The Week in Review

POLICY MONITOR September 23 – 27, 2013

The Week in Review ON THE ECONOMIC FRONT Investment Round: President Rousseff and Finance Minister Guido Mantega spoke in front of an audience of 500 executives at the Goldman Sachs’ office in New York to incentivize private sector investment in Brazil. The President emphasized her commitment to fiscal responsibility, lucrative return rates and following contracts. Jet Fighters: Brazilian newspaper Valor Econômico has reported that Rousseff has decided to postpone the purchase of jet fighters to after next year’s presidential election to 2015. According to the newspaper, close advisors to the President affirmed that the pendulum was shifting in favor of American company Boeing. The lack of an official explanation by the Obama government in espionage allegations have caused the President to postpone her decision. Mining Code: The President officially removed the constitutional urgency for the debate of the Mining Code. The urgency predicted that the Code be voted by early August, but disagreements among members of Congress had not permitted a vote. Currently, there are three other bills with constitutional urgency requirement expired and two about to expire, including the new legal framework for the Internet (Marco Civil da Internet). Tax collection: In August, tax collection totaled BRL$ 83.9 billion – a record for the period. The result was positively influenced by the following driven factors: recovery of wages; an increase in sales of goods and services; increase the dollar value of imports; and recovery in industrial production. ON THE POLITICAL FRONT UN General Assembly: President Rousseff during her opening speech at this year’s UN General Assembly strongly condemned U.S.’ espionage acts in Brazil. She demanded an international debate on a new regulatory framework for the internet, emphasizing the importance of net neutrality. U.S. President Obama focused his speech mainly on the issues of Syria and chemical weapons. See more below. 2014 presidential election: A poll released today by Ibope showed a significant recovery of President Rousseff with 38% followed by former Environment Minister, Marina Silva, with 16%. In July, during the edge of protests, the gap between them was of only 8 points. The others contenders, Aécio Neves and Eduardo Campos are far behind with 11% and 4%, respectively. New Parties: The Superior Electoral Court (TSE) approved the registration of two new parties eligible for next year’s election: the Republican Party of the Social Order (PROS) – headed by businessmen with good relations to the Worker´s Party and the Solidarity – headed by the representative and union leader, Paulinho da Força. Now, there are 32 political parties officially registered at the Court entitled to free TV time and resources from the Party Fund. Sustainability Network: Marina Silva still awaits TSE decision on the creation of her party, the Sustainability Network. It is expected for next week a final decision. Deviation in the counting of the valid signatures required to obtain the register is delaying the process. Data Protection: The bill on data protection, according to the Minister of Justice Eduardo Cardozo, is on the final stages of preparation. Still according to Cardozo, the text is currently at the Ministry of Justice and will be sent for a final analysis to the chief of staff office in October. The amendment on data centers is likely to be added to this bill instead of the Internet Legal Framework. Siemens Cartel: The President of the Brazilian Antitrust Agency (CADE), Vinícius de Carvalho, omitted in four official resumes former employment with São Paulo state congressman who denounced the scheme, Simão Pedro, of Rousseff’s government party, PT. Carvalho is currently the leading man in the investigations of cartel and overbilling allegations between major companies as Siemens and Alstom for the bids of São Paulo city and state metros. Early this year, Siemens signed a leniency agreement with the body to provide information on the deal which was under confidentiality. The PSDB government has already accused the body of leaking information to the press to hurt the party’s image.

Brazil-U.S. Business Council 1615 H Street, NW PATRI WASHINGTON, DC 20062, Washington, DC 1101 17th St. Phone: (202) 463-5729 NW Suite 1010 www.brazilcouncil.org Phone: (202) 822-6420 [email protected] Fax: (202) 822-6423 www.patri.com.br [email protected]

Patriota in Brazil´s mission at the UN: Former External Relations Minister Patriota was unanimously approved by the Committee of External Relations of the Senate to assume the post of representative of Brazil´s mission at the UN. The approval will be confirmed by the floor next Tuesday.

Quotes of the week

“There is no legal risk in Brazil” President Rousseff during a press conference of Brazil´s infrastructure event in New York.

"All bodies [of the UN] will be mobilized to address the issue in a multi-sectorial way. The cyber space cannot be used to affect the sovereignty” Former External Relations Minister, Ambassador Antônio Patriota, in his hearing at the Senate to assume Brazil´s mission at the UN.

"I was expecting 40 companies. But there is a world context, very specific situations of the companies, which led to this situation. I received three phone calls from companies, which were Exxon, BP and British Gas, saying they would not participate in the auction of the pre-salt. Each with a particularity " Director-general of the National Agency for Oil, Natural Gas and Biofuel (ANP), Magda Chambriard, on the registration of companies to join the first pre-salt bidding round.

Government Commercial code The Commission of Jurists in the Senate that will write a bill on the Commercial Code approved last week a draft version. The text is available for public consultation until October 18. After the end of the public consultation, the rapporteur professor Fabio Ulhoa Coelho will present the draft, taking into account the proposed contributions, which is expected to occur by November. Meanwhile, the jurists plan to hold seminars throughout the country, as well as in the Senate, to enhance the discussion on the subject.

The draft bill on the Commercial Code aims to regulate, under private law, the organization and operation of the company, including corporate law, contract law, corporate law exchange, the right of agribusiness, commercial law and procedural law maritime business. The text was structured in three sections including:

1. General section: standards of commercial law, the companies record, the individual entrepreneur, the assets and activities of the entrepreneur, the concept, the validity and interpretation of legal business. 2. Special section: Companies: share companies, corporations, corporate transactions, corporate bonds, obligations of entrepreneurs, business contracts; Agribusiness: Agribusiness entrepreneurial activity, integration contract agribusiness, agribusiness securities; Maritime Commercial Law: application of maritime commercial law, vessels and property, owner and limitation of their responsibilities, craft operator, captain, practical, shipping agent, carrier, obligations , contracts and securities law maritime, water transportation of cargo; Business Process: action partial dissolution of companies, overcoming impasse, tort action for damages to society, specific protection of unit holders or shareholders agreement, action demanding accountability, business process maritime, bankruptcy and reorganization, specialized jurisdiction in commercial law. 3. Complementary section: scope of the Commercial Code, the transitional provisions in relation to changes to the Civil Code and the Law of the Judicial Reorganization.

Culture voucher Since Tuesday, companies interested in offering the culture voucher for its employees can do its registration here. The employer has to choose the operator company to provide the culture voucher card. The Culture Voucher was established by Law 12.761/12 and it is an optional tax incentive for companies that grant benefits of BRL$ 50/month to workers with a salary up to five times the minimum wage to ensure access to cultural products and services in Brazil.

Trade Consumer protection

The Ministries of Health and Justice published Ordinance 3082/2013 creating an Information System for Accident of Consumption (SIAC). It aims to constitute a database for products with potential risk to consumers.

The SIAC receives information through mandatory reporting, by the health service in cases of serious and fatal accidents and by act to be defined by both ministries. Health professionals will be responsible for documenting events.The system will be operational in 120 days.

Tax & Investments Tax exemption on music The floor of the Senate approved on Tuesday a constitutional amendment bill (PEC 123/11), known as “PEC da Música”, that provides tax exemption on musical phonograms and video phonograms produced in Brazil containing musical works of Brazilian authors or works in general interpreted by Brazilian artists, as well as the material media or digital files containing them. It now goes to promulgation. A constitutional amendment bill does not require presidential sanction.

In order to avoid losing its competitiveness, the Administration of the state of Amazonas will appeal to the Supreme Court with a direct unconstitutionality action (Adin) against the promulgation of the bill.

Energy 12 bidding round of oil and gas As previously announced, the National Agency for Oil, Natural Gas and Biofuel (ANP) published on Thursday an announcement that are available the RFP and the contract model of the 12 bidding round for exploration and production oil and natural gas.

It will be offered 240 exploration blocks totaling 168,348.42 km ²: (i) 110 exploratory blocks in the basins of Acre, Parecis, São Francisco, Paraná and Parnaíba; (ii) 130 blocks in mature basins of Reconcavo and Sergipe-Alagoas.

The auction is scheduled to November 28 and 29.

Health ANVISA regulatory agenda The National Agency of Health Surveillance (ANVISA) defined 148 priorities themes for its regulatory agenda 2013-2014. As next step on the building of the agenda, the Agency will hold sectorial dialogues, which include targeted consultation and dialogue on all issues for further deliberation and publishing. The main themes include: » Food » Administrative control health » Cosmetics » Pharmaceutical supplies » Analytical laboratories » Drugs » Ports, airports and borders » Health products » Product subject to surveillance » Sanitizing » Blood cells and organs » Health services » Tobacco » Toxicology

The Pulse UN General Assembly Speeches: The Evolution

President Rousseff opened the United Nations General Assebly 68th meeting on Tuesday in a speech filled with provokations to the US President, Barack Obama. The issues that dominated this year’s agenda were claims that the N.S.A. was spying on Brazil, including the President’s emails and Brazilian oil company Petrobras. The issue led to the cancelation of Rousseff’s state visit to Washington scheduled for October. President Obama did not address the issue during his speech which focused mostly on chemical weapons, Syria and the U.S.’ action plan for Middle East.

2013 2012 2011 President Rousseff President Rousseff President Rousseff 2336 words 2268 words 2301 words Main themes: Main themes: Main themes: » N.S.A. Espionage » UN Security Council Seat » Gender » Palestine » Palestine » Financial Crisis » Millennium Development » Cuba » UN Security Council Seat Goals » Syria » Palestine » Syria » Rio + 20 “The Central Banks of developed “To interfere in this form in the life of countries persist in an expansionist “Like other emerging countries, Brazil other countries hurts International Law monetary policy destabilizing has been, so far, less affected by the and insults the principles that should exchange rates. With that, emerging global crisis. But we know that our guide the relations between them, countries lose market due to the resistance capacity is not limitless. most notably, between friendly nations. artificial appreciation of its currencies We want – and we can – help, while Never can one sovereign country firm which worsens even more the global there is still time, countries where the itself in detriment of another sovereign recession picture” crisis is already acute” country. Never can the right of citizens’ safety be ensured through the violation of fundamental human and civil rights of another country. Even worst when private companies are sustaining this espionage” 2010 2009 2008 Foreign Minister Celso Amorim President Lula President Lula 2134 words 1800 words 1550 words Main themes: Main themes: Main themes: » Poverty/Inequality » Financial Crisis » Financial Crisis » South-South Cooperation » WTO’s Doha Round » UN Security Council Seat » Haiti » Copenhagen Meeting » UNASUR » Cuba » Hunger/Poverty “What has failed is an insensate “In the peak of the crisis, we have model of thinking and action that has “The indispensable interventions of managed to avoid the worst: an subjugated the world in the last the state, contradicting the market’s uncontrolled protectionist outbreak, decades. Was the absurd doctrine fundamentalists, show that the time of which would have launched the world that markets could self-regulate, politics has arrived. Only the in a deep depression. But developed dispensing any state intervention, determined action of rules, especially countries have not showed the considered by many a mere obstacle. in those country in the midst of the necessary commitment with the global Was the thesis of absolute freedom crisis, is capable of combatting the economic stability. They continue to for the financial capital, without rules disorder that has installed in the privilege a logic based on parochial or transparency, above the peoples international finances, with perverse interests” and institutions” effects in the daily life of millions of people”