Trade Restrictions On Rough Diamonds

In the hands of rebels, diamonds have become a vital resource for financing war and conflicts which has caused over two million deaths in the past decade.4 Due to the direct link with war and armed conflicts, the phrase"conflict diamond"or"blood diamond"has caught worldwide attention recently.In order to break the link between the illicit transaction of rough diamonds and armed conflicts, as well as to protect the legitimate trade in diamonds, with the support from the United Nations and the collective contribution from the international community, the Kimberly Process Certification Scheme (hereafter the"KPCS") was officially adopted in November 2002. The KPCS is a memorandum or political agreement regarding conflict diamonds. By providing a minimum standard for its state parties to adopt in their respective national certification systems of rough diamonds, the KPCS aims at unifying the various national practices and ensuring every rough diamond legally obtained is accompanied by an KPCS certification.Although the KPCS was welcomed by the United Nations and most of the countries, it also triggered a controversial debate as to its compliance with the WTO rules. Section III (c) of the KPCS requires its member states to"ensure that no shipment of rough diamonds is imported from or exported to a non-Participant". Many countries fear that this rule will violate their obligations under the World Trade Organization (hereafter"WTO").Not all WTO members have adopted the KPCS, yet many of them are important rough diamond producing and trading countries. 5Although there is no conclusion yet as to whether the KPCS is inconsistent with the WTO rules, the possibility of being so will definitely slow down the member states to effectively implement the KPCS.The KPCS aims at establishing an international certification scheme which can trace the origin of all rough diamonds and prevent conflict diamonds from entering the international trade. In order to do so, the global participation is essential to the KPCS. To allow non-participants of the KPCS into the rough diamond trade will fundamentally undermine the effectiveness of the scheme itself.By analyzing the KPCS and the relevant WTO rules, this article aims at proving Section III (c) is in compliance with the WTO rules, and justifying the KPCS with the two exception clauses of the General Agreement on Tariffs and Trade (hereafter"GATT"). Moreover, in the research, one found that although China is a participant of the KPCS and has already adopted national implementing legislation, very few studies or discussion have been made with regards to the conflict diamonds. In view of this situation, this article tries to explore the problem so as to intrigue more interest and attention to the KPCS and conflict diamonds related issue.This article is divided into four chapters.The first chapter is the background analysis of the KPCS. By analyzing the three major civil wars in Africa, this chapter will introduce the birth of the conflict diamond and explore the fueling role of diamonds in war.The second chapter will introduce in detail of the KPCS and analyze China's implementation in view of the adopted legislation. The third chapter will examine the compliance of the KPCS with the WTO rules; and analyze, in particular, its compliance with the general elimination of quantitative restrictions required by GATT and the applicability of the two exception clauses.Finally, the last chapter will discuss the success and inadequacy of the KPCS and present the suggestions for its future development.