To prohibit the importation of diamonds unless the countries exporting the diamonds into the United States have in place a system of controls on rough diamonds, and for other purposes.

Summary: Clean Diamonds Act - Prohibits the import of diamonds into the United States unless the exporting country is implementing a system of controls on the export or import of rough diamonds that meets specified requirements, consistent with United Nations General Assembly Resolution 55/56 adopted on December 1, 2000, or a future international agreement which implements such controls and to which the United States is a signatory. Sets forth both civil and criminal penalties for violations of the requirements of this Act.Prohibits the Overseas Private Investment Corporation and the Export-Import Bank from engaging in certain transactions in connection with projects or exports to countries violating the requirements of this Act.Expresses the sense of Congress that the President should take steps to negotiate an international agreement to eliminate the trade in diamonds used to support conflict in the country or regions in which such diamonds are mined.Provides a waiver for the requirements of this Act.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Clean Diamonds Act''.

SEC. 2. FINDINGS.

    Congress finds the following:
            (1) Diamonds are being used by rebels and dictators to 
        finance military activities, overthrow legitimate governments, 
        subvert international efforts to promote peace and stability, 
        and commit horrifying atrocities against unarmed civilians. 
        During the past decade, more than 6,500,000 people from Sierra 
        Leone, Angola, and the Democratic Republic of the Congo have 
        been driven from their homes by wars waged in large part for 
        control of diamond mining areas. A million of these are 
        refugees eking out a miserable existence in neighboring 
        countries, and tens of thousands have fled to the United 
        States. Approximately 2,400,000 people have died in the 
        fighting.
            (2) The countries caught in this fighting are home to 
        nearly 70,000,000 people whose societies have been torn apart 
        not only by fighting, but by the thousands of children forced 
        to become soldiers, by the tens of thousands of women and girls 
        raped and forced into sexual slavery, and by a campaign of 
        forced amputations that has maimed and killed even more men, 
        women, and children.
            (3) In the past decade, the United States Government has 
        sent more than $2,000,000,000 in humanitarian aid to the people 
        caught up in the wars. Over the same period, approximately 
        $10,000,000,000 in diamonds were smuggled out of these same 
        countries. Much of this money was used to continue and spread 
        the wars.
            (4) The United States Government and human rights advocates 
        recently began working to block the trade in conflict diamonds. 
        Their efforts have helped to build a consensus that action is 
        urgently needed, and they have persuaded the legitimate diamond 
        industry that its own interests demand a comprehensive effort 
        to end the diamond smuggling that fuels these conflicts.
            (5) The United Nations Security Council, acting under 
        chapter VII of the Charter of the United Nations, has 
        prohibited all states from importing diamonds from, and 
        exporting weapons to, certain countries affected by diamond-
        related conflicts. Unfortunately, diamond smugglers continue 
        funding rebel movements, and the sanctions have not been 
        sufficiently effective to achieve their goals. In turn, this 
        illicit trade has facilitated trade in narcotics, arms 
        proliferation, regional destabilization, money laundering, and 
        other criminal enterprises. This has severely hampered efforts 
        by the United States to safeguard its citizens from drugs, 
        terrorism, and other threats to the security of the American 
        people.
            (6) Without effective action to prohibit trade in conflict 
        diamonds, the trade in legitimate diamonds faces the threat of 
        a consumer backlash that could damage the economies of 
        countries not involved in the trade in conflict diamonds and 
        penalize members of the legitimate trade and the people they 
        employ. To prevent that, South Africa and more than 20 other 
        countries are involved in working, through the ``Kimberley 
        Process'', toward devising a solution to this problem. As the 
        consumer of two-thirds of the world's supply of diamonds, the 
        United States has an obligation to help sever the link between 
        diamonds and conflict and press for implementation of an 
        effective solution.

SEC. 3. RESTRICTIONS ON IMPORTATION OF DIAMONDS.

    (a) Restrictions.--
            (1) Requirements for imported diamonds.--Diamonds may not 
        be imported into the United States unless the country exporting 
        the diamonds to the United States is implementing a system of 
        controls on the export and import of rough diamonds that meets 
        the requirements of paragraph (2), consistent with United 
        Nations General Assembly Resolution 55/56 adopted on December 
        1, 2000, or a future international agreement which implements 
        such controls and to which the United States is a signatory.
            (2) Requirements for system of controls.--The system of 
        controls referred to in paragraph (1) shall include the 
        following:
                    (A) Rough diamonds, when exported from the country 
                in which they were extracted, shall be sealed in a 
                secure, transparent container or bag by appropriate 
                government officials of that country.
                    (B) The sealed container or bag described in 
                subparagraph (A) shall include a fully visible document 
                that--
                            (i) certifies the country from which the 
                        rough diamonds were extracted;
                            (ii) records a unique export registration 
                        number for, and the total carat weight and 
                        number of, the rough diamonds in the container 
                        or bag; and
                            (iii) is issued by the government of that 
                        country.
                    (C) The country from whose territory the rough 
                diamonds are exported shall establish a database 
containing at least the information on exports of rough diamonds 
described in subparagraph (B).
                    (D) Any country into whose territory the rough 
                diamonds are first imported prior to polishing or other 
                processing--
                            (i) shall permit importation of the rough 
                        diamonds only in a container or bag described 
                        in subparagraphs (A) and (B); and
                            (ii) can verify, on the basis of 
                        documentation provided to it by electronic or 
                        other reliable means, the legitimacy of the 
                        export document included in the sealed 
                        container or bag in which the rough diamonds 
                        were shipped, using the database maintained in 
                        the country of export.
                    (E) Appropriate government authorities shall 
                conduct physical inspections of the sealed containers 
                and bags of rough diamonds to ensure compliance with 
                the requirements of this paragraph.
    (b) Monitoring.--The President shall ensure that the system of 
controls described in subsection (a) is monitored by appropriate 
agencies of the United States.
    (c) Presidential Advisory Commission.--
            (1) Purposes.--The President shall appoint an advisory 
        commission, the purposes of which shall be--
                    (A) to make recommendations to the President on the 
                effectiveness of the monitoring under subsection (b), 
                and on ways to improve such monitoring; and
                    (B) to develop a labeling system, that could be 
                used by diamond and jewelry vendors, that would certify 
                to consumers that a diamond imported into the United 
                States has been subject to a system of controls on 
                rough diamonds described in subsection (a).
            (2) Membership.--The advisory commission shall be composed 
        of 11 members, 3 of whom shall be representatives of private 
        voluntary organizations, and 2 of whom shall be representatives 
        of the diamond industry. The remaining members may be appointed 
        from appropriate agencies of the United States and other 
        interested parties.

SEC. 4. PENALTIES.

    (a) In General.--Violations of section 3 are subject to civil and 
criminal penalties under the laws of the United States to the same 
extent as any other violation of the customs laws of the United States.
    (b) Blocking Assets and Prohibiting Transactions.--The President 
may exercise the authorities he has under the International Economic 
Powers Act (50 U.S.C. 1701 et seq.), without regard to section 202 of 
that Act, to block, and prohibit transactions in, property owned or 
controlled by any person who exports diamonds to the United States from 
a country that fails to meet the requirements of section 3(a) of this 
Act. The penalties provided in section 206 of the International 
Economic Powers Act shall apply to violations of licenses, orders, or 
regulations issued under this subsection to the same extent as such 
penalties apply with respect to violations under that Act.
    (c) Proceeds From Fines and Forfeited Goods.--The proceeds derived 
from fines imposed for violations of section 3(a), and from the seizure 
and forfeiture of goods imported in violation of section 3(a), shall, 
in addition to amounts otherwise available for such purposes, be 
available only for--
            (1) the War Victims Fund administered by the Agency for 
        International Development or any successor program to assist 
        victims of foreign wars; and
            (2) grants under section 131 of the Foreign Assistance Act 
        of 1961 (22 U.S.C. 2152a).

SEC. 5. RESTRICTIONS ON OPIC AND EXPORT-IMPORT BANK.

    (a) OPIC.--The Overseas Private Investment Corporation may not 
insure, reinsure, guarantee, or finance any investment in connection 
with a project involving the mining, polishing or other processing, or 
sale of diamonds in a country that fails to meet the requirements of 
section 3(a).
    (b) Export-Import Bank.--The Export-Import Bank of the United 
States may not guarantee, insure, extend credit, or participate in an 
extension of credit in connection with the export of any goods to a 
country for use in an enterprise involving the mining, polishing or 
other processing, or sale of diamonds in a country that fails to meet 
the requirements of section 3(a).

SEC. 6. ANNUAL REPORT.

    The President shall transmit to the Congress, not later than 6 
months after the date of the enactment of this Act, and not later than 
September 30 of each subsequent calendar year, a report--
            (1) describing and evaluating the effectiveness of the 
        system of controls on trade in diamonds described in section 
        3(a);
            (2) identifying those countries that are implementing those 
        controls;
            (3) identifying those countries that are not implementing 
        those controls, and describing the effects of that failure on 
        the trade in diamonds used to support conflict in the country 
        or regions in which the diamonds are extracted; and
            (4) describing in detail technological developments that 
        allow--
                    (A) the determination of where a diamond was mined; 
                and
                    (B) the marking and tracking of rough and polished 
                diamonds.

SEC. 7. GAO REPORT.

    Not later than 3 years after the date of the enactment of this Act, 
the Comptroller General of the United States shall report to the 
Congress on the effectiveness of the provisions of this Act in 
preventing the importation of diamonds traded in violation of the 
system of controls described in section 3(a). The Comptroller General 
shall include in the report any recommendations on any modifications to 
this Act that may be necessary.

SEC. 8. NEGOTIATION OF INTERNATIONAL AGREEMENT.

    It is the sense of the Congress that the President should take the 
necessary steps to negotiate an international agreement, working in 
concert with the Kimberley Process referred to in section 2(6), to 
eliminate the trade in diamonds used to support conflict in the country 
or regions in which the diamonds are extracted. Such an agreement 
should create an effective global certification system covering diamond 
exporting and importing countries, and should include those elements 
described in section 3(a)(2).

SEC. 9. DEFINITIONS.

    In this Act:
            (1) Diamonds.--The term ``diamonds'' includes any diamonds 
        or diamond jewelry, classified under heading 7102 or 7113 of 
        the Harmonized Tariff Schedule of the United States, other than 
        diamond jewelry not exceeding $25,000 in value imported by or 
        on account of a person for personal use and accompanying that 
        person upon entry into the United States.
            (2) Rough diamonds.--The term ``rough diamonds'' means 
        diamonds that are unworked, or simply sawn, cleaved, or bruted, 
        classified under heading 7102 of the Harmonized Tariff Schedule 
        of the United States.
            (3) United states.--The term ``United States'', when used 
        in the geographic sense, means the several States, the District 
        of Columbia, and any commonwealth, territory, or possession of 
        the United States.

SEC. 10. EFFECTIVE DATE AND WAIVERS.

    (a) In General.--Except as provided in subsection (b), this Act 
shall take effect on the date that is 6 months after the date of the 
enactment of this Act.
    (b) Waiver Authority.--The President may waive the applicability of 
this Act with respect to a country for a period of not more than 6 
months if the President, before granting the waiver--
            (1) determines that the country is making significant 
        progress toward concluding an international agreement described 
        in section 8 or is implementing the system of controls on the 
        export and import of rough diamonds described in section 3(a); 
        and
            (2) transmits that determination, with the reasons 
        therefor, to the Congress.