VZCZCXRO6674
RR RUEHAO RUEHCD RUEHGA RUEHGD RUEHGR RUEHHA RUEHHO RUEHMC RUEHMT
RUEHNG RUEHNL RUEHQU RUEHRD RUEHRG RUEHRS RUEHTM RUEHVC
DE RUEHC #1869/01 0402207
ZNR UUUUU ZZH
R 092151Z FEB 09
FM SECSTATE WASHDC
TO RUEHBR/AMEMBASSY BRASILIA 1491
RUEHSO/AMCONSUL SAO PAULO 0013
INFO WESTERN HEMISPHERIC AFFAIRS DIPL POSTS
RUEAIIA/CIA WASHINGTON DC 3264
RUCPDOC/USDOC WASHINGTON DC 4860
RUEKJCS/SECDEF WASHINGTON DC
RHMCSUU/FBI WASHINGTON DC 2937
RUEPINS/HQ BICE INTEL WASHINGTON DC

UNCLAS SECTION 01 OF 04 STATE 011869 
 
SENSITIVE 
SIPDIS 
BRASILIA FOR JOHN ERATH 
POL 
BRASILIA FOR STEPHEN LISTON 
POL 
SAO PAULO FOR JAMES STORY 
ECON-POL 
 
E.O. 12958: N/A 
TAGS: ETTC KOMC BR
SUBJECT: BLUE LANTERN: DISCUSSIONS WITH EMBASSY, 
BRAZILIAN, AND INDUSTRY OFFICIALS SEPTEMBER 22-24 
 
¶1. (U) SUMMARY:  A team of export control experts from the 
Departments of State and Commerce met 22-24 September 2008 in 
Brasilia and Sao Paulo with country team, Brazilian 
government, and industry officials to discuss implementation 
of the Blue Lantern end-use monitoring program and U.S. 
export control licensing and policy issues in Brazil.  The 
visit's primary objective was to improve Brazilian 
understanding of U.S. export controls and to troubleshoot 
some long-standing difficulties in conducting Blue Lantern 
checks in Brazil.  While the visit in Brasilia included 
productive meetings with the country team and Ministry of 
External Relations (MRE) officials, Ministry of Defense 
(MOD), Customs, and Federal Police officials refused to meet 
with the team despite repeated efforts by the Embassy, an 
unusual occurrence suggesting the need for further engagement 
to foster Brazilian appreciation for the importance of these 
issues.  The visit in Sao Paulo included site visits to 
ammunition manufacturer Companhia Brasileira de Cartuchos and 
aircraft manufacturer Embraer.  The visits appear to have met 
the objectives of improving understanding of Blue Lantern 
end-use monitoring and USG defense trade laws and regulations 
as the U.S. seeks to enhance bilateral defense trade with 
Brazil.  END SUMMARY. 
 
¶2. (U) Administered by PM/DDTC's Office of Defense Trade 
Controls Compliance (PM/DTCC), Blue Lantern is a global 
program designed to verify the end-use, end-users, and 
disposition of commercially exported defense articles, 
technology, and services.  This visit to Brazil was part of 
PM/DTCC's ongoing efforts to improve the effectiveness of 
Blue Lantern through outreach visits with posts, host 
governments, and industry. 
 
¶3. (U) The members of the team were Judd Stitziel, compliance 
specialist, Office of Defense Trade Controls Compliance 
(PM/DTCC); Yolanda Gantlin, senior licensing officer, Office 
of Defense Trade Controls Licensing (PM/DTCL); and Timothy 
Mooney, export policy analyst, Bureau of Industry and 
Security, Department of Commerce. 
 
PREPARATORY MEETING AT BRAZILIAN EMBASSY IN WASHINGTON 
 
¶4. (SBU) In order to help lay the groundwork for a successful 
visit, Caroline Croft and Benjamin Chiang from the 
Department's Brazil desk accompanied the export control team 
to a meeting with Ministry of External Relations (MRE) and 
Ministry of Defense (MOD) officials at the Brazilian Embassy 
in Washington on September 16.  The Brazilians, led by 
Achilles Zaluar, Minister Counselor for Multilateral and 
International Security Affairs at the MRE, conditioned 
discussion of the Blue Lantern program on receiving a status 
update on an unrelated PM/DTCC compliance case.  After 
receiving this update, the Brazilian officials seemed more 
receptive to discussing the originally proposed topics. 
 
COUNTRY TEAM AND CONGEN SAO PAULO BLUE LANTERN BRIEFINGS 
 
¶5. (U) At Embassy Brasilia, DCM Lisa Kubiske chaired a 
special meeting of the country team to discuss the Blue 
Lantern program in Brazil.  Attendees included John Erath, 
political officer and Blue Lantern point-of-contact in 
Brasilia; Charles Allen, U.S. Immigration and Customs 
Enforcement (ICE) attache; Lt. Col. Sam Prugh, acting head of 
the Military Liaison Office (MLO), MILGRP; a representative 
from the Office of Regional Affairs; David Brassanini, Legal 
Attache; Mark Knight, country attache, Drug Enforcement 
Administration; and Chris Culver, Regional Security Officer. 
At Consulate General Sao Paulo, Econ/Pol Chief James Story 
chaired a special meeting that included Sara Ainsworth, 
economic officer; Sean Kelly, Foreign Commercial Service; Kim 
Wong, ICE special agent; and a representative from the Office 
of Regional Affairs. 
 
¶6. (SBU) In both meetings, Stitziel briefed the mission and 
 
STATE 00011869  002 OF 004 
 
 
results of Blue Lantern, both globally and in Brazil, which 
is an important country for the program.  Since 2002, PM/DDTC 
has received over 4,000 applications for commercial defense 
exports to Brazil worth more than two billion dollars.  From 
2002 until the visit, PM/DTCC attempted to conduct 67 Blue 
Lantern checks in Brazil, evenly divided between pre-license 
checks and post-shipment verifications.  Responses to some of 
these requests were problematic due to lengthy response times 
and inability to complete checks, which adversely affected 
both specific license applications and bilateral defense 
trade in general. 
 
¶7. (SBU) During the last year, the U.S. Mission to Brazil has 
taken steps to improve this situation and has reduced its 
backlog of overdue cases from a half dozen to zero.  With the 
designation of a full-time pol/mil officer as Blue Lantern 
POC, Embassy Brasilia has centralized responsibility for 
coordinating Blue Lantern checks throughout the country, 
drawing on the support of the consulates general and other 
country team members, including the Military Liaison Office 
(MLO), ICE, and the Foreign Commercial Service (FCS).  ConGen 
Sao Paulo's econ/pol section and MLO Brasilia have been 
instrumental in helping to clear the backlog over the last 
year.  Front office guidance has underlined to all Mission 
elements the importance of completing checks on schedule. 
The political section also has established a new tracking 
system to ensure that all Blue Lantern requests are followed 
up.  During the visit, DCM Kubiske and Econ/Pol Chief Story 
pledged their support to ensure that Mission continues to 
provide effective and timely responses to Blue Lantern 
requests. 
 
EXPORT CONTROL DISCUSSIONS WITH DIVISION OF TRADE PROMOTION 
OPERATIONS 
 
¶8. (U) The DOS-DOC export control team discussed export 
controls, including end-use monitoring, with several 
Brazilian officials responsible for developing and 
implementing Brazil's export control laws and regulations. 
The Brazilian system of export controls does not include 
formal links between agencies, relying instead on a 
"gentlemen's agreement."  A visit led by State Department 
exporters therefore generated little interest in the law 
enforcement community.  Participants included Norton de 
Andrade M. Rapesta, Head, and Thiago Couto Carneiro, 
Secretary, of MRE's Division of Trade Promotion Operations; 
Marcos Pinta Gama, Special Advisor to the Deputy Minister, 
MRE; and Osvaldo Monteiro de Carvalho Junior, Advisor, 
Nuclear Technology & Export Control, Coordination-General for 
Sensitive Items, Ministry of Science and Technology.  After 
receiving overview briefings on the Blue Lantern program as 
well as State and Commerce export control laws, regulations, 
and practices, the Brazilians expressed gratitude for the 
information exchange and posed several detailed questions. 
Pinta Gama stressed the need to "think ahead" in the area of 
export controls in order to ensure that Brazil receives the 
best defense articles possible as U.S.-Brazilian bilateral 
technology transfers becomes increasingly sophisticated. 
After asserting that export controls work in both directions, 
as Brazil also can offer the U.S. technology, Rapesta offered 
an overview of the policies and practices of Brazilian export 
controls. 
 
¶9. (SBU) Promoting a better understanding of USG export 
control regulations and policies was a central goal of the 
November 20-21 Defense Bilateral Working Group.  In the past, 
Brazilians have tended to interpret strict USG regulations, 
as well as licensing delays generally caused by exporter 
negligence, as indicators of an anti-Brazilian bent to U.S. 
export controls.  Post will be building on the BWG, including 
during the 2009 pol/mil dialogue, with further efforts to 
engage the GOB for better cooperation across the range of 
export control issues. 
 
SITE VISITS TO COMPANHIA BRASILEIRA DE CARTUCHOS AND EMBRAER 
 
¶10. (U) ConGen Sao Paulo arranged a site visit to Companhia 
Brasileira de Cartuchos (CBC) in Ribeirao Pires, a large 
ammunition manufacturer which has been both the named 
 
STATE 00011869  003 OF 004 
 
 
end-user on scores of DDTC licenses and the subject of 
several recent Blue Lantern checks.  Among the dozen company 
executives and employees who attended the meeting were Arthur 
Liuz Silva, Logistics & Supply Director; Marco Vinicius 
Goncalves, Purchasing Supervisor; Alexandre Vigano and Amanda 
Camara, Import Analysts; Claudia Bonan, Marketing & Strategy 
Manager; and Gilberto Salm, Export Director. 
 
¶11. (SBU) After thanking the export control team for its 
briefings on the Blue Lantern program and U.S. export 
controls, CBC officials offered an overview of their 
company's operations.  According to CBC's presentation, the 
privately owned company was founded in 1926 and is the 
world's third largest ammunition manufacturer, with 1,550 
employees, distribution centers in the U.S. and Europe, and 
two manufacturing facilities in Brazil and one in Germany. 
CBC's products are marketed in the U.S. under the brand name 
MAGTECH.  Approximately 70 percent of CBC's production (510 
million rounds in 2008) is exported to customers in some 70 
countries, including 31 military end-users.  During 
discussion, the export control team emphasized that U.S. laws 
prohibit the unauthorized re-transfer or re-export of United 
States Munitions List (USML) items, especially to prohibited 
destinations like Venezuela, one of the countries that CBC 
identified as a customer.  In response, CBC representatives 
expressed eagerness to fully comply with all U.S. export 
control regulations and to cooperate with end-use monitoring 
checks, stressing the importance to the company of the U.S. 
market.  The export control team thanked the CBC officials 
for their hospitality and explained that ConGen Sao Paulo 
officials would be contacting them soon to ask for their 
assistance with a post-shipment Blue Lantern check. 
 
¶12. (SBU) The export team also conducted a briefing and site 
visit at Empresa Brasileira de Aeronautica S.A. (Embraer) in 
Sao Jose dos Campos.  Among the two dozen company executives 
and employees who attended the meeting were Lizandra Karen de 
Lima, Senior Legal Counsel; Terena Penteado Rodrigues, 
Associate General Counsel; Helio Bambini Filho, Vice 
President, Supply Chain; and Falvia Sekles, Institutional 
Relations Director.  Established as a state-owned company in 
1969, the well known aircraft manufacturer was privatized in 
1996 and currently has more than 33,500 employees.  U.S. 
export controls are of particular concern to the company, as 
60 percent of its customers are based in the U.S., its annual 
U.S. exports total almost 1.8 billion dollars, and it has 
manufacturing facilities in China. 
 
¶13. (SBU) During and after the export control team's 
briefings on the Blue Lantern program and U.S. export 
controls, Embraer officials asked very informed and specific 
questions and demonstrated expert knowledge of U.S. export 
control laws and regulations.  In addition to providing a 
corporate overview, Embraer officials outlined the company's 
impressive export control compliance program, which appeared 
to incorporate many of best practices advocated by State and 
Commerce officials during corporate educational seminars and 
conferences.  Among the elements of Embraer's compliance 
program were the following:  it was established by a 
resolution of Embraer's CEO and is a Global Corporate Policy; 
U.S.-based training of employees directly responsible for 
implementation through forums like SIA conferences; export 
control training for 100 percent of procurement personnel; 
internal training of over 1,000 employees; internal 
procedures and practices, including Supplier's Certification 
of Item Classifications and screening of countries and 
entities against published sanctions and embargo lists; 
corporate policies governing storage and distribution, 
ensuring segregation of export-controlled items and 
technologies; standard end-user forms based on U.S. 
requirements; strong contractual requirements for suppliers 
and clients; and a commitment to making sure that Embraer's 
customers understand the restrictions that they are subject 
to.  The Embraer officials said they are currently in the 
process of developing an export control compliance manual and 
are committed to constantly improving, updating, and 
benchmarking their export control compliance policies and 
procedures. 
 
 
STATE 00011869  004 OF 004 
 
 
IMPROVEMENTS TO BLUE LANTERN IN BRAZIL CONTINUE 
 
¶14. (U) The export control team achieved its broad goals of 
improving understanding of and communication about the Blue 
Lantern program, gray arms trafficking, and USG defense trade 
controls in general.  PM/DTCC is committed to supporting 
Mission's efforts to strengthen Blue Lantern implementation. 
 
¶15. (U) This reporting cable was coordinated with Embassy 
Brasilia and ConGen Sao Paulo. 
 
¶16. (U) PM/DDTC would like to express its gratitude to 
Embassy Brasilia, ConGen Sao Paulo, and WHA/BSC for their 
work in helping to arrange and execute this visit. 
CLINTON