cpb-us-w2.wpmucdn.com · Law and Business Review of the Americas VOLUME 20 SUMMER 2014 NUMBER 3 TABLE OF CONTENTS PERSPECTIVE Remarks by Ambassador Michael Froman at the Council on

Law and Business Reviewof the Americas

VOLUME 20 SUMMER 2014 NUMBER 3

TABLE OF CONTENTS

PERSPECTIVE

Remarks by Ambassador Michael Froman at the Council onForeign Relations: The Strategic Logic of Trade . . . . . . . . . . . . 373

ARTICLES

The Right to Health Versus the Right to Property: ConflictsBetween Public Welfare and Private Interests, the BrazilianApproachLilian Martins, Wilson Almeida, andDr. Marcos Aurelio Pereira Valadao . . . . . . . . . . . . . . . . . . . . . . . 381

Environmental Regulation & Automotive Industrial Policiesin Brazil: The Case of “INOVAR-AUTO”Jose Marcos Domingues, Luiz Artur Pecorelli-Peres, andRonaldo Seroa da Motta . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 399

COMMENT

Repealing Birthright Citizenship: How the DominicanRepublic’s Recent Court Decision Reflects an InternationalTrendNatalie Sears . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 423

UPDATES

Reference re Senate Reform and the Supreme Court ofCanada’s Clarification of the Constitutional Procedure forReforming the Canadian Parliament’s Upper HouseChristopher Cornell . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 451

Brazil’s Legal Settling for the World CupTony Godfrey . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 463

NAFTA Chapter 11: Are the Dispute Resolution ProceduresWorth the Investment?Natalie Sears . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 473

DOCUMENT

Sixth BRICS Summit-Fortaleza Declaration . . . . . . . . . . . . . . . . . . 483

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OFFICIAL CITATIONLAW & BUS. REV. AM. SUMMER 2014

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Established in 1952, the LAW INSTITUTE OF THE AMERICAS at SouthernMethodist University Dedman School of Law was originally designed to promotegood will and to improve relations among the people of the Americas throughthe study of comparative laws, institutions and governments respecting theAmerican Republics, and to train lawyers in handling legal matters pertaining tothe nations of the Western Hemisphere. Today, in reviving the institution, theLaw Institute of the Americas comprises meaningful academic research, teachingand programs pertaining to the “NAFTA/FTAA processes” and other WesternHemispheric integration efforts; to Latin and Central American law and judicialreform, particularly focusing on Argentina, Brazil, Chile, Guatemala, Mexico,Peru and Venezuela; and to a more limited extent, to Canadian legal issues,particularly as they interrelate to the NAFTA/FTAA. The Law Institute of theAmericas also is concerned with increasing (regional and hemispheric) legal andeconomic interconnections between the “NAFTA/FTAA processes” andEuropean and Asia-Pacific integration activities.

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Perspective

REMARKS BY

AMBASSADOR MICHAEL FROMAN AT THE

COUNCIL ON FOREIGN RELATIONS

THE STRATEGIC LOGIC OF TRADE

New York, N.Y.June 16, 2014

*As Delivered*

LAST week marked the 80th anniversary of the Reciprocal TradeAgreement Act of 1934. This legislation, passed by the New DealCongress and signed into law by Franklin Roosevelt, was a revolu-

tion in trade policy and the precursor to what we today call Trade Promo-tion Authority. It was also an important component in the rise ofAmerican leadership in world affairs.

The reciprocal trade program was the brainchild of FDR’s Secretary ofState, Cordell Hull. Having watched high tariffs strangle U.S. commerceduring the early 1930’s, Hull knew that economic recovery at home de-pended on expanding trade abroad. As a former Senator, Hull also un-derstood that the United States should negotiate trade agreements with asingle voice.

With Congress’s approval, the Roosevelt administration concluded 19trade agreements during the first five years of the program. And in doingso, they established the fundamental strategic logic of trade. By ex-panding trade, the United States built its own economy, expanded pros-perity, and created the preconditions for maintaining a strong militaryand projecting power and influence abroad.

Trade liberalization stalled with the outbreak of World War II, but afterwar gave way to peace, Presidents Truman and Eisenhower wasted notime taking up where FDR left off. By 1962, the reciprocal trade pro-gram had been renewed 11 times, compelling President Kennedy to call it“an expression of America’s free world leadership–a symbol of America’saim to encourage free nations to grow together.”

FDR’s reciprocal trade program planted the seeds for today’s globaltrading system. As the principal architect and guardian of that system,America has been among its major beneficiaries, even as it providedasymmetric market access to help its partners reconstruct and developtheir economies. We made significant concessions in the short run be-cause we had the confidence that in the medium and long run, we would

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374 LAW AND BUSINESS REVIEW OF THE AMERICAS [Vol. 20

be significant beneficiaries from the system. This system has brought jobsto our shores, partners to our defense, and peace and prosperity to thosearound the world who have embraced openness, fairness, and freedom.

In recent years, though, tectonic shifts such as globalization, technolog-ical change and the rise of emerging economies have reshaped the inter-national landscape, raising questions about whether the inherited rules ofthe road and institutional frameworks are in need of updating andwhether others were prepared to live by the same calculations we were asstewards of the international system. As President Obama said lastmonth at West Point, “Just as the world has changed, this architecturemust change as well.”

We’re now engaged in such a major architectural effort: revitalizing therules, relationships, and institutions that have underpinned the globaltrading system.

We’re developing plurilateral agreements to advance the opening ofmarkets and the adoption of high standards, we’re reforming key prefer-ence programs and we’re reinvigorating the multilateral system to takeinto account the changing landscape of the global economy. We mightnot occupy the same position we held at the end of World War II, but as acountry with the largest market in the world and a rich network of alli-ances and partnerships, we continue to drive reform and innovation ininternational fora.

The strategic logic of this agenda is as compelling as the economic one,but what does that mean in practice?

American leadership, exercised through trade, can bolster the founda-tion of our power–the strength of the U.S. economy, establish rules of theroad that reflect both our interests and our values. It can support reformsthat promote openness and pluralism, it can strengthen our alliances andpartnerships, and spur global development.

I’d like to touch briefly upon how U.S. trade policy advances each ofthese five strategic objectives.

For much of the 20th century, the strategic importance of trade–andinternational economic policy, more generally–was seen through the lensof military strength. To the degree that economic policy was relevant toforeign policy and national security policy, it was treated as an enabler. Astrong economy would allow the United States to support a strong mili-tary, and that strong military, in turn, would lay the foundation for theprojection of American power and influence.

Today, trade still bolsters our most fundamental source of power: theU.S. economy. But what has changed is that economic clout in manyrespects is now the principal yardstick by which power itself is measure.In a world where market forces displace as much weight as militarymight, trade is a force multiplier, an investment in American power, bothhard and soft. America is the birthplace of new ideas, tomorrow’s inven-tions, and the driver of innovation worldwide. It is the center of researchand development and the digital economy. Economic power is not sim-

2014] REMARKS BY AMBASSADOR MICHAEL FROMAN 375

ply measured by GDP, though trade’s contribution to economic growth issignificant. Trade also enhances the competitiveness of the United Statesand its capacity to take what it creates here and make it the driver ofeconomic activity worldwide.

This is why President Obama has made trade a central part of his eco-nomic strategy for creating jobs, promoting growth and strengthening themiddle class. A few statistics: Under President Obama’s leadership, U.S.exports have hit record highs, $2.3 trillion last year. The increase in ex-ports is responsible for a full third of America’s total economic growthover the last 5 years. Each additional $1 billion in exports supports some-where between 5400-5900 U.S. jobs. Over the past 4 years, expanded ex-ports have supported 1.6 million new jobs—jobs that pay 13-18 percentmore on average than non-export related jobs.

Beyond its impact on jobs, growth and the strength of the U.S. econ-omy, trade negotiations are strategic because they are the mechanism bywhich we define the rules of the road, the standards countries should ad-here to, the norms which create a sense of fairness among economies, andthe mechanisms by which disagreements–as they inevitably arise–can bepeacefully resolved. This is particularly important at a time of rapidchange.

We welcome the rise of emerging markets, but we have concerns thatthey have yet to be willing to take on responsibilities commensurate withtheir increasing role in the global economy. And that has posed a chal-lenge to the completion of the multilateral Doha Development Round asoriginally envisaged. It also underscores the value of pressing forwardplurilateral initiatives and working with similarly focused countries to sethigh standards in terms of opening markets and addressing new chal-lenges facing global trade. By pressing forward, we can incentivize othersto adopt new, high-standard rules and give momentum to multilateraltalks.

That is the driving force behind the Trans-Pacific Partnership or TPP, acomprehensive, high-standard, ambitious negotiation between the UnitedStates and 11 other Asia-Pacific countries. TPP is as important strategi-cally as it is economically. Economically, TPP would bind together agroup that represents 40 percent of global GDP and about a third ofworld trade. Strategically, TPP is the avenue through which the UnitedStates, working with nearly a dozen other countries (and another halfdozen waiting in the wings), is playing a leading role in writing the rulesof the road for a critical region in flux.

With TPP, we can level the playing field for American workers andAmerican firms. By building strong, binding labor and environmentalstandards, we can promote competition that is fair and sustainable. Bycreating the first disciplines on state-owned enterprises in any tradeagreement, we can make sure that when SOEs compete against privatefirms, they do so on a commercial basis, not on the basis of unfair subsi-dies that they might receive by virtue of their government ownership.


By bringing traditional trade principals into the digital era, we canmake sure the global trading system reflects new developments in tech-nology, to bolster a free and open Internet, the free flow of data, and thecapacity of small and medium-sized businesses to integrate themselvesefficiently into the global economy.

These efforts all speak to updating the rules of the road for the 21stcentury global trading system–and doing so in a manner that is not justconsistent with our interests, but also with our values.

Doing so is central to strengthening the U.S. economy and, hence oursecurity.

But very importantly, doing so also underlies a broader reform agenda.Labor and environmental standards promote sustainable and inclusive

growth. SOE disciplines support competitive market reforms. A freeand open Internet supports the free flow of ideas. In these ways, ourtrade agenda promotes a liberal order among countries.

U.S. trade policy is also strategic because it strengthens our partner-ships abroad. Since their invention, U.S. free trade agreements havehelped solidify our relationships with key partners and allies. Our firstfree trade agreement, with Israel in 1985, was a clear signal to the worldthat the bond between the United States and Israel runs deeper than se-curity matters. But this is about more than just sending a signal, it’sabout creating patterns of engagement, habits of cooperation that spillover into broader relationships. Given recent developments in Asia andEurope, the strategic implications of TPP and T-TIP have never beengreater.

Today, the centrality of TPP to our Asia rebalancing strategy is key.The United States is a Pacific power and TPP is a concrete manifestationof our commitment to the region that further institutionalizes our engage-ment. Similarly, the rationale for forging deeper ties with Europethrough the Transatlantic Trade and Investment Partnership, or T-TIP,could not be stronger. Our economic bonds with Europe already rundeep: $1 trillion of trade each year, $4 trillion of investment, 13 millionworkers on both sides of the Atlantic who owe their jobs to the transat-lantic trade and investment relationship. T-TIP presents an enormous ec-onomic opportunity to increase U.S. exports to our largest market andpromote international competitiveness, particularly if we can bridge thedivergences in our regulatory and standards regimes without lowering theoverall level of health and safety and environmental protection.

But beyond the economic rationale, T-TIP presents a historic opportu-nity to put our economic partnership on par with our security and rela-tionship. In addition, many in Europe have focused on T-TIP being amechanism for supporting their efforts to reform their energy policiesand diversify their sources of energy.

Finally, U.S. trade policy is strategic because it spurs global develop-ment. By fueling economic growth, trade offers opportunities to thosewho might not otherwise have hope. By promoting good governance,

2014] REMARKS BY AMBASSADOR MICHAEL FROMAN 377

trade is a stabilizing force that prevents state failure. Due in no smallpart to expanding global trade, hundreds of millions, if not a billion peo-ple, have been lifted out of poverty over the last several decades and that,in turn, creates opportunities to address regional and transnational issuesof concern. The challenges facing some of the poorest developing coun-tries are significant, but it is substantially easier to address them in thecontext of economic growth and integration that trade can help drive.

And that’s why, as we prepare for the first US-Africa Leaders Summit,which President Obama has called for this August, we look forward toproposing mechanisms to further strengthen our economic ties with thisimportant region, including through the seamless renewal of AGOA, andto do so in a manner that reflects the changes in Africa and its relationswith other trading partners.

By this point, the strategic logic of trade should be obvious. And if itisn’t, just imagine the 20th century without trade as a tool for achievingstrategic objectives:

Imagine America’s recovery from the Great Depression without Con-gress giving FDR the authority to slash the Smoot-Hawley Tariff and ex-pand trade.

Imagine the Marshall Plan, which pulled Western Europe out of theashes after World War II, without the measures that catalyzed Europeanintegration.

Imagine nearly one billion people being lifted out of poverty between1990 and 2010 without global trade expanding by leaps and bounds.

The strategic logic of trade runs through almost every important chap-ter of U.S. foreign policy.

Yet today, there is skepticism about the promise of trade. The forces ofglobalization and technological development have created great insecu-rity about the economic futures of many Americans. These concerns arevery real. But a problem arises when those broader concerns are con-flated with trade agreements.

The reality is this: Trade agreements are how we deal with globaliza-tion, by leveling the playing field; for American workers and Americanfirms. It’s how we deal with technology, be taking advantage of its devel-opment to promote openness, innovation and competitiveness.

Trade, done right, is part of the solution, not the problem.The choice today is whether we should surrender the tools of American

economic leadership and watch our future be shaped by globalizationrather than proactively shaping it to our benefit.

The costs of that approach are substantial, economically and strategi-cally. And those costs will be further magnified in the future by the factthat if we do not act, others will. As FDR observed when requestingtrade negotiating authority from Congress over 80 years ago, “The worlddoes not stand still.”

If we don’t lead, someone else will fill the vacuum or, worse yet, thevacuum will remain unfilled. Influence follows trade. If the U.S. leads on


trade, its influence will expand. And if we don’t, others will fill the gap.And I can assure you, their vision will be at variance with American val-ues and American interest.

Yet at a time of increased tension in Asia and on the periphery of Eu-rope, at a time when the strategic logic of TPP and T-TIP has never beenmore clear, trade policy has become more difficult than in the past.

In TPP, for example, the group dynamics of negotiating at 12 countriesis different than either a bilateral or multilateral deal. And because ourmarket is largely open to most of our trading partners, this isn’t simply amatter of trading market access for stronger rules. Instead, we must findcommon ground across issues.

There is another reason that this is harder than ever before. Thebroad, bipartisan consensus that has historically supported trade hasfrayed. We need to rebuild that consensus by ensuring that trade is doneright, that it creates opportunities for Americans workers and families–byraising labor and environmental standards around the world; by ensuringthat through intellectual property rights rules, we both incentivize inno-vation and promote access to affordable medicines; by making sure thatwe level the playing field for businesses of all sizes, most importantlysmall and medium-sized businesses; and by preserving an open Internetthat promotes the free flow of ideas and the development of the digitaleconomy.

We face an enormous choice in this country: whether to lead or be lefton sidelines. Economically and strategically, there’s just one right an-swer. The Council certainly appreciates that, and I look forward to hear-ing your perspective about it. Thank you.

Articles

THE RIGHT TO HEALTH VERSUS THE

RIGHT TO PROPERTY: CONFLICTS

BETWEEN PUBLIC WELFARE AND

PRIVATE INTERESTS, THE

BRAZILIAN APPROACH

Lilian Martins,* Wilson Almeida,**and Dr. Marcos Aurelio Pereira Valadao***

I. INTRODUCTION

BRAZIL public health policy concentrates about a quarter of itstotal investment in research. Technological innovations bringtreatment alternatives and a better understanding of diseases in

addition to promoting new methods of treatment interventions. In thiscomplex environment, a conflict of interest arises between patent protec-tion for medicines—property rights—on the one hand and ensuring uni-versal access to healthcare on the other hand. This focuses on the debatearising from technological innovation, namely the linkage betweenhealth, economic, and social development, implying the need for reformsfor public health policy.

This article reflects on the right to health that arises from the right tolife, initially covering topics on human rights and public health in theworld; the legal model that governs patents and the clash of interests;Brazil’s vulnerability to the consumption of technologically-advanceddrugs and the use of flexibilities under the Agreement on Trade-RelatedAspects of Intellectual Property Rights (TRIPS);1 and the final recogni-tion that the reversal of priorities in this area favors inequalities over afundamental social right, the right to health.

* Councilor of the Court of Public Accounting of the Piauı State. L.L.B., Post-grad-uate in Civil Litigation and graduate student of the Master of Laws Program at theCatholic University of Brasilia (Universidade Catolica de Brasılia-UCB). Servedtwo terms as State Representative of Piauı State; during one of those terms, sheserved as Secretary of Health of Piauı State. Contact: [email protected].

** Ph.D. (UnB, Brazil)), MSC (Santigo de Compostela University, Spain), Pos-doc-torate studies at Georgetown University; Professor at the Master of Laws Programof the Catholic University of Brasilia (UCB); Visiting Researcher at National Tai-wan University. Contact: [email protected].

*** S.J.D (SMU, USA), L.L.M (UnB, Brazil), Professor of Law at the Master of LawsProgram of the Catholic University of Brasilia (UCB), Contact: [email protected].

1. Agreement on Trade-Related Aspects of Intellectual Property Rights, Apr. 15,1994, Marrakesh Agreement Establishing the World Trade Organization, Annex1C, 1869 U.N.T.S. 299.

381


II. HUMAN RIGHTS AND THE RIGHT TO HEALTH

According to the United Nations (UN), the world population reachedseven billion people in October 2011—this level was reached twelve yearsafter a baby born in Sarajevo, who was identified as the six billionth per-son, and twenty-four years after the five billionth person was born in Bos-nia.2 The arithmetic progression dates and demographic estimates maybe more symbolic than strict, but they raise the debate of growth versussustainability. Will natural resources and life in society sustain seven bil-lion people? Are all individuals having fulfilling livelihoods? Have allpeople secured their rights to health and well-being? The simple answerto these questions would be: not yet!

The social, political, and economic inequalities in the contemporaryworld increasingly deviate from the ideals expressed in the UniversalDeclaration of Human Rights. Structural differences of the countriesoutline the current global health landscape. On one hand, in developedcountries the advances provided by studies in medicine lead to the im-provement of a majority of their populations’ health. On the other hand,millions of people in developing countries suffer and die from many dis-eases under sub-human conditions. Scholars, like David Landes, agreethat the unbalanced economic development underlying the major differ-ences between wealth and poverty among nations are not the result ofchance.3 Is it fair that humans die without assistance for simple diseasesin poor countries? And what can be done as the world’s population in-creases? Malthus’s studies in the nineteenth century advanced the notionof disordered population growth, and the World Health Organization(WHO) introduced the concept of public health immediately after WorldWar II. These two variables are important in this study.

Viruses, bacteria, and many other microorganisms have caused moredeaths than all wars, earthquakes, and volcanic eruptions.4 In the four-teenth century, the bubonic plague ravaged Europe, killing 50 millionpeople.5 The cholera epidemic in 1817 emerged and left hundreds ofthousands dead; tuberculosis killed 1 billion people between 1850 and1950; smallpox left 300 million dead between 1896 and 1980; the Spanishflu pandemic caused 20 million deaths between the years 1918 and 1919;typhus caused 3 million deaths from 1918 to 1922; yellow fever left 30,000dead between 1960 and 1962; measles caused the death of 6 million eachyear since its emergence until 1963; and malaria has killed 3 million per

2. Stephanie Pappas, 7 Population Milestones for 7 Billion People, LIVESCIENCE

(Oct. 11, 2011, 11:06 AM), http://www.livescience.com/16489-7-population-milestones-7-billion-people.html.

3. Marc Ferguson, Why The West?, 5 HISTORIA ACTUAL ONLINE 127, 129 (2004)(quoting DAVID S. LANDES, THE WEALTH AND POVERTY OF NATIONS: WHY

SOME ARE SO RICH AND SOME SO POOR (1998)).4. Infectious Diseases, BAYLOR C. MED., https://www.bcm.edu/departments/molecu

lar-virology-and-microbiology/id (last updated July 11, 2014).5. Ole J. Benedictow, The Black Death: The Greatest Catastrophe Ever, HIST. TO-

DAY, Mar. 2005, 45.

2014] RIGHT TO HEALTH VS. RIGHT TO PROPERTY 383

year since 1980.6 AIDS, identified in the United States and considered anepidemic by the WHO in 1981, has killed 28 million people.7

Across the globe, many deaths occur as consequences of infections andparasitic diseases. There is also a high frequency of cases of cancer andautoimmune diseases and there is a growing demand for transplants andother medical events that require specialized treatment and advancedmedicines.8 All these circumstances lead to the world’s population beingdirectly dependent on complex drugs that require advanced research. Itshould be noted that the drugs are considered as therapeutic instrumentsto the medical community, whereas patients view them as a way toachieve remission or relief from symptoms. In general, these specificdrugs have very high prices and are inaccessible to most consumers. Aris-ing from this issue—between the need and the access to the medicines—is a new concept that links individual assistance to every human beingand links collective health assistance through public policies. From basicsanitation measures, which fought the bubonic plague, to current prophy-lactic measures used to combat AIDS, to Brazil’s grant for the acquisitionand advanced medicines provision through the Unified Health System(SUS)—the issue of public health becomes a central theme. In the popu-lation’s health and disease process control, the states’ actions are crucialfor individuals’ access to health and well-being. In Brazil, the SUS’s pur-pose—as a state agency—is to ensure that all citizens have access tohealth care.9

From this perspective, when it comes to public health, Brazil empha-sizes public awareness in health surveillance, health services organiza-tions, and vaccination campaigns. All of these government interventionsare widely disseminated by the media. Universal access to essentialmedicines is a highly relevant (and not sufficiently discussed) issue in thepublic health policy debate when pursuing equal health care delivery thatpromotes physical and mental well-being in a preventive and curativemanner. There are also issues related to biosafety policy that hinders ac-cessibility to medicines.10

6. David Pegg, 25 Deadliest Diseases in Human History . . . Not Surprising, Ebola IsOne of Them, LIST25 (Jan. 8, 2013), http://list25.com/25-deadliest-diseases-in-human-history/.

7. WORLD HEALTH ORG., THE WORLD HEALTH REPORT 2003: SHAPING THE FU-

TURE 45 (2003).8. The WHO considers tobacco use an epidemic, and estimates that one billion peo-

ple will die from tobacco use consequences in the twenty-first century (mostly can-cers, but also heart, veins, and lung diseases), which demands high healthexpenses. The tobacco use problem is more critical in developing countries. See,e.g., MARCOS VALADAO, REGULATORY TOBACCO TAX FRAMEWORK: A FEASIBLE

SOLUTION TO A GLOBAL HEALTH PROBLEM 107–08 (2012).9. Brazil’s March Towards Universal Coverage, 88 BULLETIN OF WORLD HEALTH

ORG. 641, 641–716, available at http://www.who.int/bulletin/volumes/88/9/10-020910/en/.

10. See, e.g., Megan Dunagan, Bioprospection versus Biopiracy and the United Statesversus Brazil: Attempts at Creating an Intellectual Property System ApplicableWorldwide When Differing Views are Worlds Apart—and Irreconcilable?, 15 L. &BUS. REV. AM. 603 (2009).


The patent rights of medicines, and their resulting restrictions outlinedbelow, create important legal issues that affect global health.11 If theseissues are not properly addressed, there may be an increase in socioeco-nomic disparities among nations.

III. THE LEGAL PROTECTION AND CONFLICT OF INTEREST

The central issue of this article is the dilemma between the right tohealth and the right to property. In this context, the right to health refersto the public interest in decent living conditions and welfare accessibility,including the right to information; culture; development; and in this spe-cific case, the right to access medicines and health procedures that canensure health in a broader concept. The right to property focuses on pri-vate enterprises’ interests, such as ownership, free enterprise, free compe-tition, profit, and economic development. The questions that underlie theapparent divide of these two interests are how to promote wider access tomedicines and ensure each citizen’s individual rights, while protecting theindustrial property rights of the drug researchers and product developers.This conflict requires mediation between the fundamental right to healthand the right to intellectual property. This issue creates a dilemma withramifications reaching the constituent fields of law, agreements, and in-ternational policies.

In Brazil, Industrial Property Law is regulated by Law No. 9,279, ofMay 14, 1996.12 This law states:

Article 6. It shall be assured to the author of an invention or a utilitymodel the right to obtain a patent that guarantees his property,under the conditions established in this Law.

Article 8. An invention is patentable if it satisfies the requirementsof novelty, inventive step, and industrial application.

Article 11. An invention and utility model are considered to be newif they are not part of the state of the art.

11. See, e.g., id.; Sean Flynn et al., An Economic Justification for Open Access to Es-sential Medicine Patents in Developing Countries, 37 J.L. MED. & ETHICS 184(2009); Colleen Chien, Cheap Drugs at What Price to Innovation: Does the Com-pulsory Licensing of Pharmaceuticals Hurt Innovation?, 18 BERKELEY TECH. L.J.853 (2003); Peggy B. Sherman & Ellwood F. Oakley, III, Pandemics and Panaceas:The World Trade Organization’s Efforts to Balance Pharmaceutical Patents andAccess to AIDS Drugs, 41 AM. BUS. L.J. 353 (2004); Stacey B. Lee, Can Incentivesto Generic Manufacturers Save the Doha Declaration’s Paragraph 6?, 44 GEO. J.INT’L L. 1387 (2013); Bryan C. Mercurio, Trips, Patents, and Access to Life-SavingDrugs in the Developing World, 8 MARQ. INTELL. PROP. L. REV. 211 (2004);Naomi A. Bass, Implications of the Trips Agreement for Developing Countries:Pharmaceutical Patent Laws in Brazil and South Africa in the 21st Century, 34GEO. WASH. INT’L L. REV. 191, 192 (2002).

12. Lei No. 9.279, de 14 de Maio de 1996, DIARIO OFICIAL DA UNIAO [D.O.U.] de15.05.1996 (Braz.). There is a bill of law pending for approval in the NationalCongress, which will modify the current Law. See Projeto de Lei No. 5402/2013, de18 de Abril de 2013 (Braz.), available at http://www.camara.gov.br/proposicoesWeb/fichadetramitacao?idProposicao=572965.


Article 13. An invention is endowed with inventive step providedthat, to a technician versed in the subject, it is not derived in an evi-dent or obvious way from the state of the art.

Article 15. An invention and a utility model are considered suscepti-ble of industrial application when they can be used or produced inany kind of industry.

Industrial Property Law regulates the rights related to industrial orcommercial activities, subdivided into patents, utility models, industrialdesigns, geographical indications, and topographies of integratedcircuits.13

In regards to medicines, the law grants patent rights for products andprocesses, assuring the holder exclusivity for a specified period (usuallyfifteen to twenty years) for exploiting a given invention.14 But the inno-vative technique, which involves the development and production pro-cess, will be transferred by state grant. International literature showssignificant differences between developed and developing countries inthe propensity to use technologically appropriate methods. The develop-ing countries are not a homogeneous group; Asian and Latin Americannations, for example, show substantial differences in their developmentalstages.

For the pharmaceutical industry, the temporary exclusivity conferredby the patent becomes important for recovering a sufficient return oninvestment for research expenses. The patented product reduces compe-tition and allows the proprietor to price the products. The resulting drugprice is closely related to market factors, and includes the product’s de-gree of innovation, the amount of competition (based on similar productsavailable for the same health problem), the brand valuation (pharmaceu-tical marketing), and research investment costs.

Brazilian Patent Law (article 40) grants patent rights for inventions fortwenty years (in line with TRIPS); starting from the filing of the request,it cannot run fewer than ten years after the official recognition by thenational agency.15 The law also allows for the issuing of a compulsorylicense, by administrative or judicial review (article 68), in cases wherethe patent holder exercises his rights in an abusive manner, or “abuses hiseconomic power, proven pursuant to law in an administrative or judicialdecision” and other particular situations (article 68);16 this disposition isparticularly important for the issues discussed in this paper and will beproperly addressed in part IV.17

13. GABRIELA COSTA CHAVES, PATENTES FARMACEUTICAS: POR QUE DIFICULTAM O

ACESSO A MEDICAMENTOS? [PHARMACEUTICAL PATENTS: WHY MAKE ACCESS

TO MEDICINES DIFFICULT?] 8 (2006).14. Lei No. 9.279, de 14 de Maio de 1996, D.O.U. de 15.05.1996, art. 40 (Braz.).15. Id.16. Lei No. 9.279, de 14 de Maio de 1996, D.O.U. de 15.05.1996, art. 68 (Braz.).17. Brazilian scholars assume that compulsory licenses for medicine are a tool to grant

the fundamental right to health. See, e.g., Thana Cristina de Campos, A LicencaCompulsoria de Medicamentos como Polıtica Publica de Saude [The Compulsory


At this point, the legal protection of patents becomes essential for uni-versal access to medicines. This is because, on the one hand, entrepre-neurs need to have their rights guaranteed against knowledge andproperty globalization rights (including the virtual ones). On the otherhand, the world population, especially that which inhabits the least devel-oped countries (economically and technologically speaking), cannot re-main isolated from the benefits brought by advances in medical research.Seen in this light, the false contradiction between public interest and pri-vate interest emerges because no individual right is above the publicinterest.

This observation is reinforced by Patricia Carvalho, who refers to theprivate interests’ legal limitation.18 The author warns that property rightsare limited when the state grants exclusive ownership of properties in thepublic interest.19 Access to medicines should be seen as part of the rightto health, constituting “a right for all and the State’s duty”—here a clearevocation of the Constitution of the Federative Republic of Brazil articles6 and 196, which state:

Article 6. Education, health, work, housing, leisure, security, socialsecurity, protection of motherhood and childhood, and assistance tothe destitute, are social rights, as set forth by this Constitution. (Asamended)

Article 196. Health is a right of all and a duty of the state and shallbe guaranteed by means of social and economic policies aimed atreducing the risk of illness and other hazards and at the universaland equal access to actions and services for its promotion, protectionand recovery.20

Soon after the right to health was enacted, its guarantee to protectagainst the spread of epidemic diseases was used to justify state interven-tion. But the state intervened for economic reasons, not just for humanrights concerns.21 Nowadays, the state must stabilize the relationship be-tween health and trade. It is the state’s responsibility to ensure access tomedicines by producing, acquiring, or partnering state power with indus-try. It is at the state level, most recently through the regulatory agencies,which determines the law of industrial property through legal devices,organizations, international agreements, and policies.

License of Medicines Public Health Policy], 102 REVISTA DA FACULDADE DE

DIREITO DA UNIVERSIDADE DE SAO PAULO 759 (2007).18. Patrıcia Luciane de Carvalho, A Protecao da Propriedade Intelectual como Ques-

tao de Saude Publica—o Caso dos Medicamentos e Cosmeticos [The Protection ofIntellectual Property as a Matter of Public Health—The Case of Drugs and Cosmet-ics], 11 REVISTA DE DIREITO SANITARIO 189, 200 (2010).

19. See id.20. CONSTITUICAO FEDERAL [C.F.] [CONSTITUTION] art. 6, 196 (Braz.).21. See generally Patrıcia Luciane de Carvalho, O Acesso a Medicamentos e as Patentes

Farmaceuticas na Ordem Jurıdica Brasileira [The Access to Medicines and Pharma-ceutical Patents in the Brazilian Legal Order], 11 DIREITO A PROPRIEDADE IN-

TELECTUAL, 94, 94–102 (2007).


An effective public policy regarding access to medicines provides agood cost-benefit ratio to states because the prophylactic treatment ofdiseases may result in cost-effective interventions against a widespreadepidemic.

In Brazil, public debate on access to medicines has become more in-tense since 1996 with the filing of the first lawsuits based on constitutionalindividual rights, claiming the right to more efficient and advancedmedicines to treat HIV, followed by the enactment of the previouslymentioned patent law (Law. 9.279/96, regulating the rights and obliga-tions relating to industrial property), and the enactment of Law 9.313/96,which provides free medicines to HIV and AIDS patients.22 As a resultof civil society mobilization, Law 9.787/99 was enacted in 1999, establish-ing the policy for generic drugs in Brazil.23

Brazil’s consolidated pharmaceutical drug laws were contained in newlegislation composed of Laws 9.313/96 (Sarney’s Law) and 9.787/99 (Ge-neric Drugs Law), which represented a turning point of the Brazilian gov-ernment’s position on patent and health care issues especially in: actionsconcerning innovations and requirements in pharmaceutical production,testing quality and bioequivalence, and prescribing generic drug alterna-tives. During this period, the Brazilian government faced reactions forwhich it had to take regulatory measures to address emerging problems,among them, the threat of international retaliation.24

Law 9.279/96 (Industrial Property Law), intended to adapt Brazilianlaw to rules of international law established under the WTO in December1996,25 has created more problems. These adjustments in national law—particularly the obligation to grant patents to the pharmaceutical indus-try—have hindered the universal access in Brazil’s current policy.26 Theproblem comes from multilateral agreements signed by WTO members,mainly TRIPS, which established the requirement for recognition of in-

22. Lei No. 9.279, de 14 de Maio de 1996, D.O.U. de 15.05.1996 (Braz.); Lei No. 9.313,de 13 de Novembro de 1996, D.O.U. de 14.11.1996 (Braz.); Gabriela Costa Chaves& Renata Reis, Challenges for the Universal Access to Medicines in Brazil - BriefComments from Civil Society, http://www.sxpolitics.org/wp-content/uploads/2009/04/challenges-universal-access-medicines.pdf (last visited Oct. 1, 2014).

23. Angelina M. M. Basso et al., Biopharmaceutical and Biosimilar Products in Brazil:from Political to Biotechnological Overview, J. BIOEQUIVALENCE & BIOAVAI-

LABILITY (2013), available at http://omicsonline.org/biopharmaceutical-and-biosimilar-products-in-brazil-from-political-to-biotechnological-overview-jbb.1000135.pdf.

24. A Generic Drug is similar to a reference or innovative product. It is intended tobe interchangeable, and is usually produced after the expiration or waiver of pat-ent protection or other proprietary rights, proven its effectiveness, safety, andquality product. See Lei No. 9.787, de 10 de Fevereiro de 1999 (Braz.). It makes iteasier for a medicine manufacturer, who is not the original patent holder, to initi-ate production without the extremely difficult initial requirements to market a newmedicine.

25. Gabriela Costa Chaves et al., Acesso a Medicamentos e Propriedade Intelectual noBrasil: Reflexoes e Estrategias da Sociedade Civil [Access to Medicines and Intellec-tual Property in Brazil: Reflections and Strategies of Civil Society], 8 REVISTA IN-

TERNACIONAL DE DIREITOS HUMANOS 171, 174 (2008).26. Id.


tellectual property for all technology fields, including the pharmaceuticalindustry.27

In other words, TRIPS established the minimum standard for intellec-tual property protection, i.e., minimum rules that WTO members shouldadopt in their national laws relating to intellectual property rights.28

Prior to the issuance of TRIPS, many countries did not recognize patentsin the pharmaceutical industry.29 But it is important to note that nationssuch as Brazil and Thailand only conducted their previous programs tofight endemic diseases, and the main drugs employed were produced lo-cally and not protected by patents.30

The minimum standards established by TRIPS do not equally benefitWTO members because the exclusivity right (the patent attribute) canaffect the imported product price, innovations, and information technol-ogy availability.31 Therefore, countries with a greater investment capac-ity for developing research and technology investment have greateradvantages over countries that do not have an organized patents systemand do not invest so heavily in technological innovations.

IV. THE USE OF FLEXIBILITIES IN TRIPS AND THEBRAZILIAN APPROACH

Possible abuses arising from TRIPS can be resolved by certain actionsand devices. Article 8 of TRIPS, for example, states that WTO members“adopt measures necessary to protect public health and nutrition, and topromote the public interest in vital importance sectors to their socio-eco-nomic and technological development sectors, since such measures areconsistent with the Agreement.”32

These “necessary measures” aimed at the public interests are called“TRIPS flexibilities,”33 among them are the compulsory license (Article31); parallel imports (article 6); experimental use (article 30), the Bolarexception (article 30); and the health sector participation in the pharma-ceutical patent applications processes (implicit in Article 8). TheseTRIPS flexibilities can be taken alone or combined, but they have limita-tions in their application that usually involve actions within the economyand world politics; the countries they consider necessary to apply the flex-ibilities should be aware of the effects in the international businessenvironment.

Compulsory licensing—with its most immediate effect being flexibil-ity—means temporarily suspending the pharmaceutical patent right and

27. Agreement on Trade-Related Aspects of Intellectual Property Rights, supra note1.

28. CHAVES, supra note 13, at 15.29. Id. at 16.30. Id.31. CHAVES, supra note 13, at 15.32. Id. at 18.33. Id. at 19.


using the patented invention without the invention holder’s consent.34

The patent breaking resulting from compulsory licensing can only be im-posed if the rights deriving from the product exclusivity are improperlyexercised by the patent holder or through an agent (usually a drug com-pany). The Law does not allow for the abuse of economic power when itis related to human health. Articles 68 to 74 of the Industrial PropertyLaw address this issue. Article 68 states:

Section IIICompulsory License

68. The titleholder shall be subject to having the patent licensed on acompulsory basis if he exercises his rights derived therefrom in anabusive manner, or by means thereof engages in abuse of economicpower, proven pursuant to law in an administrative or judicialdecision.(1) The following also occasions a compulsory license:

I. non-exploitation of the object of the patent within the Brazil-ian territory for failure to manufacture or incomplete manufac-ture of the product, or also failure to make full use of thepatented process, except cases where this is not economicallyfeasible, when importation shall be permitted; orII. commercialization that does not satisfy the needs of themarket.

(2) A license may be requested only by a person having a legitimateinterest and having technical and economic capacity to effectively ex-ploit the object of the patent, that shall be destined predominantlyfor the domestic market, in which case the exception contained initem I of the previous paragraph shall be extinguished.(3) In the case that a compulsory license is granted on the groundsof abuse of economic power, the licensee who proposes local manu-facture shall be assured a period, limited to the provisions of article74, to import the object of the license, provided that it was intro-duced onto the market directly by the titleholder or with his consent.(4) In the case of importation to exploit a patent and in the case ofimportation as provided for in the preceding paragraph, third partiesshall also be allowed to import a product manufactured according toa process or product patent, provided that it has been introducedonto the market by the titleholder or with his consent.(5) The compulsory license that is the subject of paragraph 1 shallonly be required when 3 (three) years have elapsed since the patentwas granted.35

Articles 69 and 70 bring exceptions to the general rule, Articles 71 and72 deal with the exclusiveness of compulsory licenses, and Articles 73 and74 regulate how the compulsory licensing is implemented and exercised.36

34. Id. at 19.35. Lei No. 9.279, de 14 de Maio de 1996, D.O.U. de 15.05.1996, art. 68 (Braz.).36. Id. at art. 68–74.


These actions relating to compulsory licensing, if taken abruptly, causethe opposite effect to its purpose, i.e., they impede the drug’s accessibilitybecause there is no denying the state’s dependence to the private sectorin the research stages, development, and product commercialization.Government intervention may affect the industry’s interest in investmentand drug production. But sometimes public interest, according to thelaw, allows for compulsory license. In fact, the Brazilian government hasused this strategy a couple of times.37

The Brazilian government has implemented a health program provid-ing for the free treatment of AIDS.38 This program, which began effec-tively in the early 1990s, has been affected by the high prices of anti-AIDS medicines.39 In 2001, the medicine Nelfinavir (anti-AIDS re-troviral) was threatened to be subject to compulsory licensing. A statelaboratory (Farmanguinhos) would produce the medicine, making itavailable to the population for a price 40 percent less than the originallaboratory (Roche) price.40 Other products were under negotiation suchas Kaletra, Tenofovir, and Efavirenz, anti-AIDS retroviral drugs manu-factured by Abbott, Gilead, and Merck, respectively.41 But the Ministryof Health and pharmaceutical companies were able to negotiate lowerprices and make Nelfinavir, as well as other AIDS drugs, affordable forthe Program.42 But prices still increased, and more recently, in 2007, theBrazilian government broke the patent on Efavirenz, allowing the gov-ernment to buy a generic version of the medicine at a cheaper price.43

The measure only applies for public non-commercial use.44 First, Brazilimported it from India, and then, starting in 2008, initiated domestic pro-duction.45 Regarding this issue and the dispute between Merck and Bra-zilian Health System, Vera Zolotaryova wrote:

37. See JAMES PACKARD LOVE, RECENT EXAMPLES OF COMPULSORY LICENSE ON

PATENTS 14 (2007), available at http://www.keionline.org/misc-docs/recent_cls_8mar07.pdf.

38. See HIV& AIDS in Brazil, AVERT, http://www.avert.org/hiv-aids-brazil.htm (lastvisited Oct. 1, 2014).

39. The program is a successful public health program. There was an increase in thesurvival of patients with AIDS in about five years; the program also promoted adecrease of 80 percent in hospitalization costs, generating economy of approxi-mately $2.3 billion. The success of such program was primarily due to the domes-tic manufacture of drugs that are used in the treatment and do not enjoy patentprotection in Brazil. But the high price of drugs has impacted the program afterPatent Law entered into force. See Chaves et al., supra note 25, at 171.

40. Ricardo Mignone & Denise Mandueno, Brasil Quebra Patente de Remedio contraAIDS [Brazil Breaks Patent on AIDS Drug] FOLHA DE S. PAULO (Aug. 22, 2001),http://www1.folha.uol.com.br/folha/ciencia/ult306u4664.shtml.

41. Campos, supra note 17, at 780.42. Id.43. Katia Cortes, Brazil Breaks Patent on Merck’s Efavirenz AIDS Drug (Update 3),

BLOOMBERG (May 4, 2007), available at http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aAHMaYgcQA4o.

44. Decreto No 6.108, de 4 de maio de 2007, D.O.U. de 07.05.2007 (Braz.).45. Brazil to Produce Generic Version of Merck’s Antirettroviral Efavirenz, KAISER

HEALTH NEWS (Sept. 18, 2008), http://www.kaiserhealthnews.org/Daily-Reports/2008/September/18/dr00054526.aspx?p=1.


Moreover, Brazil’s use of the compulsory licensing provision was ap-propriate because it is necessary for Brazil to use the compulsorylicensing provision in order to maintain its successful HIV/AIDSprogram. The cost of Brazil’s HIV/AIDS program is rising, partiallydue to the high costs of second-line HIV/AIDS medication. In addi-tion, an important part of Brazil’s success in its HIV/AIDS programis due to Brazil’s ability to bargain for lower prices with pharmaceu-tical companies by threatening to issue a compulsory license. Byutilizing the compulsory licensing provision after repeated threats todo so, Brazil sends a clear message to pharmaceutical companies thatit is serious about the health of its citizens.46

And by comparing the Brazilian case with the Thai case against Abbottdrug manufacturer the same author stated:

Second, Brazil’s situation is different from Thailand because Brazilattempted to negotiate with Merck for two years prior to issuing thelicense. Although prior negotiations may not have been necessaryunder the national emergency or non-commercial use exceptions ofthe compulsory licensing provision, Brazil’s willingness to negotiatean agreement with Merck prior to issuing the license sends a positivesignal to pharmaceutical companies by demonstrating that Brazil isserious about patent protection.47

In 2012, the Efavirenz compulsory license was extended for five moreyears.48 But Brazil is not alone on this issue. Other countries, includingthe United States and Canada, have also granted compulsory licenses fordrugs, and, in fact, this issue is becoming more relevant.49

When issuing a compulsory license, the state needs a strategy to com-pensate for the lack of private sector support. In other words, it mustassume responsibility for the production, development, and sale of theproducts. To this end, the Brazilian government can use state laborato-ries that are able to produce medicines under compulsory license.50

It is important to consider that the compulsory license is temporary,effective only during the time when the product is needed to restore pub-

46. Vera Zolotaryova, Are We There Yet? Taking “TRIPS” to Brazil and ExpandingAccess to HIV/AIDS Medication, 33 BROOK. J. INT’L L. 1099, 1121 (2008).

47. Id. at 1122–23.48. Decreto no 7.723, de 4 de maio de 2012. D.O. U. de 07.05.2012 (Braz.). For a

detailed timeline on compulsory licensing in Brazil from the beginning until April,2008, see JENNRYN WETZLER & ANA AYALA, TIMELINE ON BRAZIL’S COMPUL-

SORY LICENSING (2008).49. See generally, Cecilia Oh, Compulsory Licenses: Recent Experiences in Developing

Countries, 1 INT’L J. INTELL. PROP. MGMT. 22 (2006); Sangeet Shashikant, MoreCountries Use Compulsory License, But New Problems Emerge, THIRD WORLD

NETWORK (May 19, 2005), www.twnside.org.sg/title2/health.info/twninfohealth004.htm; MARTIN KHOR, PATENTS, COMPULSORY LICENSES AND ACCESS TO

MEDICINES: SOME RECENT EXPERIENCES, (2009), available at http://www.twnside.org.sg/title2/IPR/pdf/ipr10.pdf; Colleen Chien, Cheap Drugs at What Price to In-novation: Does the Compulsory Licensing of Pharmaceuticals Hurt Innovation?, 18BERKELEY TECH. L.J. 853 (2003).

50. See generally Shashikant, supra note 49.


lic health.51 The private sector cannot bear the political, budgetary, orstate management inefficiency burdens. Compulsory licensing’s usage issubject to an abnormal condition, an example being epidemic out-breaks.52 In addition to these constraints, the compulsory license alsoimplies that the nation acquires the technological capability and industrialfacilities to produce the drug.53

The threat of compulsory licensing is regarded as a price negotiationmechanism between the states and the drug industries.54 In connectionwith the negotiation, the WTO member countries (in underdeveloped ordeveloping positions) are recommending joint actions with the privatesector for research, development, and marketing, always focused on ef-fective technology transfer.55

Parallel importation—another “flexibility” under the TRIPS agree-ment—allows importing a patented drug put on the market by the owneror a third party authorized by the agreement.56 Regarding the drug’s ac-cessibility, the possibility of parallel importation is significant, since mul-tinational pharmaceutical companies often provide “different prices forthe same drug in different countries.”57 Importing allows purchasing thedrug where it is being sold at the lowest price.58 The import is linked tothe compulsory license, since a country can put into practice the importa-tion, and therefore give adequate time for local exploration of the com-pulsorily licensed drug.59

The experimental use flexibility, and the experimental use Bolar Ex-ception, are more linked to scientific and technological work that is re-quired for effective accessibility to drugs.60 The first flexibility—experimental use—attaches to scientific research using the patented drug,allowing the information use and technological development promo-tion.61 The second flexibility, Bolar Exception, also known as “earlywork,” allows a public or private laboratory to use the patented drug fortesting aimed at obtaining the sanitary record in drug regulatoryagencies.62

The flexibility mentioned here refers to the action taken by the Brazil-ian government in the pharmaceutical patent applications analysis pro-cess, denying the grant to requests that do not meet legal requirementsfor patents.63 This is an assignment for the Brazilian Health Surveillance

51. Carvalho, supra note 18, at 202.52. Id.53. CHAVES, supra note 13, at 21.54. See id. at 20–1.55. See id. at 29.56. Id. at 22.57. Id.58. Id.59. Id. at 24.60. CHAVES, supra note 13, at 24.61. Id.62. Id.63. Id. at 28.


Agency (ANVISA).64 Note that the ANVISA’s responsibility in approv-ing patents is not only to interfere in the empowerment process, but italso is a measure for the citizens’ protection, preventing the introductionof patented medicines with harmful health effects to the population.65

This flexibility combined with the experimental use are medium and long-term measures that can promote the national technologicaldevelopment.66

Another aspect is the so-called Doha Declaration’s paragraph 6, whichis an amendment to TRIPS, intended to ensure developing countries ac-cess to affordable medicines when they do not have domestic manufac-turers capable of producing medicines under compulsory license (theeffect is a flexibility on article 31(f) of TRIPS, which is the “domesticrule”).67 In this case, Brazilian manufacturers would be able to take ad-vantage of the provision, as Indian manufactures do, because it providesthat member countries “can now export generic pharmaceutical productsmade under compulsory licenses to meet the needs of importing countriessubject to certain conditions.”68 But there is a lot of criticism on thisDoha Declaration regarding its effectiveness in solving developing andless developed countries’ needs.69

Among all TRIPS flexibilities in recent years, the compulsory license—perhaps by having an immediate effect—has received strong supportfrom Brazilian citizens, especially because of the antiretroviral drugsmade accessible to HIV patients. It is important to observe that, as statedbefore, this flexibility was implemented only by Brazil in 2007 for thedrug Efavirenz, produced by Merck, showing the state commitment tothe National STD/AIDS Program and the public health system.70

It is noteworthy that the flexibilities discussed here are based onTRIPS (resulting from international policies). But some rules of interna-tional law privilege protect the right to property over the broad access to

64. Id.65. Id. at 39.66. See id. at 26–27.67. Lee, supra note 11, at 1398–99.68. Id.69. See Carlos M. Correa, O Acordo TRIPS e o acesso a medicamentos nos paıses em

desenvolvimento [TRIPS Agreement and Access to Drugs in Developing Coun-tries], 2 SUR REVISTA INTERNACIONAL DE DIREITOS HUMANOS, 26–39 (2005),available at http://www.scielo.br/scielo.php?pid=S1806-64452005000200003&script=sci_arttext#tx19 (as it was put by Lee: “Sources of generic ARV s and other drugsare diminishing. The 2016 deadline by which all countries must become TRIPScompliant steadily approaches. This means that absent a TRIPS-required compul-sory license, developing countries will lose access to generic versions of drugs stillunder patent. Those countries then will have to rely exclusively on patented drugsand, in the absence of competition from generics, pay prices set by the manufactur-ers. Within a decade, the Doha Declaration’s inadequate Paragraph 6 may be theonly available mechanism for Africa and other developing countries with insuffi-cient manufacturing capabilities to import essential medicine at competitive pric-ing. It is time for a renewed focus on how Paragraph 6 compulsory licenses can bereworked to succeed in the future.”). See Stacey Lee, Access Denied, ONE (2013),available at http://carey.jhu.edu/one/2013/spring/access-denied/.

70. KHOR, supra note 11, at 49.


public health. Additionally, under Brazilian law, one may find internalproblems, particularly considering the rules concerning the national pat-ent system and its implementation which, in its applicative instance, un-dermine the right to health. The main internal problems are the pipelinemechanism and the guidelines in the patent examination prepared by theNational Institute of Industrial Property (INPI).71 The administrativedifficulties are evident in the congressional voting process when the Min-istry of Health is positioning itself against the pharmaceutical analysisprocess and TRIPS-plus.

As a temporary rule, the pipeline mechanism allows patent applica-tions in technological fields not recognized until Law 9.279/96 (IndustrialProperty Law) is enacted—two examples being pharmaceutical and foodfields.72 Through this mechanism, patent applications are not subject tothe formal national patentability analysis (i.e., they are not examined bythe criteria for “novelty,” “activity,” and “industrial application”), be-cause it would have followed the process patent terms abroad.73 In theBrazilian case, the pipeline protected, retroactively, other countries’ filedor already existing patents without considering the adjustment periodprovided in Act 9.279/96.74

With respect to patent examination guidelines adopted by the INPI,they guide examiners’ function in interpreting the Brazilian patent law onwhat should qualify for patent protection. But these guidelines are oftenmore extensive than the rules contained in the intellectual property na-tional legislation and are at loggerheads with the goals expressed in theBrazilian Constitution protecting intellectual property (art. 5o, XXIX ofthe Federal Constitution, 1988), generating several patent grants that didnot meet rules in effect, in the country.75 The aforementioned dispositionof the Brazilian Constitution states as follows:

Art. 5 [this article lists individual rights]:

XXIX–the law shall ensure the authors of industrial inventions of atemporary privilege for their use, as well as protection of industrialcreations, property of trademarks, names of companies and otherdistinctive signs, viewing the social interest and the technological andeconomic development of the country.76

The Brazilian Ministry of Health has difficulty in positioning itselfagainst pharmaceutical analysis processes. The Brazilian intellectualproperty law says that requests for drug patents must obtain theANVISA’s prior approval because it is relevant to the public health.77

INPI does not publish the ANVISA decisions, leaving the pending patent

71. Chaves et al., supra note 25, at 181.72. Id.73. Id.74. Id.75. Chaves et al, supra note 25, at 182.76. CONSITUTITUICAO FEDERAL [C.F.] [CONSTITUTION] art. 5 (Braz.).77. Chaves et al., supra note 25, at 182–83.


application—which benefits the patent holder maintaining the productmonopoly—while not terminating the patenting process.78

Thus, in Brazil, the draft TRIPS-plus laws represent a significant limita-tion to the public interest in granting patents on medicines. This isbecause the draft TRIPS-plus law exceeds the minimum TRIPS require-ments to ensure the private sectors rights that are involved in the issue.Some authors cite as an intensification example the bill of law n. 29/2006,79 which provides the link between patent protection and drug regis-tration (also known as “linkage”). This measure would require the BolarException annulment. The Bolar Exception principle is in the indepen-dence between drug registration and the patent term, allowing the pro-ceedings for generic production to have their initiation before the patentexpires.80 In other words, the Bolar Exception invalidation allows ge-neric producers to get the sanitary registration without waiting for thepatent to expire, which would allow them to sell the drugs, allowing theentry of the generic versions in the market.81

V. FINAL REMARKS

The purpose of this article was to analyze how Brazilian law, repre-sented by the Intellectual Property Law and the rules for patentmedicines, aims to maintain a state of social welfare allowing all citizensthe access to health, while respecting international treaties and agree-ments that protect intellectual property.

The apparent opposition between the Right to Health and the Right toProperty is a controversial subject because it derives from actions per-taining to the legal and political fields. This article reflects on the trade oflife, since the growing demographic, evolution, and history regarding theserious diseases or epidemics in this global context evokes increasing de-mand for new research and new process developments that would restorepeople’s health and preserve their lives.

In the advancement of medical and pharmaceutical products, techno-logical, economic, and social inequalities that divide developed and devel-oping countries persists. Developing countries do not have the economic,political, nor military power to assert their interests in the internationalcontext, and this must be considered in international negotiations. In-vestments in research and innovation dedicated to the sector arefavorable to the developed countries because the multinational corpora-tions are headquartered in such countries. These corporations dominatethe market and invariably have better conditions for applying resourcesto scientific research subsidized by the state.

78. Id. at 183.79. See generally, Projeto de Lei do Senado Federal n. 29, de 2006 (Senator Ney Suas-

suna), DIARIO DO SENADO FEDERAL de 7 de fevereiro de 2006 (Braz.), available athttp://www.deolhonaspatentes.org.br/media/file/Proj_Leis/PL_29-03.pdf (last vis-ited May 16, 2014).

80. See CHAVES, supra note 13, at 24.81. See id.


Under these conditions, will it be acceptable to consider that citizensborn in certain countries have more rights to life than others born in lessfortunate countries? No! Laws and legal actions exist so that people canreceive different treatment, but still be entitled to the same adequate liv-ing conditions under the Universal Declaration of Human Rights. Evenin the richest nations, it is not possible for all citizens to have the right tothe same assistance and the best technologies. Then again, the privatesector cannot be punished by having their property (patents) and profits(return on investment applied) expropriated because the state is not ableto manage the public health demands.

As exposed in this article, there seems to be an insurmountable conflictbetween the WTO agenda on drug product patents, creating internationaltrade and protective rules, and the WHO, responsible for promotinghealth by subsidizing research. In other words, there is a policy contra-diction between the economic values represented by the WTO and thepublic interest in free access to medicines represented by the WHO.Nevertheless, it is worth noting that these two international organizationshave established a joint study to address such issues.82 In this study WTOand WHO manage the medicine used for vaccines and other treatmentsrelated to various diseases.83 The partnership between the WTO andWHO seeks to harmonize the conflicts of interest between theirorganizations.

But it is a responsibility of the states, supported by legal authority,which ensures that the right to health outweighs the right to property,especially concerning access to medicines. Medication access for publichealth is a function which concerns the state. Many times, civil actionsare filed in order to ensure the access to medicines, creating highs coststhat are invariably charged to vulnerable state budgets. In this sense,countries need to seek alternatives, including partnerships between publicand private interests and the use of flexibilities (like compulsory licens-ing), as mentioned above. This includes cases where the law or legal ne-gotiating tools can be used to pressure the pharmaceutical industry tolower drug prices, making it accessible for the population.

It was observed that the draft law, TRIPS-plus, and other Brazilianintellectual property protection system weaknesses may be a setback inpromoting public access to medicines. Since 1998, fifty draft laws con-cerning drugs and how the pharmaceutical industry works in Brazil havebeen under consideration in Congress. These include PL 230/03, whichlimits the substances patent protection rights regarded as drug compo-nents manufactured by state laboratories (bill was filed on the table Di-rector Chamber of Deputies) and PL 303/03, which handles compulsorylicensing in cases where there are no patent object manufacturing (ap-

82. See generally WTO AGREEMENTS AND PUBLIC HEALTH—A JOINT STUDY BY

WHO AND THE WTO SECRETARIAT (2002), available at http://www.wto.org/english/res_e/booksp_e/who_wto_e.pdf.

83. Id.


pended to PL 139/99 amending Law No. 9279 of May 14, 1996).84

In the Brazilian case, the reflection on the dilemma—public interestversus private interests—is a big challenge, characterized by many im-passes involving the pharmaceutical industry, lawsuits, and legislation de-velopment. But these impasses are not widely discussed in variousspheres involved with the issues. State and civil society should unite tosearch for alternatives within the current patent system, but, above all,promote national and international discussions on the subject. A morethorough debate will yield more interest, ensuring the public interest tobe paramount. It is socially unjust, as well as unsustainable and economi-cally inefficient, for the state to offer public health based on ability to payrather than on people’s needs.

84. See generally Projeto de Lei No. 230 de 2003, available at http://www.camara.gov.br/proposicoesWeb/fichadetramitacao?idProposicao=105268; Projetode Lei No. 303 de 2011, available at http://www.camara.gov.br/proposicoesWeb/fichadetramitacao?idProposicao=491567; Projeto de Lei No. 139, DIARIO DA

CAMARA DOS DEPUTADOS, de 19 de Marco de 1999, available at http://www.deolhonaspatentes.org.br/media/file/Proj_Leis/PL_29-03.pdf; Lei No. 9.279, de 14 deMaio de 1996, D.O.U. de 15.05.1996 (Braz.).


ENVIRONMENTAL REGULATION AND

AUTOMOTIVE INDUSTRIAL POLICIES

IN BRAZIL: THE CASE OF

“INOVAR-AUTO”Jose Marcos Domingues*, Luiz Artur Pecorelli-Peres,**

and Ronaldo Seroa da Motta***

ABSTRACT

The Brazilian Government has recently pursued policies aimed to in-crease the country’s international competitiveness, particularly towards theindustrial sector. In September 2012, a new law was passed in Congresscreating several fiscal incentives to promote technological innovation forindustrial activities. With this law, a new automotive regime was designed(INOVAR-AUTO program) in which a large reduction (up to 30 percent)of the federal value added tax (IPI) was granted in exchange for producerscomplying with innovation targets for all light-duty vehicles based on sev-eral requirements for domestic production content, safety, and emissiontargets during the period between 2013 and 2017. The emission standardstarget is modest in international terms, although the new regulation seemsto be efficient and incentive compatible. This paper will first describe theemission profile of the Brazilian automobile fleet. Then, it will analyze, indetail, the emission component of the INOVAR-AUTO program. Addi-tionally, the article explains the technological reasons for which the IN-OVAR-AUTO has design gaps where battery electric vehicles (BEVs) aretreated without differentiation. In fact, it is considered essential and it musttake into account the highly renewable Brazilian electric matrix in contrastwith its inefficient transportation matrix, which is very concentrated on

* Jose Marcos Domingues is a Professor of Public Finance Law at Rio de JaneiroState University (UERJ); Coordinator, Laboratory of Public Policies and FiscalFairness (LAPPJUS-UERJ) and an Associate Professor, Catholic University ofPetropolis, Rio de Janeiro (UCP). E-mail address: [email protected] Marcos Domingues thanks FAPERJ-Rio de Janeiro State Research SupportAgency for the financial aid extended to this project.

** Luiz Artur Pecorelli-Peres is an Associate Professor of Eletromechanical EnergyConversion at Rio de Janeiro State University (UERJ); Coordinator, Electric Ve-hicle Studies Group (GRUVE-UERJ). Luiz Artur Pecorelli Peres expresses hisgratitude to the National Electric Energy Agency-ANEEL and to Ampla Energyand Services, especially their managers Weules Correia, Victor Gomes, and FlavioSoares for their support to produce chapter two and three of this work.

*** Ronaldo Seroa-da-Motta is an Associate Professor of Environmental Economicsat Rio de Janeiro State University (UERJ). Ronaldo Seroa da Motta thanksCNPq-National Council for Research within the scope of Project CNPq 509.146/2010.

399


road vehicles based on internal combustion vehicles (ICVs). A new classi-fication is proposed for vehicle propulsion systems, along with a graphicaltool in order to better identify sustainability indicators. These tools areemployed to justify a specific plan for BEVs considering the formation of afund with a small taxation on ICVs aimed at lowering the costs of the mostexpensive component of BEVs—its electrochemical energy source. Basedon that, the article proposes how to improve the design of regulatory andfiscal policies in Brazil to exploit the synergies with INOVAR-AUTO to seta basis for new pathways of emission reduction in the Brazilian automobilefleet, including the introduction of alternative instruments, such as feebateprograms, and how they could create the basis for the promotion of Elec-tric Vehicles (EVs) in Brazil.

KEY WORDS

Electric vehicle; regulatory and tax bottlenecks; new vehicle classifica-tion; Brazilian INOVAR-AUTO and feebate adjustments; tax incentives;federative tax system.

I. INTRODUCTION

AT the Brazilian Seminar on Technologies for Electric Vehicles(EVs), held in Brasılia-FD in June 2011, the Ministry of Financevoiced governmental intentions to compel the auto industry to

adopt a green seal that would rank vehicles based on emissions and fuelconsumption.1 Joining the federal green seal program has become a legalcondition for applying for fiscal incentives under the INOVAR-AUTOprogram, even though it is not yet required for vehicles that run on dieselor semi-diesel engines.2

Despite the adequacy of the Brazilian energetic matrix for EV expan-sion, there are still barriers of regulatory and fiscal nature that ought tobe addressed. The Brazilian Government has pursued policies aimed atincreasing the country’s international competitiveness towards the indus-trial sector. In September 2012, a new law created fiscal incentives topromote technological innovation for the industry, designing a new auto-motive regime (INOVAR-AUTO).3 This law grants a large reduction (upto 30 percent) of the federal value added tax (VAT) in exchange of mak-ers complying with innovation targets for vehicles based on requirements

1. See Jose Marcos Domingues & Luiz Arthur Percorelli-Peres, Electric Vehicles, En-ergy Efficiency, Taxes and Public Policy in Brazil, 19 L. & BUS. REV. AM. 56, 56(Winter 2013).

2. See Lei No. 12.715 de 17 de Setembro de 2012, DIARIO OFICIAL DA UNIAO

[D.O.U.] de 18.09.2012, art. 40, § 5 (Braz.). The applicant must progressively in-clude 100 percent of its models in the program by 2017, up from 36 percent in 2013.Id.

3. See id. art. 40–44.

2014] THE CASE OF “INOVAR-AUTO” 401

for vehicle content, safety, and emission targets between 2013 and 2017.4EVs were completely neglected by the program until May 2013. The tar-get setting for emission standards seems modest, but the new law seemsefficient and incentive-compatible. Also, infrastructural tax incentiveswere neither specified nor indicated as a matter of national public policyfavoring EVs.5 States and municipalities have focused on case-by-caseincentives to assemble facilities in the automotive sector, such as plantfinancing, VAT postponement, and real estate property tax exemptions.

This article describes the emission profile of the Brazilian automotivefleet and its energy matrix. It suggests improvements in designing fiscalpolicies to set the basis for new pathways of emission reduction in theautomotive fleet, including the introduction of alternative instrumentssuch as feebate programs, and how they could create brackets for thepromotion of EVs. It also intends to deepen specific discussions on the“possibilities of environmental protection through tax incentives as envi-ronmentally oriented public policy tools, in which taxes are not perceivedas a traditional fund-raising device (“fiscal taxation”), but through theirnon-fiscal potentiality,”6 while presenting advanced tax policy modelsaimed at environmental protection within the case of EVs. Additionally,the article explains the technological reasons for which the INOVAR-AUTO has design gaps where Battery Electric Vehicles (BEVs) are nottreated as differentiated products. It is held essential and INOVAR-AUTO must take into account the highly renewable Brazilian electricmatrix in contrast with its inefficient transportation matrix, which is verymuch concentrated on vehicles running on internal combustion engines(ICVs). Thus, a new classification was proposed for vehicle propulsionsystems and a graphical tool in order to better identify sustainability in-dicators. These tools were employed to justify a specific tax treatment onICVs while considering a reduced taxation for BEVs, thereby aiming atdecreasing the respective costs, of which the electrochemical energysource is the most expensive component.

II. REPLENISHING ROAD VEHICLES ONLY WITHELECTRIC ENERGY: THE DREAM

In the early twentieth century, electric power companies envisionedboth urban transportation and road transportation in their business plansto create a network of streetcars and trolleybuses in Brazilian capitals,together with buses, trucks, and automobiles. The then-Brazilian Trac-tion Light and Power Company, currently Light Servicos de EletricidadeS/A (Rio de Janeiro), had a line of electric buses and maintenance

4. Brazil’s Innovar Auto Incentive Program, INT. COUNCIL ON CLEAN TRANSP. (Feb.2013), available at http://www.theicct.org/sites/default/files/publications/ICCTupdate_Brazil_InovarAuto_feb2013.pdf.

5. Domingues & Percorelli-Peres, supra note 1, at 64.6. See id. at 57.


trucks.7

Despite the better efficiency of electric transportation means, vehiclemanufacturers/assemblers and oil companies continued to integrate—benefitting from regular oil prices until the 1970’s and 1980’s crises.8 As aconsequence, people perceived oil companies not as fuel-production-and-distribution companies, but rather as energy companies, which enabled amajor expansion of their business to include electricity generation.9 Asimilar process enabled ethanol producers to migrate from merely supply-ing to a fuel-dependent, road transportation system to venture into theproduction of electricity from sugarcane bagasse.10 This considerationextends to fuel storage and distribution systems, which implies damagesto urban mobility and involves permanent refilling of fuel stations(sources of emissions and environmental risks per se). But BEVs are fu-eled by electricity only, and any advanced hybrid plug-in vehicles stillhave to rely on fuel stations, as well as electro stations.

A. ADVANTAGES OF THE EVS: THE CASE OF BRAZIL

Historic processes of energy use demonstrate mankind’s search for effi-ciency. This can be divided into two moments: before and after the em-ployment of electricity for mechanical work production. This is anirreversible evolutionary process that has been established for lighting, aswell as for powering industries and household appliances. The expansionof electric power systems has improved to date; intelligent power gridsare now a must and can be found all around, including EVs. From socialand economic perspectives, there is a self-evident synchrony between in-creasing well-being and the use of electricity.11 Technological advance-ments have driven the recognition of societal spaces that must be filled byelectric traction instead of thermal traction in road transportation.

These issues and changes have been diversified in many countries, con-sidering each individual set of priorities.12 In Brazil, a popular factor infavor of employing electric traction for road transportation comes from

7. See MARCIO PINON DE OLIVEIRA, A INDUSTRIA ELETRICA NO BRASIL NO INICIO

DO SECULO XX: A COMPANHIA BRASILEIRA DE ENERGIA ELETRICA E A ATUA-

CAO DO GRUPO GUINLE & CIA NA PRODUCAO DO URBANO E SUAS REDES TECNI-

CAS [ELECTRICAL INDUSTRY IN BRAZIL AT THE BEGINNING OF THE TWENTIETH

CENTURY: A BRAZILIAN COMPANY OF ELECTRICITY AND ACTION GROUP GUINLE

& CIA IN PRODUCTION TECHNICAL AND URBAN NETWORKS] 1 (2012), available athttp://www.ub.edu/geocrit/Simposio/cMOliveira_Aindustria.pdf.

8. Cesar Said Rosales Torres, Oil and World Power: PEMEX and PETROBRAS,ANALECTICA (Apr. 29, 2014), http://www.analectica.org/oilworldpower-said/ (not-ing the creation of Petrobras from the oil crises of the 1970s and 1980s).

9. See id.10. See id.11. Risako Morimoto & Chris Hope, The Impact of Electricity Supply on Economic

Growth in Sri Lanka 2 (Univ. of Cambridge Judge Inst. of Mgmt., Working PaperNo. 24, 2001), available at http://www.jbs.cam.ac.uk/fileadmin/user_upload/research/workingpapers/wp0124.pdf.

12. See JOAO VITOR FERNANDES SERRA, ELECTRIC VEHICLES: TECHNOLOGY, POLICY

AND COMMERCIAL DEVELOPMENT xi (2012).


the fact that domestic production of electricity relies mostly on renewablesources, along with the favorable future perspectives of resorting to thehuge available potentials of hydraulic, wind, solar, and bioenergysources.13 But, since the country is rich not only in renewable energies,but also in fossil fuels,14 a more complex issue arises for making decisionsin favor of EV-technology (in fact, it involves greater divergences withcurrent prevailing economic forces).15

Experiences and attempts to establish specific plans for EV-technolo-gies in Brazil, such as the 2009 Campinas Charter,16 have not been suc-cessful. The greatest achievement in this sector INOVAR-AUTO fallsshort in catering the needs of EV-technology.

It is important to mention that it is possible to save money to rechargea BEV at night avoiding peak time when the tariff is higher. In compari-son to refuel an internal combustion vehicle, the price is independent ofthe time of day. EVs, particularly BEVs, are revolutionary in the auto-motive sector because they allow for a gradual shift in the impact causedby conventional vehicles.

III. SPECIFIC TECHNOLOGICAL PROPOSAL FOR BEVS

INOVAR-AUTO fails to take into account vehicles with technologydifferences. This article attempts to show that EVs, particularly BEVs,call for different, specific treatment mostly due to Brazil’s highly renewa-ble electrical power mix in contrast with the transport mix (the roadmodel based on conventional ICVs are scarcely efficient). Concepts ofelectromechanical energy conversion17 have been used as well as thoseinspired by the choice awareness theory.18 Thus, it was possible to de-velop a graphic model19 expressing how these vehicle-propulsion systemspresent intrinsic characteristics different from one another in order tosubsidize the development of public policies that would take into account

13. See Domingues & Percorelli-Peres, supra note 1, at 56.14. Not to mention the intense use of sugarcane ethanol since 1975 with the “PRO-

ALCOOL” program that was created to supply thermal power for vehicles. Ma-noel Regis Lima Verde Leal, Technological Evolution of Sugarcane Processing forEthanol and Electric Power Generation, in SUGARCANE BIOETHANOL: R&D FOR

PRODUCTIVITY AND SUSTAINABILITY 561 (2010), available at http://blucheropenac-cess.com.br/pdf/bioetanol/SUGARCANEBIOETHANOL_51.pdf.

15. Countries that do not have oil and are not renewable-fuel producers should findeven more immediate reasons for adopting electricity as their source of roadtraction.

16. Carta de Campinas–uma polıtica para veıculos eletricos no Brasil [Campinas Let-ter—A Policy for Electic Vehicles in Brazil], ASSOCIACAO BRASILEIRA DO VE-

ICULO ELETRICO [BRAZILIAN ELECTRIC VEHICLE ASS’N] (Dec. 16, 2009), http://www.abve.org.br/destaques/2009/destaque09060.asp.

17. See generally DAVID BROWN, ELECTROMECHANICAL ENERGY CONVERSION

(1984).18. See HENRIK LUND, RENEWABLE ENERGY SYSTEMS: A SMART ENERGY SYSTEMS

APPROACH TO THE CHOICE AND MODELING OF 100% RENEWABLE SOLUTIONS 15(Elsevier, 2d ed. 2014).

19. See LINEU BELICO DOS REIS, GERACAO DE ENERGIA ELETRICA: REVISADA E

ATUALIZADA [ELECTRIC POWER GENERATION : REVISED AND UPDATED] (2011).


both favorable and non-favorable attributes. The found discrepanciesclarify that INOVAR-AUTO does not focus on sustainability attributesthat are relevant for BEVs, which point to the need for a differentiatedtreatment leading to improved yield levels.

A. PARADIGM SHIFTS AND MOTIVATIONS RELATED TO THE

BRAZILIAN ENERGY MATRIX

A new alliance emerges between EVs and renewable sources of en-ergy. This contrasts with the centennial alliance between oil companiesand ICV assemblers. EVs enhance technological development and en-ergy company business because they can be recharged with power gener-ated from different sources, thus reducing the impact and complexity oftraditional fuel distribution systems.20

EVs can be recharged at home through microgeneration, for instance,from photovoltaic panels.21 Smart grids also enable EVs to offer theirstored energy surplus to electricity distributors.22 Mega Joules per Kilo-meter (MJ/km) consumption reductions may rise to 70 percent when anICV-similar BEV is used to cover the same route.23 All regulated pollu-tants common to all combustion processes, not only carbon dioxide (CO2)emissions, need to be considered due to the significant damage to theenvironment.24

Even when one considers thermoelectric power generation from fossilsources, global efficiency is usually greater for the complete EV-recharg-ing process than for the ICV one.25 There is an overabundance of theroad model in the Brazilian transportation mix.26 The road transporta-tion sector consumes 26.1 percent of all energy and is second only to theindustrial sector (34.2 percent) according to the 2010 Brazilian EnergyBalance (the referenced values have not significantly changed so far).27

Because of its prevalence over other models, road transportation is re-sponsible for 90.41 percent of CO2 emissions in the sector, as indicated by

20. See Electric Vehicles: Myths v. Reality, SIERRA CLUB, http://content.sierraclub.org/evguide/myths-vs-reality (last visited Sept. 12, 2014).

21. See Von Elon Musk, Electric Cars and Photovaltaic Solar Cells, TELSA MOTORS

BLOG (Oct. 11, 2006), http://www.teslamotors.com/de_CH/node/3925.22. See Press Release, Endesa Present Charger that Enables Electric Vehicles to Return

Power to the Grid, ENDESA (Jun. 7, 2012), available at http://www.endesa.com/en/saladeprensa/noticias/Documents/NOTA%20%20PRENSA%20%20PRIMER%20CARGADOR%20V2G-EN.pdf.

23. See Lew Fulton, Scenarios for Cutting Carbon Dioxide in Transport 70 PercentWorldwide by 2050, in CLIMATE AND TRANSPORTATION SOLUTIONS FINDINGS

FROM THE 2009 ASILOMAR CONFERENCE ON TRANSPORTATION AND ENERGY POL-

ICY 9 (Daniel Sperling & James S. Cannon eds., 2010), available at file:///C:/Users/41059464/Downloads/2010-UCD-ITS-RP-10-09.pdf.

24. See Pollutants Vehicles Emit, BRIT. COLUM. AIR QUALITY, http://www.bcairqual-ity.ca/topics/vehicle-pollutants.html (last visited Sept. 12, 2014).

25. See JAMES LARMINIE & JOHN LOWRY, ELECTRIC VEHICLE TECHNOLOGY EX-

PLAINED 247 (2d ed. 2012).26. Domingues & Percorelli-Peres, supra note 1, at 67.27. Id.


the 2010 Emissions Inventory by the Science and Technology Ministry.28

The production capacity of the Brazilian electric power sector is enoughto absorb the gradual insertion of EVs by 2030.29 There is no doubtabout the broad space for transport electrification, including for the roadmodel.

B. PROPOSITION OF A CLASSIFICATION AND TOOL TO COMPARE

ROAD VEHICLES ATTRIBUTES

An innovative classification tool is proposed to identify attributes ofautomobile motors and establish public policy criteria for BEVs in Bra-zil.30 This tool focuses on the propulsion and replenishing system—em-phasizing the source of energy used by the vehicle—rather than on thetraction system. This new classification also adopts the same understand-ing of electromechanical energy converters acting as generators in powerplants, which are identified by the primary source and are called hydroe-lectric power plant, thermoelectric power plant, etc. Two steps are neces-sary for using this tool: the preparation of a table with the previouslyestablished vehicular attributes, and a method to build a correspondingradar graph, which is considered the most appropriate way to display thefavorable and non-favorable characteristics of road vehicles.31

According to the vehicle energetic source, the classification distin-guishes clearly the fuel-dependent vehicles from the independent-fuel ve-hicles. The fuel production and refueling system depends on largeamounts of electricity to work. Conversely, a BEV depends on a central-ized electricity system that can use non-renewable and renewable primaryenergy sources, as well as distributed energy sources, micro-generationfrom small photovoltaic panels, and wind generators.32

The classification helps to separate three big groups of vehicles: ther-mal energy vehicles (THV), thermal and electrochemistry energy vehicles(THELV), and electrochemistry energy vehicles (ELV). The third groupconsists of a radical innovation: a vehicle without a fuel tank, which onlyrequires electricity to operate. The first and second groups represent the

28. Id. at 65.29. See MINISTERIO DE MINAS ENERGIA [MINESTRY OF MINES ENERGY], PLANO NA-

CIONAL DE EFICIENCIA ENERGETICA PERMISSAS E DIRETRIZES BASICAS NA

ELABORACAO DO PLANO [NATIONAL EFFICIENCY ENERGY ASSUMPTIONS AND

BASIC GUIDELINES ON ESTABLISHMENT OF THE PLAN] 39 (2009).30. See LUND, supra note 18, at 15 (referring to the concepts of Eletromechanical En-

ergy Conversion as well those inspired by the Choice Awareness Theory).31. “The Choice Awareness theory presents two theses: The first states that when soci-

ety defines and wishes to implement objectives implying radical technologicalchange, existing organizations will often seek to create the perception that the rad-ical change in technologies is not an option and that society has no choice but toimplement a solution involving the technologies that will save and constitute ex-isting positions. The second thesis argues that, in such situation, society will bene-fit from focusing on Choice Awareness that is, raising the awareness thatalternatives do exist and that it is possible to make a choice.” Id. at 3–4.

32. See Musk, supra note 21.


existing fuel structure as well as the need for a fuel tank inside thevehicle.

C. DESCRIPTION OF THE PROPOSED CLASSIFICATION

Two road automotive systems to be observed and classified are the en-ergy source system and the energy fueling system. Three major groups ofroad vehicles are identified based on these systems:

Group G1: Thermal energy vehicles (THVs), corresponding to pre-sent ICVS, which emphasize the engine instead of the primary en-ergy that moves the vehicle.Group G2: Thermal and electrochemistry energy vehicles (THELV),corresponding to actual HEVs (Hybrid EVs) and PHEVs (Plug-inHybrid EVs), which emphasize the propulsion system instead of thetwo primary energies that move the vehicle.Group G3: Electrochemistry energy vehicles (ELVs), correspondingto BEVs and fuel cell vehicles.

D. EVALUATION TOOL FOR ATTRIBUTES

An attribute is a technological aspect of a road vehicle relative to itssustainability. Attributes were considered Favorable and Non-Favorable;three levels were associated to the respective categories: High (H), Me-dium (M), and Low (L). A fourth level, Null (N), is given to an inexistentattribute relative to the Favorable or Non-Favorable categories.

A favorable attribute (F) is adopted when the more it grows, the moredesirable the attribute becomes. A Non-Favorable (NF) attribute isadopted when the more it grows, the more undesirable the attribute be-comes. Four values are associated with each one level as follows: H= 3,M= 2, L= 1, N= 0.

The favorable and non-favorable attributes chosen to evaluate vehiclegroups are described in Table 1 as well as for energy production and sup-ply system in Table 2.

Table 1–Favorable and Non-Favorable Attributes for the Vehicle

Favorable Attributes for the Vehicle Non-Favorable Attributes for the(F) Vehicle (NF)

Energetic Efficiency Dependence of non-renewablecombustibles

Range Emissions of Pollutants and CO2

Home refueling Noise

Indoor operation Refuel time


Table 2–Favorable and Non-Favorable Attributes for the EnergyProduction and Supply System

Favorable Attributes for the Supply Non-Favorable Attributes for theSystem (F) Supply System (NF)

Need of only electricity to supply the Need of combustible reservoirs, watervehicle and refueling station and electric supply in refueling stations

Insertion in energy smart grids Pollutants emissions from the refuelingstation

Flexibility in the use of various forms Need of trucks of combustibles toof primary energy supply the refueling station

Energy price varies with the day hour Complex logistic to supply therefueling station

F. EVALUATION TOOL FOR COMPARING THE ATTRIBUTES

OF ROAD VEHICLES

Since the current fleet of Brazilian road vehicles is almost exclusivelycomposed of conventional THVs, and there is not a public policy compre-hensively considering the ELVs,33 the proposed tool was employed tocompare the attributes of THVs and ELVs for light-duty vehicles (LDVs)(refer to Tables 3 and 4). The extensive use of renewable combustiblemixture of sugar cane ethanol and gasoline in THVs and flex-fuel carsappear in the third column of Table 4. ELVs were considered in the Bra-zilian transportation matrix and in smart-energy grids, which are cur-rently planned. More than 80 percent of the Brazilian population lives inurban centers34 that do not always have air quality in accordance withWHO standards,35 thus making ELVs more attractive.36

The radar graphs, in general, compare attributes in a decision process.Radar graphs were utilized by Helio International as mentioned by REISto describe sustainable indicators identified by the Commission on Sus-tainable Development for UN study in 2006.37

33. See Domingues & Percorelli-Peres, supra note 1, at 67.34. Urban Population (% of Total), WORLD BANK, http://data.worldbank.org/indica

tor/SP.URB.TOTL.IN.ZS (last visited Sept. 23, 2014).35. Brazil, OECD BETTER LIFE INDEX, http://www.oecdbetterlifeindex.org/countries/

brazil/ (last visited Oct. 6, 2014).36. The air quality standards are outdated and the conditions are worse than the

presented statistics in accordance with studies of the Environmental and EnergyInstitute-IEMA in Brazil published in 2012. See generally ENVIRONMENTAL AND

ENERGY INSTITUTE, www.energiaeambiente.org.br (last visited Aug. 11, 2014).37. See REIS, supra note 19.


Table 3–Non-Favorable Attributes Evaluation

Non-Favorable ElectrochemistryAttributes Thermal Energy Vehicles Energy Vehicles

3 Mixed non-1 Non- renewable and

renewable 2 Renewable renewablecombustible combustible combustible 1 Battery

vehicles vehicles vehicles electric vehicle

1 Dependenceof non-

H M L Nrenewablecombustibles

2 PollutantsH L M N

Emission

3 Noise M M M L

4 Refuel time L L L H

5 Necessity ofcombustiblereservoirs and H H H Nelectric supplyin the station

6 GasEmission of M M M Nthe station

7 Necessity offleet ofcombustible

H H H Ntank trucks tosupply thestation

8 ComplexLogistic to

H H H MSupply theStations


Graph 1–Non-Favorable Attributes Evaluation

A4 Refuel TimeA8 Complex Logistic to Supply the StationsA3 NoiseA1 Dependence of non-renewable combustiblesA2 Gas emissionA5 Need of combustible reservoirs underground and electric supplyA6 Gas emission of the stationA7 Need of fleet of combustible tank trucks to supply stations

Non-Favorable Attributes of THV and ELV

THV, A4, 1

THV, A8, 3

THV, A3, 2

THV, A1, 1

THV, A2, 2THV, A5, 3

THV, A6, 2

THV, A7, 3

ELV, A4, 3

ELV, A8, 1

ELV, A3, 1

ELV, A1, 0

ELV, A2, 0ELV, A5, 0

ELV, A6, 0

ELV, A7, 0

THV ELV


Table 4–Favorable Attributes Evaluation

Favorable ElectrochemistryAttributes Thermal Energy Vehicles Energy Vehicles

3 Mixed non-1 Non- renewable and

renewable 2 Renewable renewablecombustible combustible combustible 1 Battery

vehicles vehicles vehicles electric vehicle

1 EnergeticL L L H

Efficiency

2 Range H H H L

3 HomeN N N H

refueling

4 Energy pricevaries with N N N Mday-time

5 IndoorN N N M

operation

6 Necessityonly ofelectricity to

N N N Hsupply thestation and thevehicle

7 Insertion inN N N H

smart grids

8 Flexibility inthe use of L M M Hprimary energy


Graph 2–Favorable Attributes Evaluation

A2 RangeA8 Flexibility in the use of primary energyA1 EfficiencyA3 Home refuelingA4 Energy price varies with day timeA5 Indoor operationA6 Necessity only of energy to supply the station and the vehicleA7 Insertion in smart grids

Favorable Attributes of THV and ELV

THV, A2, 3

THV, A8, 2

THV, A1, 1

THV, A3, 0THV, A4, 0

THV, A5, 0

THV, A6, 0

THV, A7, 0

ELV, A2, 1

ELV, A8, 3

ELV, A1, 3

ELV, A3, 3ELV, A4, 2

ELV, A5, 2

ELV, A6, 3

ELV, A7, 3

THV ELV

G. ANALYSIS OF RESULTS

Graphs 1 and 2 show large discrepancies between a THV and ELV,indicating that it is adequate to adopt different public policies, which takeinto account their attributes. The classification based on energy sourcesfor road vehicles showed that one of the major obstacles to increase ELVsin the market are batteries, the most expensive components.38 Calcula-

38. Brad Plumer, Expensive Batteries are Holding back Electric Cars. Can thatChange?, WASH. POST (Apr. 2, 2013), http://www.washingtonpost.com/blogs/wonkblog/wp/2013/04/02/expensive-batteries-are-holding-back-electric-cars-what-would-it-take-for-that-to-change/.


tions performed by Pecorelli-Peres39 showed it is possible to achievelower prices than THVs, which increased by 1 percent with the introduc-tion of ELVs. Due to low production of ELVs when the plan is imple-mented, there is a reduction in battery price because at the same timethere will be a large production of THVs. This proposed policy will re-main in effect until the price of ELVs falls to an attractive value.

IV. REGULATORY AND TAX BURDEN ON ELECTRICVEHICLES IN BRAZIL

EVs suffer from a bottleneck tax cost; they are taxed at 25 percent byfederal VAT—the same rate applied to the most polluting combustionmotor vehicles. In contrast, Electric motorcycles pay 35 percent.40 EVsare also subject to a state VAT of 18–19 percent and are taxed at 11.6percent by federal social contributions on sales.41 There is a yearly statevehicle tax of up to 4 percent.42 All taxes referred to here have the vehi-cle market value as the taxable basis. There is no substantial rebate ortax incentive related to the purchase of an EV. INOVAR-AUTO firstexcluded EVs from its product innovation and local content-incentiveprogram, but then included them on a temporary basis.43 Such tax bur-dens make it impossible for EV industrialization and trade in scale,thereby preventing a reduction in air pollution.

There are also municipal taxes on real estate related to the infrastruc-ture required for EV use such as recharging stations, repair shops, andservices rendered therein. For example, there is an annual 2.8 percent taxon the market value of non-residential real estate in Rio de Janeiro. Cit-ies also tax 2 percent of the service price on the rendition of services.44

Thus, there is no income tax incentive or financial subsidy for EV manu-facturers and consumers.45

V. AIR POLLUTION CONTROL PROGRAMS BY ROADMOTOR VEHICLES IN BRAZIL

A. REGULATORY ASPECTS LEADING TO INOVAR-AUTO

Air pollution is a serious environmental problem in major urban areasin Brazil. This situation would be worse if there was no emission control

39. See generally Luiz Artur Pecorelli Peres et al., A insercao do Veıculo Eletrico noPlanejamento Estrategico das Empresas de Energia [The Insertion of Electric Vehi-cle Strategic Planning of Energy Companies], VIII ERLAC, CIGRE, CIUDAD DEL

ESTE, PARAGUAY (1999).40. See Jose Marcos Domingues, An Introduction to The Brazilian Tax System, 44

KOBE U. L. REV. 19, 23-24 (2010) (summarizing the Brazilian tax system); See alsoDomingues & Percorelli-Peres, supra note 1, at 55.

41. Domingues & Percorelli-Peres, supra note 1, at 63.42. Only around one-third of Brazilian States allow any kind of tax differentiation in

favor of EVs. See id. at 64.43. See generally Decreto No. 8.015, de 17 Maio de 2013, DIARIO OFICIAL DA UNIAO

[D.O.U.] de 17.05.2013 (Braz.).44. Domingues & Percorelli-Peres, supra note 1, at 64.45. Id.


regulation. The Air Pollution Control Program by Motor Vehicles(PROCONVE) launched the first public policy towards vehicle emissioncontrol in Brazil in 1988. It established maximum pollution emissionstandards (in grams/km) for new vehicles entering the market, and manu-facturers were granted a rebate of 5 percent of the federal VAT46 levelsfor the adoption of catalyzers and fuel injection devices. The target wasachieved earlier than planned.

The program became law in 199347 with a schedule of additional fourphases over a large time span, but with no tax incentive. The programaimed at reaching the EURO-V standards in 2012.48 The program as awhole was fully implemented,49 but attempts to introduce a seventhphase with higher standards and adoption of more fuel-efficient technolo-gies without rebate schemes faced great opposition. In response, a newand comprehensive automotive regulatory framework was created to pro-mote vehicle technology innovation, including emission control, as well asthe industrial policy goals the INOVAR-AUTO program launched.50

INOVAR-AUTO is a type of feebate program with a limited degree ofprice variation. It first increases the federal VAT on vehicle sales by 30percent and then imposes requirements and targets on vehicle efficiency,national production, R&D, and automotive technology for manufacturersin order to qualify for a 30 percent presumed tax credit.51 There is alsothe possibility of an additional 1 percent and 2 percent tax rebate effec-tive between January 1st, 2017 and December 31st, 2020, if higher targetsare met by October 1st, 2016.52 The program covers existing manufactur-ers and vehicle importers that plan to assemble vehicles in Brazil.53

This new tax regime is also limited to vehicles manufactured between2013 and 2017. Tax incentives are granted today, but will be measured in2017 with severe non-compliance penalties, such as sanctions.54

Regarding vehicle efficiency, INOVAR-AUTO sets corporate averagevehicle efficiency targets rather than on each vehicle model.55 The

46. Policy Update, Brazil’s Inovar-Auto Incentive Program, INT’L COUNCIL ON CLEAN

TRANSP. (Feb. 2013), http://www.theicct.org/sites/default/files/publications/ICCTupdate_Brazil_InovarAuto_feb2013.pdf.

47. See generally Lei No. 8.723, de 28 de Outubro de 1993, D.O.U. de 28.10.1993(Braz.).

48. European emission standards define the acceptable limits for exhaust emissions ofnew vehicles sold in EU member states stated by the Regulation (EC) No 715/2007. Current regulation in the EU is the EURO-VI with more stringent stan-dards. See Council Regulation 715/2007, 2007 O.J. (L 171) 1.

49. Just a one year delay in the last phase on heavy vehicles. See Commission Direc-tive 2008/74, 2008 O.J. (L 192) 51 (EC).

50. See Lei No. 12.715, de 17 de Setembro de 2012, D.O.U. de 18.09.2012 (Braz.).51. Since Imposto sobre Produtos Industrializados (IPI) is a VAT, the rebate is in the

form of presumed credit to be abated at the end of the tax processing. See PolicyUpdate, supra note 46, at 1.

52. Decreto No. 7.819, de 3 Outubro de 2012, D.O.U. de 03.10.2012 (Braz.).53. Policy Update, supra note 46, at 1.54. Id. at 2.55. Id.


targeted standards are weighted by the average of the carmaker’s saleportfolio.

If these targets are met, it is expected that light-duty vehicles will im-prove their efficiency by at least 12 percent on average with the 30 per-cent tax rebate.56 The additional 1 percent and 2 percent tax rebate maylead, respectively, to 16 percent and 18 percent improvement.57 Thesetargets were based on Europe’s 2015 targets adapted to Brazil based ondifferences in driving cycle; vehicle; fuel; and road specifications, mea-sured as average vehicle efficiency in megajoules/kilometers (mj/km) esti-mated on the combined (urban/highway) CAFE cycle.58 If INOVAR-AUTO is fully implemented, it would represent between a 10 and 15 per-cent reduction in greenhouse gas emissions.59

Besides energy efficiency, car makers also need to reach certain levelsof manufacturing within the country and targets in two out of three otherpolicy goals: (1) investments in R&D, (2) investments in industrial tech-nology and engineering, and (3) participation in vehicle labeling.60

In short, INOVAR-AUTO was devised to protect and foster car-mak-ing in Brazil, which already enjoyed benefits from temporary tax rebatesand energy efficiency goals. Other requirements were designed as condi-tions to offer these rebates on sustained basis.

B. AN ECONOMIC CRITICISM AND ANALYSIS OF INOVAR-AUTO

INOVAR-AUTO implementation regulation61 did not mention EVs asqualified for the new regime. This generated reactions from manufactur-ers, environmentalists, and academics.62 In May 2013, a revised list oftypes of vehicles eligible for the tax rebate was enacted and EVs wereamong the vehicles listed.63 Such change was welcomed as a step towardsthe promotion of EVs in Brazil.

In addition to INOVAR-AUTO, plans for another major governmen-tal program, INOVA-ENERGIA, was recently announced.64 INOVA-

56. Id.57. Id. at 3.58. Id. at 3. The Corporate Average Fuel Economy (CAFE) were regulations in the

United States to improve the average fuel economy of cars and light trucks in thewake of the 1973 Arab Oil Embargo. See Fuel Economy, Regulations and Stan-dards, EPA, http://www.epa.gov/fueleconomy/regulations.htm (last visited Aug. 18,2014).

59. Id. at 2.60. Id.61. See generally Decreto No. 7.819, de 3 Outubro de 2012, D.O.U. de 03.10.2012

(Braz.).62. See generally Jose Marcos Domingues & Luiz Artur Pecorelli-Peres, Eficiencia

energetica e carga tributaria: o veıculo eletrico [Energy Efficiency and Tax Burden:The Electric Vehicle], MONITOR MERCANTIL (Dec. 27, 2012, 7:12 PM), http://www.monitormercantil.com.br/index.php?pagina=Noticias&Noticia=125276).

63. See generally Decreto No. 8.015, de 17 Maio de 2013, D.O.U. de 17.05.2013(Braz.).

64. See generally Decreto No. 6.938, de 13 Agosto de 2009, D.O.U. de 13.08.2009(Braz.); Lei No. 11.540, de 12 de Novembro de 2007, D.O.U. de 12.11.2007 (Braz.);Decreto No. 8.015, de 11 Outubro de 2005, D.O.U. de 11.10.2005 (Braz.); Lei No.


ENERGIA aims to promote the integration of smart grids, alternativeenergy sources, and EVs, through subsidy and credit funding of approxi-mately $1.5 billion between 2013 and 2017.

INOVAR-AUTO is, in the short run, the most important incentive pro-gram to EVs in Brazil. Because its primary target is corporate emissionlevels, the introduction of zero-emission EVs will facilitate compliancewith INOVAR-AUTO goals. But for energy efficiency as a whole (takinginto account total new vehicle sales), this program may have perverseeffects. INOVAR-AUTO will reduce supply incentive effects on effi-ciency improvements to other combustion models. Further, this initialincentive for EVs will be limited since gains from additional efficiencyimprovements in INOVAR-AUTO framework are quite small with onlyan additional 1 percent and 2 percent tax rebate.

C. INTRODUCING ENERGETIC EFFICIENCY INCENTIVES

IN INOVAR-AUTO

There has been growing interest in feebate programs as an alternativefor command and control-oriented emission regulations’ standards. Fee-bate programs impose a fee (tax)65 on vehicles emitting emissions abovea certain point (pivot point), but grant a rebate to those emitting less.Thus, feebates set a price for emission units for every vehicle according toits fuel efficiency.

Feebates combine a fee (tax) for new vehicles with fuel economy belowsome specified pivot point, with rebates for vehicles with fuel economyabove the pivot point. These fees/rebates could be levied/granted at ei-ther the consumer or the manufacturer level.66 The setting of the pivotpoint does not change the price of each emission unit, but affects demandand supply differently due to the new vehicle prices affected by (orgranted) feebate incentives. Adamou shows that a higher pivot point will

10.973, de 2 de Dezembro de 2004, D.O.U. de 02.12.2004 (Braz.); Lei No. 10.848,de 15 de Marco de 2004, D.O.U. de 15.03.2004 (Braz.); Lei No. 9.991, de 24 deJuhlo de 2000, D.O.U. de 24.07.2000 (Braz.); Lei No. 9.074, de 7 de Julho de 1995,D.O.U. de 07.07.1995 (Braz.). See also Inova Energy, FINEP (Mar. 6, 2014), http://www.finep.gov.br/pagina.asp?pag=programas_inovaenergia; Edital de SelecaoPublica Conjunta ANEEL/BNDES/FINEP de Apoio a Inovacao Tecnologica noSetor Eletrico[Notice of Public Joint Selection ANEEL/BNDES /FINEP SupportTechnological Innovation in The Electricity Sector-INOVA Energy-01/2013], FINEP

(Jan. 2013), http://download.finep.gov.br/chamadas/inova_energia/editais/EditalINOVAENERGIA1.pdf.

65. See JOSE MARCOS DOMINGUES DE OLIVEIRA, DIREITO TRIBUTARIO E MEIO

AMBIENTE [TAX LAW AND THE ENVIRONMENT] (Editora Forense 3rd ed. 2007).66. See David L. Greene et al., Feebates, Rebates and Gas-Guzzler Taxes: A Study of

Incentive for Increased Fuel Economy, 33 ENERGY POLICY 757 (2005), http://cta.ornl.gov/cta/Publications/Reports/FeebateEnergyPolicy_FINAL.pdf; see alsoCarolyn Fischer, Comparing flexibility mechanisms for fuel economy standards, 36ENERGY POL’Y 3116 (2008), http://ac.els-cdn.com/S0301421508001729/1-s2.0-S0301421508001729-main.pdf?_tid=e65fe612-4a90-11e4-ae76-00000aacb360&acdnat=1412294872_9429a2ba5ad5fc79ee783716455ec350.


lead to less reduction in vehicle sales with less reduction in emission.67

On the contrary, a low pivot point will result in higher emission reductionat the expenses of larger decreases in sales; therefore, the location of apivot point sets the trade-off between environmental and economic re-sults of feebate programs.

According to the International Council on Clean Transportation(ICCT), the three main, positive features of a feebate program are: (i)target based on vehicle emission levels rather than on corporate ones; (ii)a continuous and linear feebate rate line with a linear metric, such as CO2

emissions or fuel efficiency, to be applied in any vehicle model; and (iii)the pivot point set to make the system self-funding and sustainable, peri-odically adjusted to compensate for changing conditions.68 The ICCTalso shows that the most successful cases were in France and Canada,where full feebate programs were implemented (taxes on high emittingvehicles paying for less emitting vehicle tax cuts).69

We propose a complete revision of INOVAR-AUTO towards an effi-cient mechanism that will continuously benefit technologies by decreas-ing emission levels without creating perverse incentives to others. As forthe appropriate structure of a conventional feebate program, the mainsuggested changes are:

(i) vehicle-based targets rather than corporate ones;(ii) linear emission rate line; and(iii) a pivot point reduction schedule accommodating revenue-neu-

tral results and EV logistic and infrastructure dynamics.

These changes will enable INOVAR-AUTO to promote cost-effectivevehicle efficiency, ultimately leading to zero-emission vehicles, withoutcreating perverse incentives.

VI. REGULATORY AND TAXATION PROPOSALS70

To adapt Brazil’s regulatory and tax systems to minimize the tax costfor production and consumption of EVs, Brazil should develop a series ofnormative measures to support domestic production of EVs. As men-tioned, the INOVAR-AUTO program must undergo an overall review toadequately consider EVs.

Aside from updating the Brazilian Traffic Code to reflect this energy-based classification of EVs, all tax adjustments should be modulated toprogressively benefit THELVs, PHEVs, and ELVs—keeping in mind notonly the environmental friendliness of the energy source, but the emis-

67. Adamos Adamou et al., Designing Carbon Taxation Schemes for Automobiles: ASimulation Exercise for Germany, (Fondazione Eni Enrico Mattei, Working PaperNo. 96.2011), available at http://services.bepress.com/feem/paper647/.

68. Policy Update, supra note 46.69. See DOMINGUES DE OLIVEIRA, supra note 65.70. As a consequence of further interdisciplinary studies conducted by the authors,

this section is an improvement of an earlier essay. Domingues & Pecorelli-Peressupra note 1.


sion level of each category of vehicles as well.71

A. FEDERAL VAT, INOVAR-AUTO, AND SOCIAL

CONTRIBUTION ADJUSTMENTS

IPI-value added tax should be reduced for an initial period of ten tofifteen years to allow for reasonable investment amortization. First, cur-rent high tax rates of 25 percent (for electric cars)72 and 35 percent (forelectric motorcycles)73 should be eliminated. Subsequently, a dual tax-basis system should be adopted to properly fulfill the ability-to-pay prin-ciple and the polluter-pays principle applied to environmental taxation,74

following the categorization modulation device suggested above.Also following the categorization modulation device suggested above,

“PIS-COFINS (11.6 percent contributions charged on gross revenuesfrom vehicle sales), [and] as an exception, EV taxation ought to be . . .zero[ed] or at least [rescaled up] to 3.65 percent, which is the [respective]ordinary rate . . . .”75

As to INOVAR-AUTO, we propose transforming this federal IPI-VATtax incentive program from a corporate pattern into a product pattern tobetter benefit EVs according to environmental-friendly technological cri-teria, thus focusing on the efficiency-emission improvements of each classof automotive vehicle as above classified.

B. INCOME TAX DEDUCTIONS FOR COMPANIES FOLLOWING A SCALE

COMPATIBLE TO THE ABOVE CLASSIFICATION OF EVS

Companies taxed on real profit76 should be allowed to progressivelydeduct from the tax amount due, up to 10 percent of the amount investedin the purchase of EVs, limited to $20,000.00 per EV.

As an exception,77 companies taxed on presumed profit78 should be eli-gible for a tax credit of up to $20,000.00 per EV purchased, which should

71. The proposals below should not be construed as tax cuts, because there is currentlyno EV scale production or importation into Brazil. The only exceptions are theincome tax incentive proposals, which may represent a tax bonus in lieu of directgovernmental subsidies or grants.

72. Decreto No. 6.006, de 28 de Dezembro de 2006, D.O.U. de 8.01.2007 (Braz.) (ap-proving the table of IPI tax rates for electric cars).

73. Id.74. See Domingues & Pecorelli-Peres, supra note 72, at 76.75. Domingues & Pecorelli-Peres, supra note 72, at 75; Contribuicao para o PIS/

PASEP e COFINS, RECEITA FEDERAL, 390(a), (c), http://www.receita.fazenda.gov.br/PessoaJuridica/DIPJ/2004/PergResp2004/pr363a430.htm (last visited Aug. 12,2014).

76. Real profit of effective profit is the business net profit adjusted by additions, exclu-sions, or offsets as provided by law. See Decreto No. 3.000, de 26 de Marco de1999, D.O.U. de 26.3.1999, art. 247 (Braz.).

77. See Decreto No. 3.000, de 26 de Marco de 1999, D.O.U. de 26.3.1999, art. 526(Braz.) (disallowing tax incentive credits when the taxpayer is taxed on the basis ofpresumed profit).

78. As an option, a company may be taxed on its presumed profit, which is a percent-age of gross revenues varying from 8 percent to 32 percent depending on the busi-ness area, as provided by law (for revenue limits and specific percentages, see


be set off against the tax amount due in the same year the vehicle ispurchased.

Companies manufacturing EVs should be granted energy-efficiencyand emission-level progressive deductions leading to an income-tax-freetreatment on profits from sales of government certified EVs and respec-tive spare parts according to their respective environmental merits.

To stimulate equipment acquisition and renovation/modernization ofthe EV assembling industry, a yearly progressive accelerated depreciationof up to 20 percent—limited the respective asset cost, as the above envi-ronmental/efficiency criteria are met—should be granted.

Individual consumers should enjoy environmental/efficiency-relatedprogressive deductions79 of up to the equivalent to $6,250.00 from grossrevenues in relation to the acquisition of EVs, motorcycles, and tricycles(limited to 20 percent of the total cost of each vehicle).

C. STATE AND MUNICIPAL TAX DEDUCTIONS FOR/RELATED TO EVS:

State VAT is due at a general rate of 18 to 19 percent, depending on thejurisdiction. Because the National Council for Tax Policy has allowedtopic reductions of this rate under Article 155, Section 2(XII)(g) of theConstitution to reduce the final tax burden on basic consumption food-stuff down to 7 or 8 percent of the respective consumer price, we proposeextending a similar tax reduction to EVs in a progressive way, followingthe above environmental/efficiency criteria.

States also charge an annual property tax on vehicles, ranging between1.5 to 4 percent of the respective market value. 80 Some states have al-ready exempted EVs. It is proposed that all twenty-seven states proceedaccordingly; and then, as a second step, implement a dual tax-basis sys-tem to properly fulfill the ability-to-pay principle and the polluter-paysprinciple applied to environmental taxation, as above proposed for fed-eral VAT.

Municipalities charge two taxes that can be greened in favor of EVs: (i)the annual property tax on urban real estate (i.e., 2.8 percent tax on themarket value of non-residential real estate81 in Rio de Janeiro), and (ii)the service tax on the rendition of services in general (in Rio de Janeiro,rates usually range 2 to 5 percent on the service price).82

Taxes ordinarily imposed on real estate include properties used for as-sembling plants, EV-charging stations, EV workshops, and on related ser-

Decreto No. 3.000, art. 518-19, de 26 de Marco de 1999, D.O.U. de 26.3.1999(Braz.).

79. See id. art. 82.80. Juliana Mello, Everyday taxes in Brazil: IPVA, IPTU and IPTR, THE BRAZ. BUS.

(Sept. 9, 2012), http://thebrazilbusiness.com/article/everyday-taxes-in-brazil-ipva-iptu-and-iptr.

81. Lei No. 691, de 24 de dezembro de 1984, DIARIO OFICIAL DO RIO DE JANEIRO

[D.O.E.R.J.] de 24.12.1984 (Braz.).82. Lei No. 3.691, de 28 de novembro de 2003, D.O.E.R.J. de 28.11.2003, as amended

by Lei No. 5.106, de 11 de novembro de 2009 D.O.E.R.J. de 21.11.2009 (Braz.).


vices rendered therein, respectively. As a common practice,municipalities have granted ten-year long property tax exemptions forstrategic businesses interested in establishing in certain cities. This taxexpenditure can only be legitimate in view of predicted increases of eco-nomic activity, services, jobs, and income; thus, generating future growthof tax revenues.83 Thus, we propose extending exemptions for real estateinvolved with manufacturing and repairing EVs, as well as charging sta-tions and workshops. Additionally, service tax exemptions ought to begranted to services surrounding the EV market, such as designing andrepairing. In short, EV-related infrastructure should be de-taxed by mu-nicipalities to reflect the environmental merit of such activities.

VII. CONCLUSION

Changes in climate have drawn attention achieving a relevant positionin global concerns, mainly in relation to the responsibility of countries inreducing greenhouse effect emissions as well the air quality. Thus, allTHVs and THELVs, having tail pipes, produce carbon monoxide, nitro-gen oxides, etc. even when they use biofuels such as ethanol.

EVs have the great advantage of not producing such emissions evenwhen compared to hybrids such as THELVs (combining electricity withfuels), which pollute less than vehicles powered solely by fossil fuels.EVs also excel in energy efficiency, mainly in city traffic at low speedswith frequent stops and accelerations. EVs may also boost economicgrowth because their production is intimately connected to several indus-trial segments.

Even though EVs are a reality in the developed world, they are stilltreated as almost a fiction in Brazil, where the respective implementationis hampered by regulatory and tax legislations that do not properly valuethem, and even put fuel-powered vehicles in relative advantage. In anemerging country like Brazil, aiming at exercising market leadership,hampering the insertion of EVs in the domestic productive chain is, to saythe least, inconsistent with the present economic-environmental situationand national aspirations to an autonomous, efficient, and sustainable de-velopment. If EV technology is a new alternative against dependence onfossil fuels, then public policies, especially regulatory and tax policies,ought to meet the public interest as adequate tools for changing such re-ality by inducing sustainability through the inclusion of EVs in mobility.84

Notwithstanding its research and development investment possibility,the INOVAR-AUTO program, even in its new version (May 2013),seems cautious in dealing with energy efficiency and environmental pro-

83. See JOSE MARCOS DOMINGUES, DIREITO TRIBUTARIO: CAPACIDADE CONTRIBU-

TIVA: CONTEUDO E EFICACIA DO PRINCIPIO [Tax Law: Ability to Pay: Content andEffectiveness of the Principle] 120 (Renovar, 2nd ed. 1998).

84. Jose Marcos Domingues, A vez do veıculo eletrico no Brasil, MONITOR MERCAN-

TIL (Sept. 8, 2011, 9:44 PM), http://www.monitormercantil.com.br/index.php?pagina=Noticias&Noticia=99109.


tection, but derails EVs, which are more efficient than conventional fuelcombustion-powered vehicles.85

Let Brazil devote itself to EV technology supported by adequate taxtreatment with the same determination that led to the development ofethanol automotive technology. The INOVAR-AUTO program may beimproved through a more rational use of the feebate system taking intoaccount the above proposed EV categorization.

These proposed improvements to INOVAR-AUTO should inspirestates and municipalities in conceiving fiscal incentives that take into ac-count the source of the energy employed for powering transport vehiclesand the financing of infrastructure (real estate and services) required tosupport EV introduction in the market.

85. See Sobre Veıculos Eletricos [About Electric Vehicles], INSTITUTO NACIONAL DE

EFICIENCIA ENERGETICA, http://www.inee.org.br/veh_sobre.asp?Cat=veh (last vis-ited Aug. 12, 2014).

Comment

REPEALING BIRTHRIGHT CITIZENSHIP:HOW THE DOMINICAN REPUBLIC’S

RECENT COURT DECISION REFLECTS

AN INTERNATIONAL TREND

Natalie Sears*

I. INTRODUCTION

BIRTHRIGHT citizenship has historical roots dating back to origi-nal constitutions in almost every country around the world. Al-though the universal practice among countries enacting their

constitutions was to adopt birthright citizenship for their citizens, this ini-tial historical practice has long been abandoned. The more recent world-wide trend is constitutional amendments removing each country’sautomatic birthright citizenship provisions.

Most recently, the Dominican Republic’s highest court issued a deci-sion repealing the country’s constitutional birthright citizenship provisionwhile retroactively applying it to Dominicans of Haitian descent born toparents who never obtained official Dominican citizenship. This decisionreflects the rest of the world’s action in repealing birthright citizenship forall citizens born on each country’s soil. But the Dominican Republic’sdecision is particularly troubling because it will likely render thousands ofpeople completely stateless with citizenship neither in the Dominican Re-public or Haiti.

In evaluating the worldwide trend of abandoning birthright citizenship,this comment seeks to identify differences among those countries adopt-ing the trend and those flatly rejecting such a constitutional change. TheUnited States is among the very few countries that have continuously re-jected proposed constitutional amendments attempting to change the na-tion’s birthright citizenship provisions. In contrast, New Zealand andIreland are among those countries that have expressly repealed theirbirthright citizenship laws in favor of a stricter citizenship requirement.

As with any other worldwide legal trend, there are both benefits anddisadvantages to repealing birthright citizenship. Although many coun-tries have repealed this law, they have done so in different ways and withvarying reasons justifying their decision.

* Natalie Sears is a J.D. Candidate, May 2015 and has a B.B.A. from Texas ChristianUniversity. She would like to thank her family and friends for their continuedsupport.

423


This comment analyzes the motivations for keeping or discarding con-stitutional birthright provisions in countries that disregard their constitu-tional birthright citizenship provisions and those that keep such laws inplace. In addition, it will look at the repercussions countries experienceonce they have revoked such provisions, including the constitutional andhuman rights challenges to such action.

II. BACKGROUND

Birthright citizenship has been defined as “the citizenship granted to aperson by virtue of the circumstances of his/her birth.”1 A birthright citi-zenship may be obtained through one of two ways: (1) jus soli or (2) jussangunis.2 Jus soli is a “right by which nationality or citizenship can berecognized to any individual born in the territory of the related state.”3

Jus sangunis is a “social policy by which nationality or citizenship is notdetermined by place of birth, but by having an ancestor who is a nationalor citizen of the state.”4

In almost every country around the world, birthright citizenship was aclause found in each country’s constitution, guaranteeing citizenship tochildren born of immigrant parents, both those documented and undocu-mented.5 For example, the Citizenship Clause to the 14th Amendmentfound in the U.S. Constitution states that “[a]ll persons born or natural-ized in the United States, and subject to the jurisdiction thereof, are citi-zens of the United States and of the State wherein they reside.”6

Historically, the purpose and effectiveness of such constitutional provi-sions have been greatly debated. Today, the United States and Canadaare the only developed nations that have upheld their birthright citizen-ship provisions and continue to grant automatic citizenship to almost allchildren.7 In 2010, the Dominican Republic became the most recent na-tion to revoke its constitutional birthright citizenship provision, makingthe acquisition of citizenship now dependent upon one’s parents’ status.8Prior to its removal, Article 11 of the 2002 Dominican Republic Constitu-tion defined its nation’s citizens as “[a]ll persons born in the territory ofthe Republic, with the exception of the legitimate children of foreignersresiding in the country for diplomatic representation or those who are in

1. Birthright Citizenship Law & Legal Definition, U.S. LEGAL DEFINITIONS, http://definitions.uslegal.com/b/birthright-citizenship/ (last visited Aug. 11, 2014).

2. Id.3. Id.4. Id.5. See e.g., U.S. CONST. amend. XIV, § 1.6. Id.7. Nations Granting Birthright Citizenship, NUMBERSUSA, https://www.numbersusa

.com/content/learn/issues/birthright-citizenship/nations-granting-birthright-citizen-ship.html (last visited Aug. 29, 2014).

8. Rachel Reyes, The Dominican Republic Revokes Citizenship of Dominican-bornChildren of Unauthorized Migrants, CENTER FOR MIGRATION STUDIES (Oct. 3,2013), http://cmsny.org/the-dominican-republic-revokes-citizenship-of-dominican-born-children-of-unauthorized-migrants/.

2014] REPEALING BIRTHRIGHT CITIZENSHIP 425

transit.”9

When it removed the birthright citizenship provision from its constitu-tion, the question arose as to whether the Dominican Republic wouldretroactively apply the change to Dominicans of Haitian descent bornprior to 2010.10 Prior to 2010, the country’s Constitution did not give“citizenship to children born to diplomats or parents ‘in transit’ for tendays or less.”11 The September 2013 ruling by the Constitutional Courtinterprets and implements a new definition of “in transit,” applying retro-actively to revoke citizenship of children born in the Dominican Republicby parents, who were unauthorized migrants also born in the DominicanRepublic since 1929.12

This change will affect thousands of Dominican Republic residents whohave lived in the Dominican Republic since birth. Because the repeal willbe retroactively applied, it will effectively strip citizenship away fromthousands of residents rendering them entirely stateless. Such Domini-can Republic residents do not have citizenship in Haiti because they wereborn in the Dominican Republic; they are now left stateless because ofthe Constitutional Court’s ruling.

III. HISTORICAL BACKGROUND OF BIRTHRIGHTCITIZENSHIP AROUND THE WORLD

The history and reasoning behind so many countries initially grantingbirthright citizenship involves immigration policy and the fact that with-out birthright citizenship, many citizens will be left stateless. Today, outof the forty developed nations, the United States and Canada are the onlyones that continue to grant citizenship to anyone born on their land.13

Among the most recent nations repealing birthright citizenship includethe Dominican Republic in 2010,14 Australia in 2007, and New Zealand in2005.15

Some scholars argue birthright citizenship entices the practice of hav-ing “anchor babies,” a term referring to children of foreign illegal immi-grants that the families have in hopes of gaining citizenship for the entirefamily.16 But this theory used by conservatives attempting to eliminatebirthright citizenship has its faults.17 Other scholars argue that commonsense prohibits limiting the entry of undocumented immigrants on the

9. Miguel Ceara-Hatton, A critique of the ruling of the Dominican Republic Constitu-tional Court, STABROEK NEWS (Nov. 18, 2013), http://www.stabroeknews.com/2013/features/in-the-diaspora/11/18/critique-ruling-dominican-republic-constitutional-court/.

10. Reyes, supra note 8.11. Id.12. Id.13. Nations Granting Birthright Citizenship, supra note 7.14. Reyes, supra note 8.15. Nations Granting Birthright Citizenship, supra note 7.16. Allison S. Hartry, Birthright Justice: The Attack on Birthright Citizenship and Im-

migrant Women of Color, 36 N.Y.U. REV. L. & SOC. CHANGE 57, 60 (2012).17. See id.


one hand while granting citizenship to the children of those same immi-grants on the other.18

Although many proposed solutions have been suggested, many coun-tries have historically yielded to concerns fueled by the birthright citizen-ship debate by changing their immigration laws, particularly in the UnitedStates.19 Most recently, however, these concerns have been addressed byrepealing the entirety of some countries’ birthright citizenship laws, deny-ing automatic citizenship to those children born in the country, regardlessof their parents’ citizenship status. Such action is no longer the minoritydecision for countries, but now portrays an international trend occurringthroughout the world.

A. THE MOST RECENT COUNTRY TO REPEAL: DOMINICAN REPUBLIC

The Dominican Republic implemented its original Constitution in 1929and with it, automatically granted citizenship to every person born in itscountry.20 But its Constitution has always excluded from birthright citi-zenship those children born to diplomats residing in the Dominican Re-public and those “in transit.”21

Article 11 of the 1999 Dominican Republic Constitution stated that“Dominicans are: All persons born in the territory of the Republic withthe exception of the legitimate children of foreigners resident in the coun-try in diplomatic representation or in transit.”22 “In transit” was legallyinterpreted to mean a “period of less than ten days.”23 Therefore, thoseborn to temporary or permanent residents within the Dominican Repub-lic were constitutionally guaranteed Dominican Republic citizenship.24

This right existed for seventy-five years until 2004, when a new law nar-rowed the definition of “in transit.”25 But even before its new law, theDominican Republic began limiting migrant workers’, particularly of Hai-tian descent, ability of obtaining proof of Dominican citizenship, a pro-cess required to perform tasks such as opening a bank account andgetting married.26

On January 26, 2010, the Dominican government rewrote its Constitu-tion, requiring citizens to prove that at least one of their parents has Do-minican nationality in order to remain a legal Dominican citizen.27 Not

18. Rachel E. Rosenbloom, Policing the Borders of Birthright Citizenship: SomeThoughts on the New (and Old) Restrictionism, 51 WASHBURN L.J. 311, 314 (2012).

19. Id. at 313.20. Ceara-Hatton, supra note 9.21. OPEN SOCIETY INSTITUTE, DOMINICANS OF HAITIAN DESCENT AND THE COMPRO-

MISED RIGHT TO NATIONALITY 3 (Oct. 2010), available at http://www.crin.org/docs/DR%20Compromised%20Right%20to%20Nationality%20_IACHR%20report.pdf.

22. Id. at n.3.23. Id. at 3.24. Id.25. Id.26. Id. at 4.27. Prospery Raymond, Love thy neighbour? Not when it comes to the Dominican

Republic and Haiti, POVERTY MATTERS BLOG (Aug. 13, 2014, 2:00 EDT), http://


only did this constitutional amendment revoke many citizens’ rights towork and participate in society, it rendered a large amount of Haitiansand their children living in the Dominican Republic completelystateless.28

1. Constitutional Court Ruling Renders Many Haitian DominicanRepublicans Stateless

The most recent and drastic change to the Dominican Republic’s birth-right citizenship provision came in 2013, when its Constitutional Court re-interpreted the common definition of “in transit” and effectively revokedcitizenship from all Haitians living in the Dominican Republic born tomigrants who were not Dominican Republic citizens.29 The Court’s deci-sion cannot be appealed and it applies retroactively, to those born since1929, the year its Constitution came into effect.30

The Dominican Republic has since received numerous complaints andallegations of discrimination, but it continues to strongly hold to itscourt’s ruling. The nation even rejected a human rights report written bythe Inter-American Commission on Human Rights claiming that the Do-minican Republic’s decision is discriminatory against Haitian citizens andeffectively revokes 200,000 people’s citizenship.31 The government re-sponded, stating “[t]he government is acting in accordance with our con-stitution, and as such, it will follow the court’s ruling.”32

2. A Potential Human Rights Crisis

The Dominican Republic Constitutional Court’s ruling has the poten-tial to be disastrous for Haitians living in the Dominican Republic. Inaddition to immediately revoking citizenship from those without birthcertificates issued by its government, the Dominican Republic will also beanalyzing birth certificates of more than 16,000 people to determinewhether their ancestors obtained proper Dominican Republic citizen-ship.33 Many have challenged this ruling on the basis that it is in conflictwith Article 15 of the Universal Declaration of Human Rights that states,“no one shall be arbitrarily deprived of his or her nationality.”34

www.theguardian.com/global-development/poverty-matters/2011/oct/03/haiti-dominican-republic-citizenship-law.

28. Id.29. See Reyes, supra note 8.30. Fausta, Dominican Republic: Haitians stripped of citizenship, FAUSTA’S BLOG

(Sep. 30, 2013, 10:32 AM), http://faustasblog.com/2013/09/dominican-republic-haitians-stripped-of-citizenship/.

31. Dominican Republic Rejects International Human Rights Report, HUFFINGTON

POST (Dec. 7, 2013, 3:00 PM), http://www.huffingtonpost.com/2013/12/08/dominican-republic-human-rights-report_n_4408797.html [hereinafter Dominican Repub-lic Rejects].

32. Id.33. Fausta, supra note 30.34. See H.R. Res. 443, 113th Cong. (2013).


The court’s decision is the finale to its history of narrowing its Constitu-tion’s birthright citizenship provisions. The 2010 constitutional amend-ment resulted in the review of many Haitians’ birth certificates, but the2013 decision is predicted to affect even more.

A huge concern exists in regard to how the Dominican Republic plansto carry out its recent ruling.35 Some worry that the government plans toconduct raids or summary expulsions, but such actions will leave manyHaitians living in the Dominican Republic with nowhere to go.36 Butregardless of how they enforce it, thousands of Dominican Republic citi-zens are now stateless.

Whether the Dominican Republic government forcefully removes theclass of people now without Dominican Republic citizenship or continuesto check up on those of Haitian descent, so long as the ConstitutionalCourt’s ruling remains in effect, these citizens are essentially homeless.Many Dominican Republican residents who now do not qualify for citi-zenship will not have any better luck if they are deported to Haiti. Themajority of them do not hold citizenship in Haiti, have no familial con-nection to the country, and likely do not speak Creole, the official lan-guage of Haiti.37

In addition, these same Haitians will have difficulty obtaining citizen-ship in Haiti because it is hard to comply with the government’s require-ments for proving Haitian descent.38 In order to obtain Haitiancitizenship, you are required to provide extensive paperwork. But thismay prove difficult for those Dominican Republic residents whose par-ents were born in Haiti, but immigrated to the Dominican Republic. It isvery likely that those parents have not kept all of their paperworkthrough decades and even more likely that they did not care to hold ontoit after their children were granted birthright citizenship in the Domini-can Republic.

An even worse situation could arise when many Haitian children be-come stateless and risk becoming victims of human trafficking.39 Due tolack of citizenship, these children face being forced to beg on thestreets.40 Stemming from this issue, the Dominican Republic made itsfirst forced labor conviction in 2012.41 This ruling will make such childreneven more vulnerable to these kinds of exploitation.42

35. Ezequiel Abiu Lopez and Danica Coto, Dominican Republic to End CitizenshipOf Those Whose Parents Entered Illegally, HUFFINGTON POST (Sep. 27, 2013, 09:56PM), http://www.huffingtonpost.com/2013/09/27/dominican-republic-citize_n_4002844.html.

36. Id.37. Id.38. Id.39. James Pedrick, Fighting to Exist in the Dominican Republic, HUFFINGTON POST

(Dec. 13, 2013, 9:58 PM), http://www.huffingtonpost.com/world-vision/fighting-to-exist-in-the-dominican-republic_b_4432917.html.

40. Id.41. Id.42. Id.


All of the above situations could follow from the Dominican RepublicConstitutional Court’s decision to repeal birthright citizenship and retro-actively apply it to residents born to undocumented Haitian migrants.This action may seem discriminatory, unfair, and unconstitutional, butboth the Government and Court have held that the ruling will stand—nomatter what.

3. Proposed Solutions for Stateless Dominican Republic Residents

Concern regarding the Dominican Republic Constitutional Court’s rul-ing and its effect on mostly Haitian residents has spread around theworld. The U.S. Congress issued a resolution addressing the concernsthat the country’s decision is in direct conflict with Article 15 of the Uni-versal Declaration of the Human Rights.43 The U.S. Ambassador to theOrganization of American States (OAS) stated its plans to pursue a “mul-tilateral approach to promptly address the potential crisis in the Domini-can Republic as a result of that nation’s Constitutional Court ruling onSeptember 23, 2013, that could render hundreds of thousands of Domini-can-born persons stateless.”44 The Resolution does not specifically de-scribe its proposed plans, but does specify its plans to consult with otherOAS member states, governments of Caribbean nations, President of thePermanent Council and the Inter-American Commission.45

The governments of Haiti and the Dominican Republic have scheduledmeetings to discuss the immigration issue, but following the one held onJanuary 7, 2014, the Dominican Republic stated its intention in affirming,not negotiating, its Constitutional Court’s ruling.46 Therefore, it looks asthough any changes to the Dominican Republic’s ruling will come fromoutside the country.

B. THE HEADSTRONG COUNTRY: THE UNITED STATES OF AMERICA

Similar to the Dominican Republic, the United States has a constitu-tional provision guaranteeing citizenship to all people born within its ju-risdiction. The Citizenship Clause within the 14th Amendment of theU.S. Constitution states that, “[a]ll persons born or naturalized in theUnited States, and subject to the jurisdiction thereof, are citizens of theUnited States and of the State wherein they reside.”47 But, unlike theDominican Republic, the United States has not repealed or narrowed itsconstitutional birthright citizenship provision. Instead, the U.S. SupremeCourt has explicitly held that the Citizenship Clause applies to all those

43. H.R. Res. 443, 113th Cong. (2013).44. Id.45. Id.46. Ezra Fieser, Can Haiti and the Dominican Republic repair relations after citizenship

ruling?, CHRISTIAN SCI. MONITOR, (Jan. 8, 2014), http://www.csmonitor.com/World/Americas/2014/0108/Can-Haiti-and-the-Dominican-Republic-repair-relations-after-citizenship-ruling.

47. U.S. CONST. amend. XIV, § 1.


born in the United States with only three exceptions.48

The three exceptions stated by the court include “(1) children born toparents who were foreign diplomats, (2) members of foreign invading ar-mies, or (3) Native Americans subject to tribal authority.”49 Althoughthe U.S. Congress and Supreme Court have not changed their unwaver-ing enforcement of the Citizenship Clause compared to other countriesthat eventually overturned their birthright laws, there has been more de-bate as to interpretation of the Clause, as well as attempts to overturn itsapplication for immigration purposes.

1. Confronting the Controversy Surrounding the U.S. Constitution’sCitizenship Clause

When the U.S. Constitution was ratified, it did not explicitly state ex-actly how U.S. citizenship could be obtained.50 Some scholars took thisambiguity as the Framers’ intention and indication that the country con-tinues the English tradition of jus soli, which holds that “everyone bornwithin a nation’s jurisdiction is automatically a citizen.”51 This principleholds true today, although many wish to adopt the world trend of repeal-ing the Citizenship Clause of the 14th Amendment in order to improveimmigration policy.

The U.S. Supreme Court adopted its current understanding of thescope of the 14th Amendment’s Citizenship Clause with its decision inWong Kim Ark.52 Initially, many opponents to birthright citizenship ar-gued that the scope of the clause did not extend to children born of non-American citizens because they were not “subject to the jurisdiction ofthe United States.”53

In United States v. Wong Kim Ark, the Supreme Court rejected defen-dant’s argument arguing that Wong Kim Ark was not entitled to U.S.citizenship under the Citizenship Clause of the 14th Amendment “be-cause, as the child of Chinese immigrants, he was a subject of the em-peror of China, and not ‘subject to the jurisdiction’ of the UnitedStates.”54 The Supreme Court therefore broadened the 14th Amend-ment’s scope of application and effectively held that children of illegalimmigrants born on American soil are indeed granted automatic citizen-ship upon birth.

Other scholars have argued that birthright citizenship entices the prac-tice of so-called “anchor babies” and unauthorized immigration.55 Pro-

48. See United States v. Wong Kim Ark, 169 U.S. 649, 663 (1898).49. Rosenbloom, supra note 18, at 316.50. Hartry, supra note 16, at 64.51. Id.52. See Wong Kim Ark, 18 S.Ct. at 456.53. Rosenbloom, supra note 18, at 314-15.54. Id. at 315-16 (quoting U.S. Const. amend. XIV, § 1).55. Eliminating Birthright Citizenship Would Not Solve the Problem of Unauthorized

Immigration, AM. IMMIGR. COUNCIL (Jan. 4, 2011), http://www.immigrationpolicy.org/just-facts/eliminating-birthright-citizenship-would-not-solve-problem-unauthorized-immigration.


ponents of birthright citizenship, however, argue immigrants come to theUnited States to work and join family members—not to give birth—andpoint out that there is no evidence to support the anchor-baby myth.56 Inaddition, simply because one’s child is a U.S. citizen does not ensure theparent’s status if those parents are illegal immigrants living in the UnitedStates.57 Every year, the United States deports thousands of parentswhose children have U.S. citizenship due to being born in the country.58

Even further, some argue that repealing birthright citizenship in theUnited States, and other countries as well, will only result in increasedundocumented immigrants.59 Because children born to undocumentedimmigrants would presumably also be undocumented, the size of the ille-gal immigrant community would only increase in size if birthright citizen-ship were repealed.60

According to a study by the Migration Policy Institute, “if citizenshipwere denied to every child with at least one unauthorized parent, the un-authorized population in the [United States] would reach 24 million by2050.”61 As evidenced by the current situation in the Dominican Repub-lic, many children would be left with no citizenship or nationality, effec-tively leaving them stateless. This would result in an “underclass ofunauthorized immigrants who, through no fault of their own, would beforced to live in the margins of U.S. society, would not have access tohealth care and basic services, would be vulnerable to exploitation andabuse, and would be at constant risk of deportation.”62

Other opponents argue immigration statistics, which show rapidly in-creasing numbers of children born in the United States by unauthorizedimmigrants. A recent report by the Pew Hispanic Center reported that340,000 of the 4.3 million babies born in the United States in 2008 werethe children of unauthorized immigrants.63 But, legal scholars argue thatthis number is misleading because the report does not differentiate be-tween those children born to parents who are both undocumented, thustargeting the real justification for repealing birthright citizenship, andthose born to parents where only one is undocumented.64

2. Proposed Legislative Amendments to Limit and Alter the SupremeCourt’s Ruling in United States v. Wong Kim Ark

Although the Supreme Court explicitly defined the scope of the Citi-zenship Clause and enforced granting citizenship to all children born inthe United States, even those born to illegal immigrants, opposition has

56. Id.57. Id.58. Id.59. Id.60. Id.61. Id.62. Id.63. Hartry, supra note 16, at 61.64. Id.


only continued to grow. Despite the harsh repercussions that result whenother countries repealed their birthright citizenship laws, many people,including the U.S. government officials, continue to advocate for this pro-vision’s removal from the U.S. Constitution.

In 2005, Republican Representative Nathan Deal of Georgia intro-duced the Citizenship Reform Act of 2005.65 Deal’s proposed Act soughtto “deny automatic citizenship at birth to children born in the UnitedStates to parents who are not citizens or permanent residents,” includingthose born “out of wedlock” to mothers who are not current citizens orpermanent residents.66 In 2011, the U.S. House of Representatives pro-posed two additional bills seeking to change the 14th Amendment’s ap-plicability.67 The first proposed bill was the Loophole Elimination andVerification Enforcement Act (LEAVE), which sought to “remove theincentives and loopholes that encourage aliens to come to the UnitedStates to live and work, provide additional resources to local law enforce-ment and Federal border and immigration officers, and for other pur-poses.”68 The House of Representatives intended to achieve this goal byamending the Immigration and Naturalization Act (INA) to limit birth-right citizenship to children born “of parents, one of whom is—(1) a citi-zen or national of the United States; (2) an alien lawfully admitted forpermanent residence in the United States whose residence is in theUnited States; or (3) an alien performing active service in the ArmedForces.”69 The second proposed bill was the Citizenship Act of 2011,which contained identical language to that of the LEAVE Act.70

These bills sought to amend section 301 of the INA, rather than theCitizenship Clause of the 14th Amendment, in order to change the classesof people given citizenship upon birth in the United States.71 The organi-zations supporting these bills included the American Resistance Founda-tion and the John Birch Society.72 But those opposing the bill includedlocal and international organizations such as, Arab American Institute,Asian American Justice Center, America’s Voice, American ImmigrationLawyers Association, and American Civil Liberties Union.73 The bill wasintroduced on January 4, 2011, but never passed the House of Represent-atives.74 This fairly recent attempt at overturning the Unite States’ exer-cise of birthright citizenship has been one of many. Other approacheshave been recommended by scholars, along with the reasoning as to why

65. Mae M. Ngai, Birthright Citizenship and the Alien Citizen, 75 FORDHAM L. REV.2521, 2524 (2007).

66. Id. (quoting, H.R. 698 109th Cong. § 1 (2005)). ‘”Out of wedlock” specifically in-cludes “common law marriages.” Id. at n.18.

67. Hartry, supra note 16, at 72.68. Id.69. Id.70. Id.at 73.71. See H.R. 140, 112th Cong. (2011).72. H.R. 140–Birthright Citizenship Act of 2011, OPEN CONGRESS, http://www.opencon

gress.org/bill/112-h140/show (last visited Sept. 2, 2014).73. Id.74. Id.


they believe the United States should join the international trend of over-turning automatic citizenship to any person born on its soil.

3. Pragmatic Recommendations and Reasoning Behind ScholarsAdvocating for the Repealing of Birthright Citizenship

After the U.S. Supreme Court’s decision in United States v. Wong KimArk in 1884, opposition to birthright citizenship, especially the granting ofcitizenship to illegal immigrants, slowed down.75 In 1985, however, PeterSchuck and Rogers Smith published Citizenship Without Consent, a bookarguing that children born to undocumented immigrants in the UnitedStates should not be given citizenship without the express consent ofCongress.76 This book has widely been accepted as the argument thatinspired the modern-day movement to limit birthright citizenship.77 Theso-called “restrictionist” movement argues that the practice of birthrightcitizenship undermines state and federal policies concerningimmigrants.78

Some legal scholars argue that immigration policies should be based onthe consent principle, a concept similar to that argued in CitizenshipWithout Consent.79 This debate argues that the concept of jus soli is notappropriate for citizenship in a republic because citizenship should bebased on consent, not just automatic classification.80 Opponents to birth-right citizenship have also made a textual argument, claiming that theSupreme Court’s ruling in United States v. Wong Kim Ark wasincorrect.81

These textual scholars claim that “jurisdiction,” as stated in the Citizen-ship Clause of the U.S. Constitution, should not be interpreted as territo-rial jurisdiction, but rather “political jurisdiction, which invokes theprinciple of consent.”82 Following the reasoning of such a consent princi-ple, children of undocumented immigrants and temporary foreignerswould not become U.S. citizens because their parents do not have theUnited States’ permission to enter or permanent citizenship to residehere.83 But those defending birthright citizenship and the common-lawconcept of jus soli argue that no person has control over the geographywhere their birth takes place and to punish a child for their parent’s im-migrant status is to punish them for the parents’ own behavior.84

75. Rosenbloom, supra note 18, at 312.76. See PETER H. SCHUCK & ROGERS M. SMITH, CITIZENSHIP WITHOUT CONSENT:

ILLEGAL ALIENS IN THE AMERICAN POLITY (1985).77. Rosenbloom, supra note 18, at 311.78. Id. at 312.79. Christopher L. Eisgruber, Birthright Citizenship and the Constitution, 72 N.Y.U. L.

REV. 54, 54 (1997).80. Ngai, supra note 66, at 2525; SCHUCK & SMITH, supra note 73, at 20-23. Very

similar reasoning was argued by the United States in United States v. Wong KimArk. See United States v. Wong Kim Ark, 169 U.S. 649, 732 (1898).

81. Ngai, supra note 66, at 2526.82. Id.83. Id.84. Id.


In addition, scholars have questioned birthplace’s arbitrariness.85 Le-gal scholars question, “why should the law deny citizenship to an infantcarried across the Rio Grande at the age of one month (or one day) whilegranting it to a child born only days after her mother entered the UnitedStates.”86 Others worry about creating a caste of second-class peoplewithin our society that could develop without birthright citizenship.87

The biggest proposed change in the United States is the same one seenmost around the world. As evidenced by the legislative proposals, oppo-nents of birthright citizenship mostly seek to limit the benefits of birth-right citizenship to children who have at least one parent with U.S.citizenship or permanent residence in the country. This recommendationfollows suit with other countries around the world, such as New Zealand,Australia, and Ireland, which have made changes seeking to control im-migration while responding to “popular nativist sentiment against non-white immigrants,” an action seen clearly by the Dominican Republic’srecent action.88

C. REPEALING COUNTRIES: NEW ZEALAND AND IRELAND

Unlike the United States, New Zealand, and Ireland have amendedtheir constitutions to repeal birthright citizenship within their countriesfor children born to two undocumented aliens.89 The Center for Immi-gration Studies reports that out of 194 countries, only thirty continue togrant automatic birthright citizenship.90

1. Initial Constitutional Implementations and Subsequent AmendmentsAbolishing Birthright Citizenship

New Zealand’s citizenship was created in 1948 and along with it, guar-anteed any children born on New Zealand territory automatic citizen-ship.91 Prior to New Zealand’s citizenship enactment, those born in NewZealand were British subjects.92 The Citizenship Act of 1977 replacedthe 1948 provision and changed the requirements for acquiring New Zea-land citizenship.93 It provided that a person is a New Zealand citizen bybirth if:

85. See, e.g., Eisgruber, supra note 80, at 59.86. Id.87. See, e.g., id.88. Ngai, supra note 66, at 2530.89. See Irish Nationality and Citizenship Act 2004 (Act. No. 34/2004) (Ir.); see Citizen-

ship Amendment Act 2005 (N.Z.).90. Jon Feere, Birthright Citizenship and the United States: A Global Comparison,

CENTER FOR IMMIGR. STUD. (August 2010), available at http://www.cis.org/sites/cis.org/files/articles/2010/birthright.pdf.

91. Notes and Citations Regarding Birthright Citizenship Laws, NUMBERSUSA, https://www.numbersusa.com/content/node/7628 (last visited Sept. 2, 2014) [hereinafterNotes and Citations].

92. Celebrating 60 Years of New Zealand Citizenship, DEP’T INTERNAL AFF., http://www.dia.govt.nz/diawebsite.nsf/wpg_URL/Services-Citizenship-Celebrating-60-Years-of-New-Zealand-Citizenship?OpenDocument (last visited Sept. 2, 2014).

93. Citizenship Act 1997, pt 1., § 6 (N.Z.).


(a) the person was born in New Zealand on or after 1 January 1949and before 1 January 2006; or (b) the person was born in New Zea-land on or after 1 January 2006, and at the time of the person’s birthat least one of the person’s parents was—(i) a New Zealand citizen;or (ii) entitled in terms of the Immigration Act 2009 to be in NewZealand indefinitely . . . .94

The Act also provided for automatic New Zealand citizenship for thosepeople born in New Zealand on or after January 1, 1978, that would bestateless if they were not entitled to New Zealand citizenship.95 NewZealand adopted new legislation entitled Citizenship Amendment Act2005, but retained the key language mentioned above.96

New Zealand’s shift away from birthright citizenship has been arguedas a response to the perceived problem alleged within the United States(“anchor babies”).97 This concept has been brought up in numerouscountries’ debates when arguing against birthright citizenship, but wasnot a central issue to the Dominican Republic’s decision to change itslaws. In New Zealand, some scholars also believe the 2005 amendmentwas a direct response to cases preceding the Ding and Ye case, which waseventually decided by their Supreme Court in 2009.98 In that case, theNew Zealand Supreme Court held that “the interests of citizen childrenwas a relevant principle in the decision whether or not to deport theirforeign overstayer parents, and could mean that the deportation wouldnot be lawful.”99

Such a holding worried birthright citizenship opponents because itcould lead to enticement of pregnant foreign immigrants having theirchildren in New Zealand to gain citizenship for the entire family. But inreality, children’s birthright citizenship rights do not come from their for-eign parents’ rights to remain in the certain country.100 In addition, thetrue meaning, in contrast to the public opinion, of the Ding and Ye case isthat “in truly exceptional cases such as lack of medical services or educa-tion or civil war in parents’ home countries the ‘constructive deportation’of children along with their parents might be inappropriate, and theproper course could be to allow the parents to remain.”101

Ireland was the last country in Europe to implement birthright citizen-ship in its country.102 But Ireland repealed its birthright citizenship pro-

94. Id. § 6(1)(a)-(b).95. Id. § 6(3)(a).96. Citizenship Amendment Act 2005, sec. 5 (N.Z.).97. Caroline Sawyer, The Loss of Birthright Citizenship in New Zealand, 44 VICTORIA

U. WELLINGTON L. REV. 653, 671 (2013).98. Id. at 654 (citing Willie Ye, Candy Ye and Tim Ye v. Minister of Immigration and

Yueying Ding, and Alan Qiu and Stanley Qiu v Minister of Immigration, He QinQiu and Ziao Yun Qui [2009] NZSC 76).

99. Id.100. Id. at 655.101. Id. at 661 (quoting Willie Ye, Candy Ye and Tim Ye v. Minister of Immigration and

Yueying Ding, and Alan Qiu and Stanley Qiu v Minister of Immigration, He QinQiu and Ziao Yun Qui [2009] NZSC 76).

102. Notes and Citations, supra note 92.


vision through its Irish Nationality and Citizenship Act 2004.103 Insection 6A, the Act specifies:

(1) [a] person born in the island of Ireland shall not be entitled to bean Irish citizen unless a parent of that person has, during the periodof 4 years immediately preceding the person’s birth, been resident inthe island of Ireland for a period of not less than 3 years or periodsthe aggregate of which is not less than 3 years. (2) This section doesnot apply to (b) a person born in the island of Ireland to parents atleast one of whom was at the time of the person’s birth an Irish citi-zen or entitled to be an Irish citizen.104

Following Ireland’s constitutional amendment removing birthright citi-zenship, the Irish Government introduced an administrative schemecalled the Irish Born Child (IBC) ‘05 scheme.105 The IBC scheme al-lowed a small number of foreign national parents, whose children weregiven Irish citizenship automatically upon birth, to apply for permanentresidence in Ireland.106 The majority of those applications weregranted.107 The Irish Government introduced the IBC ‘05 scheme to as-sess residency applications for migrant parents with citizen children.108

The Minister for Justice, Equality, and Law Reform spoke of the IBC ‘05scheme in stating that “residence would only be granted to those parentswho could show that they have ‘not been involved in criminal activity’and were ‘willing to commit themselves to becoming economically via-ble.’”109 The majority of these Ireland residence applications continue tobe granted, although a few are denied, leaving constitutional rights’ pro-tection issues to arise.110

2. How New Zealand and Ireland Stand Apart from the DominicanRepublic

New Zealand and Ireland’s amendments are different than the Domin-ican Republic’s recent court decision for multiple reasons. New Zea-land’s enactment of Citizenship Amendment Act 2005 provided for thejus sanguinis principle, similar to the Dominican Republic’s enactment,when it stated that in order to become a New Zealand citizen, one of yourparents must also be a New Zealand citizen.111 But New Zealand’s Citi-zenship Amendment Act has a safe harbor provision for those born inNew Zealand whose parents are not New Zealand citizens.112

103. Id.104. Irish Nationality and Citizenship Act (Act No. 38/2004) sec. 4 (Ir.).105. Siobhan Mullally, Citizen Children, “Impossible Subjects” and the Limits of Mi-

grant Family Rights in Ireland, 1 EUR. HUM. RTS. L. REV. 43, 44 (2011).106. Id.107. Id.108. Id. at 46.109. Id. (quoting the Minister for Justice, Equality and Law Reform).110. Id. at 47.111. See Citizenship Act 1997, pt 1., § 6 (N.Z.).112. Id. § 6(3).


Section 3(a) of the Citizenship Amendment Act 2005 provides that“[d]espite subsections (1) and (2), (a) every person born in New Zealandon or after 1 January 1978 is a New Zealand citizen by birth if the personwould otherwise be stateless.”113 In contrast, not only does the Domini-can Republic’s decision fails to include such a provision, it is taking delib-erate steps to ensure that many people will indeed become statelessthrough its analysis of thousands of birth certificates. Through this pro-cess, the Dominican Republic will seek out those residents who will bemost susceptible to becoming stateless—children and adults without Do-minican Republic citizen parents.

Ireland’s Irish Nationality and Citizenship Act 2004 also repealedbirthright citizenship and replaced the jus soli principle with jussanguinis.114 Its language is very similar to the act implemented in NewZealand, but it does not include a safe harbor provision for those citizensdeemed stateless after the Act’s application.115 Instead, the Irish Gov-ernment adopted an administrative scheme to fix family units that may bebroken as a result of the Irish Nationality and Citizenship Act 2004. TheIBC ‘05 scheme aims to prevent separation of undocumented parentsfrom their citizen children by accepting applications from the parents andgranting them temporary residence, thus allowing the parents and chil-dren to remain together.116 The Dominican Republic ConstitutionalCourt’s ruling does not discuss options for similarly situated parents, butinstead stands firm in its decision to deport all such residents. The Do-minican Republic Government has expressed its direct support for thecourt’s ruling. Its government has conducted meetings with Haiti, whichwill likely face an influx of immigration as a result of the ConstitutionalCourt’s ruling, but has repeatedly stated that it has no intention of evennegotiating or discussing the immigration issue with its neighboring coun-try.117 During the first and second meeting with Haiti, the DominicanRepublic refused to put the immigration issue and its consequences onthe agenda.118

The most important and controversial distinction between the Domini-can Republic Constitutional Court’s decision and the acts repealing birth-right citizenship in Ireland and New Zealand is the Dominican Republic’sretroactive application of their decision, resulting in deportation ofthousands of Dominicans of Haitian origin.119 The government has is-sued neither plans nor solutions for children and adults who face deporta-tion due to ancestors having no official Dominican Republic citizenship.

113. Id.114. See Irish Nationality and Citizenship Act 2004 (Act No. 38/2004) sec. 4 (Ir.).115. Id.116. Mullally, supra note 106, at 44.117. Tracy Dornelly, Haiti, Dominican Republic Hold More Talks But Avoid Conen-

tuous Immigration Issue, ATLANTA BLACK STAR, Feb. 3, 2014, available at http://atlantablackstar.com/2014/02/03/haiti-dominican-republic-hold-talks-migrants-raises-accusations-racism/.

118. Id.119. See id.


IV. THE WORLDWIDE TREND OF ABANDONING JUS SOLI

A. COUNTRIES’ REPEALING BIRTHRIGHT CITIZENSHIP—FAIR OR

DISCRIMINATORILY RESTRICTING FOREIGN IMMIGRATION?

Since its September 2013 ruling, the Dominican Republic has facedbacklash for its allegedly “fundamentally racist and inhumane deci-sion.”120 Its Constitutional Court’s ruling has been especially challengedby human rights groups and advocates, who question why the DominicanRepublic, a country which is signatory to a variety of international andregional human rights conventions, would support such a holding.121

Long before the Dominican Republic’s ruling in September 2013, theInter-American Court of Human Rights concluded in 2005 that the gov-ernment of the Dominican Republic violated international, regional, andconstitutional law, when it refused to grant citizenship and education toDominican-born children of Haitian descent.122 The ruling found thatthe Dominican Republic had defined people “in transit” as temporaryvisiting foreigners, tourists, foreign army members, or as temporaryworkers.123 The Court used such interpretation to reason that Domini-can-born people of Haitian descent, particularly those who have residedin the Dominican Republic for many years, do not fit into the constitu-tional definition of “in transit.”124 In that case, the Inter-American Courtrequired the Dominican Government to provide nationality cards to theplaintiffs in that particular case and any other children in that countryvulnerable to the same situation.125

When comparing the repealing of birthright citizenship in the Domini-can Republic against countries like New Zealand, Ireland, and the UnitedStates, the different motivating factors behind the legislative acts are ap-parent. Historically, the United States applied the English principle ofjus soli for reasons other than human rights and immigration. Since theCitizenship Clause’s inception, the United States used that amendment toentice recruitment from Britain during the Industrial Revolution.126

Ironically enough, Britain was actually the first country to disregard itsown tradition of jus soli and established six forms of British nationalitywith its British Nationality Act 1981.127

B. IS REPEALING BIRTHRIGHT CITIZENSHIP WORTH THE RISK?

Although the United States and Canada are the only developed coun-tries that have maintained their birthright citizenship, a majority of coun-tries have faced serious hurdles after implementing stricter citizenship

120. Id.121. Id.122. Id.123. Id.124. Id.125. Id.126. Sawyer, supra note 98, at 657.127. Id. at 658.


requirements. Many nations face practical difficulties, such as papertrails and finding records for citizens, while others face deportation diffi-culties in trying to enforce their new rules. An issue arises then as towhether repealing birthright citizenship actually benefits anyone, includ-ing the implementing country itself.

Because of the difficulties that arise upon transitioning from a jus solito jus sanguinis, many true citizens may not be able to give their childrenthe same rights as they hold within the country that their family resides.As a result, true citizens will lose the opportunity to remain in a placewhere they rightfully belong. In addition, because of deportation and en-forcement issues, countries may not be able to even implement the newlaws they so desire. The result of these obstacles could be the exact oppo-site aim of countries that repeal their birthright laws. Rather than main-tain true citizenship among their society, they could inadvertentlydecrease rightful citizenship while maintaining the undocumented popu-lation they had all along.

Many countries have faced difficulties in implementing the repeal ofbirthright citizenship because of practical challenges, such as deportationefforts and paper records. In Britain, the first country to repeal its birth-right citizenship laws, citizens and the country’s recordkeeping authoritieshave faced large hurdles to trace their ancestor’s backgrounds.128 Brit-ain’s reliance on a jus sanguinis system depends entirely upon a child’sparents’ ability to timely supply the necessary documents; without them,their child will not gain the citizenship that they have.129

In New Zealand, the implementation of jus sanguinis will require offi-cial records of parents’ status for children born after 2005, the year theirrepeal was implemented.130 But New Zealand’s citizens will not facenear as much difficulty obtaining paper records as the Dominican Repub-lic, which has chosen to retroactively apply its new law to citizens born inthe country since its inception, 1929. In practice, some Dominican Re-publican citizens will need to track down proof of their grandparents’ citi-zenship in order to remain in the country.

Many scholars have also argued the economic benefits to retainingbirthright citizenship in a country. Although many opponents to birth-right citizenship claim that illegal immigrants take jobs for less money,thereby decreasing our employment and financial opportunities, manyprofessionals have argued just the opposite.131 U.S. citizens now pay upto $1,600 to verify citizenship in certain instances, and if birthright citizen-ship is repealed, parents will have to fork over this money each time they

128. Id. at 660.129. Id.130. Id.131. See Stuart Anderson, Ending Birthright Citizenship Would Be Costly for Ameri-

cans, FORBES (Mar. 9, 2012, 3:50 PM), available at http://www.forbes.com/sites/stuartanderson/2012/03/09/ending-birthright-citizenship-would-be-costly-for-americans/.


have a child to prove its citizenship.132 The repealing of birthright citi-zenship will also require an entirely new agency tasked with verifying citi-zenship of every baby born in the United States, which would costtaxpayers much more than the small fee citizens pay today for a birthcertificate. In addition, if children’s citizenship is not given upon birth,the Migration Policy Institute estimates that 100,000 to 300,000 childreneach year will live in the United States with the inability to participate inbenefitting the U.S.’ society.133

C. CAN A COURT DECIDE WHICH IS MORE IMPORTANT—MAINTAINING FAMILY LIFE VERSUS

IMMIGRATION DISPUTES?

Within every jurisdiction discussed in this comment, there is a funda-mental right and emphasis to preserving family units and the safety ofchildren. It follows then, that it may seem contradictory to repeal birth-right citizenship laws when each and every country mentioned knows theconsequences of such legislative action. On one end of the spectrum, thecountries, especially within their courts, are emphasizing the importanceof family units, while their legislatures are overhauling their legal citizen-ship governance. The Dominican Republic Constitutional Court’s rulingis the only judicial decision that (1) expressly overturned birthright citi-zenship and, more astonishingly, (2) plans to retroactively apply its ownholding.

In the United States, the Supreme Court decided that the CitizenshipClause of the 14th Amendment was to be applied broadly—even ex-tending it to grant automatic U.S. citizenship to children of illegal immi-grants.134 But since the decision, opponents have shed light on potentialproblems with this provision and legislators have attempted to providesolutions.

In Ireland, a string of cases posed this important question to the courtsand they responded—reiterating both the importance a family unit has insociety and, unintentionally, reminding us of how such a public policy isin direct conflict with repealing birthright citizenship. In Osheku v. Ire-land, the court examined the right to family life, which it deemed consti-tutionally fundamental.135 The court described restrictions on Ireland’sregulations in situations of necessity caused by furthering the rights ofchildren and migrant times.136

In Fajujonu v. Minister for Justice, the Irish Supreme Court held that achild, who was a citizen of Ireland, had a “constitutional right to the‘company, care and parentage of their parents within a family unit,’” stat-ing that only a “grave and substantial reason associated with the common

132. Id.133. Id.134. Id.135. Mullally, supra note 106, at 44.136. Id.


good” would potentially be justification enough to impose upon thisright.137 The concurring opinion was even stronger in holding against de-portation of parents of citizen children.138 Judge Walsh noted that Ire-land cannot proceed with deportation proceedings against a parent of acitizen child simply by reason of a “family’s limited financial re-sources.”139 But this statement was contradicted by subsequent courtfindings that poverty and employment situations are actually factors thatheavily weigh in favor of deporting migrant parents, even though theirchild may remain in Ireland with his/her citizenship.140

D. WHAT ABOUT LOOKING AT WHAT THE CITIZENS WANT?

Most of the challenges and amendments to a country’s birthright citi-zenship laws come at the hands of governments, courts, and legislatures.Without regarding what the actual citizens of the country desire, govern-ments decide to take, or not take, action that affects thousands of livestoday and even more down the road. But those countries that havepolled their citizens to determine the kind of support a repeal of birth-right citizenship would have, find that their own citizens are strongly infavor of such legislative action.

For example, prior to Ireland’s decision to amend its birthright citizen-ship provision, but following its landmark Zhu and Chen case, Irelandheld a referendum on whether their country’s constitution should beamended to address the birthright citizenship issue.141 The country foundthat 79 percent of people voted in favor of the change and the countryamended its constitution accordingly.142

E. WHERE DOES THIS LEAVE UNDOCUMENTED IMMIGRANTS?

With the repeal of a country’s constitutional birthright citizenship pro-vision comes multiple consequences—both intended and unintended.One of the intended consequences many of the nations discussed withinthis comment seek to achieve is a reduction in the number of childrenborn to undocumented immigrants.143 Many countries abandon the purejus soli principal to prevent foreigners attempting to abuse the birthrightcitizenship provisions in hopes of outsmarting that country’s immigrationlaws.144

The consequence of such decision-making results in yet another impor-tant decision to be made. Parents must decide between giving their chil-dren born in a country the benefits of that country without having theirparents around and removing them from the country in which they re-

137. Id.138. Id. 44-45.139. Id. at 45.140. Id.141. Sawyer, supra note 98, at 659-60.142. Id. at 660.143. See id. at 654.144. Id. at 655.


side.145 For those undocumented immigrant parents whose children areborn in a country where birthright citizenship still exists, the choice canbe easy.

Even after they repeal birthright citizenship laws, most countries donot retroactively apply the change to those born prior to the amend-ment’s enactment. Therefore, children born to undocumented immi-grants in a country whose birthright citizenship laws are valid upon theirbirth will remain citizens forever while their parents face deportation. Asa result, it places undocumented immigrants in the same place asbefore—living in a country as an undocumented, illegal immigrant. Legalscholars support this theory and believe that countries repealing birth-right citizenship have not seen a decrease in illegal immigration, and ar-gue that the United States should not follow the international trend inrepealing its own constitutional birthright citizenship provision.146

One legal scholar has argued that the trend in repealing birthright citi-zenship is not as strong as many countries suggest. In fact, thirty coun-tries in the Western Hemisphere continue to grant birthright citizenshipto children born on their soil—even to those born of illegal immi-grants.147 But the majority of the world’s sovereign nations no longerprovide birthright citizenship to children of undocumented immigrants.148

The question remains as to why the Americas are so different than therest of the world, which chooses to repeal their birthright citizenship laws.One scholar argues “it may be that the granting of fundamental citizen-ship rights by virtue of being born in the territory of a sovereign nationdeveloped precisely because the history of modern nation-building andindependence in the Americas is a history of immigration.”149 As a re-sult, when a country repeals its constitutional birthright citizenship laws,it would “fundamentally violate the conservative value of ‘Americanexceptionalism.’”150

Other scholars support the argument that statistics prove repealing acountry’s constitutional birthright citizenship laws would result in undueburdens on undocumented immigrants and go against the grain of estab-lished law common to every country around the world.151 According toone report, 340,000 children were born to at least one undocumented par-ent in the United States in 2008.152 This number remains throughout

145. Id. at 664.146. See Katherine Culliton-Gonzalez, Born in the Americas: Birthright Citizenship and

Human Rights, 25 HARV. HUM. RTS. J. 127, 181 (2012) (discussing U.S. constitu-tional birthright citizenship laws and arguing that retraction of such laws wouldviolate fundamental human rights).

147. Id. at 138.148. Id.149. Id.150. Id. at 141.151. See SAM FULWOOD III & MARSHALL FITZ, LESS THAN CITIZENS, ABOLISHING

BIRTHRIGHT CITIZENSHIP WOULD CREATE A PERMANENT UNDERCLASS IN OUR

NATION (2011), available at http://cdn.americanprogress.org/wp-content/uploads/2012/12/55174537-Less-than-Citizens.pdf

152. Id. at 5.


other nations but is particularly high in the United States, where repeal-ing birthright citizenship would result in questioning citizenship of eachof those children. Such a task would be burdensome for both childrenand the U.S. Government.153 For those countries repealing their birth-right citizenship laws, their governments will have to ask questions re-garding the legal status of these children. Such questions include:

• Would they be born undocumented?• Would they come under immediate investigation and be placed in

immigration proceedings?• Would their parents and families be investigated if these children

do not establish qualifying lineage?• Would fearful women be less likely to deliver their babies at a hos-

pital, raising an entirely new set of maternal health issues?154

These issues have now run over into legislative action that could indi-rectly affect the health and well-being of undocumented immigrants bypreventing them from seeking medical attention. For example, in Ari-zona, the legislature recently declined to pass a bill forcing hospitals andemergency rooms to check the immigration status of their patients.155

The repealing of birthright citizenship and such legislative action wouldessentially create a Big Brother in every hospital delivery room waitingfor a child’s birth.156

V. TO REPEAL OR NOT TO REPEAL?

As a hotly debated current issue, the decision of whether to repealbirthright citizenship will continue to be addressed by countries aroundthe world. After evaluating a few countries that have implemented a re-peal, one that has repeatedly chosen not to, and one that is making his-tory by applying their repeal retroactively, it is obvious that there is noclear-cut answer to this issue.

But when evaluating the implementation and difficulties faced by coun-tries amending its constitutional rights, the biggest question to ask iswhether repealing will result in the aims intended by countries or whetherit will result in unintended undesirable consequences. If history does re-peat itself, the resulting effect is that the disadvantages in repealing birth-right citizenship far outweigh its benefits to a country.

A. BENEFITS

Proponents of repealing the birthright citizenship provisions in consti-tutions around the world have consistently noted that such a changewould decrease incentives for illegal immigrants and the practice of hav-ing “anchor babies.” This is evident in countries like the Dominican Re-

153. See id. at 3-4.154. Id. at 6.155. Id.156. Id. at 4.


public, which repealed and now retroactively applies its constitutionalamendment removing the grant of birthright citizenship to children bornon Dominican Republic soil. It is also evident in the United States,where a bill introduced on January 3, 2013, seeks to stop children born inthe United States from obtaining U.S. citizenship if born to undocu-mented parents.157

Representative Steve King was responsible for introducing the bill that“would clarify those classes of individuals born in the United States whoare nationals and citizens of the United States at birth.”158 In proposingthe bill, King argued that the U.S. Supreme Court has erred in continuingto hold that anyone born in the United States is entitled to automaticcitizenship pursuant to the Citizenship Clause of the 14th Amendment.159

King argues that the framers could not have possibly considered illegalimmigrants’ children when they wrote the 14th Amendment because theUnited States did not have immigration law at that time.160

Although many proponents of repealing birthright citizenship genu-inely believe such a decision will reduce the amount of illegal immigra-tion, the facts tell a different story. Those countries that haveimplemented an amendment removing their birthright citizenship provi-sions have not seen a dramatic reduction in illegal immigration. But thismight be due to a number of factors, such as lack of enforcement of thenew amendment or lack of the government’s ability to keep track ofthose undocumented immigrants entering and leaving the country.

B. DISADVANTAGES

The one potential advantage of repealing birthright citizenship—reduc-ing incentives for illegal immigrants to have children born in a particularcountry—is far outweighed by those disadvantages expected in and seenfollowing a country’s constitutional amendment. The first disadvantageexpected by countries contemplating the removal of their constitutionalbirthright citizenship provision is the regulation of and burden in keepingtrack of paper records for citizens born within the country.161 This disad-vantage is one that affects both the government and citizens seeking toobtain citizenship for themselves and their children. From the perspec-tive of the government, officials will need extensive record-keeping sys-tems to keep track of parents of unborn children who will seek citizenshipfor those children in the future.

157. Elise Foley, Steve King Introduces Bill to Stop ‘Anchor Babies’, HUFFINGTON POST

(Jan. 4, 2013), available at http://www.huffingtonpost.com/2013/01/04/steve-king-anchor-babies_n_2411989.html.

158. Id.159. Id.160. Id.161. See Culliton-Gonzalez, supra note 147, at 150-52 (discussing the impact a repeal or

amendment of the U.S. Constitution’s Citizenship Clause would have on immi-grants, particularly affecting Latinos due to their large prevalence among the un-documented immigrants, children of immigrants, and immigration enforcementofficers).


An additional issue arises as to how new children will obtain U.S. citi-zenship upon their birth. For example, will immigration officers have tobe positioned in every hospital so that they can oversee the issuance of allbirth certificates? This situation is extremely burdensome for govern-ment staff to maintain and would likely impose a large burden upon newparents in forcing them to remember to bring stacks of paperwork to thedelivery room.

In addition to the burden imposed upon a country’s government afterrepealing its birthright citizenship laws, residents of that country seekingto obtain citizenship for their children will also face large obstacles inattempting to do so. The burden of keeping track of paperwork requiredto prove citizenship will be one obvious hurdle, but an additional barrieris based mostly upon social rights. The National Foundation for Ameri-can Policy has argued that among the costs of changing the CitizenshipClause of the 14th Amendment include “creating a two-tier Americancaste system that will result in a significant decrease in the population ofyounger U.S. citizens.”162

The National Foundation for American Policy has also argued such achange would greatly increase the undocumented population.163 Thiswould come as a result of repealing birthright citizenship because state-less children would reside in the country where they were born withoutties to any one nation.164 The Migration Policy Institute estimated that inthe United States alone, its population would decline by an amountsomewhere between 4.7 million and 13.5 million by 2050 if the UnitedStates repealed its constitutional birthright citizenship provision and didnot grant automatic citizenship to those children born to illegal immi-grants.165 As a result, these stateless children would have no legal statusin any country and would require deportation from the country he/shewas born in.166

Because of the rise in undocumented illegal immigrants, a country’seconomic and immigration conditions may also be affected for theworse.167 Simply by stating a child born in a country to undocumentedparents is also undocumented and without citizenship does not simultane-ously guarantee that the same child will also immediately leave the coun-try where they illegally reside. It is very likely that the children willremain residing in the country where they were born—especially if theirfamily also lives there.

As a result, this resident will be undocumented and fail to contribute to

162. MARGARET STOCK, THE COST TO AMERICANS AND AMERICA OF ENDING BIRTH-

RIGHT CITIZENSHIP 1 (2012), available at http://www.nfap.com/pdf/NFAPPolicyBrief.BirthrightCitizenship.March2012.pdf (discussing the impact and costs to bothAmericans and American society if the United States chose to amend the Four-teenth Amendment’s Citizenship Clause).

163. Id.164. Id.165. Id.166. Id.167. See id. at 2.


a country’s economic structure in any form whatsoever.168 On the con-trary, if that same child had been granted citizenship upon birth, he/shewould have still remained in the same country and partaken in the bene-fits and rights of society that keep a country’s government operating. Forexample, this child would be eligible to enroll in school and find a job thatenables him/her to pay taxes and make beneficial contributions to a coun-try’s society.169

C. THE BOTTOM LINE

Proponents of birthright citizenship believe that a bright-line ruleprohibiting babies from being granted automatic citizenship would bene-fit the immigration policies and reduce the number of those undocu-mented immigrants from remaining in their country and prevent thepractice of so-called “anchor babies.”170 But considering the advantagesand disadvantages countries have seen implementing such an amendmentproves that any change to a country’s birthright citizenship laws is amistake.

The United States has a longstanding history and constitutional right ingranting birthright citizenship. To amend that would reverse decades oflegislative and judicial history. Ireland and New Zealand had the samecase law and constitutional birthright citizenship provision, but they stilldecided to repeal. The most troublesome of all is the Dominican Repub-lic Constitutional Court’s ruling. The takeaway from such a worldwidetrend is that each country must evaluate its own immigration policy andcitizenry to determine if repealing birthright citizenship is a decision thatwould help, not hurt, its economic and societal landscape.

VI. CONCLUSION

Those countries considering the repeal of their constitutional birthrightcitizenship laws must undertake extensive analysis prior to doing so.

A. DON’T REINVENT THE WHEEL

First, it would benefit countries to evaluate comparable countries thathave taken the step to remove their birthright citizenship provisions. Thisway, one country may determine the consequences of enacting such aconstitutional change prior to making the wrong decision. Although noanalysis or country will be perfect or come out with the exact same re-sults, it is a much better option than to proceed with repealing withoutany further consideration. For example, the United States and Canadaare the only last two developed nations to not have repealed their consti-tutional birthright provisions. If either decides to proceed with repealingits laws, it would be extremely beneficial to evaluate other similarly de-

168. See id. at 1.169. See id. at 12-13.170. Id. at 18.


veloped nations to determine expectations and consequences of such achange.

B. BUT DO WATCH OUT FOR HUMAN RIGHTS VIOLATIONS AND

CONSTITUTIONAL CHALLENGES TO A REPEAL’S VALIDITY

The Dominican Republic Constitutional Court’s ruling has alreadyfaced domestic and international attention for the blatant discriminatorynature and language contained within it. Multiple human rights advocategroups have expressed serious concern over the way that the DominicanRepublic Government will attempt to enforce the ruling and its completeloyalty to its highest court’s ruling.

The Dominican Republic Constitutional Court’s decision cannot be ap-pealed and its government has maintained full support for this erroneousdecision. One mistake the Dominican Republic made when repealing itsbirthright citizenship laws was failing to look at other countries that havedone so. Its ruling will be applied retroactively to all residents living inthe Dominican Republic whose parents were undocumented immigrants.This decision will leave them stateless and at risk for deportation or evenworse.

The Dominican Republic is not the only country that faces or wouldface a constitutional challenge after implementing a repeal of its constitu-tional birthright citizenship laws. Some scholars argue that Haiti’s rulingis not a constitutional or discriminatory human rights violation because itonly seeks to prevent what it always has—citizenship to undocumentedimmigrants. These scholars argue that by retroactively applying its recentdecision, it will only be enforcing the law it created years ago—that un-documented immigrants shall not remain in the Dominican Republic.

Regardless of the country or its specific constitutional language or evenits immigrant makeup, the fact remains that repealing birthright citizen-ship in a country with a longstanding history of granting such citizenshipcauses turmoil. Countries hoping to implement such a change must beextremely cautious in both implementation and reform so as to avoidconstitutional and human rights challenges.


Updates

REFERENCE RE SENATE REFORM AND

THE SUPREME COURT OF CANADA’SCLARIFICATION OF THE

CONSTITUTIONAL PROCEDURE FOR

REFORMING THE CANADIAN

PARLIAMENT’S UPPER HOUSE

Christopher Cornell*

THIS article provides a comprehensive overview of the contestedpolitical topic of reform of the Canadian Senate. It begins by pro-viding brief outlines on the Senate as an institution and the history

of Senate reform, including the recent history of reform under the HarperGovernment and in the aftermath of the Canadian Senate ExpensesScandal. It goes on to examine the Supreme Court of Canada’s April2014 decision in Reference re Senate Reform, which was the Court’s firstin-depth analysis of the post-1982 constitutional amendment process andthe correct way several commonly proposed reforms to the Senate couldbe implemented. The article then highlights the positions of the threemajor Canadian political parties on Senate reform following Reference reSenate Reform before concluding.

I. THE CANADIAN SENATE: A STRUCTURAL OVERVIEW

The powers, composition, and other aspects of the Canadian Senate arelaid out by two of the documents that make up the Canadian Constitu-tion, the Constitution Act, 1867 and the Constitution Act, 1982.1 It isthrough those two documents that the Senate as an institution is gov-erned and empowered.

* Christopher is a student in his final year of study at the SMU Dedman School ofLaw. Prior to beginning law school he earned a Bachelor of Arts from TrinityUniversity and a Master of Letters from the University of St. Andrews. Christo-pher would like to thank his family, friends, and professors for their continuingsupport of him in his academic endeavors.

1. Constitution Act, 1867, 30 & 31 Vict., c. 3, §§ 21–36 (U.K.), reprinted in R.S.C.1985, app. II, no. 5 (Can.); Constitution Act, 1982, being Schedule B to the CanadaAct, 1982, c. 11, §§ 38-47 (U.K.). Note that originally the Constitution Act, 1867was known as the British North America Act, 1867, but it and several other Britishand Canadian statutes were renamed by the schedule to the Constitution Act,1982. Constitution Act, 1982, supra, sch. 1.

451


A. THE SENATE’S FORM AND COMPOSITION

The Senate serves as an appointed second chamber to the CanadianParliament. In the Senate, Canada is divided up into four divisions, eachrepresented by twenty-four senators, as well as six senators for the prov-ince of Newfoundland and Labrador and one each for the Yukon Terri-tory, the Northwest Territories, and Nunavut—leaving the Senate with aregular total membership of 105.2 Also, under the Constitution the Gov-ernor General has the right to determine that an extraordinary circum-stance is present where the four divisions are in need of extrarepresentation and recommend to the Canadian Monarch that four (oneper region) or eight (two per region) additional senators be appointed.3Such appointments bring the total number of senators to 109 or 113, butthat number gradually returns to 105 as vacancies from the regions arenot filled until a region has less than twenty-four senators.4 In practice,though, all senators are chosen by the Prime Minister and their appoint-ment by the Governor General or the Monarch is a technical formality.5

B. THE SENATE’S POWERS

In terms of power, the Senate has nearly the same legislative powers asthe directly elected lower chamber, the House of Commons.6 The differ-ences between the chambers are that: (1) spending legislation has to orig-inate in the House of Commons; (2) the Government is only responsibleto the Commons (i.e., a no confidence vote in the Senate cannot bringdown a Government); and (3) following a 1982 amendment to the Consti-tution, the Senate cannot vote down a constitutional amendment ap-proved by the Commons but can merely delay it for 180 days, after whichit can clear Parliament by another affirmative vote in the Commons.7While the Senate can vote down legislation approved by the Commonsand in the early years after Canadian Confederation did so frequently, ithas over time rarely exercised that veto.8 Senators originally served for

2. Constitution Act, 1867, supra note 1, § 22.3. Id. § 26.4. See id. § 27. The power to appoint extra senators is controversial and there have

only ever been two attempts to persuade the Monarch to use it: the first, by Lib-eral Prime Minister, Alexander Mackenzie, in 1873, was refused by Queen Victo-ria; the second, by Progressive Conservative Prime Minister, Brian Mulroney, in1990 for eight extra Senators so that he could overcome Senate opposition andimplement a Goods and Services Tax, was granted by Queen Elizabeth II, 1990:Mulroney Stacks Senate to Pass the GST, CBC DIGITAL ARCHIVES (Sept. 27,2013), http://www.cbc.ca/archives/categories/politics/federal-politics/federal-politics-general/mulroney-stacks-senate-to-pass-the-gst.html (for factual informationsee the “Did You Know?” tab, and for citation information see the “Citation” tab).

5. See JEAN-RODRIGUE PARE, SENATE REFORM IN CANADA, PRB-09-08E 1 (Aug.17, 2009) (Can.), available at http://www.parl.gc.ca/Content/LOP/ResearchPublications/prb0908-e.pdf.

6. Id.7. Id.8. Id.

2014] REFERENCE RE SENATE REFORM 453

life,9 but all senators appointed since a 1965 amendment serve until theyturn seventy-five and then enter into mandatory retirement.10

C. SENATORIAL QUALIFICATIONS

To qualify to serve in the Senate, one must be thirty years old, a subjectof the Monarch (senators thus do not have to be Canadian citizensthough in practice they typically are),11 and live in and own $4,000 (totalnet value excluding debts) of property in the province or territory he orshe represents.12 In the case of Quebec, the senatorial division that cov-ers the whole province is parceled into twenty-four individual electoraldivisions and Quebecois senators, in addition to the regular property andresidency requirements, must either live in or own $4,000 worth of prop-erty in the electoral division they represent.13 It is the above institutionalstructure that has led to repeated calls for reform over the last centuryand a half.14

II. SENATE REFORM IN CANADA: A BACKGROUND PRIMER

Since shortly after the time of Confederation in 1867, reform (or abol-ishment) of the Senate has from time to time become a hot button issuein Canadian political discourse.15 Since 1874, there have been a series ofproposals to—amongst other things—limit lifetime appointments, allowfor each provincial government to exercise some role in selecting its prov-ince’s senators or to pick them outright, have direct senatorial elections,provide for equal representation of the provinces, and to abolish the Sen-ate altogether.16

9. JACK STILLBORN, SENATE REFORM: ISSUES AND RECENT DEVELOPMENTS, PRB-07-42E 1 (Jan. 21, 2008) (Can.), available at http://www.parl.gc.ca/Content/LOP/researchpublications/prb0742-e.pdf.

10. ANDRE BARNES ET AL., REFORMING THE SENATE OF CANADA: FREQUENTLY

ASKED QUESTIONS 6 (Sept. 12, 2011) (Can.), available at http://www.parl.gc.ca/content/lop/researchpublications/2011-83-e.pdf.

11. Id. at 13.12. See PARE, supra note 5, at 1. The requirement that Senators own $4,000 worth of

property in the province they represent substantially limited the pool of potentialSenate nominees in that body’s early days, but as the monetary value of the prop-erty requirement has not changed since 1867 inflation has made it a fairly negligi-ble consideration, STILLBORN, supra note 9, at 1–2. The requirement interestinglyenough came into play in 1997 when Sister Peggy Butts, a university professor andRoman Catholic nun who had taken a vow of poverty, was appointed by LiberalPrime Minister Jean Chretien, necessitating that Butts’ religious order transfer asmall parcel of land into her name so that she could overcome the property re-quirement and take her seat in the Senate, Canada’s Upper House: Do We NeedThe Senate?, CBC NEWS (Apr. 1998), http://web.archive.org/web/20071016103302/http://www.cbc.ca/newsinreview/apr98/senate/consitut.htm (accessed by searchingfor CBC news in the Internet Archive index).

13. See PARE, supra note 5, at 1.14. See Barnes, supra note 10, at 6–7.15. See id.16. See id.


A. THE PRIMARY MOTIVATIONS FOR REFORM

Advocates for reform or abolishment of the Senate frequently point tothe method of selecting senators and the way senate seats are distributedas primary motivating reasons for their efforts.17 Because senators areappointed by the Prime Minister and can serve for up to forty-five years,two democracy-related concerns arise. First, the institution lacks demo-cratic legitimacy as it is appointed and senators do not have to share theviews of the people they represent who in turn have no way to removethem from office.18 Second, absent democratic elections, senators whoare at least theoretically in Parliament to represent the interests of theirprovinces are under no obligation or democratic pressure to do so.19 Ifsenators were elected, then those two concerns would be largely—if notentirely—moot. But new concerns might arise as the appointment pro-cess has led the appointed Senate to possess a good proportion of femaleand minority representation, and the electoral campaign process mightlead to a decrease in senators with specialized experiences or expertise aswell as the valuable contributions they make to the parliamentaryprocess.20

Because today senate seats are still basically distributed according tothe formula laid out in 1867, the representation of provinces and territo-ries in the Senate adheres to neither equal nor populationally-propor-tional representation.21 This leads to a situation where some provincesand territories have more senators (and thus representation) than theirproportional share of the Canadian populace to the detriment of some ofthe other provinces.22 The disadvantaged provinces thus resent theirlesser level of representation while those provinces and territories thatbenefit are not particularly inclined to change the status quo.23

Proponents of outright abolishment of the Senate will point to theabove two reasons and will argue that Parliament itself does not need anupper chamber.24 The argument that the Federal Parliament in Ottawashould be able to function with a single chamber has for decades beenchampioned by the opposition New Democratic Party.25 In support ofoutright abolishment, it has often pointed out that seven of the provincesused to have their own upper chambers and that by 1928 five of them had

17. See BARNES, supra note 10, at 13–14.18. See id.19. See id.20. See id. at 14.21. See id. at 22–23.22. See id.23. See DAVID E. SMITH, FEDERALISM AND THE CONSTITUTION OF CANADA 78–79

(2010).24. See, e.g., Bonnie K. Goodman, NDP Leader Thomas Mulcair Launches Senate

Abolishment Tour in Nova Scotia, EXAMINER.COM (Aug. 27, 2013), http://www.ex-aminer.com/article/ndp-leader-thomas-mulcair-launches-senate-abolishment-tour-nova-scotia.

25. See id.


been abolished, with the last one closing its doors in 1969.26

B. PREVIOUS REFORMS

Formal constitutional reforms to the Senate—though rare—have oc-curred in the past. These have included: (1) expansion of the Senate toaccommodate new provinces and territories; (2) the 1965 constitutionalamendment implementing the mandatory retirement age of seventy-five;and (3) the 1982 constitutional amendment allowing the Senate to onlydelay, rather than outright defeat, amendments to the Constitution.27

One additional reform was judicially achieved in 1929 when the UnitedKingdom-based Judicial Committee of the Privy Council (Canada’s then-highest court of appeals) reversed a contrary judgment by the SupremeCourt of Canada and ruled that for the purposes of the Canadian Consti-tution, women were persons and thus eligible to be appointed to theSenate.28

C. THE CURRENT PUSH FOR REFORM

Senate reform gained significant traction and public attention followinga public expense scandal that emerged in late 2012 when one veteranLiberal Senator Mac Harb29 and three Conservative Senators appointedby Harper in early 2009 (Mike Duffy, Pamela Wallin and PatrickBrazeau)30 were found to have falsely billed the Senate for several thou-sand dollars in travel and housing expenses.31 Harb paid back the moneyhe falsely claimed and resigned in August 2013.32 On November 5, 2013,Duffy, Wallin, and Brazeau were suspended from the Senate without paybut with health benefits until after the next general election in 2015.33

At nearly the same time, current Conservative Prime Minister StephenHarper, who has for several years supported the idea of an elected Senatewith fixed terms, began pushing Senate reform legislation that had beenintroduced into the House of Commons in 2011 that would set fixed,nine-year terms for senators and allow the provinces to hold Senate elec-

26. Id.27. See BARNES, supra note 10, at 6.28. See id.; Edwards v. Attorney General of Canada, [1930] A.C. 124 (P.C.) (appeal

taken from Can.).29. Senator Mac Harb Pays Back $231,000 in Expenses, Retires, CBC NEWS (Aug. 26,

2013, 5:52 PM), http://www.cbc.ca/news/politics/senator-mac-harb-pays-back-231-000-in-expenses-retires-1.1308485.

30. Wallin, Duffy among 18 named to fill Senate seats, CBC NEWS (Dec. 22, 2008, 7:02PM), http://www.cbc.ca/news/canada/wallin-duffy-among-18-named-to-fill-senate-seats-1.715239.

31. Timeline: Key Dates in the Evolution of the Senate Expense-Claim Controversy,GLOBAL NEWS (Feb. 4, 2014, 2:33 PM), http://globalnews.ca/news/568714/a-look-at-key-dates-in-the-evolution-of-the-senate-expense-claim-controversy/.

32. Senator Mac Harb Pays Back $231,000 in Expenses, Retires, supra note 29.33. Andrea Janus, Senators Vote to Oust Duffy, Brazeau and Wallin, CTV NEWS (Nov.

5, 2013, 7:24 PM), http://www.ctvnews.ca/politics/senators-vote-to-oust-duffy-brazeau-and-wallin-1.1528784.


tions.34 The Government of Quebec, however, sued Harper’s FederalGovernment in 2012 on the grounds that the proposed constitutionalamendments to achieve Senate reform could not be constitutionallypassed by Parliament alone.35

Under the Constitution Act, 1982, Parliament can pass certain types ofamendments alone, but some amendments must be passed by Parliamentand the legislative assemblies of at least two-thirds of the provinces thatcontain at least 50 percent of the total population of Canada, and otheramendments require the approval of Parliament and all of the provinciallegislatures.36 Quebec argued, and in October 2013 the Quebec Court ofAppeal agreed, that any amendment allowing for elections or implement-ing fixed-length terms could not be implemented by Parliament unilater-ally and had to be approved by Parliament and two-thirds of theprovincial legislatures representing at least half of the population.37

Questions as to how Senate reform had to be constitutionally imple-mented in fact led the Harper Government in 2013 to file a reference casewith the Supreme Court of Canada asking for clarification as to how sixfrequently discussed potential reforms (including outright abolishment)would have to be implemented in accordance with the Constitution.38

III. REFERENCE RE: SENATE REFORM AND THE PROCESSOF REMAKING THE CANADIAN SENATE

On April 25, 2014, the Supreme Court of Canada released its unani-mous decision in the Harper Government’s reference case, Reference reSenate Reform, breaking down each of the Government’s questions inmeticulous detail and, for the most part, ruling that Parliament cannotunilaterally make reformative changes to the Senate.39 The case is also ofparticular importance as it represents the first time the Supreme Courthas weighed in in detail on the process of amending the Constitution es-tablished by the Constitution Act, 1982.40

A. THE FIRST QUESTION: FIXED SENATORIAL TERMS

In its first question, the Government asked the Court if Parliamentalone had the ability to reform the Senate by (1) creating fixed terms ofnine years, eight years or less, or ten years or more for senators; (2) creat-

34. The Canadian Press, Senate Reform Canada: A Chronology of Nearly 150 Years ofProposals, HUFFPOST POL. CAN. (Apr. 25, 2014, 3:59 PM), http://www.huffingtonpost.ca/2014/04/25/senate-reform-canada-chronology_n_5214302.html.

35. See id.36. See Constitution Act, 1982, supra note 1, §§ 38–47.37. See The Canadian Press, Harper Senate Reform Bill Rejected by Quebec Appeal

Court, CBC NEWS (Oct. 24, 2013, 3:03 PM), http://www.cbc.ca/news/politics/harper-senate-reform-bill-rejected-by-quebec-appeal-court-1.2223975.

38. The Canadian Press, supra note 34.39. Leslie MacKinnon, Senate Reform Can’t be Done by Ottawa Alone, CBC NEWS

(Apr. 25, 2014, 6:55 PM), http://www.cbc.ca/news/politics/senate-reform-can-t-be-done-by-ottawa-alone-1.2621712.

40. Id.


ing fixed terms for senators of two or three parliaments; (3) proving forrenewable terms for senators; (4) limiting the terms of senators appointedafter October 14, 2008; or (5) imposing limits on the terms of senatorsappointed before October 14, 2008.41 In looking at the Government’squestions regarding various types of terms for senators, the Court deter-mined that any change to the Senate that would alter its fundamentalnature or role would impose on the interests of the provinces and wouldthus have to be approved by both Parliament and two-thirds of the prov-inces representing more than 50 percent of the total Canadian populace,as laid out in section 38 of the Constitution Act, 1982.42 The Court refersto this as the “7/50 procedure.”43

With the above framework established, the Court then held fixed termswould fundamentally change the Senate by removing the tenure protec-tions that currently allow senators to directly question or challenge pro-posals of the House of Commons and the Government without fear ofloss of office.44 Because the imposition of senatorial terms would be afundamental change to the nature of the Senate, the Court determinedthat such a change would be subject to the 7/50 procedure.45

B. THE SECOND AND THIRD QUESTIONS: CONSULTATIVE

SENATORIAL ELECTIONS

The Government’s second question asked the Court to determine ifParliament had the authority to unilaterally enact legislation that wouldallow for consultative elections to be held in each province and territoryto propose potential nominees for appointment to the Senate.46 Simi-larly, the Government’s third question asked if Parliament had the powerto enact legislation that would allow those provincial and territorial legis-latures that so desired to enact their own legislation to hold consultativeelections, whereby their people could propose senatorial nominees to theGovernment.47 The Government argued that because the changes neces-sary to bring about consultative elections would not necessitate anychange to the text of the Constitution, they would not be constitutionalamendments and thus could be done by Parliament acting alone.48

The Court disagreed and said that because consultative elections wouldsignificantly alter the Senate’s “fundamental nature and role as a comple-mentary legislative body of sober second thought,” they would in factconstitute a constitutional amendment.49 Because an amendment intro-ducing consultative senate elections would be a change to the architec-

41. Reference re Senate Reform, 2014 S.C.C. 32, para. 5 (Can.).42. Id. paras. 77, 82.43. Id. para. 82.44. Id. paras. 78–80.45. Id. para. 82.46. Id. para. 5.47. Id.48. Id. para. 51.49. Id. para. 52.


tural structure of the Constitution, the Court determined that such achange could only be implemented via the general 7/50 procedure.50

C. THE FOURTH QUESTION: THE REPEAL OF

PROPERTY QUALIFICATIONS

The government’s fourth question asked if Parliament had the constitu-tional authority to unilaterally repeal the existing constitutional propertyrequirements for service in the Senate.51 The Court ruled that Parlia-ment has the authority to repeal the requirement that senators have prop-erty with a net worth of $4,000.52 The court described such anamendment that “updates the constitutional framework relating to theSenate without affecting the institution’s fundamental nature and role” asprecisely what the framers of the Constitution Act, 1982 had in mindwhen they allowed the Parliament to have some unilateral control overamendments affecting Parliament and the Federal Government.53 TheCourt further ruled that in all of the provinces but Quebec, Parliamentcould unilaterally repeal the requirement that senators own $4,000 of realproperty in the province they represent.54 Because of the way Quebec’ssenatorial electoral divisions are structured and provided for in the Con-stitution, any amendment to the real property requirements forQuebecois Senators would have to be passed by both Parliament andQuebec’s legislative assembly.55

D. THE FIFTH AND SIXTH QUESTIONS: ABOLISHING THE SENATE

The Government’s fifth question asked if Parliament had the power onits own to abolish the Senate by either: (1) inserting an amendment intothe Constitution stating that the Senate was to be abolished; (2) changingor repealing some or all of the references to the Senate in the Constitu-tion; or (3) by abolishing the powers of the Senate and revoking thoseconstitutional provisions providing senatorial representation to the prov-inces.56 The Government’s sixth and final question asked the Court todetermine—if it ended up concluding that Parliament could not abolishthe Senate on its own—whether it could be abolished via the 7/50 proce-dure or if the abolishment of the Senate required the unanimous consentof all of the provinces.57

The Harper Government tried to argue that because its proposal tohave Parliament abolish the Senate would only alter the powers of theSenate and the numbers of its members, then it should be constitutionally

50. Id. para. 70.51. Id. para. 5.52. Id. para. 86.53. See id. para. 90.54. Id. para. 86.55. Id.56. Id. para. 5.57. See id. para. 5.


permissible.58 Alternatively, the Government argued that the correctprocess to abolish the Senate would be the 7/50 procedure.59

The Government’s argument was outright and bluntly rejected by theCourt when it declared:

We cannot accept the Attorney General’s arguments. Abolition ofthe Senate is not merely a matter of “powers” or “members”under . . . the Constitution Act, 1982. Rather, abolition of the Senatewould fundamentally alter our constitutional architecture—by re-moving the bicameral form of government that gives shape to theConstitution Act, 1867—and would . . . require[ ] the unanimous con-sent of Parliament and the provinces.60

The Court both determined that Parliament cannot abolish the Senateon its own and that the Senate cannot be abolished absent the agreementof Parliament and all of the provinces— the political realities of that una-nimity requirement being that the Senate’s survival for the foreseeablefuture is reasonably well assured.61

Through Reference re Senate Reform, the Supreme Court of Canadahas provided a great deal of clarity and explanation on the applicability ofthe various mechanisms for amending the Canadian Constitution, includ-ing making clear that most changes to major constitutionally created bod-ies must be approved by two-thirds of the provinces, representing morethan half of the Canadian populace, and that any move to abolish such aconstitutional body must be approved by both Parliament and all of theprovincial legislatures.62

IV. THE FUTURE OF SENATE REFORM IN LIGHT OFREFERENCE RE SENATE REFORM

Following the Supreme Court of Canada’s decision in Reference re Sen-ate Reform, it is not at all certain how, when, or if Senate reform willcontinue. On January 29, 2014, after the decision of the Quebec Court ofAppeals but before the decision of the Supreme Court, in what could beconsidered a mini-reform, Liberal Leader Justin Trudeau removed theLiberal Senators from his party caucus and barred them from officiallyengaging in Liberal Party fundraising and campaigning.63 Trudeau predi-cated his actions on the belief that by releasing Liberal Senators fromtheir partisan political positions, they will be able to function indepen-dently of the political process and more ably devote themselves to their

58. Id. para. 96.59. Id.60. Id. para. 97.61. See MacKinnon, supra note 39.62. See id.63. See Kim Mackrael & Josh Wingrove, What Trudeau’s Liberal Caucus Shakeup

Means for the Senate, GLOBE & MAIL (Jan. 30, 2014, 2:26 PM), http://www.theglobeandmail.com/news/politics/what-trudeaus-caucus-shakeup-means-for-the-senate/article16600794/.


senatorial responsibilities.64 This separation seems directed towards agradual implementation of a senate of independent figures who are ableto primarily devote themselves to the task of reviewing and enhancing theParliamentary legislative process.65 But its short term effectiveness issomewhat less pronounced as the existing Liberal Senators have simplyreorganized themselves as a Senate Liberal caucus separate from the Par-liamentary (i.e., House of Commons) Liberal caucus.66

Following the Supreme Court’s decision Trudeau announced a reformplan that would have an informal (i.e., not entrenched in legislation orofficially binding on Prime Ministers) advisory commission to vet pro-spective, non-partisan senators and make recommendations on appoint-ments to the Prime Minister.67 New Democratic Party Leader, ThomasMulcair, who is himself fervently committed towards working for the out-right abolishment of the Senate, attacked Trudeau’s plan, claiming thatthe Court’s opinion in the reference case indicates that it would be un-constitutional.68 But several legal experts have claimed that Mulcair ismistaken and that if Trudeau’s panel is merely advisory and not binding,then it passes all constitutional hurdles, raising the prospect that it mightbe the only viable, substantive near-term reform or change to theSenate.69

Following the Supreme Court’s rejection of his government’s parlia-mentary reform proposals, Prime Minister Stephen Harper seems to beoperating under some misconceptions as to what the reference case rulingmeans.70 Harper has publically stated that because of the Supreme Courtdecision in the reference case, the Federal Government is barred frominitiating Senate reforms and that they must be initiated by the prov-inces.71 The Prime Minister has also made clear that he will take anyproposals for reform from the provinces seriously and voiced an opinionthat absent senate reform, the institution should “as is be abolished,”while stressing his belief that even that decision would be up to the prov-inces.72 But the Prime Minister is wrong when he says that the SupremeCourt barred the Federal Government from initiating reform.73 Ratherthan restricting where a reform must be initiated, all the Court said wasthat any proposed reform has to have both the requisite level of provin-

64. See id.65. See id.66. See id.67. Joan Bryden, Mulcair’s Comments On Trudeau Senate Plan Full Of Baloney?,

HUFFPOST POL. CAN. (May 1, 2014, 2:59 PM), http://www.huffingtonpost.ca/2014/05/01/thomas-mulcair-justin-trudeau-senate-baloney_n_5245793.html.

68. Id.69. Id.70. See The Canadian Press, Senate Reform: Harper Says Issue Now In Hands of Prov-

inces, HUFFPOST POL. CAN. (May 1, 2014, 5:59 PM), http://www.huffingtonpost.ca/2014/05/01/senate-reform-harper-provinces_n_5248398.html.

71. Id.72. Id.73. Id.


cial and parliamentary approval.74 In any case, it appears for the foresee-able future that the New Democratic Party will continue to push forabolition of the Senate; the Liberals will advocate for an advisory Senatefull of non-partisan independents; and the Conservatives would like tosee Senate reform but for now have passed that political hockey puck tothe provinces.

V. CONCLUSION

Reform of the Canadian Senate has been a hotly discussed topic sinceat least 1874, only seven years after the Senate was established at the timeof Canadian Confederation.75 Despite being a topic of fervent politicaldiscourse for at least 140 years, very little has been achieved in terms ofgenuine senatorial reform. One could even make a pretty strong casethat the Senate of 2014 is—aside from some largely superficial changes—structurally identical to the Senate of 1867. The current political situationbeing what it is—it would appear that while small reforms such as theabolishment of senatorial property qualifications or the creation of infor-mal appointments advisory panels might be possible for the time being,attempts to comprehensively reform the Senate will unlikely succeedwhile attempts to abolish the upper house will all but certainly fail. Thepolitical difficulties of altering the institutional fabric of the Senate havekept it relatively unchanged for 147 years and will likely continue to pre-vent any comprehensive institutional change for some time to come.That being said, the Supreme Court of Canada’s decision in Reference reSenate Reform has, at the very least, removed the constitutional ambigu-ity surrounding most questions of Senate reform, making it possible forthe first time for proponents and opponents of various changes to defini-tively plot out the constitutional requirements for implementing or block-ing any proposed changes.

74. Id.75. See BARNES supra note 10, at 6.


BRAZIL’S LEGAL SETTLING

FOR THE WORLD CUP

Tony Godfrey*

Some people believe football1 is a matter of life and death.I am very disappointed with that attitude. I can assure you

it is much, much more important than that.

—Bill Shankly2

Need Food, Not Football

—Brazilian graffiti artist3

* Tony Godfrey is a third-year law student at the SMU Dedman School of Law,Class of 2015. He earned his B.A. in English Literature and Political Science, cumlaude, from Abilene Christian University. He is extremely interested in the inter-section of sports, culture, and law.

1. For many readers, fans of the sport or not, whether to call the sport “soccer” or“football” is an issue of great tension, contention, and confusion. This update willuse the word “football” for ease of reading because the paper will focus on manycountries and international organizations that consistently refer to the sport as“football.” But, it is worth noting that “soccer” is the historically correct term:

Many people, both in America and in Europe, imagine that soccer is anAmerican term invented in the late twentieth century to distinguish itfrom gridiron. Indeed, anti-American Europeans often frown on the useof the word. They consider it a mark of American imperialism. Evensome American soccer fans seem embarrassed by the word. This is a sillyposition. “Soccer” was the most common name for the game in Britainfrom the 1890s until the 1970s. As far as one can tell, when the NorthAmerican Soccer League brought soccer to the Americans in the 1970s,and Americans quite reasonably adopted the English word, the Britishstopped using it and reverted to the word football.

SIMON KUPER & STEFAN SZYMANSKI, SOCCERNOMICS: WHY ENGLAND LOSES,WHY SPAIN, GERMANY, AND BRAZIL WIN, AND WHY THE U.S., JAPAN, AUSTRA-

LIA, TURKEY–AND EVEN IRAQ–ARE DESTINED TO BECOME THE KINGS OF THE

WORLD’S MOST POPULAR SPORT 186 (2ND. ED. 2012).2. Bill Shankly: The top 10 quotes of a Liverpool legend 50 years to the day since he

took over, DAILY MAIL (Dec. 1, 2009, 5:44 AM), http://www.dailymail.co.uk/sport/soccer/article-1232318/Bill-Shankly-The-quotes-Liverpool-legend-50-years-day-took-over.html (Bill Shankly managed Liverpool Football Club from 1959 to 1974,winning three First Division titles, two FA Cups, and the UEFA Cup, amongstother honors. Thanks to foundations laid by Shankly, the Liverpool Football Clubhas won the English First Division eighteen times, the UEFA Champions Leaguetitle five times, the FA Cup seven times, the League Cup eight times, and became,in the author’s studious opinion, the greatest football club in the world).

3. ‘Need food, not football’: Brazilian graffiti art express outrage over World Cup, RTMEDIA (May 30, 2014, 5:22 PM), http://rt.com/news/162340-graffiti-brazil-football-worldcup/.

463


ON March 9, 2014, the Arena Amazonia was officially opened inthe City of Manaus.4 Costing about $227 million, the massivestadium has a capacity of more than 40,000 and will host an

equally whopping four football matches during the World Cup tourna-ment for which it was built.5 When the crowds from the World Cupleave, the stadium will be the official home of Nacional Futebol Clube.6As the oldest football club in Manaus, Nacional draws, at maximum,crowds of 1,000 fans to its matches.7

On June 12, 2014, the first ball of the World Cup was kicked in SaoPaulo, Brazil, setting off a tournament of truly mammoth proportions.8On July 13, 2014, the final whistle blew in Rio de Janeiro, and still theArena Amazonia stands in Manaus.9 With the arrival and subsequentexodus of World Cup fans—leaving 39,000 seats empty in the ArenaAmazonia, what else has come and gone in Brazil as a consequence of theWorld Cup?

I. THE TOURNAMENT

A. THE MODERN WORLD CUP

From its first tournament of thirteen teams, the World Cup has grownsignificantly in size and revenue. Since 1930, there have been nineteenWorld Cups won by eight different national teams.10 Today the tourna-ment is often referred to as the “Final Competition,” and consists ofthirty-two teams.11 These thirty-two teams are culled from three years ofqualifying competition amongst 204 entrants spread across sixcontinents.12

The Federation Internationale de Football Association’s (FIFA)growth in revenue has also been significant. In 1930 there was little reve-

4. Arena Amazonia Inaugurated in Manaus, FIFA.COM (Mar. 10, 2014), http://www.fifa.com/worldcup/news/y=2014/m=3/news=arena-amazonia-inaugurada-manaus-2295123-2295209.html.

5. Sam Borden, Building a World Cup Stadium in the Amazon, N.Y. TIMES (Sept. 24,2013), http://www.nytimes.com/2013/09/25/sports/soccer/in-building-world-cup-stadium-in-amazon-rain-is-just-one-challenge.html?_r=0; Manaus, ESPNFC.COM

(Dec. 2, 2013), http://www.espnfc.com/fifa-world-cup/story/1584738/venue-guide-arena-amazoniamanaus2014-world-cup-stadium-brazil.

6. Donna Bowater, World Cup 2014: Amazonian Climate Only One of the Problemsin Manaus as Stadium Branded ‘White Elephant,’ DAILY TELEGRAPH (Dec. 6,2013, 11:21 AM), http://www.telegraph.co.uk/sport/football/world-cup/10500117/World-Cup-2014-Amazonian-climate-only-one-of-the-problems-in-Manaus-as-stadium-branded-white-elephant.html.

7. Id.8. See Match Schedule, FIFA.COM, http://resources.fifa.com/mm/document/tourna

ment/competition/01/52/99/91/2014fwc_matchschedule_wgroups_22042014_en_neutral.pdf.

9. See id.10. FIFA World Cup, FIFA.COM, http://www.fifa.com/aboutfifa/worldcup/ (last visited

Aug. 10, 2014).11. Id.12. Id. (Antarctica does not currently have a representative in FIFA competitions).

2014] BRAZIL’S LEGAL SETTLING FOR THE WORLD CUP 465

nue to speak of—with FIFA so desperate to host a tournament that Uru-guay offered to pay the expenses of every competing country (travelacross the Atlantic was cost-prohibitive for most teams at the time), whilestill splitting any modest profit accrued.13 Today, through various compe-titions, FIFA no longer has a money problem. From 2007 to 2010, FIFArevenues were nearly $4.2 billion, with a profit of $631 million.14 Ninety-three percent of these revenues were related to tournaments and 87 per-cent came from the World Cup in South Africa.15 Nearly $2.5 billioncame from television rights to the World Cup in South Africa.16

FIFA is set to break new financial records from the tournament in Bra-zil. It is estimated that FIFA will receive $2.78 billion in media rightsalone with its total takings closer to $4.2 billion.17 This is not entirelysurprising because the World Cup is consistently the most widely-viewedsporting event in the world.18 The tournament in South Africa, for exam-ple, was broadcast in literally every country in the world (including Ant-arctica) and was viewed by over 3.2 billion people, 46.4 percent of theworld’s total population.19 The tournament in Brazil appears on track tobe no exception.20 With numbers like that, it seems clear why a countrywould want to host the World Cup and change its laws to accommodateFIFA.

B. BRAZIL’S “INCENTIVES”

But in practice, astronomical numbers do not necessarily translate tobenefits for host countries prior to and after the tournament. For theinaugural World Cup, Uruguay’s hunger for hosting was not focused onmoney.21 Actually, the monetary risks far outweighed the rewards.22 Itwas no coincidence that Uruguay opted to hold the tournament in July of1930. The tournament became a large celebration of national pride andsovereignty exactly one hundred years after Uruguay’s first independentconstitution.23

13. DAVID GOLDBLATT, THE BALL IS ROUND: A GLOBAL HISTORY OF SOCCER 248(2006).

14. Income, FIFA.COM, http://www.fifa.com/aboutfifa/finances/income.html (last vis-ited Aug. 10, 2014).

15. Id.16. Id.17. Press Release, Sportcal, Sportcal Insight: World Cup Set to Bring in More Than

$4bn, http://www.sportcal.com/News/release_article.aspx?articleid=99564 (last vis-ited Aug. 10, 2014).

18. Almost half the world tuned in at home to watch 2010 FIFA World Cup SouthAfrica, FIFA.COM (July 11, 2011), http://www.fifa.com/worldcup/archive/southafrica2010/organisation/media/newsid=1473143/.

19. Id.20. Currently total ratings for the 2014 World Cup are unavailable, but samples may

be found at FIFA.com. See Press Release, FIFA, TV Viewing Breaks Records inFirst FIFA World Cup Matches, (June 20, 2014), available at http://fifa.pressfire.net/newsletter/newsletter?id=2530&html=1.

21. GOLDBLATT, supra note 13, at 248.22. Id.23. Id.


Today, with such huge global interest in the World Cup, money isthought to be a far more convincing reason to take on the weight of host-ing. But it is not a proven benefit. In an interview in 2010 of OrlandoSilva, Jr., Brazilian sports minister, Silva said he believed the “cup hasserved as a stimulus for development and infrastructure in South Africa,and we will follow the same path in Brazil.”24 This sentiment is not justtrue of the World Cup, but can be seen by the frenzy of every city andcountry to host any large sports event, from the Super Bowl; to the Euro-pean Championships; to the Summer Olympics; and even the WinterOlympics. Huge numbers like those brought by the World Cup lead tothe belief that such large amounts of people will create huge and lucrativeconstruction jobs. The assumption is that a plethora of these service-re-lated jobs will inevitably lead to substantial improvements in infrastruc-ture throughout the country.25 The idea generally looks like this:

[B]uilding the stadium would create jobs first for construction work-ers, and later for people who worked in it. Fans would flock in fromall around (“If you build it, they will come”), and they would spendmoney. New businesses would spring up to serve them. As the areaaround the stadium became populated, more people would want tolive there, and even more businesses (and jobs) would spring up.26

Unfortunately, reality has not held up to these expectations. When theUnited States hosted the World Cup in 1994, it was expected to raise $4billion.27 But, that estimate was inflated by $13 billion; each host cityexperienced an average reduction in income of $712 million for a net lossof $9.26 billion, rather than the expected $4 billion gain.28 A study wasconducted on the economic effects of the tournament on the city of Liv-erpool29 during the 1996 European Championships hosted by England.30

The city received an influx of nearly 30,000 visitors, who altogether spentonly $1.56 million and created a total of thirty (temporary) jobs.31

Subsequent studies and anecdotes have reaffirmed this division be-tween expectation and reality. When Japan hosted the World Cup in2002, there was an expected economic boost of $26 billion.32 But, if any-thing, tourism was depressed as potential visitors traveled elsewhere to

24. KUPER & SZYMANSKI, supra note 1, at 26725. Id. at 270.26. Id. at 269.27. DENNIS COATES, WORLD CUP ECONOMICS: WHAT AMERICANS NEED TO KNOW

ABOUT A US WORLD CUP BID 4 (2010), available at http://www.transparencyinsport.org/The_documents_that_FIFA_does_not_want_fans_to_read/PDF-documents/(23)World-Cup-Economics.pdf. .

28. Id.29. The European Championship is a tournament hosted by the Union of European

Football Associations (UEFA) every four years, falling two years between WorldCups, between the top sixteen qualifying teams for the UEFA tournament. Seegenerally UEFA Euro 2016 Finals, UEFA.COM, http://www.uefa.com/uefaeuro/finals/index.html (last visited Aug. 10, 2014).

30. See KUPER & SZYMANSKI, supra note 1.31. Id. at 273 – 74.32. Id. at 274.


avoid the masses expected at the World Cup.33 Athens hosted the Sum-mer Olympics in 2004, and its tourism officials calculated a very specific10 percent decline in annual tourism.34

C. SELECTION OF A HOST

The selection of a host country for the World Cup today is not unlikethe selection of a new Pope in the Catholic Church.35 The process ofselection begins when FIFA sends out requests for expressions of intentto bid.36 After this request, member associations express the requestedinterest and receive documents outlining the rules of bidding and a“Hosting Agreement” that will bind the selected host.37 The finalizationof a country’s bid must include a contractual commitment to host thetournament if selected.38 Following these bids and acceptance of obliga-tions by the bidding nations, the FIFA Executive Committee holds a voteon the final candidates.39 The Executive Committee itself is made up oftwenty-four individuals, and a majority is required for a host country towin the bidding.40 Votes are cast in a secret ballot in multiple roundsuntil a majority is achieved,41 although there is no white smoke to indi-cate consensus.

D. CONFIDENTIAL COMMITMENTS

The key provision throughout the bidding process and host selection isthe contractual commitment of the host country and any proposed hostcities to the “Hosting Agreement.”42 While a general bidding agreementthat requires this commitment can be found, specific Hosting Agreementsare unavailable because of their confidentiality clauses. The clause setsout, specifically:

6.4 CONFIDENTIALITY:(i) The Bid Committee agrees to keep confidential, and agrees toensure that its professional advisors and other individuals involved in

33. Id.34. Id.35. See generally How a Pope is Elected, CATHOLIC.ORG, http://www.catholic.org/

pope/elect.php (last visited Aug. 10, 2014).36. Bidding process, FIFA.COM, http://www.fifa.com/tournaments/bidsfifaevents/pro

cess.html (last visited Aug. 10, 2014).37. Id.38. Ewan Macdonald, World Cup Bidding Process Explained; How the 2018 and 2022

World Cup Hosts are Chosen, GOAL.COM (Nov. 29, 2010, 3:00:00 PM), http://www.goal.com/en/news/3512/20182022-world-cup-host/2010/11/29/2234600/world-cup-bidding-process-explained-how-the-2018-2022-world.

39. Id.40. See id.41. See id.42. BIDDING AGREEMENT: REGARDING THE SUBMISSION OF BIDS FOR THE RIGHT TO

HOST AND STAGE THE 2018 FIFA WORLD CUP OR 2022 FIFA WORLD CUP 9(2009), available at http://www.transparencyinsport.org/The_documents_that_FIFA_does_not_want_fans_to_read/PDF-documents/(11)FIFA-Bidding-agreement.pdf.


the preparation of the Bid on behalf of the Big Committee also keepconfidential, all content of this Bidding Agreement and all verbaland written correspondence and communications between FIFA andthe Bid Committee and Member Association during the course ofthe Bidding Process.43

Brazil’s Hosting Agreement has not yet been released (or leaked) tothe public; however, changes in Brazil’s laws, following its selection ashost, are available for examination.

II. BRAZIL’S IMPLEMENTATION OF ITS COMMITMENTS

A. PREVIOUS LAW

Brazil has traditionally had a number of laws protecting the rights ofworkers, from general provisions in its constitution to specific statutesprotecting laborers’ rights.44 The two governing provisions are the Bra-zilian Constitution45 and the Brazilian Consolidation of Labor Laws(Consolidacao das Leis do Trabalho).46 Together, these two provide “theworld’s most advanced labor legislation.”47

Title II of the Brazilian Constitution, known as Fundamental Rightsand Guarantees, ensures that “all persons are equal before the law, with-out any distinction whatsoever, Brazilians and foreigners residing in thecountry being ensured of inviolability of the right to life, to liberty, toequality, to security and to property. . . .”48 Article 5 of the BrazilianConstitution defines a number of these inviolable rights for all persons inmany capacities.49 For example, with respect to workers, the article pro-vides that “the practice of any work, trade or profession is free, observingthe professional qualifications which the law shall establish”50 and “loco-motion within the national territory is free in time of peace, and any per-son may, under the terms of the law, enter it, remain therein or leave itwith his assets.”51 Succinctly, these inviolable rights include a freedom topursue whatever work one desires, pursuant to the regulations of thatprofession, and a freedom of movement within and without the countryof both persons and assets.

Article 6 of the Brazilian Constitution continues to focus on inviolablesocial rights, including the right to work.52 Article 7 expands on what the“right to work” entails, including severance-pay, minimum wage, working

43. Id. at 32.44. See JOHN D. FRENCH, DROWNING IN LAWS: LABOR LAW AND BRAZILIAN POLITI-

CAL CULTURE 1 (2004).45. See generally CONSTITUICAO FEDERAL [C.F.] [CONSTITUTION] (Braz.).46. See generally Decreto-lei No. 5.452, de 1 de Maio de 1943, Diario Oficial Da Uniao

[D.O.U.] de 9.8.1943 (Braz.), available at http://www.planalto.gov.br/ccivil_03/Decreto-Lei/Del5452.htm.

47. FRENCH, supra note 44, at 1.48. CONSTITUICAO FEDERAL [C.F.] [CONSTITUTION] art.5 (Braz.).49. Id.50. Id. at art. 5, § XIII.51. Id. at art.5, § XV.52. Id. at art. 6.


hours not exceeding eight hours per day and forty-four hours per week,higher wages for night-shift workers, occupational accident insurancepaid by the employers, and numerous others.53 Finally, Article 170 of theBrazilian Constitution sets out a protection of free competition, defenseof the consumer, and free exercise of any economic activity.54

The Brazilian Consolidation of Labor Laws provides even more de-tailed regulation of the rights afforded to the worker, specifying in 922articles what is expected of employers.55 This law is expansive in its pro-tections, but also a bit unwieldy; it has been amended nearly 500 timessince 1943.56 Modern protections include guaranteed wages, vacation,thermal comfort, and adequate lighting.57 For labor conducted outside,article 200 specifically mandates adequate protection against sunlight,heat, cold, humidity, winds, drinking water, and prophylaxis of diseases.58

These statutory protections of the Brazilian Constitution and the Bra-zilian Consolidation of Labor Laws work together to provide inviolablerights for both citizens and non-citizens, which allow them to work freely.These seemingly firm guarantees have been softened for 2014.

B. LAWS AS CHANGED BY FIFA

On June 5, 2012, the Republic of Brazil passed Law No. 12.663, com-monly referred to as the World Cup law.59 The World Cup law sets out anumber of specific provisions for the event itself, including: items allowedin stadiums; ticket prices and availability;60 indemnification for FIFA;61

protection of FIFA’s rights to all images and broadcasts;62 a special Visacategory for World Cup attendees;63 a special category of work permit forforeign workers associated with the World Cup;64 extra protections forFIFA’s brand, image, and sponsors; specific crimes with uniqueprosecutorial and liability avenues;65 areas of exclusion where only offi-

53. Id. at. art. 7.54. Id. at art. 170.55. See generally Decreto-lei No. 5.452, de 1 de Maio de 1943, DIARIOOFICIAL DA

UNIAO [D.O.U.] de 9.8.1943 (Braz.), available at http://www.planalto.gov.br/ccivil_03/Decreto-Lei/Del5452.htm.

56. Angelico Law, Brazil Celebrates 70th Anniversary of Labor Law (CLT) Amid De-bate, BRAZIL LAW BLOG (June 7, 2013), http://www.thebrazillawblog.com/brazil-celebrates-anniversary-of-labor-law-clt/.

57. See Decreto-lei No. 5.452, de 1 de Maio de 1943, DIARIO OFICIAL DA UNIAO

[D.O.U.] de 9.8.1943 (Braz.), available at http://www.planalto.gov.br/ccivil_03/Decreto-Lei/Del5452.htm.

58. Id. at art. 200.59. Lei No. 12.663, de 5 de Junho de 2012, DIARIOOFICIAL DA UNIAO [D.O.U.] de

6.6.2012 (Braz.), available at http://www.planalto.gov.br/ccivil_03/_ato2011-2014/2012/Lei/L12663.htm.

60. Id.at ch. V.61. Id. at ch. IV.62. Id. at ch. II., sec. III.63. Id. at ch. III.64. Id. at ch. III, art. 20.65. Id. at ch. VIII.


cial vendors may work and sell wares;66 and specific guidelines and be-haviors for attendees in and around the stadium during the competition.67

Questions were raised early but went unresolved about the constitu-tionality of the new law.68 The public prosecutor of Brazil, RobertoGurgel, filed a complaint in October 2013 alleging the law violated keyprovisions of the Brazilian Constitution related to civil liability, moneypaid to football players,69 and exemptions for FIFA from legal costs andexpenses.70 Gurgel also filed a constitutional challenge to Law No.12.350.71 This law, under article 3, exempts FIFA and all of its subsidiar-ies from income, import, and industrial taxes related to the World Cupbefore, during, and after the tournament.72 Brazil’s own internal revenueservice estimates these exemptions will amount to at least $248.7million.73

In addition to these concerns, the law sets restrictions on the “right tofreedom to move” in the Brazilian Constitution article 5, section XV,74

and the right to free enterprise in article 170.75 Article 11 of the WorldCup law sets a clear two-kilometer perimeter around stadiums whereonly authorized World Cup Officials will be allowed to conduct business,and even then only to sell sponsored products.76

C. IMPLICATIONS FOR BRAZILIANS

Brazil collided with a number of workers’ safety rights in attempting tomeet its contractual obligations to FIFA.77 Brazil committed to buildingor refurbishing twelve stadiums for the tournament.78 This estimated costof $14 billion delayed a number of necessary improvements to Brazilianinfrastructure, including hospitals, schools, and public transport.79

66. Id. at ch. II, sec. II.67. Id. at ch. VI.68. Poonam Majithia, Does Brazil’s World Cup Law Violate its Constitution?, LAWIN-

SPORT (Oct. 28, 2013), http://www.lawinsport.com/blog/poonam-majithia/item/does-brazil-s-world-cup-law-violate-its-constitution.

69. Id.70. Id.71. Id.72. Lei No. 12.350, de Dec. 20 de 2010, DIARIOOFICIAL DA UNIAO [D.O.U.] de

20.12.2010, art.3 (Braz.), available at http://www.receita.fazenda.gov.br/Legislacao/leis/2010/lei12350.htm.

73. John Sinnott, A Fair World Cup Deal for Brazil?, CNN (July 24, 2013), http://edition.cnn.com/2013/06/24/sport/football/brazil-protests-fifa-tax/.

74. CONSTITUICAO FEDERAL [C.F.] [CONSTITUTION] art.5, § XV (Braz.).75. Id. at art. 170.76. Lei No. 12.663, de 5 de Junho de 2012, DIARIOOFICIAL DA UNIAO [D.O.U.] de

6.6.2012, art. 11 (Braz.), available at http://www.planalto.gov.br/ccivil_03/_ato2011-2014/2012/Lei/L12663.htm.

77. See FIFA, FOOTBALL STADIUMS: TECHNICAL RECOMMENDATIONS AND REQUIRE-

MENTS (4th ed.2007), available at http://www.fifa.com/mm/document/tournament/competition/foot-ball_stadiums_technical_recommendations_and_requirements_en_8211.pdf.

78. 2014 FIFA World Cup Brazil: Stadiums, FIFA.COM, http://www.fifa.com/worldcup/destination/stadiums/index.html (last visited Aug. 10, 2014).

79. Majithia, supra note 68.


One of the more contentious stadiums, the Arena Amazonia in Ma-naus, fell far behind its construction schedule and killed three workers inconditions focused on rapid construction at the cost of safety.80 Thesedeaths are in addition to others at additional stadiums, including the onein Sao Paulo. This stadium hosted the opening match of the tournament,and two workers died as construction schedules fell behind.81 The fatali-ties caused further delays in construction as courts in Brazil shut downconstruction at the sites to evaluate the lack of safeguards provided work-ers in violation of the Brazilian Constitution and the Brazilian Consolida-tion of Labor Laws.82 The appeals to the courts to halt work pointed outthat these deaths were not the first instances of unsafe work environ-ments for laborers.83 In fact, these deaths were just the most recent ex-amples of numerous workplace safety violations and consistent recidivismby the contractors.84 A previous lawsuit was filed in March of 2013, wellbefore the deaths in December, alleging that serious workplace safetyhazards went unresolved.85

In addition to the delays at Manaus and other stadiums due to fatali-ties, there were a number of delays brought about by worker strikes.86

No fewer than ninety-two days of work stoppages came from strikes byworkers demanding their guaranteed workplace protections.87

Despite the mandated stoppages and serious safety concerns, pressurecontinued to mount. FIFA announced in December 2013 that six of thestadiums would not meet the completion deadline of December 31,2013.88 The six stadiums of the twelve that met the deadline were re-quired for Brazil’s hosting of the Confederations Cup in the summer of2013.89 To address the delays, representatives for the city of Curitiba(where the Arena de Baixada had fallen far behind) committed to hiring

80. World Cup construction worker killed in Brazil: 55-year-old Portuguese man isthird worker to be killed during construction of Arena de Amazonia in Manaus,GUARDIAN (Apr. 7, 2014), http://www.theguardian.com/football/2014/Apr/07/world-cup-construction-worker-killed-brazil.

81. Two Die in Brazil World Cup Stadium Accident, BBC NEWS (Nov. 27, 2014, 3:19PM), http://www.bbc.com/news/world-latin-america-25127897.

82. Andreza Lifsitch, After the Death of the Worker, MPT Seeks Ban on Work in theCopa AM, EL GLOBO (Dec. 14, 2013), http://g1.globo.com/am/amazonas/noticia/2013/12/apos-morte-de-operario-mpt-pede-interdicao-de-obra-da-copa-no-am.html.

83. Id.84. Id.85. Id.86. NAT’L COAL. OF LOCAL COMMUNITIES FOR A PEOPLE’S WORLD CUP AND OLYM-

PICS, MEGA-EVENTS AND HUMAN RIGHTS VIOLATIONS IN BRAZIL: REPORT FROM

THE NATIONAL COALITION OF LOCAL COMMITTEES FOR A PEOPLE’S WORLD CUP

AND OLYMPICS18 (2012), available at http://rioonwatch.org/wp-content/uploads/2013/05/2012-World-Cup-Olympics-Dossier-English.pdf.

87. Id.88. Poonam Majithia, Navigating Brazil’s Stadium Management Minefield, LAWIN-

SPORT (Dec. 20, 2013), http://www.lawinsport.com/blog/poonam-majithia/item/navigating-brazil-s-stadium-management-minefield.

89. Id.


additional workers and creating a third shift to expedite construction.90

III. AFTER THE WHISTLE

Much of the World Cup law of Brazil will remain just that, the WorldCup law. After the final whistle in Rio de Janeiro, many of the regula-tions will become moot. Those that do not become moot will be statuto-rily deceased because “[c]rimes defined by this law shall be enforced untilDecember 31, 2014.”91

But, just like the Arena Amazonia in Manaus, the effects of the laws onBrazil will linger across the skyline of its people; whether it is the workerswho were used by the laws; the roads, schools, and hospitals forced togive way for the stadiums; or the people prosecuted for temporary crimes.What has come and gone in Brazil for the World Cup? 39,000 fans came,and now their seats sit empty.

90. Id.91. Lei No. 12.663, de 5 de Junho de 2012, DIARIO OFICIAL DA UNIAO [D.O.U.] de

6.6.2012, art. 36 (Braz.), available at http://www.planalto.gov.br/ccivil_03/_ato2011-2014/2012/Lei/L12663.htm.

NAFTA CHAPTER 11: ARE THE DISPUTE

RESOLUTION PROCEDURES WORTH

THE INVESTMENT?Natalie Sears*

I. CHAPTER ELEVEN OF NAFTA

IN 1994, the negotiations between Mexico, Canada, and the UnitedStates ended as the North American Free Trade Agreement(NAFTA) came into effect.1 NAFTA, in its act of eliminating most

barriers to trade and investment between Mexico, Canada, and theUnited States, sought to encourage foreign investment by stabilizing eco-nomic activity among the three countries.2 One way NAFTA sought toaccomplish such a goal was through its Chapter Eleven provisions, pro-viding rights and protections to investors looking to extend their invest-ment activities into one of the three foreign countries.3

Chapter Eleven of NAFTA allows corporations and investors to bringstate-investor claims in confidential arbitration tribunals if they believe acountry’s government issued a conflicting regulation or decision that neg-atively impacts their investment in that particular country.4 This particu-lar chapter was designed to protect foreign investment transactions whileproviding for efficient resolution to investment-related disputes.5

Historically, arbitration was favored by industrialized nations and dis-favored by developing ones, who usually find themselves coerced andpressured into accepting arbitration as the sole means for resolving dis-putes.6 In fact, during initial negotiations for NAFTA, Canada was seek-ing the more independent dispute resolution body integrated into theCanada United States Free Trade Agreement (CUFTA).7 But as we see

* Natalie Sears is a J.D. Candidate, May 2015 at SMU Dedman School of Law andhas a B.B.A. from Texas Christian University. She would like to thank her familyand friends for their continued support.

1. North American Free Trade Agreement, NAFTANOW.ORG, http://www.naftanow.org/about/default_en.asp (last visited June 8, 2014).

2. Id.3. NAFTA Chapter 11: Corporate Cases, PUB. CITIZEN, http://www.citizen.org/Page

.aspx?pid=1218 (last visited June 8, 2014).4. Id.5. NAFTA Investor-State Arbitrations, U.S. DEPARTMENT OF STATE, www.state.gov/

s/l/c3439.htm (last visited June 8, 2014).6. Jennifer A. Heindl, Toward a History of NAFTA’s Chapter Eleven, 24 BERKELEY

J. INT’L LAW. 672, 673 (2006), available at http://scholarship.law.berkeley.edu/bjil/vol24/iss2/11.

7. Id.

473


the chapter in practice today, Canadian officials believe that ChapterEleven provisions have been applied even more broadly than theyintended.8

Chapter Eleven covers all disputes arising between investors of othercountries, including claims such as expropriation, discrimination, and un-fair treatment.9 Originally, arbitration was thought of as a forum thatcould settle international disputes in a neutral way, reducing the so-called“home-court” advantage.10 Particularly in the business realm, companiesand investors alike are weary towards litigation, where procedural andsubstantive unfairness can play a huge part in a case’s outcome. WithinChapter Eleven of NAFTA, arbitration was specifically selected for in-vestments because foreign investors fear having to resolve disputes in acourt that might be predisposed to ruling for the other side every time,thereby inhibiting their decision to send their investment money interna-tionally.11 In creating a mandatory arbitration procedure, NAFTAsought to encourage investors to cross borders and invest in activity with-out adding fear to the already high cost of investing there.12

Within Chapter Eleven, investors may choose between three arbitra-tion methods: ICSID Convention, Additional Facility Rules of ICSID,and UNCITRAL Arbitration Rules.13 In normal practice, because of theunderlying policy in favor of fairness, the two disputing parties will nor-mally hold the arbitration in the third NAFTA country not involved inthe dispute in order to create an additional neutrality safeguard.14 If aforeign investor initiates an investor-state case, the claim will be broughtto a binding arbitration process of the World Bank and the United Na-tions, which are “closed to public participation, observation and input.”15

II. MODERN CRITICISM OF THE AGE-OLDPRACTICE OF ARBITRATION

Although arbitration has been a method used for centuries, manyscholars claim that investor arbitration for claims arising out of ChapterEleven do not work as well in practice as the drafters of NAFTA initiallyhoped they would. One criticism is that the investment arbitration pro-vided for under Chapter Eleven is evidence of a possible double standardby the United States.16 Similar to the way Canada initially predictedChapter Eleven would be applied more narrowly, the United States, aswell, believed the investment arbitration provisions would be used a dif-

8. Ray C. Jones, NAFTA Chapter 11 Investor-to-State Dispute Resolution: A Shield toBe Embraced or a Sword to be Feared?, 2002 B.Y.U. L. REV. 527 (2002).

9. WILLIAM W. PARK, ARBITRATION OF INTERNATIONAL BUSINESS DISPUTES 701–26(2d ed. 2012).

10. Id. at 704.11. Id.12. Id.13. Jones, supra note 8, at 533–34.14. Id.15. NAFTA Chapter 11, supra note 3.16. PARK, supra note 9, at 703–04.

2014] NAFTA CHAPTER 11 475

ferent way than has played out.17 Some legal scholars note that theUnited States looks highly upon investment arbitration when it correctsmisbehavior by foreign states, but it is not favored when used to attack itsown country’s governmental decision-making.18

Broader criticisms include concerns about the confidentiality and over-all secrecy of the arbitration process and uncertainty in their outcomesand decisions. Others question the absence of accountability of domesticconstituents.19 This concern is particularly noteworthy and troublesomebecause it was one of the primary reasons for implementing arbitration,rather than permitting litigation, in Chapter Eleven of NAFTA.20 It isalso commonly tied to a violation found in section A of Chapter Eleven,which prohibits discrimination against foreign investors and requires “fairand equitable” treatment.21 In addition, some claim that the casesbrought to arbitral tribunals under Chapter Eleven constitute a “regula-tory taking,” rather than issues of Mexico seizing property from U.S. andCanadian companies, which was the originally anticipated scenariosought to be prevented by Chapter Eleven.22

Other opponents claim that Chapter Eleven acts as a “sword” for in-vestors, allowing them to attack the NAFTA countries, rather than the“shield” it was intended to be.23 This occurs because investors citingChapter Eleven claims can use their leverage of such arbitration to swaygovernmental agencies into certain law-making decisions.24 In addition,because Chapter Eleven requires full evaluation of each case on the mer-its, whether seemingly frivolous or not, governments recognize the costand time burdens such arbitration will take if they pass certain litigation,and could thus likely be persuaded to act in accordance with the demandsof foreign investors.25

III. INVESTOR-TO-STATE CLAIMS IN RECENT YEARS

Although Chapter Eleven was designed so as to minimize the numberof investor-to-state disputes and increase their outcomes’ predictability,the arbitration provision in and of itself has proven troublesome formany. Many of the cases heard through arbitration within recent yearsunder Chapter Eleven involve disputes caused by the ambiguous lan-guage contained in the provision and others involve struggles of powerbetween a foreign investor and a country’s government.

Article 1105(1) of NAFTA requires each country to “accord invest-ments of investors of another Party treatment in accordance with interna-

17. Id.18. Id.19. Id. at 705.20. See id. at 704.21. Id. at 706.22. Jones, supra note 8, at 541.23. Id. at 541–42.24. Id. at 543.25. Id.


tional law, including fair and equitable treatment and full protection andsecurity.”26 These terms represent some of those most in dispute be-tween investors and countries, especially the meaning of “internationallaw” and “full protection and security.”27 The latter term has been inter-preted to hold a nation liable for failure to use due diligence when tryingto prevent third parties from injuring foreign investors covered underNAFTA.28 In some cases, even where governmental actions have beenfound to be non-discriminatory in nature, arbitration decisions have stillfound a breach of this NAFTA provision.29

In the past, many arbitration decisions have portrayed how closely for-eign investors scrutinize governmental, and very often environmental, ac-tion, and expect remedial action to be taken to maintain and protect theirinvestments abroad. For example, in Methanex Corp. v. U.S.A., a Califor-nia governor banned gasoline with an additive called “MTBE” because ofconcerns that it would penetrate into the state’s drinking water supply.30

What is noteworthy about this case is that the claimant, Methanex, is aCanadian corporation producing feedstock, not the actual MTBE.31 Butit still filed an investor-to-state claim arguing expropriation, discrimina-tion, and denial of the minimum standard of treatment.32 This claim in-cited environmental protests based on accusations that NAFTA ChapterEleven favored foreign investors’ profits over the local governmental au-thority to regulate its own sovereign.33

Many disputes arise because of the power struggle and threat of arbi-tration proceedings brought by investors under Chapter Eleven claims.One of the most illustrative cases of this particular issue is Ethyl v. Ca-nada, which occurred only a matter of years after NAFTA was signed.34

Ethyl Corporation is a chemical company based in Virginia and a verylarge methylcyclopentadienyl manganese tricarbonyl (MMT) producer.35

Ethyl Corporation exported this chemical to its subsidiary in Canada,Ethyl Canada, who then sold it to refineries until April 1997 when theCanadian Parliament imposed a ban on MMT’s importation into Ca-nada.36 Even before the Canadian Parliament passed the law, Ethyl Cor-poration threatened a Chapter Eleven suit, claiming the ban wouldamount to expropriation.37 Ethyl Corporation’s position stated that theywere entitled to due compensation for losing the right to export to the

26. North American Free Trade Agreement, U.S.-Can.-Mex., Dec. 17, 1992, 32 I.L.M.289, art. 1105(1) (1993), available at http://www.sice.oas.org/trade/nafta/chap-11.asp.

27. Park, supra note 6 at 709.28. Id.29. Id.30. Id. at 711.31. Id. at 711–12.32. Id. at 712.33. Id.34. Jones, supra note 8 at 538–39.35. Id.36. Id.37. Id. at 538.


corporation’s Canadian subsidiary.38 The Canadian Parliament followedthrough with the law and Ethyl followed through with its threat, and sub-sequently filed a Chapter Eleven suit seeking $251 million.39 Eventhough Ethyl Corporation did not follow the timing procedure laid out inarticle 1120.72, the tribunal allowed the suit. But before it came to frui-tion, Canada rescinded its law, allowing Ethyl to continue exporting intoCanada.40

Ethyl’s argument was that Canada violated article 1102, requiring na-tional treatment for foreign investors, because Canada’s law banned theimport of MMT. But it did not interfere or object to the production ofMMT within its own country.41 Ethyl also claimed Canada committed“expropriation” by their actions to ban importation of MMT.42 This termhas also been disputed among arbitration proceedings because it is notdefined within Chapter Eleven.43 This concept is similar to that of emi-nent domain in the United States and means that a country may takemeasures, such as banning MMT importation, only if the measures arenot discriminatory.44 Even when carried out in a fair way, a country mustcompensate their investors for any loss suffered because of the new regu-lation.45 What amounts to expropriation can be an entirely separate is-sue. Chapter Eleven claimants, not surprisingly, utilize the mostexpansive definition under article 1110 to hold that any “measure” usedby the country can amount to such expropriation.46

IV. DOES CHAPTER ELEVEN NEED REVISING?

Legal scholars are divided on the question of whether Chapter Eleven,which was deemed a very important and fairly groundbreaking section inNAFTA, has proven successful, or whether it has become a nuisance ofpower struggles. Certainly, the results are not what the countries origi-nally anticipated. Upon signing in 1992, Canada and the United Statesexpected to be the investor-claimants filing Chapter Eleven suits, butmost often have found themselves placed in the respondent chair to Mex-ico’s lawsuits.47

The result most concerning since NAFTA was signed twelve years agois the idea that expensive litigation might deter legitimate governmentalregulation that could potentially be in conflict, financially and politically,

38. Id. at 539.39. Id. at 538.40. Id. at 538–39.41. PUBLIC CITIZENS GLOBAL TRADE WATCH, NAFTA CHAPTER 11 INVESTOR-

STATE CASES, LESSONS FOR THE CENTRAL AMERICAN FREE TRADE AGREEMENT

21, 22 (2005), available at http://www.citizen.org/documents/NAFTAReport_Final.pdf.

42. Id. at 22.43. Jones, supra note 8 at 550.44. Id. at 551.45. Id. at 550–51.46. Id.47. PARK, supra, note 9 at 724.


with foreign investors’ activity.48 Especially in the case of a situation sim-ilar to Ethyl v. Canada, if a company like Ethyl can manage to change theCanadian government’s decision to ban a particular substance’s importa-tion, their country’s policy-making ability is greatly hindered.49 Out-comes such as this will also have a ripple effect when other foreigninvestors watch and see how much influence and power they can haveover a governmental body simply because of fear of Chapter Elevenclaims.50 It has been noted that arbitration under NAFTA is thought ofas “investor-biased” and has only catapulted the number of investor-stateclaims and disputes filed under Chapter Eleven in the past twenty years.51

So, if Chapter Eleven is full of problems, what could be a solution?Certainly, one possibility will be to revise the language, providing morespecificity to the investment arbitration language. But this may be hardto accomplish because many arbitrators actually lobby to prevent reformin the wording of investment protection clauses.52 Vague language, how-ever, has been recognized as an invitation to litigation and disputes. TheUnited Nations Conference on Trade and Development has stated “anexpansive interpretation of minimalist treaty language can give rise to alack of predictability in the application of the standard. This, in turn, maylead to the undermining of legitimate State intervention for economic,social, environmental and other developmental ends.”53 Another optionis to create a preliminary evaluation or screening tool to weed out frivo-lous and meritless claims.54 This option might be particularly successfulbecause article 1121 removes the local remedies rule; thus, any obstacleinvestors have to go through it in order to submit a Chapter Elevenclaim—regardless if the claim is meritless.55 This option could also helpreduce the number of Chapter Eleven claims, and as a result, govern-ments would not have to be so cautious in their law-making abilities.

Although many have argued that NAFTA Chapter Eleven needs toundergo several changes to make it as beneficial as the United States,Canada, and Mexico originally intended it to be, others argue that thearbitration provision is good just the way it is.56 While critics claim thechapter’s procedures can deprive U.S. citizens of certain procedural rightsguaranteed to them under the Constitution, proponents of the provisionargue that it has served its purpose in achieving the goals found in article

48. Jones, supra note 8 at 545.49. Id. at 543.50. See id.51. Cecilia Olivet & Pia Eberhardt, Arbitrators’ Role in the Recent Investment Arbitra-

tion Boom, INVESTMENT. TREATY NEWS (March 25, 2013), http://www.iisd.org/itn/2013/03/25/arbitrators-role-in-the-recent-investment-arbitration-boom/.

52. See id.53. Id.54. Jones, supra note 8 at 546.55. See North American Free Trade Agreement, U.S.-Can.-Mex., Dec. 17, 1992, 32

I.L.M. 289, art. 1121 (1993), available at http://www.sice.oas.org/trade/nafta/chap-112.asp.

56. Jones, supra note 8, at 542.


102 and the preamble of the NAFTA Agreement.57

V. CONCLUSION

Although this year marks the twenty-year anniversary of NAFTA’s im-plementation, the path has not gone unscathed. With regards to ChapterEleven, the provision that allows for investment arbitration over foreigndisputes, scholars remain divided as to whether it has been successful, willbe successful, or whether it needs to be changed in order to get on theright path. The most obvious choice for reconstructing Chapter Elevenwould be to add specificity to the language so as to reduce frivolous in-vestor-state claims with the hopes that such action would resolve the big-picture issue.

Throughout the past twenty years, the most troublesome cases havebeen those that challenge governmental decision-making even before thedecision has been made. Investors are using Chapter Eleven as a way toentice governments to act in certain ways, which was never the purpose ofChapter Eleven. In order to end the power struggles occurring betweenwealthy investors and governments after Chapter Eleven threats havebeen made, Chapter Eleven must allow for some type of screening deviceso as to weed out meritless claims. Under NAFTA, governments are al-lowed to exercise their power reasonably, even if it interferes with foreigninvestment activity. But under the current regime, a government maystill be taken to arbitration under a Chapter Eleven claim becauseNAFTA requires full hearing on all claims—whether frivolous or not.NAFTA needs a provision to filter out such claims so that governmentswon’t be threatened and dragged into each and every claim an investormakes. It is the only way for governments to assert their power over theirsovereign and to ensure that investors don’t interfere with such decisions.

57. Id. at 546.


Document

SIXTH BRICS SUMMIT-FORTALEZA

DECLARATION

1. We, the leaders of the Federative Republic of Brazil, the RussianFederation, the Republic of India, the People’s Republic of China and theRepublic of South Africa, met in Fortaleza, Brazil, on 15 July 2014 at theSixth BRICS Summit. To inaugurate the second cycle of BRICS Sum-mits, the theme chosen for our discussions was “Inclusive Growth: Sus-tainable Solutions”, in keeping with the inclusive macroeconomic andsocial policies carried out by our governments and the imperative to ad-dress challenges to humankind posed by the need to simultaneouslyachieve growth, inclusiveness, protection and preservation.

2. In the aftermath of the first cycle of five Summits, hosted by everyBRICS member, our coordination is well established in various multilat-eral and plurilateral initiatives and intra-BRICS cooperation is expandingto encompass new areas. Our shared views and commitment to interna-tional law and to multilateralism, with the United Nations at its centerand foundation, are widely recognized and constitute a major contribu-tion to global peace, economic stability, social inclusion, equality, sustain-able development and mutually beneficial cooperation with all countries.

3. We renew our openness to increasing engagement with other coun-tries, particularly developing countries and emerging market economies,as well as with international and regional organizations, with a view tofostering cooperation and solidarity in our relations with all nations andpeoples. To that effect, we will hold a joint session with the leaders of theSouth American nations, under the theme of the Sixth BRICS Summit,with a view to furthering cooperation between BRICS and SouthAmerica. We reaffirm our support for the South American integrationprocesses, and recognize in particular the importance of the Union ofSouth American Nations (UNASUR) in promoting peace and democracyin the region, and in achieving sustainable development and povertyeradication. We believe that strengthened dialogue among BRICS andSouth American countries can play an active role in enhancing multilater-alism and international cooperation, for the promotion of peace, security,economic and social progress and sustainable development in an interde-pendent and increasingly complex, globalizing world.

4. Since its inception the BRICS have been guided by the overarchingobjectives of peace, security, development and cooperation. In this newcycle, while remaining committed to those objectives, we pledge todeepen our partnership with a renewed vision, based on openness, inclu-siveness and mutually beneficial cooperation. In this sense, we are readyto explore new areas towards a comprehensive cooperation and a closer

483


economic partnership to facilitate market inter-linkages, financial inte-gration, infrastructure connectivity as well as people-to-people contacts.

5. The Sixth Summit takes place at a crucial juncture, as the interna-tional community assesses how to address the challenges of strong eco-nomic recovery from the global financial crises, sustainable development,including climate change, while also formulating the post-2015 Develop-ment Agenda. At the same time, we are confronted with persistent polit-ical instability and conflict in various global hotspots and non-conventional emerging threats. On the other hand, international govern-ance structures designed within a different power configuration show in-creasingly evident signs of losing legitimacy and effectiveness, astransitional and ad hoc arrangements become increasingly prevalent,often at the expense of multilateralism. We believe the BRICS are animportant force for incremental change and reform of current institutionstowards more representative and equitable governance, capable of gener-ating more inclusive global growth and fostering a stable, peaceful andprosperous world.

6. During the first cycle of BRICS Summits, collectively our economieshave consolidated their position as the main engines for sustaining thepace of the international economy as it recovers from the recent eco-nomic and financial global crisis. The BRICS continue to contribute sig-nificantly to global growth and to the reduction of poverty in our own andother countries. Our economic growth and social inclusion policies havehelped to stabilize global economy, to foster the creation of jobs, to re-duce poverty, and to combat inequality, thus contributing to the achieve-ment of the Millennium Development Goals. In this new cycle, besidesits contribution in fostering strong, sustainable and balanced growth,BRICS will continue to play a significant role in promoting social devel-opment and in contributing to define the international agenda in thisarea, building on its experience in addressing the challenges of povertyand inequality.

7. To better reflect the advancement of the social policies of theBRICS and the positive impacts of its economic growth, we instruct ourNational Institutes of Statistics and the Ministries of Health and Educa-tion to work on the development of joint methodologies for social indica-tors to be incorporated in the BRICS Joint Statistical Publication. Wealso encourage the BRICS Think Tanks Council to provide technical sup-port in this task. We further request the BRICS National Institutes ofStatistics to discuss the viability and feasibility of a platform for the devel-opment of such methodologies and to report thereon.

8. The world economy has strengthened, with signs of improvement insome advanced economies. Significant downside risks to this recoveryremain, however. Unemployment and debt levels are worryingly highand growth remains weak in many advanced economies. Emerging mar-

2014] FORTALEZA DECLARATION 485

ket economies and developing countries (EMDCs) continue to contributesignificantly to global growth and will do so in the years to come. Even asthe global economy strengthens, monetary policy settings in some ad-vanced economies may bring renewed stress and volatility to financialmarkets and changes in monetary stance need to be carefully calibratedand clearly communicated in order to minimize negative spillovers.

9. Strong macroeconomic frameworks, well regulated financial mar-kets and robust levels of reserves have allowed EMDCs in general, andthe BRICS in particular, to better deal with the risks and spilloverspresented by the challenging economic conditions in the last few years.Nevertheless, further macroeconomic coordination amongst all majoreconomies, in particular in the G20, remains a critical factor for strength-ening the prospects for a vigorous and sustainable recovery worldwide.In this context, we reaffirm our strong commitment to continue workingamong ourselves and with the global community to foster financial stabil-ity, support sustainable, stronger and inclusive growth and promote qual-ity jobs. The BRICS stand ready to contribute to the G20 goal of liftingour collective GDP by more than 2 percent above the trajectory impliedby current policies over the coming 5 years.

10. We commend Russia for the successful work during its presidencyof the G20 in 2013. The institution of the BRICS Summits largely coin-cided with the beginning of the global crisis, the first G20 Summits andthe consolidation of that Group as the premier forum for economic coor-dination among its members. As a new round of BRICS Summits begins,we remain committed to deliver constructive responses to global eco-nomic and financial challenges and to serve as a strong voice for the pro-motion of sustainable development, inclusive growth, financial stabilityand of more representative international economic governance. We willcontinue to pursue our fruitful coordination and to promote our develop-ment goals within the international economic system and financialarchitecture.

11. BRICS, as well as other EMDCs, continue to face significant fi-nancing constraints to address infrastructure gaps and sustainable devel-opment needs. With this in mind, we are pleased to announce the signingof the Agreement establishing the New Development Bank (NDB), withthe purpose of mobilizing resources for infrastructure and sustainable de-velopment projects in BRICS and other emerging and developing econo-mies. We appreciate the work undertaken by our Finance Ministers.Based on sound banking principles, the NDB will strengthen the coopera-tion among our countries and will supplement the efforts of multilateraland regional financial institutions for global development, thus contribut-ing to our collective commitments for achieving the goal of strong, sus-tainable and balanced growth.


12. The Bank shall have an initial authorized capital of US$ 100 billion.The initial subscribed capital shall be of US$ 50 billion, equally sharedamong founding members. The first chair of the Board of Governorsshall be from Russia. The first chair of the Board of Directors shall befrom Brazil. The first President of the Bank shall be from India. Theheadquarters of the Bank shall be located in Shanghai. The New Devel-opment Bank Africa Regional Center shall be established in South Africaconcurrently with the headquarters. We direct our Finance Ministers towork out the modalities for its operationalization.

13. We are pleased to announce the signing of the Treaty for the estab-lishment of the BRICS Contingent Reserve Arrangement (CRA) with aninitial size of US$ 100 billion. This arrangement will have a positive pre-cautionary effect, help countries forestall short-term liquidity pressures,promote further BRICS cooperation, strengthen the global financialsafety net and complement existing international arrangements. We ap-preciate the work undertaken by our Finance Ministers and Central BankGovernors. The Agreement is a framework for the provision of liquiditythrough currency swaps in response to actual or potential short-term bal-ance of payments pressures.

14. We also welcome the signing of the Memorandum of Understand-ing on Cooperation among BRICS Export Credit and Guarantees Agen-cies that will improve the support environment for increasing tradeopportunities among our nations.

15. We appreciate the progress our Development Banks have made inenhancing and strengthening the financial ties among BRICS countries.Given the importance of adopting innovation initiatives, we welcome theconclusion of the Cooperation Agreement on Innovation within theBRICS Interbank Cooperation Mechanism.

16. We recognize that there is potential for BRICS insurance and rein-surance markets to pool capacities. We direct our relevant authorities toexplore avenues of cooperation in this regard.

17. We believe that sustainable development and economic growth willbe facilitated by taxation of revenue generated in jurisdictions where eco-nomic activity takes place. We express our concern over the harmful im-pact of tax evasion, transnational fraud and aggressive tax planning onthe world economy. We are aware of the challenges brought by aggres-sive tax avoidance and non-compliance practices. We, therefore, affirmour commitment to continue a cooperative approach on issues related totax administrations and to enhance cooperation in the international fo-rums targeting tax base erosion and information exchange for tax pur-poses. We direct our relevant authorities to explore ways of enhancingcooperation in this area. We also direct our relevant authorities tostrengthen cooperation in the field of customs.


18. We remain disappointed and seriously concerned with the currentnon-implementation of the 2010 International Monetary Fund (IMF) re-forms, which negatively impacts on the IMF’s legitimacy, credibility andeffectiveness. The IMF reform process is based on high-level commit-ments, which already strengthened the Fund’s resources and must alsolead to the modernization of its governance structure so as to better re-flect the increasing weight of EMDCs in the world economy. The Fundmust remain a quota-based institution. We call on the membership of theIMF to find ways to implement the 14th General Review of Quotas with-out further delay. We reiterate our call on the IMF to develop options tomove ahead with its reform process, with a view to ensuring increasedvoice and representation of EMDCs, in case the 2010 reforms are notentered into force by the end of the year. We also call on the member-ship of the IMF to reach a final agreement on a new quota formula to-gether with the 15th General Review of Quotas so as not to furtherjeopardize the postponed deadline of January 2015.

19. We welcome the goals set by the World Bank Group to help coun-tries end extreme poverty and to promote shared prosperity. We recog-nize the potential of this new strategy in support of the fulfillment ofthese ambitious goals by the international community. This potential willonly be realized, however, if the institution and its membership effec-tively move towards more democratic governance structures, strengthenthe Bank’s financial capacity and explore innovative ways to enhance de-velopment financing and knowledge sharing while pursuing a strong cli-ent orientation that recognizes each country’s development needs. Welook forward to initiating the work on the next shareholding review at theWorld Bank as soon as possible in order to meet the agreed deadline ofOctober 2015. In this sense, we call for an international financial archi-tecture that is more conducive to overcoming development challenges.We have been very active in improving the international financial archi-tecture through our multilateral coordination and through our financialcooperation initiatives, which will, in a complementary manner, increasethe diversity and availability of resources for promoting development andensuring stability in the global economy.

20. We are committed to raise our economic cooperation to a qualita-tively new level. To achieve this, we emphasize the importance of estab-lishing a road map for intra-BRICS economic cooperation. In thisregard, we welcome the proposals for a “BRICS Economic CooperationStrategy” and a “Framework of BRICS Closer Economic Partnership”,which lay down steps to promote intra-BRICS economic, trade and in-vestment cooperation. Based on the documents tabled and informed bythe input of the BRICS Think Tanks Council (BTTC), we instruct ourSherpas to advance discussions with a view to submit their proposal forendorsement by the next BRICS Summit.


21. We believe all countries should enjoy due rights, equal opportuni-ties and fair participation in global economic, financial and trade affairs,recognizing that countries have different capacities and are at differentlevels of development. We strive for an open world economy with effi-cient allocation of resources, free flow of goods, and fair and orderlycompetition to the benefit of all. In reaffirming our support for an open,inclusive, non-discriminatory, transparent and rule-based multilateraltrading system, we will continue our efforts towards the successful conclu-sion of the Doha Round of the World Trade Organization (WTO), fol-lowing the positive results of the Ninth Ministerial Conference (MC9),held in Bali, Indonesia, in December 2013. In this context, we reaffirmour commitment to establish by the end of this year a post-Bali workprogram for concluding the Doha Round, based on the progress alreadymade and in keeping with the mandate established in the Doha Develop-ment Agenda. We affirm that this work program should prioritize theissues where legally binding outcomes could not be achieved at MC9, in-cluding Public Stock-Holding for Food Security Purposes. We look for-ward to the implementation of the Agreement on Trade Facilitation. Wecall upon international partners to provide support to the poorest, mostvulnerable WTO members to enable them to implement this Agreement,which should support their development objectives. We strongly supportthe WTO dispute settlement system as a cornerstone of the security andpredictability of the multilateral trading system and we will enhance ourongoing dialogue on substantive and practical matters relating to it, in-cluding in the ongoing negotiations on WTO Dispute Settlement Under-standing reform. We recognize the importance of Regional TradeAgreements, which should complement the multilateral trading system,and of keeping them open, inclusive and transparent, as well as refrainingfrom introducing exclusive and discriminatory clauses and standards.

22. We reaffirm the United Nations Conference on Trade and Devel-opment’s (UNCTAD) mandate as the focal point in the UN system dedi-cated to consider the interrelated issues of trade, investment, finance andtechnology from a development perspective. UNCTAD’s mandate andwork are unique and necessary to deal with the challenges of develop-ment and growth in the increasingly interdependent global economy. Incongratulating UNCTAD for the 50th anniversary of its foundation in2014, which is also the anniversary of the establishment of the Group of77, we further reaffirm the importance of strengthening UNCTAD’s ca-pacity to deliver on its programs of consensus building, policy dialogue,research, technical cooperation and capacity building so that it is betterequipped to deliver on its development mandate.

23. We acknowledge the important role that State Owned Companies(SOCs) play in the economy and encourage our SOCs to continue to ex-plore ways of cooperation, exchange of information and best practices.We also recognize the fundamental role played by small and medium-


sized enterprises in the economies of our countries as major creators ofjobs and wealth. We will enhance cooperation and recognize the need forstrengthening intra-BRICS dialogue with a view to promote internationalexchange and cooperation and to foster innovation, research anddevelopment.

24. We underline that 2015 marks the 70th anniversary of the foundingof the United Nations (UN) and the end of the Second World War. Inthis connection, we support the UN to initiate and organize commemora-tive events to mark and pay tribute to these two historical moments inhuman history, and reaffirm our commitment to safeguarding a just andfair international order based on the UN Charter, maintaining worldpeace and security, as well as promoting human progress anddevelopment.

25. We reiterate our strong commitment to the UN as the fundamentalmultilateral organization entrusted with helping the international com-munity maintain international peace and security, protect and fosterhuman rights and promote sustainable development. The UN enjoys uni-versal membership and is at the very center of global governance andmultilateralism. We recall the 2005 World Summit Outcome Document.We reaffirm the need for a comprehensive reform of the UN, including itsSecurity Council, with a view to making it more representative, effectiveand efficient, so that it can adequately respond to global challenges.China and Russia reiterate the importance they attach to Brazil, Indiaand South Africa’s status and role in international affairs and supporttheir aspiration to play a greater role in the UN.

26. We recall that development and security are closely interlinked,mutually reinforcing and key to attaining sustainable peace. We reiterateour view that the establishment of sustainable peace requires a compre-hensive, concerted and determined approach, based on mutual trust, mu-tual benefit, equity and cooperation, that addresses the root causes ofconflicts, including their political, economic and social dimensions. Inthis context, we also stress the close interrelation between peacekeepingand peacebuilding. We also highlight the importance of bringing genderperspectives to conflict prevention and resolution, peacebuilding,peacekeeping, rehabilitation and reconstruction efforts.

27. We will continue our joint efforts in coordinating positions and act-ing on shared interests on global peace and security issues for the com-mon well-being of humanity. We stress our commitment to thesustainable and peaceful settlement of disputes, according to the princi-ples and purposes of the UN Charter. We condemn unilateral militaryinterventions and economic sanctions in violation of international lawand universally recognized norms of international relations. Bearing thisin mind, we emphasize the unique importance of the indivisible nature of


security, and that no State should strengthen its security at the expense ofthe security of others.

28. We agree to continue to treat all human rights, including the rightto development, in a fair and equal manner, on the same footing and withthe same emphasis. We will foster dialogue and cooperation on the basisof equality and mutual respect in the field of human rights, both withinBRICS and in multilateral fora–including the United Nations HumanRights Council where all BRICS serve as members in 2014–taking intoaccount the necessity to promote, protect and fulfill human rights in anon-selective, non-politicized and constructive manner, and withoutdouble standards.

29. We commend the efforts made by the United Nations, the AfricanUnion (AU), Economic Community of West African States (ECOWAS)and the Community of Portuguese-Speaking Countries (CPLP), amongothers, in support for the realization of legislative and presidential elec-tions in Guinea Bissau, paving the way for the return to constitutionaldemocracy in the country. We recognize the importance of promotinglong-term political stability in Guinea-Bissau, which necessarily encom-passes measures to reduce food insecurity and to advance a comprehen-sive security sector reform, as proposed by the Guinea-BissauConfiguration of the UN Peacebuilding Commission. Similarly, we alsowelcome the efforts of the UN, AU and Southern African DevelopmentCommunity (SADC) in support of legislative and presidential elections inMadagascar, assisting in the return of constitutional democracy in thecountry.

30. We commend the efforts of the international community in ad-dressing instability in Africa through engagement with, and coordinationby, the AU and its Peace and Security Council. We express our deepconcern at the deterioration of the security and the humanitarian situa-tion in West Africa. We call upon all parties in these conflicts to ceasehostilities, exercise restraint and engage in dialogue to ensure return topeace and stability. However, we also note the progress that has beenmade in areas of the region in addressing political and securitychallenges.

31. We also express our concern with the plight of the abducted wo-men and children of Chibok and call for an end to the continued terroristacts perpetrated by Boko Haram.

32. We support the efforts of the UN Multidimensional Integrated Sta-bilization Mission in Mali (MINUSMA) in its task to help the Govern-ment of Mali fully stabilize the country, facilitate national politicaldialogue, protect civilians, monitor the human rights situation, createconditions for the provision of humanitarian assistance and the return ofdisplaced persons, and extend the State authority in the whole country.We emphasize the importance of an inclusive political process; the imme-


diate implementation of a disarmament, demobilization and reintegration(DDR) process; and political, economic and social development in orderfor Mali to achieve sustainable peace and stability.

33. We express our concern about the ongoing political and humanita-rian crises in South Sudan. We condemn the continuation of violenceagainst civilians and call upon all parties to ensure a safe environment forthe delivery of humanitarian assistance. We also condemn the continua-tion of confrontations despite the successive commitments to the cessa-tion of hostilities and express our belief that a sustainable solution to thecrisis is only possible through an inclusive political dialogue aimed at na-tional reconciliation. We support, in this regard, the regional efforts tofind a peaceful solution to the crisis, especially the mediation process ledby the Intergovernmental Authority on Development (IGAD). We wel-come the “Agreement to Resolve the Crisis in South Sudan”, signed onMay 9, and expect the political leaders of South Sudan to remain commit-ted to the negotiation process and to the completion of dialogue on theformation of a transitional government of national unity within 60 days,as announced by IGAD on June 10. We commend the efforts of theUnited Nations Mission in South Sudan to fulfill its mandate and expressour deep concern about the armed attacks that were led against UN basesin the country.

34. We reiterate our grave concern with the situation in the CentralAfrican Republic (CAR). We strongly condemn the abuses and acts ofviolence against the civilian population, including sectarian violence, andurge all armed groups to cease hostilities immediately. We recognize theefforts of the Economic Community of Central African States and theAU to restore peace and stability in the country. We commend the estab-lishment of the UN Multidimensional Integrated Stabilization Mission inthe CAR (MINUSCA). We express our support for a successful transi-tion from the African-led International Support Mission to the CAR(MISCA) to MINUSCA by 15 September 2014. We urge the transitionalauthorities in the CAR to adhere strictly to the N’Djamena Roadmap.We call upon all parties to allow safe and unhindered humanitarian accessto those in need. We reaffirm our readiness to work with the interna-tional community to assist the CAR in accelerating the implementation ofthe political process of the country.

35. We support the efforts by the UN, in particular the UN Organiza-tion Stabilization Mission in the Democratic Republic of the Congo(MONUSCO), deployed under UN Security Council resolution 2098, andthe regional and sub-regional organizations to bring peace and stability tothe Democratic Republic of the Congo (DRC), and we call upon all in-volved to honor their obligations in order to achieve lasting peace andstability in the DRC.


36. We welcome the AU Malabo Summit decision to establish an in-terim African Capacity for Immediate Response to Crises (ACIRC) byOctober 2014 to respond quickly to crisis situations as they arise. Westress the importance of adequate support to ensure the timely operation-alization of the ACIRC, pending the final establishment of the AfricanStand-by Force.

37. We express deep concern about the ongoing violence and the dete-rioration of the humanitarian situation in Syria and condemn the increas-ing violations of human rights by all parties. We reiterate our view thatthere is no military solution to the conflict, and highlight the need toavoid its further militarization. We call upon all parties to commit imme-diately to a complete cease-fire, to halt violence and to allow and facili-tate immediate, safe, full and unimpeded access for humanitarianorganizations and agencies, in compliance with the UN Security Councilresolution 2139. We recognize practical steps undertaken by the Syrianparties in implementing its requirements, including the practice of localcease-fire agreements reached between the Syrian authorities and the op-position forces.

We reiterate our condemnation of terrorism in all its forms and mani-festations, wherever it occurs. We are gravely concerned at the continuedthreat of terrorism and extremism in Syria. We call on all Syrian parties tocommit to putting an end to terrorist acts perpetrated by Al-Qaeda, itsaffiliates and other terrorist organizations.

We strongly condemn the use of chemical weapons in any circum-stances. We welcome the decision of the Syrian Arab Republic to accedeto the Chemical Weapons Convention. In accordance with related Or-ganization for the Proscription of Chemical Weapons (OPCW) ExecutiveCouncil decisions and UN Security Council resolution 2118, we reiteratethe importance of the complete removal and elimination of the Syrianchemical weapons. We commend the progress in that regard and wel-come the announcement that the removal of declared chemicals from theSyrian Arab Republic was completed. We call on all Syrian parties andinterested external actors with relevant capabilities to work closely to-gether and with the OPCW and the UN to arrange for the security of themonitoring and destruction mission in its final stage.

We support the mediation role played by the UN. We appreciate thecontribution made by former Joint UN–Arab League Special Represen-tative for Syria, Mr. Lakhdar Brahimi, and welcome the appointment ofMr. Staffan De Mistura as UN Special Envoy to Syria, and express ourhope for his active efforts to promote an early resumption of comprehen-sive negotiations.

We recall that national dialogue and reconciliation are key to the politi-cal solution for the Syrian crisis. We take note of the recent Syrian presi-dential elections. We stress that only an inclusive political process, led bythe Syrians, as recommended in the Action Group on Syria Final Com-munique of 2012, will lead to peace, effective protection of civilians, the


realization of the legitimate aspirations of the Syrian society for freedomand prosperity and respect for Syrian independence, territorial integrityand sovereignty. We emphasize that a national reconciliation processneeds to be launched as early as possible, in the interest of the nationalunity of Syria. To that end, we urge all parties in Syria to demonstratepolitical will, enhance mutual understanding, exercise restraint and com-mit to seeking common ground in accommodating their differences.

38. We reaffirm our commitment to contribute to a comprehensive,just and lasting settlement of the Arab-Israeli conflict on the basis of theuniversally recognized international legal framework, including the rele-vant UN resolutions, the Madrid Principles and the Arab Peace Initiative.We believe that the resolution of the Israeli-Palestinian conflict is a fun-damental component for building a sustainable peace in the Middle East.We call upon Israel and Palestine to resume negotiations leading to atwo-State solution with a contiguous and economically viable PalestinianState existing side by side in peace with Israel, within mutually agreedand internationally recognized borders based on the 4 June 1967 lines,with East Jerusalem as its capital. We oppose the continuous construc-tion and expansion of settlements in the Occupied Palestinian Territoriesby the Israeli Government, which violates international law, gravely un-dermines peace efforts and threatens the viability of the two-State solu-tion. We welcome recent efforts to achieve intra-Palestinian unity,including the formation of a national unity government and steps towardsconducting general elections, which is key element to consolidate a demo-cratic and sustainable Palestinian State, and call on the parties to fullycommit to the obligations assumed by Palestine. We call on the UN Se-curity Council to fully exercise its functions under the UN Charter withregard to the Israeli-Palestinian conflict. We recall with satisfaction thedecision of the UN General Assembly to proclaim 2014 the InternationalYear of Solidarity with the Palestinian People, welcome the efforts of UNRelief and Works Agency (UNRWA) in providing assistance and protec-tion for Palestine refugees and encourage the international community tocontinue to support the activities of the agency.

39. We express our support for the convening, at the earliest possibledate, of the Conference on the establishment of a Middle East zone freeof nuclear weapons and all other weapons of mass destruction. We callupon all states of the region to attend the Conference and to engage con-structively and in a pragmatic manner with a view to advancing that goal.

40. Noting the open-ended consultations on a draft International Codeof Conduct on Outer Space Activities, and the active and constructiveengagement of our countries in these consultations, we call for an inclu-sive and consensus-based multilateral negotiation to be conducted withinthe framework of the UN without specific deadlines in order to reach abalanced outcome that addresses the needs and reflects the concerns ofall participants. Reaffirming our will that the exploration and use of outer


space shall be for peaceful purposes, we stress that negotiations for theconclusion of an international agreement or agreements to prevent anarms race in outer space remain a priority task of the Conference on Dis-armament, and welcome the introduction by China and Russia of the up-dated draft Treaty on the Prevention of the Placement of Weapons inOuter Space, the Threat or Use of Force Against Outer Space Objects.

41. While reiterating our view that there is no alternative to a negoti-ated solution to the Iranian nuclear issue, we reaffirm our support to itsresolution through political and diplomatic means and dialogue. In thiscontext, we welcome the positive momentum generated by talks betweenIran and the E3+3 and encourage the thorough implementation of theGeneva Joint Plan of Action of 24 November 2013, with a view to achiev-ing a comprehensive and long-lasting solution to this issue. We also en-courage Iran and the International Atomic Energy Agency (IAEA) tocontinue strengthening their cooperation and dialogue on the basis of theJoint Statement signed on 11 November 2013. We recognize Iran’s ina-lienable right to the peaceful use of nuclear energy in a manner consistentwith its international obligations.

42. Recognizing that peace, security and development are closely in-terlinked, we reaffirm that Afghanistan needs time, development assis-tance and cooperation, preferential access to world markets and foreigninvestment to attain lasting peace and stability. We support the commit-ment of the international community to remain engaged in Afghanistanduring the transformation decade (2015-2024), as enunciated at the BonnInternational Conference in December 2011. We stress that the UNshould play an increasingly important role in assisting Afghanistan’s na-tional reconciliation, recovery and economic reconstruction. We also re-affirm our commitment to support Afghanistan’s emergence as apeaceful, stable and democratic state, free of terrorism and extremism,and underscore the need for more effective regional and internationalcooperation for the stabilization of Afghanistan, including by combatingterrorism. We extend support to the efforts aimed at combating illicittraffic in opiates originating in Afghanistan within the framework of theParis Pact. We expect a broad-based and inclusive peace process in Af-ghanistan which is Afghan-led and Afghan-owned. We welcome the sec-ond round of the presidential elections in Afghanistan which contributeto the democratic transfer of power in this country. We welcome China’soffer to host the Fourth Heart of Asia Ministerial Conference in August2014.

43. We are deeply concerned by the situation in Iraq. We strongly sup-port the Iraqi government in its effort to overcome the crisis, uphold na-tional sovereignty and territorial integrity. We are concerned aboutspillover effects of the instability in Iraq resulting from increased terroristactivities in the region, and urge all parties to address the terrorist threatin a consistent manner. We urge all regional and global players to refrain


from interference that will further deepen the crisis and to support theIraqi government and the people of Iraq in their efforts to overcome thecrisis, and build a stable, inclusive and united Iraq. We emphasize theimportance of national reconciliation and unity in Iraq, taking into con-sideration the wars and conflicts the Iraqi people have suffered and inthis context we commend the peaceful and orderly holding of the latestparliamentary elections.

44. We express our deep concern with the situation in Ukraine. Wecall for a comprehensive dialogue, the de-escalation of the conflict andrestraint from all the actors involved, with a view to finding a peacefulpolitical solution, in full compliance with the UN Charter and universallyrecognized human rights and fundamental freedoms.

45. We reaffirm our commitment to continue to tackle transnationalorganized crime, with full respect for human rights, in order to reduce thenegative impact it has on individuals and societies. We encourage jointefforts aimed at preventing and combating transnational criminal activi-ties in accordance with national legislations and international legal instru-ments, especially the UN Convention against Transnational OrganizedCrime. In this regard, we welcome BRICS cooperation in multilateralfora, highlighting our engagement in the ECOSOC Commission onCrime Prevention and Criminal Justice.

46. Piracy and armed robbery at sea are complex phenomena thatmust be fought effectively in a comprehensive and integrated manner.We welcome the efforts made by the international community to countermaritime piracy and call upon all stakeholders–civilian and military, pub-lic and private–to remain engaged in the fight against this phenomenon.We also highlight the need for a transparent and objective review of theHigh Risk Areas, with a view to avoiding unnecessary negative effects onthe economy and security of coastal states. We commit to strengthen ourcooperation on this serious issue.

47. We are deeply concerned by the world drug problem, which contin-ues to threaten public health, safety and well-being and to underminesocial, economic and political stability and sustainable development. Weare committed to countering the world drug problem, which remains acommon and shared responsibility, through an integrated, multidiscipli-nary, mutually reinforcing and balanced approach to supply and demandreduction strategies, in line with the three UN drug conventions andother relevant norms and principles of international law. We welcomethe substantive work done by Russia in preparing and hosting the Inter-national Ministers Meeting on 15 May 2014 to discuss the world drugproblem. We take note of the proposal for the creation of an Anti-DrugWorking Group presented at the Second Meeting of BRICS Heads ofDrug Control Agencies.


48. We reiterate our strong condemnation of terrorism in all its formsand manifestations and stress that there can be no justification, whatso-ever, for any acts of terrorism, whether based upon ideological, religious,political, racial, ethnic, or any other justification. We call upon all entitiesto refrain from financing, encouraging, providing training for or other-wise supporting terrorist activities. We believe that the UN has a centralrole in coordinating international action against terrorism, which must beconducted in accordance with international law, including the UN Char-ter, and with respect to human rights and fundamental freedoms. In thiscontext, we reaffirm our commitment to the implementation of the UNGlobal Counter-Terrorism Strategy. We express our concern at the in-creasing use, in a globalized society, by terrorists and their supporters, ofinformation and communications technologies (ICTs), in particular theInternet and other media, and reiterate that such technologies can bepowerful tools in countering the spread of terrorism, including by pro-moting tolerance and dialogue among peoples. We will continue to worktogether to conclude as soon as possible negotiations and to adopt in theUN General Assembly the Comprehensive Convention on InternationalTerrorism. We also stress the need to promote cooperation among ourcountries in preventing terrorism, especially in the context of majorevents.

49. We believe that ICTs should provide instruments to foster sustaina-ble economic progress and social inclusion, working together with theICT industry, civil society and academia in order to realize the ICT-re-lated potential opportunities and benefits for all. We agree that particu-lar attention should be given to young people and to small and medium-sized enterprises, with a view to promoting international exchange andcooperation, as well as to fostering innovation, ICT research and devel-opment. We agree that the use and development of ICTs through inter-national cooperation and universally accepted norms and principles ofinternational law is of paramount importance, in order to ensure a peace-ful, secure and open digital and Internet space. We strongly condemnacts of mass electronic surveillance and data collection of individuals allover the world, as well as violation of the sovereignty of States and ofhuman rights, in particular the right to privacy. We take note of theGlobal Multistakeholder Meeting on the Future of Internet, held in SaoPaulo, on 23-24 April 2014. We thank Brazil for having organized it.

50. We will explore cooperation on combating cybercrimes and we alsorecommit to the negotiation of a universal legally binding instrument inthat field. We consider that the UN has a central role in this matter. Weagree it is necessary to preserve ICTs, particularly the Internet, as an in-strument of peace and development and to prevent its use as a weapon.Moreover, we commit ourselves to working together in order to identifypossibilities of developing joint activities to address common securityconcerns in the use of ICTs. We reiterate the common approach set forth


in the eThekwini Declaration about the importance of security in the useof ICTs. We welcome the decision of the National Security Advisors toestablish a group of experts of BRICS member States which will elabo-rate practical proposals concerning major fields of cooperation and coor-dinate our positions in international fora. Bearing in mind thesignificance of these issues, we take note of Russia’s proposal of a BRICSagreement on cooperation in this field to be jointly elaborated.

51. We reiterate our commitment to the implementation of the Con-vention on Biological Diversity and its Protocols, with special attention tothe Strategic Plan for Biodiversity 2011-2020 and the Aichi Targets. Werecognize the challenge posed by the agreed targets on conservation ofbiodiversity and reaffirm the need to implement the decisions on re-source mobilization agreed to by all parties in Hyderabad in 2012, and setresource mobilization targets that are ambitious in order to allow fortheir fulfillment.

52. Acknowledging that climate change is one of the greatest chal-lenges facing humankind, we call on all countries to build upon the deci-sions adopted in the UN Framework Convention on Climate Change(UNFCCC) with a view to reaching a successful conclusion by 2015, ofnegotiations on the development of a protocol, another legal instrumentor an agreed outcome with legal force under the Convention applicableto all Parties, in accordance with the principles and provisions ofUNFCCC, in particular the principle of common but differentiated re-sponsibilities and respective capabilities. In this regard, we reiterate oursupport to the Presidency of the 20th session of the Conference of theParties and the 10th session of the Conference of the Parties serving asthe Meeting of the Parties to the Kyoto Protocol, to be held in Lima,Peru, in December 2014. We also note the convening of the UN ClimateSummit 2014 to be held this September.

53. While bearing in mind that fossil fuel remains one of the majorsources of energy, we reiterate our belief that renewable and clean en-ergy, research and development of new technologies and energy effi-ciency, can constitute an important driver to promote sustainabledevelopment, create new economic growth, reduce energy costs and in-crease the efficiency in the use of natural resources. Considering the dy-namic link between renewable and clean energy and sustainabledevelopment, we reaffirm the importance of continuing international ef-forts aimed at promoting the deployment of renewable and clean energyand energy efficiency technologies, taking into account national policies,priorities and resources. We stand for strengthening international coop-eration to promote renewable and clean energy and to universalize en-ergy access, which is of great importance to improving the standard ofliving of our peoples.


54. We are committed to working towards an inclusive, transparentand participative intergovernmental process for building a universal andintegrated development agenda with poverty eradication as the centraland overarching objective. The agenda should integrate the economic,social and environmental dimensions of sustainable development in a bal-anced and comprehensive manner with concise, implementable and mea-surable goals, taking into account differing national realities and levels ofdevelopment and respecting national policies and priorities. The Post-2015 Development Agenda must also be based on and fully respect allRio principles on sustainable development, including the principle ofcommon but differentiated responsibilities. We welcome the outcomedocument of the UN General Assembly Special Event on the MillenniumDevelopment Goals, which decided to launch an intergovernmental pro-cess at the beginning of the 69th Session of the UN General Assemblythat will lead to the adoption of the Post-2015 Development Agenda.

55. We reiterate our commitment to the UN General Assembly OpenWorking Group on Sustainable Development Goals (SDGs) and to work-ing together to achieve a consensual and ambitious proposal on SDGs.We emphasize the importance of the work by the IntergovernmentalCommittee of Experts on Sustainable Development Financing and high-light the need for an effective sustainable development financing strategyto facilitate the mobilization of resources in achieving sustainable devel-opment objectives and supporting developing countries in the implemen-tation efforts, with ODA as a major source of financing. We support thecreation of a facilitation mechanism for the development, transfer anddissemination of clean and environmentally sound technologies and callfor the establishment of a working group within the UN on this proposal,taking into account the Rio+20 outcome document and the SecretaryGeneral’s reports on the issue. In this regard, we reaffirm that the out-come of each of these processes can contribute to the formulation of Sus-tainable Development Goals.

56. We recognize the strategic importance of education for sustainabledevelopment and inclusive economic growth. We reaffirm our commit-ment to accelerating progress in attaining the Education for All goals andeducation-related Millennium Development Goals by 2015 and stressthat the development agenda beyond 2015 should build on these goals toensure equitable, inclusive and quality education and lifelong learning forall. We are willing to strengthen intra-BRICS cooperation in the areaand welcome the meeting of Ministers of Education held in Paris, in No-vember 2013. We intend to continue cooperation with relevant interna-tional organizations. We encourage the initiative to establish the BRICSNetwork University.

57. In March 2014 we agreed to collaborate through dialogue, coopera-tion, sharing of experiences and capacity building on population relatedmatters of mutual concern to member states. We recognize the vital im-


portance of the demographic dividend that many of us possess to advanceour sustainable development as well as the need to integrate populationfactors into national development plans, and to promote a long-term bal-anced population and development. The demographic transition andpost-transition challenges, including population ageing and mortality re-duction are amongst the most important challenges facing the world to-day. We confirm our strong commitment to address social issues ingeneral and in particular gender inequality, women’s rights and issues fac-ing young people and we reaffirm our determination to ensure sexual andreproductive health and reproductive rights for all.

58. We recognize that corruption negatively affects sustainable eco-nomic growth, poverty reduction and financial stability. We are commit-ted to combat domestic and foreign bribery, and strengthen internationalcooperation, including law enforcement cooperation, in accordance withmultilaterally established principles and norms, especially the UN Con-vention Against Corruption.

59. Considering the link between culture and sustainable development,as well as the role of cultural diplomacy as a promoter of understandingbetween peoples, we will encourage cooperation between BRICS coun-tries in the cultural sector, including on the multilateral basis. Recogniz-ing the contribution and the benefits of cultural exchanges andcooperation in enhancing our mutual understanding and friendship, wewill actively promote greater awareness, understanding and appreciationof each other’s arts and culture. In this regard, we ask our relevant au-thorities responsible for culture to explore areas of practical cooperation,including to expedite negotiations on the draft agreement on culturalcooperation.

60. We are pleased with progress in implementing the eThekwini Ac-tion Plan, which further enhanced our cooperation and unleashed greaterpotential for our development. In this regard, we commend South Africafor the full implementation of the eThekwini Action Plan.

61. We are committed to promoting agricultural cooperation and toexchange information regarding strategies for ensuring access to food forthe most vulnerable population, reduction of negative impact of climatechange on food security and adaptation of agriculture to climate change.We recall with satisfaction the decision of UN General Assembly to de-clare 2014 the International Year of Family Farming.

62. We take note of the following meetings which were held in prepa-ration for this Summit:

- Third BRICS Think Tanks Council (BTTC);- Third BRICS Business Council;- Sixth Academic Forum;- Fifth Business Forum;


- Fourth Financial Forum.

63. We welcome the outcomes of the meeting of the BRICS FinanceMinisters and Central Bank Governors and endorse the Joint Communi-que of the Meeting of the BRICS Trade Ministers held in preparation forthe Summit.

64. The 5th edition of the BRICS Business Forum provided an oppor-tunity for match-making and for in-depth discussion of highly relevantissues of the trade and investment agenda. We welcome the meeting ofthe BRICS Business Council and commend it for its Annual Report 2013/2014. We encourage the respective business communities to follow-upthe initiatives proposed and to deepen dialogue and cooperation in thefive areas dealt with by the Industry/Sector Working Groups with a viewto intensifying trade and investment flows amongst BRICS countries aswell as between BRICS and other partners around the world.

65. We reiterate our commitment made during the BRICS Leaders-Africa Retreat at the 5th BRICS Summit to foster and develop BRICS-Africa cooperation in support of the socioeconomic development of Af-rica, particularly with regard to infrastructure development and industri-alization. We welcome the inclusion of these issues in discussions duringthe BRICS Business Council Meeting, held in Johannesburg in August2013.

66. We welcome the BTTC Study “Towards a Long-Term Strategy forBRICS: Recommendations by the BTTC”. We acknowledge the decisiontaken by the BTTC, taken at its Rio de Janeiro meeting in March 2014 tofocus its work on the five pillars upon which the BRICS long-term strat-egy for cooperation will rest. The BTTC is encouraged to develop strate-gic pathways and action plans that will lead to the realization of this long-term strategy.

67. We welcome the holding of the first Meeting of the BRICS Minis-ters of Science, Technology and Innovation and the Cape Town Declara-tion, which is aimed at: (i) strengthening cooperation in science,technology and innovation; (ii) addressing common global and regionalsocio-economic challenges utilizing shared experiences and complemen-tarities; (iii) co-generating new knowledge and innovative products, ser-vices and processes utilizing appropriate funding and investmentinstruments; and (iv) promoting, where appropriate, joint BRICS part-nerships with other strategic actors in the developing world. We instructthe BRICS Ministers of Science and Technology to sign at their nextmeeting the Memorandum of Understanding on Science, Technology andInnovation, which provides a strategic framework for cooperation in thisfield.


68. We welcome the establishment of the BRICS Information Sharingand Exchange Platform, which seeks to facilitate trade and investmentcooperation.

69. We will continue to improve competition policy and enforcement,undertake actions to address challenges that BRICS Competition Au-thorities face and further enable competitive environments in order toenhance contributions to economic growth in our economies. We noteSouth Africa’s offer to host the 4th Meeting of BRICS Competition Au-thorities in 2015.

70. We reiterate our commitment to fostering our partnership for com-mon development. To this end, we adopt the Fortaleza Action Plan.

71. Russia, India, China and South Africa extend their warm apprecia-tion to the Government and people of Brazil for hosting the Sixth BRICSSummit in Fortaleza.

72. Brazil, India, China and South Africa convey their appreciation toRussia for its offer to host the Seventh BRICS Summit in 2015 in the cityof Ufa and extend their full support to that end.

FORTALEZA ACTION PLAN

1. Meeting of BRICS Ministers of Foreign Affairs / International Rela-tions on the margins of UN General Assembly.

2. Meeting of BRICS National Security Advisors.

3. Mid-term meeting of BRICS Sherpas and Sous-Sherpas.

4. Meetings of BRICS Finance Ministers and Central Bank Governorson the margins of G20 meetings, WB/IMF meetings, as well as stand-alone meetings, as required.

5. Meetings of BRICS Trade Ministers on the margin of multilateralevents, or stand-alone meetings, as required.

6. Meeting of BRICS Ministers of Agriculture and Agrarian Develop-ment, preceded by the Meeting of BRICS Agricultural CooperationWorking Group.

7. Meeting of BRICS Health Ministers.

8. Meeting of BRICS Ministers of Science, Technology andInnovation.

9. Meeting of BRICS Ministers of Education.

10. Meeting of Ministers or Senior Officials responsible for social se-curity, on the margins of a multilateral meeting.

11. BRICS Seminar of Officials and Experts on Population Matters.


12. Meeting of BRICS Cooperatives (held in Curitiba on 14-16 May2014).

13. Meetings of financial and fiscal authorities on the margins of WB/IMF meetings as well as stand-alone meetings, as required.

14. Meetings of the BRICS Contact Group on Economic and TradeIssues (CGETI).

15. Meeting of the BRICS Friendship Cities and Local GovernmentsCooperation Forum.

16. Meeting of the BRICS Urbanization Forum.

17. Meeting of BRICS Competition Authorities in 2015 in SouthAfrica.

18. Meeting of BRICS Heads of National Statistical Institutions.

19. Meeting of Anti-Drug Experts.

20. Meeting of BRICS Experts on Anti-corruption cooperation, on themargins of a multilateral meeting

21. Consultations amongst BRICS Permanent Missions and/or Embas-sies, as appropriate, in New York, Vienna, Rome, Paris, Washington, Nai-robi and Geneva, where appropriate.

22. Consultative meeting of BRICS Senior Officials on the margins ofrelevant sustainable development, environment and climate related inter-national fora, where appropriate.

23. Sports and Mega Sporting Events.

New areas of cooperation to be explored

- Mutual recognition of Higher Education Degrees and Diplomas;- Labor and Employment, Social Security, Social Inclusion Public

Policies;- Foreign Policy Planning Dialogue;- Insurance and reinsurance;- Seminar of Experts on E-commerce.