Public consultation: Brazil establishes new mechanisms for regulatory revision

Industrial activity in Brazil has been characterized by a very high production cost, often referred to as “Custo Brasil”. According to the Special Secretariat of Productivity, Employment and Competitiveness (SEPEC) of the Brazilian Ministry of Economy, the annual cost for complying with all legal and regulatory requirements alone is approximately US$ 37 billion higher than the annual average of other OECD (Organization for Economic Cooperation and Development) countries.

In order to improve Brazil’s business environment, the government has developed additional measures that, in line with the Economic Freedom Act (law No. 13.874), aim at reducing production costs and barriers to trade as well as at enhancing competitiveness and productivity. Thus, Decree nº 10.411 from June 2020 obliges Brazilian regulators to carry out Regulatory Impact Analyses (RIA) when introducing or reviewing existing regulations.

Against this background, on July 16^th, 2020, the Secretariat for Competition Advocacy and Competitiveness of the Brazilian Ministry of Economy (SEAE/ME) has published two Public Consultations in regards to official Guidances (“instruções normativas”) proposed by SEAE. Both consultations aim to allow the other public entities, society and the productive sector to contribute and provide feedback to SEAE on the two Guidances.

Public Consultation nº. 01/2020 addresses the so-called “Intensive Front for Regulatory and Competitive Evaluation” – FIARC Guidance, which establishes parameters and guidelines by which SEAE may propose changes in regulations considered disproportionate or arbitrary. By its turn, Public Consultation nº 02/2020 refers to Regulatory Exemption/Relief Guidance, which establishes directives for evaluating whether a regulation and its provisions are truly necessary and legitimate– i.e eliminating unreasonable legal requirements – during the development of any new regulation by federal regulatory agencies.  

The two aforementioned Guidances shall offer opportunities for the private sector and society to indicate (“denounce”) the legislations that from their perspective seem to rely on unfounded requirements and processes, thus possessing unnecessary barriers to doing business. While FIARC will addresses existing regulations, the Regulatory Exemption/Relief Guidance will deal with new regulations as they are being developed by the regulator. Each postulation will go through an internal analysis by SEAE before being passed on to the responsible public entity.

The Secretariat expects to collect contributions regarding the Guidances from the productive sector and from public entities until August 17, 2020. As GPQI Brazil, we offer to collect feedback from interested stakeholders in order to forward it to SEAE in a consolidated manner. Therefore, by 10 August, 2020, please send your comments to sabrina.sabatovicz@giz.de. The results of both public consultations, altogether with responses to these contributions and further information, will be posted on the Ministry of Economy’s website by September 1^st, 2020.