S 1084 IS

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.

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

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.

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

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 3,700,000 people have died during these wars.

(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 also by terrible human rights violations.

(3) Human rights advocates, the diamond trade as represented by the World Diamond Council, and the United States Government recently began working to block the trade in conflict diamonds. Their efforts have helped to build a consensus that action is urgently needed to end the trade in conflict diamonds.

(4) 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, which has led in turn to regional destabilization, arms proliferation, and other activities which are a potential threat to the essential security interests of the United States, and the United Nations sanctions have not been sufficiently effective to achieve their goals. In order to put an end to this emergency situation in international relations, to maintain international peace and security, and to protect its essential security interests, and pursuant to its obligations under the United Nations Charter, the United States must take action against this illicit trade and smuggling of conflict diamonds.

(5) Articles XX and XXI of GATT 1994 allow WTO member countries to take measures to deal with situations such as that presented by the current trade in conflict diamonds without violating their WTO obligations.

(6) Without effective action to eliminate 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 a majority 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. DEFINITIONS.

In this Act:

(1) DIAMONDS- The term `diamonds' means diamonds classified under subheading 7102.31.00 or subheading 7102.39.00 of the Harmonized Tariff Schedule of the United States.

(2) GATT 1994- The term `GATT 1994' means the General Agreement on Tariffs and Trade annexed to the WTO Agreement.

(3) POLISHED DIAMONDS- The term `polished diamonds' means diamonds that are classified under subheading 7102.39.00 of the Harmonized Tariff Schedule of the United States.

(4) ROUGH DIAMONDS- The term `rough diamonds' means diamonds that are unworked, or simply sawn, cleaved, or bruted, classified under subheading 7102.3100 of the Harmonized Tariff Schedule of the United States.

(5) 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.

(6) WTO AGREEMENT- The term `WTO Agreement' means the Agreement Establishing the World Trade Organization entered into on April 15, 1994.

(7) WORLD TRADE ORGANIZATION AND WTO- The terms `World Trade Organization' and `WTO' mean the organization established pursuant to the WTO Agreement.

SEC. 4. REQUIREMENTS FOR THE IMPORTATION OF DIAMONDS.

(a) REQUIREMENTS-

(1) ROUGH DIAMONDS- Rough diamonds may not be imported into the United States from a country unless the country exporting the rough diamonds is implementing--

(A) a system of controls on the export from, and import into, that country 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 consistent with an international agreement which requires such controls and to which the United States is a party; or

(B) a system of controls that the President determines to be functionally equivalent to the system of controls specified in subparagraph (A).

(2) SYSTEM OF CONTROLS- The system of controls referred to in paragraph (1)(A) shall include the following requirements:

(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 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 first exported shall maintain 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) shall 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 information maintained by the country of export.

(E) Appropriate government authorities of countries that import rough diamonds shall conduct reasonable physical inspections of a sampling of the sealed containers and bags of rough diamonds to ensure compliance with the requirements of this paragraph.

(3) POLISHED DIAMONDS- Polished diamonds may not be imported into the United States from a country unless the country exporting the diamonds--

(A) is implementing a system of controls on the export from, and import into, that country of rough diamonds described in paragraph (1), except that such

system shall not be required for those countries that do not import rough diamonds; and

(B) requires that its own imports of diamonds originate from countries that have implemented a system of controls on the export and import of rough diamonds described in paragraph (1).

(4) JEWELRY CONTAINING DIAMONDS- Jewelry containing diamonds may not be imported into the United States from a country unless the country exporting the jewelry--

(A) is implementing a system of controls on the export and import of rough diamonds described in paragraph (1), except that such system shall not be required for those countries that do not import rough diamonds; and

(B) requires that its own imports of diamonds originate from countries that have implemented a system of controls on the export and import of rough diamonds described in paragraph (1).

(5) EXCLUSIONS-

(A) IN GENERAL- The provisions of this subsection do not apply to--

(i) jewelry containing diamonds imported by or on behalf of a person for personal use and accompanying a person upon entry into the United States; or

(ii) diamonds or jewelry containing diamonds, previously exported from the United States and reimported by the same importer, without having been advanced in value or improved in condition by any process or other means while abroad, if the importer declares that the reimportation of the diamonds or jewelry, as the case may be, satisfies the requirements of this clause.

(B) REGULATIONS- The Secretary of the Treasury is authorized to promulgate regulations to ensure that the exclusions described in subparagraph (A) do not become a means to evade the requirements made by this section.

(b) MONITORING- The President shall ensure that any system of controls described in subsection (a)(1) is monitored by appropriate agencies of the United States.

(c) PRESIDENTIAL ADVISORY COMMISSION-

(1) PURPOSE- The President shall appoint an advisory commission the purpose of which shall be to make recommendations to the President on the effectiveness of the monitoring system under subsection (b), and on ways to improve that monitoring system.

(2) MEMBERSHIP- The advisory commission shall be composed of 9 members, 2 of whom shall be representatives of private and 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. 5. ENFORCEMENT.

(a) IN GENERAL- Diamonds imported into the United States in violation of section 4 are subject to seizure and forfeiture laws, and all criminal and civil laws of the United States shall apply to the same extent as any other violation of the customs and navigation laws of the United States.

(b) PROHIBITING TRANSACTIONS IN CERTAIN PROPERTY-

(1) IN GENERAL- The President may exercise the authorities under the International Emergency Economic Powers Act (50 U.S.C. 1701 et seq.) to prohibit transactions involving any property described in paragraph (2) or to prohibit any transaction by a person subject to the jurisdiction of the United States with respect to such property.

(2) PROPERTY COVERED- Property described in this paragraph is property owned or controlled by a person that exports diamonds to the United States from a country that fails to meet the requirements of section 4(a).

(3) PENALTIES- The penalties provided in section 206 of the International Emergency 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- Notwithstanding any other provision of law, the proceeds derived from fines imposed for violations of section 4(a), and from the seizure and forfeiture of goods imported in violation of section 4(a), shall, in addition to amounts otherwise available for such purposes, be available only for--

(1) the Leahy War Victims Fund administered by the United States 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. 6. LIMITATIONS 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 4(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 4(a).

SEC. 7. WAIVER AUTHORITY.

(a) WAIVER AUTHORITY- The President may at any time 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 cooperating because the country--

(A) is making significant progress toward concluding an international agreement such as the one described in section 12; or

(B) is acting in good faith to establish and enforce a unilateral certification system containing the requirements described in section 4(a); and

(2) transmits that determination, with the reasons therefor, to Congress.

(b) EVALUATION CRITERIA- Not later than 180 days after the date of enactment of this Act, the President, in consultation with the heads of appropriate Federal agencies, shall develop and publish criteria that will be used to evaluate whether or not a country is a cooperating country for purposes of subsection (a). Before adopting such criteria in final form, the President shall provide

for public notice and a period for public comment on the criteria.

SEC. 8. ANNUAL REPORTS.

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, the President shall transmit to Congress a report--

(1) describing and evaluating the effectiveness of any system of controls on trade in diamonds described in section 4(a)(1);

(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. 9. GAO REPORT.

Not later than 3 years after the date of enactment of this Act, the Comptroller General of the United States shall transmit a report to Congress on the effectiveness of the provisions of this Act in preventing the importation of diamonds traded in violation of any system of controls described in section 4(a)(1). The Comptroller General shall include in the report any recommendations on any modifications to this Act that may be necessary.

SEC. 10. STATUTORY CONSTRUCTION.

This Act may not be construed to apply to restrictions on the importation of diamonds in effect on its date of enactment or to diminish the authority of the President under the International Emergency Economic Powers Act or any other Act to impose restrictions on the importation of diamonds after such date.

SEC. 11. CONSISTENCY OF ACTIONS UNDER THIS ACT WITH THE WTO.

(a) STATUTORY CONSTRUCTION- Nothing in this Act requires the Secretary of the Treasury or the Commissioner of Customs to take any action that would be a violation of United States obligations under the agreements of the World Trade Organization (WTO), as determined in a WTO dispute settlement proceeding.

(b) SENSE OF CONGRESS- It is the sense of Congress that, in the event there is a determination in a WTO dispute settlement proceeding that this Act, any part of this Act, or any action taken under this Act is inconsistent with United States obligations under the WTO, the United States will take such steps as are necessary to bring itself into conformity with its WTO obligations.

SEC. 12. SENSE OF CONGRESS ON NEGOTIATION OF AN INTERNATIONAL AGREEMENT.

It is the sense of 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--

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

(2) a requirement that any country from whose territory rough diamonds are exported publish annual reports disclosing the names of all entities and individuals who hold mining concessions, licenses to purchase rough diamonds, and licenses to export rough diamonds, as well as the volume and value of such diamonds exported categorized by country of importation; and

(3) a requirement that any country into whose territory rough diamonds are imported publish annual reports disclosing the source by country of exportation of its diamond imports as well as the volume and value of such diamonds for each such country of exportation.

SEC. 13. SENSE OF CONGRESS ON IMPLEMENTATION OF THE SYSTEM OF CONTROLS.

It is the sense of Congress that companies involved in diamond extraction and trade should make financial contributions to countries seeking to implement any system of controls described in section 4(a)(1), if those countries would have financial difficulty implementing that system of controls.

SEC. 14. AUTHORIZATION OF APPROPRIATIONS.

There is authorized to be appropriated to the President $5,000,000 for fiscal year 2002 to provide assistance to countries seeking to implement any system of controls described in section 4(a)(1), if those countries would have financial difficulty implementing that system of controls.

SEC. 15. EFFECTIVE DATE.

This Act shall take effect 6 months after its date of enactment.

END