Source: Correio Braziliense, 23/09/2004

By Emerson Kapaz *

Just over a year after launching offensives on three simultaneous fronts? against evasion, piracy and smuggling? defenders of competition ethics are leaving the days of guerrilla war behind. Where previously there was a feeling of complacency, and even resignation in living with the evils of the "parallel state", now the prevailing conviction that it is imperative to abolish it so that the economy can grow again, safely and profitably for the investor.

The most striking novelty is the organized mobilization of all sectors of the economy. No one is more willing to remain silent while fraudsters gain ground with the competitive advantages of taxes they fail to collect from public coffers or the pure and simple copy of products from well-known brands, without investment in qualified personnel, research and technology. A striking example is the reaction of the footwear industry, a victim of all types of counterfeiting, which is adding the strength of many companies in the sector to turn things around. Even though it has not yet evolved towards the creation of the desired National Council to Combat Illegality, the government has shown itself to be sensitive to the thesis that the articulation between organized civil society and the State is fundamental for a fight of this magnitude. Proof of this is the recent agreement between the Federal Revenue Secretariat and the Economic Law Secretariat with the purpose of intensifying the fight against tax evasion and unfair competition.

The decision to promptly investigate the complaints instead of filing them and just carrying out investigations in the economic area promises to have the most positive developments. From now on, companies that evade their fiscal responsibilities will certainly no longer go unpunished to the rigor of the law. Never before have defenders of competition ethics achieved such relevant positions. Never before have they received so much attention from the authorities. Using a classic concept of guerrilla warfare, it can be said that what theorists call the "vulnerability curve" has been overcome. Or the stage where the guerrillas are not so incipient that they can be ignored, but are not yet vigorous enough to reach power.

In the case of ethical companies, power is synonymous with the ability to influence change. There is much to do. Bureaucracy, for example, is a priority target. The World Bank has just published a study carried out in 145 countries under the title Doing Business in 2005, where it puts its finger on the wound: over-regulation is a major factor in economic backwardness. Since it was published last year, 58 countries have tried to make business relationships simpler. This is not the case in Brazil. We are still very much tied to the bureaucratic heritage of colonial times and also to the tangle of laws originating in the Napoleonic Code. This straitjacket could include excess taxes, the rigidity of labor legislation, the slowness of the judicial system and the difficulties in opening and closing companies.

In a more comprehensive view, a reform is needed to modernize the State, which is still excessively patrimonial and focused more on the distribution of privileges than on social inclusion. Just as the late jurist Raymundo Faoro diagnosed in The Owners of Power. In commenting on the World Bank study, The Economist magazine, in a recent editorial, suggests that, in order to reform the state in countries besieged by bureaucracy, as is the case in Brazil, the first step is to put aside ideologies, on the left or right ??.

Improving the business environment means more investments, more wealth circulating and more job offers. Without reforms, only driven by the recovery of the economy, in recent months the country has created more than one million formal jobs. With the reforms, how many millions of jobs can be created? Let us, however, do justice to reality. We are moving from rhetoric to action on many fronts. In terms of competition ethics, the challenge is to expand the radius of positive changes. It will make the difference for me- and it will determine the end of the guerrilla war.

View the facsimile of the page published in Correio Braziliense [190 Kb - PDF]

* President of the Brazilian Institute of Competition Ethics? Etco