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.