Brazil: U.S. Trade Mavens React to Cisco Case

https://i0.wp.com/upload.wikimedia.org/wikipedia/commons/thumb/5/5e/Carlos_Gutierrez.jpg/194px-Carlos_Gutierrez.jpg
Gutierrez: A local paper described him
as contrariado.

U.S. Secretary of Commerce, Carlos Gutierrez, who was taking part in the same seminar, was surprised to hear of [the alleged] tax avoidance by Cisco. “I did not know of that case, so I cannot comment,” said Gutierrez, visibly irritated. Asked if the case would affect the current trade negotiations over double taxation by the two countries, he had no comment.

”País é propício ao subfaturamento”: The Estado de S. Paulo collects some reactions to the Cisco case here — in which we now learn that all individuals arrested have been charged, I am reading here from another source.

Also interesting are the two (creatively spelled) comments to the article.

On local reactions to the gringo reaction:

The latter of which is by way of being something of a dubious proposition, given that the USCC and the association of Latin American AMCHAMs operate out of the same H Street SW address in our Nation’s Capital.

O excesso de impostos e as altas tarifas de importação fazem do Brasil um país propício para o subfaturamento de importações. Essa é a opinião de Mark Smith, diretor-gerente para assuntos de hemisfério ocidental da Câmara de Comércio dos Estados Unidos, que reúne 3 milhões de empresas americanas.

Excessive taxation and high import tariffs make Brazil a country susceptible to the undervaluation of import goods. That is the opinion of Mark Smith, director of Western Hemisphere affairs for the U.S. Chamber of Commerce, which represents 3 million U.S. firms.

“Subfaturamento de importações é muito comum no Brasil, há uma série de questões estruturais que criam um ambiente propício para as pessoas fazerem isso no País – carga tributária pesada, tarifas de importação altas”, disse Smith, em seminário sobre as relações Brasil-EUA, realizado ontem na Câmara de Comércio, referindo-se às acusações que envolvem a Cisco Systems no País.

“Undervaluation of import goods is very common in Brazil, there is a series of structural questions that create an environment conducive to people doing that there — a heavy tax burden, high tariffs,” said Smith during a seminar on Brazil-U.S. relations held yesterday at the Chamber of Commerce, referring to the accusations involving Cisco Systems in Brazil.

Was that AMCHAM here in São Paulo?

Smith fez a ressalva de que todas as empresas americanas devem cumprir a lei. “Quem desrespeita a lei deve ser punido, seja uma empresa americana ou brasileira.” Mas ele acha que o governo brasileiro não deveria se focar no caso específico da Cisco Systems. “Essas práticas (subfaturamento) são causadas por questões estruturais”, disse o executivo. “Por isso , esperamos que o foco seja não apenas o problema da Cisco, mas como melhorar a aplicação das leis e examinar as origens dessas práticas.”

Smith did add that all U.S. firms ought to comply with local law. “If you break the law, you should be punished, whether it’s an American or Brazilian firm.” But he thinks the Brazilian government should not focus on the specific case of Cisco Systems. “For that reason, we hope the focus will not be just on Cisco’s problem, but how to improve the enforcement of the laws and examining the origins of such practices.”

That seems like a fairly diplomatic thing to say.

Já o secretário de Comércio dos EUA, Carlos Gutierrez, que participou do seminário, ficou surpreso com a informação de sonegação fiscal na Cisco. “Não estava sabendo desse caso, por isso não posso comentar”, disse Gutierrez, visivelmente contrariado. Perguntado se o caso teria impacto sobre as atuais negociações de um tratado para eliminar bitributação entre os dois países, ele não quis comentar.

But the U.S. Secretary of Commerce, Carlos Gutierrez, who was taking part in the same seminar, was surprised to hear of [the alleged] tax avoidance by Cisco. “I did not know of that case, so I cannot comment,” said Gutierrez, visibly upset. Asked if the case would affect the current trade negotiations over double taxation by the two countries, he had no comment.

What makes you say he “looked upset” or “irritated”?

Did he turn purple and splutter? Did his brows knit? Did sparks fly from his eyes?

From the Wikipedia autohagiography by proxy of Gutierrez, a Horatio Alger story:

Gutierrez was born in Havana, Cuba, the son of a pineapple plantation owner. Faced with the expropriation of their property following the Cuban Revolution, his family fled for the United States in 1960 when he was six years old. Like many other Cuban American refugees, they settled in Miami. Gutierrez learned his first words of English from the bellhop at the hotel where they initially stayed and, some years later, he and his family acquired United States citizenship. The family moved once again – this time to Mexico, where Gutiérrez studied business administration at the Monterrey Institute of Technology‘s campus in Santiago de Querétaro. He joined Kellogg’s in 1975 as a sales representative and management trainee. One of his early assignments included driving a delivery-truck route around local stores.

Kellogg’s Mexico and Wal-Mart Mexico currently partner on campaigns to eradicate child hunger in that country. The Kellogg Foundation does a lot of journalist training projects down here.

Em seu discurso, Gutierrez voltou a reivindicar que o Brasil use sua liderança entre os países em desenvolvimento para fazer a Rodada Doha avançar, afirmando que o País tem essa “responsabilidade”. Ele afirmou que as empresas enfrentam problemas para fazer negócios no Brasil por causa das “dificuldades do sistema alfandegário e a alta carga tributária”.

In his speech, Gutierrez once again asked Brazil to use its leadership among developing nations to further the Doha process, saying that Brazil has this “responsibility.” He stated that companies have problems doing business in Brazil because of “problems with the Customs system and the high tax burden.”

It will be interested to see what Brazilian diplomats say to that.

Ontem, David Cook, porta-voz da Cisco em Londres, afirmou, em nota: “Ainda estamos tentando descobrir exatamente o que aconteceu no Brasil e, até que tenhamos mais informações, não podemos fazer nenhum comentário”. Na noite de terça-feira, a matriz da empresa havia divulgado nota confirmando o envolvimento de uma revendedora da Cisco no Brasil e a prisão de “um pequeno número” de funcionários. “Os princípios da Cisco incluem respeito às leis e regulamentações dos países onde a empresa atua. Estamos cooperando com as autoridades.”

Yesterday, David Cook, a Cisco spokesman in London, said, in a press release, “We are still trying to discover what exactly went on in Brazil, and until we get more information we cannot comment.” On Tuesday evening, the company’s headquarters issued a statement confirming the involvement of a Cisco reseller in Brazil and the arrest of “a small number of employees.” “Cisco’s principles include respect for the laws and regulations of the countries in which it operates. We are cooperating with authorities.”

Em Brasília, fontes do governo envolvidas nas investigações da Operação Persona reagiram com um misto de ironia e indignação às declarações de Smith. “Fico satisfeito por ele estar confirmando, na prática, que a Cisco e outras empresas fazem subfaturamento”, disse uma fonte. Usar o argumento, segundo a mesma fonte, de que a carga tributária elevada no Brasil é a razão para o ambiente propício ao subfaturamento é o mesmo que discutir quem veio primeiro: o ovo ou galinha?

In Brasila, government sources involved in the Persona case reacted with a mixture of amusement and indignation to Smith’s statements. “I am happy to hear him confirm that, in practice, Cisco and other companies do undervalue goods,” said one source. Using the argument that Brazil’s high taxes, said another, create an environment conducive to undervaluing goods is the same thing as debating which came first: The chicken or the egg?

“O subfaturamento é alto porque tem carga elevada ou a carga é elevada por causa do subfaturamento? Leis são para ser cumpridas”, disse.

“Is this practice common because taxes are high, or are taxes are high because such practices are common? Laws are there to be obeyed,” he [or she] said.

This is what the Embassy always advises us rank-and-file “citizen diplomats,” in fact: Obey local laws.

Which I personally always try to do (even when it is difficult to understand what some of those local laws mean — though to their credit, the Tupi are working on bureaucracy reduction. See, for example,São Paulo Diary: Bureaucracy Day, for a surprisingly non-Kafkaesque personal experience).

I had to pay a fine for overstaying my visa last trip, for example. I grinned, I bore it, and I paid up, smiling through clenched teeth,  without being rude to the (always weary-looking) federal airport fuzz (who were not at all rude to me, by the way, and gave me good advice on how to avoid this fubar in the future).

The fact is that I did overstay my visa and got a ticket for it, fair and square. I was a disorganized idiot. So I owned up to it. is what the Embassy advises. Does it advise differently for other citizens, with privileged access to the Bush Pioneer who runs the diplomatic mission here?

(On the other hand, the 1967 Press Law is still on the books here, for example. If write a personal Web diary about consuming what comes down Brazilian content pipelines (boil before consuming, in many case), sem fins lucrativos, am I “practicing journalism without a license”? I worry about this. But no problems so far.)

Two readers comment:

A CISCO Systems é a maior empresa de dispositivos de redes. A justificativa do Sr. David Cook só piorou a situação da empresa que assumiu que sonegava (cadê a ética das grandes empresas???). Se fosse nos EUA ele já estava preso. Não justifica uma empresa do porte da CISCO sonegar impostos para se tornar competitiva. A CISCO agiu com a falta de ética e projudicou, em licitações e concorrencias públicas, outras empresas que pagaram os devidos impostos. Agora nós sabemos o porque dos preços imbativéis!!! Peço como cidadão que paga meus impostos em dia Que a justiça seja feita e que a CISCO e os implicados pague pelos seus crimes.

CISCO is the world’s largest networking equipment company. Cook’s justification only worsened the firm’s situation, which admits it avoided taxes (where are the ethics of big corporations?). If it were the U.S. he would have been arrested. There is no justification for a company the size of Cisco evading taxes in order to stay competitive.

Young man, how much tax do you think NEWS Corp. paid in the United States last year?

CISCO acted unethically and harmed other companies, in pubic competitions and bid solicitations, who did pay their taxes.

Ah,, but did they pay their taxes? That, I think, is an open question.

Let us take a survey of which big tech importers paid how many taxes here recently and see. I bet the Estado even sets out to do just that. They have some good economics reporters there.

Now we know why their prices are unbeatable! All I ask, as a citizen who pays my taxes on time, is that justice be done and CISCO and the people involved pay for their crimes.

Again, I actually understood — there is a lot of noise to filter out about this story, mind you, so my brain may be on the fritz on this point — that only the executives are involved in the criminal charges, as individuals — while CSCO may be on the hook for taxes avoided on its behalf.

Call that one an exercise in “the folklore of the evil corporation.”

Combined with the folklore of the United States as a utopia of perfect justice and harmony.

He is a little hard on the Cisco spokesperson, too, who was only saying “We do not know what has happened yet.” Which seems honest enough. Nobody really knows too much yet.

Next comment:

Americanos nunca sao culpados – O problema e do sistema…hein ???

The Americans are never to blame — the problem is the system. Is that it?

Mark Smith admite que as empresas americanas praticam o subfaturamento no Brasil, mas o problema nao e das empresas que se beneficiam com isso (nao recolhendo tributos e desbalancenado a concorrencia), mas sim do governo Brasileiro – Este e um americano nato !! Carlos Gutierrez diz que nao sabia – Esse americano anda lendo muito as desculpas do Lula… O porta voz da Matriz diz que o assunto precisa ser analisado “ver o que aconteceu no Brasil” – na hora de receber os lucros e EUA, na hora das responsabilidades…e a adm no Brasil.

Mark Smith admits that American firms undervalue goods, but the problem is not the firms that benefit from this (not collecting taxes and distorting competition). The problem is the government of Brazil. That guy is a typical American! Guitierrez said he did not know — That American has been reading up on the kinds of excuses Lula makes. The HQ spokesman said the matter needs study to “see what happened in Brazil.” At a time when it is [announcing] its profits, at the time of assigning responsibility … it is the Brazilian adm[inistration] …

O ultimo: O presidente da empresa no Brasil se recusa a falar com o MP.

 

And last: The president of Cisco Brazil refused to talk to the prosecutor.

He has that right.

Que eles sao culpados e evidente, resta saber se o governo ira esclarecer tudo e puni-los…Midia esse e um dos seus papeis…joga no ventilador !!!

That they are guilty is obvious, what remains to be seen is whether the government will clarify it all and punish them. Media, this is one of your roles. [The shit] needs to hit the fan!

Quanto aos comentarios anteriores, concordo com eles, porem nao podemos esquecer que se a empresa aceitou operar no Brasil – tem que necessariamente respeitar a lei, se nao concordar com as regras “previamente” conteste isto na justica.

As to previous comments, I agree with them, but we cannot forget that if the company agrees to operate in Brazil, it has to respect the law, if it does not agree with the laws “beforehand,” it should go to court over it.

This comment reminds of a guy I once met at the bus terminal who was drinking heavily at 10 in the morning, reading headlines about Congress voting itself a pay raise, and weeping and ranting about how the institutions were putrid and he was ashamed to be living in such a shithole of a country. “You, an American, must think we are fools,” he says to me. And me smiling, making soothing noises, and backing away, backing away.

It also counts toward a meme that Neuza and I like collect when we are watching TV: “I do not how or why, but IT MUST ALL BE LULA’S FAULT!”

If we were to drink every time we collected one of those, we would be out on the street cadging moedas for cheap pinga within a week.

Word of the day:

Bitributação – Diz-se quando duas autoridades diferentes, igualmente competentes, mas exorbitando uma delas das atribuições que lhes são conferidas, decretam impostos que incidem, seja sob o mesmo título ou sob nome diferente, sobre a mesma matéria tributável, isto é, ato ou objeto. Na bitributação há uma competência privativa, conferida ao poder que está autorizado a cobrar determinado imposto, e outra arbitrária, decorrente da tributação, que se faz excedente e contrariamente, ao que se institui na Constituição. Não se confunde com o bis in idem. A bitributação é vedada pela Constituição Federal. O bis in idem, embora imposto injusto e antieconômico, não se diz proibido por lei.

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