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VII. SERVICES
(1) General Features
1. In1994, services accounted forabout 53percentofBrazil 'sGDP andgenerated justover
55percentoftotalemployment. Thelargest single activity wasgovernment services, which contributed
about 18percentoftotalvalue added inthesector; other important categories werefinancial services,
commerce andhousing (Chart VII.1).
2. Non-factor services exports (credits) werevalued atsome US$3.7 billion in1994, equivalent
toabout 8.5percentofmerchandise exports. Transport receipts werethelargest single item,accounting
foralmost 60percentofservices exports. AtUS$7.6 billion, thevalue ofservices imports (debits)
wasabout double thatofservices exports andequivalent tosome 23percentofmerchandise imports.
Transport accounted for56percentofservices imports, andtravel forafurther 28percent.
3. Brazil 'sexports ofcommercial services fellbetween 1990 and1991, buttended toincrease
thereafter(ChartVII.2).Importsofservicesfollowedasimilarpattern,declininguntil1992andgrowing
rapidly since then. Asaresult, there hasbeenaconsiderable widening oftheservices trade deficit
since 1992.WT/TPR/S/21
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4. Inefficiencies intheservices sector haveattimes imposed severe constraints onother sectors
oftheBrazilian economy (partoftheso-called "Brazil cost"). Themostserious problems havearisen
inrelation tofinancial services, although porthandling andtelecommunications havealsocreated
impediments togreater economic efficiency. However, restructuring during the1990s hasproduced
considerable gains insome areas, andfurther progress isexpected withthecompletion ofthereforms
tothelegalframework thatbegan early inthedecade.
5. TheState isanimportant supplier ofservices, including banking, insurance, transport,
telecommunicationsandelectricity.Suchinvolvementisdecreasingmarkedlyasthecurrentprivatization
programme moves forward, aided bycurrent efforts toopen toforeign investment major industries
including services suchasbanking, insurance andtelecommunications.
6. Inthecontext ofitsongoing efforts toadvance theopening ofitseconomy, attract foreign
investment andreduce inefficiencies initsservices sector, Brazil participated actively intheUruguay
Round General Agreement onTrade inServices (GATS). Asummary oftheBrazilian schedule of
"horizontal"commitments,i.e.,thosecoveringallsectors,isshowninTableVII.1.1Brazilhasengaged
nottoapply national treatment limitations inanysector withrespect tocommercial presence, except
forthepreference given totheuseofBrazilian space satellites; therearenootherbinding commitments.
1ThescheduleofcommitmentsmadebycountriesundertheGATScoverthefollowingfourmodesofdelivery:
(i)cross-border supply, (ii)consumption abroad ofservices, (iii)supply ofservices through commercial presence
and(iv)thepresence ofnatural persons inthehostcountry.Brazil WT/TPR/S/21
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Table VII.1
Summary ofBrazil 'shorizontal GATS commitments
Mode ofsupply
(MA: Market Access; NT: National Treatment)
Cross-border supply Consumption abroad Commercial presence Presence ofnatural
persons
Movement ofnatural
personsMA: Nobinding (1)
NT:Nobinding (2)
Investment MA: (3)(4)
NT:Nolimitation
Subsidies MA: Nobinding
NT:Nobinding (5)MA: Nobinding
NT:Nobinding (5)MA: Nobinding
NT:Nobinding (5)MA: Nobinding
NT:Nobinding (5)
Notes: TheScheduleofSpecificCommitments(GATTdocumentGATS/SC/13)isthesoleauthenticsourceofinformationoncommitments.
Nobinding means thatBrazil made noengagements withrespect totheiteminquestion.
Nolimitation means thatBrazil agreed toplace noconstraints ontheiteminquestion.
(1) Except formeasures related tothetemporary workofspecialized technicians, highly qualified professionals, managers anddirectors.
(2) Exceptions apply.
(3) Remittances require compliance withprocedures established bytheCentral Bank.
(4) Foreign suppliers mustbeorganized aslegalentities under Brazilian law.Thelawdoesnotprovide forthe"sole proprietorship"
and"partnership" forms envisaged inArticle XXVIII:1 oftheGATS.
(5) Unbound forresearch anddevelopment subsidies.
Source: WTO Secretariat.
7. Brazil 'ssector-specific commitments mainly consist oftheengagement nottoplace national
treatment limitations oncommercial presence (Table AVII.2). Formostitems, Brazil 'sschedule of
commitments leaves unbound market access withrespect tothefourmodes ofsupply considered in
theGATS. Theauthorities noted thatBrazil 'sgreater willingness tomake commitments withrespect
tonational treatment thanmarket access reflected thefactthatentry offoreign service providers to
certain activities wasstillsubject tolegal orconstitutional constraints (e.g., banking and
telecommunications). With regard tothedifferent modes ofsupply, theauthorities expressed their
preference formaking bindings oncommercial presence because thismode results ingreater foreign
investment andlimits thepotential forwidening trade deficits inservices.
8. Brazil sfinallistofArticle II(m.f.n.) exemptions covered audiovisual production aswell
aslandandmaritime transport (Table VII.2). Inthesethreeareas, Brazil maymaintain measures which
would otherwise beinconsistent withtheobligation toprovide m.f.n. treatment toothercountries under
theGATS. Suchexemptions areofindefinite duration. Theauthorities indicated thattheexemptions
areneeded topromote cultural exchanges, todevelop regional transport inthe"Southern Cone" and
toensure Brazilian participation inthelinercargo trade.
9. Brazilmaintainsalargenumberofbilateralagreementsrelatedtoservices.Inmaritimetransport,
Brazil isaparty to27agreements, ofwhich seven involve cargo sharing arrangements (with Algeria,
Angola, Argentina, Chile, Peru, Romania andUruguay). Inairtransport Brazil hasconcluded
agreementswith44countriesundertheauspicesoftheInternationalCivilAviationOrganization(ICAO).
Intourism, Brazil maintains bilateral agreements with11countries (twowithEuropean Union members
andtherestwithLatin American States).
10. Brazil alsoparticipates inanumber ofregional agreements onservices. These include the
AgreementonInternationalLandTransportwithArgentina,Bolivia,Chile,Paraguay,PeruandUruguay,WT/TPR/S/21
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which aimstofacilitate roadtransport inthe"Southern Cone" region, aswellasagreements within
theALADI framework. TheBrazilian authorities indicated thatMERCOSUL members wereinthe
process ofnegotiating aframework agreement intheservices area.2
Table VII.2
Summary ofBrazil 'sArticle II(m.f.n.) exemptions
Sector Descriptions ofmeasure indicating its
inconsistency withArticle IICountries towhich itapplies
Audiovisual andmotion
picturesNational treatment isgranted exclusively to
companies from countries withwhich Brazil
maintains filmco-production agreementsAllcountries (in1994 Brazil maintained co-
production agreements withAngola, Argentina,
Colombia, France, Germany, Italy, Mozambique
andPortugal).
International land
transport ofcargo and
passengersTheAgreement onInternational Land
Transport provides national treatment to
authorized suppliers from signatory countries.Signatories areArgentina, Bolivia, Brazil, Chile,
Paraguay, PeruandUruguay.
Maritime transport Bilateral agreements oncargo sharing and
cargo reservation andmeasures providing for
access tocargo onareciprocity basis.Allcountries (in1994 Brazil hadagreements
withsome ALADI members, China, certain
European Union countries andtheUnited
States).
Note: Brazil -ListofArticle IIExemptions (GATT document GATS/EL/13) isthesoleauthentic source ofexemptions.
Source: WTO Secretariat.
11. Multilateral agreements inwhich Brazil participates include INMARSAT andINTELSAT,
bothinthetelecommunications field.
(2) Telecommunications
(i) Market structure andperformance
12. Brazilhasalargetelecommunicationsindustryemployingsome97,000personsandcontributing
about 1.3percenttothecountry 'sGDP (Table VII.3). Theauthorities estimate thattheindustry
generates some US$7.9billion annually invalue added, andgross annual salesoftelecommunication
services ofabout US$6.7billion, ofwhich international transactions account for7.5percent. Brazil 's
telecommunications industry istheworld 'sfourth largest bythenumber ofinstalled public telephones
andtheeleventh largest bythenumber ofconnected lines.
13. Thetelecommunications system hasarelatively lowtelephone density atonly8.9units
per100inhabitants.Theauthoritiesestimatethatbetween1994and1999thedemandforfixedtelephone
linesshouldincreasefromjustover12millionto26million(publictelephonesincluded),ruraltelephones
from 230,000 to700,000, public telephones from some 345,000 to800,000 andcellular telephones
from 720,000 to9.6million.
2TheTreaty ofAsuncion, establishing MERCOSUL, provided fortheestablishment ofacommon market
withfreecirculation ofgoods, services andworkers from 1January 1995, butonlythecustoms union forgoods
hasbeen implemented todate-seeChapter II.Brazil WT/TPR/S/21
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Table VII.3
Selected statistics ontelecommunications
Item Units 1992 1993 1994 1995
Access linesforordinary telephony Million 10.6 11.4 12.2 15.3
Access tocellular telephony Thousand 60.5 250.5 720.7 1,530.5
Total telephone linesinoperation Million 9.9 10.7 11.7 13.5
Public payphones Thousand 259.6 298.6 343.7 366.6
Access topacket-switched data
communication networkThousand ports 14.2 30.5 45.8 47.0
Capital investment US$billion 3.0 2.9 3.4 5.3
Localities served Thousand 15.4 16.1 17.5 20.6
Number ofemployees Thousand 89.6 93.6 96.6 92.5
Contribution toGDP Percent 1.5 1.6 1.3 ...
... notavailable
Source: Brazilian authorities.
14. Thecornerstone ofBrazil 'stelecommunications sector isTelecomunica çõesBrasileiras S.A.,
TELEBRAS, ajoint public andprivate stock holding corporation controlled bytheMinistry of
Communications onbehalf oftheFederal Government. TELEBRAS ischarged withplanning,
establishing andoperating telecommunications services atthenational level; itisalsoresponsible for
securing thefinancial resources tocarry outsuchprogrammes. TheFederal Government owns about
23percentofthecapital ofTELEBRAS and51percentofthevoting shares; foreign investors control
about 14percentofthecapital.
15. TELEBRAS and28otherpublicly controlled firms formtheTELEBRAS system. Outofthose
firms,27areregionaltelephonecompanieswithmonopoliesfortheprovisionofbasictelecommunication
services inparticular Brazilian States. TELESP, intheState ofSaoPaulo, isbyfarthelargest of
theregional telephone companies, andtheseventh largest Brazilian firm. Carriers, notpartofthe
TELEBRAS system, account foronlysome 5percentofBrazil 'sinstalled telephones.
16. TheEmpresa Brasileira deTelecommunica ções,EMBRATEL, incorporated in1965 under
97percentfederal government ownership, isthesecond largest company intheTELEBRAS system.
EMBRATEL isresponsible forproviding interstate services through thebasic telecommunications
network; italsooperates international telecommunication services. Onaverage, TELEBRAS hasa
capital participation of84percentinEMBRATEL andtheregional telephone companies.
17. TheTELEBRAS system accounts forsome 95percentofinvestment ininstalled capacity,
withmostinvestment largely financed fromthesystem 'sinternally generated funds. Inthepast,the
National Telecommunications Fund, FNT, provided resources tosupport theexpansion ofthe
telecommunications network; theFNTwasterminated inthemid-1980s. Bylaw,30percentofrevenue
from telephone callswentintotheFNT, but,aspublic finances weakened, partofthatrevenue wasWT/TPR/S/21
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diverted intoother government activities; ingeneral, investment intelecommunications fellmarkedly
during the1980s.3
18. Inrecent years, capital expenditures intelecommunications haverecovered, investment bythe
TELEBRAS system reaching about US$3.4 billion in1994. However, theauthorities estimated that
meeting growing demand would require investments ofsome US$37.5 billion between 1995and1999,
ofwhich TELEBRAS wasexpected tobeabletoprovide onlyabout 60percent.
(ii) Regulatory framework
19. The1988Constitution required thatallpublic telecommunications services fallunder thecontrol
ofState enterprises; theBrazilian Code ofTelecommunications, LawNo.4117 of27August 1962,
establishedthebasicregulatoryframeworkforthetelecommunicationssector.TheFederalGovernment,
through theMinistry ofCommunications, isresponsible forregulating telecommunication services,
including theadministration oftheelectromagnetic spectrum. TheMinistry ofCommunications has
supervisory functions overtheTELEBRAS System, having allpowers associated withacontrolling
share holder.
20. Brazil 'sregulatory framework makes afundamental distinction between "public" services and
"non-public" services. Public services arethose provided tothecommunity atlargethrough thepublic
switch network, independently ofthetypeoftransmission (e.g,voice, data,faxortelex) oritsmeans
(e.g., fibreoptics, radio orsatellite). Non-public services include paging andlimited services; the
latter arethose provided toclosed usergroups connected tothepublic network, subject torestrictions.
21. Alicence isrequired tooperate alltelecommunication services. Criteria usedtogrant licences
include theapplicant 'stechnical andfinancial capacity and,incertain cases, pricing policies andthe
amount offered forthelicence. Applicants mustbeBrazilian firms; forsome services therearelimits
onforeign ownership ofvoting shares. TheMinistry 'sdecisions maybeappealed tothePresident
orthecourts. Aspublic services havebeenprovided uptonowbyState-controlled companies, no
formal obligations havebeenestablished regarding universal services ortechnology transfer.
22. Public services mayonlybeprovided bycompanies inwhich theFederal Government holds
atleast51percentofthevoting shares. Forcellular telephones, amaximum oftwooperators perregion
areallowed: onemustbeaTELEBRAS associate, while theothermustbeaprivate Brazilian company.4
Public companies mustmaintain separate accounts forcellular services toprevent cross-subsidization,
which would place private competitors atadisadvantage. Although noprivate firms wereinvolved
intheoperation ofcellular telephones inearly 1996, theauthorities expected toissuethefirstprivate
licence before theendoftheyear. Since theearly1990s, efforts made toliberalize telecommunication
services, including limited services, cellular telephones andvalue added services, havebeenchallenged
before theBrazilian courts.
23. Foreign participation isnotallowed inbroadcasting services. Forcable television, theoperator
mustbeaBrazilian company; amaximum of49percentofvoting shares maybeunder foreign control.
Concessions aregranted forrenewable periods of15years. Noforeign participation isallowed in
mailservices suchasletters, telegrams, postcards andgrouped mailservices, which mayonlybe
3World Bank (1992), p.42.
4Brazilian firms arethose incorporated under Brazilian laws, andwithheadquarters andadministrative control
inBrazil.Brazil WT/TPR/S/21
Page 157
provided bytheStatecompany, Empresa Brasileira deCorrêios eTelégrafos ,ECT. Other mailservices
maybeprovided byprivate Brazilian companies withnorestriction onforeign capital participation.
24. Rates forpublic telecommunication services areestablished bytheMinistry ofCommunication
inco-ordination withtheMinistry ofFinance, which must approve alladjustments topublic rates.
Criteria forsetting ratesarecontained intheCode ofTelecommunications andprovide foroperators
tocover allcosts, including capital expenditure aswellasimprovements andexpansions tothenetwork.
Forcellular telephones, ceiling ratesareproposed bytheoperators forapproval bytheauthorities.
Certain users (e.g., residential orrural) aresubject tolower fixedcharges; international callssubsidize
localpublic telephone services.
25. Theresale ofinternational telecommunication services isnotcovered bythelaw;calling card
services maybeoperated aspartofspecial arrangements between companies.
26. TheMinistryofCommunicationsisresponsibleforcertificationoftelecommunicationsequipment.
Devices connected tothebasictelecommunications network mustbecertified, asmustequipment relying
ontheuseofradio frequencies. Although self-certification isnotallowed, certificates maybegranted
onthebasisofdocumentationpreparedandmeasurementsperformeddirectlybyapplicants.Recognition
offoreign certificates isdecided onacase-by-case basis, but,according totheauthorities, foreign and
domestic producers ofequipment receive thesame treatment.
27. TheSecretariat report fortheprevious Trade Policy Review ofBrazil noted thatTELEBRAS '
dominant position anditspurchasing policies combined togiveBrazilian producers avirtual monopoly
inthesupply oftelecommunications equipment. Moreover, government policies, inparticular theuse
ofgovernment procurement policies toencourage thetransfer ofspecific technologies, encouraged
thetransformation ofmultinational company affiliates intojointventures controlled bynationals. This
situation haschanged andpreference, intheformofapricemargin, isnowonlygiven fortheacquisition
ofBrazilian-made equipment classified asaninformatics product.
28. Aspartofitsparticipation intheUruguay Round GATS negotiations, Brazil made specific
commitments inthetelecommunications areaonlywithrespect tocourier services (Table AVII.1);
thisreflects thefactthatatthetimeofthenegotiations most ofthetelecommunications sector was
reserved fortheState. Thecountry 'ssubsequent efforts toopenthesector resulted inBrazil becoming
afullparticipant inthenegotiations onbasic telecommunications, having submitted twooffers tothe
WTO Negotiating Group. Byandlarge, theseoffers reflect proposed changes orchanges already made
tothesector 'sregulatory framework (seefollowing sub-section).
29. Fornon-publicservices,Brazilhasofferedtoallowforeignintereststoparticipatein"non-public"
servicesforclosedusergroups(e.g.,voicetelephony,packet-switcheddatatransmission,telex,telegraph
andprivate leased circuit services). Brazil alsooffered toallow foreign participation invalue-added
services, suchasE-mail, voice mail, on-line information and/or dataprocessing, incellular telephone
(band Bfrequency), inpaging andinsatellite-space segment provision services. Incellular telephone
andsatellite services, foreign participation mayberestricted to49percentofthevoting shares. Brazil
alsoproposed toadopt, nolaterthantwoyears afteranewTelecommunications Actisapproved,
modified regulations oncompetition, inter-connection, universal services, licensing criteria andthe
separation ofoperational andregulatory functions.WT/TPR/S/21
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(iii) Recent andplanned reforms
30. Thepartial liberalization oftelecommunications services isseenasawaytocomplement the
sector 'slargeinvestment requirements andtoenhance competition. Constitutional Amendment No.8
of1995 hasmade possible theparticipation ofprivate enterprises inservices previously reserved to
State enterprises. Further changes arebeing considered to:
- consolidate theliberalization ofcellular telephone networks, satellite transmission and
value-added services;
- establish anewregulatory framework andpricing structure;
- restructure theTELEBRAS associate companies intoregional firms withtheaimofcreating
stronger enterprises abletocompete onequal terms withprivate firms; and
- prepare forthepossible privatization ofparts oftheTELEBRAS system.
31. Inearly 1996 theNational Congress wasconsidering adraftbillthatwould relaxrestrictions
onforeign participation incellular telephone (band Bfrequency), andsatellite andvalue-added services.
Under thebill,foreign interests would beallowed toownallofafirm'snon-voting shares (upto
two-thirds ofthetotalcapital) andtocontrol upto49percentofthevoting capital. Inthelatter case,
therestriction onforeign ownership would remain forthreeyears afterthelegislation came intoforce,
andwould thenbeadjusted ifrequired bythe"national interest."
32. Under theproposed legislation, thelength ofconcessions would varywiththetypeofservice;
concessions forsatellite andcellular telephone services would begranted forrenewable periods of
15years, while ten-year renewable concessions would begranted forlimited services. Concessions
forlimited, satellite andcellular telephone services would beavailable onlytoBrazilian firms.
33. Thebillrequires thepublic, regional telephone companies tocreate newfirms tooperate their
cellular telephone services separately toprevent cross-subsidization between cellular andbasic public
services.ThebillalsoprovidesforthecreationofanindependentNationalCommunicationsCommission
totakeoverthepresent regulatory functions oftheMinistry ofCommunications.
(3) Banking andInsurance
Article 192ofthe1988Constitution requires theNational Congress torestructure thenational
financial system andadopt complementary regulations regarding, interalia:
- authorization fortheoperation offinancial institutions, providing access toallinstruments in
themarket forpublic andprivate banks;
- authorization andtheoperation ofinsurance, pension funds andcapitalization institutions, as
wellasanofficial supervisory agency andanofficial reinsurance agency;
- conditions forforeign capital participation intheabove-mentioned institutions, taking into
consideration thenational interest andinternational agreements; and
- theestablishment ofafundorinsurance toprotect andguarantee credits, investments and
deposits.
34. Article 192oftheConstitution alsoestablished a12percentceiling onrealinterest rates.Brazil WT/TPR/S/21
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35. Article 52oftheTransitional Constitutional Provisions of1988 makes theadoption of
complementary regulations forArticle 192apre-condition forallowing theestablishment inBrazil
ofnewforeign financial institutions oranyincreases inforeign participation inthecapital ofBrazilian
financial institutions. Limitations maybewaived pursuant tointernational agreements, reciprocity
orthenational interest.
36. Various legislative proposals havebeen made since 1988 tointroduce thecomplementary
legislation referred toinArticle 192oftheConstitution andArticle 52oftheTransitional Constitutional
Provisions, butnonehasbeenapproved byCongress. Since 1988, about tenforeign financial firms
havebeenauthorized toincrease theircapital participation indomestic financial institutions ortoinstall
branches inBrazil.
(i) Banking
(a) Market structure andperformance
37. Brazilhasalargeanddiversifiedbankingsystemcoveringcommercial,development,investment,
savings andmulti-purpose banks aswellasconsumer finance, leasing, andrealestate finance companies.
Thesystemincludessome265banks,plushundredsofcreditco-operatives,securitybrokersanddealers,
andconsortium managers (Table VII.4).5Thebanking system encompasses bothfederal andState
institutions andprivate firms. Foreign participation ismodest; overseas banks established inBrazil
account forlessthan10percentoftotalassets.
Table VII.4
Structure ofthebanking system, March 1996
Main Offices Branches Total Assets
No. No. US$billion Percent
Commercial banks 38 4,091 102.2 18.9
Foreign banksa18 77 18.6 3.4
Others 20 4,014 83.6 15.4
Multi-purpose banks 202 11,481 291.8 53.8
Foreign banksa20 309 33.5 6.2
Others 182 11,172 258.3 47.7
Development banks 6 9 3.0 0.6
Investment banks 17 47 7.3 1.3
Savings banks 2 1,821 86.8 16.0
Credit co-operatives 926 - 1.3 0.2
Consumer finance companies 45 101 1.6 0.3
Security brokers 227 366 7.9 1.5
Securities dealers 313 574 10.5 1.9
Leasing companies 77 114 20.5 3.8
Savings andloancompanies 22 33 7.4 1.4
Consortium managers 455 6,040 1.6 0.3
Total 2,532 36,158 541.9 100.0
a Refers tobanks under foreign control (where themajority ofvoting capital isforeign) andbranches offoreign banks.
Source: Brazilian authorities.
38. Public sector banks playanimportant rôleintheBrazilian system. Federal institutions provide
thebulkofinvestment finance andagricultural credit through awidechain offederal, regional, State
commercial andStatedevelopment banks (Chapter V).TheFederal Savings Bank (CEF) andBanco
5Consortium managers provide credit fortheacquisition ofdurable consumer goods.WT/TPR/S/21
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doBrasil arethecountry 'sfirstandsecond largest banks respectively; together theycontrol assets
ofabout US$154 billion representing about 32percentofthesystem 'scapitalization. TheCEFis
responsible forfinancing newandexisting housing, atpreferential rates, andmanaging theEmployment
Guarantee Fund (FGTS), theSocial Integration Program (PIS) andtheFund fortheFormation ofCivil
Servants (PASEP). TheCEFholds about 18percentofthebanking system 'sassets andhasbecome
inrecent years amulti-purpose bank, acting asaprivate institution inseveral areas ofactivity.
39. Banco doBrasil accounts forjustunder 14percentofthebanking system 'stotalassets and
isBrazil 'ssecond largest bankinterms ofdeposits. Banco doBrasil istheprincipal executor ofbanking
services fortheFederal Government, withactivities extending toareas related toforeign trade and
thefinancing ofruralandindustrial activities. TheFederal Government holds acontrolling 73percent
stake inBanco doBrasil ;thebalance ofshares ispublicly owned andtraded.
40. TheNational Development Bank (BNDES) plays aparticularly important rôleintheprovision
ofpreferential credit insupport ofBrazil 'sdevelopment objectives (Box V.3). Inaddition totheCEF
Banco doBrasil andBNDES, there are26State-owned banks andthree federally owned, regionally
operated development banks. Thelargest banks aftertheCEF andBanco doBrasil areBradesco,
Unibanco andItaú,allprivate banks withtotalassets ofUS$80 billion, orsome 17percentofbanking
assets.
41. TheBrazilian securities market hasexpanded rapidly inrecent years, influenced bytheopening
oftheeconomy, inparticular through theliberalization ofsecurities regulations tofacilitate foreign
portfolio investment. Foreign participation inthestock market (BOVESPA) hasincreased rapidly from
closetoUS$5.5billionin1993toaboutUS$11.5billionin1995.Multi-purposebanksplayaprominent
rôleinthesecurities market, followed bypublic andprivate pension andmutual funds.
42. Brazilian banks benefited formany years from highinflation: theywere abletoearnhigh
yields onnon-interest bearing deposits suchasdemand deposits andresources intransit, which tended
tocompensate foradministrative inefficiencies. Thenewenvironment oflowinflation andhighreal
interest rates resulting from thePlano Real(Chapter I)hasseriously affected thebanking system,
reducing profit margins andresulting insubstantial losses insome institutions
43. Since theadoption ofthePlano Realinmid-1994 theCentral Bank hashadtointervene in
orliquidate some 31institutions, notably theBanco Economico andBANESPA, theSaoPaulo State
bank, thelatteralone requiring someUS$15 billion inrefinancing. In1996, theGovernment announced
aplantoincrease byR$7.8 billion thecapital oftheBanco doBrasil afterthebankdisclosed losses
ofR$4.0 billion in1995.6
44. Banks areunder pressure toadjust totheneweconomic environment oflowinflation andhigh
interest ratesbycutting costs anddiversifying intonewactivities. Personal credit operations have
increased, investment portfolios havediversified, andservice charges havebeensetmore realistically;
personnel cutshavealsobeenimplemented, withthelossofsome66,000 positions in1995. State-owned
banks, withhighlabour costs andalarge proportion onnon-performing loans, areexpected toface
amore difficult adjustment process thanprivate banks, withseveral expected tohavetogothrough
drastic restructuring withaviewtotheireventual privatization.
6Banco doBrasil 'sproblems havebeenattributed tonon-performing loans related topastpolicies requiring
thebank tofinance loss-making State companies andagriculture (Financial Times, 21March 1996).Brazil WT/TPR/S/21
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45. Althoughbankprofitshavefallen,theyremainhigherthaninnon-financialactivities.Moreover,
Brazilian banks stillexhibit some ofthebestperformance indicators inLatin America, including a
13percentnetinterest margin and20percentequity relative toassets. Mostanalysts agree thatBrazil 's
private banksector remains solidandthatthestability ofthelargest institutions forms abuffer against
asystemic crisis.7Observers foresee further bankconsolidations leading towards athree-tier banking
system: retail banking withasmall number oflarge institutions, investment banking withareduced
number ofhighly specialized firms, andcompanies engaged innarrowly defined activities suchas
financing vehicle sales.
(b) Regulatory Framework
46. Themostimportant lawsaffecting thestructure andoperation ofBrazil 'sbanking system are
LawNo.4595of1964andLawNo.4728of1965. LawNo.4,595 established theNational Monetary
Council (CMN) asthedecision-making organism oftheNational Financial System; theCouncil is
responsible fordefining policies andforregulating activities inthemonetary andcredit areas. The
CMN iscomposed oftheMinister ofFinance, whopresides overitsmeetings, theMinister ofPlanning
andBudget, andthePresident oftheCentral Bank (Chart II.1). TheCentral Bank ofBrazil isthe
mainagency incharge ofimplementing thepolicies defined bytheCMN. TheCentral Bank regulates
allfinancial institutions; theirestablishment andexpansion aresubject toprior authorization bythe
Bank.8
47. TheFederalSavingsBank(CEF),BancodoBrasilandtheNationalDevelopmentBank(BNDES)
playauxiliary roles intheexecution ofcredit policies.
48. Prudential regulations areestablished bytheCMN andtheCentral Bank. Financial institutions
mustcomply withaccounting standards setbytheCMN andtheCentral Bank'sAccounting Planfor
theNational Financial Institutions System (COSIF). ThePlan'snorms arebinding oncommercial,
development, investment andsavings banks, consumer finance companies, leasing companies, securities
brokers, securities dealers, savings andloancompanies, andcredit co-operatives. Financial accounts
areverifiedbyindependentpublicauditors,registeredwiththeSecuritiesExchangeCommission(CVM).
49. Resolution 1524 of21September 1988 opened thepossibility ofestablishing multi-purpose
banks, alsoformed through allowing themerger ofspecialized financial institutions. Prior totheissue
ofResolution 1524, specialized financial institutions operated invarious financial sectors, oftenaspart
offinancial conglomerates. Theresolution broadened therange ofactivities inwhich banks could
engage, seeking inthiswaytoreduce segmentation inthefinancial system, allowing themerger of
subsidiaries intooneorganization, reducing thecircumvention ofprudential regulations andincreasing
efficiency bygiving financial institutions greater organizational flexibility. Thearrangement proved
highly attractive and91applications were approved in1988; mostforeign banks tookadvantage of
thescheme.
50. Approval procedures forfinancial institutions include publishing a"declaration ofintention"
which describes thetypeofinstitution tobecreated, theinitial capital andthename oftheprincipal
administrators. Allfinancial institutions mustmeetminimum levels ofpaid-in capital andnetworth
(Resolutions 2099of17August 1994and2139of29December 1994). Paid-in capital andnetworth
7Euromoney, September 1995; Financial Times, 19April 1996.
8TheCentral Bank isalsoresponsible forimplementing Brazil 'smonetary policy (Chapter I).WT/TPR/S/21
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levels arerelated totheriskofparticular activities andvaryfrom R$200,000 forsecurities brokers
andexchange brokerage firms toR$7million forcommercial banks andthecommercial bankportfolio
inmulti-purpose banks. Risk-based capital isrequired asprovided under theBasel Agreement.
51. Under the1988Constitution, theparticipation offoreign firms intheBrazilian banking system
isrestricted. Except inconnection withtheprivatization programme, thereisnomarket access guarantee
fortheestablishment ofnewbranches andsubsidiaries offoreign firms orforincreases inforeign
participation inestablished firms. Thetotalnumber offoreign branches inBrazil islimited tothat
existing on5October 1988. Exemptions maybeauthorized bythePresident oftheRepublic, based
oninternational agreements, reciprocity orthenational interests; itappears thatnosuchexemptions
havebeenmade.
52. Theoperations offoreign banks established before 1988were"grandfathered" i.e.,unaffected
bytheconstitutional change, butwere stillsubject torestrictions onexpansion. Both foreign and
domestic banks aresubject torestrictions onthenumber ofbranches theymayopen. Foreign banks
areonlyallowed toacquire branches ofother foreign banks. Foreign banks mustrelocate branches
byclosing onebranch toopenanewone.
53. NationaltreatmentisgrantedtoforeignbanksoperatinginBrazil.Therequirementsforobtaining
permits toexpand operations orconduct newactivities arethesame forallfinancial institutions; the
conditions areestablished bytheNational Monetary Council andtheCentral Bank.
54. Financial services provided byMERCOSUL institutions aresubject tothesame treatment as
anyother foreign agent. However, anad-hoc group hasbeensetuptonegotiate aframework agreement
along thelinesoftheGeneral Agreement onTrade inServices (GATS). Suchagreement would include
aliberalization process consistent withArticle VoftheGATS (oneconomic integration) andbased
onpositive liststobeimplemented overtenyears. Thenegotiations alsoenvisage adispute settlement
mechanism andspecific rulesforthesectors included intherelevant annex oftheGATS. Thead-hoc
group isalsotodocument allagreements signed between individual MERCOSUL members andthird
parties.
56. There arenoobligations ondomestic operators tousespecific banks forparticular transactions.
(c) Recent Reforms
57. Difficulties inthebanking sector havespurred efforts tosetupamarket-based system toprevent
problemsanddealwithinstitutionsindistress.Stepsweretakenin1995toestablishthedepositinsurance
system called forinthe1988Constitution: CMN Resolution No.2211of16November 1995provides
forasafeguard system toguarantee deposits andreduce theriskofliquidity crises. Thesystem would
include afundtobecreated bytheindustry; itwould befinanced fromcharges onitems suchasthe
balances tobeguaranteed aswellasoncertain bankservices. Theinsurance system would fullycover
deposits ofuptoR$20,000, which account for95percentofbankdeposits.
58. Provisional Measure No.1,179 andResolution No.2208, bothof3November 1995, created
theProgramme fortheRestructuring andStrengthening oftheNational Financial System (PROER).
TheProgramme seeks toachieve anordered consolidation ofbanks through rulesdefined bytheCentral
Bank. Itwasimplemented byProvisional Measure No.1182 of17November 1995, requiring the
Central Banktorestructure theentire banking system andgivetheBanktheauthority tomaintain within
thesystem onlyhealthy institutions withthenecessary levels ofsolvency. TheProvisional Measure
alsosimplified theconditions under which theFederal Government maygaincontrol ofinstitutionsBrazil WT/TPR/S/21
Page 163
indifficulties withaviewtotheirfuture sale; ineachcase, atimelimitistobespecified forthesale,
which mayonlyinvolve private investors.
59. Inorder toensure therecovery ofafinancial institution, theCentral Bank mayrequire their
recapitalization, thetransfer ofstock control, mergers orbreak-ups; failure tocomply withsuch
requirements allows theCentral Bank recourse totheTemporary System ofSpecial Administration,
interventions orextra-judicial liquidations. Insuchcases, theCentral Bank mayauthorize thetransfer
ofproperties andrights tothird parties. TheBank mayalsoadopt precautionary measures suchas
removing individual administrators orrestricting aninstitution 'sactivities.
60. Brazil'slistofcommitmentsundertheGeneralAgreementonTradeinServices(GATS)includes
engagements tointroduce intotheschedule criteria fortheparticipation offoreign capital inBrazilian
financialinstitutionswithintwoyearsaftertheadoptionbytheNationalCongressoflegislationpermitting
suchparticipation.
(ii) Insurance
(a) Market structure andperformance
61. Theshare inGDP oftheinsurance sector remained static ataround 1percentbetween 1980
and1993; however, thatshare hasdoubled following theintroduction ofthePlano Realinmid-1994
andtheachievement ofamore stable economic environment. Thevalue ofinsurance premiums has
alsorisen sharply, from US$7.3 billion in1993 toUS$11.7 billion in1994 andUS$14.2 billion in
1995. Considering allfirms andagents operating inthesector, insurance employs directly some213,000
persons.
62. TheBrazilian insurance market isserved by122companies andagovernment-controlled
monopoly re-insurer. There areseveral independent insurance companies butsome ofthelargest firms
arebank affiliates, withabout 70percentofthemarket controlled byinsurers linked tofinancial
institutions. Brazil 'sfourlargest insurance groups areSulAmérica, Bradesco, ItaúandBamerindus,
which together collected some R$6.2 billion inpremiums in1995. Market concentration ishigh, the
tenlargest insurance firms having collected close to64percentofallpremiums in1995. Several
foreign insurers haveownership interest inBrazilian insurance companies butforeign-controlled firms
account foronlysome 10percentoftotalpremiums.
(b) Regulatory framework
63. Decree-Law No.73of1966 established thebasic legal framework within which insurance
activities takeplace inBrazil. TheDecree-Law created thePrivate Insurance National System (SNSP)
comprising theNational Private Insurance Council (CNSP), theBrazilian Re-insurance Institute (IRB),
thePrivate Insurance Superintendency (SUSEP) aswellasinsurance companies andinsurance brokers;
openpension funds arealsopartoftheSNSP.
64. TheCNSP 'sresponsibilities include defining policies forprivate insurance andreinsurance
aswellasregulating theestablishment, organization, operation andsupervision ofentities undertaking
activities within theSNSP. TheCouncil isalsocharged withensuring thattheconstraints faced by
foreign insurances firms operating inBrazil arereciprocal tothoseapplied toBrazilian firms established
orseeking toenter thecountries oforigin ofsuchfirms.WT/TPR/S/21
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65. SUSEP ischarged withimplementing thepolicies defined bytheCNSP, supervising firms
operating within theSNSP, processing applications tooperate orliquidate insurance companies and
approving contracts coverage andpremiums. Prior authorizations havenotbeenrequired since 1992,
butcontracts must besubmitted totheSUSEP foranalysis andfiling; based onitsanalyses, the
Superintendency mayrequire modifications ororder thesuspension ofmarketing. TheSUSEP may
alsosetreference premiums toensure appropriate levels oftechnical reserves.
66. TheIRBhascompetence toaccept mandatory oroptional re-insurance bothinBrazil andabroad;
insurance companies mustre-insure withtheInstitute liabilities exceeding theirretention limits. The
IRBisalsoresponsible forplacing overseas insurance andre-insurance; re-insurance operations abroad
areusually restricted totheexcess thedomestic market cannot absorb, based onthetechnical retention
capacity oftheInstitute andretrocession constortia. Suchconsortia areadministered bytheIRBand
membership iscompulosry forallinsurance companies operating inBrazil. TheFederal Government
owns 50percentoftheIRB'sshares, withtherestcontrolled byinsurance companies.
67. Theprocurement ofinsurance services bygovernments (Federal, Stateandmunicipalities) used
totakeplace atsetprices, withcontracts allocated toinsurers through a"lottery" system. Since the
approval in1993 ofLaw No.8666 regulating government procurement ofgoods andservices
(Chapter V(1)), thepublic sector hascontracted insurance services through atendering system. Tenders
areopened toallinsurers operating inBrazil andmeeting therequirements setbythecontracting
agencies, normally related totheinsurer 'sfinancial situation anditsexpertise intherelevant area.
68. Under the1988Constitution, foreign access toBrazil 'sinsurance market isrelatively restricted.
Theincorporation ofnewbranches andsubsidiaries offoreign insurance companies, aswellasincreases
inthepercentage oftheparticipation offoreign persons andfirms inthecapital stock ofBrazilian
insurance institutions withheadquarters inBrazil isnotpermitted. Nodistinctions aremade between
companies from different trading partners, including MERCOSUL.
69. Foreign nationals mayestablish themselves asbrokers. However, thepresence offoreign capital
indomestic brokerage firms, directly orindirectly, isrestricted to50percentofthedomestic firm's
totalcapital andone-third ofitsvoting capital. Thisruledoesnotapply tofirms established before
3July1986.
70. Imports mayonlybeinsured withcompanies established inBrazil; exports mustbeinsured
inBrazil when thesaleincludes theinsurance cost.
(c) Recent andplanned reforms
InlinewithArticle 192oftheConstitution requiring theadoption ofcomplementary regulations
forthenational financial system (seeintroduction tosection (3)),newregulations forsuchsystem,
including insurance, were under consideration bytheNational Congress inmid-1996. Awaiting
promulgation atthattimewasaconstitutional amendment substituting ageneral re-insurance provision
forthereference inArticle 192toanofficial re-insurance agency; asaresult, future complementary
regulations would cover re-insurance ingeneral andnotonlysuchanagency. Theregulations would
includeforeignparticipationintheinsurancesector,rulesfortheauthorizationandoperationofinsurance
establishments, andcapitalization andprivate pension schemes; thenewregulations would alsocover
theofficial supervisory agency (SUSEP) andmayestablish anindemnification fundtoprotect insured
parties against theliquidation ofinsurers.Brazil WT/TPR/S/21
Page 165
71. Under Article 52oftheTransitional Constitutional Provisions, thePresident oftheRepublic
maywaive theprohibition ontheentry offoreign capital; using thisprerogative, newforeign capital
wasauthorized inhealth insurance in1996.
72. Brazil 'slistofcommitments under theGeneral Agreement onTrade inServices includes
engagements tointroduce intotheschedule criteria fortheparticipation offoreign capital ininsurance,
re-insurance andbrokerage activities inBrazil within twoyears aftertheadoption bytheNational
Congress oflegislation permitting suchparticipation.
(4) International Transport
(i) Airtransport
73. All18Brazilian airline companies areprivate enterprises; equity participation isallowed in
three ofthese firms. Activity levels arerelatively high: in1995 international airservices involved
justover305,000 tonnes ofcargo, 7,200 tonnes ofmailandsome 6.4million passengers, withforeign
firms providing about halfofthecargo andpassenger services and60percentofmailoperations.9
There are25fullyoperational international airports inBrazil.
74. TheDepartmentofCivilAviation(DAC)oftheMinistryofAeronauticsistheagencyresponsible
fortheplanning, direction, co-ordination, operation andprovision ofincentives forBrazil 'scivilaviation
sector, inaccordance withtheobjectives defined intheNational Aerospace Policy. Responsibility
forgranting authorization toconstruct andoperate airports andauxiliary services lieswiththeDAC
andotheragencies,includingtheAeronauticsEngineeringDirection(DIRENG),theBrazilianEnterprise
forAirport Infrastructure (INFRAERO), andtheFlight Protection andElectronic Direction (DEPV).
75. Theoperation andadministration ofpublic airports comes under theexclusive control of
INFRAERO; DEPV hasresponsibility fornavigation andairtraffic services. Foreign enterprises
maynotadminister oroperate airports norprovide navigation andairtraffic services; however, they
mayoperate other auxiliary services fortheirownbenefit (i.e., these services maynotbemarketed
tothirdparties). Construction authorization forairports andauxiliary services isgranted through public
tender opentoallparties.
76. Theoperation ofpublic airservices issubject toDAC authorization. Authorization isonly
granted tolegalpersons withheadquarters inBrazil, four-fifths ofvoting rights inBrazilian hands and
under Brazilian management.
77. There arethree firms operating asnational flagcarriers (Varig, Vasp andTransbrasil).
According totheauthorities, suchcarriers receive nospecial benefits, withaccess toroutes granted
onthebasisofpublic proposals byairline companies. There isnorestriction onnational linespurchasing
craftandother equipment from foreign sources.
78. Theprinciple ofreciprocity isthebasis ofBrazil 'sinternational bilateral agreements; no
preferences aregranted tocarriers fromother countries, including those fromMERCOSUL. Cabotage
services arereserved tonational companies.
9Domestic airservices involved thehandling ofclose to350,000 tonnes ofcargo, 7,100 tonnes ofmailand
some 18.1 million passengers.WT/TPR/S/21
Page 166Trade Policy Review
(ii) Ports andmaritime transport
(a) Ports
79. In1994, Brazil 's12busiest ports handled almost 122million tonnes; involume terms the
most important ports wereTubar ão,which handled 43percentofthetotal, followed farbehind by
Santos, with19percent, andPraia-mole with11percent.10
80. Thegovernmentagenciesinvolvedintheinternationalmaritimetransportsectorare:theMinistry
ofTransport, which hasresponsibility fortrade-related matters through theDepartments oftheMerchant
Navy (DMM) andofPorts andInland Waterways (DPH); theMinistry oftheNavy, whose Department
ofPorts andCoasts (DPC) isresponsible forsafety andnavigation; andtheMinistries ofFinance
andoftheEnvironment.
81. Portservices areregulated byLawNo.8630 ofFebruary 1992. Thelawprovides fora
decentralized system ofports administration, withports under federal, State, municipal andprivate
administration operating sidebyside. Most ports, including those involved inliner cargo, are
administered bytheStatefirm, Docas Companies. Various specialized terminals aremanaged bystate-
runPETROBRAS andCompanhia ValedoRioDoce (CVRD). Private companies operate asmall
number ofterminals. LawNo.8630envisages increasing private participation inportsadministration
andanending theStevedore Union special rights.
82. DPH istheGovernment 'scentral planning agency forports, while Docas Companies has
responsibility forinvestments inports. Federal regulations areapplicable tosecurity, safety, customs
andtheuseofoperational areas. Regulations areapplied onanon-discriminatory basis. Firms
supplyingauxiliaryportservicesmustbeestablishedaslegalentitiesunderBrazilianlaw.Theauthorities
noted thatnodiscrimination exists against theparticipation offoreign capital intheprovision ofauxiliary
services.11
83. Theuseofpilotage, towing andtugassistance, navigation aids,berth andberthing services
andother terminal facilities ismandatory atallports. Pilotage andtugsforgeneral cargo operation
aresupplied byprivate companies. Crews arenotallowed toundertake stevedoring; insome ports
theuseofthefacilities mustberelated topre-established activities. CVRD andPETROBRAS contract
services orusetheirownequipment tohandle bulkoperations (dryandliquid). Private companies
areimportant providers ofservices suchasoilandfreshwater supplies, garbage collection andballast
waste disposal.
84. Portservices areavailable onanon-discriminatory basis, theauthorities indicating thatthere
isnodiscrimination against foreign firms inrespect ofaccess oruseofsea-ports. Nocountry receives
preference onaccess oruseofports. Theonlyportrestriction imposed onforeign vessels concerns
minimum distances ofseatraffic from Navy installations. DPC hastherighttoinspect andprevent
ships from entering harbours onsafety grounds.
10FurtherdetailsonthestructureandrulesgoverningbothportsandmaritimetransportarecontainedinBrazil's
replies totheQuestionnaire onMaritime Transport Services (S/NGMTS/W/2/Add.34, 18July1995).
11Including container anddepot services, maritime agencies, forwarding services, cargo handling, storage
andwarehousing, customs clearance andvessel maintenance.Brazil WT/TPR/S/21
Page 167
85. Theauthoritiesindicatedthatonemeasurediscriminatinginfavourofnationalmaritimetransport
services orservice suppliers isthelighthouse feewhich applies onlytoforeign flagvessels (Decree-Law
No.1023 ofOctober 1969).12
86. TheSecretariat report fortheprevious Trade Policy Review ofBrazil pointed outthatpoor
portinfrastructure wasamajor barrier affecting imports andexport. TheGovernment hasaddressed
suchinfrastructure problems through legislative reforms andprivatization.
(b) Maritime transport
87. In1994, there were 196national flagvessels inBrazil 'sfleetwithadeadweight tonnage of
justover8.6million tonnes. Bulkcarriers andoiltankers werethemainvessel types intheBrazilian
register. Alsoin1994, theestimated share oftotalBrazilian international trade carried byseawas
91percentbyvolume, or94percentbyvalue. Some twothirds ofthetotalinternational maritime
trade corresponded toexports, andabout 70percentwascarried inforeign flagvessels.
88. Article 178ofthe1988Federal Constitution gaveBrazilian shipowners priority intheprovision
ofmaritime transport services. Thisarticle imposed constraints onthehiring offoreign nationals,
including therequirement thatatleasttwothirds ofthecrewandthecaptain ofBrazilian flagvessels
hadtobeBrazilian nationals. Article 178wasremoved in1995byConstitutional Amendment No.7;
revisions tothecorresponding regulations areinprogress.
89. Intermodal transport isregulated byLawNo.6288ofDecember 1975. Under thatlaw,only
companies controlled byBrazilian nationals mayissue"intermodal documents oftransport" forinland
cargo. LawProject No.4586-A/90, nowwithCongress, seeks torevoke LawNo.6288andestablish
rulesforMultimodal Transport Operator activities. Nodiscriminatory regulations affect bulktransport
services, except thatimported crude oilanddomestically produced petroleum andpetroleum products
mustbetransported bynational flagvessels. International maritime transport ofgeneral cargoes requires
thefiling withtheauthorities oftariff schedules andother information.
90. Foreign commercial presence forthesupply ofinternational maritime transport services requires
thesupplier tobeestablished inBrazil under Brazilian law,andthatthemajority ofthecompany 's
voting rights beowned byBrazilian nationals. Such shares must beatleast60percenttoobtain
registration ofavessel inBrazil. These restrictions areunder review byCongress.
91. Theauthoritiesindicatedthattherewerenomeasureslimitingthetotalvalueofmaritimetransport
services undertaken byforeigners orinstitutional arrangements forcargo allocation, except forcertain
bilateralagreementsandreservationsconcerninggovernmentcargoes.Cargoesunderbilateralagreements
amount tosome 8-8.5 percent. Brazil maintains cargo-sharing agreements withAlgeria, Angola,
Argentina, Chile, Peru, Romania andUruguay.
92. Brazil isnotaparty totheUnited Nations Convention onaCode ofConduct forLiner
Conferences. Atpresent, linerconferences andtheiragreements arenotsubject togovernment control.
Filingoftariffschedulesandcomplementarydataarerequiredbythemaritimeauthorities;theauthorities
noted thatallparties aregiven equal treatment.
12Preferential treatment isalsogranted toBrazilian shipping enterprises intheform oftheMerchand Marine
Fund forShipbuilding; thisfund isalsousedtofinance theconstruction ofvessels inBrazilian shipyards for
export.WT/TPR/S/21
Page 168Trade Policy Review
93. Current legislation reserves certain cargoes toBrazilian flagvessels operated bynational
companies, including equipment andpartsforBrazilian military organizations. Themaritime transport
ofcargoes ofpublic entities andgoods benefiting fromofficial fiscal orcredit programmes mustalso
betransported inBrazilian flagvessels. When nosuchvessels areavailable orratesarenotconsidered
reasonable, awaiver maybegiven fortheuseofforeign vessels; insuchcases preference isgiven
tovessels registered incountries withwhich Brazil hasagreements.
94. Violation offaircommercial practices inthemaritime sector fallunder thegeneral competition
laws(Law No.8884 -Chapter V(1)). However, theGovernment wasstudying theneedforspecific
antitrust regulations formaritime transport services.
95. Constitutional Amendment No.7eliminated restrictions andreduced former requirements in
thetransport sector, inparticular maritime navigation (BoxII(1)). Adraftbilltointroduce therequired
implementingregulationswasunderconsiderationbyCongressinmid-1996.Thebillproposeschanging
therequirements forgranting authorizations tonavigation firms andfortheregistry ofBrazilian flag
vessels; itseeks toallow foreign freight vessels toprovide services between Brazilian ports under
certain circumstances andtoopeninternal navigation toforeign ships when reciprocity isgranted.Brazil WT/TPR/S/21
Page 169
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