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