Inspecting is not enough


Author: Romoaldo de Souza

Source: ETCO Magazine, No. 10, August 2008

Counterfeit productsThe fight against counterfeiting of products in Brazil has recently gained two major reinforcements, celebrated at the National Council for Combating Piracy, CNCP, an agency linked to the Ministry of Justice. One of them was the entrance of the National Trade Confederation, CNC, in the vacancy previously occupied by the Brazilian Association of Reprographic Rights, ABDR. The entry of CNC reinforces the work to combat counterfeiting because “Brazil has characteristics of a consuming country, and not a producer of counterfeit products”, says the executive secretary of the CNCP, André Barcellos. This is so true that, according to a recent estimate, the CNCP estimated that 75% of what circulates in Brazil of counterfeit goods originates in Southeast Asia.

The other reinforcement comes from the Chamber of Deputies. In May, finally, the deputies decided to install a special commission to systematize the work of grouping more than a hundred projects that are going through the house, all dealing with the typification of the crime of piracy. The survey of the proposals presented in the form of a project is already well advanced, according to deputy Pedro Chaves (PMDB-GO), chairman of the special commission. "Recently, the Constitution and Justice Commission took an important step in this direction, when it approved the substitute for Bill 2729/03, which typifies the crime of piracy in intellectual works, including computer programs, videophonograms and phonograms", says the parliamentarian . Chaves recalls that the project is part of the result of the Piracy CPI, in 2003, which denounced the gang led by Chinese businessman, naturalized Brazilian, Law Kin Chong.

Now with the reinforcement of the CNC, which allies with the National Confederation of Industry, CNI, in the strategy of carrying out educational campaigns across the country with messages against piracy, the CNCP rolls up its sleeves. Soon, the results of a survey, contracted by the software sector, should be released, in which the conclusions will already come with an outline of what will be addressed in educational campaigns.

For André Barcellos, society needs to see counterfeiting of goods in three different dimensions: criminal, since it is manipulated by an “international criminal network”; the economic one, for generating unemployment and reducing the attraction of investments; and social, due to the risks that pirated products bring to the final consumer.
"It is necessary to have a different approach in these educational campaigns", he says.
"We are already clear that consumer-targeted messages that piracy is a crime are not well accepted." Whoever buys the pirated CD or DVD, he explains, does not see himself as a criminal.

Information campaigns that talk about unemployment caused by the action of counterfeiters produce more results, as well as those that account for the losses of tax evasion. "It must be stressed that piracy erodes the collection of taxes that could be used for education, health and other social areas," he says. "The consumer is sensitive to this issue."

The National Council to Combat Piracy, however, does not want to be limited to educational campaigns. Barcellos is also focusing on repression in primary areas - ports, airports and border regions - through which pirated products enter the country.

The problem is repeated, to a greater or lesser extent, in other countries, even among those with advanced economies. According to Barcellos, even in the United States and Sweden, two of the holders of the highest per capita income on the planet, the action of counterfeiters is a plague.

“If you go to Sweden, for example, you will not find physical piracy on the street, but on the internet. And that, in a country with practically 100% digital inclusion and a very high level of education.

In the United States you see the same situation. ” Although not as visible as in Brazil, in which counterfeit products are sold in the open, by street vendors, the problem faced by these countries, according to Barcellos, is also serious.

"Invisible piracy is just as damaging as physics," he says. Free-of-charge programs (freewares) to download music and movies pop up on the internet, just a click away from the mouse. All of them allow to violate copyrights, protected by the legislation. The few exceptions are portals that work only with music that, downloaded on the computer, depends on a confirmation of payment of the rights to be able to be executed. Those who arrive at the austere room of the Executive Secretariat of the CNCP find gleaming Rolex watches, perfumes and a set of CD and DVD with music and a show by the singer, composer and current Minister of Culture, Gilberto Gil, among the counterfeit objects that are displayed there. to illustrate the scope of the problem. "There is no follow-up to find out what is most falsified, but what is most visible, which is on the streets, in fact are CDs and DVDs," says Barcellos.

"But there are also toys, sneakers, glasses, in short, it is so much that you cannot quantify it." A number, however, should serve as an indication of the volume marketed in the country. The CNCP is about to release a survey, according to which, only for goods seized in Brazil, the value exceeded 1 billion reais last year. It is double what was apprehended in years prior to the creation of the organ by the government, in October 2004. It remains to be seen how much of this growth was due to the efficiency of inspection and how much resulted from the pure and simple increase in the sale of pirated products in the country. .

For Barcellos, the restraining action promoted by the public sector, in order to be effective, needs to be complemented by greater consumer awareness. "As it is a criminal phenomenon, it requires repression, to contain the product offer," he says. "But if there is also no demand restraint on counterfeit products, we will continue to dry ice."

The CNCP is not unaware that the main driver of consumption of these products is the price, which often does not even reach 50% of what is charged in stores for products with a proven brand. "It would be cowardly to expect these values ​​to be equal, given that the cost structures for the production of one and the other, the legal and the counterfeit, are totally different," says Barcellos. For this reason, one of the agency's recommendations for reducing the cost of production through the legal route is to reduce social charges and taxes paid by companies.

While the special commission continues to sift the projects already presented on the subject, the Chamber of Deputies is also about to consider a Proposed Amendment to the Constitution, PEC, authored by Deputy Otávio Leite (PSDB-RJ), which grants tax exemption to the production of CDs and DVDs of Brazilian music or phonographic products by national artists. 
The exemption would also apply to the inserts of the discs, which increase production by up to 15%.

According to the author of the draft amendment, although the repression of counterfeiting is a relevant activity, if there is a reduction in taxes, together with an information campaign aimed at the taxpayer, the consumer “will have raised awareness of the importance of buying original products” , thus contributing to the effort to create or rescue jobs in the manufacture and distribution of products. "It is unacceptable that the action of piracy leaves 80 fathers and mothers unemployed," says Leite. "If the legal CD is produced and sold at a lower price, there will be dividends for the country, because it will earn the formal economy, and our MPB (Brazilian popular music), a heritage of national culture, will be valued."

Based on data from the Brazilian Association of Disc Producers, ABPD, he says that, with tax exemption, CDs and DVDs by Brazilian artists can be sold with up to 40% discount in relation to current market prices.

But the deputy toucan's project faces resistance on the basis of government support. PT deputy Paulo Teixeira (SP) says that while the Chamber is discussing the government's tax reform proposal, it is necessary to wait before analyzing other tax reduction measures. "We need to debate with society, to see if it is ready to give up these taxes", he argues. The proposal must return to the Constitution and Justice Commission for a new opinion.