US embassy cable - 05BRASILIA691

UNCLAS SECTION 01 OF 03 BRASILIA 000691 
 
SIPDIS 
 
SENSITIVE 
 
E.O. 12958: N/A 
TAGS: PARM, PGOV, ETTC, KNNP, BR, IAEA, Misc. 
SUBJECT: PART I: BRAZIL'S CONTROL OF SENSITIVE 
TECHNOLOGIES, THE SISCOMEX SYSTEM 
 
1.  (SBU) Summary & Introduction:  The GOB possesses an 
effective, Internet-based export control licensing system 
(SISCOMEX), and in discussions with emboffs Brazilian 
officials could not identify any cases of unauthorized 
transfers of sensitive items since SISCOMEX has been 
functioning.  Long, porous borders; an overstretched customs 
service; and a lack of focus on export control enforcement, 
however, are weak links in Brazil's export control chain. 
The GOB does not conduct pre-license and post-shipment 
inspections. 
 
2.  (SBU) Mission has seen no evidence or information 
indicating diversion of controlled dual-use exports that pass 
through the SISCOMEX process.  However, it is difficult to 
access whether items of concern may Slip clandestinely 
through borders owing to enforcement gaps.  Due to Brazil's 
well developed petrochemical sector, chemicals and chemical 
products make up the bulk of Brazil's licensed, dual-use 
exports.  (Note: Portions of this report were prepared in 
conjunction with research conducted in Brazil in 2003 by 
Professor Victor Zaborsky, University of Georgia.) 
End Summary 
 
Brazil's Export Control Mechanism 
--------------------------------- 
 
3.  (U) Law 9112, entitled "Rules of the Export Sensitive 
Goods and Services," provides the foundation for Brazil's 
export control system.  Signed on Oct. 10, 1995 by then 
President Cardoso, the law defines those military goods, 
dual-use items, and services subject to export controls; 
spells out licensing procedures; establishes an 
interministerial commission which oversees export controls; 
stipulates penalties for export control violations; and 
identifies the Ministry of Defense as supervisory authority 
for all transactions involving military items.  Although 
short -- the law is only two pages long -- the implementation 
of Law 9112 helped facilitate Brazil's October 1995 entry 
into the Missile Technology Control Regime (MTCR) and the 
Nuclear Suppliers Group (NSG) in April 1996.  The 
Interministerial Commission on Controlling Exports of 
Sensitive Goods, with representatives from the Ministries of 
Foreign Affairs; Defense; Development, Industry & Foreign 
Trade; Science & Technology; and Economy; implements Law 9112 
and determines violations of control regulations. 
 
4.  (SBU) The Department of Nuclear Affairs and Sensitive 
Technologies (DNASA), Ministry of Science & Technology, is 
responsible for licensing most controlled exports, including 
technologies (licensing of conventional military goods 
belongs to the Ministry of Defense.)  According to Monteleone 
Neto, former Director of DNASA, the Department reviewed about 
1,500 export control license applications in 2002; 
approximately 80% of these applications dealt with controlled 
dual-use chemicals. In most cases, Monteleone Neto asserted, 
DNASA is capable of licensing classification and 
decision-making without outside consultation, although if 
needed, technical expertise from other government agencies 
such as the Brazil Space Agency and the National Commission 
for Nuclear Energy, may be requested. 
 
The SISCOMEX Process 
-------------------- 
 
5.  (U) Brazilian companies seeking export licenses submit 
their applications through the SISCOMEX (Sistema Integrado de 
Comercio Exterior), an electronic code registration network 
maintained and supervised by the Ministry of Development, 
Industry & Foreign Trade.  Established in 1993, the web-based 
SISCOMEX contains comprehensive profiles of all Brazilian 
exporters and importers.  At present, approximately 23,000 
Brazilian companies are registered in SISCOMEX.  According to 
the Ministry's Coordinator for Commercial Operations, only 
about 100 Brazilian firms are engaged in the manufacture of 
sensitive dual-use items.  The Ministry also maintains a 
"negative" list of bad exporters and, if warranted, submits 
any follow-up investigative work to the Federal Police. 
SISCOMEX declarations identified or suspected as false are 
also passed to the Central Bank. 
 
6.  (U) As part of the licensing procedure, DNASA staff 
review import certificates issued by authorized government 
agencies of the importing country and determine whether the 
foreign importing entity is legally qualified to import the 
stated goods.  DNASA also seeks assurance that the items not 
be re-exported to a third country without authorization of 
the importing country.  In licensed sales to foreign 
governments, DNASA requires end-use certificates stating that 
the imported items will only be used within its national 
territory and will not be re-exported without prior 
authorization of the GOB.  In some cases, for example when 
missile or nuclear-related items are involved, exporters 
require Ministry of Foreign Affairs (Department of 
Disarmament & Sensitive Technologies and/or Department of 
Trade Promotion) approval before beginning contract 
negotiations with a foreign partner.  If DNASA doubts the 
credibility of an end-user on an item deemed to contribute 
potentially to the development of weapons of mass destruction 
(chemical, biological or nuclear), it may seek additional 
information from the Brazilian Intelligence Agency (ABIN). 
 
7.  (U) Even though Brazilian exporters of dual-use items are 
few, exporters occasionally complain about delays in license 
approvals, and Law 9112 does not contain any time limit 
provisions.  Brazilian exporters appear to comply with the 
control regulations, and identifiable attempts to evade 
procedures are very rare, according to the SISCOMEX director. 
 Maurice Costin, Director of the Department of International 
Affairs and Foreign Trade in the Federation of Industries of 
Sao Paulo, Brazil's largest industry association, told 
Emboffs that he could conceive of a dishonest manager forging 
an export license or bypassing the licensing process, but 
asserted he had never heard of any such instance. 
 
Enforcement 
----------- 
 
8.  (U) With 14,691 km of land border and 7,491 km of 
coastline, Brazil presents a huge challenge to law 
enforcement agencies, particularly the understaffed and 
underfunded customs service (Receita Federal).  Although 
Brazilian customs officials are often well trained in 
inspection techniques for detecting illicit drugs and 
weapons, U.S. law enforcement officials observe that they 
often possess very limited expertise and almost no interest 
in identification of specific, licensed export control items. 
 Customs officials have the power to search, detain, and 
seize cargoes, but they lack the authority to investigate or 
arrest and must pass cases to the police.  In cases where the 
validity of an export license is in question, customs may 
contact DNASA, although in practice, customs officials 
rarely, if ever, appear to exercise this procedure. Under the 
Container Security Initiative (CSI), officials from the U.S. 
Department of Homeland Security (DHS) conducted a port 
security assessment in 2004.  DHS is awaiting GOB approval 
for the CSI in the form of a Letter of Agreement. 
 
9.  (SBU) While the export license decision-making process 
appears to be relatively free of corruption, the possibility 
of this problem or other enforcement gaps on the borders 
cannot be dismissed.  Despite the problems in border 
enforcement, Brazilian officials assert that they know of no 
case in which dual-use items were smuggled out of the 
country.  Since DNASA does not have the capability of 
performing pre-license checks or post-shipment verifications 
-- Brazilian embassies are not staffed for these purposes -- 
supervision over end-use is non-existent. 
 
10. (SBU) Comment:  Brazilian officials are proud of the 
SISCOMEX network and believe it is a strong licensing 
mechanism.  It does appear that companies registered in 
SISCOMEX probably conform fully with GOB export control 
procedures.  Enforcement procedures on the ground, however, 
are less reassuring, and unscrupulous diversion of controlled 
items could occur without the knowledge of the GOB. 
Nevertheless, we have not seen evidence to date that dual-use 
items are slipping out of Brazil.  Brazilian-U.S. law 
enforcement and intelligence cooperation is excellent, and if 
called upon to investigate suspected activity of illicit 
exports, we believe the GOB will do its part based on its 
international commitments. 
Danilovich