Between Tariffs and De-dollarization: Opportunities for Legal Collaboration Among BRICS+ Nations

Since American President Donald Trump was inaugurated, a policy of tariff threats toward other countries has been initiated. Initially, the main targets were Canada, Mexico, and China. BRICS countries have already been mentioned as potential targets for trade barriers, in case the group continues expressing the intention to replace the U.S. dollar. Recently, the U.S. introduced a 25% tariff on steel and aluminum from general imports, which will impact countries like Brazil.

The debate on the de-dollarization of the international economy had already been fueled by Western sanctions against Russia and, likely, the risk of a new wave of trade wars may further inflame the discussion.

On the other hand, recent OECD reports show that BRICS countries have experienced higher levels of national economic growth, according to GDP data. The rankings indicate that India, Indonesia, China, Russia, and Brazil are among the top ten fastest-growing economies in 2024. [1] However, legal matters can become a misleading or discouraging factor for investors in those countries, especially when considering that legal traditions in BRICS+ countries are quite diverse. For those unfamiliar with a specific legal environment, investment may be perceived as a risk factor.

This challenge, however, can be addressed if legal firms in BRICS+ countries are prepared to collaborate with each other in order to provide proper consulting on the existing laws of another country.

In the case of Brazil, foreign investments are governed by the Brazilian Constitution and by Law No. 14.286/2021. One key point to consider regarding foreign investment in Brazil is the general rule that prohibits different treatment between national and foreign capital. In the 1990s, a series of constitutional and legislative amendments aimed to eliminate rules that previously allowed preferential treatment for national companies. Law No. 14.286/2021 reaffirms this normative approach in its Article 9. [2]

Moreover, the law clarifies that the authority responsible for regulating foreign capital is the Central Bank of Brazil. According to the law, the Central Bank is responsible for regulating and monitoring transnational capital flows, establishing procedures for capital remittances, and requiring any information it deems necessary regarding cross-border transfers of Brazilian capital. However, regulatory matters may arise in various economic sectors, making it essential to consult a local expert to ensure a profitable and regulation-compliant operation.

In addition to the general legal framework applicable to foreign investments, Brazil also adopts sector-specific regulations that must be observed depending on the nature of the economic activity. Certain industries such as oil and gas, energy, mining, telecommunications, financial services, and data protection are subject to oversight by regulatory agencies, each with its own set of rules, procedures, and compliance requirements. For example, companies operating in the energy sector must comply with rules established by ANEEL (the electricity regulatory agency), while financial institutions fall under the supervision of the Central Bank and the Securities Commission (CVM). These sectoral norms can have a significant impact on the feasibility, cost, and risk of investment projects, making it essential to obtain legal advice tailored to the specific area of operation.

While BRICS+ countries are developing innovative people-to-people connections involving various sectors of civil society and entrepreneurship, little has been done to promote closer ties between legal professionals. As the intensity of interconnection among these countries increases, it will no longer be feasible for legal firms to remain isolated from professionals in other BRICS+ countries.

[1] See TV BRICS: https://tvbrics.com/pt/news/5-paises-do-brics-se-destacam-entre-os-dez-lideres-em-crescimento-do-pib-em-2024/ 

[2] Article 9: To foreign capital it shall be given identic legal treatment to that conferred to national capital in equity of conditions.

Emilio Mendonça Dias