VZCZCXRO8462
RR RUEHRG
DE RUEHBR #2103/01 2761741
ZNR UUUUU ZZH
R 031741Z OCT 06
FM AMEMBASSY BRASILIA
TO RUEHC/SECSTATE WASHDC 6907
INFO RUEHRI/AMCONSUL RIO DE JANEIRO 3044
RUEHRG/AMCONSUL RECIFE 5607
RUEHSO/AMCONSUL SAO PAULO 8253
RUEHBU/AMEMBASSY BUENOS AIRES 4330
RUEHAC/AMEMBASSY ASUNCION 5717
RUEHMN/AMEMBASSY MONTEVIDEO 6526
RUEHSG/AMEMBASSY SANTIAGO 5843
RUEHPE/AMEMBASSY LIMA 3197
RUEHCV/AMEMBASSY CARACAS 3460
RUEHQT/AMEMBASSY QUITO 1993
RUEHLP/AMEMBASSY LA PAZ 4913
RUEHBO/AMEMBASSY BOGOTA 3958
RUEHME/AMEMBASSY MEXICO 2028
RUCPDO/USDOC WASHDC
RUEAHLC/DHS WASHDC

UNCLAS SECTION 01 OF 02 BRASILIA 002103 
 
SIPDIS 
 
SIPDIS 
SENSITIVE 
 
STATE PASS USTR - SCRONIN/MSULLIVAN 
USDOC FOR 4332/ITA/MAC/WH/OLAC/MWARD 
USDOC FOR 3134/ITA/USCS/OIO/WH/RD/SHUPKA 
USTDA FOR AMCKINNEY 
AID/W FOR LAC 
DHS FOR CBP AND ICE 
 
E.O. 12958:  N/A 
TAGS: ETRD BEXP ECON EIND BR
SUBJECT: BRAZILIAN CUSTOMS MOVING FORWARD ON PLAN TO REFORM AGENCY 
OPERATIONS 
 
¶1.   (SBU) Summary.  In a September 27 meeting with DHS and Embassy 
officers, leadership at Brazilian Customs outlined the challenges 
they face in modernizing their agency and the strategies they have 
formulated to accomplish this task.  GOB managers seek to reform the 
culture of their organization, transforming the agency from a slow, 
rule-bound unit to one guided by scientific risk analysis and 
possessing the latest technology.  To move forward, Brazilian 
Customs has requested technical assistance and training from U.S. 
Customs and Border Protection (CBP) to assist in its implementation 
of the World Customs Organization (WCO) Framework of Standards. 
Meanwhile, through the ongoing Commercial Dialogue between USDOC and 
the Ministry of Development, Industry, and Commerce (MDIC), USDOC 
and the Embassy are organizing a visit of Brazilian Customs 
officials to Tennessee and/or Kentucky to look at industry's "best 
practice" express delivery services in operation there.  A visit to 
Detroit to see the FAST lane is also contemplated.  End Summary. 
 
¶2.  (SBU) On September 27, Ian Saunders, Division Director for 
Training and Assistance for CBP's Office of International Affairs 
met with Jorge Rachid (Director of Brazil's Receita Federal), Clecy 
Lionco (Deputy Director of Receita Federal), and Lytha Spindola (Tax 
and Customs Attache at the Brazilian Embassy in Washington) to 
discuss ongoing technical cooperation between U.S. and Brazilian 
Customs.  (In Brazil, Customs is a sub-unit of Receita Federal - the 
federal tax service.)  CBP Senior Policy Advisor Keith Thomson 
joined the group later in the day.  During the discussion, Rachid 
made the following general points: 
 
--  The Lula Administration has set aside US$200 million to 
modernize the country's customs operations.  With these funds, the 
agency plans to procure modern scanning technology for both major 
ports and smaller inspection stations, purchase boats and aircraft 
to monitor border areas, upgrade its information technology base, 
and implement inspection based upon risk analysis. 
--  The Ministry of Transportation is currently in the process of 
expanding the country's ports.  On the customs side, functions such 
as bonded warehouses are to be out-sourced to the private sector, 
thereby increasing efficiency and lessening the burden on the GOB. 
--  On the personnel side, the GOB hopes to revitalize the Customs 
agency through increased training - some of which would be provided 
by CBP - and the establishment of a Code of Conduct specifically 
applicable to Customs officials.  (In the past, Rachid said, efforts 
by well-connected politicians to use their influence to get their 
personal goods through Customs duty-free had demoralized agency 
personnel.  To help remedy these problems, CBP recently offered 
Brazilian Customs a training class on ethics.) 
--  To speed the flow of goods through Brazilian Customs, plans are 
also in the works to place officers in Miami under the reciprocity 
provisions of the Container Security Initiative (CSI). 
--  By end-year 2006, Customs would complete the second stage of its 
gigantic inspection station at the Friendship bridge in the 
tri-border area of Foz do Iguacu.  This would enable the GOB to 
intensify its crack down on contraband crossing the bridge, though 
law enforcement officials expected that traffickers would respond to 
the tough controls by trying to move their goods clandestinely 
across the border elsewhere via boat. 
 
¶3.  (SBU) In a more, comprehensive follow-up session after Rachid 
departed, Clecy Lionco filled in many of the details.  She noted 
that long-time Brazilian Customs officials had known for some time 
that their agency needed change and had persuaded the Lula 
Administration to submit reform legislation to Congress.  As 
Congress had failed to act on this measure, on August 24, 2006 Lula 
issued an executive decree (M.P. 320) implementing the reform on his 
own.  (Temporary in nature, the decree would lapse unless ratified 
by Congress by early 2007.  However, as the New Year would bring a 
new session of Congress, the next President could re-issue the 
decree, thus extending its temporary clock.)  Lionco opined that 
 
BRASILIA 00002103  002 OF 002 
 
 
even though Customs was consulting with business through Procomex, 
an industry advisory group, some firms would welcome the reforms 
while others would complain. 
 
¶4.  (SBU) Lionco reiterated that plans were underway, with the 
assistance of academic experts, to revitalize Customs' information 
base.  The government-wide SISCOMEX system would be modified to 
include maritime cargo manifests and other Customs-specific data, 
thus opening the way for the application of risk analysis.  In 
addition, she noted, revamping SISCOMEX would allow the GOB to 
implement procedures to provide for quicker turnaround for express 
delivery services.  The goal was to have the IT component ready to 
go in 3 to 4 months, she declared, adding that efforts on the part 
of U.S. industry to sponsor a tour of express delivery operations in 
Tennessee and Kentucky needed to move forward quickly if they were 
to be integrated into the GOB's strategic plan.  Once the express 
delivery component was in place, she said, the GOB wanted to turn to 
its Linha Azul (literally, "Blue Line") project.  Under this 
program, certain registered high-volume, high-value importers would 
get VIP treatment in clearing their goods. 
 
¶5. (SBU) Both Lionco and Spindola noted that while the exchange of 
information between Customs and its U.S. law enforcement 
counterparts was useful, even though the Brazilian side was able to 
quickly provide the USG with extensive information on a particular 
transaction, too often the data it received from the USG was late or 
incomplete.  In particular, they fretted that U.S. law prevents 
USDOC from sharing exporter declarations with foreign customs 
agencies.  They requested that USG agencies confer so as to find a 
way to make such information available in a timely manner via our 
bilateral 2005 Customs Mutual Assistance Agreement. 
 
¶6. (SBU) Comment. Given the difficulty U.S. firms face in moving 
goods through Brazilian Customs, the GOB's reform plan is most 
welcome.  Especially good to hear is the fact that Receita Federal 
is consulting with industry as it moves forward to revamp its 
internal procedures.  Post believes that the continuing strong 
relations between CBP and Brazilian Customs will afford USG 
interlocutors a window to shape and guide the GOB's reform efforts. 
 
 
Sobel