HOW HE SEES IT Trade partners, pirates, terrorists

By JAMES COOPER
PROVIDENCE JOURNAL
SAN DIEGO -- Every day at 6 p.m., just down the street from my apartment in Santiago, Chile, the sidewalk vendors would emerge to sell their pirated digital copies of Hollywood films and Silicon Valley software. They would do so outside one of Chile's largest department-store chains, Almacenes Paris, a legitimate seller of the same goods. The street vendors sold their wares with virtual impunity.
Although such activity is formally illegal in Chile, there is very little police enforcement of intellectual-property laws and little protection of the rights-holders' investment: the music, computer codes, films and books that are stolen. The losses to the artists, writers, publishers, musicians, media and software companies, and their respective shareholders, are immeasurable. So are the losses to governments (through depleted tax revenues) and the decline in incentives for innovation that results from research and development.
Worse, according to Interpol, profits gained in the piracy business are going to terrorist groups.
Hezbollah
The music CD that sells for a quarter of the price of the legitimately produced CD may have come from Ciudad de Este, Paraguay, on the border of Brazil and Argentina. This capital city of pirated goods is reported by law-enforcement agencies to be a base of operations for Hezbollah, the Iranian-backed Lebanese terrorist group. Moreover, a major Canadian newspaper has broken a story detailing a plot whereby money raised in South America has been sent through Iquique, in northern Chile, to Beirut, to fund terrorist attacks against places of worship in North America.
A 90-page U.S. Library of Congress report, compiled with the help of U.S. intelligence personnel and released last year, details the terror planning and training activities that occur in a mysterious unregulated and completely lawless corner of South America. The Tri-Border Area -- where Argentina, Brazil, and Paraguay meet, near Cuidad de Este -- is a haven for organized crime, Islamic-fundamentalist terrorist groups and drug traffickers. It is also a center for intellectual-property fraud and piracy.
This area was the base from which Hezbollah terrorists carried out the deadly bombings against the Israeli embassy in Argentina in 1992, and the bombing two years later of a Jewish community center in Buenos Aires. In the latter attack hundreds of people were killed or injured.
Part of the war on terror has been to shut off terrorist financing networks. In the aftermath of the Sept. 11, 2001, attacks, the U.S. government passed laws to better investigate and prosecute sources of financing for terrorist plots and attacks. Saddam Hussein, the Saudi royal family and the Palestinian Authority have been implicated in terrorist-financing schemes. These have to be shut down.
Renewed legislation and enforcement efforts are a good start. However, legal cultures in the various countries must also be changed. There need to be independent judiciaries, an active police force and advanced investigatory techniques to stem financing, planning and operations by and for terrorists.
Lucrative business
Piracy is an excellent starting point. It is not a problem only in South Americ. Russia, China, Thailand and Saudi Arabia are also centers of this lucrative business. In fact, you do not have to look any further than downtown Los Angeles' own "Alley" or the swap meets around Southern California to find pirated goods for sale.
The Super 301 Watchlist of the U.S. trade representative has identified Chile, among many others, as a problem country. Granted, a new law has been introduced in the Chilean congress for discussion, but the proposed fines for violations are too low and do not create a sufficient deterrent to pirating activities. As long as the profits remain high and the risks small, piracy will continue.
Chilean legislators must develop more procedures to penetrate banking secrecy and other legal techniques to obfuscate, protect evidence and block transparency. Moreover, the Chilean judiciary must stop the Robin Hood mentality and begin to treat intellectual-property fraud as a crime, rather than a mechanism by which the masses can gain access to overpriced entertainment.
A bilateral free-trade agreement between Chile and the United States went into force at the beginning of this year. An entire section of the treaty details obligations by Chile to protect U.S. rights holders. It is time that we held our trading partners more accountable for the commitments they have made.
X James Cooper is an assistant dean at California Western School of Law, in San Diego, Calif., where he teaches international trade law. He directs Proyecto ACCESO, a Latin American judicial-innovation and civic-education program, supported by the Chilean, German and U.S. governments and private foundations.