By Denise Choi
The government of the Northwest Territories is lobbying Ottawa to tighten the definition of “Canadian” diamonds, saying a more restrictive definition will strengthen its diamond industry.
Last fall, the N.W.T. government asked MPs to pressure the Competition Bureau to reconsider the definition of Canadian diamonds.
Currently, the Competition Bureau defines Canadian diamonds as gems mined in Canada, regardless of where they are cut and polished.
The N.W.T. government is now asking only those diamonds that are mined, cut and polished in Canada be defined as “Canadian.”
The Competition Bureau has a general guideline on the criteria a product has to meet in order to be labeled “made in Canada.” Marie-France Gauvreau, a competition law officer, says 50 per cent of the production costs must occur in Canada.
In 2000, the bureau began a series of consultations when the Canadian diamond industry raised concern that diamonds extracted from other countries and manufactured in Canada, could easily be labeled “Canadian,” thereby cutting into Canada’s competitive advantage.
“We consulted the industry, consumers, government, and stakeholders. We looked at our provisions of the Competition Act regarding the misleading advertising and took the position that to be called Canadian, the diamonds have to be mined in Canada to comply with the misleading provisions of the Competition Act,” Gauvreau says.
According to Howard Appotive, the president of Howard Manufacturing Jewellers Limited, located on Sparks Street, only 13 to 15 per cent of the so-called “Canadian” gems are cut and polished in Canada.
The majority of cutting and polishing work is done outside of Canada because of lower overseas costs.
Appotive says the tightening of the definition would lead to rapid development in the Canadian diamond cutting industry.
“We’ve brought in people from overseas. They’ve trained our Canadian citizens to be diamond cutters. We have the newest and latest equipment and we’re doing the full production,” Appotive says.
Canadian miners are obliged to sell only 13 per cent of their gemstones, so Canadian manufacturers end up not having enough supply to cut and polish.
In fact, some of the miners are already selling an extra two per cent to Canadian manufacturers.
The development of the cutting industry would mean more employment opportunities, especially in the north. Appotive says that a professional diamond cutter can easily earn $50,000 to $75,000 annually.
“Otherwise, they’re sitting up north, half of them collecting welfare,” he says.
The Competition Bureau says it has taken action since the N.W.T. government made its request.
“When we were asked to reconsider our position, we hired an expert in trade law and made extensive research on this issue,” Gauvreau says.
After carefully studying the issue, the trade law expert came to the conclusion that advertising only those diamonds mined, cut and polished in Canada as Canadian could be interpreted as being unduly restrictive, Gauvreau says.
“We came to the conclusion that there was no sufficient ground to alter our position,” she adds.
The consumer demand for 100 per cent Canadian diamonds is mainly due to the tarnished image of conflict diamonds from African countries, Appotive says.
Conflict diamonds smuggled out of African countries are thought to be sold to profit rebel groups who might finance terrorist groups.
“People who are buying a nice precious stone, would rather support a conflict-free diamond where people are in good money and they feel good about making that purchase,” he adds.
Consumer confidence is also affected by the definition of Canadian diamonds because not all consumers are aware of the fact that the majority of Canadian diamonds sold at jewelers across Canada are manufactured elsewhere.
“I think it’s important that what you think you are buying is what you are buying,” Appotive says. The Competition Bureau also has concerns regarding how consumers are affected by what are Canadian products and what aren’t.
“The way our position is set, consumers and retailers have the choice of having a supply of Canadian diamonds that were mined, cut and polished in Canada while other retailers or consumers may prefer Canadian diamond that is cut and polished in different cutting centre, like Israel and Belgium,” Gauvreau says.
“We believe our position would encourage more competition, more choice of products, usually consequently it is better prices.”