Ecuador Port Sees Piracy Boom

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Ecuador’s port city Guayaquil is among the world’s biggest sites for selling pirate merchandise, raising concerns that the burgeoning industry could be funding organized criminal groups.

As El Universo reports, the U.S. Department of Commerce lists the city’s Bahia marketplace as one of the 20 foremost centers for pirate merchandise in the world, and has called on local authorities to redouble their efforts to crack down on counterfeit goods. According to local officials, roughly 70 percent of the goods sold in the Bahia, which consists of 20 city blocks and 5,000 booths, are illegitimate.

A trip through the facility reveals all manner of goods — shoes, clothes, electronics, CDs, DVDs, etc. — available at discounts from anywhere from 50 to 90 percent of the original retail price, according to the report.

While authorities don’t have reliable statistics regarding the revenue generated in the pirate merchandise, El Universo treats virgin discs, which are vital to the sale of pirate DVDs and CDs, as a proxy for trends within in the industry. The news on that front is worrying: according to Ecuadorean authorities, from 2007 to 2010, the number of virgin discs imported into the nation jumped from 27.5 million to 162.4 million.

As a result, legitimate CD and DVD manufacturers in Ecuador have lost some 95 percent of their market share, according to David Checa, of the Ecuadorean Society of Authors and Composers.

While the pirate vendors are an obvious concern for legitimate businesses whose revenues decline as pirate sales increase, authorities are also worried by the role of organized crime in producing and selling the illicit merchandise. The incursion of criminal groups into retail has earned attention in Mexico most of all, where the Zetas have long emblazoned pirate CDs sold in their territory with a “Z” logo, and the Familia Michoacana was recently accused of marketing knockoff Microsoft programs.

For criminal groups, the appeal is simple: it secures a consistent revenue stream for drug traffickers, whose primary income can be suddenly interrupted by seizures across the supply chain. This can help a group consolidate their control over the local underworld, which opens the door to other criminal enterprises like kidnapping and extortion.

However, the links between pirate merchandisers and organized crime are limited. Because piracy is labor-intensive and requires a fixed location, fugitive drug traffickers are less interested in overseeing a vast retail empire with low profit margins. Instead, by virtue of their firepower and links to corrupt law enforcement, they often charge pirate vendors for the right to operate in their territory.

Guayaquil, Ecuador’s largest city, has long been linked to different criminal groups. The presence of the Sinaloa Cartel of Joaquin Guzman, alias “El Chapo,” was laid bare with the January arrest of two Colombians working for the group. Sinaloa operatives, who operated in the region years prior to the January arrests, favor the port city as an exit point for drugs heading to Mexico via the Pacific Ocean.

Colombian rebel group the Revolutionary Armed Forces of Colombia (Fuerzas Armadas Revolucionarias de Colombia – FARC) also operate in Ecuador, especially with the Colombian government crackdown in recent years. The guerrilla group is, however, more based in the sanctuaries in the northern regions bordering Colombia than in Guayaquil.

The port city is also the site of a thriving human trafficking industry which has been growing more closely linked to organized crime. Ecuador has grown more popular particularly as a stepping-stone for Asian and African immigrants seeking a route into the U.S.

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