Sanctions Causing Shipment Delays in Antwerp, Traders Say

Joshua Freedman

The European Union’s new sanctions regime is resulting in diamonds being stuck at customs for more than a week and disrupting supply chains, Antwerp dealers have claimed.

The ban on Russian diamonds, which went into effect on March 1, requires all goods entering the EU to go for inspection at Antwerp’s Diamond Office, a dedicated customs center for the industry.

On Wednesday, 146 companies signed a letter of complaint to the Antwerp World Diamond Centre (AWDC), which operates the Diamond Office in collaboration with the government. The letter said they supported the sanctions in principle, but the implementation had adversely affected traders’ business in the Belgian city, slowing down shipments and adding costs.

“The intention [of the rules] was to prevent the flow of diamonds from sanctioned states, but the reality we face is the severe disruption of our supply chains, and alienation from the rest of the global trade,” according to the letter, seen by Rapaport News. “This is resulting in [a] significant increase in expenses and irreplaceable loss of business. We are failing to meet our customer orders and having to fund excess blocked inventory, and are being demanded paperwork that was not asked for preemptively.”

The trade had received assurances that shipments would be cleared in under 24 hours, the letter noted. However, “even straightforward cases are held up for over a week,” it continued.

Examples of blocked goods include rough coming straight from African producer nations, polished from beneficiation factories, and merchandise returning to Antwerp from trade fairs outside the EU, the letter said.

Companies bringing goods back from the recent Hong Kong shows have faced particular difficulties, traders told Rapaport News.

A sightholder said some of his goods from the February De Beers sight had been blocked, while stones under the size thresholds have also been held up. The EU rules ban imports of Russian rough or polished over 1 carat from March 1 and over 0.50 carats from September 1.

“From day one, they started having excessive checking, asking people for paperwork, asking people where there’s doubt, where there’s issues,” an Antwerp-based diamond executive told Rapaport News on condition of anonymity. “At the same time, [the] Hong Kong fair also ended, so goods that left Belgium on consignment were coming back to Belgium, and even on things like that, there were a million questions.”

Some people shipping goods internationally are trying to avoid Antwerp because of the situation, the executive observed. “They want to reroute them,” he said. “We stand a lot to lose here as Antwerp dealers.”

Trade members raised concerns about the policies months ago, but no answers or amendments were forthcoming, the letter continued.

“The Diamond Office staff, with whom we empathize, are also clearly overwhelmed with the lack of clarity and what is expected of them,” it added.

The complaint called on the AWDC to conduct a “comprehensive review of the procedures in collaboration with industry stakeholders to devise practical solutions that have maximum impact on sanctioned sources but leave the largely legitimate trade uninterrupted. The same applies to the impending procedures set to be implemented on September 1, 2024.”

From that date, it will be mandatory for importers of diamonds over 0.50 carats into the EU to obtain a G7 certificate confirming non-Russian origin.

“We share the goals and the spirit of the sanctions but object to this cumbersome, ineffective, and inefficient execution,” the letter continued. “The current trajectory threatens the existence of Antwerp’s diamond industry, a heritage of six centuries. Urgent action is needed to safeguard its future.”

The AWDC is committed to compliance “while ensuring the least possible disruption to our legitimate trade activities,” said Ari Epstein, its CEO, in a statement to the trade Thursday.

The Diamond Office is “prioritizing the processing of correct declarations over the usual first-come, first-serve system” with the aim of enabling goods with the proper documentation to be “expedited” within 24 hours, Epstein explained. The government has agreed to hold an informational session to clarify the requirements, he added.

Main image: Rough diamonds from Russian miner Alrosa. (Alrosa)

Source Rapaport