitoring steps.

Mr. EASTHAM. Good statistics, transparency. You have to have some transparency on the part of industry in terms of internal movements of diamonds, and I support the concept of independent monitoring. The NGOs call that external monitoring which means that the industry would not monitor industry. You would have government monitor industry; you would have industry involved in some way.

In a sentence, we need to build in some checks and balances to make sure that we know what is going on in the diamond trade so that we can keep conflict diamonds out of the legal trade.

Chairman CRANE. Mr. Herger.

Mr. HERGER. Thank you very much. Mr. Mendenhall, if I could get your opinion on this. Do you feel that this legislation and the fact that the Congress is working on this helps put, if you will, emphasis or perhaps even positive pressure on these international groups like Kimberley Process to move perhaps a little more quickly than they might have otherwise and try to come up a solution a little sooner to these incredibly horrendous crimes that are taking place?

Mr. MENDENHALL. I believe many countries are probably monitoring very closely what the United States is doing here. I have not been as intimately involved with the Kimberley Process as my colleague has and that may be a question that may be more appropriate for him.

I guess my concern, which is a concern that I think I share with the State Department, is that if we do go forward and if the purpose of the legislation is to give momentum to the Kimberley Process, we need to make sure that the legislation does not, in fact, work at odds with what may come out of Kimberley. The mechanism that we use, the legislation that we adopt, needs to be capacious enough, it needs to be flexible enough, to allow the United States to participate in Kimberley. It should not get ahead of where the Kimberley participants are.

There are several very complex questions that are still being worked out in the Kimberley Process. Given that it is an international process with cooperation by many governments, the NGO community and the business community, they may hit upon ways to address this problem that will be very effective. I think we need to be concerned about adopting measures that preempt that process or undermine it.

Mr. HERGER. How long has the Kimberley Process been going on now? Do you know, Mr. Eastham?

Mr. EASTHAM. It has been in two stages. It has been about a year and a half since the meeting in Kimberley which launched the process. I would mark the real definitional phase of that, though, from the first of December of last year when the U.N. General Assembly passed Resolution 55/56, which gave some direction and required a report at the end, so there have been two phases of it.

Mr. HERGER. Mr. Eastham, the same question to you. Do you feel the emphasis in the U.S. Congress to move forward with legislation indicating certainly the great importance that the Congress places on it gives emphasis to perhaps move along more rapidly the Kimberley Process?

Mr. EASTHAM. Yes, sir, I think that emphasis of the Congress and the NGO community but certainly the Congress because the Congress has the power to make laws is a very important element in stimulating action on the part of the Kimberley Process.

When we were in London at the last meeting, on the Senate side the bill moved as an attachment to an appropriations measure, and that was very much on the minds of the other delegations at Kimberley. That is one example.

I think that there is a general recognition that the Congress is pushing the administration to take action on this, and there should be a recognition--if there is not, I will state it explicitly--that if Kimberley does not eventually produce, and by eventually I mean by the first of December, a workable certification system, that the Congress will certainly act.

Congress may act before that. That is within your purview. And I have heard the recommendation from Mr. Hall and Mr. Wolf this morning that you move in the next week or two. So Congress may act sooner, but it will certainly act following the conclusion of the current Kimberley road map and the report to the Secretary General which is going to be at the end of it. So I think that is very much in the minds of our partners in the Kimberley Process and it does give it a sense of urgency and a sense of importance.

Mr. HERGER. Very good. Thank you very much, both of you. Thank you, Mr. Chairman.

Chairman CRANE. Mr. McDermott. Oh, Mr. McDermott is not here. Mr. Camp or--I am sorry--Mr. Jefferson.

Mr. JEFFERSON. Thank you, Mr. Chairman, and I thank you for this hearing. This is a very important subject. We are all concerned about the presence of what we call conflict diamonds in the world community and the atrocities that they are connected with. All of us have that concern. Many of us have also been concerned about how this legislation might affect diamond trade in countries like Botswana, Namibia, South Africa, and Tanzania that have legitimate diamond operations.

And, therefore, with the help of Mr. Rangel and Mr. Payne, we were successful with the Chairman's acquiescence in adding some provisions in the bill that acknowledge that and that tries to make sure that whatever we do with respect to eliminating the atrocities that we are all concerned about that we do not do it in such a way that we forget about the constructive work that is being done in developing countries, and that our work here works to eliminate the trade in conflict diamonds but not in legitimate diamonds.

And so I am pleased that we are focusing on this issue, and I want to recognize the Honorable A.M. Duvay who is Botswana's Special Envoy to the United States. He is here in the audience. I had the pleasure of going to Botswana in April--he was here in the audience--meeting with President Mogae with about five other Members of Congress. We had a chance to take a firsthand look at Botswana's diamond regime.

We investigated how the legislation before us would affect that and we discovered that Botswana is particularly vulnerable in this situation, and that it is the largest producer of gem quality diamonds in the world and that unlike some African nations, the Botswana diamond trade is entirely legitimate and tightly controlled, as you know.

So I want to, Mr. Chairman, make the point and underscore the point again that we all support legislation to eliminate conflict diamonds, but we ought to make sure that we do it the right way, and I think the inclusions of section 2 in the Findings and the new sections added to the bill will be very helpful in that respect.

I want to, if I might, introduce into the record a letter from the Special Envoy, whose name I mentioned earlier, that congratulates Mr. Rangel and Mr. Payne and myself for work on this bill and for visiting the country back in April, and those of us who did, and that points out the interests of the Botswana government in making sure that whatever we do here takes into account and protects legitimate trade in diamonds, and that it recognizes that it is our process, it is our decision to make, and they do not want to interpose themselves into this discussion.

But they want us to know about how important it is for their country, for their development, and they speak to this issue without taking a position on the bill. They are careful not to do that, but just want to inform the Committee of where they stand.

So, Mr. Chairman, if I might, I would like to have leave to introduce a copy of this letter into the record of the Committee's proceedings so that we may be aware of the interest of the Botswana government in this very important topic.

Chairman CRANE. Without objection, so ordered.

Mr. JEFFERSON. Thank you, Mr. Chairman.

[The information follows:]

Embassy of Botswana
Washington, DC 20036
October 4, 2001

The Honorable William J. Jefferson
240 Cannon House Office Building
Washington, DC 20515

Dear Congressman Jefferson,

We understand that the House Ways and Means Committee's Subcommittee on Trade, will hold a hearing on "Trade in African Diamonds," on Tuesday October 9th, 2001.

Knowing of your long-standing activity on the Subcommittee relating to this issue, we thought it important again to share Botswana's view with you. Botswana was honoured to host the congressional fact-finding mission that you led in April this year. We were particularly pleased that you were able to observe our diamond industry firsthand and be briefed by both public and private officials.

President Mogae paid a visit to Washington shortly thereafter, in June, to brief Congress on the vital role that the diamond industry plays in the economic and social development of Botswana. We are grateful that you and your colleagues in the Congressional Black Caucus received the President so warmly, and that he was able to hold such productive discussions with the congressional leadership.

During the meetings in Botswana, we demonstrated to your delegation that Botswana's diamond industry is 100% secure and legitimate. It is the economic bedrock of our 35 year-old democracy. Through the exploitation and careful management of our natural resources, especially diamonds, we have achieved remarkable economic development over the last 25 years. Botswana as you know, is now hailed as one of the fastest growing economies in the world. Our economic prosperity for example has allowed us to develop one of the world's most comprehensive anti-HIV/AIDS efforts, as we face the most devastating pandemic in Africa. We believe that the example of Botswana illustrates, as President Mogae said in his Washington speech, the good that diamonds can accomplish when responsibly used by nations, as against the evil they can do when commandeered and exploited by corrupt and unaccountable leaders as is happened in some countries. Congressman Jefferson, we applaud you, Congressman Payne, and Congressman Rangel for your efforts to recognize and make this distinction as your Congress deliberates this issue.

During your visit you were also able to observe that our diamond mines and sorting floors have developed the highest level of security comparable to the best in the world. Our export pipeline is seamless, from the valuation floors in Gaborone, to the sales floors at the Diamond Trading Company in London. The entire production of Botswana's rough diamonds is exported through this channel. Furthermore under our Mines and Minerals Act, all mineral rights belong to the nation, and Government issues mining leases for development and extraction. We therefore have considerable leverage and control over our mining industry.

We have made clear in all our discussions with you how we abhor the presence of diamonds in the market, that are now play a direct role in the atrocities taking place in some countries on our Continent. Botswana is eager to find a cooperative solution to the issue of conflict diamonds. However, it must be a solution that not only bans such diamonds from the trade, but that also safeguards the legitimate market upon which our country is so dependent. A solution that helps to prevent the spread of regional conflicts; and preserves the ability of peace-loving democracies like ours, to use their mineral wealth for the good of their citizens. We therefore support the UN General Assembly Resolution 55/56 of December 1st, 2000, and are active participants in the Kimberley Process. We believe that ultimately we must have an international agreement on certification through the Kimberley Process to effectively protect the legitimate diamond trade.

Congressman, we have great respect for your legislative process. We applaud your efforts and those of your colleagues, to confront the serious issue of conflict diamonds. And, again we especially thank you and your colleagues for all your endeavors to protect democratic economies such as Botswana who do not trade in conflict diamonds.

With my best wishes,

I remain, Yours Sincerely

A.M. Dube
Minister/Special Envoy

Chairman CRANE. Mr. English.

Mr. ENGLISH. Thank you. Mr. Mendenhall, reviewing my colleague Mr. Houghton's legislation, in your view, would this legislation if enacted be enforceable?

Mr. MENDENHALL. I am sorry? Would it be enforceable?

Mr. ENGLISH. Yes.

Mr. MENDENHALL. There are certain aspects of the bill that we have concerns about that we have raised with staff of the members who sponsored the legislation. We are working through those issues with them.

Mr. ENGLISH. Would you care to elaborate?

Mr. MENDENHALL. We have raised concerns with them about--it is essentially the same questions that are being debated in Kimberley, which are how do you track a diamond as it moves through the international stream of commerce, and do we have a system that is actually going to be workable, and is the industry going to come forward with proposals like a chain of warranties or something else that will actually be enforceable and confirmable or verifiable by Customs authorities?

There is flexibility built into the bill. We have questions that we have raised about certain aspects of the bill and how it deals with, for example, transshipment through various countries. My understanding is that we have an ongoing dialogue with them to see how this is going to play out. We need to confirm how the bill is going to work in practice and there are some ambiguities that I think need to be cleared up.

Mr. ENGLISH. Accepting those ambiguities, do you have any cost estimates of what it would cost for the United States to implement this new regime?

Mr. MENDENHALL. I do not have a cost estimate. That question would be appropriate for Customs to answer. They are going to be responsible for implementing this for the United States. And so I am not in a position to answer that question. I do not know.

Mr. ENGLISH. Mr. Eastham, would you care to comment on any of those points?

Mr. EASTHAM. Let me agree that we do not know what the cost of implementing the bill would be. I suspect that the marginal cost would be fairly low. But since Customs is already implementing the control regimes on Sierra Leone and Angola, I would just endorse the views that Mr. Mendenhall has expressed on the other aspects of it.

Mr. ENGLISH. Thank you. I have no further questions, Mr. Chairman.

Chairman CRANE. We want to express appreciation to both of you for your participation today, and we look forward to working with you in the future on this issue.

Chairman CRANE. And with that, we shall move to the final panel, and that is Matthew Runci, president and CEO of Jewelers of America, Inc., in New York City; Cecilia Gardner, general counsel, World Diamond Council, New York City; Rory Anderson, government relations manager for Africa area, World Vision; and Adotei Akwei, senior advocacy director of Amnesty International.

And if you folks will be seated, we shall proceed in the order that I presented you, and I would ask you all if you will, please, try and keep your oral testimony to 5 minutes or less and your written testimony will be made a part of the permanent record, and with that, Mr. Runci, you can open up.

STATEMENT OF MATTHEW RUNCI, PRESIDENT AND CHIEF EXECUTIVE OFFICER, JEWELERS OF AMERICA, INC., NEW YORK, NEW YORK, AND EXECUTIVE DIRECTOR, WORLD DIAMOND COUNCIL, NEW YORK, NEW YORK

Mr. RUNCI. Mr. Chairman and members of the Trade Subcommittee, thank you for this opportunity to testify in support of the Clean Diamonds Trade Act, the purpose of which is to choke off illicit traffic in conflict diamonds.

We in the industry would like to thank Congressman Hall, Congressman Wolf, as well as Senator DeWine, who have appeared this morning, for their courageous leadership and persistence in connection with this matter.

I am Matthew Runci, president and chief executive office of Jewelers of America and executive director of the World Diamond Council. Jewelers of America, founded in 1903, represents more than 10,000 U.S. retail jewelers including family owned stores and major national chains.

The World Diamond Council representing all segments of the diamond and jewelry industries here and abroad was founded a year ago to establish a workable system to eliminate trade in conflict diamonds. Both organizations--along with trade groups associated with the importing, processing and distribution of diamonds in the United States--urge prompt enactment of H.R. 2722. This legislation is a major and essential step in eliminating the illicit trade in conflict diamonds. Both moral and business imperatives underpin our position. Halting this insidious traffic also serves the U.S. foreign policy goal of encouraging stability and economic progress in developing African nations.

The moral case here is undeniable. Rebels and bandits in parts of Africa have used the profits from diamonds they appropriate to fuel their violent activities. Innocent citizens have suffered deprivation and terrible atrocities as a direct result. While criminals have grown rich, the economies of Sierra Leone, Angola, and the Democratic Republic of Congo have been impoverished. This evil cycle must end.

The business factor is also clear. Gems are objects of beauty and symbols of enduring affection. They have value because of the positive feelings they evoke. If consumers come to believe that the diamonds they might buy are connected to violence, the effects could be very damaging to thousands of businesses and to their employees. The threat exists even though it is clear that only a very small proportion of the world supply can be linked in any way to conflicts. And it exists even though there has been some progress toward eliminating conflict diamonds, thanks to the efforts by the United Nations, individual governments, non-governmental organizations, and the industry.

The fact remains that as of today it is impossible for a retail jeweler to tell a customer with absolute certainty whether a particular stone offered for sale is conflict free. So there is a cloud over our industry casting a shadow not only on American retail establishments but also on all segments of the industry here and abroad.

Removing this cloud requires firm and timely action by the U.S. government--specifically, enactment of the legislation now before you. In recent years, as awareness of the conflict diamond problem has grown, there have been several positive steps, as I mentioned a moment ago. One of these is the effort originally launched by South Africa now grown to include more than 30 countries called the Kimberley Process.

Just last month, I was in London for the latest Kimberley Process meeting, where there was, agreement in principle on the ingredients of an international monitoring system to protect the legitimate supply chain from exploitation by those dealing in conflict diamonds.

While we applaud this work--as well as the steps taken by the United Nations--the fact is that a catalyst is required to put in place the controls necessary to eliminate conflict diamonds. Because the United States is the largest importer of diamonds, we have the opportunity and the obligation to provide that catalyst.

Enacting H.R. 2722 would serve that purpose admirably. It would, first of all, allow the importation of diamonds and diamond jewelry into the U.S. only from countries that have adopted effective controls on the import and export of rough diamonds. This alone would be a great incentive for other nations to take appropriate action within an acceptable time table. The legislation would also encourage the President to negotiate an international agreement leading to a global control system.

H.R. 2722 and its Senate companion, S. 1084, include a number of other strong features. The Clean Diamonds Trade Act is totally consistent with the resolutions adopted by both the U.N. Security Council and the General Assembly. It is also consistent with the principles approved by the Kimberley Process.

Finally, this legislation is truly a consensus measure. Interested members of both houses and of both parties support this bill. So does a broad coalition of humanitarian and faith-based organizations concerned with the issue. Jewelers of America, the World Diamond Council, and others representing segments of the industry also believe that this legislation is both sound and absolutely necessary for the success of our campaign to rid the world of conflict diamonds.

Again, my many thanks for the opportunity to testify. I will be happy to take any questions you may have.

[The prepared statement of Mr. Runci follows:]

Chairman CRANE. Thank you, Mr. Runci. Ms. Gardner.

Ms. GARDNER. Thank you, Mr. Chairman. I am Cecilia Gardner. I am the executive director and general counsel of the Jewelers Vigilance Committee (JVC), and I am general counsel of the World Diamond Council. I am grateful to the Subcommittee for the opportunity to testify on the critical need for enactment of legislation to eliminate conflict diamonds. I also would wish to join with Mr. Runci's comments that we are grateful to Congressman Hall and Congressman Wolf and others for their continued interest, concern and hard work in this area.

The Jewelers Vigilance Committee is a committee formed in 1917 with a membership of 11,000 retailers, manufacturers, and related enterprises. We emphasize self-regulation and compliance with all relevant laws. With this mission in mind, it was natural for the JVC to become a founding constituent of the World Diamond Council, which was organized in the summer of 2000 for the purpose of constructing an effective system to protect the legitimate supply chain of diamonds worldwide from the pollution of conflict diamonds.

My experience has been to participate in all of the meetings of the Kimberley Process, essentially from the inception after the U.N. Resolution and the World Diamond Council, after the World Diamond Council was formed, in the year 2000.

This morning I would like to provide a brief summary of the international efforts to end this trade. This will provide the context for our view that enactment of the Clean Diamond Trade Act is necessary to get the job done.

As you know, for several years, an awareness of this problem grew and it was the subject of a number of Security Council and General Assembly resolutions at the U.N. The administration's acts over the past few years also have been in compliance with those U.N. initiatives.

Meanwhile, evidence mounted that proceeds from diamonds were a leading source of revenue to rebels and adventurers whose only cause was profit. The societies of Angola, Sierra Leone, and the Democratic Republic of Congo were crumbling in the process.

While the immediate victims were the innocent citizens of these nations, there were other prospective casualties starting with peaceful African nations that rely heavily on legitimate extraction and export of diamonds. Ultimately, a global industry in which the United States is a major participant could be blighted and therefore a coordinated international response was necessary, and this is what brought into being the ad hoc coalition which has come to be known as the Kimberley Process after the site of its first meeting.

At the same time, the World Diamond Council was formed, an industry coalition that had its initial organizing meeting in September of 2000. These efforts have had some success. The Kimberley Process is a process in which the World Diamond Council is intimately involved, and we have agreed on main ingredients of an international monitoring system to protect the legitimate supply chain.

In fact, the features of that system are already being employed pertaining to the rough diamond trade from Sierra Leone, Angola, Guinea to Belgium. There is broad agreement in the Kimberley Process to various elements that are very similar to that that is contained in this legislation.

While these and other points of agreement represent progress, the picture is still very incomplete. What is missing is effective implementation of these very excellent goals. The World Diamond Council believes that legislative action by the United States is immediately necessary to achieve a catalyst to the Kimberley Process.

Interested parties for months have debated the details of the legislation and now we have found common ground in the form of the Clean Diamonds Trade Act. It encompasses the very best features of earlier bills. It is enforceable. It provides the executive branch sufficient flexibility. It is consistent with the principles adopted by the U.N., and it is consistent with what is being formulated in the Kimberley Process.

It serves the interests of all diamond producing nations. It does not impinge on the U.S. commitments to the World Trade Organization. It is very unusual, as Members of Congress know, for an industry to come to Washington to request government intervention in its affairs, but conflict diamonds pose a very unusual menace.

The industry has gone a long way into meeting this challenge, and now the government's assistance is necessary to complete the job. Thank you for your attention, and I would be happy to answer any questions that you have.

[The prepared statement of Ms. Gardner follows:]

Chairman CRANE. Thank you, Ms. Gardner. Ms. Anderson.

STATEMENT OF RORY E. ANDERSON, GOVERNMENT RELATIONS MANAGER AND AFRICA POLICY SPECIALIST, WORLD VISION UNITED STATES

Ms. ANDERSON. Thank you, Mr. Chairman, for the opportunity to present testimony to the Subcommittee on solutions to the trade in conflict diamonds. My name is Rory Anderson, government relations manager and Africa policy specialist for World Vision, the largest privately funded international relief and development organization in the U.S.

Currently, World Vision implements more than 6,000 relief, rehabilitation and long-term development projects in 95 countries.

Mr. Chairman, you and the Committee have had a chance to review my testimony which describes in specific detail how the trade in conflict diamonds in Sierra Leone, Angola, and the Congo contributes to war, poverty, and human misery. I was in Sierra Leone and Liberia only 2 months ago, and it was my second visit to Sierra Leone in less than a year.

The images of children, some as young as 5 months, with arms and legs cut off by rebel soldiers will remain with me forever. After seeing these faces of suffering in Sierra Leone, I can honestly say that terrorism is not only a phenomenon that is rooted in extremist Islamic fundamentalism. Terrorism, which is the planned systematic violent attacks against unarmed non-combatant civilians, has been a central platform to the wars in Sierra Leone, Angola, and the DRC (Democratic Republic of the Congo).

Terrorism has become a conventional weapon in 21st century warfare, making war more brutal and more costly. Although terrorism has become a conventional method, it is mostly sustained through underground networks of money laundering and weapon smuggling and trading in conflict diamonds.

As an internationally valued commodity, diamonds have become the dollar, particularly in Sierra Leone. Because diamonds can move so easily and quickly, a dealer can buy low, sell high and reap high windfall profits, particularly during the height of a war. For the seemingly intractable war in Sierra Leone, the point of the war may not be to actually win it, but to engage in profitable crime under the cover of warfare.

As documented in the U.N. Panel of Experts Report submitted to the U.N. Security Council in December of 2000, the Revolutionary United Front in Sierra Leone is able to obtain large quantities of arms and military equipment and related material largely as a result of the purchasing power it derives in the sale of conflict diamonds, and the willingness of some major arms producing countries to sell weapons and with disregard to the final end users.

Given this awful reality, what can we do? What are the solutions? Mr. Chairman, I believe that there are two significant solutions which will make a tremendous difference in eradicating the trade in conflict diamonds.

The first solution is swift enactment of the Clean Diamonds Trade Act. Mr. Chairman, World Vision and the Campaign to Eliminate Conflict Diamonds, which is a coalition of more than 150 non-governmental organizations and faith groups, unanimously applaud and welcomes the leadership that this Committee has shown by introducing the Clean Diamonds Trade Act.

If you do not object, I would like to submit for the record a letter of endorsement signed by over 70 religious organizations from across the country, ranging from Jewish, Catholic, and a variety of protestant churches who all call for the swift enactment of U.S. legislation to prevent conflict diamonds from being sold in America.

Mr. Chairman, America consumes 65 percent of the world's supply of diamonds. We in the campaign believe that the Clean Diamonds Trade Act will make a significant contribution because it sets up a system of transparent controls for the importation of all diamonds including rough, polished and diamond jewelry. Diamonds are the most concentrated form of wealth known to humanity. They are also the most easily smuggled.

But the Clean Diamond Trade Act specifies certification standards for the importation of diamonds which will create a clean stream of diamonds entering into the U.S. market. The system's implementation will be monitored by a diverse presidential commission, which will consist of representatives from NGOs, industry and government. Tough penalties are also specified for those who are dealing in conflict diamonds.

Further, we believe that this bill gives the administration maximum flexibility to implement effective controls.

Mr. Chairman, a second solution is strong U.S. leadership at the international level. One of the greatest strengths of the Clean Diamond Trade Act is that it is explicitly linked to the ongoing global diamond certification agreement, also known as the Kimberley Process.

A diamond is an international commodity that requires international cooperation. If there is to be proper oversight, U.S. legislation is crucial, and we believe that U.S. legislation is shaping and helping to invigorate the international process and it mirrors the specifications which are being discussed at the international level.

This said, we also acknowledge that the only way to effectively root out the trade in conflict diamonds is to have universal standards of packaging and oversight of all diamond producing, polishing and importing countries.

A tiered system prejudiced against African producing systems and lax on importing and polishing countries creates new loopholes for transshipment of blood diamonds. If this were the case, conflict diamonds could simply be laundered through Canada, Australia, or any other peaceful country. A global certification system with standard import packaging and controls including international independent monitoring of diamond exports from mine to finger is the only way to effectively end the trade in conflict diamonds while protecting the legitimate diamond industry.

Mr. Chairman, I had the privilege to attend and participate as an NGO representative in the recent meetings held in London. Though the process is slow in getting definitive consensus, we believe that the Clean Diamonds Trade Act is helping to bring countries around, and we believe that invigorated U.S. leadership is necessary at the highest levels to accomplish an effective workable system.

Mr. Chairman, in conclusion, we at World Vision and the entire Campaign to Eliminate Conflict Diamonds firmly believe that American gifts of love should not be financing acts of terror. The diamond ring on your finger or my finger should not come at the expense of the finger of a child in Sierra Leone.

The Campaign to Eliminate Conflict Diamonds firmly calls upon Congress to enact the Clean Diamond Trade Act and we call upon the Bush administration to demonstrate a high level of leadership in the negotiations of the international diamond certification system. Thank you.

[The prepared statement of Ms. Anderson follows:]

Chairman CRANE. Thank you, Mrs. Anderson. Mr. Akwei.

Mr. RANGEL. Mr. Chairman.

Chairman CRANE. Oh, yes. Mr. Rangel.

Mr. RANGEL. Ms. Anderson had asked unanimous consent that a list of supporters for the legislation before us be entered into the record.

Chairman CRANE. Without objection, so ordered. Mr. Akwei.

[The information follows:]

Interfaith Statement on Conflict Diamonds

As faith communities concerned about peace and justice for all God’s people, we, the undersigned, want to express our concern over the trade in conflict diamonds—gems that are used to fund warfare and civilian atrocities—and we want to collectively show solidarity with our brothers and sisters who are suffering in Sierra Leone as a result of a decade-long civil warwhere rebels seek to control diamond resources.  In particular, the brutal tactics of the Revolutionary United Front (RUF), who routinely practice mutilation of innocent civilians, notably amputation of limbs and other body parts; forced recruitment of child soldiers, and abduction of women to be soldiers’ “wives,” are all tactics intended to maintain their wicked reign over resources.  This cannot and should not be tolerated by any member of the international community, least of all by those who believe all people are God’s creation.

The war in Sierra Leone is not about political liberation or religious freedom—it is a war about conflict diamonds, where greed, warfare and civilian terror have become a cover for controlling and smuggling diamond resources. As Muctar Jalloh, a victim of the Sierra Leone conflict explains, the bloodshed in his country “is simply a war over control of diamonds. Little pieces of rock that people around the world like to wear on their fingers and hang from their ears. As you can see, because of these rocks I no longer have an ear or five of my fingers.” The RUF controls two-thirds of Sierra Leone, including the lucrative diamond-mining regions in the north. The sale of these illicit gems to the diamond industry—often routed through other countries such as Liberia—then supplies a constant stream of funding for the rebels’ arms purchases, which in turn leads to the continuation of war, further displacement of the civilian population, and general instability in the West African region. Angola, the Democratic Republic of the Congo and many surrounding African countries also have similar experiences of human suffering as result of the trade in conflict diamonds. 

While the worldwide diamond industry has made encouraging strides toward establishing an international diamond certification system that seeks to ensure that conflict diamonds are kept out of the retail market, the pace of reform is slow. Delays in enacting an international system leave millions of people at the mercy of atrocious human rights abusers such as the Revolutionary United Front (RUF).

In response to this situation, we, the undersigned faith communities in the U.S., are joining together in support of clean diamond legislation, including the Clean Diamonds Act, which would prohibit the direct or indirect importation of any and all diamonds and diamond jewelry without a global certification system in place.  By taking leadership, the U.S. can send a message that the trade in conflict diamonds is morally egregious and will not be tolerated.  Moral authority under these circumstances is not an option; it is an imperative.  The longer it takes to enact an international certification system, the more hardship is inflicted on innocent people in Sierra Leone, Angola, and the Congo, and the more risk of harm to the legitimate diamond-producing nations of Botswana, Namibia, and South Africa. It has been written: “Do not profit by the blood of your neighbor…you shall not hate your kinsman in your heart.  Reprove your neighbor but incur no guilt because of him. You shall not take vengeance or bear a grudge against your kinsfolk. Love your neighbor as yourself” (Leviticus 19:16-18). Across our faith traditions, we teach all to love others and speak up for those who cannot speak up for themselves.  We stand ready to commit what we can to this fight against the use of conflict diamonds which inflict pain and suffering on the innocent.

Signatories of the Intefaith Statement on Conflict Diamonds as of October 1, 2001

Cantor Scott E. Colbert, Executive Vice-President, American Conference of Cantors
Rabbi Paul Menitoff, Executive Vice-President, Central Conference of American Rabbis
Rabbi Lane Steinger, Director, Midwest Council of the Union of American Hebrew Congregations, St. Louis, MO
Rabbi Susan B. Stone, Temple Beth Shalom, Hudson, OH
Rabbi Norman T. Roman, West Bloomfield, MI
Rabbi Sue Levi Elwell, Director, Pennsylvania Council of the Union of American Hebrew Congregations, Philadelphia, PA
Rabbi Jody Cohen, Ft. Lauderdale, FL
Rabbi Melinda Mersack, Shaker Heights, OH
Rabbi Elliott Kleinman, Director, Northeast Lakes Council of the Union of American Hebrew Congregations, Cleveland, OH
Rabbi Karyn Kedar, Director, Great Lakes Council of the Union of American Hebrew Congregations, Northbrook, IL
Rabbi David Fine, Pacific Northwest Council of the Union of American Hebrew Congregations, Seattle, WA
Rabbi Harry Rosenfeld, Buffalo, NY
Rabbi Randi Musnitsky, Washington Township, NJ
Rabbi David Wolfman, Needham, MA
Rabbi Marc Israel, Director of Congregational Relations, Religious Action Center of Reform Judaism
Rabbi David Saperstein, Director and Council, Religious Action Center of Reform Judaism
Eileen B. Weiss, Co-founder, Jews Against Genocide
Roney A. Heinz, International Director, Canaan Christians Fund
Rev. Dr. Leon Spencer, Director, Washington Office on Africa
Rev. Richard P. Roy, M.Afr., Assistant Provincial, Missionaries of Africa
Rev. Daniel Hoffman, Africa Office, Global Ministries, United Church of Christ/Disciples of Christ
Rev. Rich Cizik, Vice-President, National Association of Evangelicals
Rev. Herbert Daughtry, National Presiding Minister of the House of the Lord Church and the Church on the Mound, Brooklyn, NY
Kenneth Hackett, Executive Director, Catholic Relief Services
Kathy Thornton, RSM, National Coordinator, NETWORK
Kathryn Wolford, President, Lutheran World Relief
Larry J. Goodwin, Executive Director, Africa Faith & Justice Network
Serge Duss, Public Policy Director, World Vision
Stephen G. Price, Office of Justice and Peace, Society of African Missions
Rev. Ian B. Straker, member, New York Annual Conference of the United Methodist Church
Rev. Scott Summerville, Pastor, Asbury United Methodist Church, Tuckahoe, NY
Bishop Elias G. Galván, President, Council of Bishops, and Seattle Episcopal Area
Bishop Warner H. Brown, Jr., Denver Episcopal Area
Bishop John L. Hopkins, Minnesota Episcopal Area
Bishop William W. Hutchinson, Louisiana Episcopal Area
Bishop S. Clifton Ives, West Virginia Episcopal Area
Bishop Alfred Johnson, New Jersey Episcopal Area
Bishop Hae-Jong Kim, Pittsburgh Episcopal Area
Bishop Linda Lee, Michigan Episcopal Area
Bishop Ernest S. Lyght, New York Episcopal Area
Bishop Joel N. Martinez, San Antonio Episcopal Area
Bishop Felton Edwin May, Washington Episcopal Area
Bishop Susan Morrison, Albany Episcopal Area
Bishop Albert Frederick Mutti, Kansas Episcopal Area
Bishop Edward W. Paup, Portland Episcopal Area
Bishop Joe E. Pennel, Jr., Richmond Episcopal Area
Bishop Sharon Z. Rader, Wisconsin Episcopal Area
Bishop Beverly J. Shamana, San Francisco Episcopal Area
Bishop B. Michael Watson, South Georgia Episcopal Area
Bishop Peter D. Weaver, Philadelphia Episcopal Area
Bishop Timothy W. Whitaker, Florida Episcopal Area
Jim Winkler, General Secretary of the General Board of Church and Society 
Aleticia Tijerina, Arizona
Esther Bohn Groves
Mary Alice and Kent Warner Center Harbor, New Hampshire
Rev. Laurence C. Zirschky, Pastor of Spiritual Formation, Chapel Hill Presbyterian Church, Gig Harbor, WA
Rev. Dr. Earl PalmerSenior Pastor, University Presbyterian Church, Seattle, WA
Dr. Phil Eaton, President, Seattle Pacific University, Seattle, WA
Gordon Aeschliman, President, Target Earth, Villanova, PA
Dr. John Crosby, Senior Pastor, Christ Presbyterian Church of Medina, MN
Leighton Ford, President, Leighton Ford Ministries, Charlotte, NC
Paul Kennel, President, World Concern, Shoreline, WA
Dr. William L. Flanagan, Mission Pastor, St. Andrew’s Presbyterian Church, Newport Beach, CA
Bart Campolo, President, Mission Year, Philadelphia PA
|Richard J. Mouw, President and Professor of Christian Philosophy, Fuller Theological Seminary, Pasadena CA
Tony Campolo, Professor of Sociology, Eastern College, St. Davids, PA
Rev. Dr. M. Craig Barnes, Senior Pastor, National Presbyterian Church, Washington, DC
Ronald J. Sider, President, Evangelicals for Social Action, Wynnewood, PA
Millard Fuller, Founder and President, Habitat for Humanity, Americus, GA
Peter Vander Meulen, Coordinator, Office of Social Justice and Hunger Action, Christian Reformed Church of America
Paul Kortenhoven, Director, Christian Reformed Church Mission to Sierra Leone, Christian Reformed Church of America
Kay M. Shively, Special Assignment and Recruitment Specialist for Global Missions of the Church of God, Anderson, IN
Dr. Peter Borgdorff, Executive Director of Ministries, Christian Reformed Church of America
Dr. Steve Hayner, Senior Associate Pastor, High Point Church, Madison, WI
David Beckmann, President, Bread for the World, Washington, DC
Rev. Doug Calhoun, Pastor, Church of Christ Oak Brook, Oak Brook, IL
Debra Braaksma, Africa Office Mission Services Unit, Reformed Church in America
Ken Hackett, President, Catholic Relief Services (relief and development arm of the US Conference of Catholic Bishops), Baltimore, MD
Rev. Dr. Michael Curry, Director of Outreach Ministries, Church of God, Anderson, IN

STATEMENT OF ADOTEI AKWEI, AFRICA ADVOCACY DIRECTOR, AMNESTY INTERNATIONAL USA

Mr. AKWEI. My name is Adotei Akwei, and I am the advocacy director for Africa with Amnesty International USA. I am also here representing a coalition of over 100 organizations that come from a broad spectrum of society. The Campaign to Eliminate Conflict Diamonds includes faith-based organizations, unions, environmental, humanitarian and human rights organizations, and these groups are in turn made up of students, retired persons, young professionals, recently engaged men and women, newly married couples, and yes, mom and pop jewelry store owners.

Over the last year, these individuals have written letters, held vigils and teach-ins and communicated with their congressional representatives to raise awareness about the issue of conflict diamonds and to try to push the United States government to lead the international community toward taking effective action against conflict diamonds.

On their behalf, I would like to express our appreciation to you for holding these hearings. The members of the campaign understand that in these difficult and extraordinary times, it is not as easy to work on other issues when so much remains to be done here in the United States. It is a tribute to you and a strong reassurance to the rest of the global community to see that even in this period, the United States will not disengage from international affairs or shirk its responsibility to be a leader on human rights issues.

I would like to stress this last point, to be a leader on human rights issues, because this is what the issue of conflict diamonds is about, an effort by the United States government, the diamond industry and the non-governmental sector to take on and end one of the most painful and avoidable human rights abuses being inflicted on millions of children, women and men in sub-Saharan Africa.

The misappropriation of a valuable natural resource like diamonds, the use of revenues acquired from the sale of that resource to purchase weapons, drugs, and supplies by armed opposition groups, who then commit human rights abuses, is unacceptable and avoidable.

The conflict diamond crisis is unacceptable because in addition to the horrific suffering that continues to be inflicted to innocent persons in these conflict zones is the incalculable loss of development opportunities that legitimate and efficient use of this resource could represent.

It is avoidable because we sitting here in Washington can make a difference by helping build an international certification system that would ensure a clean stream of diamonds from the point of extraction to retail sale and that would be transparent and independently monitored.

H.R. 2722, which complements and helps build up to ongoing Kimberley Process negotiations, does this by empowering the U.S. Customs Service to permit diamond imports only from those countries that have adopted strong and effective controls on the exportation and importation of rough diamonds to ensure that conflict diamonds do not enter the international stream of commerce.

For the last 2 years, various parties in this initiative have worked to try to cut off the revenue flows from the illicit sales of diamonds to armed groups like the Revolutionary United Front in Sierra Leone and to break the linkage between the innocent American consumer, the legitimate diamond industry and RUF atrocities.

In other words, Mr. Chairman, this bill, H.R. 2722, represents the coming together of a broad variety of groups, individuals and companies all with the same goal, ending the brutal and avoidable human rights abuses that are linked to conflict diamonds.

This is why I am sitting here before you today, along with my colleagues from the diamond industry and with Members of Congress, to urge you to take this legislation and the energy and support of all the sectors behind it I have mentioned and make a difference. Pass H.R. 2722 before you go out on recess.

I would like to just make a few comments on H.R. 2722 before wrapping up. First, input for this legislation has come from the industry, from sectors of the administration, notably Customs, and international as well as U.S. non-governmental organizations.

The bill has been shared and previewed with members at the Kimberley Process and we, therefore, feel that there has been a common agreement and approach on the way in which the bill is drafted and also for the action to be taken by the United States Congress.

I would also say that this is supportive and complementary to the Kimberley Process and all three of my colleagues have also mentioned that. It in no way undermines this and, in fact, leaves the President the necessary flexibility to negotiate and to come into compliance with his WTO obligations.

As drafted, all efforts have been made to make this bill responsible and effective. Our colleagues in the industry who helped draft this legislation were obviously careful to ensure that our actions and this bill would not hurt the legitimate trade in diamonds.

Our colleagues in the industry are also aware of the need for prompt action. The longer this problem persists, the more damage is done to the industry and its products. I would also say that we have tried to make this bill as procedurally correct while remaining as effective as possible.

Input from the Department of State and USTR has been sought and I must confess has not been met with the same energy and enthusiasm for detail as we have had here on the Hill. Unfortunately, that pattern seems to have continued today.

I would just again end by saying that this bill is a responsible bill. It will make a big difference and there is certainly no time left for the people in Sierra Leone, Angola, and the DRC to wait for yet another couple of months while the negotiations in Kimberley drag on and eventually come to the same principles and standards that are in H.R. 2722. Thank you.

[The prepared statement of Mr. Akwei follows:]

Chairman CRANE. Thank you. I would like to put a question to all of you and get your responses, and I know you jointly support legislation to create control systems to prevent the import of conflict diamonds. But there have been many versions by either the industry NGOs or members, and can you comment on why the divided sides, on the same issue, though, do not support earlier versions offered by either side?

Mr. RUNCI. Mr. Chairman, I think that from the outset all parties involved, from our perspective certainly, shared a commitment to find a solution. But the approaches we took to devising solutions I think were defined largely by the directions from which we came, the context in which we operate.

Our concern as industry from the outset was in supporting a solution which would, as was said earlier, not harm the legitimate diamond trade, the economies of those countries with legitimate diamond industries.

I think from the perspective of civil society, the superseding goal was to stop the--from the outset--was to stop the trade and end the connection between diamonds and violence, to stop the violence. I think we reached common ground when we found the technical means in June to accomplish that and agreed to terms.

Commitments I think were strong from all sides from the outset. I think our approach is different given the various directions from which we came, but I think we found common ground because of our desire to effect a solution this year, and our strong commitment not to allow technical differences, which were really what separated us before, technical differences, from standing in the way of getting behind a consensus solution that Congress could enact this year because we are united in our commitment not to allow this issue to linger and drift in the international community any longer than it has to date.

Chairman CRANE. Ms. Gardner.

Ms. GARDNER. I would only add to that that part of the process was an educational one on both sides. The diamond industry and the pipeline for diamond trading is extremely complex. The goal was to create an effective system that was credible and would be practical and would not present obstruction to legitimate trade, and the varying competing and differing approaches were ultimately brought to consensus, I think, through a process of mutual education on both sides.

Chairman CRANE. Ms. Anderson.

Ms. ANDERSON. I would just resound with what my two colleagues have said here, that I think the more communication we had and the greater understanding we had of our differing constituencies, we were able to work out the technical details and come to consensus. Thank you.

Chairman CRANE. Mr. Akwei.

Mr. AKWEI. I would agree that we not only had an educational process, which basically improved the content of the bill, and I think all of us would agree that H.R. 2722 is the strongest of all of the different legislative initiatives that we worked on individually, but also as part of our educational process got beyond some misconceptions and suspicions of each other, and I think that has been extremely important.

Chairman CRANE. Mr. Rangel.

Mr. RANGEL. Thank you, Mr. Chairman. I am extremely impressed not only with your testimony but the process that you went through to get this consensus. It is very unusual for an industry to be coming to the Congress asking for control guidelines, but none of the testimony that I have heard this morning has given me any reasons why we should not legislate, and certainly if anything, it should be considered as impetus for the administration and our negotiators to move forward.

I assume all of you heard the testimony of the State Department and the Trade Representative. Are you fearful that legislation would interfere with their ability to try negotiate this thing out? Anybody? Ms. Gardner?

Ms. GARDNER. If I may, congressman. I have been intimately involved with the Kimberley Process from the first point after the December resolution in the U.N. that asked for the international conference to produce a result, and I intend to be a participant both in Luanda in Botswana and come up with the ultimate results.

I have no doubt in my mind that indeed this legislation will serve as a catalyst to that process, not at all as any kind of complicating or interfering factor whatsoever.

Mr. RANGEL. What do you think the main reason is as to why they have not been able to resolve this diplomatically?

Ms. GARDNER. I am not sure that I would say that it has not been resolved. It is a process. We have a work plan so to speak; we have dates and deadlines to meet and so far we have met them all. I have no reason to doubt that by the deadline that has been provided by the road map which is the December meeting in Botswana, we will produce a product for consideration by the U.N. which will address all of the elements that are necessary to provide the control of this trade.

Mr. RANGEL. But you are not satisfied that that is enough; you still believe that the Congress should enact legislation?

Ms. GARDNER. Yes, I do, and part of that is because of the fact that the U.S. is the largest consuming nation of this product. I think that while all of the delegations to the Kimberley Process are mindful and are concerned with the humanitarian rights violations that exist here, there are also people involved in the diamond industry and in this trade and they want to continue that trade in the most propitious manner possible and I think that that includes concluding this international agreement and getting on with the business of trading diamonds.

Mr. RANGEL. Does any member of the panel disagree with Ms. Gardner's observations?

Ms. ANDERSON. Mr. Rangel, I would just like to add with Ms. Gardner's observations that I think that in our meetings, NGOs meeting with the various members of the U.S. delegation who are connected to the international process, they themselves have told us privately as well as when we have attended the meetings that U.S. legislation has been the strongest impetus for the administration taking the international process seriously as well as other governments taking the process seriously because once this bill is passed, they won't be able to get their diamonds in here, which we are the largest market. So we feel very strongly that U.S. legislation is really necessary to invigorating the process. Thank you.

Mr. RANGEL. Thank you, Mr. Chairman.

Chairman CRANE. I have got a question that I failed to ask to maybe Mr. Runci, but it may be any of the rest of you, too. The Kimberley Process is designed to help countries identify the source of diamonds, but they recommend that forgery-proof certificates of origin be issued by exporting State authorities. How do you create a forgery-proof certificate?

Ms. GARDNER. Mr. Chairman, I think that every effort is being undertaken by the Kimberley Process to research the most technologically advanced processes by which documentation can be made forgery proof. We have had presentations by companies who have been involved in the printing of currency and those techniques are being contemplated to be used in connection with the formulation of the documentation here as well.

Chairman CRANE. Yeah. But I mean currency is not forgery proof.

Ms. GARDNER. Well, Mr. Chairman, in my former life as a Federal prosecutor with the Department of Justice, I myself prosecuted a number of people for counterfeiting American currency.

Chairman CRANE. Oh, I am sure that--

Ms. GARDNER. Despite efforts to the contrary, this system is going to make every effort to confront and prevent any possibility of contravention of the system including using the latest technology on documents. We will certainly do what we can. Any system to interdict contraband goods is only as good as the anticipated problems that it seeks to resolve.

We are trying to make the system as effective as possible including elements of developing documentation that is forgery proof.

Chairman CRANE. Forgery proof.

Ms. GARDNER. To the best of our ability.

Chairman CRANE. To the best of the ability. I was going to say there is a qualifier in there.

Ms. ANDERSON. Mr. Chairman, to add to Ms. Gardner's comments, I think some of the checks that are built into the system is independent monitoring. So if somebody is able to make or plagiarize or make a phony certificate, you have got statistics as well as independent monitoring to back up what is being produced in the certification process.

So if you see statistics are inconsistent with the amount that is come out of, say, Sierra Leone or Liberia, that will be a red flag for independent monitors to see that there is something going wrong. So even though you might have problems with the certificate, you also have independent monitoring and statistics to back up what is coming out of a country. Thank you.

Chairman CRANE. Very good. All right. Mr. Houghton.

Mr. HOUGHTON. I just have one question. First of all, thank you very much for your testimony. Let us just assume that the things we are doing work out. Kimberley Process is in effect. We have legislation. Other countries buy into this. What is the big worry 5 years out?

Mr. RUNCI. Mr. Houghton, I think the worry that we would have is that without such a system in place, this traffic in illicit conflict diamonds could recur.

Mr. HOUGHTON. No, but you got the system in place now. Let us just make that assumption. What is the big worry on top of all these things which we are doing now?

Mr. RUNCI. The only component, sir, that I believe has not yet been fully contemplated is a supporting international law enforcement authority to ensure that not only that we have monitoring but that we have enforcement and consequences associated with violations.

So I would say looking further out from this immediate structure that we are talking about this morning, from my perspective and the perspective of my colleagues, I think that component is an additional feature, not yet fully addressed by the process.

Ms. GARDNER. I would add to those comments that the participants in the Kimberley Process are fully aware that once the process is put in place that experience will be a teacher and that we might have to further refine enforcement mechanisms based on experience, and the Kimberley Process is already contemplating a mechanism to fulfill that obligation as experience shows is necessary during the implementation of the system as designed.

Mr. HOUGHTON. But the enforcement mechanism that you foresee at the moment when these immediate pieces are in place, you feel is adequate?

Ms. GARDNER. I think it has been designed and it is not fully formed yet. We are still in the process of fleshing out the details. We feel strongly that the enforcement mechanism that is contemplated by the system will be effective, will be credible, and will be practical as well.

Mr. HOUGHTON. Yes?

Mr. AKWEI. I would just like to add also that there is no system currently in place and so this will represent a major step forward not only in terms of the enforcement mechanisms that are there now, but also in the data, and I think that is one of the things that the industry itself has been very forthcoming in admitting, that the transparency of the diamond industry will be significantly enhanced and improved because you will have statistics on geographical output, you will have statistics on how many carats or how many stones are supposed to be coming from sources. And that in itself is going to be a major leap forward.

Mr. HOUGHTON. Thank you very much.

Chairman CRANE. Mr. Herger.

Mr. HERGER. Thank you, Mr. Chairman. I really do not have any questions. I just want to thank our panelists and everyone who is involved on working in this area that is having such horrendous results in the lives of so many victims in Africa, and everything it is doing as far as terrorism all over the world. Again, I want to thank you for you efforts and certainly I as one want to work with you and the entire community and everyone to further your goals. Thank you very much.

Chairman CRANE. Well, I want to express appreciation to all of you for your participation today, too, and we look forward to continuing to work with you and to get legislation that hopefully will address this problem in a meaningful way. And with that, the Committee stands adjourned.

[Whereupon, at 11:50 a.m., the hearing was adjourned.]