Draft Kimberley Process Certification Scheme (Amendment) (EU Exit) Regulations 2019

Alan Duncan Excerpts

Tuesday 5th February 2019 General Committees

[The Minister for Europe and the Americas (Sir Alan Duncan)]

I beg to move,

That the Committee has considered the draft Kimberley Process Certification Scheme (Amendment) (EU Exit) Regulations 2019.

It is a pleasure to serve under your chairmanship, Mr Evans.

During the 1990s, the trade in conflict diamonds was a significant cause of instability, particularly in Africa. The Kimberley process certification scheme is an important tool for reducing conflict in Africa and elsewhere. Great strides have been made since its inception in 2002. Today, more than 99% of the global supply chain of rough diamonds is certified as conflict-free.

From the beginning of the Kimberley process, the UK has been represented by the European Union. Together with our European partners and other participants, the UK has been active in support of the Kimberley process and its principles: increasing transparency, ensuring that trade is limited to Kimberley process participants, and applying effective controls.

The Kimberley process is not a treaty and has no basis in international law. It is simply a grouping of interested states known as the “participants”, which have decided to enact domestically the same process for verifying the trade in rough diamonds at their borders. They then made the political decision to permit the trade in rough diamonds only with similarly minded states within the Kimberley process. Its legal effect, therefore, comes from domestic legislation. Hence, if we are to continue to participate in the process after we leave the EU, as we intend, the draft regulations are essential.

As Members will be aware, until 29 March 2019 the UK remains a full member state and is subject to all the rights and obligations of EU membership. Those include trade arrangements that fall within the EU’s common commercial policy, such as the Kimberley process. Under the terms of the withdrawal agreement, we have agreed with the EU that it will notify international partners that the UK is to be treated as a member state during the implementation period. That would mean that the UK continues to participate, represented by the EU, and that the UK trade in Kimberley process-compliant rough diamonds would continue.

In the event that we are unable to enter an implementation period, our participation through the EU would end. UK trade would be frozen until our application for participation was approved by the other participants in the Kimberley process. In either case, this draft legislation will ensure that we continue to comply with the requirements of the Kimberley process. It will secure our borders, prevent any non-compliant rough diamonds entering the UK supply chain and send a strong message to would-be smugglers that the UK is not a recipient of conflict diamonds.

[James Cleverly (Braintree) (Con)]

Will my right hon. Friend give way?

[Sir Alan Duncan]

May I first explain the logic fully? Perhaps my hon. Friend will save his comments for later in the Committee sitting, when I shall be happy to answer.

The draft regulations will also reassure the Kimberley process bodies of the UK’s commitment to the scheme ahead of our application for independent participation. The instrument does not undermine the wider EU withdrawal negotiations, nor does it assume no deal. Instead, it lays the groundwork for our future relationship with, and independent participation in, the Kimberley process. That matters because maintaining our relationship with the process is an intrinsic element of our international commitment to conflict prevention. It is also pivotal to how we support UK business to operate responsibly in post-conflict and difficult environments.

In 2017, the UK’s exports in rough diamonds outside the EU were valued at £67 million. We expect that to continue. The Government Diamond Office implements the Kimberley process in the UK and works closely with Border Force to ensure that we meet the minimum standards set by the process.

As an EU member state, we are a well-respected participant in the Kimberley process, and we expect to remain so as an independent participant. We have already informed the EU of our intention to initiate our application. Demonstrating that we have appropriate legislation in place is a fundamental part of that application process. That is the purpose of the instrument, which, once passed, will apply even if we are not a participant immediately at the point that the UK leaves the European Union or after any implementation period.

I welcome the opportunity to hear any comments. The regulations are essential to the process I have described and I commend them to the Committee.

--- Later in debate ---

[Sir Alan Duncan]

I am grateful to hon. Members for their comments and questions. Let me endeavour to answer them in turn.

I will respond first to the hon. Member for Heywood and Middleton, on the Opposition Front Bench. Among other things, if we were not a participant, others would not trade in rough diamonds with us, so we would be out of the trading system that has emerged on the back of the Kimberley process. Potentially, that could lead to a weakness in the policing of the trade in rough diamonds.

The cost would be the same as now. Likewise, the impact is unchanged, hence the absence of a need for an impact assessment. The point that I would make is that the draft regulations are simply the transposition of the EU-based regime to an autonomous UK one, so that we can participate autonomously. I suppose the parallel is with the Sanctions and Anti-Money Laundering Act 2018: we used to do all sanctions with the EU, but now we will be able to do them on our own. The regulations are one of the changes necessary to adjust to us leaving the European Union.

In response to the hon. Member for Vauxhall, 82 countries are members, which include Zimbabwe. We are confident that our existing participant status will be embraced by the 81 as we reapply on a slightly different footing.

My hon. Friend the Member for Braintree is absolutely right to emphasise again the importance of this regime in addressing some of the worst aspects of conflict and rapacious behaviour in war-torn areas. My hon. Friend the Member for Beckenham is also right that this is not a perfect regime, but it has been a successful and improving one, given what was there before, which was quite simply nothing.

The hon. Member for Glenrothes asked about influencing direction. We would remain a full participant, and would be so on our own, so inasmuch as we could influence direction in the past, we will still be able to do so in future. The draft regulations are a transposition of the regime—that is what such statutory instruments are for—which does not open up immediately any scope for adjusting, improving or amending, because that is not what the changes before us are intended to do.

[Bob Stewart]

I thank my right hon. Friend for allowing me to intervene again. May I ask whether, on 30 March—assuming that we leave on 29 March, as we will—Hatton Garden, say, will be able to import legal diamonds into the country? Is that what this is all about?

[Sir Alan Duncan]

There is a distinction between polished and rough diamonds—

[Bob Stewart]

I am sorry.

[Sir Alan Duncan]

So this is about a particular category of diamond. The draft regulations mean that if we were a participant, anything legal in the Kimberley process would include us in that process; if we do not pass them today, it would not.

Let me answer one more question put to me about the powers. The Kimberley process requires participating Governments to certify the origin of rough diamonds and to put in place effective controls to prevent conflict diamonds entering the supply chain. That is done through the Kimberley process certification scheme, of which we would be a part if the draft regulations go through. In the process, each international shipment of rough diamonds must be accompanied by a Kimberley process certificate relating to that specific shipment. In other words, the certificate is valid for one specific journey only. The certificates are issued by the exporting country’s Kimberley process authority, which has controls in place to verify that the shipments are conflict-free.

As I outlined in my opening speech, the draft regulations are crucial to our participation in the Kimberley process and, in turn, to our conflict prevention objectives and obligations. The instrument is fully consistent with the Prime Minister’s commitment to be a supportive member of the European Union until we leave, and it will ensure the UK’s continuous compliance with the scheme. It has the added advantage, Mr Evans, of making me a greater expert in rough trade than even you, sir. I commend the regulations to the Committee.

Question put and agreed to.