Identifier
Created
Classification
Origin
05BRASILIA691
2005-03-14 14:06:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Brasilia
Cable title:  

PART I: BRAZIL'S CONTROL OF SENSITIVE

Tags:  PARM PGOV ETTC KNNP BR IAEA 
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UNCLAS SECTION 01 OF 03 BRASILIA 000691 

SIPDIS

SENSITIVE

E.O. 12958: N/A
TAGS: PARM PGOV ETTC KNNP BR IAEA
SUBJECT: PART I: BRAZIL'S CONTROL OF SENSITIVE
TECHNOLOGIES, THE SISCOMEX SYSTEM

UNCLAS SECTION 01 OF 03 BRASILIA 000691

SIPDIS

SENSITIVE

E.O. 12958: N/A
TAGS: PARM PGOV ETTC KNNP BR IAEA
SUBJECT: PART I: BRAZIL'S CONTROL OF SENSITIVE
TECHNOLOGIES, THE SISCOMEX SYSTEM


1. (SBU) Summary & Introduction: The GOB possesses an
effective, Internet-based export control licensing system
(SISCOMEX),and in discussions with emboffs Brazilian
officials could not identify any cases of unauthorized
transfers of sensitive items since SISCOMEX has been
functioning. Long, porous borders; an overstretched customs
service; and a lack of focus on export control enforcement,
however, are weak links in Brazil's export control chain.
The GOB does not conduct pre-license and post-shipment
inspections.


2. (SBU) Mission has seen no evidence or information
indicating diversion of controlled dual-use exports that pass
through the SISCOMEX process. However, it is difficult to
access whether items of concern may Slip clandestinely
through borders owing to enforcement gaps. Due to Brazil's
well developed petrochemical sector, chemicals and chemical
products make up the bulk of Brazil's licensed, dual-use
exports. (Note: Portions of this report were prepared in
conjunction with research conducted in Brazil in 2003 by
Professor Victor Zaborsky, University of Georgia.)
End Summary

Brazil's Export Control Mechanism
--------------


3. (U) Law 9112, entitled "Rules of the Export Sensitive
Goods and Services," provides the foundation for Brazil's
export control system. Signed on Oct. 10, 1995 by then
President Cardoso, the law defines those military goods,
dual-use items, and services subject to export controls;
spells out licensing procedures; establishes an
interministerial commission which oversees export controls;
stipulates penalties for export control violations; and
identifies the Ministry of Defense as supervisory authority
for all transactions involving military items. Although
short -- the law is only two pages long -- the implementation
of Law 9112 helped facilitate Brazil's October 1995 entry
into the Missile Technology Control Regime (MTCR) and the
Nuclear Suppliers Group (NSG) in April 1996. The
Interministerial Commission on Controlling Exports of
Sensitive Goods, with representatives from the Ministries of
Foreign Affairs; Defense; Development, Industry & Foreign
Trade; Science & Technology; and Economy; implements Law 9112

and determines violations of control regulations.


4. (SBU) The Department of Nuclear Affairs and Sensitive
Technologies (DNASA),Ministry of Science & Technology, is
responsible for licensing most controlled exports, including
technologies (licensing of conventional military goods
belongs to the Ministry of Defense.) According to Monteleone
Neto, former Director of DNASA, the Department reviewed about
1,500 export control license applications in 2002;
approximately 80% of these applications dealt with controlled
dual-use chemicals. In most cases, Monteleone Neto asserted,
DNASA is capable of licensing classification and
decision-making without outside consultation, although if
needed, technical expertise from other government agencies
such as the Brazil Space Agency and the National Commission
for Nuclear Energy, may be requested.

The SISCOMEX Process
--------------


5. (U) Brazilian companies seeking export licenses submit
their applications through the SISCOMEX (Sistema Integrado de
Comercio Exterior),an electronic code registration network
maintained and supervised by the Ministry of Development,
Industry & Foreign Trade. Established in 1993, the web-based
SISCOMEX contains comprehensive profiles of all Brazilian
exporters and importers. At present, approximately 23,000
Brazilian companies are registered in SISCOMEX. According to
the Ministry's Coordinator for Commercial Operations, only
about 100 Brazilian firms are engaged in the manufacture of
sensitive dual-use items. The Ministry also maintains a
"negative" list of bad exporters and, if warranted, submits
any follow-up investigative work to the Federal Police.
SISCOMEX declarations identified or suspected as false are
also passed to the Central Bank.


6. (U) As part of the licensing procedure, DNASA staff
review import certificates issued by authorized government
agencies of the importing country and determine whether the
foreign importing entity is legally qualified to import the
stated goods. DNASA also seeks assurance that the items not
be re-exported to a third country without authorization of
the importing country. In licensed sales to foreign
governments, DNASA requires end-use certificates stating that
the imported items will only be used within its national
territory and will not be re-exported without prior
authorization of the GOB. In some cases, for example when
missile or nuclear-related items are involved, exporters
require Ministry of Foreign Affairs (Department of
Disarmament & Sensitive Technologies and/or Department of
Trade Promotion) approval before beginning contract
negotiations with a foreign partner. If DNASA doubts the
credibility of an end-user on an item deemed to contribute
potentially to the development of weapons of mass destruction
(chemical, biological or nuclear),it may seek additional
information from the Brazilian Intelligence Agency (ABIN).


7. (U) Even though Brazilian exporters of dual-use items are
few, exporters occasionally complain about delays in license
approvals, and Law 9112 does not contain any time limit
provisions. Brazilian exporters appear to comply with the
control regulations, and identifiable attempts to evade
procedures are very rare, according to the SISCOMEX director.
Maurice Costin, Director of the Department of International
Affairs and Foreign Trade in the Federation of Industries of
Sao Paulo, Brazil's largest industry association, told
Emboffs that he could conceive of a dishonest manager forging
an export license or bypassing the licensing process, but
asserted he had never heard of any such instance.

Enforcement
--------------


8. (U) With 14,691 km of land border and 7,491 km of
coastline, Brazil presents a huge challenge to law
enforcement agencies, particularly the understaffed and
underfunded customs service (Receita Federal). Although
Brazilian customs officials are often well trained in
inspection techniques for detecting illicit drugs and
weapons, U.S. law enforcement officials observe that they
often possess very limited expertise and almost no interest
in identification of specific, licensed export control items.
Customs officials have the power to search, detain, and
seize cargoes, but they lack the authority to investigate or
arrest and must pass cases to the police. In cases where the
validity of an export license is in question, customs may
contact DNASA, although in practice, customs officials
rarely, if ever, appear to exercise this procedure. Under the
Container Security Initiative (CSI),officials from the U.S.
Department of Homeland Security (DHS) conducted a port
security assessment in 2004. DHS is awaiting GOB approval
for the CSI in the form of a Letter of Agreement.


9. (SBU) While the export license decision-making process
appears to be relatively free of corruption, the possibility
of this problem or other enforcement gaps on the borders
cannot be dismissed. Despite the problems in border
enforcement, Brazilian officials assert that they know of no
case in which dual-use items were smuggled out of the
country. Since DNASA does not have the capability of
performing pre-license checks or post-shipment verifications
-- Brazilian embassies are not staffed for these purposes --
supervision over end-use is non-existent.


10. (SBU) Comment: Brazilian officials are proud of the
SISCOMEX network and believe it is a strong licensing
mechanism. It does appear that companies registered in
SISCOMEX probably conform fully with GOB export control
procedures. Enforcement procedures on the ground, however,
are less reassuring, and unscrupulous diversion of controlled
items could occur without the knowledge of the GOB.
Nevertheless, we have not seen evidence to date that dual-use
items are slipping out of Brazil. Brazilian-U.S. law
enforcement and intelligence cooperation is excellent, and if
called upon to investigate suspected activity of illicit
exports, we believe the GOB will do its part based on its
international commitments.
Danilovich