'Pirate' goods market in Brazil drawing worldwide attention

In this story: Wannabe Barbies and fake nikes "If they're cheaper here, I buy them" RELATED STORIES, SITES

RIO DE JANEIRO, Brazil (Reuters) -- Brazil's modern-day pirates deal in Ray Ban lookalikes and fake Nike sneakers, not gold bullion, and rather than pillaging and plundering under cover of night they sidle up to ports to hawk their wares in broad daylight.

With its huge market of 165 million people and thinly staffed customs offices, Brazil has become a haven for these latter-day swashbucklers.

"We have very few people to watch over extensive borders and cheap goods pouring into a country with a lot of people in need -- it's a difficult situation," said Murilo Amaral, the head customs inspector at Rio de Janeiro's port.

Only 2,000 customs officials patrol Brazil's porous borders compared with 21,000 in France, which is a fraction the size of Brazil, he said.

Brazil's federal tax authority, which oversees customs, does not even have official estimates on how big an industry pirated goods is. "Our primary function is to collect taxes. When we find illegal merchandise we seize it, but we don't have enough people to make it a primary duty," a spokesman said.

Trade associations estimate that billions of dollars in legitimate sales are lost every year as a result of the booming black market. Nearly 70 percent of all sunglasses and eyeglasses sold in the country, 40 percent of compact discs and 45 percent of toys are fakes, they say.

In a typical year, 2.4 billion packs of illegal cigarettes, 1.5 million wannabe Barbie dolls and 1 million pairs of fake Nike athletic shoes reportedly pour in through Rio, Santos and Paranagua ports as well as through neighbouring Paraguay.

In some cases, the bogus products cause health problems. "Last year, authorities found that falsified reading glasses had done serious harm to consumers," Amaral said.

Trucks, dolls and school supplies from China and Taiwan sold as Disney and Teletubbie products in teeming stalls in downtown Sao Paulo and Rio have also sent children to hospitals.

"They use lead and toxic substances in the paint that rub off when they come in contact with babies' saliva," said Sinesio Batista da Costa, president of Brazil's Toy Association.

Batista said multinational companies should take a more active role in preventing the production of these goods around the globe, but he also complained that Brazil does little to crack down on the black market at home.

The booming industry is hard to control. After decades of a closed economy, Brazil finally opened its borders to international trade in 1990, revealing a huge population that had never had access to a wide range of consumer goods.

Falsified products, costing a fraction of the real thing, appealed to Brazil's masses, millions of whom earn a measly minimum salary of $83 a month. Pens and lighters are sold at a discount, while running shoes can go for less than a quarter of the department store price for authentic merchandise.

"If they're the same brand, the same smell, but cheaper here ... I buy them here," one young Rio resident said, pausing by rows of fake Nikes on a street known as "Duty Free" by locals.

Brazil has tried to battle pirates with a detailed patent and trademark law issued in 1996, but officials say it is all but impossible to implement. The maximum sentence is only four years and few people are tried because customs officials are prohibited by secrecy laws from revealing the names of vendors who break the law so the injured companies can sue them.

"The law is very good, the problem is applying it," said Luis Fernando Matos, a lawyer who works on patent and trademark infringement. "The inefficiency is embarrassing."

This month, Brazilians got a glimpse of how big and complex the problem is as customs officials pulverized 45,000 fake Nike running shoes on television. The shoes were actually confiscated more than a year earlier and nobody has been sent to jail.

But what bothered many Brazilians was that they did not find a more charitable use for the shoes.

"We would prefer to donate these goods but we have to follow the law and these companies' bidding," Amaral said. So, after two years of negotiations, officials finally agreed to grind the offending shoes into shreds.

"Falsified sneakers can cause serious damage to areas like ankles and Achilles' tendons, for example, because in the majority of the cases they are not the proper shape and are made from low quality raw materials," Nike spokeswoman Katia Gianone said.

And the last time Nike donated shoes to poor kids in Sao Paulo slums, Amaral said, they were back on the black market within 48 hours.

Copyright 2000 Reuters. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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