National Day Against Smuggling

By ETCO
06/03/2015
Photo: Marcelo Camargo / Agência Brasil
Photo: Marcelo Camargo / Agência Brasil

Brasilia, March 3, 2015 - Brazil is losing the fight for smuggling. Products from different sectors enter the country illegally, without technical or health certification and without collecting taxes, which ends up generating a huge tax evasion to public coffers, in addition to harming people's health, subtracting Brazilian jobs, increasing insecurity in cities and borders and undermine national sovereignty and defense.

Annually, billions of reais in taxes are no longer collected due to the illegal entry of products into the country. The FNCP estimates that the country has losses of around R $ 100 billion with contraband (sector losses + tax evasion), a sufficient resource to build 1,4 million low-income houses, 105 thousand km of highways, 77 thousand hospital beds and 19 thousand daycare centers.

As a way to make the population aware of this serious problem, and to seek solutions from the authorities, the Movement for the Defense of the Legal Market, a coalition formed by more than 70 entities representing the Brazilian economy led by the Instituto de Ética Concorrencial (ETCO) and the National Forum Against Piracy and Illegality (FNCP), they decided to institute the National Day to Combat Smuggling.

The idea is that annually, always on March 3, society can debate issues related to smuggling from different perspectives: economic, social, national sovereign impacts, among others. In addition, the entities involved intend to forward proposals for actions that can contribute to the fight against smuggling to members of the executive and legislative branches.

This year, several events and initiatives mark the National Day to Combat Smuggling:

Study Idesf - The Institute for Economic and Social Development of Borders (Idesf) developed, in partnership with the Gaúcha Public Opinion and Statistics Company (Egope) the study 'The Cost of Smuggling', which aims to analyze the main impacts of smuggling on society Brazilian, focusing on the 10 most smuggled products from Paraguay to Brazil.

The main conclusion of the study shows that the cost of smuggling varies from 19% to 22% of the value of the cargo, value added to the purchase price of the product in Paraguay, consisting of logistics, corruption, loss, among other factors. The study also reveals that criminals' profitability is enormous: in the case of cigarettes, the most smuggled product, it ranges from 179% to 231%.

Among other findings of the study, it is possible to highlight:

  •  Only between 5% and 10% of smuggled goods entering the country are seized
  •  It is estimated that approximately 15 thousand people are directly involved in smuggling activity in the Foz do Iguaçu region alone

The smuggling champion is the cigarette, which accounts for more than 67% of the products that cross the borders illegally, which is equivalent to R $ 6,4 billion in industry losses and tax evasion.

Retail Ad - Idesf, in partnership with the Brazilian Association to Combat Counterfeiting (ABCF), the Brazilian Association of Gastronomy, Lodging and Tourism (Abresi), the Brazilian Association of Bars and Restaurants (Abrasel) and the Brazilian Federation of Accommodation and Food (FBHA) ), runs on March 3 an advertising campaign to raise awareness about the law that prohibits the sale of contraband cigarettes in the country. The objective is to alert traders about possible penalties for those who commit this crime.

ABCF Balance Sheet - The Brazilian Association to Combat Counterfeiting (ABCF) released this Tuesday in 'Paulo a balance of operations for the seizure of illegal goods in the country in 2014. In total, the entity carried out, in partnership with the civil police of several states, about 1.200 operations, growth of 34% over the previous year. Among the main products seized are cigarettes, clothing and luxury items.

The State of São Paulo, the main consumer market in the country, is the preferred final destination of criminals. In second place is Paraná, followed by Rio Grande do Sul, Minas Gerais, Bahia, Pernambuco, Goiás, Pará and Rio de Janeiro as the biggest markets affected by the counterfeiting and smuggling of industrialized products.

  •  Cigars: 436 operations carried out in the country with more than 650 thousand packs seized;
  • Clothing: 42 operations and approximately 1.3 million pieces seized;
  • Luxury segment (bags, glasses and accessories): 19 operations carried out, and about 10 items seized;
  • Wires and cables, electric: 18 operations, with seizure of approximately 20.000 rolls of electrical wires and cables;
  • Auto Parts: 42 operations, in distributors and manufacturers, totaling 10 tons of seized auto parts;
  • Beer and drinks: 36 operations, with more than 20.000 units seized and five clandestine factories closed;
  • Cigars: More than 3.500 units seized.

Engagement of mayors - In March, the National Movement for the Defense of the Legal Market will forward material to the more than 5.500 municipalities in Brazil. The aim is to inform the mayors that the crime of smuggling directly affects cities, since part of the unpaid taxes should go to municipal coffers. In addition, the movement expects these mayors to sensitize deputies and senators to institute tough measures to fight crime.

Awards - To encourage the development of public initiatives in all spheres that help the country to abandon illegal commercial practices such as smuggling, piracy and counterfeiting, ETCO, FNCP and dozens of other entities are launching the 1st Management Efficiency Award Public Policy for Initiatives to Fight the Illegal Market. The rules will be announced in September 2015, and delivery is already scheduled for March 3, 2016.

Destruction of smuggled products - Two cigarette destruction actions have been carried out today. In São Paulo, the action was left to ABCF; in Foz do Iguaçu, the main port of entry for smuggling to Brazil, the initiative carried out by the Federal Revenue Service of Foz in partnership with Idesf.

DIALOGUE WITH THE GOVERNMENT

On February 25, the Movement for the Defense of the Brazilian Legal Market sent a letter to the main ministers and other authorities related to the topic. The objective: to inform the authorities about the actions that the Movement would be taking on March 3, and to request meetings to present a list of three measures that can be debated in the short and medium term, and which are fundamental for combating smuggling:

  •  Controlling borders, combating smuggling through strict inspection that prevents the entry of products that do not pay taxes, do not create jobs and increase crime in the country
  •  Create a positive Brazil / Paraguay business agenda so that the neighboring country can develop in a sustainable way
  •  Promote tax adjustments so that legalized products can be more competitive, thus reducing the financial attractiveness of smuggled goods and making the business environment more fair and competitive