Clock is Ticking on G7 Traceability

So the latest sanctions deadline came and went largely unnoticed, with none of the chaos and confusion that accompanied the 1 March ban.

Back then, traders were required, for the first time, to provide documentary evidence that the diamonds they were importing were not of Russian origin.

It led to bottlenecks at Antwerp, sole entry point for diamonds entering the EU, with shipments taking a week or longer to clear Customs.

The latest G7 ruling - expanding the ban from goods over 1.0-cts to those over 0.50-cts - came into effect, quietly and efficiently, on 1 September.

The issue now is traceability - using technology as a more robust and reliable guarantee of a diamond's origin than self-declaration by a trader.

The original plan was to have such a mechanism implemented as of 1 September, inn tandem with the 0.50-cts ban.

But that's since been put back to 1 March 2025, and there are many within the industry who expect further delays.

"The EU has publicly stated that they're delaying implementation until March 1st of next year," Sara Yood, CEO and general counsel at JVC (Jewelers Vigilance Committee) tells IDEX Online.

"We've spoken with US officials, and they say that they support the delay. They're working within the G7 to ensure some more equity in the system.

"There were a lot of concerns that especially for African diamond producing countries, it was not an efficient method of registering goods.

"The G7 has a technical group that is working to create some kind of blockchain registration system.

"From what we've heard from the US government side, they're very supportive of delaying this and in fact, they think it might be delayed longer to get it right."

"I know from the EU side that they are issuing G7 certificates, the pilot program is working, and I think it shows a lot of promise. I think the US is supportive of traceability and also realistic that it takes time."

What complicates matters is the fact that the G7 - Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States plus 27 EU nations - can make decisions, such as banning Russian diamonds, but has absolutely no regulatory authority to enforce them.

"They are just a group of countries are working together to achieve common goals," Yood explains.

"There is no legislation mechanism or governing body, it's just countries proactively agreeing to work together.

"And so every time the G7 decides that they're going to do something, each individual member has to figure out how they can implement that according to their country's laws or according to the EU's laws.

"It's fragmented because everyone's legal system works differently. And so they each have to figure out how it can implement a particular rule in their specific country."

The rule change on 1 September was, thankfully, not a big deal, says Yood, and she's not aware of any problems with its implementation.

"It's just a threshold drop," she says. "So everything that you've been doing for diamonds of 1.0-cts and higher you now have to do for diamonds of 0.50-cts and higher.

"The whole point of stepping down levels of implementation is to get used to doing it, to figure out how it works in my business."

She also welcomed announcements made by the US in August allowing trade in loose diamonds and jewelry imported before sanctions on Russia were implemented - although she prefers the term legacy to "grandfathered", which has racist connotations dating back to the US civil War.

The final stage of the G7 sanctions, the traceability initiative, represents a pivotal shift towards greater accountability in the diamond trade.

Some high-end jewelry brands have already embraced traceability with their own technologies, but the majority of the industry - diamond producers and manufacturers - have significant concerns. And less than six months to address them.

Have a fabulous weekend.