Effective policing of the illicit diamond trade faces difficult challenges. The world diamond trade is large, diamonds are a highly fungible and concentrated form of wealth, and the legitimateinternational diamond industry is historically insular, self-regulating, and lacks transparency. Thetrade in conflict diamonds takes advantage of these factors. Observers have concluded that conflictdiamonds regularly enter into the legitimate international market through illicit trading practices andactors. (31) The illicit diamond trade, of whichconflict diamonds are part, is also difficult to regulatefor reasons similar to those that make illegal drugs and arms smuggling difficult to control. Illicitdiamond trading has been linked to covert and sometimes violent business transactions, and isreportedly associated with international criminal activities, such as money laundering, smuggling,commercial fraud, and arms trafficking. Trade in conflict diamonds, and regulatory proposals to end trade in such gems, are associated primarily with the rough diamond market. In 2001, world-wide diamond mine output, that is,production of rough diamonds, was estimated to be worth $7.885 billion, compared to $7.86 billionin 2000 and between $6.857 and $7.25 billion in 1999. (32) An industry trade group has reported thatworld exports of rough diamonds rose by 25.32% in carat terms and 20.8% in price in the first 8months of 2002. (33) In most years, more roughdiamonds -- a mix of new production plus pre-existinginventories -- are sold on world markets than are produced during a given year. In 2000, a total ofnearly $9 billion of rough diamonds was estimated to have come to market globally, of which $5.67billion was reportedly sold by the De Beers Diamond Trading Company (DTC, formerly called theCentral Selling Organization). (34) U.S. Diamond Imports and Trade. U.S. market demand for diamonds is the largest in the world, and the vast majority of diamonds sold in theUnited States are imported. The value of rough diamonds imported into the United States totaled$597.38 million in 2001, $815.96 million in 2000, and $754.6 million in 1999. The value of workedbut unmounted diamonds imported into the United States is exponentially larger than that of roughdiamonds, amounting to approximately $9.17 billion in 1999, $11.28 billion in 2000, and $10.06billion in 2001. (35) U.S. diamond imports bolster a large U.S. diamond retail jewelry market. Estimates of the total size of the jewelry market vary widely; one published source estimates that the total U.S. retailmarket for diamond jewelry was worth $11.71 billion in 2001 and $11.54 billion in 2000. The samesource estimated the aggregate market value for all U.S. retail jewelry sales as being worth $39.53billion in 2001 and $39.8 billion in 2000. (36) Othersources suggest that the U.S. jewelry market maybe smaller, worth an estimated $26 billion in 2000, an increase of about 6% over 1999, representingabout 48% of a global $57.5 diamond jewelry retail market in 2000, which had itself grown from anestimated $56 billion in 1999. (37) Conflict Diamonds in Global Diamond Markets. De Beers/DTC, a large diamond mining and marketing business group, estimated that conflictdiamonds comprised approximately 3.7% of world diamond production in 1999. (38) That figure wasoften rounded up to 4% in press reports. Other estimates, cited by human rights and natural resourceactivist groups, suggest that the conflict diamond trade might have comprised as much as 15% of theworld trade in recent years. Some analysts, however, dispute such figures, asserting that they includeillicitly traded diamonds that are not associated with the funding of conflict. Some press accounts in 2002 have continued to cite estimates that indicate that about 4% of diamonds are conflict diamonds, but such references do not appear to be based on new orindependently obtained and verifiable data. The current proportion of the world diamond marketcomprised of conflict-related stones is difficult to reliably estimate, but it may be smaller than it wasin 2000 or 2001. In an April 2002 presentation, Rory More O'Ferrall, Director Public & CorporateAffairs for the De Beers Group of Companies, stated that "conflict diamonds account for less than2% of world rough diamond production." (39) Thehypothesized decrease in the volume of trade inconflict diamonds may be attributable to the termination of wars in Angola and Sierra Leone,formerly two of the key sources of such gems. In addition, in the Democratic Republic of the Congo(DRC) an on-going war appears to be waning, and to the extent that this conflict was fueled bydiamond wealth, trade in conflict diamonds from the DRC may also be diminishing. Reliability of Conflict Diamond Statistics: Discussion. As previously noted, many aggregate diamond trade statistics aremerely approximations, based on assumptions about mining methods, rates of extraction, tradevolume trends, and other market factors. Some estimates take into account only official productionfigures, which ordinarily reflect state-reported or sales and production, and which may or may nottake into account -- or may erroneously estimate -- artisanal and unofficial production. (40) Estimatesof annual diamond production and trade value in countries where conflict diamonds are mined, inparticular, vary widely because credible or detailed data during periods and in sites of conflict areoften unavailable. The volumes and value of unreported or unofficial trade and production fromconflict-affected areas are particularly difficult to estimate, and as a proportion of such categoriesthat comprised of diamonds that directly fund military or associated activities is especially difficultto measure. Differentiating conflict diamonds from other types of illicitly-traded diamonds isextremely difficult; both varieties tend to be traded in a covert manner, and many of the same marketactors may engage in unofficial or illicit transactions involving both conflict and non-conflictdiamonds. (41) Conflict Diamonds as a Current Policy Challenge. Despite the paucity of current, independently verifiable data about the present extent of the conflictdiamond trade, advocates of diamond trade regulation maintain that regulatory efforts remainnecessary regardless of the current level of such trade. They stress that the regions that have beenaffected by diamond-related political unrest and conflict over the last decade remain volatile. Observers note that many of the same actors who were accused of being responsible for conflictsinvolving diamonds remain associated with diamond extraction and marketing operations. Inaddition, they note that diamonds continue to be the source of localized conflicts over control ofmining or trading rights. Advocates argue that bolstering states' ability to regulate the diamond trademay prevent future diamond-related conflict and, in addition, may enable countries to moreeffectively use their diamond wealth to fund national development efforts. Some industryrepresentatives broadly agree with such views. (42) Most proposals for curtailing the trade in conflict diamonds center around implementing systems to identify the origin of diamonds to ensure that diamonds sold by illicit sellers do not enterlegitimate international commerce. (43) Suchproposals provide the basis for laws and internationalactions, such as U.N. Security Council sanctions, that ban trade in conflict diamonds. Three primaryapproaches for determining the origin of diamonds have been proposed. (44) 1. Physical or "Geo-Chemical" Identification of Diamonds. Research on geo-chemical methods for identifying diamonds by typeor as individual units focuses on the comparative analysis of trace elements and impurities withindiamonds. Such information would be used to establish common characteristics of diamonds fromsimilar areas or to pinpoint unique characteristics, in a manner analogous to fingerprinting, ofindividual diamonds. This research employs plasma mass spectrometry and related technologies. A related approach for purposes of tracking is to classify diamonds by their place of origin, and possibly on an individual stone-specific basis, by correlating surface, crystalline, and otherstructure-related features of rough diamonds. Such identification would be based on visualassessments and on the use of spectral refraction methods or optical, laser, x-ray, and other scanningtechnologies. Geo-chemical and automated physical characteristic identification technologies have not yet been perfected, according to many experts, many of whom also assert that such technologies arelikely to remain prohibitively expensive in the short to medium term. Another limitation of suchtechnologies is that some of the physical characteristics upon which identification methods dependare permanently altered or destroyed when diamonds are cut or polished. A third challenge is thatalluvial (surface) diamonds are often carried far from their points of origin by water or movementsof geologic elements. This means, in many cases, that diamonds from a particular country or sub-region cannot bephysically differentiated from those found in neighboring countries or regions. 2. Tagging of Diamonds. This approach seeks to use laser and focused ion beam technologies to inscribe on individual diamonds identifyinginformation, such as microscopic bar codes, which can then be used to register and track stones.Several firms market such technology. Other firms offer technology that use laser scanningtechnologies to identify unique spectral features of individual, cut diamonds. The costs of taggingtechnology currently represent a barrier to their widespread use in diamond commerce, but expertopinion suggests that these prices may fall in the near to medium future. Critics point out that it maybe possible to cut off or otherwise physically alter or obliterate identifying marks that are cut ontodiamond surfaces. 3. Certificate of Origin Laws. This approach seeks to create a legally-binding chain of warranties from the point of mining origin to the countryof importation or, in some proposals, to the retail level.