Brazil: A Step Closer to Ending the Limitation on Foreign Capital Investments in Airlines

Business TravelBrazilian President Michel Temer will submit a bill to modify the Brazilian Aviation Code and allow foreign capital to own 100 percent of any Brazilian airline. If approved by Congress, the new ruling will end the existing 20 percent limitation. The measure comes as part of the Government’s strategy to boost tourism industry in the country. It is expected that removing the foreign capital restriction will allow more investments in aviation, thus increasing competitiveness and the availability of flights, which may reduce costs to the consumer.

The bill also purports to regulate the “electronic visa” for the United States, Canada, Australia and Japan, to facilitate entry of foreign visitors of those countries in Brazil.

When first announced, though, the executive government had intended to pass a provisional measure to effect these changes immediately upon publication. However, due to a previous settlement with Brazilian Senators in 2016, it was later decided by President Temer that a bill should be submitted for approval by Congress instead.

Ecuador Elects New President

Ecuador FlagOn April 2, 2017, Ecuador held its second round of presidential elections, in which the governing party, Alianza País’s (AP) candidate, former Vice President Lenin Moreno, has been declared the winner. According to the National Electoral Council of Ecuador (CNE), AP obtained 51.16 percent of the vote, as compared to 48.84 percent that went to his challenger, former banker Guillermo Lasso of the Conservative Movement (CREO).

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Peru Flooding Spurs Infrastructure Investments

Peru FloodsPeru was recently pummeled by heavy rains, flooding and disastrous landslides, which destroyed buildings, bridges and roads. In Peru’s bustling capital Lima, heavy flooding clogged a water treatment plant, forcing a shut-down restricting the availability of running water and prompting water rationing across many regions of the city.

Natural disasters are nothing new in Peru, and repeat events — driven in part by the El Nino phenomenon — are a certainty.  Infrastructure investment has been a longtime theme of President Pedro Pablo Kuczynski’s political platform, and recent events underscored the immediate need to make such investments a top priority.  Peru’s government already announced a $240 million investment in the badly-affected infrastructure of the country’s northern coast.  In addition, some Peruvian politicians are even calling for the cancellation of the 2019 Pan American Games in order to shift available funds towards rebuilding.  The pressure for immediate and sweeping investment in the country’s infrastructure is rising.

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Entry into force of Law No. 42-08 on Defense of Competition in the Dominican Republic: Immediate Practical Consequences

Fish BaitOn January 16th, 2008, the Dominican Republic enacted Law No. 42-08 for the Defense of Competition (“Law No. 42-08”), which is of public policy nature and seeks to promote free competition and sanction unfair practices in the Dominican market. The entry into force of Law No. 42-08, however, was conditioned on the appointment of the Directive Committee and the Executive Director of the National Commission for the Defense of Competition, respectively, pursuant to Article 67 of the law.

The Directive Committee was sworn into office on January 29th, 2011, and just recently, on January 6th, 2017, the Executive Branch[1] appointed the Executive Director of the National Commission for the Defense of Competition. Hence, the legal requirements for the full entry into force of the law are complete.

The immediate consequences resulting from the application of Law No. 42-08 include:

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Brazil’s Provisional Measure 752/16: New Arbitration Rules on Public Partnership Programs

Provisional Measure 752/16 (“MP 752/16”) established new rules for the Road Constructionextension and rebid of airport, highway and rail concessions under the Investment Partnership Program (“PPI”). A major feature of this provisional measure is the possibility of extension of highway and rail concessions without a new tender, pursuant to the existing concessionaire’s commitment of making further investments and improvements.

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Latin America Practice- March Events

March 10, 2017Rebekah J. Poston, Partner at Squire Patton Boggs, will participate on a panel discussion on Ethical and Compliance Dilemmas Presented in Cuba at the Andrea School of Business at Barry University in Miami Shores. The panel discussion will be part of a day long program titled: “Doing Business in Cuba: Legal, Ethical and Compliance Challenges” hosted by Barry University and the Miami-Dade County Commission on Ethics and Public Trust. For program information, click here.

March 23-24, 2017Al Cardenas, Partner at Squire Patton Boggs and the Chair of the firm’s Latin America practice, will be speaking at the 1st Expanded Board Meeting by The Latin American Business Council (“CEAL”) that will be held in Antigua, Guatemala. The event is titled: “Macro tendencias Globales y la relación con los Estados Unidos: Oportunidades y Desafíos para un crecimiento inclusive.” For additional information regarding this event, click here.

The Court Rulings That Changed Agency and Distributorship Law in the Dominican Republic

Dominican Republic National FlagIn the last decade, Dominican Judges have adopted a new interpretation of certain provisions of the Dominican Agency Law 173 of 1966, a law which is considered of public policy and very protective of local agents and distributors. Particularly, the courts’ have changed their interpretation of the law on exclusivity of distribution agreements and competent jurisdiction to hear Law 173 cases.

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US Officials Travel to Mexico City as Part of Ongoing Bilateral Talks

NAFTA MembersOn Wednesday, February 22, US Secretary of State Rex Tillerson and Homeland Security Secretary John Kelly arrived in Mexico City for a series of meetings with senior Mexican officials, including Foreign Relations Minister Luis Videgaray Caso, Secretary of Government Miguel Angel Osorio Chong, and Secretary of National Defense General Salvador Cienfuegos Zepeda, among others.

During the visit, the two began efforts to coordinate on a wide range of bilateral issues, including counterterrorism, border security, and trade. However, prospects for any breakthrough dimmed after the Trump Administration announced new immigration directives that some worry could greatly increase the number of US deportations of undocumented individuals.  Speaking to manufacturers at the White House later that week, President Trump said he warned Secretary Tillerson the trip would be difficult “because we have to be treated fairly by Mexico.”

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NAFTA: Mexican Trucking Program

Trucks on a HighwayPresident Trump’s plans to renegotiate the North American Free Trade Agreement (NAFTA) may also impact a controversial program that allows Mexican carriers to make long-haul deliveries in the U.S. 

As part of the NAFTA agreement, the U.S. and Mexico agreed to allow trucks from each country to carry goods across the border for deliveries anywhere inside each of their respective countries, but the program faced challenges from the get-go.  In 2007, the George W. Bush Administration launched a trial program to expand Mexico’s trucking operations beyond the border. However, the program ended in 2009 after Congress defunded the program following pressure from labor unions. 

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The Search for Returns on Argentine Renewables

Renewable Energy2017 will be a year of truth for Argentina’s ambitious renewable energy program (“RenovAR”), which launched in 2015 and set a mandatory renewable energy target of 20 percent by the end of 2025, with incremental targets every two years.   In addition to implementing positive reforms in the energy sector, the RenovAR program signifies an effort to overcome the country’s below-investment-grade credit rating, as well as fresh memories of Argentina’s sovereign default in 2001 and the bevy of protracted investor disputes that ensued.  To this end, the program incorporates features such as government-sponsored project financing, guarantees supported by multilateral institutions, fiscal incentives, and put options allowing project owners to short-circuit dispute resolution procedures in the event of key default scenarios.

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