In times of intense discussions on ethics in politics, the Brazilian Institute for Competition Ethics (ETCO) runs a campaign to raise awareness among market, bakery and bar owners about the importance of everyone doing their part to have a country without corruption. The campaign started in the cities of Guarapuava (PR) and Franca (SP). Approximately 2 merchants will be impacted by the campaign that warns about three themes: sale of smuggled or stolen products, payment of taxes and trade in alcohol and cigarettes for children under 18. ETCO takes advantage of the contact with retailers to also publicize the campaign of the Comptroller General of the Union (CGU) “Say no to small corruptions”, which addresses various illegal or unethical attitudes, such as stealing cable TV, skipping lines and buying counterfeit products.
To have an idea of the size of the problem, in the first quarter of the year, the illegal cigarette market reached 57% of the total in the interior of São Paulo, a growth of 15 percentage points over the same period last year, and exceeding the average national rate of 45%. In 2017, the smuggling of this product caused a leak of R $ 1,2 billion in the collection of the State of São Paulo, with 15,1 billion units of illegal cigarettes circulating freely in the market. In Paraná, the loss was R $ 293 million in the collection, with 3,3 billion units of contraband cigarettes circulating freely in the market.
Despite the authorities' efforts to combat this crime, 48% of cigarettes sold in Brazil are illegal (according to Ibope) and come from Paraguay.
On Tuesday (4/9) in Brasilia the study “Illegal market in Brazil: diagnosis and solutions ”. Developed by the Center for the Study of Economic and Social Law (Cedes), the research is a mapping of the main structural and economic failures in which the illegal market is sustained in the country, in addition to analyzing the tools already available in the country to combat it and the proposals that are under discussion in the Legislative.
Based on the research, a list was prepared with 10 priority measures to combat the illegal Brazilian market, available on the website www.dezmedidascontroilegal.com.br.
The study was coordinated by professor at Fundação Getúlio Vargas Luciano de Souza Godoy in co-authorship with professors Carlos Augusto Daniel Neto, doctor at the University of São Paulo (USP), Danyelle Galvão, master at USP and José Vicente Mendonça, professor at the Federal University of Rio de Janeiro (UERJ).
"We started the research in the first half of this year, with a diagnosis of the facts and data about the illegal market and the tools already available in the country to combat it, in addition to the proposals that are under discussion in the Legislative," explains Luciano Godoy.
For academic purposes, a case study was carried out on cigarette smuggling, as it is on top of the learned illegal products. According to Federal Revenue figures, in 2017, 221 million smuggled bundles were seized, equivalent to almost half (R $ 1,08 billion) of the total value of irregular items collected in the country.
According to Godoy, the research carried out in the research addresses four main vectors: the practical difficulties regarding the instruments to combat the illegal market; preliminary projects, bills of law and normative acts already presented; the position of national courts on the punishment of the offense and administrative sanctions against companies and traders who benefit from this problem; and new concrete proposals for optimizing available resources and creating new tools to combat smuggling.
“The study is a first meeting and analysis of the various tools already available, which may indicate a way to consolidate them and create a specific legal framework for this problem. But before that, it is necessary to improve the tactical measures ”, says Godoy.
Among the measures that are under discussion in the Legislative and that could represent advances in the fight against the illegal market, the CEDES study highlights the prohibition of driving for drivers who are caught in the practice of the crimes in question, and also a specific treatment for persistent debtors, that is, those companies that systematically circumvent the tax authorities and continue to operate.
The study points out ways that, if adopted by the public authorities, can contribute to drastically reduce illegality in Brazil. Among the actions suggested in the document are the creation of an integrated system of intelligence agencies to inspect land borders and map possible routes for the disposal of products from the illegal market; cooperation between law enforcement agencies in different countries affected by illegality and tax regulation in the sectors most affected by smuggling in the country.
Initiative unites municipal, state and federal agencies and has the participation of ETCO and other entities that fight against smuggling, piracy and counterfeiting of products
Smuggling, piracy and other forms of illegal trade harm companies that operate legally, destroy jobs, finance criminal organizations, take products with no quality control to citizens and reduce government tax collections, harming public services.
Despite so many evils, the fight against these crimes is not usually as rigorous as it should be - neither at the borders, where gangs move large amounts of cargo clandestinely, nor in the areas of popular commerce in large cities, where the sale of pirated products and smuggled goods usually happen in the open.
In the main capital of the country, however, the history of leniency may have its days numbered. The city of São Paulo decided to join forces with the Movement for the Defense of the Brazilian Legal Market, which has the support of 70 entities and is coordinated by ETCO and the National Forum Against Piracy and Illegality (FNCP), in the creation of the Legality Movement with the objective of intensifying the fight against smuggling in the capital.
The initiative consists of coordinated actions to combat illegal trade involving the inspection bodies of the City Hall and also the State (Civil and Military police, Sanitary Surveillance, Procon and Ipem) and the Union (Federal Revenue, Federal Police, Anvisa and ANP).
Based on the pioneering experience of the city of São Paulo, the project, which already has the support of the National Front of Mayors, will be implemented in other municipalities in the coming months. Porto Alegre and Campinas have already joined.
ETCO's president, Edson Vismona, believes that the decision of the São Paulo City Hall to adopt the project will have important effects on the reduction of illegal trade in the city and should become a reference for the rest of the country. According to him, in recent years, the municipality has come adopting a permissive attitude towards the sale of pirated or smuggled products to both end consumers and resellers. “São Paulo is an important distribution center for illegal products throughout Brazil,” he says. "Legal market defense entities have long claimed a more forceful attitude on the part of the public administration - and now it has come."
THE SIZE OF THE PROBLEM
Smuggling, piracy and counterfeiting of products produce huge losses for manufacturers and traders who respect the laws and public coffers. According to a survey carried out by the FNCP, last year, in the city of São Paulo alone, these crimes generated more than R $ 9 billion in losses for 16 productive sectors - among the most affected are software, audiovisual, tobacco, clothing, fuels, medicines and cosmetics. The activity caused R $ 4,5 billion in tax evasion, money equivalent to two years of budget in municipal daycare centers and enough to maintain the program of free distribution of medicines to the population of São Paulo for 15 years.
One of the main smuggled products is cigarettes: currently, 35% of the entire market in the capital is dominated by illegal brands, mainly of Paraguayan origin. In 2016, 5 billion units of illegal cigarettes were sold.
The ETCO president notes that financial damage is only part of the problem. He recalls that products that arrive on the market in a clandestine manner do not pass the inspection filters that protect the health of the population. And he points out that the illegal consumer goods market fuels organized crime and finances drug and arms trafficking, increasing the rates of violence.
“We are going to work together with the City Hall to combat these evils that so many losses bring to our city,” said Vismona at the launching ceremony of the Legality Movement, on September 15th. “The violence that is on the streets and that scares us is financed by these crimes. To fight against this is to fight for the life and dignity of the people of São Paulo. The Municipality of São Paulo is taking the lead, but the time has come to join forces with all Brazilian municipalities in search of solutions for the illegal market. ”
NOW THE LAW WILL BE FULFILLED
On the occasion, the mayor of São Paulo, João Doria, thanked the partnership with ETCO and the Brazilian Legal Market Partnership Movement and promised to act strictly. "The time for leniency is over," said Doria, who criticized the demagogic discourse of justifying tolerance with sellers of smuggled products for considering them victims of unemployment (read on page XX). "From now on, in the city of São Paulo the law will be enforced."
Federal Deputy Efraim Filho (DEM-PB), president of the Parliamentary Front to Combat Smuggling, praised the adhesion of the São Paulo City Hall to the project. According to him, the great challenge to fight against the illegal market is not to change or create new laws. "Changing the law is perhaps the easiest part - the cold letter of the law on a page of paper," he said. “Our great challenge is to change the culture, because the culture of tolerance that exists with these small crimes ends up putting us in an absolutely paradoxical situation, especially in Brazil today, where we all know what is right, but we must have courage to do right, as São Paulo is doing. ”
Brazil will present the impacts of smuggling and measures to contain the advance of the illegal market
To mark the ministerial conference of the World Trade Organization (WTO), the Crime Stoppers International Foundation (CSI), invites governments, businessmen and civil society to the panel "Threats of illegal trade". The purpose of the event is to draw up a series of recommendations that will be officially presented to the WTO.
The event will be open to all companies, entities and government representatives who will meet at the 11th WTO Ministerial Conference and are interested in protecting their industries, economies and countries from the threat of illegal trade.
Scheduled on December 12 (Wednesday), in Buenos Aires, Argentina, the panel will be attended by Ruud Smulders, CSI's executive director; Devrol Dupigny, director of global operations; and Edson Vismona, president of the Brazilian Institute of Competitive Ethics and the National Forum Against Piracy and Illegality (FNCP).
Panelists will present the problem of illegal trade from different perspectives, highlighting the impact on international trade, health and the economies of the affected countries. They will also expose the relationship between illegal trade and corruption, money laundering and financing of terrorist groups, and how free trade zones are exploited by criminal organizations.
The scale and impact of illicit trade globally
Since the creation of the WTO in 1995, international trade has grown substantially, improving the living conditions of thousands of people around the world. However, this same growth has led to an exponential increase in illegal trade, which amounts to a value close to US $ 650 billion. It is estimated that the illegal financial flows related to this activity total US $ 1,3 trillion and that the illegal economy represents about 15% of the world GDP.
These overwhelming levels of illegal trade present a series of challenges that have not yet been resolved by the international community. It is necessary to implement greater and better controls to combat these illegal activities, promoting formal trade and positively impacting the governance and effectiveness of global sustainable development.
Brazil: case at the Ministerial Conference
Within the cases that will be presented during the event, Brazil stands out. In 2016, smuggling, counterfeiting and piracy generated losses for the country in the order of R $ 130 billion, added to the losses of productive sectors - tobacco, clothing, fuels, cosmetics, medicines, among others - and tax evasion, according to survey of the National Forum Against Piracy and Illegality (FNCP).
According to data from the Federal Revenue, more than 65% of the smuggled goods entering Brazil are cigarettes and, in the last year, the volume of illegal cigarettes reached 45,2 billion units.
The increase in smuggling has occurred due to a combination of factors, including the tax imbalance between Brazil and Paraguay, the economic crisis and the fragility of borders. While in Brazil, taxes represent 80% of the value of a pack of cigarettes, in Paraguay, taxes paid by cigarette manufacturers are only 16%, which favors the entry of the product across borders, which have a very control structure it's precarious.
The effects of the illegal market fall on society with the increase in Brazilian violence, since criminal organizations are financed by smuggling. In addition to crime, smuggling also generates losses in tax collection, fosters unemployment, impacts the competitiveness of companies in Brazil and harms consumers' health.
For Edson Vismona, the panel will be an opportunity to discuss effective measures to combat smuggling definitively. "It is necessary for the Government to establish a tax reform based on the reality of the Brazilian market, added to the increase in taxes in Paraguay to reduce the attractiveness of smuggled goods, in addition to intensifying border control", explains Vismona.
About Crime Stoppers International (CSI)
Crime Stoppers International (CSI) is an international NGO based in the Netherlands, whose mission is to mobilize international society to report, anonymously, information related to criminal activities. CSI maintains cooperation agreements with INTERPOL and maintains collaborative memos with the United Nations Office on Drugs and Crime (UNODC), the CNN Freedom project, Airline Ambassadors International (AAI) and the International Police Training Institute (IPTI).
From 27 to 29 November, mayors and managers from all over the country will meet in Recife / PE to work on common themes of the municipalities. The agenda is the 72nd General Meeting of the National Front of Mayors (FNP), whose program was developed to deal with tax reform and subsidize the construction of an initial document, which will be improved and delivered in 2018 to candidates for the presidency of the Republic and Congress National.
During the meeting, the president of FNCP and ETCO, coordinating the Legality Movement, signed with the Mayor of Recife, Geraldo Julio, the term of commitment to encourage the defense of the legal market, to combat smuggling, counterfeiting and piracy in the city. Recife is the second capital to sign this commitment, after São Paulo.
In an interview with CBN São Paulo, Edson Vismona, President of ETCO comments on the Legality Movement, led by the Municipality of São Paulo and supported by ETCO, FNCP and 70 other entities, which intensifies the fight against the illegal market in the city of São Paulo.
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