SANTIAGO, Chile, June 20 (UPI) -- Although it has not yet been released, many Chileans have already seen the blockbuster film "Star Wars: The Phantom Menace" from the comfort of their own homes.
A DVD copy of the blockbuster is just one of the many pirated items that are available at markets of central Santiago. Besides DVDs, the markets also offer counterfeit versions of expensive perfumes, top-selling CDs, state of the art software, or the latest bestsellers.
A virtual "open air mall" is how many are describing Chile's booming black market, which according to the newly created National Anti-Piracy Commission costs $950 million annually.
"This sort of activity does not contribute a thing to the national treasury since it does not pay customs rights, Value Added Tax, (VAT), nor income tax," said Eduardo Castillo, president of the National Anti-Piracy Commission, or Conapi. "They compete in an unfair manner with small business, which pays all of its taxes and is submitted to controls."
The commission was created in May 2001 by several industries -- including software, videos, books, records, as well as writer and musician associations -- as a joint effort to prosecute the progressive influence of piracy in the Chilean economy.
Castillo is also president of the Chilean Chamber of Books, a group that includes the nation's publishers, booksellers and distributors. Chile's book industry losses an estimated $30 million per year to piracy.
A repeated complaint among Chilean readers is what they deem to be the excessive price of books. One of the main causes for this is the 18 percent VAT that Chile charges to books, largely held to be a strong deterrent not only for the country's reading habits, but for buying original paperbacks.
Clandestine presses churn out thousands of titles each month, making it easy for the Chilean public to acquire their favorite titles in many sidewalks of Santiago's most affluent streets. Among the top bestsellers figure J.R.R. Tolkien's "Lord of the Rings" or the whole output of the Brazilian New Age guru Paulo Coelho.
An illustrative situation on the extent of book piracy in Chile took place after the banning of reporter Alejandra Matus' "Black Book of Chilean Justice," an investigation on corruption in the judiciary that was prohibited by the Supreme Court in 1999. Within a couple of weeks after the controversial sentence was dictated, pirate copies of the book could be bought in the streets of Santiago. Two years later, when Chile derogated its stringent censorship laws and the book could be finally sold legally, almost anyone who had any interest in the publication had already read it.
The book industry and movie distributors are also grieving over the growth of piracy in Chile. Conapi estimates claim that illegal videos account for some $7 million in losses per year. The figure does not take into account, however, the commercializing of pirate DVDs. Accordingly, losses for film distributors can not be properly estimated given that the practice of downloading movies from the internet and selling them is relatively new for street vendors and reliable figures are not readily available.
To foreign observers, however, the problem of piracy in Chile transcends mere price considerations and has much more to do with a country whose legal framework has traditionally disregarded international copyright constraints. Intellectual property rights were one of the main concerns of the negotiating team of the European Union during the conversations of the recently signed free trade agreement with Chile. The same item has been thoroughly discussed in the ongoing talks for a trade agreement with the United States.
Although Chile revised its copyright law in 1992 to make it more compliant with international treaties, it looks as if there is yet a long way to go in order to ensure effective protection of intellectual property. At least that is the assessment of a 2000 report from the Office of the United States Trade Representative (USTR,) which was unequivocal in stating that in spite of the progress that Chilean legislation has undergone, "shortcomings remain."
According to the report, "Chilean law does not provide adequate penalties for copyright infringement, has no provision for ex parte civil searches, is uncertain regarding the availability of injunctions and temporary restraining orders," as attempts to enforce the existing law "have met with considerable delays in the courts and weak sentences for offenders."
In accordance to Chile's Intellectual Property Law, a street vendor who sells counterfeit software, books, etc. faces a sanction ranging from 61 to 541 days in jail. Nonetheless, the penalty is rarely enforced, as the offenders seldom show up in court when subpoenaed and return to their business practices after being detained for a few days or, in some cases, hours.
Languishing in Congress are several legal initiatives to modernize Chile's intellectual property laws, although the country already signed in April 2001 the World Intellectual Property Organization's Treaties on Copyright and Performances and Phonograms.
Ever since its inception, the Conapi has presented on behalf of its associates several such initiatives to reform Chile's copyright laws. This is why Conapi President Eduardo Castillo has made repeated calls to the authorities "to be conscious of the effects that this criminal offense has over the economy, the country, and society in general."
Similar words were echoed Wednesday by Castillo's fellow Conapi board members, along with assorted writers, musicians, filmmakers, publishers, and businessmen who gathered in an open field in the outskirts of Santiago for the destruction of an approximate $1.5 billion in confiscated counterfeit merchandise. Included were 2,400 pirated software programs, 70,000 CDs, 1,000 movies and thousand of books.
According to Castillo, the destructed merchandise was but a "sample of the magnitude of resources that the pirate industry has in Chile." He added that if piracy was not effectively combated, "we will end up killing the artistic and cultural activity of our country."
Other industries that are severely impacted by the rise of piracy are software distributors (with an estimated $150 million annual losses) and record companies ($20 million.) Both have launched ambitious anti-piracy campaigns in recent years.
Through several newspaper insertions, the Software Distributors Association (ADS) has been warning both Chilean companies and regular computer users to get rid of their counterfeit programs and acquire the originals. The ADS has placed special emphasis on businesses, undertaking periodic visits by qualified personnel to inspect the different companies' software and verify if they have the proper licenses. Already last year, the ADS undertook a similar campaign under the label "Zero Tolerance."
Official estimates state that on average, copying a computer program costs less than a dollar and is sold in the street at a bit over $7, whereas its mean market price reaches an approximate $60.
"Don't kill the music" is, in turn, how the record industry baptized its campaign against piracy. According to industry estimates, the counterfeit market accounts for a sales drop of nearly 40 percent in the last year. Based on the number of confiscated equipments in 2001, it is estimated that the pirate record industry could have manufactured some 19 million illegal CDs, more than three times the number of sold records in the country in a given year.
A counterfeit CD is sold in the streets at an average price of $3.
The campaign has effectively united musicians and record company executives in denouncing the economic damage that piracy causes them. Some artists have routinely engaged in public activities, confronting street vendors in the streets.
One such case is local pop musician Alvaro Scaramelli, who some weeks ago invited the TV cameras to watch him try to sell his records in a particularly busy street in Santiago. Both Scaramelli and the journalists were met with fist cuffs from the street vendors, in a scene that has been repeated from time to time with other artists, often under the watchful eye of passive police officers.
Even some musicians have justified the negligence of certain law enforcers in arresting street vendors, claiming that in any event the blandness of Chilean laws will enable them to return to the streets in no time. In other words, that the police has more productive things to do.
Although the USTR report acknowledges the "increasingly active enforcement efforts by the police, piracy of computer software and video recordings remains significant."
Other musicians, however, choose to combat piracy only as long as it hurts their own interests, as they could care less about multinational artists. As the leader of a local punk rock band said recently: "I'm not going to worry about not pirating a Madonna record because, after all, it is not as if she's going to lack any food in her home."
These words, nonetheless, interpret the thoughts of many Chileans who sponsor the pirate industry by acquiring its conveniently priced products. When asked about their support of a criminal offense --in spite of Chilean law not penalizing the customer- the typical rationale is that "there's too much unemployment, anyway, and no other way that these people could earn as much money."
Several analysts agree with the observation, pointing out how informal commerce has boomed since the beginning of the economic slowdown in 1998, growing in direct proportion with unemployment.
Street vendors use almost half of the sidewalk in some of the busiest streets of central Santiago, such as Ahumada and Huerfanos, where one can find up to ten different salesmen in a single block. They constitute increasingly organized bands, with people especially appointed to tip them whenever the police is near and individuals whose mission is to bail the vendors out whenever one is arrested.
The flourishing of street salesmen in Chile's largest cities is a clear symptom of high unemployment, which reached 8.8 percent during the first quarter and is likely to hit the double digits soon.
Unofficial estimates state that a single vendor can earn as much as $44 a day selling counterfeit merchandise, a none too despicable sum if it is considered that the minimum wage in Chile barely scrapes above $155 a month.
In this scenario, it is unlikely that local authorities will enforce the law against people who would otherwise be jobless. A case in point is Santiago Mayor Joaquin Lavin, who in spite of consistently being the most popular politician in opinion polls, has been widely accused of leniency towards street vendors as informal commerce grows and thrives under his nose. It has been argued that it would be extremely unpopular to prosecute the merchants considering the high levels of unemployment in the country and the basic fact that a considerable number of Chileans buy what they are selling.
