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### Viewing cable 04BRASILIA2017, GSP: FIRST US-BRAZIL IPR WORKING GROUP MEETING

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Reference ID | Created | Released | Classification | Origin
--- | --- | --- | --- | ---
04BRASILIA2017 | 2004-08-11 12:28 | 2011-07-11 00:00 | CONFIDENTIAL | Embassy Brasilia

`

    This record is a partial extract of the original cable. The full text of the original cable is not available.

` `

    C O N F I D E N T I A L SECTION 01 OF 03 BRASILIA 002017

    SIPDIS

    STATE FOR WHA/BSC AND EPSC; EB/IPC
    STATE PASS TO USTR FOR SCRONIN, LYANG AND BPECK
    STATE PASS USPTO FOR LLOURIE, CBERDUT, MRASENBERGER
    USDOC FOR 4332/ITA/MAC/OLAC/WBASTION/JANDERSON/DMCDOUGA L
    AND FOR JBOGER
    NSC FOR MIKE DEMPSEY

    E.O. 12958: DECL: 08/09/2014
    TAGS: ETRD KIPR BR IPR
    SUBJECT: GSP: FIRST US-BRAZIL IPR WORKING GROUP MEETING

    Classified By: Economic Officer Janice Fair for reasons 1.4, (b) and (d
    )

    ¶1. (C) Summary.  As a result of the 90-day extension
    announced on June 30, 2004 for review of Brazil's trade
    benefits under the Generalized System of Preferences (GSP), a
    bilateral IPR Working Group held its inaugural session on
    August 5 in Rio de Janeiro to discuss IPR enforcement issues.
     The WG was formed as part of the existing U.S.-Brazil
    Bilateral Consultative Mechanism (BCM) with the aim of
    identifying concrete steps the GoB is undertaking to improve
    enforcement of copyright laws and combat piracy.  Not
    unexpectedly, the GoB offered no concrete commitments on new
    actions during this initial meeting.  However, despite some
    push-back, the atmospherics for the meeting were generally
    positive and the tone of the discussion was constructive.
    The next WG session will take place in Washington DC the week
    of September 6 and will focus on producing a report, which
    will be presented later in the month to DUSTR Peter Allgeier
    and to U/S Clodoaldo Hugueney, as joint chairs of the BCM
    process.  The U.S. GSP Committee will review the WG's report
    as it considers further action regarding the International
    Intellectual Property Alliance (IIPA) petition to remove
    Brazil's GSP benefits.  End Summary.

    ¶2. (U) Within the United States-Brazil Bilateral Consultative
    Mechanism process, U.S. and Brazilian officials launched a
    bilateral Working Group on IPR enforcement during a five-hour
    session in Rio de Janeiro on August 5, 2004.  The Brazilian
    delegation was led by Foreign Ministry rep Antonino Marques
    Porto e Santos, Chief of the Department for Scientific and
    Technological Affairs, who reports directly to MRE's
    Undersecretary for Economic and Technological Affairs,
    Ambassador Hugueney.  Porto was accompanied by Otavio
    Brandelli and Henrique Choer Moraes - Acting Chief and
    Advisor in MRE's Intellectual Property Division,
    respectively; Ambassador Oswaldo Portella - International
    Advisor, Valquiria Souza Teixera de Andrade - Director
    General of the Federal Police, and Robson Robin da Silva
    -Advisor to the National Secretariat for Public Security from
    the Ministry of Justice; and Ernani Checcucci - Acting
    Director General of Customs in the Ministry of Finance.

    ¶3. (U) Sue Cronin, USTR Senior Director for Brazil and the
    Southern Cone led the U.S. delegation, which included Linda
    Lourie, Attorney-Advisor, USPTO Office of International
    Relations; David Edwards, State Brazil desk officer; Erin
    McConaha, Consulate Rio Econoff; and Janice Fair, Embassy
    Brasilia Econoff.  USG participants for the afternoon session
    via teleconference were Brian Peck, Senior Director of
    Intellectual Property, USTR; Leslie Yang, Director for
    MERCOSUR, USTR; Caridad Berdut, Attorney-Advisor, USPTO
    Office of Enforcement; Mary Rasenberger, Policy Planning
    Advisor, U.S.  Copyright Office; Jennifer Boger,
    International Trade Specialist, Commerce Department; and Meg
    Ward, Brazil desk officer, Commerce Department.

    ¶4. (SBU) The WG on IPR enforcement was formed as a result of
    discussions between DUSTR Peter Allgeier and Brazilian
    Ambassador to the U.S., Roberto Abdenur, following USTR's
    announcement on June 30, 2004 that the USG's review of
    Brazil's continuing benefits under the Generalized System of
    Preferences (GSP) trade program had been extended by 90 days
    (until September 30).  The review was prompted by a petition
    submitted in 2001 in which the IIPA requested that GSP
    benefits for Brazilian products be removed on grounds the
    Brazilian government does not provide adequate copyright
    protection.  While providing a bilateral forum for discussion
    of IPR enforcement issues in general, the WG has as a
    specific objective the development of a report on the GoB's
    recent actions and work plan for improving the enforcement of
    copyright protection and combating piracy.  This information
    will feed into GSP Committee deliberations as it decides
    what action to take regarding the IIPA petition.

    ¶5. (C) Not surprisingly, no GoB commitments emerged from this
    initial meeting.  However, despite a pro-forma reiteration of
    the Brazilian view that it is inappropriate to address IPR
    enforcement under the GSP program, the tone of the meeting
    was generally constructive, with Brazilian interlocutors
    professing a sincere interest in resolving the GSP/IPR issue.

    ¶6. (C) In his opening remarks, Minister Porto cautioned
    against misrepresentations that imply the GoB has done little
    in ("lacks") IPR enforcement.  He emphasized that the WG
    should work constructively to avoid negative repercussions in
    the otherwise broad and rich bilateral relationship.  To
    deflect the focus from being solely on GoB actions, Porto was
    also keen throughout the meeting to frame the discussion as a
    bilateral exchange and to emphasize that effective IPR
    enforcement cannot be attained by Brazil alone, but requires
    international cooperation.

    ¶7. (C) To ensure the Brazilian interlocutors understood the
    seriousness of the situation, Cronin drew attention to the
    real risk posed by the GSP review by noting the past
    withdrawal of GSP benefits from Argentina and Honduras on IPR
    grounds.   Cronin stressed the USG preference to avoid such
    an outcome through a productive WG process.  Cronin also took
    pains to make clear that although the WG is a bilateral
    forum, the WG is charged with producing a report that
    identifies GoB, not USG, actions to improve copyright
    enforcement; the issue is piracy of U.S. products in the
    Brazilian market, not piracy of Brazilian products in the
    U.S. market.

    ¶8. (C) Regarding possible GoB actions, Porto stressed that
    the WG process itself is important and that Brazil won't
    accept guidelines imposed from abroad.  Porto and his team
    said the Brazilian executive branch is analyzing the
    recommendations contained in the June 23 report of the
    Chamber of Deputies' Parliamentary Investigative Commission
    (CPI) on Piracy and Tax Evasion, but it was not yet possible
    to identify those measures that will be implemented.  They
    stressed the complexity of certain recommendations,
    particularly those involving different branches of the
    government, and cautioned that the CPI report is not a cake
    recipe in which once the recommendations are implemented
    piracy is eliminated.  Cronin suggested the CPI
    recommendations be viewed more as a menu offering good
    suggestions on meaningful actions the GoB can undertake to
    combat piracy.

    ¶9. (C) Minister Porto and his delegation gave extensive
    reports on current GoB enforcement efforts including those of
    the Federal Police, Customs, and of the Secretariat of Public
    Security.  Some of the more interesting points included:
    - Admission that the Inter-ministerial Committee on Piracy
    had not performed adequately and an indication the GoB is
    looking at its reformulation, including possible inclusion of
    private-sector representatives and a more direct role with
    law enforcement activities.
    - Existence of Mercosul Agreement #5 in 2003 to enhance
    regional security by strengthening intelligence exchange on
    piracy activities and GoB plans to press for increased joint
    action in the Southern Cone during Brazil's tenure as
    Mercosul president pro tempore.  Specifically, copyright
    violation will be a central topic of Interior Ministers
    (Mercosul plus Associate members) during a meeting this
    semester.
    - Existence of a Unified Public Security System (Ministry of
    Justice) for integrating and standardizing crime information
    as a means of improving public security (covers all types of
    crime).
    - With regard to a CPI recommendation for increasing
    copyright infringement penalties, Porto noted that changes to
    Brazil's penal code in 2003 already increased the minimum
    sentence from one to two years (Note: the increase in
    penalties does not apply to software piracy).
    - Seemingly high level of coordination with other government
    agencies by Brazil's Customs to combat smuggling at ports,
    airports, and along the frontier.  Customs uses an integrated
    system of a trade database and intelligence information to
    determine inspections based on risk factor.  To deter
    transshipment of pirated products or their base materials,
    Customs inspects all shipments of "sensitive" products -
    included virgin CDs since 2000; list was expanded this year
    to now include all shipments of CDs.  Customs is also
    considering banning the transshipment of CDs and blank
    CD-ROMs (presumably to Paraguay).

    ¶10. (SBU) U.S. officials on conference call from Washington
    provided an overview of U.S. procedures to combat piracy, in
    particular, U.S. Customs' ability as a competent authority to
    determine infringement and dispose of merchandise without
    judicial action.

    ¶11. (C) In speaking with Porto after the formal close of the
    meeting, Cronin emphasized the need for the WG to show real
    results, and explained that the WG report will be considered
    by the GSP Committee in making its final decision on the
    90-day GSP review.  Cronin also noted that the role of the
    judicial system had not been discussed and encouraged the GoB
    to consider possible action in this area to further deter
    piracy.

    ¶12. (C) The next WG meeting will take place in Washington DC.
    the week of September 6, specific date to be determined, and
    will focus on producing a report.  Working Group officials
    will present their report later in September to DUSTR Peter
    Allgeier and to the Foreign Ministry's Under Secretary for
    Economic and Technological Affairs, Clodoaldo Hugueney, joint
    chairs of the BCM, at a venue to be determined.

    Comment

    ¶13.  (C) Considering the GoB's normal sensitivity regarding
    IPR issues, the frank and serious exchange of this meeting is
    noteworthy.  While Porto displayed some prickliness out of
    concern that the shorthand reference to "Brazil's lack of
    enforcement" evokes the misperception that Brazil in no way
    provides IPR protection, he refrained from using "lack of
    resources" and legalistic arguments (recent WTO case on EU's
    GSP program) to avoid entirely a discussion of the GSP/IPR
    enforcement problem.  This in part may reflect the less
    antagonistic attitude of Ambassador Hugueney, with whom USTR
    works closely on WTO issues, compared to those of his other
    MRE counterparts.  The timing may also be propitious, as the
    fanfare surrounding the CPI report already creates pressure
    within Brazil to improve IPR protection, so that subsequent
    GoB enactment of new measures need not be linked to USG
    pressure.  These next weeks may clarify GoB intentions as the
    CPI formally wraps up on August 11.  The GoB will likely give
    serious and careful consideration to CPI recommendations in
    an effort to calibrate its response to the USG, searching for
    sufficient action to avoid losing GSP benefits. It is
    impossible to know at this juncture if the GoB is prepared to
    do what is necessary.  The devil will be in the details when
    the WG next meets and the discussion turns to the specifics
    of the report.

    ¶14. (U) This cable was cleared by USTR and coordinated with
    Consulate Rio.
    Danilovich

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