House of Commons Hansard #11 of the 37th Parliament, 2nd Session. (The original version is on Parliament's site.) The word of the day was diamonds.

Topics

Export and Import of Rough Diamonds Act
Government Orders

October 21st, 2002 / 11:05 a.m.

Westmount—Ville-Marie
Québec

Liberal

Lucienne Robillard President of the Treasury Board

moved That Bill C-14, an act providing for controls on the export, import or transit across Canada of rough diamonds and for a certification scheme for the export of rough diamonds in order to meet Canada's obligations under the Kimberley Process be read the second time and referred to a committee.

Export and Import of Rough Diamonds Act
Government Orders

11:05 a.m.

Timiskaming—Cochrane
Ontario

Liberal

Ben Serré Parliamentary Secretary to the Minister of Natural Resources

Mr. Speaker, I am pleased to speak today to Bill C-14, which will make it possible to control the export, import and transit across Canada of rough diamonds and will establish a certification scheme for the export of rough diamonds in compliance with the Kimberley process internationally.

Before discussing the bill itself, I would like to give a brief overview of the steps that have been taken by Canada and the international community in connection with the rough diamond trade. The international community is still greatly concerned about the lilnk between the illegal rough diamond trade and the financing of armed conflicts, particularly in Angola, Sierra Leone and the Democratic Republic of the Congo.

Although blood diamonds constitute only a small part of the international diamond trade, they do have considerable impact on the peace, security and sustainable development of the countries involved.

With leadership from Canada, the United Nations has taken several initiatives to address this problem. In 1998 the Security Council imposed sanctions prohibiting the import of rough diamonds from Angola that were not controlled through an official certificate of origin scheme.

During its term on the UN Security Council in 1999 and 2000, Canada played a key role as chair of the Angola sanctions committee in pressing for measures to strengthen implementation of these sanctions. These measures laid the foundation for the adoption of additional sanctions on Sierra Leone which placed similar restrictions on rough diamond imports from that country.

Sanctions were also imposed on Liberia, given its role as a channel for illicit diamonds from Sierra Leone.

The UN has shown an ongoing interest in the blood diamond issue. In December 2000, and again in March 2002, the United Nations General Assembly passed resolutions, of which Canada was one of the sponsors, calling for the creation of an international rough diamond certification program, in order to tighten up measures to control the diamond trade and prevent blood diamonds from getting into legitimate markets.

The G-8 is also keenly interested in this issue. At the July 2000 Okinawa summit, Prime Minister Jean Chrétien, along with the leaders of the other G-8 countries--

Export and Import of Rough Diamonds Act
Government Orders

11:05 a.m.

The Acting Speaker (Mr. Bélair)

A member of Parliament cannot be referred to by name. I know that the hon. member for Timiskaming—Cochrane is a veteran and will not make that mistake again.

Export and Import of Rough Diamonds Act
Government Orders

11:05 a.m.

Liberal

Ben Serré Timiskaming—Cochrane, ON

Mr. Speaker, I apologize for doing that. At the Okinawa summit, in July 2000, the Prime Minister, along with the leaders of the other G-8 countries, stressed that the trade in conflict diamonds is a priority for G-8 members in the prevention of armed conflicts.

On that occasion, G-8 leaders asked that the possibility of formulating an international agreement on the certification of rough diamonds be considered.

At the June 2002 Kananaskis summit, under the G-8 action plan for Africa, the leaders reiterated their support for the international efforts made to identify the link that exists between the development of natural resources and conflicts in Africa, including the monitoring measures developed under the Kimberley process led by South Africa.

My colleague, the hon. member for Nepean—Carleton recognized early on that the illegal diamond trade meant death and suffering for many people on the African continent.

This is an issue that he not only took to heart but acted upon. As Canada's special envoy for Sierra Leone he informed us of the situation in two reports: “The Forgotten Crisis” and “Sierra Leone, Danger and Opportunity in a Regional Conflict”.

One year ago, on October 17, 2001, this hon. member got the attention of the House by introducing Bill C-402, an Act to prohibit the importation of conflict diamonds into Canada. In doing so, the hon. member recognized that such trade had to stop because it was a threat to human rights, political stability, economic development, peace and security in many regions, and also a threat to the legitimate trade in diamonds in countries such as Botswana, South Africa and, of course, Canada. I congratulate the hon. member for his work in this area.

In Canada the diamond industry is a relatively new industry. Our first commercial deposit was discovered in the Northwest Territories in 1991. The diamond mining industry is growing and by 2011 it is expected that Canada will rank third globally, in terms of the value of annual rough diamond production, after Botswana and Russia.

BHP Billiton has been operating the Ekati mine since 1998. This mine is located 300 kilometres northeast of Yellowknife. Operations at the Diavik mine, which is located near the Ekati mine, should begin in 2003, while two other mines in that region, more specifically in the Northwest Territories and in the western part of Nunavut, could begin operations by 2007. The annual production for these mines could reach $1.6 billion and operations at these sites could create 1,600 direct jobs.

The major exploration activities going on indicate that other mines could begin operating in the Northwest Territories and Nunavut. Exploration is also going on in Alberta, Saskatchewan, Manitoba, Ontario, Quebec and Newfoundland and Labrador; these operations could also lead to the opening of diamond mines in these provinces.

In addition to the mining industry, there is a small diamond cutting and polishing industry in Yellowknife and in Quebec's Gaspe region. Other polishing and jewellery making facilities are located in various regions of Canada.

The diamond mining, cutting and polishing industry depends on access to export markets, which in turn depend on Canada's participation in the Kimberly process.

The Kimberley process is the principal international initiative established to develop practical approaches to the conflict diamond problem. Launched in May 2000, the process was initiated by several southern African countries in response to growing international pressure to address peace and security concerns as well as to protect several national economies in the sub-region, including Namibia, Botswana and South Africa, that depend on the diamond industry.

The process, which is chaired by South Africa, now includes 48 countries involved in producing, processing, importing and exporting rough diamonds. These countries account for 98% of the global trade in and production of rough diamonds and they include all of Canada's major diamond trading partners. For example, the United States, the European Union, Japan, Russia, Israel and India are all participating in the Kimberley process.

Canada participated in the Kimberley process from the start. Nine full meetings and two ministerial meetings held as part of this process resulted in detailed proposals concerning an international certification scheme for rough diamonds. In March 2002, Canada hosted the latest meeting of the Kimberley process, at which time a consensus was achieved on the proposals for a scheme.

A technical meeting on the implementation of the process was held in September in Pretoria, South Africa. Participating countries demanded that the certification scheme be simultaneously put in place by the end of 2002. Given the tight timeframe, the government made drafting and passing this bill a priority.

At the next ministerial meeting scheduled for November 5, 2002, in Switzerland, participating countries will be asked to examine progress to date, commit to implementing the scheme in their respective countries and setting a specific effective date. The end of 2002 should be maintained as the deadline.

The international certification scheme includes several key commitments, one of which provides for all rough diamonds imported into Canada or exported to other countries to meet the certification scheme criteria. There are also trade restrictions whereby trading rough diamonds with non-participating countries is prohibited.

Implementing the scheme in Canada required developing rough diamond certification procedures and controls on imports and exports. The legislative authorities provided in Bill C-14 must therefore be put in place.

The proposed bill will provide the authority to verify that natural rough diamonds exported from Canada are non-conflict. It also will give the authority to verify that every shipment of natural rough diamonds entering Canada is accompanied by a Kimberley process certificate from the exporting country, again certifying that the diamonds have a non-conflict source.

Consistent with the scheme and other country's processes, the bill is designed to ensure that natural rough diamonds in transit from one country to another across Canadian territory will be limited to trade between Kimberley process participants. Canada will not be a conduit for conflict diamond trade.

Passage of Bill C-14 will put in place all of the authorities required for Canada to meet its commitment under the international Kimberley process. The early passage of Bill C-14 will ensure that these authorities are in place by year end, when the process is planned for international implementation.

To conclude, I seek the support of all members of this House so that Bill C-14 can move forward quickly, to enable Canada to implement the Kimberley process together with its world partners.

Export and Import of Rough Diamonds Act
Government Orders

11:15 a.m.

Canadian Alliance

Darrel Stinson Okanagan—Shuswap, BC

Mr. Speaker, it actually gives me pleasure to rise today to discuss Bill C-14, the government's answer to the Kimberley process.

Bill C-14 is an act providing for controls on the export, import or transit across Canada of rough diamonds and for a certification scheme for the export of rough diamonds in order to meet Canada's obligations under the Kimberley process.

A number of people might ask why Canada needs the legislation. Those who are unaware, Canada is now heavily involved in the diamond mining industry. Why Canada requires legislation along these lines is that without legislation Canada is not in a legal position to meet all the requirements of the Kimberley process certification scheme.

Under the legislation the Minister of Natural Resources will have the authority to do the following: issue a Kimberley process certificate, KPC, for exports; verify the information in an exporter's application for a certificate for participating in an import shipment, including the important KPC documents; delegate the above administration practices to any person; make regulations prescribed in the records to be retained and presented by exporters and importers; the form and containment of the KPC and KPC application and the requirements of a tamper resistance container; and designate enforcement officers and establish that they process the KPC applications.

The Kimberley process was originally initiated and developed by South Africa in May 2000. It is an international certification scheme for rough diamonds to prevent conflict diamonds or, as some of us know them, blood diamonds, from entering legitimate markets. It was chaired by the government of South Africa. The process brought together 48 countries, including Canada and the United States, along with a number of other countries such as Central African Republic, China, Cyprus, Czech Republic, India, Switzerland, Tanzania, Thailand, Ireland, Italy, Luxembourg and the Netherlands. There are many countries that have the same concern that we do in regard to these diamonds.

What exactly is the Kimberley process? The Kimberley process was internationally established to break the link between the trade in rough diamonds or blood diamonds and armed conflict, particularly in Angola, Sierra Leone and the Democratic Republic of Congo.

We may wonder whether the trade in conflict diamonds is large. No, it is not really right now because conflict diamonds constitute only a small percentage of the diamond trade. However they still have a very devastating impact on peace, security and sustainable development in the affected countries. Has the trade in conflict diamonds not been eliminated? As I said, there is much less trade today but it still affects several African countries.

Why has Canada's position on the issue of conflict diamonds been international? As I said, we are now finding diamonds in Canada and we will be part of this process. We have been a leader in instituting some control in this.

The government's answer to our concern is Bill C-14. It is not an extensive bill but it answers a lot of the questions. As we go through the summary of the bill, it is the government's response to efforts among diamond importing and exporting nations to certify that rough diamonds on the move are sealed in tamper proof containers and certified as not being used to finance conflict, or so-called blood diamonds. Although such diamonds are supposedly decreasing in number, the threat to the marketing image of gem quality diamonds as well as the economics of several African nations remains serious.

Time constraints are tight due to the target of this November for all 48 to 50 participating nations to commit to national implementation and December 31 for simultaneous implementation world wide.

Bill C-14 is accepted by BHP Billiton Diamonds Inc. which operates the Ekati Diamond Mine 300 kilometres northeast of Yellowknife. It also is endorsed by the mining association. The mine employs 650 people and has offices in Kelowna and Vancouver, British Columbia; Yellowknife, as well as Antwerp; Belgium; and London, England.

Other companies expect their mines in the territories to be operational by 2007 with the annual production forecast at $1.6 billion and direct payrolls of 1,600 people plus 3,200 indirect jobs. Additional diamond exploration in Alberta, Saskatchewan, Manitoba, Ontario, Quebec and Newfoundland and Labrador has not yet yielded economically viable sites but exploration is still ongoing.

What we are talking about today impacts a large working force here in Canada with the potential for it to go a lot higher. I only refer to this to show the justification for Canada becoming involved in the Kimberley process. Some of the cutting and polishing is centred at Yellowknife and Quebec's Gaspé Peninsula. Training programs, especially for aboriginal workers, are still in process with resulting job skills being among the benefits to northern residents. This is an industry that was very much needed in the northern parts because unemployment was very high up there.

All Canadian diamonds are first exported to London and Antwerp for sorting. We also import diamonds from 44 countries, including Israel, India, the United States, Belgium and the U.K.. In terms of value of our diamond imports, the top five are those countries.

The multiple stages of handling from international mining through sorting, polishing, cutting et cetera are major reasons for the Kimberley process agreement to ship these valuable products in tamper proof containers with a certificate attached to prevent inclusion of blood diamonds.

Each certificate should bear the title, Kimberley process certificate. It should also include the Kimberley process logo and the following statement “the rough diamonds in the shipment have been handled in accordance with the provisions of the Kimberley process international certification scheme for rough diamonds”.

The country of origin should also be included on the certificate for shipment of parcels of unmixed. The certificate may be issued in any language provided that an English translation is incorporated. Also included would be unique numbering with the alpha 2 country code according to ISO 3166-1. It should indicate that the package is tamper and forgery resistant; the date of issuance; the date of expiry; the issuing authority; identification of exporter and importer; the carat, the weight and the mass; the value in U.S. dollars; the number of parcels in the shipment; relevant harmonized commodity description and coding system; and validation of the certificate by exporting authority.

There are also some optional elements with regard to the certificate. It may also include characteristics of a certificate, for example, as to form and security elements; and quality characteristics of the rough diamonds in the shipment. The recommended import information should also have the following elements: country of designation; identification of importer; and authentication by approving authority. Rough diamonds may be shipped in transparent security bags. The unique certificate number may be replicated on the container.

The weakest link in Bill C-14 and the process that Canada is taking in answering the Kimberley process remains the initial certification, especially when performed by officials and countries widely reputed to suffer from an epidemic of corruption, notably some of the African countries. No independent, international agency will verify or even spot check the certification. This becomes another problem. It should be incorporated into the bill.

Bill C-14 requires that Canadians ensure the certificate provides accurate information to company officials and that individual directors are liable.

We come to a point that I hope can be addressed in committee along with a couple of other concerns. There is no liability under clause 24 of the bill for investigators who enter on private property. We in North America have strong feelings toward private property and what we own.

Clause 24 reads:

When exercising their enforcement powers, investigators may enter on and pass through or over private property without being liable for damage to property or infringement of rights relating to property.

The clause raises some concern with me, particularly with regard to no liability if the company and the people who are under investigation are proven innocent and damage is done to the property. Surely with our environmental codes and standards there has to be some liability. If a property was disrupted the company would be on the hook 100 per cent. I think that clause has to be looked at very closely.

Another point is that prosecutions under Bill C-14 can only be instituted within three years from the time the complaint arose.

I am tougher on this point. Due to the significant degree of international cooperation that is likely to be involved and the fact that human lives are at risk with the trade in blood diamonds, I would suggest that a time limit of seven years is not unreasonable. I say that because the lines of communication when dealing with other countries and ourselves can be a hindrance. A company's reputation will already be damaged by the laying of charges. The best way to minimize such impact would be to obtain convictions and not allow the guilty parties get away with the crimes due to paperwork technicalities that are bound to arise when dealing between countries.

When we deal with financial costs, seized diamonds can only be held with the consent of the owner. An improvement would be to authorize holding such diamonds until the case is resolved. That way it would be guaranteed that possible fines would be paid. We know of a number of cases where fines have been levied against companies or individuals but by the time it comes around to collecting the fee the individual or company has disappeared or the finances have all gone up in smoke. Those are areas we have to look at. Is the process needed in Canada? Definitely.

These concerns will have to be addressed in committee to our satisfaction. Overall the legislation is long overdue.

Export and Import of Rough Diamonds Act
Government Orders

11:30 a.m.

Bloc

Ghislain Fournier Manicouagan, QC

Mr. Speaker, I am pleased to have this opportunity to speak in connection with Bill C-14, an act providing for controls on the export, import or transit across Canada of rough diamonds and for a certification scheme for the export of rough diamonds in order to meet Canada's obligations under the Kimberley process.

In order to meet its international commitments, Canada had to create a document for implementation of the Kimberley process within its territory. This will help it assume its role on the international scene, as both leader and stakeholder.

The need for the Kimberley process has been demonstrated. It was high time, as far as I am concerned, for steps to be taken, if for no other reason than humanitarian imperatives. The far too numerous victims of the crimes perpetrated with the proceeds of trade in conflict diamonds may not be able to rejoice, but at least this is a step in the right direction.

Predators will now find it more difficult to use diamonds as currency. We must not let down our guard, however, for attenuation of symptoms does not mean that the causes of the problems, such as poverty and political instability, have been eliminated.

It is necessary, therefore, for the federal government to make a firm and resolute commitment to developmental aid. It must waste no time in injecting the necessary funds to help overcome the sufferings of the populations experiencing the problems which have made the Kimberley process necessary.

In certain cases, particularly Liberia and Sierra Leone, there needs to be funding provided to track diamonds from their source to prevent people from thwarting the procedures and embargos decreed by the UN.

Keep in mind that Liberia, a country that produces very few diamonds, trades in them and uses the proceeds to purchase arms and to help rebel military factions in Sierra Leone.

In providing the money needed to track diamonds to their source, the government wins on two fronts: first, by meeting the objectives of the Kimberley process, which are to protect human rights in the countries involved and protect the diamond industry; and second, by improving its performance when it comes to its contributions to international assistance.

Let us not forget that Canada contributes well below the standard set by the United Nations, which is 0.7% of gross domestic product. Our contribution was only 0.23% for 2001. Are we less capable than Denmark, for example, which contributes more than 1% of GDP to foreign aid, or Norway, or the Netherlands, to name but a few? We rank 18th in the world. Given our resources, this is nothing to be proud of.

However, we know quite well that when it comes to this issue, it has been economic considerations that have sparked research for economic solutions. Indeed, once the role of diamonds in the conflicts, along with the underlying reasons, were identified—for the most part by non-governmental organizations—the diamond industry could no longer ignore the problem, nor could it shirk its responsibilities. The industry itself also had to come up with a sustainable solution for the international community.

However, we acknowledge that the measures that were taken, given the context, were appropriate, since the diamond industry is a very important economic lever for developing countries, as well as here at home.

Quebec is one of the top mining producers in the world. There remains much land to be explored and there is a great deal of hope in terms of the prospects: new occurrences of gold, diamonds and other metals are discovered every year.

In terms of diamonds, to mention but a few of the possibilities identified by renowned geologists, northwestern Abitibi is a region where kimberlite is likely to be found, as is the Témiscamingue region; Quebec's near north also has a significant kimberlite potential over large areas; and the environment in the western part of New Quebec is very conducive to the presence of kimberlite.

Just last Friday, October 18, the American firm Diamond Discoveries announced it had discovered numerous kimberlite dykes north of Schefferville. I have here a newspaper clipping to that effect. Schefferville is in my riding, some 450 kilometres north of Sept-Îles, which goes to show how large my riding is.

Let me read to the House this short article recently published in Le Nord-Est Plus , a newspaper from my riding which has a large readership and is very informative.

The headline reads “Mineral Discoveries North of Schefferville”. The article reads as follows:

Months after acquiring permits for the exploration of 50,000 acres—this is a huge area—of property in the Torngat Mountain region, northeast of Schefferville, the American company Diamond Discoveries just announced the discovery of numerous kimberlite dykes.

In August, this American company teamed up with Toronto-based Tandem Resources; the latter acquired a 40% interest in an investment of several millions in Lac Castignon. Diamond Discoveries had previously acquired the above-mentioned area following preliminary work that yielded results encouraging enough to warrant a further expansion of the area to explore.

On this new property, Prospecting Geophysics, which is in charge of the exploration program, has already detected diamond indicators. Specimens totalling 450 pounds were shipped to the lab in Val-d'Or for further examination.

A magnetic survey is being performed by a team of eight with two senior geologists.

All this to say that it is looks very good. Even in my riding, in the North, we have incomparable resources.

As we can see, mineral prospecting and exploration open up some extremely interesting possibilities and hold out a promising future. Hence the need to address immediately all processes and problems that may tarnish the long-term reputation of the diamond industry in Canada.

This involves the economic future of many regions and communities, not to mention the stone cutting and polishing industries, which are beginning to flourish in Quebec. If we want Montreal to be a world diamond capital, we need to first make sure that the diamond industry will last.

As for Bill C-14 per se, we have a few questions regarding clause 17 on in-transit diamonds. Clause 17(1) states that “An investigator may seize in-transit rough diamonds if they are not accompanied by a Kimberley Process Certificate—”.

What happens to diamonds that are not seized? We understand that seizure is a direct prevention and implementation measure under the process to stop unauthorized exporters and more specifically, exporters dealing in blood diamonds. If they are not seized, these diamonds will remain in the system and will continue on their way without any problems.

As a result, the objective of the process is out of reach.

As a transit country in this type of situation, what is Canada's position? How does this affect our image and credibility in the context of the process?

In closing, the Bloc Quebecois supports the bill for the following reasons: the numerous atrocities perpetrated with blood diamond money are very well documented.

We must act in order to put a stop to this. Without such a process, countries that purchase diamonds, including Canada, fund the crimes that take place in these countries.

Canada's social and moral responsibilities require that we move ahead with this bill. This is what I would consider a quite modest step to deal with the terrible situation in the countries in question, which I mentioned earlier. Canada must be consistent and increase its development assistance and its support to help Africa and its more fragile countries.

Such action will also protect the diamond industry from the terrible fallout from the inappropriate use of revenues generated by the industry.

We await an answer to our questions regarding clause 17 of the bill. This may be but a small flaw, but it is a flaw nonetheless.

Export and Import of Rough Diamonds Act
Government Orders

11:40 a.m.

The Acting Speaker (Mr. Bélair)

Colleagues, as of the next speaker, speeches will be 20 minutes in length followed by a 10 minute question and comment period.

Export and Import of Rough Diamonds Act
Government Orders

11:40 a.m.

NDP

Svend Robinson Burnaby—Douglas, BC

Mr. Speaker, I am pleased to rise on behalf of my colleagues in the New Democratic Party to join with members from all sides of the House in supporting the principle of Bill C-14.

My colleagues and I have long called on the Government of Canada to take the steps that are necessary to ensure Canada's participation in the Kimberley process, which is an international certification scheme that aims to break the link between armed conflict and the trade in rough diamonds. We know all too well that civil wars in Angola, Liberia and the Democratic Republic of Congo are currently being fueled by the export of conflict diamonds. Rebel groups in Sierra Leone were also exporting diamonds to finance their military campaigns, although fortunately this conflict now appears to be over.

This morning I do want to pay particular tribute to the member for Nepean—Carleton for the work he has done, the tireless efforts that he has put into making this important legislation possible. I know that he has travelled to Sierra Leone on a number of occasions and has come back to Canada and made his colleagues and the public generally more aware of the concerns in this area. I think all of us owe a debt of gratitude to the member for Nepean—Carleton for the work he has done.

I will not be speaking at length as others have given some of the history of this process. We know that a number of dedicated NGOs have also been very much involved in making this important advance possible. Here I want to single out Partnership Africa Canada, which has really done an outstanding job. As Canadians, I think we should be very proud of the work it has done at the international level to help make this important Kimberley process viable. It has been working since 1996, along with another NGO called Global Witness, to conduct research on the issue and also to come up with an international mechanism to help address the problem. We heard earlier about UN resolution 1173, calling for the embargo of conflict diamonds from Angola. This has really been a partnership of NGOs, the diamond industry itself, political leaders and the United Nations working together to determine how we can actually track and stop the flow of these conflict diamonds and the resources that come from them from funding bloody struggles.

In May 2000, the Government of South Africa initiated the Kimberley process at an international meeting to discuss the establishment of an international system to monitor the trade in diamonds. Later that year in December, it was Canada that co-sponsored UN General Assembly resolution 55/56, which envisioned the creation of an international certification scheme for rough diamonds. This resolution was adopted unanimously by the General Assembly.

Here I want to point to the role that was played by our then ambassador to the United Nations, Ambassador Bob Fowler. Members of the House may recall that Bob Fowler made very strong and eloquent speeches on a number of occasions at the UN Security Council, drawing to the attention of members the importance of acting. We should as well recognize that we owe him a great debt of gratitude and that again as Canadians we have played an important role here. Just as our Ambassador Philippe Kirsch played such an important role in the establishment of the International Criminal Court, so too Ambassador Bob Fowler, I believe, deserves a great deal of credit in this area.

Earlier this year in March, the most recent Kimberley process meeting was held here in Canada, in Ottawa. Some 48 countries agreed to enact domestic legislation in order to create a global certification scheme for rough diamonds. That is the purpose of this legislation before the House today: to ensure that Canada plays its role as a member of the Kimberley process. We have heard already how that will work and we are hoping that the first Kimberley process certificates will be issued beginning on January 1 of next year.

Obviously this is an important step, but it is by no means the only step that has to be taken in order to deal with conflicts in areas such as Angola, the Democratic Republic of Congo and Sierra Leone. It is important that there be strong diplomatic action as well and that Canada play an important role there, that Canada work tirelessly to bring about peaceful solutions to these conflicts through diplomacy and, if necessary, through the contribution of peacekeeping forces under UN auspices. Yes, we must work hard on the issue of conflict diamonds, but we must also redouble our diplomatic efforts to deal with the underlying causes of these tragic and often incredibly bloody and violent conflicts.

We know that this will be good for the Canadian diamond industry.

We have heard the comments from the Bloc Quebecois member on this issue. He comes from a riding where there are diamond mines.

In fact, clearly the Canadian diamond industry would benefit from the Kimberley process because our Canadian stones would be certified as conflict free. We know as well that a number of consumers have avoided diamonds altogether because of the risk of supporting conflicts or terrorism. Hopefully now that this process is going to be in place they will call off these boycotts and this will again assist the development of the Canadian mining industry.

There is one important area in which I want to call upon the government to take every possible effort to strengthen the Kimberley process. The gravest weakness in the Kimberley process is the lack of independent, impartial, external, regular monitoring of governments' compliance with the regulations. This is a very important area and it is one which I hope Canada will be working hard on to strengthen in the coming months. Yes, we signed on to the Kimberley process, but it seems to me we also should be listening to those voices from the NGO community in particular, including Partnership Africa Canada, Global Witness, Amnesty International and Oxfam, which have all noted that this absence of independent monitoring may be a fatal flaw in the system. It is essential that we campaign actively to ensure that this problem is addressed.

In March of this year they made an effort at the Ottawa meeting on the Kimberley process, but unfortunately the participating committees were not able to agree to independent monitoring. Russia, for example, objected to external scrutiny of its diamond industry as it considers diamonds a strategic mineral. Other nations objected that such monitoring would be too costly, or they said it might jeopardize commercial interests, but it is essential that we move toward independent monitoring because without it there are simply too many loopholes in the entire certification system.

Conflict diamonds could enter the international marketplace under the guise of legitimacy and supported by the Kimberley process certificates. Now, for example, the Kimberley process only admits so-called review missions which will be established only when there are “credible indications of significant non-compliance”. These missions will only be conducted with the consent of the country concerned, which means they can simply be rejected by the suspect country. They would not be truly independent and impartial and the reviews would not be conducted on a regular and ongoing basis.

One example of this, according to Partnership Africa Canada, is the United Arab Emirates, which produces absolutely no diamonds whatsoever but increased its exports of diamonds to Belgium from $4.2 million in 1998 to $149 million in 2001. This is a country that does not produce any diamonds at all. Clearly if the United Arab Emirates does not join the Kimberley process, its diamonds will be excluded from the global trade.

It is important that we recognize that this is a significant step we are taking. Again I pay tribute to the member for Nepean--Carleton, to Partnership Africa Canada and to Ambassador Bob Fowler for the leading role they have played on this issue internationally, but at the same time I urge them to continue working to significantly strengthen the Kimberley process.

With that, once again, on behalf of my New Democrat colleagues, we join with members on all sides of the House in commending this important step forward. We will do whatever we can to work to strengthen it and make it a more effective scheme to ensure that conflict diamonds do not in any way fund the wars taking place at the present time.

Export and Import of Rough Diamonds Act
Government Orders

11:50 a.m.

Progressive Conservative

Gerald Keddy South Shore, NS

Mr. Speaker, it is a pleasure to rise today to speak to Bill C-14, an act on the export and import of rough diamonds. There has been a fair amount of discussion on the bill so far but not a lot of debate. There are a number of issues in the legislation that are relevant to the debate and certainly should be open for discussion.

The bill has been a long time in the waiting. Unfortunately it has taken the government until the last hour of the last day to bring forward the bill and now it has to be ratified by December 31, 2002. Of course the government likes to say that date is actually January 1, 2003, so it is a different year, but my point is that there is a real urgency here. We need to look at the bill immediately, we need to debate it and we need to have it go through committee. We need to have it ratified by December 31, which as far as I am concerned as an opposition member of Parliament, is too little too late. We should have had this before us last spring. We knew it was up and coming. We could have had our committee studies done and a lot of groundwork could have been covered already.

Certainly we all know the story of diamonds. To many people they symbolize love, happiness and wealth, yet for many they mean conflict, misery and poverty. In African countries such as Angola, the Democratic Republic of Congo and Sierra Leone, the profits from the unregulated diamond trade are used to obtain weapons and fund armed conflict. As a result, tens of thousands of civilians have been killed, raped, mutilated or abducted.

The rebel forces in these conflicts use so-called conflict diamonds to finance arms purchases and other illegal activities. Neighbouring and other countries can be used as trading and transit grounds. The transit grounds are for the trade and travel of illicit diamonds. Once diamonds are brought to the market their origin is difficult to trace. Once polished, they are even more difficult to identify. This is why it is very important that Canada is brought into line with the other almost 50 countries to stamp out the international trade in illicit rough diamonds.

On December 1, 2000, nearly three years ago now, the United Nations General Assembly unanimously adopted a resolution on the role of diamonds in fueling conflict, seeking to break the link between the illicit transactions in rough diamonds and armed conflict. In taking up this agenda item, the General Assembly recognized that conflict diamonds are a crucial factor in prolonging the brutal wars in parts of Africa and it underscored that legitimate diamonds contribute to prosperity and development elsewhere on the continent.

In Angola and Sierra Leone, conflict diamonds continue to fund the rebel groups, the National Union for the Total Independence of Angola and the Revolutionary United Front of Sierra Leone, both of which are acting in contravention of the international community's objectives of restoring peace in the two countries.

In March 2002, an international agreement was reached on a plan to require a paper trail for diamonds to help throttle the trade in the so-called blood diamonds, blamed for financing the bloody civil wars in Africa, yet we still have no legislation from the federal government. If we look at even part of the chronology, we had the UN resolution on December 1, 2000, and phase one of the Kimberley process, which was completed November 29, 2001, wherein the ministers of participating states at a meeting in Botswana declared their detailed proposals for international certification for rough diamonds. Then we had the March meeting here in Ottawa. In the meantime, the United States government took a very serious look at this problem and proposed legislation. That legislation was proposed and actually sent to Congress in the U.S., with the support of the diamond industry and over 100 non-governmental agencies. Unfortunately the bill stalled in Congress.

The fact that the bill stalled does not reflect at all on the importance and the timeliness of the bill being introduced last spring in the American system rather than late in the fall of 2002 in our system in Canada, again with the December 31 deadline. Certainly there are still a number of problems with the legislation. Beside the fact that we are down to the crunch and that the legislation needs to become law by the end of the year end, a few other points need to be explained and laid out.

By January 1, 2003, to take the government's date, all gem quality diamonds must be certified according to the standards outlined in the Kimberley process or they simply will not be allowed into other countries. In the meantime Canada does not have a diamond regulatory body. Canada Customs does not have a centralized port of entry or ports of entry for diamonds and it does not require proof of the origins of diamonds at this time. Perhaps the legislation will encompass all this, but we will have to see.

Importers simply can declare diamonds to be from their last port of call, such as a processing centre in Antwerp. Therefore we certainly need to have the discussion about ports of entry and exit for rough diamonds. Designated points of entry will put a stop to the smuggling of diamonds in other countries. That is not as great a danger to Canada, but it certainly is a great danger to many other countries on the planet.

Canada now has a vested interest in this. We have a particular interest as a new producer of diamonds, in particular from the Northwest Territories. This country needs to protect its diamond industry by encouraging a strong monitoring system to ensure that consumers can trust the claims about the origins of the diamond.

Bill C-14 is attempting to establish an international certification process to trace uncut stones so that gems mined by driller groups in Sierra Leone, Angola and Liberia do not infiltrate the legitimate diamond markets. We absolutely agree that this is a good step to crack down on the smuggling of rough diamonds. Canadian law in this instance would impose a $500,000 fine or a five year prison term, or both, on anyone attempting to smuggle conflict diamonds into Canada.

The Kimberley process is to address exports and imports in transit and deal only with natural rough diamonds. This process was initiated in South Africa in May 2000 to develop an international certification scheme for rough diamonds to prevent conflict diamonds from entering legitimate markets. We have a vested interest in seeing that this process is approved and that it goes through.

On November 5 of this year, the Kimberley process will meet in Interlaken, Switzerland to confirm the end of 2002 as the date for simultaneous implementation. I would think it would be in the best interests certainly of our country and the fledgling diamond industry in our country that the Minister of Natural Resources attend this very important meeting himself.

In the meantime this is more than just an issue about the import and export of rough diamonds. Now that the government actually has figured out that we have a diamond industry in Canada which has the potential to supply 12% of the world's gem quality diamonds by 2004, which is very important to fledgling economies in northern Canada, and now that we actually are looking at this issue, perhaps the government will also agree to look at the issue in a more serious and broader way and take a broader mandate.

We will deal with the legislation and support it. We will even support it being rushed through the House, but we will not simply turn a blind eye to it. There are concerns and we need to take a very strong look at them. I would like to reiterate once again that my greatest concern is the fact that the government has waited this long to introduce the legislation, and now we are in an all-fired panic to get it through the House.

There are other concerns. Canadian diamond dealers have a concern about the 10% excise tax on diamonds. It is applied against the manufacturers of all jewellery. It needs to be discontinued if Canada's fledgling diamond industry is to compete with diamonds from Botswana, Australia, Russia and South Africa.

The excise tax came into effect in 1919. It is funny how taxes get on the books and are forgotten. It was applied to a range of so-called luxury items to help finance Canada's World War I expenditures. Probably, like most taxes, it was well meaning and brought in for all the right reasons. Over time the excise tax was dropped on a number of items and remains on only a few today. It continues to remain on jewellery. If we add the 10% excise tax, the GST and the various provincial sales taxes, that is 25%.

The diamond industry is on the verge of blossoming and has real potential to fuel the economies of northern Canada and some of our southern cities as well. There is huge potential here and already we are seriously considering putting a tax of up to 25% on the product. If we have a $2 billion industry with the potential to supply 12% of the world's gem quality stones, why are we not taking a serious look at the industry, and not just the import and export of rough stones which curves around the world, and supporting it?

Our only producing diamond mine right now, the Ekati mine, employs 650 people and produces three to four million karats of gem quality rough cut diamonds every year. This is an equivalent to nearly 4% in today's numbers of the world diamond production by weight and 6% by value.

The Diavik mine will begin operation in 2003. Two more projects, one in the Northwest Territories and one in Nunavut, could open by 2007. These four mines would provide direct employment for about 1,600 people and could bring a total annual production of nearly $2 billion.

Many people will benefit from the development, including northern aboriginal groups, at the mine and in industry related activities as well as training and skills in cutting and polishing diamonds. They will receive direct transfers under the impact and benefit agreements negotiated directly with the mining companies. Therefore the diamond industry has been a win-win for our northern communities. It is an exciting time for Canada and especially Canadians in the northern region. This is a time to bring jobs and skills to many people who need to enrich their lives, and these jobs and skills will come from the mining of rough diamonds.

We support the bill at second reading. We hope the government will take the entire industry much more seriously than it has in the past. We recognize the time frame and the restraints and conditions the government is working under. However we should have our legislation in place even if the meeting in Switzerland does not confirm December 31, 2002 as the deadline.

Furthermore, we have a fantastic opportunity and a terrific industry. It is environmentally friendly and safe. It has the potential to put our northern communities on the world map. It has huge potential for the sale of Canadian stones. That little laser etched polar bear on that polished stone at the end of the day may be the greatest trade mark that Canada has ever come up with. This is a fantastic opportunity. We have free trade with the United States and the United States buys 60% of the world's polished stones. The biggest market in the world is next door. There is no way Americans or anyone else on this planet should even consider buying conflict diamonds when they have a guaranteed safe source of stones right in Canada. We have an industry waiting to happen, to cut, polish and export these stones.

It is not just about this legislation, which we support. It is also about the excise tax and the situation in which the diamond industry is today. I hope the government is at least listening to this debate. I hope it intends to follow this up and not only regulate the import and export of rough diamonds, not necessarily for Canada but certainly for the conflict regions of the world, but also look at the industry in Canada which supplies 6% of the value of all the gemstones on the planet. It has huge potential not just for the regions of northern Canada, but for the rest of the country as well.

Export and Import of Rough Diamonds Act
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12:05 p.m.

Canadian Alliance

Roy H. Bailey Souris—Moose Mountain, SK

Mr. Speaker, the hon. member mentioned the tax that was placed on Canadian jewellery, I believe in 1919. If Canadians want to buy a piece of handcrafted jewellery, because of that tax, which was supposed to last only a few years, and the PST and GST, a cheap $100 community diamond will cost them $125.

If we are to make good use of the diamond mine being developed in the Northwest Territories, the government should take another look at the tax which was brought in in 1919. Jewellers have been complaining about it ever since that time. Could the hon. member comment on that?

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12:05 p.m.

Progressive Conservative

Gerald Keddy South Shore, NS

Mr. Speaker, I appreciate the hon. member's question. Although not included in this bill, my point in raising the excise tax issue is that we need to look at it in a serious way. If we are to promote a diamond industry in Canada, it is a lot more than just regulating the import and export of rough stones.

We have tremendous potential just in rough diamonds. If we are able to do something about the export of rough diamonds and get rid of the excise tax on those quality stones, by promoting the sale of diamonds in Canada, people might be interested in flying to Yellowknife to purchase a stone at the source. There is no reason why that could not happen.

We are on the threshold of a tremendous business and so far I do not think the government realizes it. A 25% penalty on any industry is too much. It is a given that we will have provincial sales tax and the GST. However we need to do something about the export tax. I have raised this issue in the House over the last couple of years. It is not the first time it has been brought up. It is time the government took a look at it. We have a fledgling industry with huge potential. Let us help it out.

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12:10 p.m.

Timiskaming—Cochrane
Ontario

Liberal

Ben Serré Parliamentary Secretary to the Minister of Natural Resources

Mr. Speaker, I would just make a point of clarification on the excise tax issue. Cut and polished diamonds imported into Canada are subjected to the same excise tax as the diamonds cut and polished in Canada and sold here. There is technically no competitive disadvantage for Canadian cutters and polishers.

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12:10 p.m.

Progressive Conservative

Gerald Keddy South Shore, NS

Mr. Speaker, that is the whole point. We need to encourage the diamond industry by getting rid of the excise tax on export. If we want to keep it on imports, then maybe there is room for that discussion. However we should be favouring and promoting our own industry.

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12:10 p.m.

NDP

Bev Desjarlais Churchill, MB

Mr. Speaker, I first want to thank my hon. colleague from South Shore for mentioning the polar bear which is lasered on Canadian diamonds. I represent the Churchill riding in Manitoba, the polar bear capital of Canada if not the world. I would encourage everyone to visit and see the real thing as well as the little polar bear on the diamond.

A number of years ago, the northern and aboriginal trappers suffered greatly as a result of criticisms over unfair hunting and trapping practices. We lost a fair amount of the industry and it took years to get that economic activity back up and running. Now we have another industry, a new and dynamic industry in diamond mining, and it also has the risk of having a boycott if a process is not put in place to ensure that conflict diamonds can be distinguished from diamonds of Canada.

Does he see a risk to our industry if the government does not take a very strong position of ensuring that independent bodies are in place and that the Kimberley process can do the job it is intended to do?

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12:10 p.m.

Progressive Conservative

Gerald Keddy South Shore, NS

Mr. Speaker, there is a real risk. I appreciate the question from the member for Churchill, especially the comparison to the fur boycott because this is something very real and it is something that could happen again. It happened for no good reason the first time when many countries in the world decided to boycott the fur industry. It was absolutely devastating to our northern communities and to communities throughout the country. It was not just northern Canada that participated, and still participates, in the fur trade. It was rural Canada from sea to sea to sea.

A number of the issues alluded to by the member were brought up at the meetings held with the NGOs in Ottawa on March 18 and March 20. Three of them were outstanding. Given the Kimberley process, and we are all in agreement that it is needed, there are still a number of things that need to be followed up on.

The group, which was headed up by Amnesty International, came up with a number of questions. One of them was on how the statistics would be kept and essentially who would produce the quarterly trade statistics and semi-annual production statistics even when they are supposed to be available within two months of the reference period. Countries will use their own arrangements and will endeavour to ensure that these relate to the international harmonized system or so-called HS codes. Statistics will be collated centrally. It was agreed that an existing intergovernmental body with the capacity for this should be approached. The IMF and the World Bank were two parties that were mentioned.

Certainly this is a significant and important step. First of all, we have to have real statistics, we have to be able to collate them and the body needs to be at arm's length. Right now the bodies will simply be the diamond-producing countries. There are some political and commercial concerns which were expressed at the meeting.

The other thing that seems to be a problem is the secretariat itself. It seems perfectly logical that the Kimberley process will need a secretariat to coordinate its many functions, but it is not clear to all the participants who will sit on the secretariat, who they will represent and how the chairs will work. There are some very important details to be worked out.

The other issue which was already alluded to in the discussions is that of monitoring. The NGOs feel that they failed when it came to monitoring. I will read their own words:

We have insisted from the beginning that independent, impartial, external, regular monitoring of all national control systems must be a part of the final system. Without this, the system will have no credibility, and it will provide a wide range of loopholes in the system.

There are concerns about the Kimberley process with regard to monitoring, on how the statistics are held and on how the secretariat is formed.

Yes, this is a great piece of legislation. It ties up a lot of the loose ends affecting the trade of so-called blood or conflict diamonds and will help to prevent the flow and trade and sale of conflict diamonds around the world. Is it a perfect piece of legislation? I am questioning that. Should we support it? Absolutely. It is better than what we have now.

Worse than that, this has the potential to shut down a diamond industry that is in existence in Canada. If the UN ratifies the agreement on December 31 and we have not ratified it, we cannot export the diamonds coming out of a great industry in northern Canada. I would say we had best get on the ball and do exactly that.