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Brazzil - Behavior - August 2004

Brazil's Piracy, a Cultural Challenge

Cigarettes top the list of illegal merchandise sold in Brazil. Around
32 percent of the cigarettes sold there are contraband or counterfeit.
The fiscal harm caused by illegal cigarette sales alone amounts
to US$ 1.2 billion annually. Authorities believe legislation alone
will not solve the problem. Brazilians need a new mindset.

Juliana Andrade


Picture Brazil is the world's fourth largest market for counterfeit merchandise, trailing only China, which is first, and Russia and Paraguay, second and third, respectively, in the ranking.

This illegal commerce causes Brazil annual losses of more than US$ 10 billion, according to the National Union of Federal Revenue Agents (Sindireceita).

For Rio de Janeiro's House Representative Júlio Lopes, Vice-President of the Congressional Investigatory Commission (CPI) that is looking into piracy in Brazil, to combat this type of crime it is not enough to pass tougher laws; it is also necessary to raise the consciousness of the population.

"It is very important for the National Congress to update the laws, but this won't make any difference, if a national culture opposed to this practice does not exist," the Deputy argued, addressing the 24th National Seminar on Intellectual Property, which ended August 18, in Brasília.

Besides the economic impact of piracy, the Deputy pointed out that the industry of counterfeit products hinders the creation of at least 1.5 million formal jobs.

The lawmaker presented those attending the event with the report prepared by the CPI on Piracy, fruit of more than a year's work. The Commission accused over 100 individuals and requested the indictment of 55 counterfeiters.

As well as suggesting changes in the Intellectual Property and Penal Codes, the CPI proposed the creation of the National Council for the Defense of Intellectual Property.

According to the President of the Sindireceita, Reynaldo Puggi, the entry of US$ 10 billion worth of black market and counterfeit products each year sustains the illegal trade in Brazil.

Cigarettes top the list of illegal merchandise. Around 32 percent of the cigarettes sold in Brazil are contraband or counterfeit. The fiscal harm caused by illegal cigarette sales alone amounts to US$ 1.2 billion annually.

Puggi emphasized that, to reverse this situation, three factors must be combined: more rigorous legislation, organs equipped to combat piracy, and consciousness-raising in the population, to reduce the consumption of these items.

Fifty three Brazilian and foreign specialists took part in the seminar, where they discussed questions related to the theme "Intellectual Property: Economic Growth with Social Responsibility." The event was sponsored by the Brazilian Intellectual Property Association.

The governments and police forces of the 181 countries that are members of the Interpol should do more to integrate their efforts, making it possible to combat global piracy more effectively. This is the opinion of Interpol representative John Newton, one of the seminar's participants.

He pointed out that this kind of activity is responsible for 5-7 percent of world trade and is frequently the source of funds for terrorism. "We must foster trustful relations among countries," Newton argued.

Earlier this month, Brazil's Minister of Justice, Márcio Thomas Bastos, said that the creation of the National Intellectual Property Council will be an important instrument in the fight against piracy.

The council is one of the suggestions in the Congressional Inquiry Commission (CPI) on piracy. The commission's report is 300 pages long, summing up a year of investigations which resulted in indictments of 100 people.

The commission report also suggests changes in various of the country legal codes (Intellectual Property, Industrial Property and Penal). The commission strongly calls for stiffer penalties for the production or sale of pirated goods.

According to Minister Bastos, piracy is economically as damaging as, and related to, money laundering. "Piracy is a case of tax evasion that usually involves some form of money laundering which is a case of legalizing money obtained illegally," said the minister.

Bastos said the government would use the CPI report as a tool to make the country safer.

It was announced in July that the Brazilian government is investing in new anti-piracy techniques. According to official reports, the Ministry of Science and Technology will have a budget of US$ 162,000 (500,000 reais) to develop new technologies to impede and make it difficult to make illegal reproductions of sound and image, such as CDs and DVDs.

As stated by Marcelo Lopes, the coordinator of the Technology Network at the ministry, the situation is worrisome because it is estimated that in Brazil 55 percent of the sound and image market is pirate.

There are 120,000 jobs in the Brazilian audiovisual sector which pays some US$64.4 million (R$200 million) in taxes annually.

However, it is estimated that losses due to piracy reach almost double that—around US$ 119.5 million , not to mention the loss of 17,000 jobs. Out of every three CDs or DVDs sold in Brazil last year, one was pirate.

Medicine Too

The number of counterfeit remedies, however, seems to be diminishing in Brazil. In 1998 the National Sanitary Inspection Agency (Anvisa) received 172 notifications. Since 1999 only seven have been registered. The majority, contraband medications.

To control deviation of drugs, some measures were adopted. Among them, campaigns in the distributors and inspection in the pharmaceutical industries.

All boxes of medications should also be sealed and carry a symbol with a metallic covering, which, when rubbed, reveals the word "quality" and the manufacturer's trademark.

Sales slips—for transactions between industries and distributors and distributors and pharmacies—must bear the lot number of the medications.

According to Anvisa, stolen shipments of remedies can be a motive for falsification. In these cases, the Agency alerts all the state Sanitary Inspection units, informing the number of the lot that was stolen.

When a medication from this lot is discovered, it is removed from the pharmacy's shelves.

Juliana Andrade works for Agência Brasil (AB), the official press agency of the Brazilian government. Comments are welcome at lia@radiobras.gov.br.
Translated from the Portuguese by David Silberstein.

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