FAIT Committee Meeting

37th PARLIAMENT, 2nd SESSION

Standing Committee on Foreign Affairs and International Trade

EVIDENCE

CONTENTS

Wednesday, October 30, 2002

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1540

The Chair (Mr. Bernard Patry (Pierrefonds—Dollard, Lib.))

Mr. Bruce Boyd (Acting Associate Director, Stewardship Division, International and Domestic Market Policy Division, Mineral and Metal Policy Branch, Minerals and Metals Sector, Natural Resources Canada)

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1545

The Chair

Mr. Darrel Stinson (Okanagan—Shuswap, Canadian Alliance)

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1550

Mr. Bruce Boyd

The Chair

Mr. David Cox (Legal Counsel, Indian and Northern Affairs Canada)

Mr. Darrel Stinson

Mr. David Cox

The Chair

Mr. Benoît Serré (Timiskaming—Cochrane, Lib.)

The Chair

Mr. Benoît Serré

The Chair

Ms. Francine Lalonde (Mercier, BQ)

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1555

The Chair

Mr. Bruce Boyd

Ms. Francine Lalonde

Mr. Bruce Boyd

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1600

Ms. Francine Lalonde

The Chair

Ms. Francine Lalonde

The Chair

Ms. Francine Lalonde

The Chair

Mr. Bruce Boyd

Ms. Francine Lalonde

The Chair

Ms. Geneviève Giroux (Legal Counsel, Foreign Affairs and International Trade, Legislative and Regulatory Services, Department of Justice Canada)

The Chair

Mr. David Pratt (Nepean—Carleton, Lib.)

Mr. Bruce Boyd

Mr. David Pratt

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1605

Mr. Bruce Boyd

The Chair

Mr. Gerald Keddy (South Shore, PC)

The Chair

Mr. Bruce Boyd

Mr. Gerald Keddy

Mr. Bruce Boyd

Mr. Gerald Keddy

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1610

Mr. David Pratt

The Chair

Mr. David Pratt

The Chair

Ms. Geneviève Giroux

The Chair

Mr. Keith Martin (Esquimalt—Juan de Fuca, Canadian Alliance)

Mr. Gerald Keddy

Mr. Keith Martin

Mr. Bruce Boyd

Mr. Keith Martin

Mr. Bruce Boyd

Mr. Keith Martin

Mr. Bruce Boyd

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1615

Mr. Keith Martin

The Chair

Mr. Bruce Boyd

Mr. Keith Martin

Mr. Bruce Boyd

The Chair

Mr. Stéphane Bergeron (Verchères—Les-Patriotes, BQ)

Mr. Bruce Boyd

The Chair

Mr. Stéphane Bergeron

Ms. Geneviève Giroux

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1620

Mr. Stéphane Bergeron

Ms. Geneviève Giroux

Mr. Stéphane Bergeron

Mr. Bruce Boyd

The Chair

Mr. Gerald Keddy

The Chair

Mr. David Cox

The Chair

Mr. Gerald Keddy

Mr. David Cox

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1625

Mr. Gerald Keddy

Mr. Bruce Boyd

Mr. Gerald Keddy

Mr. Bruce Boyd

Mr. David Pratt

Mr. Bruce Boyd

Mr. Gerald Keddy

Mr. Bruce Boyd

Mr. Gerald Keddy

Mr. Bruce Boyd

Mr. David Pratt

Mr. Gerald Keddy

Mr. David Pratt

Mr. Gerald Keddy

Mr. David Pratt

The Chair

Mr. Stéphane Bergeron

The Chair

Mr. Bernard Taylor (Executive Director, Partnership Africa Canada)

The Chair

Mr. Bernard Taylor

The Chair

Mr. Bernard Taylor

The Chair

Mr. Keith Martin

Mr. Bernard Taylor

Mr. Keith Martin

Mr. Bernard Taylor

Mr. Keith Martin

Mr. Bernard Taylor

The Chair

Mr. Bernard Taylor

Mr. Keith Martin

The Chair

Mr. Stéphane Bergeron

The Chair

Ms. Susan Isaac (Coordinator, Partnership Africa Canada)

The Chair

Mr. Ralph Hazleton (Research Associate, Partnership Africa Canada)

Mr. Stéphane Bergeron

The Chair

Mr. Bernard Taylor

The Chair

Mr. Ralph Hazleton

The Chair

Mr. John Harvard (Charleswood—St. James—Assiniboia, Lib.)

Mr. Bernard Taylor

Mr. John Harvard

Mr. Bernard Taylor

The Chair

Mr. Gerald Keddy

Mr. Ralph Hazleton

Mr. Gerald Keddy

Mr. Ralph Hazleton

Mr. Gerald Keddy

The Chair

Mr. Gerald Keddy

Mr. Bernard Taylor

Mr. Gerald Keddy

The Chair

Mr. David Pratt

Mr. Ralph Hazleton

Mr. David Pratt

The Chair

Mr. Darrel Stinson

Mr. Bernard Taylor

Mr. Darrel Stinson

The Chair

Mr. Benoît Serré

The Chair

Ms. Francine Lalonde

The Chair

Mr. Bernard Taylor

The Chair

Mrs. Marlene Jennings (Notre-Dame-de-Grâce—Lachine, Lib.)

The Chair

Mr. Bernard Taylor

The Chair

Mr. Ralph Hazleton

The Chair

Mr. Gerald Keddy

Mr. Bernard Taylor

The Chair

Ms. Francine Lalonde

The Chair

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CANADA

Standing Committee on Foreign Affairs and International Trade

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NUMBER 004

l

2nd SESSION

l

37th PARLIAMENT

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EVIDENCE

Wednesday, October 30, 2002

[Recorded by Electronic Apparatus]

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[Translation]

    The Chair (Mr. Bernard Patry (Pierrefonds—Dollard, Lib.)): The Standing Committee on Foreign Affairs and International Trade is meeting today, October 30, 2002.

[English]

    Through a reference from the House dated October 21, 2002, it is ordered that Bill C-14, an act providing for controls on the export, import, or transit across Canada of rough diamonds and for a certification scheme for the export of rough diamonds in order to meet Canada's obligations under the Kimberley process, be read a second time and referred to the Standing Committee on Foreign Affairs and International Trade.

    According to the rules, I now say that I now call clause 1.

    We have witnesses today. From the Department of Natural Resources, we have Mr. Bruce Boyd, who is the acting associate director for the International and Domestic Market Policy Division, Minerals and Metals Sector.

[Translation]

    From the Department of Indian and Northern Affairs, we welcome Mr. David Cox, Counsel, and from the Department of Justice, Ms. Geneviève Giroux, who is also a legal counsel.

    Welcome to both of you.

[English]

    Mr. Cox, are you going to start with an opening remark, or is it Mr. Boyd? It's Mr. Boyd?

    Go ahead, please.

    Mr. Bruce Boyd (Acting Associate Director, Stewardship Division, International and Domestic Market Policy Division, Mineral and Metal Policy Branch, Minerals and Metals Sector, Natural Resources Canada): Thank you, Mr. Chairman.

    International concern persists about the link between armed conflict and illicit international trade in rough diamonds, particularly in Angola, Sierra Leone, and the Democratic Republic of Congo. Conflict diamonds have had a devastating impact on peace, security, and sustainable development in affected countries.

    During its term on the UN Security Council from 1999 to 2000, Canada played a key role as chair of the Angola sanctions committee, in pressing for measures to strengthen implementation of these sanctions. In December 2000 and March 2002, the UN General Assembly adopted resolutions co-sponsored by Canada calling for the development of an international certification scheme for rough diamonds. This would tighten controls over the rough diamond trade and prevent conflict diamonds from entering legitimate markets.

    The honourable member for Nepean--Carleton introduced a private member's bill last year that recognized that this trade had to be stopped because it threatened human rights, political stability, economic development, and peace and security in a number of areas. The issue also threatened the legitimate diamond trade in countries like Botswana, Namibia, South Africa, and Canada.

    In Canada, BHP Billiton's Ekati Diamond Mine, which is 300 kilometres northeast of Yellowknife, has been in operation since 1998. Recently, its complement of employees rose to 740. About 77% of these are northern residents. Of those northerners, about 39% are aboriginals. That means there are over 200 aboriginal employees at that mine.

    The royalties from Ekati, from a second mine that is scheduled to open in 2003, and from two other planned mines, could contribute as much as $68 million in royalties a year to Canada. In addition to diamond mining, a small diamond cutting and polishing industry has grown up in Yellowknife and in the Gaspé region of Quebec. Other polishing facilities and jewellery manufacturers are located in various sites across Canada.

    The Kimberley process is the principal international initiative established to develop practical approaches to the conflict diamond problem and to protect our industry. The Kimberley process was launched by several southern African countries in May 2000, in response to growing international pressure to address peace and security concerns. As well, it protects several national economies that depend on the diamond industry. The process, which is chaired by South Africa, now includes 48 participants that account for 98% of global trade in production of rough diamonds, and they include all of Canada's major diamond trading partners.

    Canada has participated in the Kimberley process since its inception. Over the course of nine plenary sessions and two ministerial meetings, the process has developed detailed proposals for an international certification scheme for rough diamonds. In March 2002, Canada hosted a meeting of the Kimberley process that achieved consensus on the proposals for the scheme.

    The work to prepare legislation to bring to the House began in the spring, immediately following the March agreement, and the preparations carried through this past summer to be ready as early as possible. Participating countries have called for implementation of the certification scheme simultaneously by all participants by the end of 2002. Given this timeline, development and passage of this legislation is an urgent priority.

    A ministerial meeting is planned in Switzerland for next week, at which time countries will review their progress and be asked to commit to implementation of the scheme at national levels and to agree on a specific start date for implementation. The start date is still expected to be the end of 2002.

    The proposed international certification scheme includes several key commitments, including a requirement that all shipments of rough diamonds imported to or exported from Canada be certified under the scheme. It also contains trade prohibitions banning the trade in rough diamonds with countries that do not participate in the scheme. Bill C-14 establishes such a trade regulation regime in Canada.

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    It is necessary to participate in the Kimberley process on this rough diamond certificate scheme. The bill deals strictly with natural rough diamonds. It does not deal with synthetic diamonds, which constitute the majority of the industrial diamond trade, it deals only with the gem-quality stones that are unsorted, unworked, or simply sawn, cleaved, and bruted. This bill provides the authority to verify that natural rough diamonds exported from Canada are non-conflict. It also gives the authority to verify that every shipment of natural rough diamonds entering Canada is accompanied by a Kimberley process certificate from the exporting country, again certifying that the diamonds have a non-conflict source.

    Verification of certificates from other countries will begin at our borders. An exchange of specimen certificates among the participants will ensure that forged certificates will not be passed into Canada. The monitoring of the certification processes of other countries is part of the international arrangement among the participants. Consistent with the scheme and other countries' processes, this bill is designed to ensure that natural rough diamonds in transit from one country to another across Canadian territory will be limited to trade between Kimberley process participants, so that Canada will not be a conduit for conflict diamond trade.

    I would like to address some of the specific issues relating to the bill that were raised during second reading. The treatment of in-transit rough diamonds was questioned. Consistent with the internationally agreed upon treatment of in-transit shipments, the clause in the bill provides the minister with the discretion to order the return of rough diamonds that are destined for transit across Canadian territory if they are accompanied by a KPC—a Kimberley process certificate—but are in a container that shows evidence of being opened. The container would be returned to the export authority of the participating country, it wouldn't be given back to the shipper. However, whether the opening resulted from an accident or wilful design, the export authority that issued the Kimberley process certificate will be in a better position than Canadian authorities for verifying the evidence. It will have the information from the original application, and the coordinates of the exporter. In case of an offence, it will be more likely able to prosecute successfully.

    Concern was expressed about the lack of designated points of entry. The bill provides for designation of points of entry; however, it is as yet unclear whether such a measure will be necessary. Customs officials will verify that any rough diamonds entering Canada are accompanied by a Kimberley process certificate. In cases of suspicion of an offence, they will be able to detain the shipment until proper verification has been conducted. If necessary, designated points of entry and exit could help to facilitate the verification of the imports and the exports.

    Some mention was made of lengthening the time limit for bringing a prosecution. Bill C-14 provides that a prosecution must be brought within three years of the occurrence of an offence, although the more typical limit for bringing a prosecution would be two years. Three years was adopted based on other trade legislation. The example we have is the Export and Import Permits Act.

    There has been mention of the rights of the investigators under the act. The investigators would be public officers who would require warrants under the Criminal Code. For their investigations, they would have access to cross private property to execute their warrants.

    Passage of Bill C-14 will put in place all the authorities required for Canada to meet its commitments under the international Kimberley process. Prompt passage of Bill C-14 will ensure that these authorities are in place by year's end, when the process is planned for international implementation.

    Thank you, Mr. Chairman.

    The Chair: Thank you very much, Mr. Boyd.

    We're going to start questions and answers. Members have five minutes for those questions and answers, and we'll start with Mr. Stinson.

    Mr. Darrel Stinson (Okanagan—Shuswap, Canadian Alliance): Thank you, Mr. Chairman.

    Mr. Boyd, in going through the bill, clause 4—which contains the disclosure powers given to the minister—has raised some concerns in terms of defining who the minister can disclose and what information is subject to such disclosure. This is brought forward because of confidentiality. Some companies are very concerned in regard to their business and their competitive edge not being disclosed. There's an understanding out there that there is a possibility of word-changing to try to rectify that.

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    Mr. Bruce Boyd: For that question I would defer to my colleagues, who are lawyers, if that's all right, Mr. Chairman.

    The Chair: Yes, please.

    Mr. Cox.

    Mr. David Cox (Legal Counsel, Indian and Northern Affairs Canada): Mr. Chair, the clause being referred to was intended to operate as follows.

    In the course of administering the act, it will be necessary to have the ability to verify information both in the application for the Kimberley process certificate and at any time until it's leaving Canada, to ensure that the information is correct. In order to do so, it may in fact be necessary that an inspector would have to perhaps disclose to a third party some information that might have formed part of the application. This would be the circumstance that would likely arise when you would have to rely on this provision.

    I guess the first point to make is that it's a discretionary provision, not a mandatory one. The minister can make a decision and can take steps to try to maintain confidentiality if there is in fact confidential business or sensitive information involved in the disclosure.

    Wording has been presented and will be considered that will essentially put some framework to the disclosure. That is, it would guide the minister as to what, in the nature of public interest, must be considered prior to the disclosure. But the fact remains that the intent is there. To ensure that the credibility of the scheme is maintained, the minister must be in a position to possibly disclose. It should be stressed that it won't happen in every case, but the authority is there if necessary.

    Mr. Darrel Stinson: When you talk about diamonds, you're talking about large amounts of money and large amounts of speculation. Some of this information will absolutely pertain to shareholders in the companies. You can fall back and almost use it as insider information on a confidential report if it comes out.

    Mr. David Cox: Mr. Chair, I understand that the question is focusing on issues that may go to an insider trading issue or potentially to an insider trading situation. From our understanding, that speaks to the disclosure of the value of the diamond shipment.

    At this point, there is no alternative to requiring an applicant to indicate what the value of the shipment is. At present, it is a minimum requirement of the international working document. That's not to say it doesn't perhaps create some difficulties in very specific situations, but, generally speaking, the world community involved in the Kimberley process has required that this critical piece of information be a minimum requirement of the scheme.

    What we try to do in the provision is ensure that the minister is able to keep credibility with the process. The fact that it's discretionary is there so that it's not utilized in every case. And as I say, some additional wording is being considered to put a little higher test on the minister perhaps.

    The Chair: Thank you, Mr. Cox.

    Monsieur Serré.

    Mr. Benoît Serré (Timiskaming—Cochrane, Lib.): On a point of order, colleagues, we'll be bringing in an amendment to clarify the situation. I know the clerk has it, and if the chair permits it, we can circulate the amendment. Maybe it will address the concern.

    The Chair: That's fine if all agree. I know the government has a few amendments to be brought up—

    Mr. Benoît Serré: I know it's not clause-by-clause at this point, but—

    The Chair: I fully agree that if it's the wish of the committee, it could be circulated right now.

    Some hon. members: Agreed.

    The Chair: Thank you.

    Madame Lalonde.

[Translation]

    Ms. Francine Lalonde (Mercier, BQ): Thank you, Mr. Chairman. I have three issues I'd like to get to. If I run out of time, my colleague will continue for me.

    The first issue was raised by Les Diamants du Saint-Laurent. No doubt you're familiar with this company that imports, cuts and exports diamonds. The company insists that the certificate accompanying the diamond shipment lists quantity, weight and number of carats. The fact of the matter is that a shipment of 250 diamonds does not have the same value as 10 shipments of 25 diamonds. If the content of the 250 carats isn't specified, we could have a situation where the diamonds could be resold or sold on the black market for a fairly substantial profit. I trust that company representatives will have an opportunity to put in a brief appearance before the committee on Tuesday morning. All of this has happened quickly, but they insist that the contents...This is quite legitimate. I reviewed the text of the Kimberley Process. It's quite legitimate to provide details of the diamonds contained in the sealed container. That's my first comment.

    I understand that as the bill is now drafted, the minister could decide to proceed by way of regulations. Therefore, I have a sub-question for you. Would it be possible for us to take a look at the regulations? They might be satisfied if the regulations specified diamond weight and characteristics. That was the first point I wanted to make.

    My second point concerns the inspectors who will verify shipments. Minister Dhaliwal received a letter from Quebec Minister François Gendron advising him that Quebec has jurisdiction over its natural resources, as do the other provinces. Therefore, permission to conduct exploration and mining activities is given by the province and as such, certification should be determined by Quebec inspectors, throughout the exploration, mining and manufacturing stages. Otherwise, major problems could arise.

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[English]

    The Chair: Mr. Boyd.

    Mr. Bruce Boyd: On the first question, the guideline for this legislation was a working document negotiated internationally during the Kimberley process meetings. The criteria for the certificates and applications were laid out in that working document. I believe it was in the bill kit.

    The point about the weight is true. They would ask for the weight of the diamonds, but not the details or the breakdown by distribution. So only the total weight of the shipment would be required for the certificate. This was in annex 1 to the working document. It would give the total weight and not the details on the diamonds in the shipment.

[Translation]

    Ms. Francine Lalonde: May I ask a sub-question at this time? Quite apart from minimal requirements, there could be some optional items. Canada may decide that the quantity and weight in carats of the diamonds in the shipment must be listed on the certificate.

[English]

    Mr. Bruce Boyd: The intent of the bill was to meet the minimum requirements only, not the optional items that were in that document. So if we go back to the document, it's only the total weight that would be required. This is what the intent was. In the bill it says the minister would make the regulations that would be--

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[Translation]

    Ms. Francine Lalonde: —[Editor's note: Inaudible]— minimal requirements. In any event, I hope you're still open to the idea of hearing from Les Diamants Saint-Laurent, because this is an extremely important issue for this firm.

    The Chair: Ms. Lalonde, Mr. Boyd has nothing to do with whether or not we hear from this company. That's up to the committee of which you yourself are a member.

    Ms. Francine Lalonde: I was referring to the department as a whole.

    The Chair: Departmental officials are always available to meet with us.

    Ms. Francine Lalonde: I wanted his assurances that they were willing to listen. They may be willing to meet with us, but sometimes, they've already made up their minds and matters get complicated. I just want them to keep an open mind.

[English]

    The Chair: On the second question, Mr. Boyd, regarding the inspector.

    Mr. Bruce Boyd: As it's written, this is a trade bill, and the inspections would be regarding strictly the items to administer the bill for the diamonds that were destined for trade and would not be involved with the other operations in any province where the regulation of production is definitely within the provincial domain.

[Translation]

    Ms. Francine Lalonde: It's directly related to that.

    The Chair: Go ahead, Ms. Giroux.

    Ms. Geneviève Giroux (Legal Counsel, Foreign Affairs and International Trade, Legislative and Regulatory Services, Department of Justice Canada): Clause 6 of the bill refers to the delegation of ministerial powers. The inspection function could be delegated to the provinces.

    In certain instances, the minister cannot delegate his authority, but this is one function that could be delegated to the provinces.

[English]

    The Chair: Thank you.

    Mr. Pratt.

    Mr. David Pratt (Nepean—Carleton, Lib.): Thank you, Mr. Chair.

    I feel compelled to ask a question today in relation to one aspect of the private member's bill I introduced. Mr. Boyd, I think you've had an opportunity to look at it. I must say, the minister's bill is far superior to mine on a whole lot of levels, but there was one aspect of my bill I was attracted to, and that was the issue, Mr. Boyd, of perhaps establishing a committee--that's in clause 4 of Bill C-402--composed of those representatives of the diamond industry and of other sectors the minister considers appropriate to monitor the effectiveness of the control system and to report and make recommendations to the minister on ways to improve the system, the requirements, and their monitoring. Have you given that issue any further thought, the possibility of perhaps incorporating that suggestion into the legislation?

    Mr. Bruce Boyd: The policy within the department where I work is very definitely that there's continuous evaluation and audit of programs, especially new programs. With that advice, it would be reasonable to have participation from other bodies in the evaluation process. As far as the legislation is concerned, creating a separate body has not been addressed. As I mentioned before, we were trying to meet the minimum requirements of the Kimberley process within the bill. This evaluation would be part of normal procedure, but would not be part of meeting the minimum requirements of the process.

    Mr. David Pratt: As long as the committee could be satisfied that in the process of reviewing the legislation, monitoring the legislation, monitoring the implementation of the legislation, NGOs, for instance, that have been involved in this work, miners, cutters, polishers, etc., would be included, I suspect members wouldn't have much difficulty with it, if we could get those assurances.

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    Mr. Bruce Boyd: I can certainly make that recommendation to my superiors.

    The Chair: Thank you.

    Mr. Keddy.

    Mr. Gerald Keddy (South Shore, PC): Thank you, Mr. Chair

    Since there are five minutes for questions and, hopefully, some answers, I would just tag this onto Mr. Pratt's question. I appreciate the work he's done on this particular piece of legislation, but I also see a great many pitfalls in it.

    In respect of Mr. Boyd's comment, or perhaps it was Mr. Cox's comment, that this is a trade bill, not a natural resources bill, I suspect the government should have put it through trade and industry instead of through natural resources. Where I'm headed with that comment is fairly simple. There are a number of items in this bill I don't see immediate answers to. If the whole intention is to follow the Kimberley process, we also have to be able to dovetail that with an effective working mechanism to allow the diamond industry in Canada to operate. So there are a few things that are totally out of this loop.

    It doesn't allow for the export of bulk samples. If it does allow for export of bulk samples, then I'd like to know how it does. In particular, how can you assay and evaluate a bulk sample? You could have a bulk sample of ore that you were sending away to be tested. It quite simply could have the Star of Africa in it. You don't know what's in it. How do you make sure the diamonds are not smuggled out or smuggled in with a bulk sample? And how can you have a diamond industry if you don't allow for bulk sampling? That needs to be answered. The minister may answer Mr. Pratt's question. It had better be in the legislation, rather than having the minister answer it at a later date.

    The other answer I would like is how the federal versus provincial control thing works. I guess that's more of a legal question, but if this involves diamonds destined for trade, what exactly is the prerogative of the provinces?

    The Chair: On the first question, regarding bulk samples, Mr. Boyd.

    Mr. Bruce Boyd: Right now there is active trade in bulk samples. They are sent to various places for breakdown and analysis. I worked in an assay lab years ago. These travel under a customs tariff code not covered under this bill. That would be expected to continue. The possibility of the Star of Africa turning up a bulk sample is an unknown quantity for the shipper and for the customs people. It's not really the sort of thing the Kimberley process has been trying to address.

    Mr. Gerald Keddy: That, I think, is exactly my point. How do you prevent--and I'm not suggesting that Canadian companies are the problem here--abuse of a system that doesn't cover bulk sampling? You don't know how many diamonds are going out in a bulk sample, and you don't know how many diamonds are coming back. This bill has to answer that question for us. We're not talking about a suitcase full of ore, we're talking about 150 tonnes in a bulk sample.

    Mr. Bruce Boyd: This is true. What you would be talking about in a bulk sample--

    Mr. Gerald Keddy: You have to allow the industry to work here. Gentlemen, we have a problem here, and the problem is that we have a good piece of legislation that's badly needed, we have a timeline, and we also have an industry we should be responsible for protecting. We have two converging entities. We have the Kimberley process, which I think we all agree is a good process. Somehow, we have to dovetail that with our Canadian responsibilities. I see some real problems in the bill in doing that. You can convince me I'm wrong.

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    Mr. David Pratt: I have a point of interest.

    The Chair: Mr. Pratt.

    Mr. David Pratt: It's my understanding, based on all the discussions I've had, that the industry supports this bill. Very clearly, they see it as vital to the protection of their industry in respect of being inside or outside the Kimberley process. So this issue about samples is one that has probably been considered by the industry in regard to the existing regime. Perhaps we need some more elaboration on it, but that would be my initial take on the situation.

[Translation]

    The Chair: Ms. Giroux.

    Ms. Geneviève Giroux: The aim of this bill, as I see it, is to satisfy the requirements of the Kimberley Process within a very restricted time frame. It's a starting point from which to build on. We're satisfying the minimal requirements of the international community and putting in place fairly effective means of complying with the process and avoiding further trade in conflict diamonds.

    Secondly, we're dealing here with an international trade issue. We're not legislating domestic trade. That's why this committee is the appropriate forum in which to discuss this kind of legislative initiative.

    The Chair: Thank you very much, Ms. Giroux.

[English]

    Mr. Martin, then Monsieur Bergeron.

    Mr. Keith Martin (Esquimalt—Juan de Fuca, Canadian Alliance): Merci beaucoup, monsieur le président.

    I thank you all for being here.

    The issue of the number of karats going into a shipment and the number of karats being acquired at the point of exit is a huge loophole. Mr. Keddy, I think that's what you're referring to, isn't it, the number of the karats going in the bulk sample? I just wanted to clarify that.

    Mr. Gerald Keddy: There are two different issues here, shipping rough stones and shipping a bulk sample.

    Mr. Keith Martin: Okay.

    One of the loopholes my connections in the industry tell me exists--correct me if I'm wrong--is the fact that there isn't any requirement in the Kimberley process that identifies the numbers of karats of rough diamonds leaving a country like Sierra Leone and the numbers entering a centre like Antwerp or Tel Aviv. Is that built into the system?

    Mr. Bruce Boyd: The system for keeping track of the exports from Sierra Leone to Antwerp compared with the imports in Antwerp from Sierra Leone is part of the statistical system that has been negotiated internationally under the process. It's in parallel with the certification scheme, but it is a separate initiative under the Kimberley process, it has its own working group, and is covered in this--

    Mr. Keith Martin: It's a regulatory aspect of this, is it?

    Mr. Bruce Boyd: The regulatory aspects are with each country, so that there is no supranational regulation here. What it comes down to is using statistics of the sort you were talking about to identify problems that would have to be followed up on a national basis.

    Mr. Keith Martin: It's wonderful that some of the countries you have here have signed on, like Sierra Leone, the DRC, and Zimbabwe, but there's no rule of law in these countries. I wonder how we can be assured that the certification process at the exit points is going to be adhered to and, second, whether you can acquire certification in a country that doesn't produce diamonds, like Zimbabwe or Ethiopia.

    Mr. Bruce Boyd: There are several parts to the answer. One of them is that this is dealing with participants. The participants are to work together to have national programs that will provide valid certificates. The international community under the Kimberley process, the other participants, the more wealthy participants, has offered to provide expertise and technical aid to the countries that would need it the most. That has been part of the understanding of the Kimberley process.

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    Mr. Keith Martin: Thank you. You brought up a very good point about forgery of certificates. How do we ensure that the certificates at the exit points are not going to be forged in the murky world of the sites of Antwerp and Tel Aviv? As you know, a lot of the blood diamonds have been diverted or laundered through both of those centres. How do we ensure that the certification process is going to be valid and cannot be forged?

    The Chair: Mr. Boyd.

    Mr. Bruce Boyd: The understanding among the countries is that before implementation, there will be an exchange of sample certificates among all the countries--these will be specimen certificates--and the certificates will be produced by competent printing companies that will be able to incorporate into them a number of anti-forgery features. That has been discussed internationally.

    Mr. Keith Martin: Each country will have its own certificate?

    Mr. Bruce Boyd: Each country will have its own certificate. In other words, if we have 48 participants, we will have samples from those 48.

    The other part is the World Diamond Council has undertaken to put images of those certificates on a website that can be accessed by customs officials around the world to verify, at least as a first step, that the certificates they are receiving from a given country match what is on the website. But additional security features will be given to customs officials in each country.

[Translation]

    The Chair: Mr. Bergeron.

    Mr. Stéphane Bergeron (Verchères—Les-Patriotes, BQ): Mr. Chairman, I'd like to focus for a moment on something Mr. Martin just said. What assurances do we have that a country like the Ivory Coast which exports more diamonds than it mines, is not in fact exporting contraband diamonds, which would fly in the face of the Kimberley Process?

[English]

    Mr. Bruce Boyd: In fact, the purpose of the Kimberley process is to prevent that from happening. If Côte d'Ivoire is not a participant, then it will not be able to trade with any of the participating countries, which make up 98% of the trade.

    If Côte d'Ivoire is a participant--and I can refer to the list to see if they are--they will be required to demonstrate that they have a system in place for validating that any diamonds exported with their certificate are from a non-conflict source. This comes back to its domestic national program that will be augmented by aid from other countries.

[Translation]

    The Chair: Mr. Bergeron.

    Mr. Stéphane Bergeron: My question is for Ms. Giroux. What assurances does a company wishing to mine diamonds have that the federal government will move quickly to issue an export certificate once the site has been certified by a provincial inspector?

    The Chair:Ms. Giroux.

    Ms. Geneviève Giroux: I'm not a legal expert, but I assume the administrative process will be the same everywhere in Canada. I don't think the process will be any different in Quebec. The truth of the matter is that I'm here only to explain the legislative measures to you.

º  (1620)  

    Mr. Stéphane Bergeron: I'm not implying that the process will differ from one province to the next. I'm simply saying that a business requires some assurances that it is in its best interest to invest. We're talking about substantial sums of money and a business wants assurances that there will not be an unusually long delay between the inspection stage and certification by the provincial inspector, regardless of the province, and the issuance of the export certificate by the federal government.

    Ms. Geneviève Giroux: Responsibility for issuing certificates can be delegated to an authority other than Natural Resources Canada. In future, consultations with the provinces will show if delegating this task to the provinces is necessary. The job of issuing certificates could indeed be delegated to the provinces.

    Mr. Stéphane Bergeron: I gather you understood that some members would like to see these sealed containers list not only the number of carats contained therein, but also weight and quantity. We were told earlier that currently there was no provision for this in the Kimberley Process.

    However, can you tell us at this time if some countries would voluntarily agree to list this information at some point in the future on the shipment?

[English]

    Mr. Bruce Boyd: Each country will have its own system in place, and a country could require that kind of information for the certificates it is issuing for export. But as a participant in the Kimberley process, it would be very irregular for a country to require that kind of additional information, such as the number of diamonds in a shipment. It would be quite irregular for it to require that of the other participants, since it is not one of the minimum requirements that was agreed to.

    The Chair: Thank you.

    Mr. Keddy, for one or two questions, please, and then we will change witnesses.

    Mr. Gerald Keddy: Thank you, Mr. Chairman.

    The Chair: Sorry, Mr. Keddy.

    Mr. Cox, did you have something to add?

    Mr. David Cox: I simply wanted to refer the member to subclause 9(1) of the act, Mr. Chair. It lays out the administrative system that has been designed for the issuance of the certificate, and the consideration of the application. This particular provision would still apply across Canada. In other words, there are provisions here for notification to an applicant if there are deficiencies, so that the process can keep moving and not stall as a result of the administration of the process. The intent of this provision was to ensure that an applicant would receive quick notice of a deficiency and could correct the deficiency, and that the minister could move on with the issuance. That might address the concern about the delays in getting certificates.

    The Chair: Mr. Keddy.

    Mr. Gerald Keddy: Thank you, Mr. Chair. I'd like to ask a couple of quick questions, if I could, and try to get some short answers here.

    On the destruction of property provision in the act, if an inspector goes on a mine site or into someplace that's holding rough stones, they certainly have the force of law behind them to open any doors they need to open or open any containers that they need to open. The legal question here is this: If they destroyed property in that process and somehow abused their rights as law enforcement agents during that process, would the company have the respect of the law behind it to turn around and charge that individual for destruction of property?

    Mr. David Cox: The member is referring to clause 24 of the bill. The provision as it presently reads would lead one to conclude that this was the intent. However, there are proposals—I believe the proposed amendments have been distributed—and the intent is to basically endorse a position already in federal law, which is in the circumstances of anything other than reasonable force on entry.

º  (1625)  

    Mr. Gerald Keddy: I have two other quick questions. Can there be 48 certificates from 48 countries, all of them slightly different? You're talking about a certificate. There can be 48 certificates, so can each individual country have a certificate that's different than those of the other participants?

    Mr. Bruce Boyd: Yes, that is correct. What has been agreed to has been that there would be, on the certificates from every country, the words “Kimberley Process Certificate”, in a recognized standard font and colour. However, the certificates themselves could be different colours and they could have different aspects to them, yes.

    Mr. Gerald Keddy: That's fine, thank you.

    As my last question, you spoke earlier and stated that there was no alternative to requiring the applicant to declare disclosure of the value of the rough stones. I want one more question on the bulk samples.

    For junior mining companies in Canada that may need to export a bulk sample of ore, how do they get around the disclosure? How do you know how many rough stones are going out in that, and how do you know accurately how many are being returned if they have to declare the value under this act, under the bill?

    Mr. Bruce Boyd: Mr. Chairman, this is an issue that has been raised by the Prospectors and Developers Association of Canada, the mining industry, and the Australian government. I guess I misunderstood the question before, because it's actually referring to samples that are being sent for valuation, rather than to a bulk sample. A bulk sample would be travelling somewhat differently.

    Mr. David Pratt: This would be a test sample?

    Mr. Bruce Boyd: This would be a test sample that has been extracted from a property, yes. The diamonds have been extracted from the bulk sample, and it is now very similar to the kinds of packages you would be looking for exactly from conflict areas under the Kimberley process.

    The requirements—

    Mr. Gerald Keddy: No, that's not what I'm discussing. I'm talking about a bulk sample of rough diamonds in situ in the ore, in the background material.

    Mr. Bruce Boyd: A bulk sample that has diamonds in situ in the ore is not the kind of material that has been addressed in the Kimberley process. For the bulk sample, when it's 100 tonnes—

    Mr. Gerald Keddy: You're exporting and importing rough diamonds.

    Mr. Bruce Boyd: It goes under a different harmonized system code. This would be 100 tonnes to 1,000 tonnes of material in which there might be a very small quantity of diamonds. This has not been identified as the problem area of trade.

    Mr. David Pratt: On a point of clarification, Mr. Chair, I think what Mr. Boyd is getting at—and I don't want to put words in his mouth—is that the nature of the problem here is dealing with artisanal mining, the small operators who mine on the sides of riverbanks and—if I could continue, Mr. Keddy—and whose only equipment is normally a shovel and a wheelbarrow, typically. That's the nature—

    Mr. Gerald Keddy: With respect, that's not my concern. My concern is the Canadian industry.

    Mr. David Pratt: I realize that, but what I'm getting at—

    Mr. Gerald Keddy: I agree with you on that one.

    Mr. David Pratt: —is that, in terms of the bulk samples, they would normally be found with the large industrial kimberlite-pipe diamond mining that exists in places like Botswana and that exists in Canada. But that's not the problem we're trying to deal with. The legislation doesn't have to deal with that issue, because it's already covered in terms of our existing trade legislation.

[Translation]

    The Chair: Mr. Boyd, Mr. Cox and Ms. Giroux, thank you very much for coming this afternoon to outline the department's position to us. We will now hear from Mr. Bernard Taylor, Executive Director of Partnership Africa Canada.

    If you have no objections, Mr. Taylor, we will break for three or four minutes. Thank you.

    Mr. Stéphane Bergeron: If I may interject, Mr. Chairman, I would like to make a request. I think it might be interesting to hear from Foreign Affairs and International Trade representatives, perhaps on Tuesday morning, so that we can analyse the political aspects of this issue.

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º  1635  

    The Chair: We'll now begin the second part of our meeting.

[English]

    It is our pleasure to have with us, from Partnership Africa Canada, Mr. Bernard Taylor, the executive director.

    Mr. Taylor, welcome. Would you please introduce the people who are with you.

    Mr. Bernard Taylor (Executive Director, Partnership Africa Canada): Thank you, Mr. Chair.

    We're grateful for the opportunity to speak to you this afternoon. I'd like to introduce my two colleagues, Ms. Susan Isaac, the coordinator in Partnership Africa Canada for the They are an extremely viable resource for Canada as well. But no job, no amount of employment, is worth the havoc, war, and death that have resulted from conflict or blood diamonds., which we are leading, and Mr. Ralph Hazleton, a research associate in this same program.

    Thank you.

    The Chair: Do you want to make an opening statement?

    Mr. Bernard Taylor: Yes, I do.

    The Chair: Please go ahead.

    Mr. Bernard Taylor: Partnership Africa Canada strongly supports Bill C-14 and commends the government for working to ensure that Canada will be able to comply on time with the provisions of the Kimberley process international diamond certification system. In our view, it is important to remember, though, that this is not just about trade; it is also about human security. For the past two decades, diamond theft in Africa has been at the centre of state corruption, collapse, and conflict. The wars in Angola, the Democratic Republic of Congo, Sierra Leone, and Liberia have been massively fueled by diamonds stolen by rebels to buy weapons.

    More than two million people have died in these wars. Millions more have been displaced. Schools have not operated in vast areas for a decade or more. Hospitals and clinics have disappeared. Civilians have been mutilated and butchered, and families have been destroyed.

    Until two NGOs, Global Witness, in Britain, and Partnership Africa Canada, exposed the diamond connection in the late 1990s, there was little understanding or concern within the diamond industry that as much as 15% of the $6 billion U.S. trade in rough diamonds--that is, nearly $1 billion U.S.--was being used by rebel armies to fight these horrific wars. In the year 2000, the UN Security Council became involved and confirmed the diamond connection. By the middle of that year, the diamond industry's denial of the problem changed to one of engagement.

    The Government of South Africa called a meeting in May 2000 bringing together concerned governments, the diamond industry, and NGOs to discuss possible solutions. That meeting, held in the town of Kimberley, where South African diamonds were discovered almost 150 years ago, became the first of a series that came to be known as the Kimberley process.

    Partnership Africa Canada has attended almost all of these meetings and has been an active participant. The meetings threshed out a series of difficult issues: the need for reliable diamond statistics; WTO compliance; government-backed export certificates; and auditable industry chains of warranty to guarantee the origin of rough diamonds as they move from one dealer to another.

    Now the Kimberley process certification system is almost ready for implementation. From January 2000 on, no rough diamonds will be able to enter the formal diamond trading system unless they are guaranteed to be conflict-free by the government of the country where they are mined, and by the government of every country they pass through before they are cut and polished. Bill C-14 establishes this provision where Canada is concerned.

    There is only one problem, however. At the last Kimberley process meeting, held in Ottawa in March, governments refused an NGO demand for regular, professional, independent monitoring of all nationally controlled systems. This means that any country can join and remain in the system without inspection. Its word is good enough.

    Congo Brazzaville, which has no diamonds of its own, but which exported $221 million U.S. worth of diamonds to Belgium last year, can join without inspection, and Gambia, Rwanda, Uganda, and Zambia the same.

    Countries that apparently export double or triple what they produce can also join without question: Guinea, Ivory Coast, the Central African Republic. The controls in Sierra Leone, the Democratic Republic of Congo, Angola, Russia, and South Africa are notoriously lax, but all can join the Kimberley process by simply stating that they are willing and able to meet its standards. No international inspection will be required.

    Before the Kimberley process began, there were already laws against theft, smuggling, murder, human rights abuse, and sanctions-busting. These did not stop the flow of conflict diamonds. New rules will not change anything unless they contain provisions for regular independent monitoring and meaningful deterrence on those countries, companies, and individuals that have so far proven themselves so untrustworthy.

    The NGO coalition that has participated in the Kimberley process has grown large. It includes some of the world's biggest NGOs--Oxfam, World Vision, Amnesty International, and more than 200 others. We have never called for a consumer boycott, because diamonds create hundreds of thousands of jobs in many poor countries where there is no conflict. They are an extremely viable resource for Canada as well. But no job, no amount of employment, is worth the havoc, war, and death that have resulted from conflict or blood diamonds.

    Without regular professional independent monitoring of all national control mechanisms, the Kimberley process will be seriously flawed, leaving millions of people at risk and threatening the future of the entire diamond industry.

    Mr. Chairman, Bill C-14 could be strengthened by the establishment of a board made up of government officials in Canada, industry representatives, and civil society organizations that would monitor its implementation in Canada. The creation of such a board would send a signal to other countries that independent oversight is an important part of rebuilding consumer confidence in a product that has been compromised by terror, human rights abuse, and war.

    The overall Kimberley process could also be strengthened if this parliamentary committee were able to send a strong message through Canada's delegation to the Kimberley process meeting that will be held in Interlaken, Switzerland, next week, a message that Canada takes the Kimberley process very seriously, as demonstrated by its constructive participation to date and by Bill C-14, and that it will work through the Kimberley process toward the development of a regular independent international monitoring scheme for all national rough diamond control systems in order to create the international credibility, confidence, and probity that the diamond industry so badly needs.

    Thank you, Mr. Chairman.

    The Chair: Thank you, Mr. Taylor.

    Now we'll go to the question and answer. We'll start with Mr. Martin. Five minutes, Mr. Martin.

    Mr. Keith Martin: Thank you very much for the work that PAC did in your seminal work relating to blood diamonds. Truly that was a landmark. I congratulate you for the work your organization has done, along with, of course, the work Mr. Pratt had done previously.

    You hit the nail on the head, Mr. Taylor, on some issues. Perhaps you can guide us on how we can operate internationally on the issue of wars, particularly on the continent of Africa, and how we can manage to strengthen the system to ensure that the statements in the certification process are going to be valued. What exists right now, I would submit to you, is worthless in terms of the certification process in the countries you've mentioned. There's no rule of law, as we know, in many of these countries.

    How do we ensure that we get a certification process that we know is going to be trustworthy in countries such as Sierra Leone, DRC, Congo Brazaville, and others? Would you suggest we should opt for a certification process where there's one certificate that all the countries have to adopt, and that there is an independent third party that produces these certificates that all countries that have joined on would have to use?

    The Chair: Mr. Taylor.

    Mr. Bernard Taylor: Thank you.

    In making my comments, if either of my colleagues wishes to intervene, they will signal.

    Perhaps I may answer the second question first, because I think it's easier to answer, the question of the certification. It's our understanding, and we have been part of the discussions of the Kimberley process meetings, that the certificates will resemble each other significantly. There are certain minimum things they will have to have. There may be different colours, there may be different addresses, there may be some additional things, but it's the understanding of those who have created the certificates that they will sufficiently look alike so as not to cause difficulties. Of course, as was reported before, they will be issued with forgery-proof--as good as they can be--elements, which should be satisfactory. That's as much as I can say to that point.

    I don't think necessarily having the same certificate will tackle the problem you're getting at in the first question, and that's how to help countries that admittedly have very weak systems of governance at the moment cope with the huge problem they're faced with. We're sympathetic to that question, and that's part of the reason why we have argued for an independent monitoring system to be accepted by the Kimberley process. NGOs have argued it from the very beginning.

    Mr. Keith Martin: How would it work, Mr. Taylor? I think it's really essential for this process to work at the bottom line, which is to prevent the trafficking of blood diamonds. How would you envision that working?

    Mr. Bernard Taylor: In discussing this, we have produced a publication that talks about the Kimberley process and the importance of monitoring. We have actually put on paper and shared with the government the idea of a pilot program we ourselves are prepared to lead with certain countries, whereby visits would be made to specific countries by experts to look at the system in place. Those results would be shared with that country, those results would be shared, through the Kimberley process, with other countries. Our intention has been that if the process at the moment, for whatever reasons, has been unable to approve this idea, which we consider is a logical thing to do--

    Mr. Keith Martin: Is there a provision to add that in this bill somehow?

    Mr. Bernard Taylor: As far as I know, no, but if the Kimberley process is able to accept that, our delegation to that process from Canada could make stronger recommendations. If it felt it was possible at this stage, we would support that.

    May I add a point about governance in these countries?

    The Chair: Yes, go ahead.

    Mr. Bernard Taylor: It's true that in Sierra Leone, for example, conditions have been very difficult and until recently government wasn't functioning. Things are changing quite quickly in Sierra Leone, as they are in Congo, but they're still far from perfect. I think the Kimberley process system, which is working, and that means countries in the north that have allowed conflict diamonds to come in blocking them, will help with governance in the south, and it will help emerging governments in Congo and Sierra Leone begin to deal with the problem. If we have the additional factor of the external monitoring in place, I think that will give everyone much greater confidence.

    Mr. Keith Martin: Thank you.

    The Chair: Mr. Bergeron.

[Translation]

    Mr. Stéphane Bergeron: Thank you, Mr. Chairman.

    As you know, this monitoring board does not exist and no provision for establishing one has been made in the Kimberley Process. You've called for the creation of a board in Canada to oversee the implementation of the process in Canada, but there are no guarantees that each country would establish analogous boards. For now, as I was saying, there is no independent oversight mechanism at the international level.

    Therefore, to all intents and purposes, the success of the process rests on mutual trust among nations. What assurances do we have, or will we have, even after the process is implemented, that Congo-Brazzaville, to use your example, will not export conflict diamonds? In the final analysis, what will we have accomplished if countries continue to trade in conflict diamonds?

[English]

    The Chair: Mrs. Isaac.

    Ms. Susan Isaac (Coordinator, Partnership Africa Canada): One point the current Kimberley process does have in place is that if there are significant indicators of non-compliance, a monitoring mission can be sent. The current positions for monitoring in the Kimberley process allow it, so there is that need for international naming that would have to happen, naming of countries that are not complying. There is that need for the participants to identify where problems have occurred, and then there would be a monitoring mission. There is that particular provision now, but if countries aren't willing to name and shame, nothing is going to happen. So that's where independent, regular monitoring would be a better way of dealing with it.

[Translation]

    The Chair: Mr. Hazleton.

[English]

    Mr. Ralph Hazleton (Research Associate, Partnership Africa Canada): Could I just add two quick points? One is that with the Kimberley process it takes into consideration both the export and the import. So even if you have a country that has some difficulty in establishing their own systems, the process also includes the fact that someone in Antwerp cannot import that diamond or those diamonds without verification that they are abiding by the Kimberley process. So at least there's a bit of a check. We don't think it's enough. We have said that we need a monitoring system. We don't think it's enough.

    The second point, to add a little bit to what Bernard said, is there is a problem in some of the diamond-producing countries, but Sierra Leone is an example where the Diamond High Council in Antwerp funded and helped with the technology and the British government and other governments helped with the technology so that they had in fact established their own certificate system already, prior to this process. The result of that is absolutely amazing. They went from almost zero export of official diamonds through the government, where the government collects revenue and where it contributes to the social and economic development of the country with tax revenue royalties, to an immense amount of money now two years later simply because of the awareness and the setting up of their own independent certificate system. So we see that as elaborated internationally that this has the potential to have the same positive effect on the rest of the countries, but adding that we would still push very strongly for a monitoring system.

[Translation]

    Mr. Stéphane Bergeron: Some of the media, including La Presse, reported that according to a UN report released in mid-October, at least five Canadian firms were either suspected of, or had in fact been identified as having participated in the illegal diamond trade and of having taking part in cattle, gold, coltan, forestry and coffee industry operations.

    The purpose of Bill C-14 is to provide for the implementation of the provisions of the Kimberley Process. However, what more should the Government of Canada be doing to deal with these Canadian firms that were involved in these operations in African countries? Shouldn't it also be taking steps to help those countries that have been compromised by the conflict diamond trade, or perhaps even providing some financial assistance to these nations to help them deal with these situations?

[English]

    The Chair: Mr. Taylor, rapidly.

    Mr. Bernard Taylor: Yes, thank you.

    I think that point is really important. There of course are codes of conduct. They may not be strict enough, and in many cases they're certainly not being applied. In dealing with Canadian companies that may be going against these codes of conduct, I think the government has a duty to do something, quite seriously.

    Regarding the question of aid assistance to countries such as Congo, it's clear that Congo itself is coming out of a war, and it's more than a civil war. The country has been occupied by other countries around that have been occupying it partly to take its materials, its primary products. That country needs assistance now, not in ten years' time when everything is calm. It needs it now to help it come out of that and to strengthen its institutions, including the question of managing its resources.

    So I would agree with you on both scores.

    The Chair: Thank you.

    Mr. Hazelton, briefly.

    Mr. Ralph Hazleton: I think we also have to realize that, for example, the term “conflict diamonds” didn't exist until two years ago. It's something that is very new. The research and the work that's being done on the relationship between resource and conflict is very new. But it's moving very fast. The Kimberley process and the legislation you are now considering form one part of several other important parts.

    Many of you may be aware that just last week the United Nations expert panel produced a report on the exploitation of resources in the Democratic Republic of Congo. It names more than 80 companies involved in the DROC that ought to be looked into. It names over 50 companies that ought to have financial restrictions put upon them. It names over 60 individuals who ought to have sanctions in terms of financial restrictions and movement around the world.

    So it is moving very rapidly. That's why this process, this legislation, is so important. It's a piece of the whole movement to try to do something about helping countries utilize the resources for their own purposes and their own development. And the aid has to be carried on; it has to be carried on very judicially in such areas as good governance, the support of democratic processes, and so forth.

    The Chair: Thank you, Mr. Hazleton.

    Mr. Harvard.

    Mr. John Harvard (Charleswood—St. James—Assiniboia, Lib.): Thank you, Mr. Chairman.

    Just to pick up on what was said by Mr. Martin and Mr. Bergeron, it seems to me that the legislation we're proposing is taking us in the right direction. We certainly appreciate the work of the PAC.

    Your suggestion of an independent monitoring system sounds like a good one, but if I could sort of break it down into the good actors and the bad actors, perhaps we are the good actors, as are other countries as well. Being a good actor, I guess we would embrace this idea of an independent monitoring system. Then there are the bad actors.

    In the real world, how do you get the bad actors to change? How do you force them into a system that is workable? How do you get them to accept an independent monitoring system? And is there a way of applying pressure? That's what I'd like to hear from you. What means does the world have, or anyone who is interested in this issue have, of forcing them to do the right thing when it's not their inclination?

    I think the lady there suggested that if they can't be shamed, then perhaps nothing will happen. How do we force these people to the table and to do the right thing?

    Mr. Bernard Taylor: My understanding of some of the discussions that took place in Kimberley process meetings in various cities was that there was some reluctance on the part of certain countries, and we don't necessarily have to name them, that were afraid of their sovereignty being affected. Perhaps in those countries the private sector was afraid of its industrial secrets being affected. I think there are strong arguments to show that in an international monitoring system, neither sovereignty nor industrial secrets will be affected. Rather, it will be to their advantage in the long run.

    I think there are certain politically important large countries that have been dragging their feet on this, but we hope that over time, within a year or so, with the right pressure from Canada and other countries, they will come to see that such a system would be in their interest.

    Mr. John Harvard: And the pressure would be in what form? What kind of leverage is there? Give me just one example of leverage that would make them feel a bit of a pinch.

    Mr. Bernard Taylor: The immediate example I can think of is through the Kimberley process itself. If there were sufficient momentum in the Kimberley process, it would be put on the table for discussion. I really can't say more than that.

    If you're thinking of a poorer country in the third world that may not want to comply for reasons of bad governance, then I think there are many additional pressures that could be brought. But I think the countries that have been dragging their feet have been the larger ones, in Asia in particular.

    The Chair: Thank you.

    Mr. Keddy.

    Mr. Gerald Keddy: Thank you, Mr. Chairman. I'd like to thank the group for appearing here.

    With all respect to the good work that you folks have done—and there's a lot of it—there are a couple of questions that I find particularly problematic with this bill. Perhaps you can answer some of them.

    From what I've heard so far—and I'm not trying to put words in your mouth—I think it would be safe to say you believe that even though this bill could go further in places, it's certainly better than what we've had previous to this, and it's a pretty good piece of legislation. The difficulty that I have with it, of course, is the difficulty that it may pose. I've not yet heard convincing replies from the government side that it doesn't impose certain restrictions on our fledgling industry in Canada. It's a huge industry and is about to become larger, with the possibility that it could become even larger than that.

    In particular, there's the whole idea of any country being able to join and remain in this system, in the Kimberley process, whether or not they export or import diamonds. Can any country join whether it's a diamond producer or not?

    Mr. Ralph Hazleton: To some extent, on the first statement you made, there's an argument for the opposite. The Kimberley process can in fact support and enhance the diamond industry, because we've done some research and have written a paper on the Canadian diamond industry that suggests that the Canadian diamond industry is in fact quite clean. Therefore, it comes out with a decided competitive advantage over the rest of the world in terms of the diamond trade and the Kimberley process.

    Mr. Gerald Keddy: Absolutely, and I totally agree with that. But that's not part of my discussion. That was a statement more than it was a question.

    My question is whether or not any country can join and become a member of the Kimberley process whether or not it produces diamonds.

    Mr. Ralph Hazleton: Let me respond to that question.

    That is in fact a very serious problem with the Kimberley process. Bernard used one example. The big thing is that—and I will name countries, because other people are doing so—since the pressure of sanctions has gone to places like Liberia, countries like Dubai and the United Arab Emirates, have become some of the biggest diamond exporters in the world, and they have no diamonds.

    In terms of the Kimberley process as it exists, the check on that is not 100%, but it is at the importer end. For example, if the Kimberley process works in the way it's supposed to work, no one in Antwerp, no one in Tel Aviv, or no one in New York can import a diamond from Dubai or the U.A.E. unless they have a certificate consistent with the Kimberley process. So as I said before, the check is not just on the producing country, it's also on the importing country, which, in our mind, is equally or more important.

    In the first research that we did on Sierra Leone, we were very critical, as you know, of places like Antwerp, Belgium. We saw that as a very big source of the problem. If the Kimberley process is in place, Belgium can control the import through the certification process, and it will start to minimize that issue of rogue countries that are or are not members of the process.

    Mr. Gerald Keddy: I appreciate that answer.

    The Chair: You have time for a very short question, Mr. Keddy.

    Mr. Gerald Keddy: It's a quick question.

    From the NGO end of this spectrum, is there still the potential to look at some type of monitoring process, even in a rudimentary form, before implementation? Is that still possible? How can we help in that process?

    Mr. Bernard Taylor: We have presented a paper and have proposed and shared with the government here, a pilot project that we would like to undertake if the Kimberley process does not include a system of international and independent monitoring. We are prepared to undertake this with Global Witness, the partner organization in the U.K. that has a lot of experience like our own. We would do this with a handful of countries, and hopefully Canada would be part of that.

    So, yes, we want to go ahead and will go ahead, but we would prefer the Kimberley process itself to do it.

    Mr. Gerald Keddy: Thank you.

    The Chair: Mr. Pratt.

    Mr. David Pratt: Thank you, Mr. Chair.

    I'd like to take this opportunity to again thank Partnership Africa Canada publicly for all of the tremendous work they've done. One of the members of the team is not here today, Mr. Chair. Ian Smillie has been a critical team member in terms of the work that the group has done. I think it's important—and I hope our witnesses would bear this out—in terms of the position that Canada has taken with respect to monitoring.

    We have been very much on the side of independent monitoring to the greatest extent possible, in terms of trying to convince other countries to engage in some form of independent monitoring. But it has not been Canada that has been the problem in the process, it has in fact been other countries. I would hope you would agree with that statement.

    This is following up on a comment Mr. Hazleton made, because I think it's important—and hopefully you would agree with this statement as well. If there is a problem in terms of a country that is clearly off base, where there's a significant amount of smuggling going on, where they're only paying lip service to the Kimberley process, then based on the studies that we've seen so far from your own group in terms of the heart of the matter, and from Global Witness and Amnesty International, not to mention perhaps the United Nations as well—because the UN convenes periodic expert panels on Angola, Congo, Sierra Leone, etc.—it wouldn't be long before the international community was aware of any particular country that was in fact offside on this. From that standpoint, would you also agree that it's critical that we get this legislation passed, but that this is very much a work in progress in terms of looking out to the future, in terms of the problems that may exist with the legislation, and in terms of being able to deal with those problems by government regulation?

    Would you agree with those comments? Do you feel they're accurate?

    Mr. Ralph Hazleton: Yes, most emphatically. In fact, we would be remiss not to say that the Government of Canada representatives, throughout the Kimberley process, have been critical to the process to begin with. In fact, there were certain moments when the process was stalled, and it was due to the Canadian representatives that it started moving again.

    We have worked continually, from the first days, with the Government of Canada very closely on all of these issues. There are no secrets in terms of this issue of monitoring, and on behalf of PAC, I would especially like to thank David Viveash, who has led the delegation for these meetings.

    I would also say we were at the very first meeting. In fact, we were invited to give a keynote address at the very first meeting in Kimberley when this first started, and we've been part of it all the way.

    So I think Canada has a lot to be proud of: not just the Government of Canada representation, but also Ambassador Fowler, who was head of the commission and set a precedent with the United Nations expert panels by naming people and saying that sanctions ought to be put in place against individual people. And then there's the NGO community in Canada.

    So Canada has been a huge part of this whole process, and I think Canadians should be very proud of that fact.

    Mr. David Pratt: Just as a final, very quick question, Mr. Chair—and perhaps this is something the parliamentary secretary could consider in terms of the issue of monitoring that has come up here—obviously, I had some provisions in my own private member's bill relating to a monitoring mechanism. However, I don't consider that to be the be-all and end-all by any stretch of the imagination. Perhaps the parliamentary secretary could take back to the minister the suggestion that some form of monitoring involving the minister, involving representatives from industry, and involving representatives from NGOs, should be included in the legislation in order to perhaps act as a model for other countries to adopt as far as their own practices are concerned.

    The Chair: Thank you.

    We'll go to Mr. Stinson, and then we'll come back to Monsieur Serré after that.

    Mr. Darrel Stinson: Mine is very quick. I'd just like to ask Mr. Taylor if it's possible that we can get that document he talked about, with their recommendations in the certification area.

    Mr. Bernard Taylor: Yes, we have several here.

    Mr. Darrel Stinson: If we can all can get one, it sure would be appreciated. It might save us a lot of work.

    The Chair: Thank you, Mr. Stinson.

    Monsieur Serré.

    Mr. Benoît Serré: Thank you very much, Mr. Chairman.

    The comments I want to make were partly answered by Mr. Hazelton and by David Pratt. I want to clarify the government position on the very important issue that was raised by Partnership Africa Canada. I too want to join all the other members here in congratulating you and in thanking you on behalf of the government for the work you've done on this issue. You've been very helpful, and quite frankly I don't think it would have happened without your participation.

    In terms of the Canadian position on the independent monitoring, surely we're not 100% happy with the monitoring that's going to take place under the Kimberley process. Having said that, if we had gone to the wall and made it a sine qua non condition of participating in the Kimberley process, we would not be here today because the whole process would have fallen apart.

    There is a mechanism, I believe, within the Kimberley process. There is an annual review and there are some checks and balances on the imports. I believe that if enough countries like Canada say this country, country X, is not doing a good job in certification, we won't accept their diamonds. If enough countries do that it will force them, somehow, to clean up their process.

    So that's another check and balance. But I can vouch that we will continue with the process. It's a first step. It's not 100%, but it's a lot better than nothing, and we will continue to push for spending on the monitoring process.

    In terms of the question by Mr. Pratt, I cannot speak for the government as a whole, and I still have to consult my minister, but personally, I certainly agree with the intent. I don't even think we need to incorporate that into the legislation because this legislation wants us to deal specifically with the process internationally. But internally I think it's at the discretion of the minister to create such a monitoring board or such a panel, and it could be worked out through the regulations. I certainly will transfer that to the minister and hopefully make it happen.

[Translation]

    The Chair: Thank you very much for your comments, Mr. Serré.

    Go ahead, Ms. Lalonde.

    Ms. Francine Lalonde: Thank you, Mr. Chairman.

    I too would like to thank you for everything you've done. Unfortunately, you cannot rest on your laurels because diamonds are not the only commodity to be tinged with blood. Judging from the report on the Congo—I haven't read the entire report, but I've perused a great deal of it—blood has also been shed over copper, coltan and other commodities. In some respects, because they are so rare and so precious, diamonds are easier to monitor then other minerals.

    What struck me was the fact that Rwanda occupies one third of the Congo and is funded by royalties that flow from the mines to the Rwandan government. I've seen some figures. Rwanda allegedly has a military budget in the neighbourhood of $80 million. Yet, the UN pegs that figure more at $400 million, with the difference made up through royalties that flow to the Rwandan government. This figure represents 150 per cent of Rwanda's overall budget.

    The report goes on to say that while Rwanda has signed a ceasefire agreement in which it agrees to withdraw its army, expectations are that it will continue to exploit its interests using various covert measures. By the way, it is alleged that six Canadian firms, five from Vancouver and one from Montreal, are taking part in these ventures. In the meantime, don't you think we should be urging the government to threaten to invoke the Special Economic Measures Act to bring these companies that are acting as agents of war back into line, so to speak?

    The Chair: Quickly please, Mr. Taylor.

    Mr. Bernard Taylor: I'll be brief. I fully agree with your analysis of the situation in the Congo. To my mind, it is unconscionable that foreign countries are allowed to invade another country in this manner and spark a war that has led to the death of between two and three million people, all in the name of security. While that may be a legitimate concern, surely the solution does not lie in plundering the country. That's unconscionable. In my opinion, the international community has been very slow to respond to this crisis, for all sorts of reasons. If legislative measures were in place to control these companies' actions -- either the measures you mentioned or some other ones...To my way of thinking, we need to press the government into taking this kind of action.

    The Kimberley Process is a fine example of the international community working together to try and solve a problem. The same approach needs to be taken to deal with other natural resources that are threatened in the Congo. At the same time, legislation is needed in other countries to control the actions of these companies. I fully agree with you on that score.

    The Chair: Thank you, Mr. Taylor.

    Mrs. Jennings.

    Mrs. Marlene Jennings (Notre-Dame-de-Grâce—Lachine, Lib.): Thank you very much for your presentations.

    I have only one question. You mentioned an independent monitoring system. Since the bill makes no provision for such a system, would you object to the committee nevertheless endorsing this bill so that it can be debated and passed in the House, by Parliament? That way, it would become law and the committee could also recommend to the government that it continue working to put in place an even more effective, independent monitoring system in Canada, one that, as you mentioned, could spur other countries to take similar action? Putting such a system in place would increase the value-added of our own diamonds.

    The Chair: Mr. Taylor.

    Mr. Bernard Taylor: That is our position as well. At the last meeting of the Kimberly Process in March, NGOs in attendance raised the issue and made arrangements with all participants for endorsing the process. We recognized the significance of the process and knew that we had to support it. We endorsed the bill, but at the same time, we hoped that Canada, NGOs and the private sector would endeavour to bring about the improvements you mentioned.

    The Chair: Thank you, Mr. Taylor.

    Mr. Hazleton.

[English]

    Mr. Ralph Hazleton: I think I would like to add very emphatically that we, as well as the rest of the NGO communities that we have worked with, support this legislation very, very strongly and we support the Kimberley process very, very strongly.

    It's very seldom that things are perfect. We have a way in which we think we could contribute to an improvement of the situation. This is all a work in progress. We will continue discussing it with the government, with everyone else internationally, and see if we can improve it, but we support it very, very strongly. I don't think we can say that emphatically enough: that we want the legislation passed, we want Canada to be a part of the process. The process is fundamentally good and positive.

    The Chair: Thank you, Mr. Hazleton.

    One quick and last question, Mr. Keddy.

    Mr. Gerald Keddy: I appreciate very much what you said, Mr. Hazleton, and I think most of us support the process as well. That doesn't mean that you get a process in October and you get it passed through the House of Commons by the end of December. And we're not going to be here sitting all of December, so understand the timelines we're under. You guys have studied this for three or four years and made projects and did a lot of work, and other members have as well.

    On the way the process works, if we have an export and an import point, that may be fine for Botswana and that may be fine for the Congo and Sierra Leone, but that may not be fine for Canada. There's no argument that this is a good process; we're not trying to say that it isn't. In Canada, we may need three or four or five import and export points. So as the legislation is written now, as you understand it, does it allow for one, does it allow for more than one, or is it ministerial discretion? As I understand it, it's one, and I have some difficulty with that, the way the legislation is written now.

    Mr. Bernard Taylor: We're not able to comment on that detail, I'm sorry.

    The Chair: Thank you very much.

    Thank you, Mr. Taylor, Mr. Hazelton, Mrs. Isaac. Now we can see it's always a fabulous role the NGOs are playing in our country, and we wish you great success.

    I just want to remind my colleagues that tomorrow morning you'll receive another notice that the meeting with the Minister of Foreign Affairs will be in Room 308 West Block; it's not going to be in the Centre Block.

    Finally, if any of the parties have amendments, they need to be received from the legislative counsel by the clerk by Friday.

[Translation]

    The amendments must be drafted by the legislative counsel and submitted to the clerk by Friday afternoon at the latest.

    Ms. Lalonde.

    Ms. Francine Lalonde: May I point out that we didn't receive the bill until this very afternoon. That's doesn't make much sense. We need to have the material sooner than that, please.

    The Chair: Thank you very much. We are adjourned.