VZCZCXRO5087
RR RUEHBZ RUEHDU RUEHJO RUEHMR RUEHRN
DE RUEHTO #0847/01 2481211
ZNR UUUUU ZZH
R 041211Z SEP 08
FM AMEMBASSY MAPUTO
TO RUEHC/SECSTATE WASHDC 9293
INFO RUCNSAD/SOUTHERN AFRICAN DEVELOPMENT COMMUNITY
RUEHLO/AMEMBASSY LONDON 0227

UNCLAS SECTION 01 OF 03 MAPUTO 000847 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: KIPR ETRD ECON PGOV PREL MZ
SUBJECT: MOZAMBIQUE AWASH IN A SEA OF COUNTERFEITS 
 
¶1.   (SBU) SUMMARY:  Econoff and visiting CommOff canvassed a 
wide spectrum of stakeholders in regards to intellectual 
property (IP) from August 13-21.  Mozambique is making some 
headway, as the issue is gaining some attention at the 
highest levels--President Armando Guebuza made two public 
statements in support of IP protection and against 
counterfeit goods in the past two months.  Most interlocutors 
indicate that the Government of Mozambique's (GRM) IP laws 
are sufficient, but enforcement is virtually non-existent. 
Several instances of counterfeit good sales in Mozambique 
have involved forgeries of brands sold by U.S. companies.  In 
two cases, the trademark of U.S. companies has been 
registered by local business persons intent on selling 
counterfeit versions of U.S. products in Mozambique, despite 
protests from U.S. companies.  Several companies have also 
complained of unfair competition against genuine products 
smuggled from neighboring countries that avoid tariffs and 
VATs.  END SUMMARY. 
 
-------------------------------------------- 
WHERE ARE THE COUNTERFEIT GOODS COMING FROM? 
-------------------------------------------- 
 
¶2.  (SBU)  Mozambique is awash in a sea of counterfeit goods. 
 Visitors need only to sit for a few seconds at sidewalk 
cafes before they are approached by hawkers selling pirated 
DVDs, fake watches, counterfeit sunglasses, and knock-off 
pens.  The sale of counterfeit goods extends to the formal 
retail sector as well, with counterfeit goods featuring in 
even the most up-market malls of Maputo.  While the majority 
of counterfeit goods in Mozambique are from China, others 
have been sourced from India, Indonesia, Nigeria, Pakistan, 
and South America.  Still other products, such as pirated 
DVDs, CDs, and liquid dish soap appear to be packaged and 
produced domestically by Chinese businessmen with a knowledge 
of counterfeiting.  Several sources noted that a few 
unscrupulous but well-connected Mozambicans appear to be 
importing and selling a wide variety of counterfeited 
products, particularly shoes, apparel, and sports equipment, 
with the knowledge of senior members of the government and 
ruling party. 
 
----------------------- 
WHAT'S THE GRM MISSING? 
----------------------- 
 
¶3.  (SBU)  As part of a broader Department of Commerce 
initiative designed to strengthen IP enforcement efforts in 
Africa and assist adversely affected U.S. companies operating 
on the continent, visiting ITA/MAC CommOff and Econoff met 
with a wide range of Government of Mozambique (GRM) 
officials, foreign investors, entrepreneurs, legal experts, 
and members of the donor community August 13-21.  All 
interlocutors called for greater IP enforcement under 
existing laws.  Several IP lawyers pointed out that 
Mozambique has yet to draft laws on competition, and an 
authority to monitor competition is needed.  Others explained 
that current IP laws, which were revised in June, 2006, do 
not adequately centralize enforcement powers, but instead 
provide for an unhappy marriage between Customs and the 
Ministry of Industry and Commerce (MIC) which share the 
responsibility.  Still others comment that the institutional 
framework is not in place to handle IP issues, particularly 
in the judiciary, where the Administrative Court has made 
only two decisions on IP-related cases in 8 years.  The 
administrative courts were described as under-trained and 
inexperienced by nearly all our contacts. 
 
¶4.  (SBU) The GRM Director of Customs Audit, Investigations, 
and Intelligence division explained that Mozambique's 1,500 
customs officers constitute the first line of defense against 
counterfeit goods, but do not have the capacity to easily 
identify counterfeit goods, nor do they have the authority to 
confirm counterfeit cases and provide expert testimony in 
Mozambican courts, under current laws.  A 
second shortcoming of the current laws is that Customs has no 
authority of seizure should goods be produced locally, or 
intercepted outside of the ports.  Customs officials called 
for expanded information sharing on counterfeit goods 
interceptions, and additional training of officers across 
Customs and MIC, as well as the judiciary, as a means of 
building capacity on IP issues. 
 
¶5.  (SBU) Businessmen and industry analysts alike pointed to 
the absence of a qualified Bureau of Standards in Mozambique 
as a significant problem for the GRM.  A qualified Standards 
Board would be able to provide expertise to determine not 
only the quality of products, but also differentiate between 
counterfeit and genuine goods.  Several interlocutors 
discounted the capabilities of the current equivalent body, 
INOC, in the Ministry of Trade, which has not shown the 
 
MAPUTO 00000847  002 OF 003 
 
 
capacity or technical expertise to develop standards for more 
than a handful of products.  Lack of standards in Mozambique 
not only allows for counterfeit goods, but also hurts the 
country's ability to export to exacting markets like the U.S. 
and E.U.  Kekobad Patel of the quasi-governmental business 
development association CTA commented that Mozambique 
struggles to export products other than raw materials under 
AGOA because of an inability to conform to standards required 
by the U.S. consumer. 
 
--------------------------------------------- ------- 
INTELLECTUAL PROPERTY INSTITUTE - A POSITIVE EXAMPLE 
--------------------------------------------- ------- 
 
¶6.  (SBU)  The director  of the Intellectual Property 
Institute (IPI), a semi-autonomous group under the Ministry 
of Trade, explained that in a developing country like 
Mozambique that it was difficult to get both the business 
community and the government to focus on IP issues.  IPI has 
had some success with raising public awareness on trade mark 
and patents since it began registrations in 1999 and 
Mozambican companies accounted for only 3 percent of 
registered companies.  Today 41 percent of registered trade 
marks are for domestic companies, with 90 percent of the 
2,709 trade marks 
registered last year being issued to companies in Maputo 
province.  The director also explained that intra-agency 
cooperation is increasing, with monthly Customs Enforcement 
Taskforce meetings, in which all GRM stakeholders share 
intelligence on counterfeit goods. 
 
--------------------------------------------- --- 
HOW HAVE MULTI-NATIONAL COMPANIES BEEN AFFECTED? 
--------------------------------------------- --- 
 
¶7.  (SBU)  Unilever has seen several assaults on its products 
over the past few years.  OMO, its clothing detergent brand 
saw a 30 percent loss in market share due to competition from 
Chinese counterfeit versions of its product.  Its liquid dish 
soap brand Sunlight has also been pressured by the presence 
of counterfeiters who collect and recycle used bottles, 
filling them with locally-sourced liquid soap of unknown 
quality.  A third Unilever product, Rajah Spices, was 
counterfeited using bulk spices sourced from Pakistan, and 
packaging produced in Maputo.  Other U.S. companies have seen 
attempts to register trademarks in Mozambique under names 
such as Arley-Davidson, Skechers, and Timberland in an effort 
to "legitimately" sell counterfeit goods in the domestic 
market. 
 
--------------------------------------------- ------ 
HP EXPOSES FAKE TECH AND GOV,T PROCUREMENT PROBLEMS 
--------------------------------------------- ------ 
 
¶8.  (SBU)  Consultrajin, Hewlett-Packard,s representative in 
Mozambique, highlighted concerns with government procurement 
of computers and computer parts from vendors who are sourcing 
counterfeit goods.  While statistics are unavailable, the 
company held a press conference on the 24th of July raising 
its concerns that the GRM, one of the largest buyers of IT 
products in Mozambique, continues to procure counterfeit 
computers and accessories.  As a result, providers of genuine 
products cannot compete for government contracts. 
Consultrajin representatives also pointed out that due to the 
poor quality of the counterfeited products, the government 
often ends up replacing these computers and components with 
greater frequency, eventually costing more than the genuine 
article.  Since over 50 percent of the GRM budget is 
supported by a consortium of EU donors called the G19, 
Consultrajin argued that the G19 is supporting the 
counterfeit computer industry in Mozambique. 
 
--------------------------------------------- --------- 
COMMENT: NO POLITICAL WILL TO TACKLE COUNTERFEIT GOODS 
--------------------------------------------- --------- 
 
¶9.  (SBU)  Several interlocutors discounted President 
Guebuza's July 11 comments condemning piracy and 
counterfeit goods as "cancers" in Mozambican society, 
pointing to historical inaction by the GRM in the area of 
enforcement.  However, an August 21st public statement by 
Guebuza expressing concern about counterfeit goods and the 
damage they do to consumers, the economy, and the GRM's tax 
revenues on IP--the second such statement in as many 
months--may mark a change in the GRM's approach.  Some 
contacts suggest that Guebuza's close relationship with China 
and broad-based corruption throughout the country mean that 
counterfeit goods will continue to enter Mozambican ports 
with relative ease. Nonetheless, a majority of 
non-governmental contacts confirmed that the GRM does not, as 
yet, have the political will to provide rigorous IP 
 
MAPUTO 00000847  003 OF 003 
 
 
enforcement and rid its markets of counterfeited goods. 
Highly price-sensitive consumers, and a merchant class 
dominated by traders willing to source counterfeit products 
without fear of prosecution suggest that the problem of 
counterfeit goods is unlikely to be resolved in Mozambique in 
the near term.  In the meantime, the Embassy is pressing the 
government to commit to using only legal computers and 
software, and we are collaborating with Commerce, USPTO, and 
other stakeholders to leverage training resources from the 
United States, southern Africa, and Mozambique to build local 
capacity and continue to raise awareness on IP issues. 
Chapman