BRAZIL: GOB THREAT TO SUSPEND IPR OF US CITIZENS

UNCLAS BRASILIA 001648

SIPDIS

SENSITIVE
SIPDIS

DEPT FOR EB/TPP/IPE JENNIFER BOGER AND JOELLEN URBAN
DEPT FOR EB/TPP/MTA/IPC RACHEL WALLACE
DEPT PASS USTR FOR CHRIS WILSON, KATHERINE DUCKWORTH AND JENNIFER
CHOE GROVES
DEPT PASS USPTO
USDOC FOR ITA/MAC/OIPR CASSIE PETERS
USDOC FOR ITA/MAC/WH/OLAC/MCAMPOS

E.O. 12958: N/A
TAGS: KIPR ETRD ECON BR
SUBJECT: BRAZIL: GOB THREAT TO SUSPEND IPR OF US CITIZENS



1. (SBU) Summary: Otavio Brandelli, Chief of the Division of
Intellectual Property Rights at the Ministry of External Relations
told EconOff on August 27 that the media exaggerated some elements
of an August 24 report announcing GoB plans to "cross-retaliate"
over a WTO finding against U.S. cotton subsidies by suspending the
intellectual property rights of U.S. citizens and businesses. He
noted that the GoB has not yet asked the WTO for authorization to
"cross-retaliate" in this manner and was only laying the legal
groundwork to retaliate should the WTO authorize such action - which
he thought would be over a year away if it did occur.
Characterizing legislation being introduced by Deputy Paulo Teixeira
(PT-SP - Workers Party, Sao Paulo State) as too broad, he said GIPI,
the GoB inter-ministerial council, planned to form a subcommittee to
draft alternative legislation. Separately, Sao Paulo industry
contacts told Sao Paulo EconOff that they were not aware of the
specifics of this proposal, but considered the issue significant and
were not wholly unsympathetic to the GoB position. End Summary.


2. (SBU) According to Brandelli, the GoB is still studying the
possibility of "cross-retaliation" and has not reached a decision.
He said that a 2005 GoB request to the WTO for "cross-retaliation"
against U.S. IPR interests in connection with its cotton case only
applied to patents. A new WTO request would be broader. New
legislation will be introduced by Deputy Paulo Teixeira (PT-SP -
Workers Party, Sao Paulo State) the week of August 27 to provide a
legal framework for "cross-retaliation" covering all IPR areas,
should such action be authorized by the WTO and the GoB decide to
retaliate. Brandelli said he felt the language in the legislation
the Deputy plans to introduce should be more precise. To that end,
he said the GoB inter-ministerial council (GIPI) was forming a
sub-committee to draft alternative legislation. All of which, he
assured, would be done within WTO guidelines. Brandelli added that
his government would prefer a negotiated settlement to the cotton
dispute, which he claimed was costing Brazilian industry US$ 4
billion a year.

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Industry Reaction
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3. (SBU) Sao Paulo industry and trade associations seem to have
been left out of the federal government's decision to consider
cross-retaliation. When contacted by Sao Paulo EconOff, they had no
knowledge of the details of the government's strategy. Generally
speaking, the contacts said the issue is clearly important and that
they planned to discuss it at higher levels within their
organizations. Frederico Meira, International Negotiations
Supervisor at the Sao Paulo Federation of Industries (FIESP),said
any measure that breaks patents and undermines the rule of law is
harmful; however, the GoB should work within the WTO panel's
decision and protect Brazilian industries that may suffer from
unfair US trade practices.


4. (SBU) Comment: At this point, it appears that the GoB is
strongly considering "cross-retaliation" against U.S. IPR interests
if the USG does not comply with the WTO cotton case finding and
contests the results, but has not made a final decision. If this
strategy proves successful, the GoB may attempt to expand it to
combat all USG and EU agricultural subsidies in general, which would
also encompass EU IPR interests. Yet, planning is in its infancy
and GIPI may well propose competing legislation to that being
introduced by Deputy Teixeira leading to a delay in passage of any
enabling legislation in Brazil's already lengthy legislative
process. End Comment.


5. (U) This cable was coordinated with Consulate General Sao Paulo.

Chicola