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Brazilian Ports and Navigation Remain in Operation

Navigation is a field of study that focuses on the process of monitoring and controlling the movement of a craft or vehicle from one place to another. The field of navigation includes four general categories: land navigation, marine navigation, aeronautic navigation, and space navigation.

In view of the worsening of the coronavirus epidemic in Brazil, the country’s port terminals have reinforced the security measures and containment of the spread of COVID-19, according to guidelines from health authorities and the federal government. However, there is already a concern about possible logistical bottleneck due to the crisis.

The first fear is the very need to dismiss employees. Industry officials and executives have reiterated that there is no forecast for any port terminal shutdown, as occurred in China.

The standard measure has been to implement remote work for administrative areas, release employees from risk groups and expand precautionary measures for those who work directly in the port operation.

Port Logistics

A letter signed by almost 50 entities representing agribusiness segment was addressed on Wednesday, 18, to the President of the Republic, Jair Bolsonaro, and to the Minister of Infrastructure, Tarcísio Gomes de Freitas, requesting support from the federal government to guarantee the functioning of the national port logistics amid the coronavirus crisis.

Public & Private Ports

The NANTAQ announced today, 20, that public, private and other port facilities remain in operation, as well as coastal and long-haul transportation activities.

In a note, ANTAQ clarified that only the Union will be able to determine the closure of port facilities in all Brazilian states or the suspension of service provision on interstate and international waterway transportation lines. The legal basis is Article 22, item X, of the Federal Constitution, and Ordinance 125, of March 19th, 2020, of the Presidency of the Republic.

Cabotage

The Brazilian Association of Cabotage Shipowners reported that the modal remains active. The companies associated with ABAC have taken actions to protect their employees and contribute to the prevention of the contagion of COVID-19, following the guidelines of the country’s health authorities.

The measures safely guarantee the continuity of cabotage services, always within the principles of preventing and maintaining the supply of products to society.

Santos Port

On Wednesday, operation in Santos Port was threatened due to a possible halt of the stevedores work, who even sent a letter to the authorities announcing their decision to stop working. The situation was, in principle, contained in a meeting between port authority, representatives of companies and unions.

Container terminals DP World, Santos Brasil and BTP have reinforced their security measures and dismissed employees, but said there is no impact on activities.

The port operation could also be impacted in other ways, in addition to an employee stoppage itself. One of the concerns, for example, is in relation to the release of the cargo by inspection agencies, such as the Federal Revenue Service, the Ministry of Agriculture or the National Health Surveillance Agency, which need to verify imports.

According to the National Association of Cargo Transport and Logistics, it is too early to say whether there will be an impact on cargo transport, which will depend on the worsening of the epidemic. In March, the assessment is that the movement has been positive, driven by the soybean harvest.

In general, the assessment of executives and analysts about the current scenario is highly uncertain, and the forecasts seem to change every day. The fear – and the main scenario to be avoided panic, that could lead to a complete halt in activities and logistical chaos in the country.

Cabotage Gains New Incentive With Cost Reduction

Cabotage is the transport of goods or passengers between two places in the same country. It originally applied to shipping along coastal routes, port to port, but now applies to aviation, railways, and road transport as well. Cabotage rights are the right of a company from one country to trade in another country.

The Federal Government reduced the import tax for vessels destined for cabotage operations in Brazil. With this, the expectation is to reduce by 40% the cost to import a specific vessel for this segment. The measure is part of “BR do Mar”, a plan that aims to boost maritime cargo transportation along the Brazilian coast.

Today, the import tax rate for vessels is 14%. But with the plans to encourage cabotage, which should be revealed with the disclosure of the BR do Mar, the issue has been analysed by the Foreign Trade Chamber, which approved the elimination of the tax.

The measure was announced and celebrated by the Minister of Infrastructure, Tarcísio Gomes de Freitas. For him, the Government’s decision is “a huge nod to those who are willing to invest in the sector, create jobs, move the entire production chain and contribute to expand the participation of the cabotage matrix in Brazil’s transport matrix”.

For port consultant Fabrizio Pierdomenico, the measure is also welcome.

On the other hand, the consultant points out the risk of the measure having side effects. The idea, according to Pierdomenico, is that the tax exemption lasts from 12 to 24 months.

Other Extreme Measures

Pierdomenico believes that BR do Mar has to resolve other issues to boost cabotage. One of them is the issue of bunker oil, the fuel of navigation, considered one of the obstacles to the development of the modal.

The BR do Mar may be published through a bill or a Provisional Measure.

The idea is that ships carrying cargo through cabotage will have a differentiated treatment, which can guarantee a reduction in bureaucracy and agility compared to long-haul shipping, which will not have a revision of standards and regulation.

CARF Disapproves Binding Precedent

CARF is a collegiate body, composed of representatives of the State and society, with the task of judging in the second administrative instance, disputes in tax and customs matters.

The law firm was represented today by our partner Jeová Costa Lima Neto, who accompanied the extraordinary session of the Administrative Council of Tax Appeals, in Brasília, which deliberated on fifty draft proposals.

THE CARF came up with the unification of the three Boards of Taxpayers then existing, from the edition of Law 11.941, of May 2009.

The measure stemmed from studies that pointed to the need to eliminate redundancies, rationalise administrative activities, optimise procedural procedures and print faster in the solution of tax administrative disputes.

Among the proposals, we highlight the 49th Proposal for Binding Precedents, whereby “the cargo agent and the maritime agent, as local representatives for the international carrier, are liable for infringements committed in the carriage of goods by sea”.

The Binding Precedent was not approved! This closed another chapter in the long battle fought by the Tax Authority against ship agents – who suffer from the fact that The Brazilian Federal Revenue Office imposes on them fines that should be destined to the international carrier.

The binding precedent proposed by CARF intended to give a final outline to the imbroglio, but in a completely unfavourable outcome to ship agents – essential figure for international maritime transport.

As agents of foreign shipowners who carry out international transport, ship agents perform important task of dealing directly with the complex intricacies of Brazilian bureaucracy.

Our office mission is to promote foreign trade, shipping mentality and Legal Certainty in and outside the courts, we are happy with the outcome of the non-approval of CARF’s proposed binding precedent!

ParrisWhittaker Named as A Finalist At 2019 Awards

ParrisWhittaker is a local law firm founded by two top lawyers: Arthur Parris, real estate / commercial expert, and Jacy Whittaker, a litigator with extraordinary energy and an outstanding track record.

The 2019 Awards are part of the Lloyd’s List Excellence in Shipping Awards, which is the flagship awards program that recognises and rewards excellence across the entire maritime sector. The definition of maritime is something nautical or related to the sea. The body of laws that set the rules for commerce that takes place on oceans and seas are an example of maritime laws.

Given the incredible list of firms nominated, It is with great pride and humility that ParrisWhittaker announces being named a finalist for excellence.

The Awards promote and celebrate excellence in the shipping industry.

Freight transport is the physical process of transporting commodities and merchandise goods and cargo. The term shipping originally referred to transport by sea but in American English, it has been extended to refer to transport by land or air as well.

The judging panel volunteer their time and experience to consider hundreds of entries. They come from all core sectors of the maritime industry to engage in lengthy face to face deliberation to debate and, ultimately, decide on winners.

Other awards being presented by Lloyd’s List Americas include:

  • Excellence in Future Fuels Solutions
  • Deal of the Year
  • Excellence in Data and Technology Innovation
  • Excellence in Decarbonisation towards 2050
  • Excellence in Environmental Management
  • Excellence in Port Management and Infrastructure
  • Excellence in Safety & Training

Lloyd’s List is one of the world’s oldest continuously running journals, having provided weekly shipping news in London as early as 1734. It was published daily until 2013, and is in constantly updated digital format only since then.

ANTAQ Approves Regulatory Standard

ANTAQ is an autonomous government agency dependent on the Ministry of Transportation, Ports and Civil Aviation created in 2001 and in operation since 2002. ANTAQ is engaged in the implementation of policies to regulate, supervise and inspect activities related to the provision of waterway transport services and infrastructure. 

ANTAQ approved the norm that establishes regulatory parameters to be observed in the provision of container and volume handling and storage services at public and private port facilities, repealing the Resolution No. 2,389-Antaq, 2012.

Among other aspects, the now approved regulatory standard establishes criteria to be considered when billing the THC and the SSE, also known as THC-2.

The THC is the reimbursement of expenses for cargo handling services between the port terminal gate and the vessel’s side, including the transitory storage of cargo for the term agreed between the maritime carrier and the port facility or operator, in the case of exportation, or between the vessel’s side and its placement in the port terminal stack, in the case of importation.

SSE, on the other hand, refers to the collection, on importation, by the cargo handling service between the stack in the yard and the port terminal gate, not being part of the services paid by Box Rate, nor of the services whose expenses are reimbursed through the THC.

According to ANTAQ, prior to the billing of SSE, there will be electronic scheduling by the facility or port operator of operating windows to be made available continuously and regularly spaced, in order to serve all customers / users.

The new rule applies to the private container handling terminals, in line with Law No. 12,815 / 2013 and Decree No. 9,046 / 2017.

As a result, port facilities are required to disclose, with thirty days in advance, on their websites and terminal access, the maximum prices and detailed description of the services to be payed by the user, including application rules, deductibles and exemptions, if any.

Coastal Navigation Incentive Program in Brazil

Coastal navigation is a navigational method concerning the vessel’s movement in relation to the approximate shore, the visible objects in the sea and the sea depths. Coastal navigation demands great experience.

A Coastal Navigation incentive program that the Ministry of Infrastructure intends to launch in August expects to expand the transport of goods along the Brazilian coast.

An interim measure is expected to bring about major changes in the industry’s regulatory framework, which has had an average annual growth of 12.8% over the past decade. Despite the Chinese economic pace, the government estimates that there is still plenty of room for expansion.

The goals of the new program include doubling the volume of containers transported per year from the current 1.35 million to 2.7 million TEUs in 2022, and to increase by 40% the capacity of the maritime fleet dedicated to costal navigation in the next three years.

The plan, which has been called “BR do Mar” by the ministry’s technicians, foresees simultaneous and multi-front initiatives to stimulate the sector: more flexibility in the incorporation / import of new vessel by Brazilian shipping companies, easier use of port terminals aimed at handling cargo, a change in the guarantee system for access to the Merchant Marine Fund and an attempt to end distortions in the charging of ICMS on bunker.

One of the Program’s greatest advances is the encouragement of the establishment of “special operations” – new routes that companies can offer on a trial basis linking one port to another.

To test a domestic route, one will be temporarily free from the requirement to have own fleet to obtain registration as a Brazilian shipping company.

For a maximum period of four years, EBN may charter vessels without this obligation. The idea is to allow a test that paves the way for the establishment of longer lasting routes.

Today one of the biggest obstacles to the development of coastal navigation is the lack of regularity of operations. “We are reversing the logic,” explains the director of the Department of Navigation and Waterways of the Ministry of Infrastructure, Dino Antunes Batista.

Shipping companies will gain an incentive to expand supply – not just special operations – with foreign vessels. They will earn exemption from federal taxes, such as Import Tax and PIS / Cofins, by incorporating ships manufactured abroad.

These taxes increase equipment costs by 40% to 50%, according to government estimates, and will turn into credits.

The credits must necessarily be used in the Brazilian shipbuilding industry. It can be in the repair or maintenance of imported vessels, not just in the construction of ships. But gains from the exemption will need to be “returned” to national shipyards.

Another obstacle that the government intends to unlock with the MP is the guarantees for access to the billionaire Merchant Marine Fund. With different rates of financing for shipbuilding, the fund has been underused.

The risk of loans rests with the credit transfer institutions – BNDES, Banco do Brasil, Caixa, Banco do Nordeste and Banco da Amazônia.

In the new program, the government will put into practice the “unenforceability of the linked account”. This means that a tax on the amount of freight that is collected by the shipping company and goes to itself, in a specific account for any FMM financing, can no longer be frozen or enforced against. As a result, banks will be collateralised and more comfortable with landing credit.

An additional goal of the Program is to match the price of fuel used in international and domestic freight rates. The Union cannot legislate on state taxes, but has found a legal solution to allow the government of each state to clear the tax collection.

Without this, any exemption would have to be endorsed by ever state on the National Council of Finance Policy.