Mr. Speaker, the Senate bill, Bill S-36, is entitled An Act to amend the Export and Import of Rough Diamonds Act. This bill includes only a few clauses that are essentially of an administrative nature.
From the outset, the Bloc is quite sympathetic to this bill, but I would like to explain two important effects Bill S-36 will have.
First, Bill S-36 will authorize the government to compile and distribute data on international trade in diamonds. The adoption of this amendment, which would make the diamond trade more transparent and easier to control, is necessary for Canada to remain in compliance with its international obligations pursuant to the Kimberley process. I will say more on that later, but the Kimberley process is the action, past and present, taken by the international community to monitor the money earned from the mining of conflict diamonds.
Second, Bill S-36 will remove a formality associated with the Kimberley process as regards very small diamonds less than one millimetre in size. In number and in weight, the great majority of the diamonds dealt on the market are tiny. They are not used just to make jewellery, but have more of a utilitarian function. They are to be found, for example, in turntable needles, in watch-making or in certain industrial knives. Unlike large diamonds whose scarcity makes their price exorbitant, these diamonds are of no great value, and the administrative burden associated with the Kimberley process can be prohibitive. This proposed amendment will facilitate the diamond trade and is good news for the industry.
I might mention that Canada recently became the world's third largest diamond producer. In Quebec, even though no diamond mine is yet active, seven mining companies hold licences for such mines, mostly in Abitibi, Témiscamingue and in northwestern Quebec. Deposits of kimberlite, the ore in which diamonds are found, have been discovered in five sub-regions of Quebec.
As I said right from the start, the Bloc Québécois is not opposed to this new flexibility in principle, but it intends to ensure, in the course of review in committee, that it will not be introduced to the detriment of achievement of the objectives for which the act was passed, that is, the establishment of fairly tight control so as to prevent trade in what are and what must be called “conflict diamonds”. These amendments are the result of decisions made by countries adhering to the Kimberly process and are essential for Canada's continued compliance.
I want to take a few minutes to talk about the Kimberly process and conflict diamonds. I was associated with a study conducted by the Standing Committee on Industry, Natural Resources, Science and Technology. This study was the result of pressure by international NGOs that realized just how much conflict diamonds, as they are called, contribute to the development, maintenance and continuation of wars that should never have happened. However, these wars were fostered and fueled by these diamonds.
I want to quote Mr. Ian Smillie of Partnership Africa Canada, as he really puts things into context:
In 2000, the international diamond industry produced more than 120 million carats of rough diamonds with a market value of US$7.5 billion. At the end of the diamond chain this bounty was converted into 70 million pieces of jewelry worth close to US$58 billion. Of total world production, rebel armies in Sierra Leone, as well as in Angola and the Democratic Republic of Congo (DRC), are estimated by De Beers to traffic in about 4 per cent. Other estimates place the number higher. Although not a significant proportion of the overall industry, four per cent of $7.5 billion—or whatever other estimate one might use—can buy a lot of weapons.
This is particularly true in countries in which merchants take part in this traffic in order to finance wars between developing countries.
The Export and Import of Rough Diamonds Act ensures that Canada is in compliance with the Kimberley process, an international agreement which has established a process for certifying the origin of rough diamonds. This was to ensure that any diamonds traded by or transiting through signatory countries were not conflict diamonds.
The Kimberley process is basically designed to limit the trade in conflict diamonds, which are sold by armed factions to finance their wars.
Because the diamonds are small and highly valuable, they are easy to market and can be very profitable
In the 1980s, this trade was a veritable scourge, and a major component in the funding of wars that displaced about 10 million people in Sierra Leone, Liberia, Angola and the Democratic Republic of Congo, to name just a few.
At first, only a few NGOs were concerned about these conflicts and critical of the lucrative diamond trade that bankrolled them.
In 2000, the UN published a report on the funding of the war in Angola, confirming everything that the NGOs had been proclaiming for years: the diamond trade was being used to finance the war.
Also in 2000, the RUF, the Revolutionary United Front, an armed faction in Sierra Leone, stepped up its attacks on civilians, making Sierra Leone the country with the largest number of displaced persons in the world.
With these two events, the African conflicts and their link to the diamond trade left the back pages and made the headlines.
That is when the countries and the companies that produce diamonds began to get involved. The moment that diamonds become synonymous with war, rape and murder and not with dreams, wealth and eternal love, they lose their essential value.
Responding to the invitation of two NGO groups, Global Witness and Partnership Africa Canada, 37 countries and the principal diamond merchants agreed to sit down together with the NGOs to find a solution to the problem.
The first meeting was held in May 2002 in the city of Kimberley, South Africa, hence the name, the Kimberley process
At the end of a series of meetings, they agreed that the best way to civilize the diamond trade was to put in place a system for certifying the origin of diamonds. Certification of the diamond's origin was the only way this group of individuals and businesses could find to ensure that diamonds from companies using them to fund wars were not getting into the legal diamond trade.
Under this system, all diamonds, without exception, exported from a country participating in the Kimberley process must be placed in a sealed container and accompanied by a government-issued certificate of authenticity called a Kimberley certificate. Note that I said all diamonds.
Importing countries that are participants in the Kimberley process may import only diamonds that are placed in a sealed container and accompanied by this certificate. They may trade in diamonds only with participating countries.
Today the Kimberley process has 45 participants—all to their credit—including the European Union and its 25 members, for a total of 69 countries. These countries account for 99% of the legal international trade in diamonds.To the NGOs which started this initiative and succeeded in transforming an awareness campaign into binding rules of international law, the Bloc Québécois says: well done. I hope Parliament will agree with me in congratulating them.
Without taking anything away from the other NGOs that have joined the movement and made it the success it is, the Bloc Québécois wishes to specifically salute the work, clear-sightedness and tenacity of the two NGOs which got this initiative under way, Global Witness and Partnership Africa Canada.
That is a short summary of the Kimberley process, which might help our viewers.
From what I have read, there appears to be a need to amend the Export and Import of Rough Diamonds Act and to pass Bill S-36.
From the outset, the Bloc Québécois has demonstrated keen support for the Kimberley process. In the fall of 2002, it lent immediate support to the bill on the export and import of rough diamonds, Bill C-14, which was intended to bring Canadian practice into compliance with the Kimberley process. The Bloc Québécois continues to support the Kimberley process and will support the initiatives to make it more efficient and effective.
Many of the amendments contained in Bill S-36 are the product of the discussions of the plenary session of Kimberley process participants held at the Lac-Leamy Hilton in Gatineau in 2004. Their adoption is necessary for Canada to remain in compliance with the Kimberley obligations. Most of the amendments in Bill S-36 are in fact designed to facilitate application of the process.
For these reasons, the Bloc Québécois supports Bill S-36 in principle and will vote in favour of it at second reading.
However, there are shortcomings in Bill S-36. Bill S-36 was introduced before Parliament could do a serious review of the current control mechanism. Events will no doubt help the process unfold, as the Bloc Québécois would have liked at the outset.
The Export and Import of Rough Diamonds Act requires the government to carry out a complete review of the operation and effect of the act three years after its coming into force and submit a report to Parliament. Next January, the act will have been in effect for three years. The government will therefore submit a complete review of the act, its operation and its flaws. That is what we are expecting at least.
By then, Bill S-36 will probably have already been passed—and then again, maybe not, and that may be for the best—but, at any rate, the process has to go on because some of the provisions must be in force by January 1 for Canada to remain in compliance with the Kimberley process and be able to continue exporting diamonds. There is a problem, however.
The government is in a minority situation and can no longer allow itself to think that a majority of members in the House are at its command and will pass anything it proposes, even without being provided with appropriate information.
The Bloc Québécois expects the government to release its review of the Export and Import of Rough Diamonds Act and to submit it to Parliament before Bill S-36 is considered in committee. We hope that will be done shortly.
However, even under Bill S-36, Canada is content with the minimum obligations under the Kimberley process. That is what we find unfortunate.
Let me explain why this is unfortunate.
The Kimberley process sets forth a series of minimum obligations that participating countries have to adhere to and comply with.
First, exported diamonds must be placed in sealed, tamper-resistant containers. Then, the certificates of authenticity must contain certain information, such as the origin of the diamonds, the identity of the merchant, and the total weight of the lot in carats.
In the Export and Import of Rough Diamonds Act, Canada decided to content itself with meeting the minimal obligations under the Kimberley process, although it would have been at liberty to go further. For example, with respect to the information required on the Kimberley certificate, Canada is content to require the total weight of the lot. However, we had been told that there could be major problems associated with this obligation alone. Let me explain. It so happens that 20 ten-carat diamonds are worth 30 times as much as 400 diamonds of 0.5 carats, even though both lots add up to 200 carats. Canada is content with asking what the total weight of the lot is.
At present, an importer can very easily buy a lot of small diamonds on the legal market, replace them with large stones bought cheap on the black market, then sell them again with no problem, since his Kimberley certificate does not contain the information that could be used to spot the swindle. This dishonest importer will be able to make an enormous profit, while at the same time laundering an entire lot of conflict diamonds.
This situation was described in committee when members heard from witnesses. Has this in fact happened? We cannot know. What we do know, however, is that in 2003 Canada imported rough diamonds valued at $730,820, from India. It exported nearly $200,000 worth of them to the same country.
The import value per carat was $162; the export value was $392. While this may simply be explained by the return of undesired gems of great value, or by exports unrelated to the imports, there might also be something fishy going on here. If the Canadian certificate contained certain optional information provided for in the process, such as the number of stones over two carats in size, this sort of stratagem would no longer be possible.
The Bloc Québécois is counting on the committee hearings to see if it might be possible to make the act more effective and whether all the parties might be interested in doing so.
The real weakness of a Kimberley process is the lack of resources dedicated to control in the poor countries and the lack of assistance the latter are being offered by the rich countries. I rarely say such a thing.
I just want to say, in the last minute remaining, that it is absolutely unacceptable that blood diamonds are being used to finance conflicts. We all agree on that. We must take the necessary precautions for the Kimberley process to be more than a semblance of assurance. It must guarantee assurance.
We are committed to the Kimberley process because we think that if we succeed in the conflict diamond issue, then we can learn from that success to promote fair globalization. Countries, companies and NGOs have been able to sit down, identify a problem and find solutions for developing countries to stop being cannon fodder and stop contributing to the wealth of companies that might come from Canada or other developed nations.