BRAZILIAN CUSTOMS MOVING FORWARD ON PLAN TO REFORM AGENCY

UNCLAS SECTION 01 OF 02 BRASILIA 002103 SIPDIS SIPDIS SENSITIVE STATE PASS USTR - SCRONIN/MSULLIVAN USDOC FOR 4332/ITA/MAC/WH/OLAC/MWARD USDOC FOR 3134/ITA/USCS/OIO/WH/RD/SHUPKA USTDA FOR AMCKINNEY AID/W FOR LAC DHS FOR CBP AND ICE E.O. 12958: N/A TAGS: ETRD BEXP ECON EIND BR SUBJECT: BRAZILIAN CUSTOMS MOVING FORWARD ON PLAN TO REFORM AGENCY OPERATIONS ¶1. (SBU) Summary. In a September 27 meeting with DHS and Embassy officers, leadership at Brazilian Customs outlined the challenges they face in modernizing their agency and the strategies they have formulated to accomplish this task. GOB managers seek to reform the culture of their organization, transforming the agency from a slow, rule-bound unit to one guided by scientific risk analysis and possessing the latest technology. To move forward, Brazilian Customs has requested technical assistance and training from U.S. Customs and Border Protection (CBP) to assist in its implementation of the World Customs Organization (WCO) Framework of Standards. Meanwhile, through the ongoing Commercial Dialogue between USDOC and the Ministry of Development, Industry, and Commerce (MDIC),USDOC and the Embassy are organizing a visit of Brazilian Customs officials to Tennessee and/or Kentucky to look at industry's "best practice" express delivery services in operation there. A visit to Detroit to see the FAST lane is also contemplated. End Summary. ¶2. (SBU) On September 27, Ian Saunders, Division Director for Training and Assistance for CBP's Office of International Affairs met with Jorge Rachid (Director of Brazil's Receita Federal),Clecy Lionco (Deputy Director of Receita Federal),and Lytha Spindola (Tax and Customs Attache at the Brazilian Embassy in Washington) to discuss ongoing technical cooperation between U.S. and Brazilian Customs. (In Brazil, Customs is a sub-unit of Receita Federal - the federal tax service.) CBP Senior Policy Advisor Keith Thomson joined the group later in the day. During the discussion, Rachid made the following general points: -- The Lula Administration has set aside US$200 million to modernize the country's customs operations. With these funds, the agency plans to procure modern scanning technology for both major ports and smaller inspection stations, purchase boats and aircraft to monitor border areas, upgrade its information technology base, and implement inspection based upon risk analysis. -- The Ministry of Transportation is currently in the process of expanding the country's ports. On the customs side, functions such �0A;as bonded warehouses are to be out-sourced to the private sector, thereby increasing efficiency and lessening the burden on the GOB. -- On the personnel side, the GOB hopes to revitalize the Customs agency through increased training - some of which would be provided by CBP - and the establishment of a Code of Conduct specifically applicable to Customs officials. (In the past, Rachid said, efforts by well-connected politicians to use their influence to get their personal goods through Customs duty-free had demoralized agency personnel. To help remedy these problems, CBP recently offered Brazilian Customs a training class on ethics.) -- To speed the flow of goods through Brazilian Customs, plans are also in the works to place officers in Miami under the reciprocity provisions of the Container Security Initiative (CSI). -- By end-year 2006, Customs would complete the second stage of its gigantic inspection station at the Friendship bridge in the tri-border area of Foz do Iguacu. This would enable the GOB to intensify its crack down on contraband crossing the bridge, though law enforcement officials expected that traffickers would respond to the tough controls by trying to move their goods clandestinely across the border elsewhere via boat. ¶3. (SBU) In a more, comprehensive follow-up session after Rachid departed, Clecy Lionco filled in many of the details. She noted that long-time Brazilian Customs officials had known for some time that their agency needed change and had persuaded the Lula Administration to submit reform legislation to Congress. As Congress had failed to act on this measure, on August 24, 2006 Lula issued an executive decree (M.P. 320) implementing the reform on his own. (Temporary in nature, the decree would lapse unless ratified by Congress by early 2007. However, as the New Year would bring a new session of Congress, the next President could re-issue the decree, thus extending its temporary clock.) Lionco opined that BRASILIA 00002103 002 OF 002 even though Customs was consulting with business through Procomex, an industry advisory group, some firms would welcome the reforms while others would complain. ¶4. (SBU) Lionco reiterated that plans were underway, with the assistance of academic experts, to revitalize Customs' information base. The government-wide SISCOMEX system would be modified to include maritime cargo manifests and other Customs-specific data, thus opening the way for the application of risk analysis. In addition, she noted, revamping SISCOMEX would allow the GOB to implement procedures to provide for quicker turnaround for express delivery services. The goal was to have the IT component ready to go in 3 to 4 months, she declared, adding that efforts on the part of U.S. industry to sponsor a tour of express delivery operations in Tennessee and Kentucky needed to move forward quickly if they were to be integrated into the GOB's strategic plan. Once the express delivery component was in place, she said, the GOB wanted to turn to its Linha Azul (literally, "Blue Line") project. Under this program, certain registered high-volume, high-value importers would get VIP treatment in clearing their goods. ¶5. (SBU) Both Lionco and Spindola noted that while the exchange of information between Customs and its U.S. law enforcement counterparts was useful, even though the Brazilian side was able to quickly provide the USG with extensive information on a particular transaction, too often the data it received from the USG was late or incomplete. In particular, they fretted that U.S. law prevents USDOC from sharing exporter declarations with foreign customs agencies. They requested that USG agencies confer so as to find a way to make such information available in a timely manner via our bilateral 2005 Customs Mutual Assistance Agreement. ¶6. (SBU) Comment. Given the difficulty U.S. firms face in moving goods through Brazilian Customs, the GOB's reform plan is most welcome. Especially good to hear is the fact that Receita Federal is consulting with industry as it moves forward to revamp its internal procedures. Post believes that the continuing strong relations between CBP and Brazilian Customs will afford USG interlocutors a window to shape and guide the GOB's reform efforts. Sobel