Brazil may suffer US trade sanctions because of piracy record

The US government has warned Brazil that it faces being removed from the list of countries covered by the Generalized System of Preferences (GSP), which is administered by the Office of the US Trade Representative (USTR).

The GSP affords duty-free treatment to certain products exported by developing countries such as Brazil, which in 2003 received duty-free benefits of about $2.5 billion. However, since 2001 Brazil has been included on the USTR Special 301 Priority Watch List, which notes those countries that do not have an adequate level of protection or enforcement of IP rights.

The USTR evaluates the countries on the list each year. After requests from several US companies, the USTR stated that it would examine whether Brazil has taken appropriate action to reduce the level of IP rights violation. If the USTR concludes that Brazil has economically damaged exporting companies, Brazil's position in the GSP may be under threat.

This comes despite the fact that (i) Brazil has modern IP legislation that is harmonized with the Agreement of Trade-Related Aspects of Intellectual Property Rights, and (ii) the Brazilian Congress has recently set up a special IP committee to evaluate the situation and propose changes. It also seems at odds with the fact that Brazil and the United States have been working together this year to fight piracy.

Hopefully, the Brazilian government will take this opportunity to create a broad strategy against piracy that would include offering appropriate training to police and customs agents, as well as giving greater financial support to the Industrial Property Institute. The creation of a national policy against piracy would be a positive sign that Brazil is giving priority to the protection of IP rights and that prospects for the future are bright.

Mauro JG Arruda and José Mauro D Machado, Pinheiro Neto Advogados, Sao Paulo