POLICY MONITOR October 21 – 25, 2013 The Week in Review ON THE ECONOMIC FRONT Pre-Salt Round: The government held the first bidding round for the pre-salt field of Libra on Monday in Rio de Janeiro. The event was surrounded by protesters calling against foreign intervention in Brazilian oil reserves. The winning consortium was headed by Brazilian company Petrobras, french Total, Dutch Shell, and Chinese firms CNPC and CNOOC. See more below. Unemployment: September’s unemployment rate grew slighty from 5.3% to 5.4% due to higher interest rates, more expensive credit, and decreased consumer confidence. Despite the growth, the rate is still among the lowest historically in Brazil. State Debt: The House approved bill 238/13, written by the Executive branch, alters the correction index of states and municipalities debt to decrease the total amount due by states and cities. The city of Sao Paulo would be a big beneficiary of the law since it would be able to reduce in BRL$24 billion its current debt of from BRL$54 billion to BRL$24 billion. The bill still must approved by the Senate. IMF: The International Monetary Fund reduced potential growth projections for Brazil from 4.25% to 3.5% in 2014. According to the report “World Economic Outlook,” the IMF made the following assumptions for its projections: foreign savings can finance only part of the investment needs of the country, domestic savings will increase gradually but will remain relatively low, and the government will be successful in implementing its program of investment in infrastructure, with important positive effects on productivity. Guido Mantega, Minister of Finance, strongly criticized the IMF projection for the country. ON THE POLITICAL FRONT Internet: President Dilma Rousseff continues to use her Twitter account to publicly defend a free internet. One of the posts refered to Minister of Communications Paulo Bernardo’s attendance at the Internet Governance Forum (IGF) being held in Bali, Indonesia. The President emphasized that internet governance should envolve governments, the private sector, and civil society. On Friday, October 25th, the urgency requirement for the Internet Framework bill (Marco Civil da Internet) reaches its deadline. According to internal bylaws of the House, no other issue can be voted on before that bill. However, not only are there two other bills with the same requirement that have already expired, the procedures are not always entirely followed. Biographies: The bill which regulates the publishing of unauthorized biographies was once again removed from the House’s voting list and won’t be debated until November. The issue was brought up in 2007 when singer Roberto Carlos managed to obtain a judicial order forbidding the distribution of a non-authorized biography. Since then, the issue has been presented to the Supreme Court, and in 2011 Rep. Newton Lima introduced a bill that authorizes biographies without the consent of the person being profiled. Numerous Brazilian artists have expressed their position on the issue. Royal Institute: Last Friday, a group of 100 activists invaded and rescued 200 dogs from the Instituto Royal in Sao Roque, 60 kilometers from Sao Paulo. The Institute conducts research and testing of pharmaceutical and cosmetic goods on animals. The invasion triggered legislative and political backlashes as House and state representatives visited the institute and raised the issue of abolishing the practice of animal testing. The Minister of Science and Technology, Marco Raupp, stated that the invasion was a crime and that when the law on the issue was discussed, the necessity of the scientific community was also taken into account. The State legislature of Sao Paulo said that it will establish a Commission to investigate the condition of the Royal laboratory. See more below. Telecom Services Users: The National Agency of Telecommunications (Anatel) published Resolution 623/2013 establishing the Consumer Council. This action empowers consumer oversight and also aims to improve services by reducing the number of complaints. The councils will have to be implemented by concessionaries and authorized companies of pay TV, Internet, and mobile phone with over one million users. Electric Energy board: José Jurhosa Júnior was appointed as the new director of the National Agency of Electric Energy (ANEEL) board of directors with a four-year mandate. He was advisor to the board of directors and vice- president of the Special Committee on Bidding. He also worked with former director Edvaldo Santana and was personally nominated by him. 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] Government Indigenous Land The indigenous land demarcation has been under discussion for a long time. This week, the Supreme Court decided that the 19 conditions established by the “Raposa Serra do Sol” case of indigenous land demarcation will not be applied automatically to other land demarcations, but it may be used to guide future situations. On this case, over 20,000 indigenous people were permitted to occupy the land indefinitely, requiring non-indigenous to leave without compensation. Among these 19 conditions are the prohibition on the expansion of indigenous lands that have already been demarcated; and, the federal government guaranteed right to install roads, communication networks, and military bases without prior consultation with local communities. Others rules and bills concerning the issue are: » An ordinance by the Ministry of Justice with changes on demarcation rules has been expected since May. » In Congress, a group of parliamentarians want to install a committee to discuss the Constitutional Amendment Bill 215/2000 which transfers the decision on demarcation to Congress. » Complementary Bill 227/2012 is a rural caucus proposal on the issue. Nonetheless, the government considers it too biased as it ignores the rights of indigenous people. » The Administration wants to split the process of demarcation analysis among different Ministries to include the Brazilian Agricultural Research Corporation (Embrapa) and the Ministry of Agrarian Development, in addition to the National Indian Foundation (FUNAI), Railway concessions Due to the distrust of investors and questions raised by the National Accounts Tribunal (TCU), the Administration published Decree 8129/2013 to consolidate railway concessions through the auction of 14 stretches. It involves 11,000 km² of new lines and BRL$ 99.6 billion in private investment. The Decree 8.129/2013 institutes the policy of free access to railways and aims to provide juridical security. Private investors are skeptical of the state-company Valec’s guarantee provisions for the purchase of transportation rights of the stretches. The Decree also separates the exploration of the railway infrastructure, the aim of the auction, from the provision of transportation services. Tax & Investments Debt Payment Relief The Secretariat of Federal Revenue (RFB) regulated through Ordinance 9/2013 debts resulting from the taxation of profits of companies controlled abroad overdue until December, 31, 2012. The deadline for companies to accept the deal is November 29th. This regulation is derived from Law 12.865/2013 which granted Brazilian multinational companies fined by the RFB for non-payment of taxes of its related and controlled companies abroad benefits to pay off their debts. Energy Deep-Water Oil Spills Last Wednesday, after 13 years of debate and one day after the first pre-salt auction, the Administration published a National Contingency Plan to Combat Deep-Water Oil Spills through Decree 8127/2013. The Plan involves 17 governmental institutions and establishes a real-time monitoring system to be implemented by the Brazilian Institute of Environment and Renewable Natural Resources (Ibama) aiming to prevent, prepare, and respond to incidents. Some of the main provisions are: » Creation of a guidebook in the next six months with detailed procedures concerning operational activities, and human and material resources in the event of oil spills; » Establishment of responsibilities to the polluter or responsible party for the emergency plans, such as logistical support, appropriate working conditions for environmental cleanups, equipment provision, sensible areas protection, and wildlife recovery, among others; » Provision of internal internal training programs related to the National Contingency Plan by the government; 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] » Establishment of penalties for ports and platforms that do not support the Administration in dealing with oil spills. The Contingency Plan will be used only in incidents of national scope, as defined by a monitoring group according with the spill volume, environmental sensibility, efficacy of emergency plans, etc., and based on the accident, explosion, or fire which may have caused the oil pollution,. Sugarcane Subsidies Bill (MP622/2013) The House of Representatives approved Provisional Measure (MP) 622/13 which opens an extraordinary credit of BRL$380 million to enable the payment of a subsidy to the industrial units producing