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Banks and risks

To the core: The Central Bank made significant and complex changes to the calculation that banks must follow to establish how much money they must keep available to avoid the risk of insolvency. Most of these new definitions concern the calculation of Risk-Weighted Assets (RWA). The Central Bank now allows banks, in transactions linked to the variation

of foreign currency or interest rates, to exclude operations with derivatives (financial instruments of which the value is wholly or partially derived from another asset) from risk calculations.</span></p> <p><b>Source:</b> <a href=""><span style="font-weight: 400;">Circular nº 3.947, de 25 de junho de 2019</span></a></p> <h2 style="text-align: center;"></h2> <h4><b>Banks and risks 2</b></h4> <p><b>To the core: </b><span style="font-weight: 400;">In another important move by the Central Bank, related to the matter of risk mentioned above, the bank established a higher stimulus for banks to grant credit, by partly relaxing the precautions to be followed by financial institutions. Now, banks may apply a reduced risk-weighted factor of 35 percent, in cases where the balance of loans granted to individuals is up to 50 percent of the value of the guarantee received.</span></p> <p><b>Source:</b> <a href=""><span style="font-weight: 400;">Circular nº 3.948, de 25 de junho de 2019</span></a><span style="font-weight: 400;"> and </span><a href=""><span style="font-weight: 400;">Circular nº 3.949, de 25 de junho de 2019</span></a></p> <h1><b> </b></h1> <h2 style="text-align: center;"><b>CRIME AND CORRUPTION</b></h2> <h2 style="text-align: center;"></h2> <h4><b>Defense Counsel and Federal Police</b></h4> <p><b>To the core: </b><span style="font-weight: 400;">A move to empower federal prosecutors, members of the Defense Counsel of the Federal Government (AGU). These are not to be confused with members of the Federal Prosecution Service. Now, these prosecutors may work directly in enquiries led by the Federal Police and in legal cases of a criminal nature. The cases should involve alleged violations committed against &#8220;goods, services, or interests&#8221; of federal agencies and foundations—Social Security Institute (INSS), Central Bank, National Department of Transport Infrastructure (DNIT), National Health Foundation (Funasa), Brazilian Institute of Geography and Statistics (IBGE), among others. The aim is to allow prosecutors to have access to evidence simultaneously to the investigations, and base civil and administrative proceedings seeking the &#8220;recovery of assets and redress of the treasury.&#8221;</span></p> <p><b>Source:</b> <a href=""><span style="font-weight: 400;">Portaria nº 566, de 18 de junho de 2019</span></a></p> <h2 style="text-align: center;"></h2> <h4><b>Extradition</b></h4> <p><b>To the core: </b><span style="font-weight: 400;">The Department of Asset Recovery and International Legal Cooperation of the National Justice Department set procedures to be taken in the case of transferring arrestees for carrying out sentences—both for requests made by other countries for the extradition of Brazilians or Brazilian residents to other countries, as well as cases of citizens of other countries whose transfer to Brazil is in the interests of Brazilian courts. This transfer is only possible in the case of countries with which Brazil has signed a treaty, or where there is a promise of reciprocity if the Brazilian government were to one day request the transfer of an arrestee in this other country. In the analysis of the request made by the other government, for instance, Brazilian officials will examine whether the fact which originated the conviction (which must be definitive or confirmed by an appellate body) is also a crime in Brazil.</span></p> <p><b>Source:</b> <a href=""><span style="font-weight: 400;">Portaria nº 605, de 21 de junho de 2019</span></a></p> <h2 style="text-align: center;"></h2> <h4><b>New rules for Cade</b></h4> <p><b>To the core: </b><span style="font-weight: 400;">Cade, Brazil&#8217;s antitrust authority which is responsible for investigating and punishing cartels, and controlling the country&#8217;s competition ecosystem, approved its new internal laws. The document had been the object of a public consultation since last year. The general structure of the agency has undergone no important changes, except in relation to Cade&#8217;s tribunal, which includes members who decide on more complex mergers and acquisitions. More specific rules regarding the disqualification and suspicion of the tribunal&#8217;s members were established. Each of these cases will be assigned a specific rapporteur to analyze the situation. If this arbiter decides in favor of disqualification, the case will be paralyzed. The tribunal will then decide on any prior acts to be canceled and the reassignment of the case.</span></p> <p><b>Other important aspects to bear in mind:</b></p> <ul> <li style="font-weight: 400;"><span style="font-weight: 400;">Company requests for the provisional approval of mergers may now be made at any time.</span></li> <li style="font-weight: 400;"><span style="font-weight: 400;">For cases investigating antitrust practices and cartels, the General Commissioner may use evidence produced in other cases.  </span></li> <li style="font-weight: 400;"><span style="font-weight: 400;">Tribunal members may request specific measures in cases which they have taken under advisement.</span></li> <li style="font-weight: 400;"><span style="font-weight: 400;">Previously, the priority for trials was for cases taken under advisement. Now, preference will be given to &#8220;cases with priority requests.&#8221;</span></li> <li style="font-weight: 400;"><span style="font-weight: 400;">When a case is taken under advisement suspending a trial, upon resuming the case, votes rendered previously will be counted, even if the members who voted have already finished their terms. </span></li> </ul> <p><b>Source:</b> <a href=""><span style="font-weight: 400;">Resolução nº 22, de 19 de junho de 2019</span></a><span style="font-weight: 400;"> and </span><a href=""><span style="font-weight: 400;">Resolução nº 23, de 19 de junho de 2019</span><b> </b></a></p> <h2></h2> <h2 style="text-align: center;"><b>ENVIRONMENT</b></h2> <h2 style="text-align: center;"></h2> <h4><b>No rules for artificial reefs</b></h4> <p><b>To the core: </b><span style="font-weight: 400;">The president of Ibama suspended a normative instruction from 2009 to define rules for the implantation of artificial reefs on Brazil&#8217;s sea coast. According to the new instruction published this week, until a new regulation is published which is &#8220;compatible&#8221; with current environmental legislation, artificial reefs will be licensed by Ibama&#8217;s Licensing Department &#8220;based on technical criteria.&#8221; </span></p> <p><b>Source:</b> <a href=""><span style="font-weight: 400;">Instrução Normativa nº 17, de 21 de junho de 2019</span></a></p> <h4></h4> <h4><b>Motorbike pollution</b></h4> <p><b>To the core: </b><span style="font-weight: 400;">Coname issued new rules about the limits of pollutant gas emissions by motorbikes and similar vehicles. The rules will apply only as of 2023 (for new models) and 2025 (for all other models), but the limits are less restrictive than those currently in force in Phase 4 of the Program for the Control of Air Pollution by Motorcycles and Similar Vehicles (Promot). Limits for nitrogen oxide have been raised, while those of carbon monoxide will now have three different limits. Current rules establish a limit of 2 grams per kilometer. With the new rule, motorcycles with engines working over 2,000 rpm will have a limit of 5 grams per kilometer. Those running slower will be limited to 3 grams per kilometer, while those on the &#8220;dynamometric cycle&#8221; will have a limit of 1 gram.</span></p> <p><b>Source:</b> <a href=""><span style="font-weight: 400;">Resolução nº 493, de 24 de junho de 2019</span></a></p> <h2 style="text-align: center;"></h2> <h4><b>Conservation Units</b></h4> <p><b>To the core: </b><span style="font-weight: 400;">The Chico Mendes Environmental Conservation Institute (ICMBio) decided that the definitions about the signing, termination, alteration, and monitoring related to several responsibilities of the institute will now depend on a prior analysis of the ICMBio management committee, made up of the agency president and board members. Among other points that the committee will decide upon is the elaboration and review of management plans of Conservation Units, the creation of these units, land rectifications, the consolidation of limits and compensation of legal reserves, and the approval of environmental licensing of general activities under its jurisdiction.</span></p> <p><b>Other important aspects to bear in mind:</b></p> <ul> <li style="font-weight: 400;"><span style="font-weight: 400;">Regional departments of ICMBio lost the power to deal directly on institute partnerships with other public or private institutions which have the purpose of &#8220;performing projects which seek to improve the quality of management of federal conservation units.”</span></li> </ul> <p><b>Source:</b> <a href=""><span style="font-weight: 400;">Portaria nº 298, de 26 de junho de 2019</span></a><span style="font-weight: 400;"> and </span><a href=""><span style="font-weight: 400;">Portaria nº 299, de 26 de junho de 2019</span></a></p> <h2 style="text-align: center;"></h2> <h4><b>Solid waste management</b></h4> <p><b>To the core: </b><span style="font-weight: 400;">Foreseen in a 2010 decree, the Ministry of the Environment has only now implemented the National System of Information on the Management of Solid Waste (SINIR), an online system which allows states and municipalities to publish information each year on the solid waste under their spheres of jurisdiction. There is already information available on solid waste, but this will now be consolidated on this new system.</span></p> <p><b>Source:</b> <a href=""><span style="font-weight: 400;">Portaria nº 298, de 26 de junho de 2019</span></a><span style="font-weight: 400;"> and </span><a href=""><span style="font-weight: 400;">Portaria nº 299, de 26 de junho de 2019</span></a></p> <h1></h1> <h2 style="text-align: center;"><b>INFRASTRUCTURE</b></h2> <h2 style="text-align: center;"></h2> <h4><b>Special cargo</b></h4> <p><b>To the core: </b><span style="font-weight: 400;">The National Department of Transport Infrastructure (DNIT) defined a series of specific procedures for special authorization for vehicles transporting special cargo, the so-called Special Transit Authorizations (AET). Among the main provisions is the need for the explicit authorization of the DNIT director general, or an employee &#8220;expressly accredited&#8221; to carry out this function. Furthermore, whenever a &#8220;viability study&#8221; is held before issuing the AET, in order to check the traffic conditions of the intended roadways, it must be carried out with the participation of the regional commissioners of the DNIT, or, in the case of outsourced highways, the companies in charge.</span></p> <p><b>Source:</b> <a href=""><span style="font-weight: 400;">Instrução nº 14, de 17 de junho de 2019</span></a></p> <h2 style="text-align: center;"></h2> <h4><b>Powers in infrastructure</b></h4> <p><b>To the core: </b><span style="font-weight: 400;">The Minister of Infrastructure granted important powers to the department&#8217;s executive secretary, Marcelo Sampaio Cunha Filho. He will be directly responsible for declaring the public utility for the construction and expansion of ports and airports, approving development and zoning plans of ports, and approving grants of federal highways and railways. </span></p> <p><b>Source:</b> <a href=""><span style="font-weight: 400;">Portaria nº 2.787, de 24 de junho de 2019</span></a></p> <h2 style="text-align: center;"></h2> <h4><b>Control of imports</b></h4> <p><b>To the core: </b><span style="font-weight: 400;">This is an apparently important change in the control of imports. The customs sector of Brasilia International Airport will be responsible for the posterior verification of imports made in all of Brazil (made after the product has already entered the country and was delivered to its destination). These are goods with preferential tariffs (which may annul the import tax due), resulting from international agreements signed by the country. Generally, the responsibility for this post-delivery conference on the propriety of the origin of the products is of the tax authority branch in the corresponding jurisdiction.</span></p> <p><b>Source:</b> <a href=""><span style="font-weight: 400;">Portaria nº 25, de 20 de maio de 2019</span></a></p> <h2 style="text-align: center;"></h2> <h4><b>Looser rules for imports</b></h4> <p><b>To the core: </b><span style="font-weight: 400;">A new rule established by the Ministry of the Economy reduces the variables to be considered by the Brazilian government to reject requests for import tax reductions of exemptions on capital goods and telecom and IT products which do not have similar products in the country, or where the national production is not sufficient to meet the current demand. These are so-called &#8220;ex-tariff&#8221; goods. There are now less avenues available to the government to reject these requests.</span></p> <p><b>Source:</b> <a href=""><span style="font-weight: 400;">Portaria nº 309, de 24 de junho de 2019</span></a><b> </b></p> <p><b> </b></p> <h2 style="text-align: center;"><b>MINING AND ENERGY</b></h2> <h2 style="text-align: center;"></h2> <h4><b>Privatization of the natural gas market</b></h4> <p><b>To the core: </b><span style="font-weight: 400;">A resolution was published by the National Energy Policy Board this week which prepares the ground for opening up the natural gas market. The objective is to break Petrobras&#8217; monopoly on the sector. Among the recommendations defined by the board is that the state-owned company must rid itself of all of the ownership equity it holds in natural gas transport and distribution companies, as well as demanding that Petrobras remove barriers so that &#8220;the producing agents may sell the gas they produce.&#8221; With one eye on state governments, the resolution also states that the Ministries of the Economy and Mines and Energy must &#8220;incentivize&#8221; states and municipalities to privatize their state-owned companies which supply mains gas to the population, as well as creating (or maintaining) independent regulatory agencies and signing tax agreements which are &#8220;necessary to opening the gas market.&#8221; </span></p> <p><b>Other important aspects to bear in mind:</b></p> <ul> <li style="font-weight: 400;"><span style="font-weight: 400;">One point which is likely to create controversy in the future is that the board recommends the Ministry of Mines and Energy &#8220;drafts technical subsidies to encourage the exploitation and production of natural gas on land&#8221;—essentially, fracking.</span></li> </ul> <p><b>Source:</b> <a href=""><span style="font-weight: 400;">Resolução nº 16, de 24 de junho de 2019</span></a></p> <p><b> </b></p> <h2 style="text-align: center;"><b>PUBLIC ADMINISTRATION</b></h2> <h2 style="text-align: center;"></h2> <h4><b>Skeletons out of the closet</b></h4> <p><b>To the core: </b><span style="font-weight: 400;">President Jair Bolsonaro sanctioned a number of vetoes made by Congress on varying matters. Out of four laws which were subject to vetoes, three of them were crossed out by Mr. Bolsonaro himself, with less than six months in office. The changes are as follows:</span></p> <ul> <li style="font-weight: 400;"><span style="font-weight: 400;">Support foundations should be equated to organizations which manage endowment funds.</span></li> <li style="font-weight: 400;"><span style="font-weight: 400;">There is now no need for the re-evaluation of health conditions of people carrying the HIV virus which receive invalidity pensions from the National Social Security Institute</span></li> <li style="font-weight: 400;"><span style="font-weight: 400;">Political parties will no longer have to return donations received in previous years from public servants, providing these servants are affiliated to political parties. </span></li> <li style="font-weight: 400;"><span style="font-weight: 400;">By suspending vetoes imposed by former President Michel Temer, Congress has now decided that electric cars built in Brazil will be exempt from manufactured goods tax and financial transactions tax. </span></li> </ul> <p><b>Source:</b> <a href=""><span style="font-weight: 400;">Lei nº 13.755, de 10 de dezembro de 2018</span></a><span style="font-weight: 400;">, </span><a href=""><span style="font-weight: 400;">Lei nº 13.800, de 4 de janeiro de 2019</span></a><span style="font-weight: 400;">, </span><a href=""><span style="font-weight: 400;">Lei nº 13..831, de 17 de maio de 2019</span></a><span style="font-weight: 400;"> and </span><a href=""><span style="font-weight: 400;">Lei nº 13.847, de 19 de junho de 2019</span></a><span style="font-weight: 400;">.</span></p> <h2 style="text-align: center;"></h2> <h4><b>Regulatory agencies</b></h4> <p><b>To the core: </b><span style="font-weight: 400;">President Jair Bolsonaro sanctioned a law to unify the general rules of the 11 regulatory agencies currently operating under the federal government, reinforcing their administrative and decisive autonomy. The most important point is that the definition of all board members of all agencies will have five-year terms, and extending these terms is prohibited. All agencies will also have to have five members in their board of directors, including the director-general. Today this varies from agency to agency. The new law also creates barriers for the political rigging of agencies by blocking appointments in the following cases: </span></p> <ul> <li style="font-weight: 400;"><span style="font-weight: 400;">Politicians and relatives of politicians.</span></li> <li style="font-weight: 400;"><span style="font-weight: 400;">People who, in the last three years, participated &#8220;in the decision-making structure of political parties or in work connected to the organization, structuring, and performance of electoral campaigns.</span></li> <li style="font-weight: 400;"><span style="font-weight: 400;">People who have &#8220;direct or indirect participation in companies or entities which work in the sector subject to the regulation exerted by the regulatory agency in which he/she works.” </span></li> <li style="font-weight: 400;"><span style="font-weight: 400;">“Member of the board of regional or national associations representing employers&#8217; or employees&#8217; interests connected to the activities regulated by the agency in question.”</span></li> <li style="font-weight: 400;"><span style="font-weight: 400;">People ineligible for public office</span></li> </ul> <p><b>Source:</b> <a href=""><span style="font-weight: 400;">Lei nº 13.848, de 25 de junho de 2019</span></a></p> <h2 style="text-align: center;"></h2> <h4><b>Control of Carf</b></h4> <p><b>To the core: </b><span style="font-weight: 400;">In the past, economy minister Paulo Guedes has argued in favor of scrapping the Administrative Council of Tax Appeals (Carf), which is responsible for deciding on appeals submitted by companies against tax notices imposed by the federal government. The council was targeted by Operation Zelotes, which discovered a scheme to influence the decisions of council members by way of bribes paid by large companies. Mr. Guedes has moved to recreate the Committee of Monitoring, Evaluation, and Selection of Council Members, to &#8220;monitor and evaluate the performance of council members&#8217; decision-making,&#8221; propose measures to speed up Carf trials, as well as defining guidelines to select members of the council.</span></p> <p><b>Source:</b> <a href=""><span style="font-weight: 400;">Portaria nº 314, de 26 de junho de 2019</span> </a></p> <h2 style="text-align: center;"></h2> <h4><b>Obligatory budget</b></h4> <p><b>To the core: </b><span style="font-weight: 400;">In what was the first constitutional amendment rendered by Congress in the Jair Bolsonaro government, Amendment 100 states that the government has &#8220;the responsibility to perform budget programs, adopting the methods and measures necessary, with the proposal to guarantee the effective delivery of goods and services to the population.&#8221; This is the so-called &#8220;obligatory budget.&#8221; The amendment in itself is somewhat open-ended, but the political impulse for the change was the transformation of parliamentary grants into obligatory items of the federal budget.</span></p> <p><b>Source:</b> <a href=""><span style="font-weight: 400;">Emenda Constitucional nº 100</span></a></p> <p>&nbsp;</p> <h2 style="text-align: center;"><b>PUBLIC SECURITY</b></h2> <h2 style="text-align: center;"></h2> <h4><b>Firearms dispute</b></h4> <p><b>To the core: </b><span style="font-weight: 400;">One of the main causes led by Jair Bolsonaro so far, the loosening of gun carry rules will now have to be subjected to Congress. After much confusion and an attempt to avoid a complete suspension of the new rules he instituted by decree, the president decided to shuffle his deck and take a new approach: he completely repealed the most recent decree which extended permissions for gun carry licenses for several professions, and created three new decrees, which supplement each other. With the exception of the expansion of carry permits, the rest of the controversial rules brought in continue in effect, but now they are divided into three decrees instead of one. The rules on carry permits have now been included in a bill which will be submitted to the House of Representatives.</span></p> <p><b>Source:</b> <a href=""><span style="font-weight: 400;">Decreto nº 9.845, de 25 de junho de 2019</span></a><span style="font-weight: 400;">, </span><a href=""><span style="font-weight: 400;">Decreto nº 9.846, de 25 de junho de 2019</span></a><span style="font-weight: 400;"> and </span><a href=""><span style="font-weight: 400;">Decreto nº 9.847, de 25 de junho de 2019</span><b> </b></a></p> <h2 style="text-align: center;"><b>SCIENCE AND TECHNOLOGY</b></h2> <h2 style="text-align: center;"></h2> <h4><b>Incentives for laptops and cellphones</b></h4> <p><b>To the core: </b><span style="font-weight: 400;">In 2014, the European Union made a complaint to the WTF about several Brazilian tax incentive programs, among them the Informatics Law. These programs waived tax on companies and the products they produce, in exchange for carrying out productive phases in Brazil, as well as making investments in research, development, and innovation. In January of this year, the WTO upheld its understanding that so-called Nested PPBs (when a basic productive process in inserted into another, such as demanding the production of batteries take place in the country, as part of the process of manufacturing cell phones) constitute local content requirements and are thus against WTO rules. In light of this, the Brazilian government revoked the programs related to computing which had these flaws, such as those for laptops, desktop computers, tablets, and cellphones. The ordinance states that new basic productive processes will be established for these products by the end of the month.</span></p> <p><span style="font-weight: 400;">The first of these processes was issued later in the week, specifically concerning cell phones. There are two ordinances: one concerning a general program, and another involving products produced in the Manaus Free Trade Zone.</span></p> <p><b>Source:</b> <a href=""><span style="font-weight: 400;">Portaria Interministerial nº 1, de 19 de junho de 2019</span></a><span style="font-weight: 400;">, </span><a href=""><span style="font-weight: 400;">Portaria Interministerial nº 2, de 21 de junho de 2019</span></a><span style="font-weight: 400;"> and </span><a href=""><span style="font-weight: 400;">Portaria Interministerial nº 3, de 21 de junho de 2019</span></a></p> <h2 style="text-align: center;"></h2> <h4><b>Internet of Things</b></h4> <p><b>To the core: </b><span style="font-weight: 400;">Though it is still quite abstract, this is an important step for a country which intends to become more technologically advanced: the government has launched the National Plan for the Internet of Things (IoT). Among the objectives of the plan are to &#8220;promote professional training related to the development of applications of IoT and the creation of jobs in the digital economy,&#8221; and &#8220;to seek partnerships with the public and private sectors to implement the IoT.&#8221; The Minister of Science and Technology, Marcos Pontes, is still to establish the priorities for the application of IoT solutions, but it is guaranteed that the areas of health, cities, industries, and the rural sector will be involved.</span></p> <p><b>Source:</b> <a href=""><span style="font-weight: 400;">Decreto nº 9.854, de 25 de junho de 2019</span></a></p> <h2></h2> <h2 style="text-align: center;"><b>TELECOMMUNICATIONS</b></h2> <h2 style="text-align: center;"></h2> <h4><b>Data on phones and TV subscriptions</b></h4> <p><b>To the core: </b><span style="font-weight: 400;">One of the obligations of providers regulated by the National Telecommunications Agency (Anatel), such as cellphone operators and TV subscription companies, is to supply the agency with data on their services. This data is collected by Anatel and allow monitoring of mobile lines operating in Brazil. Now, Anatel changed the rules for the collection of this data, which, in theory, streamlines this process. In short, the system will work as follows: Anatel&#8217;s data management committee will propose a new type of data to be collected, and will submit the proposal to the agency&#8217;s executive superintendent. This department will decide on the matter, and companies will have at least 180 days to collect the data.</span></p> <p><b>Source:</b> <a href=""><span style="font-weight: 400;">Resolução nº 712, de 18 de junho de 2019</span></a></p> <p>

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