Thursday, July 11, 2024

Amid Global Diamond Trade Disruptions, US Mulls ‘Self-Certification’ as India and Africa Challenge EU Mandate

As the deadline looms for excluding Russian diamonds from key global markets, the diamond trade finds itself navigating a complex landscape shaped by diverse influences. Europe’s stringent directive, aimed at reclaiming its waning authority, faces opposition from emerging voices in Africa and India. Meanwhile, a novel proposal has surfaced in the United States, the world’s largest market, suggesting a “self-certification” mechanism for diamond importers, mirroring procedures utilized in fish and seafood imports, potentially offering a smoother path forward amidst geopolitical turbulence.

A recent meeting between a US government official and leading jewelers importing diamonds polished in India and other regions sparked optimism regarding the adoption of self-certification by American jewelers, ensuring their imported diamonds have no ties to Russia. This proposal diverges from the European Union’s insistence on a centralized certification authority in Belgium, sparking concerns about increased expenses, transaction delays, and disruptions in the established diamond trade—a sentiment echoed by African nations and India, which have voiced their apprehensions to the G7.

The virtual gathering on February 15 with the US official, a senior advisor in the US Department of State, holds significance against the backdrop of reinforced sanctions slated to come into force from March 1, 2024, targeting the severance of financial flows to the Russian government from rough diamond sales by state-controlled enterprises. Despite the imminent deadline, industry stakeholders remain uncertain about the specifics of the proposed certification process, with some attributing the EU’s push for a centralized hub to maintain Antwerp’s dominance in the diamond trade amidst relocations to jurisdictions like Dubai.

As stakeholders await clarity on the proposed certification process, attention turns to forthcoming guidelines from the US, hinting at a potential self-certification system akin to seafood imports, albeit with due diligence requirements on diamond importers to ensure compliance with restrictions on Russian sourcing. Concerns also linger regarding the EU’s proposed centralized certification system, prompting discussions on leveraging technology, potentially blockchain-based, to trace stone origins across global customs authorities.

With Russia being the world’s largest rough diamond producer, primarily through Alrosa, its influence on the diamond market remains significant. Indian diamond firms are advocating for a standardized procedure well ahead of the September 1, 2024 deadline to mitigate the repercussions of G7 measures. The commitment of G7 leaders to curb Russian diamond trade revenue underscores the multifaceted impact of the Ukraine conflict, with unsold Russian rough stocks further contributing to supply uncertainties.

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