TCS Daily

Richman? Poorman? Beggarman? Thief?

By James Pinkerton - June 29, 2005 12:00 AM

Will the real Brazil please stand up? Is Brazil a poor country that needs more foreign aid from the United States -- even involuntary aid? Or is it an increasingly rich and powerful country that can seize foreign markets for itself? Indeed, is it so powerful that that it doesn't need to play by the rules?

One source not to look to for answers is the Brazilian government itself, as we shall see.

To an outside observer, it's apparent that the Brazilians clearly want to have it all three ways: being needy when it suits them, being export-y as they are able, being greedy when they think they can get away with it -- and if that last stance hurts the U.S. economy, too bad. It's a little complicated, and a little bewildering. And yet Uncle Sam's answer to the "Brazil Bewilderment" will help determine America's own wealth, and health, in the 21st Century.

Two recent items show the sharp divergence in perspectives on Brazil. The New York Times' editorial page sees Brazil as a destitute place. Which means, of course, that Brazil is a wonderful place -- for the Times to preach some politically correct "compassion." Using somebody else's money, of course. In a June 23 editorial, the paper sided with Brazil in its long-running argument with American owners of Intellectual Property (IP); in this case, the fight is with the biotech industry.

The Times noted that "Brazil's free universal treatment program, an indispensable weapon against the AIDS epidemic, locks Brazil's government into buying lifelong daily medicines for 170,000 people, and that number is rising." And so, the Times continued, "Brazil has the right to make sure it can continue to meet this burden by getting medicines at the cheapest possible price." And the cheapest possible price can be arrived at, quite often, through simple theft: the violation of IP property rights.

In other words, the Times is so in love with government-run "universal" health care that it wants the US -- or, more precisely, U.S. Pharma companies -- -to finance such health care in other countries. It would be one thing if the Times simply editorialized in favor of America subsidizing the Brazilian social insurance system. That is, the president and the Congress could simply vote to transfer a few billion dollars a year to Brazil. But of course, no elected officials would ever vote for such an overt wealth-transfer, so the Times finds it expedient to endorse a covert wealth-transfer, in the form of IP ripoff.

And obviously the Times couldn't be expected to worry much about anything so bourgeois as the rights of American companies, and their shareholders and stakeholders. As the Times sneeringly put it, "Right-wing groups in the United States and pharmaceutical manufacturers are calling this theft, and several members of Congress have asked the United States trade representative to apply trade sanctions." And yet, the Times advised, "The American trade representative should make a public statement that the United States will not retaliate against Brazil for exercising its right to save lives."

In the paper's pro-Brazil policy, we see how p.c. solicitude for AIDS victims joins up with an all-purpose entitlement mentality -- to create a ruinous prescription for American well-being, as well as a dire prospect for future medical innovation in a property-rights-wrecking environment.

But another Times newspaper has a far different take on Brazil, a country which, after all, boasts the 9th-largest economy in the world today. According to a June 22 article in The Financial Times that ran the same day, under the headline, "Brazil is yielding farms that can feed the world," Brazil is on its way to becoming "a pivotal nation in the future of world trade. Brazil is to agriculture what India is to business offshoring and China to manufacturing: a powerhouse whose size and efficiency few competitors can match."

As the FT details, Brazil now enjoys the largest agricultural trade surplus in the world, and the country's balance of trade is helped enormously by IP theft, which often goes by the more polite name of "compulsory licensing." But by any name, it's still theft, and theft is "zero sum." So if Brazil has more, the US has less. From Brazil's narrow point of view, it's easy to see the logic of its current course. In the words of Ken Adelman, former deputy U.S. representative to the United Nations, Brazil's "earnest commitment to premeditated theft of American assets should prompt the administration to stop considering Brazil a good partner and its president a great friend until they demonstrate a stronger commitment to the Rule of Law and free trade." That was on May 9. On June 24, in an important Wall Street Journal column entitled "Brazil Mulls Drug Patent Theft as an AIDS Antidote," Mary Anastasia O'Grady wrote, "The possible compulsory licensing of AIDS drugs is only part of Brazil's wider assault on intellectual property rights. While China and India are promising to firm up protections and sucking in capital investment, Brazil seems bent on joining the likes of Cuba, Iran and Venezuela.

Like IP itself, IP theft is a somewhat obscure topic, but across the board, from movies to music to software to pharmaceutical patents, such theft costs the United States some 750,000 jobs and $200 billion a year annually. Which is to say, it's a lotta money. Indeed, one might ask how The New York Times would feel if, in some alternative universe, the key to treating AIDS patients was discovered to be the breaking of all the Times' copyrights and trademarks.

So which Brazil is it? Poverty-stricken victim? Hyper-aggressive trader? Or rogue-nation with a national strategy of IP-pirating? I posed that exact three-part question to Roberto Abdenur , Brazil's ambassador to the US, at a June 24 meeting at the Council of the Americas Society in Manhattan.

And here's what he said to me in response: "It is absolutely not true that Brazil would have a national strategy [of IP theft]. Keeping a perfectly straight face, he added, "Of IP there is something like a revolution taking place in Brazil; ... we are taking very decisive actions on piracy. Brazil is deeply committed to enforcing TRIPs [trade-related intellectual property rights]."

Well, those were nice and reassuring words. But there was one small problem: they weren't true. That very afternoon, on June 24, came the news that Abdenur's bureaucratic buddies back in Brasilia had announced that the country would impose "compulsory licensing" on Abbott Laboratories' anti-HIV drug Kaletra if the company didn't surrender the license first. Sorry, Mr. Ambassador, but your own government has made you into a liar.

The irony is that for all Brazil's enthusiasm for IP-mulcting, such a policy is not actually in the country's overall long-term best interest. That was a useful perspective supplied at the same June 24 Council of the Americas discussion by Donna Hrinak, the former U.S. ambassador to Brazil. She reminded the audience, which included Abdenur, that for Brazil, "the whole issue of IP goes from AIDS treatment to the guy who is selling a pirated CD to the grey market in computers." Which is to say, Brazil's IP-lawlessness is endemic.

Then she added, "I never understood Brazil's IP position. It goes against its own interest." That is, Brazil would ultimately gain more by working within the world IP system, where rights are respected for the long-term benefit of all property holders. Continuing, Hrinak added, "Recife would be like Bangalore if Brazil would look to its own interest, and implement its own [IP] laws." Better to be supportive of a thriving indigenous high-tech industry, she was saying, than to merely be stealing technology from others.

From an American point of view, it's nice to know that some U.S. diplomats see the importance of IP, for the well-being of this country, and also for the well-being of the world property-rights system -- which will make all countries better off if it's allowed to work.

But so far, at least, there's not much evidence that Brazil is looking to anybody's ultimate well-being, not even its own. However, it does have The New York Times in its corner. Maybe Brazilians can feast on that.


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