Introduction
Other agreements
Reasons for decision


Introduction

On 3 May 2021 the government announced that Brazil will not renew its bilateral agreements on maritime transport with Argentina and Uruguay, which have been in force since 1985 and 1976, respectively.

According to official information, this decision was made by the Chamber of Foreign Trade and the authorities of Argentina and Uruguay were notified of said decision in February 2021.

The main issue addressed by both bilateral agreements was that the movement of goods between the signatory countries' ports should preferably be carried out by ships under the flag of one of the signatory countries, creating a protected and reserved market between the parties.

The Argentina and Uruguay agreements will remain in force until a date is fixed by a decree which formalises the non-renewals. This will have a significant effect on the maritime transport sector as, according to the Ministry of Economy, in 2019 approximately 46% of all products exported by Brazil to Argentina were transported by sea. Similarly, the percentage of products exported by Brazil to Uruguay by sea was approximately 40%.

Other agreements

The government's decision was unsurprising given that Brazil has not renewed its maritime transport bilateral agreement with Chile since 8 January 2020. The agreement had been maintained since 1974. The main reason behind that decision was the intention to reduce Brazil's market reserve and, as a natural consequence, foster competitiveness in the maritime cargo transport sector.

In addition, Brazil maintains similar treaties with:

  • Algeria;
  • Bulgaria;
  • China;
  • France;
  • Germany;
  • Poland;
  • Portugal; and
  • Russia.

Considering that three of the bilateral agreements that involved a higher volume of cargo handling have not been renewed (ie, Chile, Argentina and Uruguay), this trend may also extend to the above agreements.

Reasons for decision

Besides the stimulation of competition in the sector, the government's decision was based on ensuring that the Brazilian legal framework is in line with the principles and regulations of the Organisation for Economic Cooperation and Development, as Brazil has been petitioning to join the organisation.

Since the enactment of Law 9.432/97, Brazilian ocean navigation (not including cabotage) has been open to shipping companies of all countries, except for:

  • trade between Brazil and countries with which Brazil has a bilateral agreement;
  • crude oil exportation; and
  • prescribed cargo importation.

In addition to the decision not to renew some of Brazil's bilateral agreements, President Bolsonaro's administration also recently issued a provisory measure to amend Law 9.432/97 to avoid appearing to favour Brazilian shipping companies with regard to importing prescribed cargo. This shows a clear trend towards the opening up of Brazil's deep-sea navigation.

For further information on this topic please contact Juliana Pizzolato Furtado Senna or Luna Jaeger at Kincaid | Mendes Vianna Advogados by telephone (+55 21 2276 6200) or email ([email protected] or [email protected]). The Kincaid | Mendes Vianna Advogados website can be accessed at www.kincaid.com.br.