Canadian Diamonds Should Be Truly Canadian!
March 13, 03Canadian diamonds must be truly Canadian! If this isn't axiomatic, Martin Irving, the Director of the Diamonds Projects Division of the Ministry of Mineral Resources in the Northwest Territories is willing to go to court or to parliament to make the statement legally robust.
The Northwest Territories is launching a fight against a ruling by the Canadian Competition Bureau that will allow a Canadian diamond, cut and polished in Surat (India) or in Guangdong (China) to be marketed as 'Made in Canada'.
The Competition Bureau is supported in this by some of the mining companies which are convinced that the prospects of manufacturing diamonds in Canada economically are so remote, and the premium on the Made in Canada so significant, that it should be sufficient that the resultant polished of their rough should be allowed to be marketed under a Canadian label, as long as the diamond was mined in Canada.
The official excuse is that there was no "substantial product transformation" in the polishing process. That approach totally ignores the fact that the cost of cutting and polishing is far more substantial than the actual cost of mining. From a consumer product perspective, rough diamonds have no appeal, no utility nor emotional value in their own right.
Martin Irving may be entering into a legal minefield, or more precisely, a muddy morass. In the United States, the Customs Authorities will consider a polished diamond as having been manufactured in the place where it was polished. However, in the same US, the Federal Trade Commission subscribes to a different interpretation.
"The NWT government is lobbying Ottawa to have regulators revisit the definition of 'Canadian diamond' in hopes it will be changed from any gem 'mined in Canada' to only those 'mined, cut and polished in Canada'," says the Globe and Mail.
"It's arguing that Canada is missing an opportunity to develop a major cutting and polishing business while the international diamond industry is reaping the benefit of the premium attached to a 'Made in Canada' diamond. About 93 percent, by value, of Canadian diamonds are exported in rough form overseas," says Irving, quoted in the daily. "There's not something magical about cutting and polishing that means Canadians can't do it," explains Irving.
"Many of the jobs, and earnings, associated with transforming the rough stone into a finished diamond are located elsewhere in the world. If there is a premium attached to a Canadian polished diamond, that premium should be made available only to people doing business in Canada," he continues. "The NWT believes a more stringent definition of what constitutes a Canadian diamond would encourage foreign investors to build more finishing facilities in Canada. Current manufacturing plans would see between 10 and 15 percent of diamonds that come straight from Canadian mines being cut and finished here, Irving concludes.
Jim Antoine, the NWT's Resources Minister, says it doesn't make sense that diamonds cut and polished outside Canada are considered Canadian. "If you take a tree from British Columbia and you ship it to Japan and they transform it into a chair and bring it back, is it a Canadian chair or a Japanese chair?" That's something the Competition Bureau ought to sit on.