Government Supervision of Polished Diamonds? Maybe SoSeptember 19, 12
What will happen if the
There is a chance that some governments, even the
So why is the
I recently spoke with KP Chair, Ambassador Gillian Milovanovic, and asked her about this. Milovanovic is not denying that this is a possibility. She didn't state this directly, but other U.S. State Department people warn that if the KP does not update the definition of conflict diamonds, the
Manufacturers vs. Consumers
This raises a couple of questions like how much government intervention should exist in the diamond market? And, is it a positive intervention? Milovanovic warns of a reputational issue, saying, "Once you have a negative image, you have to roll it back before you can promote it again."
Understandably, business does not appreciate government intervention. Industries try to avoid it either by deploying lobbyists to modify the wording of a law, or by setting their own business self-regulations. One such example is the broadcast industry in the
Local regulation does not have to be a threat. Maybe retailers should set their own regulations – with the associated costs. If you can meet the standards, you can then supply them. If you don't, sell your diamonds elsewhere. This way, manufacturers that are hesitant to endorse changes to the KP because they don't want to carry the extra burden it would inevitably entail will be spared the cost.
This is an important issue, and as Milovanovic says, it won't go away. Retailers may set very strict standards in one country, and lesser ones in another. Manufacturers may find that this is tougher to manage and will need to think of how they want to proceed. Retailers interested in such regulation should consider the cost – and their willingness to bite the bullet on this one and adjust their margins to make room for this. And maybe, KP should just evolve.
However this matter unfolds, a future where polished diamonds, not just rough, is regulated is possibly right around the corner.
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