[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[S. 1084 Introduced in Senate (IS)]







107th CONGRESS
  1st Session
                                S. 1084

 To prohibit the importation into the United States of diamonds unless 
the countries exporting the diamonds have in place a system of controls 
               on rough diamonds, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             June 21, 2001

 Mr. Durbin (for himself, Mr. DeWine, and Mr. Feingold) introduced the 
 following bill; which was read twice and referred to the Committee on 
                                Finance

_______________________________________________________________________

                                 A BILL


 
 To prohibit the importation into the United States of diamonds unless 
the countries exporting the diamonds have in place a system of controls 
               on rough diamonds, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Clean Diamonds Act''.

SEC. 2. FINDINGS.

    Congress finds the following:
            (1) Diamonds are being used by rebels and dictators to 
        finance military activities, overthrow legitimate governments, 
        subvert international efforts to promote peace and stability, 
        and commit horrifying atrocities against unarmed civilians. 
        During the past decade, more than 6,500,000 people from Sierra 
        Leone, Angola, and the Democratic Republic of the Congo have 
        been driven from their homes by wars waged in large part for 
        control of diamond mining areas. A million of these are 
        refugees eking out a miserable existence in neighboring 
        countries, and tens of thousands have fled to the United 
        States. Approximately 3,700,000 people have died during these 
        wars.
            (2) The countries caught in this fighting are home to 
        nearly 70,000,000 people whose societies have been torn apart 
        not only by fighting but also by terrible human rights 
        violations.
            (3) Human rights advocates, the diamond trade as 
        represented by the World Diamond Council, and the United States 
        Government recently began working to block the trade in 
        conflict diamonds. Their efforts have helped to build a 
        consensus that action is urgently needed to end the trade in 
        conflict diamonds.
            (4) The United Nations Security Council, acting under 
        chapter VII of the Charter of the United Nations, has 
        prohibited all states from importing diamonds from, and 
        exporting weapons to, certain countries affected by diamond-
        related conflicts. Unfortunately, diamond smugglers continue 
        funding rebel movements, which has led in turn to regional 
        destabilization, arms proliferation, and other activities which 
        are a potential threat to the essential security interests of 
        the United States, and the United Nations sanctions have not 
        been sufficiently effective to achieve their goals. In order to 
        put an end to this emergency situation in international 
        relations, to maintain international peace and security, and to 
        protect its essential security interests, and pursuant to its 
        obligations under the United Nations Charter, the United States 
        must take action against this illicit trade and smuggling of 
        conflict diamonds.
            (5) Articles XX and XXI of GATT 1994 allow WTO member 
        countries to take measures to deal with situations such as that 
        presented by the current trade in conflict diamonds without 
        violating their WTO obligations.
            (6) Without effective action to eliminate trade in conflict 
        diamonds, the trade in legitimate diamonds faces the threat of 
        a consumer backlash that could damage the economies of 
        countries not involved in the trade in conflict diamonds and 
        penalize members of the legitimate trade and the people they 
employ. To prevent that, South Africa and more than 20 other countries 
are involved in working, through the ``Kimberley Process'', toward 
devising a solution to this problem. As the consumer of a majority of 
the world's supply of diamonds, the United States has an obligation to 
help sever the link between diamonds and conflict and press for 
implementation of an effective solution.

SEC. 3. DEFINITIONS.

    In this Act:
            (1) Diamonds.--The term ``diamonds'' means diamonds 
        classified under subheading 7102.31.00 or subheading 7102.39.00 
        of the Harmonized Tariff Schedule of the United States.
            (2) GATT 1994.--The term ``GATT 1994'' means the General 
        Agreement on Tariffs and Trade annexed to the WTO Agreement.
            (3) Polished diamonds.--The term ``polished diamonds'' 
        means diamonds that are classified under subheading 7102.39.00 
        of the Harmonized Tariff Schedule of the United States.
            (4) Rough diamonds.--The term ``rough diamonds'' means 
        diamonds that are unworked, or simply sawn, cleaved, or bruted, 
        classified under subheading 7102.3100 of the Harmonized Tariff 
        Schedule of the United States.
            (5) United states.--The term ``United States'', when used 
        in the geographic sense, means the several States, the District 
        of Columbia, and any commonwealth, territory, or possession of 
        the United States.
            (6) WTO agreement.--The term ``WTO Agreement'' means the 
        Agreement Establishing the World Trade Organization entered 
        into on April 15, 1994.
            (7) World trade organization and wto.--The terms ``World 
        Trade Organization'' and ``WTO'' mean the organization 
        established pursuant to the WTO Agreement.

SEC. 4. REQUIREMENTS FOR THE IMPORTATION OF DIAMONDS.

    (a) Requirements.--
            (1) Rough diamonds.--Rough diamonds may not be imported 
        into the United States from a country unless the country 
        exporting the rough diamonds is implementing--
                    (A) a system of controls on the export from, and 
                import into, that country of rough diamonds that meets 
                the requirements of paragraph (2), consistent with 
                United Nations General Assembly Resolution 55/56 
                adopted on December 1, 2000, or consistent with an 
                international agreement which requires such controls 
                and to which the United States is a party; or
                    (B) a system of controls that the President 
                determines to be functionally equivalent to the system 
                of controls specified in subparagraph (A).
            (2) System of controls.--The system of controls referred to 
        in paragraph (1)(A) shall include the following requirements:
                    (A) Rough diamonds, when exported from the country 
                in which they were extracted, shall be sealed in a 
                secure, transparent container or bag by appropriate 
                government officials of that country.
                    (B) The sealed container or bag described in 
                subparagraph (A) shall include a fully visible document 
                that--
                            (i) certifies the country from which the 
                        rough diamonds were extracted;
                            (ii) records a unique export registration 
                        number for, and the total carat weight of, the 
                        rough diamonds in the container or bag; and
                            (iii) is issued by the government of that 
                        country.
                    (C) The country from whose territory the rough 
                diamonds are first exported shall maintain at least the 
                information on exports of rough diamonds described in 
                subparagraph (B).
                    (D) Any country into whose territory the rough 
                diamonds are first imported prior to polishing or other 
                processing--
                            (i) shall permit importation of the rough 
                        diamonds only in a container or bag described 
                        in subparagraphs (A) and (B); and
                            (ii) shall verify, on the basis of 
                        documentation provided to it by electronic or 
                        other reliable means, the legitimacy of the 
                        export document included in the sealed 
                        container or bag in which the rough diamonds 
                        were shipped, using the information maintained 
                        by the country of export.
                    (E) Appropriate government authorities of countries 
                that import rough diamonds shall conduct reasonable 
                physical inspections of a sampling of the sealed 
                containers and bags of rough diamonds to ensure 
                compliance with the requirements of this paragraph.
            (3) Polished diamonds.--Polished diamonds may not be 
        imported into the United States from a country unless the 
        country exporting the diamonds--
                    (A) is implementing a system of controls on the 
                export from, and import into, that country of rough 
                diamonds described in paragraph (1), except that 
such system shall not be required for those countries that do not 
import rough diamonds; and
                    (B) requires that its own imports of diamonds 
                originate from countries that have implemented a system 
                of controls on the export and import of rough diamonds 
                described in paragraph (1).
            (4) Jewelry containing diamonds.--Jewelry containing 
        diamonds may not be imported into the United States from a 
        country unless the country exporting the jewelry--
                    (A) is implementing a system of controls on the 
                export and import of rough diamonds described in 
                paragraph (1), except that such system shall not be 
                required for those countries that do not import rough 
                diamonds; and
                    (B) requires that its own imports of diamonds 
                originate from countries that have implemented a system 
                of controls on the export and import of rough diamonds 
                described in paragraph (1).
            (5) Exclusions.--
                    (A) In general.--The provisions of this subsection 
                do not apply to--
                            (i) jewelry containing diamonds imported by 
                        or on behalf of a person for personal use and 
                        accompanying a person upon entry into the 
                        United States; or
                            (ii) diamonds or jewelry containing 
                        diamonds, previously exported from the United 
                        States and reimported by the same importer, 
                        without having been advanced in value or 
                        improved in condition by any process or other 
                        means while abroad, if the importer declares 
                        that the reimportation of the diamonds or 
                        jewelry, as the case may be, satisfies the 
                        requirements of this clause.
                    (B) Regulations.--The Secretary of the Treasury is 
                authorized to promulgate regulations to ensure that the 
                exclusions described in subparagraph (A) do not become 
                a means to evade the requirements made by this section.
    (b) Monitoring.--The President shall ensure that any system of 
controls described in subsection (a)(1) is monitored by appropriate 
agencies of the United States.
    (c) Presidential Advisory Commission.--
            (1) Purpose.--The President shall appoint an advisory 
        commission the purpose of which shall be to make 
        recommendations to the President on the effectiveness of the 
        monitoring system under subsection (b), and on ways to improve 
        that monitoring system.
            (2) Membership.--The advisory commission shall be composed 
        of 9 members, 2 of whom shall be representatives of private and 
        voluntary organizations, and 2 of whom shall be representatives 
        of the diamond industry. The remaining members may be appointed 
        from appropriate agencies of the United States and other 
        interested parties.

SEC. 5. ENFORCEMENT.

    (a) In General.--Diamonds imported into the United States in 
violation of section 4 are subject to seizure and forfeiture laws, and 
all criminal and civil laws of the United States shall apply to the 
same extent as any other violation of the customs and navigation laws 
of the United States.
    (b) Prohibiting Transactions in Certain Property.--
            (1) In general.--The President may exercise the authorities 
        under the International Emergency Economic Powers Act (50 
        U.S.C. 1701 et seq.) to prohibit transactions involving any 
        property described in paragraph (2) or to prohibit any 
        transaction by a person subject to the jurisdiction of the 
        United States with respect to such property.
            (2) Property covered.--Property described in this paragraph 
        is property owned or controlled by a person that exports 
        diamonds to the United States from a country that fails to meet 
        the requirements of section 4(a).
            (3) Penalties.--The penalties provided in section 206 of 
        the International Emergency Economic Powers Act shall apply to 
        violations of licenses, orders, or regulations issued under 
        this subsection to the same extent as such penalties apply with 
        respect to violations under that Act.
    (c) Proceeds From Fines and Forfeited Goods.--Notwithstanding any 
other provision of law, the proceeds derived from fines imposed for 
violations of section 4(a), and from the seizure and forfeiture of 
goods imported in violation of section 4(a), shall, in addition to 
amounts otherwise available for such purposes, be available only for--
            (1) the Leahy War Victims Fund administered by the United 
        States Agency for International Development or any successor 
        program to assist victims of foreign wars; and
            (2) grants under section 131 of the Foreign Assistance Act 
        of 1961 (22 U.S.C. 2152a).

SEC. 6. LIMITATIONS ON OPIC AND EXPORT-IMPORT BANK.

    (a) OPIC.--The Overseas Private Investment Corporation may not 
insure, reinsure, guarantee, or finance any investment in connection 
with a project involving the mining, polishing or other processing, or 
sale of diamonds in a country that fails to meet the requirements of 
section 4(a).
    (b) Export-Import Bank.--The Export-Import Bank of the United 
States may not guarantee, insure, extend credit, or participate in an 
extension of credit in connection with the export of any goods to a 
country for use in an enterprise involving the mining, polishing or 
other processing, or sale of diamonds in a country that fails to meet 
the requirements of section 4(a).

SEC. 7. WAIVER AUTHORITY.

    (a) Waiver Authority.--The President may at any time waive the 
applicability of this Act with respect to a country for a period of not 
more than 6 months if the President, before granting the waiver--
            (1) determines that the country is cooperating because the 
        country--
                    (A) is making significant progress toward 
                concluding an international agreement such as the one 
                described in section 12; or
                    (B) is acting in good faith to establish and 
                enforce a unilateral certification system containing 
                the requirements described in section 4(a); and
            (2) transmits that determination, with the reasons 
        therefor, to Congress.
    (b) Evaluation Criteria.--Not later than 180 days after the date of 
enactment of this Act, the President, in consultation with the heads of 
appropriate Federal agencies, shall develop and publish criteria that 
will be used to evaluate whether or not a country is a cooperating 
country for purposes of subsection (a). Before adopting such criteria 
in final form, the President shall provide for public notice and a 
period for public comment on the criteria.

SEC. 8. ANNUAL REPORTS.

    Not later than 6 months after the date of the enactment of this 
Act, and not later than September 30 of each subsequent calendar year, 
the President shall transmit to Congress a report--
            (1) describing and evaluating the effectiveness of any 
        system of controls on trade in diamonds described in section 
        4(a)(1);
            (2) identifying those countries that are implementing those 
        controls;
            (3) identifying those countries that are not implementing 
        those controls, and describing the effects of that failure on 
        the trade in diamonds used to support conflict in the country 
        or regions in which the diamonds are extracted; and
            (4) describing in detail technological developments that 
        allow--
                    (A) the determination of where a diamond was mined; 
                and
                    (B) the marking and tracking of rough and polished 
                diamonds.

SEC. 9. GAO REPORT.

    Not later than 3 years after the date of enactment of this Act, the 
Comptroller General of the United States shall transmit a report to 
Congress on the effectiveness of the provisions of this Act in 
preventing the importation of diamonds traded in violation of any 
system of controls described in section 4(a)(1). The Comptroller 
General shall include in the report any recommendations on any 
modifications to this Act that may be necessary.

SEC. 10. STATUTORY CONSTRUCTION.

    This Act may not be construed to apply to restrictions on the 
importation of diamonds in effect on its date of enactment or to 
diminish the authority of the President under the International 
Emergency Economic Powers Act or any other Act to impose restrictions 
on the importation of diamonds after such date.

SEC. 11. CONSISTENCY OF ACTIONS UNDER THIS ACT WITH THE WTO.

    (a) Statutory Construction.--Nothing in this Act requires the 
Secretary of the Treasury or the Commissioner of Customs to take any 
action that would be a violation of United States obligations under the 
agreements of the World Trade Organization (WTO), as determined in a 
WTO dispute settlement proceeding.
    (b) Sense of Congress.--It is the sense of Congress that, in the 
event there is a determination in a WTO dispute settlement proceeding 
that this Act, any part of this Act, or any action taken under this Act 
is inconsistent with United States obligations under the WTO, the 
United States will take such steps as are necessary to bring itself 
into conformity with its WTO obligations.

SEC. 12. SENSE OF CONGRESS ON NEGOTIATION OF AN INTERNATIONAL 
              AGREEMENT.

    It is the sense of Congress that the President should take the 
necessary steps to negotiate an international agreement, working in 
concert with the Kimberley Process referred to in section 2(6), to 
eliminate the trade in diamonds used to support conflict in the country 
or regions in which the diamonds are extracted. Such an agreement 
should create an effective global certification system covering diamond 
exporting and importing countries, and should include--
            (1) the requirements described in section 4(a);
            (2) a requirement that any country from whose territory 
        rough diamonds are exported publish annual reports disclosing 
        the names of all entities and individuals who hold mining 
        concessions, licenses to purchase rough diamonds, and licenses 
        to export rough diamonds, as well as the volume and value of 
        such diamonds exported categorized by country of importation; 
        and
            (3) a requirement that any country into whose territory 
        rough diamonds are imported publish annual reports disclosing 
        the source by country of exportation of its diamond imports as 
        well as the volume and value of such diamonds for each such 
        country of exportation.

SEC. 13. SENSE OF CONGRESS ON IMPLEMENTATION OF THE SYSTEM OF CONTROLS.

    It is the sense of Congress that companies involved in diamond 
extraction and trade should make financial contributions to countries 
seeking to implement any system of controls described in section 
4(a)(1), if those countries would have financial difficulty 
implementing that system of controls.

SEC. 14. AUTHORIZATION OF APPROPRIATIONS.

    There is authorized to be appropriated to the President $5,000,000 
for fiscal year 2002 to provide assistance to countries seeking to 
implement any system of controls described in section 4(a)(1), if those 
countries would have financial difficulty implementing that system of 
controls.

SEC. 15. EFFECTIVE DATE.

    This Act shall take effect 6 months after its date of enactment.
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