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On May 3, 2021, Brazilian government announced Brazil will not renew the Bilateral Agreements on maritime transportation, which were in force since 1985 and 1976, respectively.
According to official information, this decision was taken by the Chamber of Foreign Trade (Camex) and the authorities of Argentina and Uruguay were notified of this decision in February 2021.
The main issue addressed by both Bilateral Agreements was the movement of goods between ports of the signatory countries should preferably be carried out on flag ships in one of these nations that are parties to each Agreement, creating a protected and reserved market between the parties.
Brazilian government’s decision was not received as a surprise, given that, since January 8th, 2020, Brazil did not renew the Agreement maintained with Chile since 1974.
The main reason behind the decision is the intention to reduce Brazil’s market reserve and, as a natural consequence, foster competitiveness in the maritime cargo transportation sector. The agreements will remain in force until a date is fixed by Decree formalizing the non-renewals and this option will have significant effect over the maritime transport sector, since, in 2019, about 46% of all products exported by Brazil to Argentina were transported by sea and, in relation to Uruguay, this percentage was around 40%, according to data provided by the Brazilian Ministry of Economy.
In addition to these instruments with Argentina and Uruguay, Brazil maintains similar treaties with Germany, Algeria, Bulgaria, China, France, Poland, Portugal and Russia. Considering that three of the Bilateral Agreements that involved greater volume of cargo handling have not been renewed (Chile, Argentina and Uruguai), this may be a trend to be followed in relation to the other Agreements with the same subject.
Besides the stimulation for competition in the sector, the Brazilian government’s decision was also based on ensuring that the Brazilian legal framework is in line with the principles and regulations of the Organization for Economic Co-operation and Development (OECD), as Brazil has been pleading for a spot on the Organization.
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 the: (i) trade between Brazil and Countries that Brazil has a bilateral agreement, (ii) exportation of crude oil and (iii) importation of prescribed cargo. In this sense, in addition to the decision not to renew some of the bilateral agreements, it is important to note that recently President Bolsonaro’s administration also issued a provisory measure to amend Law 9.432/97 to avoid the observance of preference to Brazilian Shipping Companies in the importation of prescribed cargo. That shows a clear trend in the opening of the Brazilian deep sea navigation.