UAE for Standardization of Rough Prices

Dubai: Kimberley Process (KP) chairman UAE has sponsored an initiative aimed at standardizing rough diamond prices, due to be launched later this year, according to a report in The National.

It comes as a response to NGO criticism of transfer mispricing practices in the diamond trade, which have allegedly deprived diamond producer states of tax revenue.

“We feel that should address all the questions that have been raised and start a dialogue on valuation, and we’re planning to hold workshops to start the process,” said Kimberley Process chairman Ahmed bin Sulayem. “We need to see whether it’s a UAE issue, or whether it’s an issue with producing countries or if it’s an industry-wide problem, and then come with ideas on how we can tackle the problems.”

Dubai has been particularly targeted for criticism, due to its role as a major diamond export hub, with NGOs accusing the UAE of turning a blind eye to such practices, thus aiding and abetting the flow of wealth out of African diamond producers.

Amnesty International’s report published in September titled Chains of Abuse: The Case of diamonds from the Central African Republic and the Global Diamond Supply Chain charged that the lack of a global standardized pricing mechanism for rough diamonds and opaque valuation practices, enables international diamond traders to make large profits at the expense of diamond producing countries. Amnesty’s report claimed that one of the ways this was achieved was through minimizing export taxes by undervaluing diamonds, which in turn leads to the diamond producing countries receiving less revenue.

Bin Sulayem did not say when the initiative’s formal launch will be, but its progress through the Kimberley Process is not expected to be without its challenges, nor is it likely that there will be resolution before the end of the UAE’s term as KP chair at the end of the year.

The announcement of the initiative has coincided with mediation efforts between the UAE and a number of NGOs, who decided to boycott the Kimberley Process during the country’s chairmanship. The Civil Society Coalition (CSC), a group of nine NGOs, announced its boycott of the Kimberley Process during 2016 in September, specifically due to the issue of undervaluing diamonds.