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107TH CONGRESS

1ST SESSION S. 1084

To prohibit the importation into the United States of diamonds unless the

countries exporting the diamonds have in place a system of controls

on rough diamonds, and for other purposes.

IN THE SENATE OF THE UNITED STATES

JUNE 21, 2001

Mr. DURBIN (for himself, Mr. DEWINE, and Mr. FEINGOLD) introduced the

following bill; which was read twice and referred to the Committee on Finance

A BILL

To prohibit the importation into the United States of diamonds unless the countries exporting the diamonds have

in place a system of controls on rough diamonds, and

for other purposes.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Clean Diamonds Act’’.

5 SEC. 2. FINDINGS.

6 Congress finds the following:

7 (1) Diamonds are being used by rebels and dic8 tators to finance military activities, overthrow legiti-
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1 mate governments, subvert international efforts to

2 promote peace and stability, and commit horrifying

3 atrocities against unarmed civilians. During the past

4 decade, more than 6,500,000 people from Sierra

5 Leone, Angola, and the Democratic Republic of the

6 Congo have been driven from their homes by wars

7 waged in large part for control of diamond mining

8 areas. A million of these are refugees eking out a

9 miserable existence in neighboring countries, and

10 tens of thousands have fled to the United States.

11 Approximately 3,700,000 people have died during

12 these wars.

13 (2) The countries caught in this fighting are

14 home to nearly 70,000,000 people whose societies

15 have been torn apart not only by fighting but also

16 by terrible human rights violations.

17 (3) Human rights advocates, the diamond trade

18 as represented by the World Diamond Council, and

19 the United States Government recently began work20 ing to block the trade in conflict diamonds. Their ef21 forts have helped to build a consensus that action is

22 urgently needed to end the trade in conflict dia23 monds.

24 (4) The United Nations Security Council, act25 ing under chapter VII of the Charter of the United
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1 Nations, has prohibited all states from importing

2 diamonds from, and exporting weapons to, certain

3 countries affected by diamond-related conflicts. Un4 fortunately, diamond smugglers continue funding

5 rebel movements, which has led in turn to regional

6 destabilization, arms proliferation, and other activi7 ties which are a potential threat to the essential se8 curity interests of the United States, and the United

9 Nations sanctions have not been sufficiently effective

10 to achieve their goals. In order to put an end to this

11 emergency situation in international relations, to

12 maintain international peace and security, and to

13 protect its essential security interests, and pursuant

14 to its obligations under the United Nations Charter,

15 the United States must take action against this il16 licit trade and smuggling of conflict diamonds.

17 (5) Articles XX and XXI of GATT 1994 allow

18 WTO member countries to take measures to deal

19 with situations such as that presented by the current

20 trade in conflict diamonds without violating their

21 WTO obligations.

22 (6) Without effective action to eliminate trade

23 in conflict diamonds, the trade in legitimate dia24 monds faces the threat of a consumer backlash that

25 could damage the economies of countries not in-
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1 volved in the trade in conflict diamonds and penalize

2 members of the legitimate trade and the people they

3 employ. To prevent that, South Africa and more

4 than 20 other countries are involved in working,

5 through the ‘‘Kimberley Process’’, toward devising a

6 solution to this problem. As the consumer of a ma7 jority of the world’s supply of diamonds, the United

8 States has an obligation to help sever the link be9 tween diamonds and conflict and press for imple10 mentation of an effective solution.

11 SEC. 3. DEFINITIONS.

12 In this Act:

13 (1) DIAMONDS.—The term ‘‘diamonds’’ means

14 diamonds classified under subheading 7102.31.00 or

15 subheading 7102.39.00 of the Harmonized Tariff

16 Schedule of the United States.

17 (2) GATT 1994.—The term ‘‘GATT 1994’’

18 means the General Agreement on Tariffs and Trade

19 annexed to the WTO Agreement.

20 (3) POLISHED DIAMONDS.—The term ‘‘polished

21 diamonds’’ means diamonds that are classified under

22 subheading 7102.39.00 of the Harmonized Tariff

23 Schedule of the United States.

24 (4) ROUGH DIAMONDS.—The term ‘‘rough dia25 monds’’ means diamonds that are unworked, or sim-
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1 ply sawn, cleaved, or bruted, classified under sub2 heading 7102.3100 of the Harmonized Tariff Sched3 ule of the United States.

4 (5) UNITED STATES.—The term ‘‘United

5 States’’, when used in the geographic sense, means

6 the several States, the District of Columbia, and any

7 commonwealth, territory, or possession of the United

8 States.

9 (6) WTO AGREEMENT.—The term ‘‘WTO

10 Agreement’’ means the Agreement Establishing the

11 World Trade Organization entered into on April 15,

12 1994.

13 (7) WORLD TRADE ORGANIZATION AND WTO.—

14 The terms ‘‘World Trade Organization’’ and

15 ‘‘WTO’’ mean the organization established pursuant

16 to the WTO Agreement.

17 SEC. 4. REQUIREMENTS FOR THE IMPORTATION OF DIA18 MONDS.

19 (a) REQUIREMENTS.—

20 (1) ROUGH DIAMONDS.—Rough diamonds may

21 not be imported into the United States from a coun22 try unless the country exporting the rough diamonds

23 is implementing—

24 (A) a system of controls on the export

25 from, and import into, that country of rough
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1 diamonds that meets the requirements of para2 graph (2), consistent with United Nations Gen3 eral Assembly Resolution 55/56 adopted on De4 cember 1, 2000, or consistent with an inter5 national agreement which requires such controls

6 and to which the United States is a party; or

7 (B) a system of controls that the President

8 determines to be functionally equivalent to the

9 system of controls specified in subparagraph

10 (A).

11 (2) SYSTEM OF CONTROLS.—The system of

12 controls referred to in paragraph (1)(A) shall in13 clude the following requirements:

14 (A) Rough diamonds, when exported from

15 the country in which they were extracted, shall

16 be sealed in a secure, transparent container or

17 bag by appropriate government officials of that

18 country.

19 (B) The sealed container or bag described

20 in subparagraph (A) shall include a fully visible

21 document that—

22 (i) certifies the country from which

23 the rough diamonds were extracted;

24 (ii) records a unique export registra25 tion number for, and the total carat weight
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1 of, the rough diamonds in the container or

2 bag; and

3 (iii) is issued by the government of

4 that country.

5 (C) The country from whose territory the

6 rough diamonds are first exported shall main7 tain at least the information on exports of

8 rough diamonds described in subparagraph (B).

9 (D) Any country into whose territory the

10 rough diamonds are first imported prior to

11 polishing or other processing—

12 (i) shall permit importation of the

13 rough diamonds only in a container or bag

14 described in subparagraphs (A) and (B);

15 and

16 (ii) shall verify, on the basis of docu17 mentation provided to it by electronic or

18 other reliable means, the legitimacy of the

19 export document included in the sealed

20 container or bag in which the rough dia21 monds were shipped, using the information

22 maintained by the country of export.

23 (E) Appropriate government authorities of

24 countries that import rough diamonds shall

25 conduct reasonable physical inspections of a
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1 sampling of the sealed containers and bags of

2 rough diamonds to ensure compliance with the

3 requirements of this paragraph.

4 (3) POLISHED DIAMONDS.—Polished diamonds

5 may not be imported into the United States from a

6 country unless the country exporting the

7 diamonds—

8 (A) is implementing a system of controls

9 on the export from, and import into, that coun10 try of rough diamonds described in paragraph

11 (1), except that such system shall not be re12 quired for those countries that do not import

13 rough diamonds; and

14 (B) requires that its own imports of dia15 monds originate from countries that have imple16 mented a system of controls on the export and

17 import of rough diamonds described in para18 graph (1).

19 (4) JEWELRY CONTAINING DIAMONDS.—Jew20 elry containing diamonds may not be imported into

21 the United States from a country unless the country

22 exporting the jewelry—

23 (A) is implementing a system of controls

24 on the export and import of rough diamonds

25 described in paragraph (1), except that such
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1 system shall not be required for those countries

2 that do not import rough diamonds; and

3 (B) requires that its own imports of dia4 monds originate from countries that have imple5 mented a system of controls on the export and

6 import of rough diamonds described in para7 graph (1).

8 (5) EXCLUSIONS.—

9 (A) IN GENERAL.—The provisions of this

10 subsection do not apply to—

11 (i) jewelry containing diamonds im12 ported by or on behalf of a person for per13 sonal use and accompanying a person upon

14 entry into the United States; or

15 (ii) diamonds or jewelry containing

16 diamonds, previously exported from the

17 United States and reimported by the same

18 importer, without having been advanced in

19 value or improved in condition by any

20 process or other means while abroad, if the

21 importer declares that the reimportation of

22 the diamonds or jewelry, as the case may

23 be, satisfies the requirements of this

24 clause.
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1 (B) REGULATIONS.—The Secretary of the

2 Treasury is authorized to promulgate regula3 tions to ensure that the exclusions described in

4 subparagraph (A) do not become a means to

5 evade the requirements made by this section.

6 (b) MONITORING.—The President shall ensure that

7 any system of controls described in subsection (a)(1) is

8 monitored by appropriate agencies of the United States.

9 (c) PRESIDENTIAL ADVISORY COMMISSION.—

10 (1) PURPOSE.—The President shall appoint an

11 advisory commission the purpose of which shall be to

12 make recommendations to the President on the ef13 fectiveness of the monitoring system under sub14 section (b), and on ways to improve that monitoring

15 system.

16 (2) MEMBERSHIP.—The advisory commission

17 shall be composed of 9 members, 2 of whom shall be

18 representatives of private and voluntary organiza19 tions, and 2 of whom shall be representatives of the

20 diamond industry. The remaining members may be

21 appointed from appropriate agencies of the United

22 States and other interested parties.

23 SEC. 5. ENFORCEMENT.

24 (a) IN GENERAL.—Diamonds imported into the

25 United States in violation of section 4 are subject to sei-
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1 zure and forfeiture laws, and all criminal and civil laws

2 of the United States shall apply to the same extent as

3 any other violation of the customs and navigation laws of

4 the United States.

5 (b) PROHIBITING TRANSACTIONS IN CERTAIN PROP6 ERTY.—

7 (1) IN GENERAL.—The President may exercise

8 the authorities under the International Emergency

9 Economic Powers Act (50 U.S.C. 1701 et seq.) to

10 prohibit transactions involving any property de11 scribed in paragraph (2) or to prohibit any trans12 action by a person subject to the jurisdiction of the

13 United States with respect to such property.

14 (2) PROPERTY COVERED.—Property described

15 in this paragraph is property owned or controlled by

16 a person that exports diamonds to the United States

17 from a country that fails to meet the requirements

18 of section 4(a).

19 (3) PENALTIES.—The penalties provided in sec20 tion 206 of the International Emergency Economic

21 Powers Act shall apply to violations of licenses, or22 ders, or regulations issued under this subsection to

23 the same extent as such penalties apply with respect

24 to violations under that Act.
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1 (c) PROCEEDS FROM FINES AND FORFEITED

2 GOODS.—Notwithstanding any other provision of law, the

3 proceeds derived from fines imposed for violations of sec4 tion 4(a), and from the seizure and forfeiture of goods

5 imported in violation of section 4(a), shall, in addition to

6 amounts otherwise available for such purposes, be avail7 able only for—

8 (1) the Leahy War Victims Fund administered

9 by the United States Agency for International De10 velopment or any successor program to assist victims

11 of foreign wars; and

12 (2) grants under section 131 of the Foreign As13 sistance Act of 1961 (22 U.S.C. 2152a).

14 SEC. 6. LIMITATIONS ON OPIC AND EXPORT-IMPORT BANK.

15 (a) OPIC.—The Overseas Private Investment Cor16 poration may not insure, reinsure, guarantee, or finance

17 any investment in connection with a project involving the

18 mining, polishing or other processing, or sale of diamonds

19 in a country that fails to meet the requirements of section

20 4(a).

21 (b) EXPORT-IMPORT BANK.—The Export-Import

22 Bank of the United States may not guarantee, insure, ex23 tend credit, or participate in an extension of credit in con24 nection with the export of any goods to a country for use

25 in an enterprise involving the mining, polishing or other
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1 processing, or sale of diamonds in a country that fails to

2 meet the requirements of section 4(a).

3 SEC. 7. WAIVER AUTHORITY.

4 (a) WAIVER AUTHORITY.—The President may at any

5 time waive the applicability of this Act with respect to a

6 country for a period of not more than 6 months if the

7 President, before granting the waiver—

8 (1) determines that the country is cooperating

9 because the country—

10 (A) is making significant progress toward

11 concluding an international agreement such as

12 the one described in section 12; or

13 (B) is acting in good faith to establish and

14 enforce a unilateral certification system con15 taining the requirements described in section

16 4(a); and

17 (2) transmits that determination, with the rea18 sons therefor, to Congress.

19 (b) EVALUATION CRITERIA.—Not later than 180

20 days after the date of enactment of this Act, the Presi21 dent, in consultation with the heads of appropriate Fed22 eral agencies, shall develop and publish criteria that will

23 be used to evaluate whether or not a country is a cooper24 ating country for purposes of subsection (a). Before adopt25 ing such criteria in final form, the President shall provide
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1 for public notice and a period for public comment on the

2 criteria.

3 SEC. 8. ANNUAL REPORTS.

4 Not later than 6 months after the date of the enact5 ment of this Act, and not later than September 30 of each

6 subsequent calendar year, the President shall transmit to

7 Congress a report—

8 (1) describing and evaluating the effectiveness

9 of any system of controls on trade in diamonds de10 scribed in section 4(a)(1);

11 (2) identifying those countries that are imple12 menting those controls;

13 (3) identifying those countries that are not im14 plementing those controls, and describing the effects

15 of that failure on the trade in diamonds used to sup16 port conflict in the country or regions in which the

17 diamonds are extracted; and

18 (4) describing in detail technological develop19 ments that allow—

20 (A) the determination of where a diamond

21 was mined; and

22 (B) the marking and tracking of rough

23 and polished diamonds.
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1 SEC. 9. GAO REPORT.

2 Not later than 3 years after the date of enactment

3 of this Act, the Comptroller General of the United States

4 shall transmit a report to Congress on the effectiveness

5 of the provisions of this Act in preventing the importation

6 of diamonds traded in violation of any system of controls

7 described in section 4(a)(1). The Comptroller General

8 shall include in the report any recommendations on any

9 modifications to this Act that may be necessary.

10 SEC. 10. STATUTORY CONSTRUCTION.

11 This Act may not be construed to apply to restric12 tions on the importation of diamonds in effect on its date

13 of enactment or to diminish the authority of the President

14 under the International Emergency Economic Powers Act

15 or any other Act to impose restrictions on the importation

16 of diamonds after such date.

17 SEC. 11. CONSISTENCY OF ACTIONS UNDER THIS ACT WITH

18 THE WTO.

19 (a) STATUTORY CONSTRUCTION.—Nothing in this

20 Act requires the Secretary of the Treasury or the Commis21 sioner of Customs to take any action that would be a viola22 tion of United States obligations under the agreements of

23 the World Trade Organization (WTO), as determined in

24 a WTO dispute settlement proceeding.

25 (b) SENSE OF CONGRESS.—It is the sense of Con26 gress that, in the event there is a determination in a WTO
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1 dispute settlement proceeding that this Act, any part of

2 this Act, or any action taken under this Act is inconsistent

3 with United States obligations under the WTO, the United

4 States will take such steps as are necessary to bring itself

5 into conformity with its WTO obligations.

6 SEC. 12. SENSE OF CONGRESS ON NEGOTIATION OF AN

7 INTERNATIONAL AGREEMENT.

8 It is the sense of Congress that the President should

9 take the necessary steps to negotiate an international

10 agreement, working in concert with the Kimberley Process

11 referred to in section 2(6), to eliminate the trade in dia12 monds used to support conflict in the country or regions

13 in which the diamonds are extracted. Such an agreement

14 should create an effective global certification system cov15 ering diamond exporting and importing countries, and

16 should include—

17 (1) the requirements described in section 4(a);

18 (2) a requirement that any country from whose

19 territory rough diamonds are exported publish an20 nual reports disclosing the names of all entities and

21 individuals who hold mining concessions, licenses to

22 purchase rough diamonds, and licenses to export

23 rough diamonds, as well as the volume and value of

24 such diamonds exported categorized by country of

25 importation; and
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1 (3) a requirement that any country into whose

2 territory rough diamonds are imported publish an3 nual reports disclosing the source by country of ex4 portation of its diamond imports as well as the vol5 ume and value of such diamonds for each such coun6 try of exportation.

7 SEC. 13. SENSE OF CONGRESS ON IMPLEMENTATION OF

8 THE SYSTEM OF CONTROLS.

9 It is the sense of Congress that companies involved

10 in diamond extraction and trade should make financial

11 contributions to countries seeking to implement any sys12 tem of controls described in section 4(a)(1), if those coun13 tries would have financial difficulty implementing that sys14 tem of controls.

15 SEC. 14. AUTHORIZATION OF APPROPRIATIONS.

16 There is authorized to be appropriated to the Presi17 dent $5,000,000 for fiscal year 2002 to provide assistance

18 to countries seeking to implement any system of controls

19 described in section 4(a)(1), if those countries would have

20 financial difficulty implementing that system of controls.

21 SEC. 15. EFFECTIVE DATE.

22 This Act shall take effect 6 months after its date of

23 enactment.

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