WFDB Mobilizes Industry in Call to Action Regarding G7 Diamond Restrictions

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WFDB Mobilizes Industry in Call to Action Regarding G7 Diamond Restrictions
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The World Federation of Diamond Bourses (WFDB) has launched a campaign to unite the industry in presenting its concerns regarding the proposed G7 restrictions on diamonds.

The WFDB has sent out a letter (appended below) today to the G7 and EU government representatives, detailing the challenges that the “one import node” solution creates for the industry. In addition to the signature of Yoram Dvash, President of the WFDB, the letter has been signed by Feriel Zerouki, President of the World Diamond Council (WDC), Vipul Shah, Chairman of the Gem & Jewellery Export Promotion Council of India (GJEPC), and Ronnie Vanderlinden, President of the International Diamond Manufacturers Association (IDMA).

Presidents and members of the 27 diamond bourses within the WFDB and members from all sectors of the trade will also be invited to add their names.

The letter states:

“We the undersigned, representing all segments of the diamond and jewellery industry, including organizations that are based in the G7 jurisdictions, call upon the G7 member states to hear our concerns over the proposal being developed by its experts to restrict Diamonds of Russian origin (natural or synthetics) rough, polished or set in jewellery, from the G7 member states. While strongly agreeing that the time has come for the industry to be able to trace the origin of their diamonds, we should be working together to meet these objectives but feel that the process, that has been suggested, will cause irreparable harm to the non-Russian industry.

WFDB President Yoram Dvash said, “With the current legislation enacted by the G7 countries, the WFDB has been working hard to find a consensus within the industry regarding the situation we find ourselves in. Sanctions should work in the right direction, punishing the intended party and not the entire industry.”

Dvash added that he was hopeful that additional organizations and wider members of the trade would sign the letter. Diamond and jewelry industry members are invited to add their names to the letter via this link.

“The G7 must understand that the direction they have chosen will cause great damage to the world diamond industry. We hope that the concerns we are voicing will convince the G7 governments that an alternative solution must be found.”

Below is the full text of the letter sent to the G7 governments:

WFDB & INDUSTRY CALL TO ACTION.

We the undersigned, representing all segments of the diamond and jewellery industry, including organizations that are based in the G7 jurisdictions, call upon the G7 member states to hear our concerns over the proposal being developed by its experts to restrict Diamonds of Russian origin (natural or synthetics) rough, polished or set in jewellery, from the G7 member states. While strongly agreeing that the time has come for the industry to be able to trace the origin of their diamonds, we should be working together to meet these objectives but feel that the process, that has been suggested, will cause irreparable harm to the non-Russian industry.

As of 31st January, G7 member states have published high level statements, with only the EU sharing limited details as to how this proposal intends to be enforced.

On Thursday 8th of February, the U.S. Treasury’s Office of Foreign Assets Control (OFAC) confirmed that its new sanctions on Russian Diamonds will start in 2 weeks. (1st March 2024) This sanction being the prohibition on diamonds of 1.00ct and greater that have been “mined, produced or manufactured wholly or impart in the Russian Federation, notwithstanding that such diamonds have been substantially transformed outside of the Russian Federation”.

Considering the complexity of the pipeline and the looming date of the slated prohibition, the industry is seriously concerned as no guidance has been issued on the evidence required to comply. With just two weeks to go, the silence is extremely concerning. The trade requires clarity of process to secure their business.

The G7 is not a Customs Union, and all goods would have to be checked crossing borders and their ‘non- Russian’ status verified and retained, to facilitate further trade.

The details shared by the EU on the twelfth package to restrict Russian Diamonds, that requires all non-Russian diamonds to be shipped to Antwerp to be certified as non- Russian, does more to restrict non-Russian Diamonds. This will not meet the objectives of the G7 and may create irreparable damage to the non-Russian Diamond Industry.

The effect on the cost, of both rough and polished diamonds, from non-Russian sources being forced into one node has not been factored into the calculations. The increased costs of shipping the diamonds to Belgium, which includes extra financing terms for the diamond traders, insurance, freight etc. will add a significant cost to the price of the diamonds. Over and above the time taken in shipping back and forth (and its non-eco-friendly narrative) there would be an extra charge for the inspection, certification & registration of the diamonds, which would create a competitive disadvantage for non-Antwerp dealers. The margins in the ‘mid-stream’ are small and these increases would seriously affect those involved and the price increase to the G7 consumer would be substantial and in fact would make Russian Diamonds far more desirable as they would be more accessible.

We urge the G7 to support a global solution and any technology that is being made available to the EU, to register, certify and track rough diamonds and the subsequent polished diamonds produced from that rough, should be made available to all non-

Russian producer countries, trading countries, manufacturing countries as well as consumer countries and allow legitimate and sovereign governments to certify the origin of their diamonds. This technology could easily be linked using the existing KP framework (Diamond Office) of those countries wishing to participate. Furthermore, the technology must be inclusive and accessible, and not destroy the trade in non- Russian diamonds.

Artisanal & small-scale miners must have free access to the technology and should be able to send their rough into any cutting centre. The diamond trade is an important livelihood for millions in the artisanal trade, and although informal, artisanal mining is legal and legitimate. Any restriction that isn’t accessible to this important sector of the industry will create room for exploitation and disproportionally impact the sector3.

We stand united against forcing all participants who wish to sell their polished diamonds in the G7 markets, to send their rough to Belgium first. As Diamond experts, we know that this would add no value to the objectives of the G7 member states and would result in a major restriction for all non-Russian diamonds, with terrible impacts on the industry. It would also force, a functioning trans-global trade into one centralised point that would create bottle necks in supply and give unwarranted power and advantage to one participant at the detriment of all others.

One must remember that the upcoming ban is on polished diamonds, the node in Belgium certifying rough diamonds, does nothing to comply with a polished ban. Manufacturing turnaround time of rough diamonds, from rough to polish and then to jewellery set with diamonds, takes on average 3-6 month. An advance notice of less than 6 month to start to implement a new regime (whatever it will be), means instant shut off many industrial processes in the diamond manufacturing pipeline in many countries around the world, bringing havoc to those whose livelihoods depend on the diamond trade.

The process detailed by the EU, as it stands, undermines Sovereign African Governments to send their diamonds directly to the market of their choosing. It also undermines legitimate local industry beneficiation and could encourage smuggling, which would be counterproductive.

Special attention must be given to protect restricted propriety trade information belonging to private companies, uploaded to the blockchain system.

There is no information on what happens to pre-existing stock – both rough & polished.

    • There is no information on second hand diamonds and jewellery.
    • There is no information on jewellery and watches.

Gem & Jewellery Export Promotion Council
World Federation of Diamond Bourses World Diamond Council
International Diamond Manufacturers Association

Disclaimer: This information has been collected through secondary research and TJM Media Pvt Ltd. is not responsible for any errors in the same.