Cablegate: Brazilian Customs Moving Forward On Plan to Reform Agency

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FM AMEMBASSY BRASILIA
TO RUEHC/SECSTATE WASHDC 6907
INFO RUEHRI/AMCONSUL RIO DE JANEIRO 3044
RUEHRG/AMCONSUL RECIFE 5607
RUEHSO/AMCONSUL SAO PAULO 8253
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RUEHLP/AMEMBASSY LA PAZ 4913
RUEHBO/AMEMBASSY BOGOTA 3958
RUEHME/AMEMBASSY MEXICO 2028
RUCPDO/USDOC WASHDC
RUEAHLC/DHS WASHDC

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
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

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