Cisco Case: “Senhor Smith Should Stay in Washington”

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A gente não sabemos escolher presidente
A gente não sabemos tomar conta da gente
A gente não sabemos nem escovar os dentes
Tem gringo pensando que nóis é indigente
Inútil
A gente somos inútil
–Korzus (Brazil), “Inútil (Useless)”, from Mass Illusion

Frase nos EUA sobre o Brasil gera mal-estar: More fallout in the Brazilian press on statements by the U.S. Chamber of Commerce official in charge of Western Hemisphere affairs, in this case from the Folha de S. Paulo.

AMCHAM Brasil — a member organization of the Association of American Chambers of Commerce in Latin America (AACCLA) — issued a statement distancing itself from the U.S. Chamber and declaring itself “independent” of that body. See

The USCC and the AACCLA both operate out of the exact same Washington, D.C., address, however.

A declaração de Mark Smith, diretor-gerente para assuntos do hemisfério Ocidental da Câmara de Comércio dos EUA, de que subfaturamento é comum no Brasil, referindo-se às acusações feitas à Cisco, causou mal-estar na sede da empresa na Califórnia -a multinacional é uma das associadas da mesma entidade que a acusava.

The statement by Mark Smith of the U.S. Chamber of Commerce, according to which understating the value of import goods is common in Brazil, in reference to the Cisco case, caused uneasiness at Cisco HQ in California, which is a U.S. Chamber member.

“Não posso comentar as declarações desse cavalheiro; só posso falar em nome da Cisco”, disse John Noh, instado a dar a posição oficial da empresa sobre o que disse Smith. Anteontem, no intervalo de evento promovido pela Câmara em Washington, o diretor afirmou aos jornais “O Estado de S.Paulo” e “O Globo” que “infelizmente” o subfaturamento de importações era lugar-comum no contexto do Brasil.

“I cannot comment on the statements by this gentleman; I can only speak for Cisco,” said John Noh, who was assigned to state the firm’s official response to Smith. The day before yesterday, during a break in an event promoted by the U.S. Chamber in Washington, the official told the Estadão and O Globo dailies that “unfortunately,” undervaluing import goods is commonplace in Brazil.

I gather this was taken as something of an implied defense of the practice — given the cause Smith stated, which was Brazil’s high taxes and tariffs.

Brazilians really, really hate being told that they do not know how to run their own country. They get really, really touchy on the subject. Guys like Larry Rohter enjoy making fun of them for it — The Brazilians are paranoid! — but that only pisses them off even more.

And it is a sentiment that seems to cross a lot of ideological fault lines, too. So if you want to secure their cooperation, it is best not to be seen as implying anything of the sort.

It kind of pisses me off, too, I have to say. Brazil has an awful lot of appalling problems, but it also has an awful lot of really, really fine people working their asses off to try and fix them. From various sectors of society and ideological persuasions. And risking an awful lot to do so. There is some sincere respect due to the Tupininiquins in general on this account, I tend to think.

“Acho que há uma série de questões que criam o ambiente para que as pessoas façam isso, como o peso tributário muito elevado e altas tarifas.” Mas ressaltou que “quem desrespeita a lei deve ser punido, seja empresa americana ou brasileira.” Para ele, no entanto, o foco não deveria ser apenas a Cisco, mas “como melhorar a aplicação das leis e examinar as origens dessas práticas”.

“I think there are a series of issues that create an environment for people doing this, such as the high tax burden and high tariffs,” said Smith. But he did also say that “those who break the law should be punished, whether the firm is American or Brazilian.” In Smith’s view, however, the focus should not fall just on Cisco, but on “how to improve the enforcement of the law and examine the origins of these practices.”

On alleged Brazilian inaction on reforming the administration of justice, see also

But see, just today,

Procurado pela Folha ontem, o diretor não respondeu, até a conclusão desta edição, às ligações nem os recados deixados na Câmara.

Sought for comment by the Folha today, Smith did not return calls or response to messages left at the Chamber by the deadline for this edition.

Now that the man’s foot is inserted firmly in mouth, perhaps it is best that it stay there.

Segundo o ministro da Fazenda, Guido Mantega, “se há superfaturamento, vamos investigar. Não podemos tolerar que haja alguma violação das leis brasileiras”.

According to the Brazilian Treasury minister, Mr. Mantega, “if there is overvaluation, we are going to investigate. We cannot tolerate violation of Brazilian law.”

Especialistas em tributação ouvidos pela Folha reagiram com indignação à afirmação de Smith. “Carga tributária elevada não é razão para cometer crimes tributários”, disse Clóvis Panzarini, sócio da CP Consultores.

Tax specialists consulted by the Folha reacted with indignation to Smith’s statement. “High taxes is no reason to commit tax crimes,” said Panzarini, a partner at CP Consultores.

That’s the best quote you could get to illustate the point?

I preferred the anonymous government official who pointed out that this argument is an example of chicken-egg circularity. Are taxes high because so many people cheat? Or the other way around?

“Fico perplexo com uma afirmação absurda e sem lógica como essa. Seria como que sancionar uma ilegalidade -no caso, subfaturamento- como pretexto para justificar a carga tributária elevada”, disse Everardo Maciel, ex-secretário da Receita Federal no governo FHC.

“I was perplexed by such an illogical and absurd statement. It is though he were saying that we countenance illegal acts as a pretext for justifying high taxes,” said the former director of the federal tax authority during the Cardoso government.

Look, I know nothing about trade diplomacy, and I am not a traitor to my nation. I would like to see American firms selling stuff to Brazilians to the benefit of teacher’s retirement plans back in Gringoland. I support good, hard horse-trading to put American capital to work here, and keep it out of the hands of bad elements.

And it gives me no pleasure to know that Chiquita Brands of Ohio has confessed to buying guns for people who tend to line labor organizers up at the edge of big pits and shoot them. We gringos are world-class businessman, I do believe this, who ought to be able to show these folks a thing or two about how things are supposed to be done.

But that is definitely not it.

So I do like to think I know a little something about message control and America’s image abroad.

You cannot spit in people’s faces and then ask politely for their cooperation in the next round of Doha. They are likely to tell you to go fuck yourself.

In much more diplomatic language than that, of course. This is not Hugo ‘The Bolivarian Blowhard” we are dealing with here.

Maybe we should stop stacking our embassies with champion campaign donor cronies, who seem to view their mandates as a license to punder the conquered city, and put some career professionals in there instead.

Case in point:

Just because our press does not report on these sorts of things — the Mexican elections of 2006, for crying out loud — does not mean they are not going to come back to haunt us. You cannot line the entire workforce up against the wall and shoot it, after all. Who is going to buy your soapflakes and iPods, with money earned from assembling your VW Beetles, then?

As to Cisco’s digital-inclusion social programs — an area in which vies with Redmond —  a case study I am sort of interested in, though I am just getting started looking at the program:

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