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Cablegate: Nigeria: Lower Nigerian Tariffs Could Reduce

VZCZCXRO1596
RR RUEHMA RUEHPA
DE RUEHOS #0767/01 3370601
ZNR UUUUU ZZH
R 030601Z DEC 07
FM AMCONSUL LAGOS
TO RUEHC/SECSTATE WASHDC 9633
INFO RUEHZK/ECOWAS COLLECTIVE
RUEHUJA/AMEMBASSY ABUJA 9379
RUCPDOC/DEPT OF COMMERCE WASHDC
RHEFDIA/DIA WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHDC
RUEAIIA/CIA WASHINGTON DC
RUEAWJA/DEPT OF JUSTICE WASHDC

UNCLAS SECTION 01 OF 02 LAGOS 000767

SIPDIS

SIPDIS

STATE FOR AF/W, STATE FOR INR/AA
DEPARTMENT PASS TO USTR (AGAMA)
TREASURY FOR DPETERS
USDOC FOR 3317/ITA/OA/KBURRESS
USDOC FOR 3130/USFC/OIO/ANESA/DHARRIS
USDOC FOR USPTO - PAUL SALMON
USDOJ FOR MARIE-FLORE KOUAME

E.O. 12958: N/A
TAGS: ETRD ECON KIPR PGOV NI
SUBJECT: NIGERIA: LOWER NIGERIAN TARIFFS COULD REDUCE
COUNTERFEITING

1. SUMMARY: At a recent lunch meeting, representatives of
Pfizer, Microsoft, Hewlett Packard (HP), and the
International Federation of the Phonographic Industry (IFPI)
discussed common obstacles their industries face in enforcing
intellectual property rights (IPR) in Nigeria. While the
lack of respect for intellectual property rights hampers all
industries, each pushed for solutions specific to their
industry. The common way forward depends on lowered import
duties to make genuine products affordable, strengthened laws
and support for Nigerian governmental and private industry
efforts. End Summary.

-----------------------------------------
High Import Duties Encourage Counterfeits
-----------------------------------------

2. While Nigerian consumers are generally aware of the
problems of counterfeit drugs, thanks in large part to the
extensive public awareness campaigns undertaken by the
National Agency for Food, Drug Administration and Control
(NAFDAC), counterfeiting remains an enormous problem for
Pfizer. NAFDAC estimates that counterfeit goods make up
twenty percent of the market, while Pfizer estimates they are
a full 80 percent of the market. Pfizer representatives at
the meeting said they sometimes cannot distinguish a
well-packaged counterfeit product from a legitimate product,
and send samples both to their London lab for testing and to
NAFDAC to be entered into NAFDAC,s database.

3. Though Pfizer and NAFDAC work together, Pfizer sees the
agency as understaffed and unable to perform all the work it
needs to do. Most counterfeit pharmaceuticals are produced
in India, although the company knows of Chinese counterfeit
drugs as well. It is not known exactly how large shipments
of drugs from these countries arrive in Nigeria, which points
to the need for stronger border inspection and strengthened
skills for customs officials, Pfizer representatives said.
(Comment: It may also point to insider complicity and
corruption. End Comment.) High import duties make imported
drugs prohibitively expensive for many in the health care
system. Pfizer has heard of hospitals purchasing counterfeit
medications to keep costs down.

4. Nigeria,s high import duties encourage counterfeiting of
all products because no importer can bring in authentic
products and sell them at a reasonable cost, participants
agreed. The representatives at the meeting had purchased
counterfeit or pirated goods themselves and suffered the
consequences: poor quality videos and software that damaged
their computers and audiovisual equipment. These ancillary
costs make the final price paid for the counterfeit drugs,
movies or CDs equivalent to or higher than the cost of
authentic products. IPR is a source of economic value to
individuals, companies and governments alike, the
participants stressed.

--------------------------------------------
Copyright Commission Lacks Capacity, Funding
--------------------------------------------

5. The representative of the International Federation of the
Phonographic Industry (IFPI), who also represents the
Business Software Alliance (BSA), decried the public
perception of IPR violations of audio and visual recordings
and software as insignificant and benign. Software customers
cannot find genuine products to purchase. BSA estimates that
more than 80 percent of software in Nigeria is pirated, well
above the global rate estimated at 35 percent. For example,
Microsoft recently held a meeting with cybercaf owners to
disseminate free cybercaf management software that would
reduce owners, costs, but at the same time ensure that the
owners used other legitimate Microsoft products. Cheers
arose when the software was offered free of charge, until
Microsoft emphasized it only worked with registered and
legitimate software packages. Then faces fell throughout the
audience, the Microsoft representative said.


LAGOS 00000767 002 OF 002


6. IFPI says it supports the use of a NQerian Copyright
Commission (NCC)-registered stamp, placed in production
machinery to trace the origins of all discs, to combat disc
piracy. Also, in May 2007, the Economic and Financial Crimes
Commission (EFCC) took on prosecution of all IPR violations.
IFPI and the BSA now rely primarily on the EFCC for
prosecutions but are trying to build capacity in the NCC to
handle these cases. According to the attendees, the NCC
needs better funding, via increased fees for registration of
copyrights, in order to grow its capacity. At the same time
it needs to refocus its current spending by having fewer
overseas trips for staff and by implementing more effective
policies. Stamping out in-country production of counterfeit
items should be NCC,s first priority; a second priority
should be improvement of the Customs Service's ability to
interdict counterfeiters. The NCC must learn how the
equipment for pirating software gets in, but more importantly
to which countries pirated products are shipped regionally.
In addition, the laws pertaining to piracy must be
strengthened and enforced, the IFPI/BSA representative said.
IFPI is finding allies who support its efforts in the
Business Association of Nigeria.

7. Comment: Points raised by these industry representatives
about how high import duties foster counterfeiting, about the
need to improve funding for the NCC via registration fees,
and about the need for improved performance by Nigeria's
customs service, may be fruitful topics for discussion in
upcoming Trade and Investment Framework Agreement talks. End
Comment.

8. This cable has been coordinated with Embassy Abuja.

HUTCHINSON

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