RESTRICTED
WORLD TRADE S/FIN/W/12/Add.46
8December 1997
ORGANIZATION(97-5392)
Original: English Committee onTrade inFinancial Services
COMMUNICATION FROM BRAZIL
Conditional Offer onFinancial Services
Addendum
Thefollowing communication iscirculated attherequest ofBrazil toMembers oftheCommittee
onTrade inFinancial Services.
_______________
1. Brazil hasthehonour tosubmit theannexed draft conditional offer infinancial services. It
contains significant improvements vis-à-vis theBrazilian 1995commitments, anditfullyreflects current
market access conditions.
2. Themostsignificant improvements concern theinsurance sector. TheBrazilian Government
iscommitted totheopening ofthemarket forcommercial presence invarious modalities ofinsurance
services andauxiliary insurance-related services.
3. Theoffer alsoincludes twotypes ofinsurance, namely body, machinery andcivilliability
insurance forvessels, andworkaccident insurance, which werenotmentioned inthe1995commitments.
4. Limitations related toreinsurance havebeenmade considerably more flexible. Thetransitional
character ofthemonopoly oftheBrazilian reinsurance institution (IRB-Brasil Resseguros S.A.) has
beenclarified. Future regulations willallow private sector activity inthereinsurance services. Within
twoyears afterthose regulations areineffect, Brazil willintroduce newcommitments intothepresent
schedule.
5. Theofferhasalsobeensubstantially improved regarding thebanking sector. Intheprevious
commitments, commercial presence offoreign banks wasnotpermitted, except inthecontext of
privatization ofpublic sector financial institutions. Inthepresent offer, commercial presence isadmitted,
conditioned toacase-by-case authorization bytheExecutive Branch.
6. Theoffer alsoallows forcommercial presence ofsuppliers notcharacterized asfinancial
institutions bytheBrazilian law,regarding some services related tocapital market operations.
7. Thisofferisconditional onthesatisfactory conclusion ofamultilateral MFN-based agreement
infinancial services, andBrazil reserves theright tolistMFN exemptions. Some orallofthe
commitments undertaken mayberevised orwithdrawn during thepresent negotiations. Also, Brazil
reserves theright tomake technical changes totheoffer andtocorrect anyerrors, omissions or
inaccuracies.S/FIN/W/12/Add.46
Page2FEDERATIVE REPUBLIC OFBRAZIL
DRAFT CONDITIONAL OFFER ONFINANCIAL SERVICES
Modes ofsupply: 1) Cross-border supply 2) Consumption abroad 3) Commercial presence 4) Presence ofnatural persons
Sector orSub-sector Limitations onMarket Access Limitations onNational Treatment Additional
Commitments
7.FINANCIAL SERVICES
A. Allinsurance and
insurance-related services
- Lifeinsurance.
- Insurance onfreight.
- Property insurance.
- Medical care.
- Liability insurance.
- Body, machinery andcivil
liability insurance for
vessels.1) Unbound except for:
-insurance onfreight: none. However,
commercial presence isrequired for
contracts on,andanyliability arising
from, imported goods.
-body, machinery andcivilliability
insurance maybeauthorized for
vessels registered intheBrazilian
Special Registry (REB), depending
oninternal supply conditions.
2) Unbound.
3) Incorporation under Brazilian law,inthe
form ofa“sociedade anônima ”,andthe
enactment ofaPresidential decree, are
required.
4) Unbound except asindicated inthe
horizontal section.1) Unbound.
2) Unbound.
3) None.
4) Unbound except asindicated inthe
horizontal section.S/FIN/W/12/Add.46
Page3Modes ofsupply: 1) Cross-border supply 2) Consumption abroad 3) Commercial presence 4) Presence ofnatural persons
Sector orSub-sector Limitations onMarket Access Limitations onNational Treatment Additional
Commitments
- Work accident insurance. 1) Unbound.
2) Unbound.
3) TheNational Social Security Institute
(INSS) isthesoleauthorized supplier.
4) Unbound except asindicated inthe
horizontal section.1) Unbound.
2) Unbound.
3) Unbound.
4) Unbound.Brazil willundertake
commitments regarding
commercial presence in
thework accident
insurance market within
twoyears after the
adoption bytheNational
Congress oflegislation
regulating such presence.
- Reinsurance and
retrocession.1) Unbound.
2) Unbound.
3) Future regulations willpermit supply by
private institutions. Meanwhile, itisof
theexclusive competence oftheBrazilian
reinsurance institution (IRB- Brasil
Resseguros S.A.) toaccept mandatory or
facultative reinsurance, inBrazil or
abroad, aswellastodistribute
reinsurance itdoes notretain.
4) Unbound except asindicated inthe
horizontal section.1) Unbound.
2) Unbound.
3) Unbound.
4) Unbound.Brazil willundertake
commitments regarding
commercial presence in
thereinsurance and
retrocession markets
within twoyears after the
adoption bytheNational
Congress oflegislation
regulating such presence.S/FIN/W/12/Add.46
Page4Modes ofsupply: 1) Cross-border supply 2) Consumption abroad 3) Commercial presence 4) Presence ofnatural persons
Sector orSub-sector Limitations onMarket Access Limitations onNational Treatment Additional
Commitments
- Auxiliary services -
agencies andbrokers.1) Unbound.
2) Unbound.
3) Forlegal persons, incorporation under
Brazilian lawisrequired.
4) Unbound except asindicated inthe
horizontal section.1) Unbound.
2) Unbound.
3) None.
4) Unbound except asindicated inthe
horizontal section.
- Auxiliary services -
consultancy, actuarial and
surveys.1) None.
2) None.
3) None.
4) Unbound except asindicated inthe
horizontal section.1) None.
2) None.
3) None.
4) Unbound except asindicated inthe
horizontal section.S/FIN/W/12/Add.46
Page5Modes ofsupply: 1) Cross-border supply 2) Consumption abroad 3) Commercial presence 4) Presence ofnatural persons
Sector orSub-sector Limitations onMarket Access Limitations onNational Treatment Additional
Commitments
B. Banking andother financial services
Forthepurpose ofthese commitments, financial institutions aredefined asmultiple banks, commercial banks, investment banks, consumer finance companies,
realestate finance companies, leasing companies, brokers anddealers. Each mayperform onlythose activities permitted bytheNational Monetary Council,
theCentral Bank and/or theSecurities Commission. Financial instruments, such assecurities, futures andoptions, when registered fornegotiation onan
exchange, cannotbetraded inanover-the-counter market. Allmembers ofsenior level management offinancial services suppliers must bepermanent
residents inBrazil.
B.1) Services provided by
financial institutions.
- Acceptance ofthefollowing
funds from thepublic:
(i)demand deposits;
(ii)timedeposits;
(iii)savings deposits
destined forhousing
finance.
- Lending ofalltypes,
including:
(i)consumer credit;
(ii)mortgage credit;1) Unbound.
2) Unbound.
3) Theestablishment ofnewbranches and
subsidiaries offoreign financial
institutions, aswellasincreases inthe
participation offoreign persons inthe
capital offinancial institutions
incorporated under Brazilian law,isonly
permitted when subject toacase-by-case
authorization bytheExecutive Branch, by
means ofaPresidential decree. Applying
investors mayberequired tofulfil
specific conditions. Foreign persons may
participate intheprivatization program of
public sector financial institutions andin
each casecommercial presence willbe
granted, alsobymeans ofaPresidential
decree. Otherwise, commercial presence
isnotallowed.1) Unbound.
2) Unbound.
3) None.Fortheservices ofcredit
cards andfactoring,
national treatment shall
begranted incommercial
presence, ifthese services
aredefined asfinancial
services infuture
legislation adopted bythe
National Congress.S/FIN/W/12/Add.46
Page6Modes ofsupply: 1) Cross-border supply 2) Consumption abroad 3) Commercial presence 4) Presence ofnatural persons
Sector orSub-sector Limitations onMarket Access Limitations onNational Treatment Additional
Commitments
(iii)financing of
commercial
transactions.Forthose banks established within Brazil
before October 5th,1988, theaggregate
number ofbranches islimited tothatexisting
onthatdate. Forthose banks authorized to
operate inBrazil after thatdate, thenumber of
branches issubject totheconditions setout,in
each case, atthetime authorization isgranted.
- Financial leasing.
- Payment andmoney
transmission services.
- Guarantees and
commitments.
- Trading forownaccount or
fortheaccount of
customers, whether onan
exchange orinan
over-the-counter market, of
thefollowing:
(i)money market
instruments;
(ii)foreign exchange;
(iii)futures, options and
swaps referenced in
bullion andinprice
indexes;Financial institutions, unless otherwise
specified, shall taketheform ofa“sociedade
anônima ”when incorporated under Brazilian
law.S/FIN/W/12/Add.46
Page7Modes ofsupply: 1) Cross-border supply 2) Consumption abroad 3) Commercial presence 4) Presence ofnatural persons
Sector orSub-sector Limitations onMarket Access Limitations onNational Treatment Additional
Commitments
(iv)exchange rateand
interest rate
instruments, including
swaps;
(v)transferable securities;
(vi)other negotiable
instruments and
financial assets,
including bullion.
- Participation inpublic
offerings ofsecurities,
including underwriting and
placement asagent, and
provision ofservices related
tosuch offers.
- Money brokerage.
- Asset management,
management ofcollective
investments andcustodial
anddepository services.
- Settlement andclearing
services forsecurities and
derivatives.
- Advisory services,
investment andportfolio
research andadvice and
credit analysis.4) Unbound, except asindicated inthe
horizontal section.4) Unbound, except asindicated inthe
horizontal section.S/FIN/W/12/Add.46
Page8Modes ofsupply: 1) Cross-border supply 2) Consumption abroad 3) Commercial presence 4) Presence ofnatural persons
Sector orSub-sector Limitations onMarket Access Limitations onNational Treatment Additional
Commitments
B.2) Services provided by
non-financial institutions
(i) trading forownaccount or
fortheaccount of
customers, whether onan
exchange orinaregulated
over-the-counter market, of
securities andderivatives.
(ii) clearing services for
securities andderivatives.
(iii) public offerings of
securities inaregulated
over-the-counter market.
(The securities andderivatives in
thethree sub-sectors listed above
arethefollowing:
- corporate shares,
debentures, secured bonds,
founder ’sshares, coupons
ofthese securities, and
subscription warrants;
- securities certificates of
deposit;1) Unbound.
2) Unbound.
3) None except that:
-legal persons must beincorporated
under Brazilian law;
-onlylegal persons mayprovide the
services listed initems iiandiii;
-clearing services shall beprovided by
“sociedades anônimas ”.1) Unbound.
2) Unbound.
3) None.S/FIN/W/12/Add.46
Page9Modes ofsupply: 1) Cross-border supply 2) Consumption abroad 3) Commercial presence 4) Presence ofnatural persons
Sector orSub-sector Limitations onMarket Access Limitations onNational Treatment Additional
Commitments
- indices representing
corporate shares portfolios;
- securities options, forwards
andfutures contracts;
- commercial paper issued by
public companies, except
financial institutions,
securities brokers,
securities dealers, and
leasing companies;
- securities subscription
rights;
- securities subscription
receipts;
- corporate shares certificates
ofdeposit;
- shares ofrealestate
investment funds;
- non-standardized options;
- audio-visual certificates.)
iv) advisory services,
investment andportfolio
research andadvice and
credit analysis.
v) portfolio management of
investment funds subject to
theregulation ofthe
Securities Commission.4) Unbound, except asindicated inthe
horizontal section.4) Unbound, except asindicated inthe
horizontal section.