In his latest Diamond Intelligence Briefs, “Keeping Stock of U.S. Kimberley Process Certificates”, industry analyst Chaim Even-Zohar takes another hard look at the U.S. rough diamond trade and the country’s half-hearted approach when it comes to implementing Kimberley Process (KP) certification standards domestically.
Controversy is brewing in Namibia about who is selling their diamonds to whom, for how much, and whether the country is obtaining fair value from its precious resources. The Namibian newspaper previously raised concerns that a new government independent sales company called Namib Desert Diamonds (Namdia), which is designated to sell stones worth over an estimated US$150 million (N$2.1 billion) per year as stipulated by a 10-year agreement
In the lastest installment of the Diamond Intelligence Briefing (DIB), diamond industry analyst Chaim Even-Zohar presents a searing indictiment of the rough diamond trade in the United States, "The world's most convenient and 'uncontrolled' rough transfer market", claiming that, "The main justification for the overwhelming bulk of the (U.S.) rough trade is pure transfer pricing*." This rough diamond 'stopover' in the U.S. also "endangers the integrity of the legitimate U.S.
An UAE-sponsored initiative aimed at standardising pricing mechanisms for the rough diamond trade is due to be launched later this year under the country’s chairmanship of the Kimberley Process, reports UAE daily The National. Some may view this move as ironic, as it comes in response to criticism of trade and transfer mispricing practices within the diamond trade, which NGOs claim has deprived diamond producer states of crucial tax revenue - and UAE is considered the main practitioner of transfer pricing.
UAE's Ministry of Economy (MoE), and the Dubai Multi-Commodities Centre (DMCC) have signed a Memorandum of Understanding (MoU) to support and enhance cooperation and coordination between the two sides concerning the supervision of imports, exports and transit of rough diamonds to and from the country, in line with the Kimberley Process Certification Scheme (KPCS) on the international trade of rough diamonds and in accordance with European Union Law. The MoU is part of joints efforts by the MoE and DMCC to ensure optimal implementation of the KPCS, under which official certificates are issue
A local businessman believes the islands are ideally placed to serve as a hub for diamond trading, being almost on the United States' doorstep. However, the Cayman Islands would face a range of hurdles, including being accepted by the KP, which could take two years, being accepted as a member of the World Federation of Diamond Bourses (WFDB), which could also be a lengthy process, and competition from the recently opened Panama Diamond Exchange. And then there is the somewhat negative public perception of the islands as a tax hideaway.