Ecuador’s illegal CD and DVD trade is in the crosshairs again; thousands of jobs are at stake as National Assembly considers new penalties

May 5, 2015 | 2 comments

For years, illegal DVDs and CDs have been mainstays of the entertainment diet for Ecuador residents, both locals and expats. For $1 to $1.50, they can buy the latest movies, sometimes before they are released in U.S. and European theaters. They can buy CDs of their favorite musicians for even less, often as low as 50 cents.

A video store in Cuenca's historic district.

A video store in Cuenca’s historic district.

It is unclear if legislation being debated in the National Assembly, and likely to pass, will put an end to the trade in counterfeit DVDs and CDs. What is clear, however, is that Ecuador wants to convince the World Trade Organization that it is getting tough on intellectual property violators.

The legislation contains a revision to the criminal code to punish those who manufacture, distribute or sell copyrighted material without permission. Last year, another law eliminated such penalties, although the president of the Assembly said that it was a mistake.

The new penalties are a reaction to comments by the World Trade Organization that Ecuador does not adequately enforce intellectual property rights as laid out in the international Trade-Related Intellectual Property Rights agreement, or TRIPS, of which it is a signatory.

The penalties are also intended to convince the European Union that Ecuador is getting tough on violators. The country is currently negotiating a free trade agreement with the EU that is scheduled to go into effect next year.

In the past, when the government has said it planned to crack down on movie and music copyright violations, there has been relatively little enforcement.

By some estimates, there are 10,000 tax-paying businesses in Ecuador that sell illegal DVDs and CDs, as well as many more “informal” street sellers. In all, the industry is said to employ 30,000.

“As in almost all Latin American countries, the sale of these disks is a significant part of the economy and governments are leery of putting large numbers of people out of work,” says John Allison, one of the authors of the American Intellectual Property Piracy Report. “The situation in Ecuador is not much different than in Colombia and Peru.”

According to the report, 95% of movie and music disk sales in Ecuador are illegal and the number of unpressed DVDs and CDs entering the country to make them was estimated to be 225 million in 2014.

According to Allison, most of the master copies of music and movies, from which the discs are made, come from Russia and Brazil. “Advance copies are pirated to these countries where sub-masters are produced that are then shipped around the world,” he says.

There is another reason why enforcement of copyright laws is lax. “Where the problem is worst, in Latin America, Asia and Africa, average income is low,” Allison says. “Most people can not afford to pay $10 to $20 for legal disks, so there is the question of how much more money copyright owners would make if illegal sales were stopped,” he says.

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