Marcelo Pupe Braga *

The Generalized System of Preferences (GSP) is a program designed to promote economic growth in the developing world by providing preferential duty-free, low tax or special schemes of quotas for several products from the beneficiary developing countries. Today, around twenty five developed countries grant the GSP in an attempt to demonstrate that commerce is a more powerful and less onerous method of stimulating self-supported growth than direct financial help.

In the United States of America, the General System of Preferences (GSP)is authorized by Title V of the Trade Act of 1974, and it is implemented in accordance with Executive Order 11888 of November 24, 1975, as modified by subsequent Executive Orders and Presidential Proclamations.¹

Some requirements should be fulfilled by the eligible countries in order to grant GSP benefits. It is important to mention that under the Trade Act of 1974, the President of the US is authorized to withdraw, suspend or limit duty-free treatment for any or all articles from the beneficiary countries. In its Annual Review, the United States Trade Representative (USTR), through its Trade Policy Staff Committee (TPSC), reviews petitions concerning the practices of certain beneficiary developing countries of the GSP program, in order to ratify or not the benefit.

One of these requirements is that the beneficiary country shall provide adequate and effective intellectual property protection. In the year of 2000, the International Intellectual Property Alliance (IIPA) claimed the USTR for a stronger position against the violations practiced in countries such as Brazil, Lebanon and Russia.

The president of the IPPA, Mr. Eric H. Smith, stated that there was no national policy to strive against piracy in Brazil, where this violation would be reaching high levels without effective punishment from the authorities.

Indeed, in the last decade, Brazil has been dealing with serious issues related to piracy. In fact, piracy in Brazil shows itself as a very complex theme, essentially because it involves not only the investments on falsified products by undertakers, but also and particularly because of the financial situation of many people, who can not always afford to buy original items.

As the USTR TPSC started to review the IIPA’s petition, Brazilian exporters got truly concerned about the possibility of Brazil’s exclusion from the American GSP program. However, on January 13th, Brazilian exporters’ expectation finally ended as the US Government ordered the closure of the Case 13-CP-5 – Protection of Intellectual Property in Brazil.²

Both parties reacted positively to the case closure. If Brazil was excluded from the American GSP program, its economic damage could reach around US$ 3 billion in annual preferential GSP trade benefits. Mr. Eric H. Smith said that “significant and lasting improvements in the Brazilian market are currently within reach, but much more work remains to be done. We have witnessed a decisive change in the attitudes of Government officials towards piracy. It is now time to fully implement this new vision, and it remains imperative that the Brazilian Government demonstrate sustained results in its anti-piracy campaigns”.³

It is unquestionable that Brazilian Government’s anti-piracy practices were crucial to the case closure. Likewise, it is also true that political matters might have interfered in the decision.

Some say that one of the ways the US to cope with the upbringing of a Latin America Group united for mutual support or joint action is to firm bilateral agreements with each of these countries, granting them several benefits and the GSP program is a perfect example.

Therefore, the American Government’s case closure should be analyzed under a more critical view. Brazilian Government has been improving its practices against piracy, but it is clear that the US has its own advantage on confirming Brazilian permanence as a beneficiary country of its GSP program.

Furthermore, it is valuable to note that Brazilian permanence is much more favorable to its own economy than any other apparently negative matter. As referred to before, Brazil will continue to export around US$ 3,3 billion under the GSP list per year to US, which will definitely raise the country’s balance of trade surplus and consequently contribute to the national industry, income and employment growth.
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¹USTR – Office of The United States Trade Representative sources.

²US Federal Register / Vol. 71, Nº 9 / Friday, January 13, 2006 / Notices.

³IIPA’s website release – January 13, 2006. “IIPA and its member approve of the new partnership between the U.S. and Brazilian Governments”.

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* Lawyer of the firm Trigueiro Fontes Advogados

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