Why a no-deal Brexit risks freezing London’s diamond trade
The U.K. has warned that a no-deal Brexit risks London being frozen out of the global diamond trade.
Britain is a member of the Kimberley Process, the global certification program used to track and prevent the trade of conflict gems, through its European Union membership. The country will need to apply for its own membership post Brexit, and the government last week warned diamond traders that any delays caused by a no-deal scenario may see shipments grinding to a temporary halt.
Traders should consider having rough diamonds that they own outside the U.K. shipped to the country before it leaves the EU in March to ensure they can get their stones
“We cannot at this stage rule out the possibility that we could exit the EU neither with a deal nor immediate independent participation,” the U.K.’s foreign office said in a letter to traders. “In this very unlikely case, you would not be able to trade internationally in rough diamonds until we had secured our KP participation.”
London was once the global hub of the rough-diamond industry when De Beers sold nearly all the world’s stones from its fortress like headquarters at 17 Charterhouse Street. But volumes fell after 2000 when the company’s monopoly ended and dwindled to almost nothing after it moved sales operations in 2013 to Botswana, where most of its diamonds are mined.
Still, the Antwerp World Diamond Centre, which represents the Belgian city’s diamond merchants, said some major producers still use London as a conduit into Europe.
“These goods are then transported through the EU common market to Antwerp to be sorted and traded here,” the AWDC said. “It is AWDC’s goal to ensure that these trade flows continue to pass through Antwerp, even after Brexit.”
The U.K. is currently just one of six EU countries allowed to import and export rough diamonds. Once stones enter one of those nations, which include Belgium and Portugal, they’re then free to move around the region.
(By Thomas Biesheuvel and Lyubov Pronina)