The U.S. State Department and Departments of Commerce and Homeland Security have said they will implement additional measures to help stem the flow of blood diamonds into the United States.

A Government Accountability Office (GAO) study recently submitted to the Senate Committees on Finance and Foreign Relations, and the House Committees on International Relations and Ways and Means found more must be done to stop “conflict diamonds” from entering the United States.

The Departments of State, Treasury, Homeland Security and Commerce, and a private entity called the U.S. Kimberley Process Authority are responsible for controlling U.S. imports and exports of rough diamonds. However, the GAO found that their systems “are vulnerable to illicit trade.”

The agency also found that the U.S. fails to periodically inspect rough diamond imports or exports “to ensure that the contents of the rough diamond parcels match the Kimberley Process certificates. In addition, the United States lacks an effective system for confirming receipt of imports—a Kimberly Process requirement for avoiding possible diversions of rough diamond imports.”

In 2002, the U.S. and other nations began implementing the Kimberley Process Certification Scheme (KPCS) to curtail the trade of rough diamonds that had financed severe conflicts and humanitarian crises in Liberia, Sierra Leone, the Democratic Republic of the Congo, and Angola. These stones are referred to as “conflict” or “blood diamonds.” Although many of these wars have ended, the UN and other sources report that illegal trading of rough diamonds still exists and could potentially finance civil conflicts, as well as criminal and terrorists activities.

The GAO found that the U.S. was the seventh largest exporter of rough diamonds among non-mining KPCS participants in 2003, exporting about $227 million worth of diamonds, and the fifth largest exporter of polished diamonds. The United States enacted the Clean Diamond Trade Act (CDTA) in April 2003 to implement the KPCS.

The GAO also determined that the U.S. “does not have an effective system for confirming the receipt of rough diamond imports shipments, a control feature that allows participants to track shipment and prevent their diversion.” For example, the U.S. did not confirm most important shipments originating from Canada, Belgium, Israel and the United Kingdom in 2004 and 2005 “and it does not know the extent to which it has not confirmed imports with other countries,” according to the agency.

The U.S., however, has been an active participant in the Kimberley Process certification, including the provision of $7.57 million in assistance to help Sierra Leone and Liberia’s efforts to implement systems controlling their rough diamond trade.

The trade data submitted by the United States has raised concerns with KPCS officials, according to the GAO report. “For example, it reported that the United States had exported about 3 million carats more than it imported in 2003. As a non-producing nation, this excess in exports was not plausible and raised concerns about the accuracy of U.S. trade data and the potential laundering of rough diamonds through the United States.” The Bureau of the Census responded with a number of data collection changes, which resulted “in a significant reduction in the reported discrepancies,” according to the report.

Meanwhile, while the Customs and Border Patrol (CBP) has established a system of documentation review and physical inspections for controlling U.S. rough diamond imports, the GAO found the inspections do not occur periodically or regularly. Since 2003, Customs has seized seven diamond shipments for violation of the CDTA.

“Furthermore, since 2003, U.S. importers have failed to confirm rough diamond import receipts with foreign exporting authorities, resulting in U.S. non-compliance with this KPCS standard.”

Meanwhile, much of the responsibility for confirming rough diamond import receipts has been delegated by the U.S. Government to diamond importers. However, the State Department sent letters to 150 U.S. importers earlier this year to remind them of the requirement to confirm receipt of rough diamond imports. A grand total of only 1,970 Kimberley Process Certificates were issued in 2005, according to the GAO.

Among its recommendations to correct implementation of the KPCS in the U.S., the GAO suggested that the Secretary of State direct the Assistant Secretary, Bureau of African Affairs, “to develop and implement a plan using a regional approach so that countries within a region can harmonize aspects of their systems for controlling the rough diamond trade across porous borders.”

EXECUTIVE BRANCH RESPONSE

In response to the Congressional report, the U.S. State Department said the Department of Homeland Security will begin to provide monthly reports to the Department of State on rough diamonds, which will be forwarded to the appropriate foreign exporting authority.

The State Department also noted that “Kimberley Process Economic Support Funds appropriated through FY06 are committed to projects to support strengthening of land tenure and property rights systems. If additional funds are appropriated by the Congress, we will consider funding programs with a regional focus.”

The Department of Homeland Security said it has directed U.S. Customs and Border Protection to implement a random selection process to examine a specific percentage of diamond shipments before release. The examination will include a full document review to ensure that a valid and original KPCS certificate accompanies the shipment.

U.S. Customs will also establish a process to target diamond export shipments for verification. Meanwhile, the U.S. Census Bureau said “if there continues to be a substantial amount of exports over imports, the Census Bureau will work with the U.S. Kimberley Process Implementation Coordinating Committee to research this issue.”

In a news release Monday, Jewelers of America President and CEO Matthew Runci said, “I applaud our government for responding quickly and decisively to correct flaws in U.S. compliance with the rules of the Kimberley Process and the Clean Diamond Act. The government’s corrective actions will add teeth to U.S. oversight functions, especially in regard to regular monitoring, which is an essential element of any credible system.”

Find More Other News : Company, Exploration, Mine Trade & Market, Mining Top News