A joint committee of both organizations has been formed in order to ensure rapid implementation of the above.

As we envisage it, each time rough diamonds leave a producer or rough trading center, those rough diamonds would be sealed in a standardized manner by an authority accredited by the international diamond council. This is the only means by which those diamonds could be imported into the next country.

We understand that it is the nature of the diamond business and directly related to the profitability of mines and the efficient manufacturing processes currently employed, that rough diamonds of various origins and qualities are mixed together into "saleable" parcels. Therefore, our system allows for the mixture of such parcels by requiring their further export and import from any mixing or dealing center to be subject once again to sealing and documentation.

Key to the whole process is monitoring and keeping accounts of the data flows. In particular, it is essential to be able to verify and see that one country's exports to another are matched by the country's official imports from the exporting country. All accounts should, ultimately, balance. The establishment of the International Diamond Council is crucial to this process in that the International Diamond Council would be required to balance all imports and exports and accredit importing and exporting authorities in each country.

Just as importantly, it is undoubtedly correct to assume that a certain degree of deliberate noncompliance may occur. The International Diamond Council would be required to remove export accreditation from producer countries where rough exports are known to exceed production capacity or verified official imports.

By the same taken, the International Diamond Council would be able to remove the accreditation of countries to import diamonds if it was found that those countries were allowing the import of non-verifiable rough.

We believe that funding for our proposals can be achieved through charging a minimal levy, both on the import and export of rough diamonds. Undoubtedly, effectiveness of the system can be improved over time. However, we believe that we will immediately close off all the legal loopholes by which conflict diamonds may currently be entering the trade. This will make the task of relevant customs and criminal authorities far easier in terms of identifying and prosecuting perpetrators. In particular, if all legitimate rough diamonds are knowingly "declared", the four percent of conflict rough diamonds will be impossible for those few companies trading in them to hide.

As a final note, we do not claim that this is an immediately perfect system or that improvements cannot be made. However, we believe that these are practically implementable measures, that they will be highly effective in terms of the current status quo and that they can be relatively rapidly implemented without precluding any further additions.

Most significantly, we believe that our proposals will see immediate results and that they are non-destructive to the legitimate industry and producer countries. In fact they stand to enhance the legitimate trade. By adopting a code of conduct, consumer choice can be made into a positive enhancement of the diamond industry, without the necessity of negative imagery.

STATEMENT OF ALEX YEARSLEY, CAMPAIGNER, GLOBAL WITNESS, LONDON, ENGLAND

Mr. YEARSLEY. Good morning, Chairman Crane and members of the committee that are still left here. My name is Alex Yearsley and I am a campaigner for Global Witness. I am pleased to appear at this meeting and I thank you for holding it. Global Witness are a British-based non-governmental organization that focuses on the links between environmental and human rights abuses, especially the impacts of natural resource exploitation upon countries and their people.

In late 1996, Global Witness began to look at the role of diamonds in funding the tragic conflicts in Angola. In December 1998, we published our first report on conflict diamonds called, “A Rough Trade: The Role of Governments and Companies in the Angolan Conflict." In June of this year, we published our second report, simply entitled, "Conflict Diamonds: Possibilities for the Identification, Certification, and Control of Diamonds."

Since late 1996, my colleague and I, Ms. Charmian Gooch, have traveled extensively to the diamond producing and marketing countries of Angola, Botswana, Belgium, Sierra Leone, South Africa, Namibia, Israel, India, and the United States in order to see whether a solution is possible to the curse of conflict diamonds. As a result of this work and due to the extensive contact we have had with many of the companies, trade associations, government officials, and individuals in the diamond industry, we believe that, indeed, a solution that is practical, implementable, WTO compatible, and that will not damage the legitimate trade but will protect it is entirely feasible.

Four months ago, my colleague, Ms. Charmian Gooch, gave evidence at a Congressional hearing on the issue of conflict diamonds. Today, 127 days later, are we any closer to a solution? Whilst we wish that a system could have been imposed many years ago, I believe that we are looking at the possible solutions to this deadly trade. I think it is fair to say that we have come a long way in a very short time. This, I believe, is testimony to the gravity of the situation and some of the expert work carried out by government, industry, and civil society individuals.

However, currently as I speak, the diamond trade as a unified whole has failed to put recognizable or verifiable controls or certification in place that can reliably attach conflict-free status to diamonds. However, since late 1998, there has been a shift in world opinion on the issue of conflict diamonds which in itself is a new term. No longer is the soaking up of open market goods from areas of conflict deemed to be an inevitable consequence of the need to stabilize the world price of diamonds. Governments have ceased to accept this as an argument for non-interference, as, and probably more importantly, have consumers.

The majority of the proposals I am about to suggest are ideas that are consistent with the suggestions of the Kimberley Working Group, of which Global Witness is a member. The problem that these proposals aim to address is that of illicitly traded rough diamonds being used to finance weapons purchases and fuel wars in Africa. This problem can only be addressed by all the relevant stakeholders in the diamond producing, processing, and consuming

nations and all segments of the diamond industry working together to curb the trade in conflict diamonds whilst avoiding harm to the legitimate trade.

However, it is important to remember, though, that no system will be 100 percent watertight, and with a commodity as valuable and as fungible as diamonds, determined individuals will always manage to get through. However, what the system will do is prevent the horrors of the 1990s, when companies such as DeBeers were able to buy up several hundred million dollars worth of rough diamonds that originated from the diamond mines under the control of the UNITA rebels in Angola on the markets of Tel Aviv, Antwerp, London, and New York.

Possible solutions: The only solution to have been so far identified that is currently both practical and implementable is the creation of an international certification system for all rough diamonds. There are, indeed, many potential technological solutions, such as laser marking. However, these are currently not financially viable or practical to implement. However, I would urge this committee to consider the funding of continued research in this field. Much thought and deliberation has gone into how this system could work, most notably by the Kimberley Working Group. The general consensus reached by the group regarding the creation and implementation of an international system has been explained. Information contained on the certificates would build upon existing national systems currently in place and should certainly not water down any existing national systems. However, as a basic international standard which needs to be agreed to under best principles, the certificate should contain a minimum of the following information relating to the diamond shipment: The total caratage of diamonds, the aggregate value of the diamonds, and the country of origin, country of origin meaning extraction.

Global Witness believes that it is necessary to go several stages beyond the certification scheme and that more specific requirements are needed for countries where diamonds are mined, commercially traded, manufactured, and reexported.

Whilst no one within Global Witness professes to be an expert in international trade law or the WTO, we have carried out some basic research into this important question. If, as is expected and hoped, the recommendations of the Pretoria ministerial meeting goes through United Nations General Assembly vote to ratification into a global treaty, then there should be no problems with WTO compatibility and, hence, will be free from any significant challenges.

However, in conclusion, there are still some countries and individuals that believe a sledgehammer is being used to crack a nut. Nothing could be further from the truth. Those with personal vested interests argue that an international system will be restrictive of trade and will impact upon the small miner. Again, nothing could be further from the truth. All that will happen is that the great majority of illicit smugglers and those that benefit will be caught.

Whilst not wanting to end on a pessimistic note, I think it would be folly not to raise this issue here. There are many in the press and the diamond trade who believe that a diamond boycott is fast