Continued political and economic crises in the context of anti-corruption investigations: Brazil continued to face political instability in 2018 as a result of Operation Car Wash (Operação Lava-Jato), an ongoing criminal investigation. Operation Car Wash initially targeted allegations of corruption at the state-controlled oil company Petrobras. It has expanded to include illegal payments by the largest private construction companies in Brazil to politicians, in exchange for awarding contracts at inflated prices and procuring financing from state-owned banks on favorable terms. The former President Lula (Luiz Inácio Lula da Silva) is one of the politicians involved in the corruption scandals. He was convicted in July 2017 and imprisoned in April 2018 for corruption and money laundering under Operation Car Wash.

Elections and Market Reaction: The former Army captain, Jair Bolsonaro, on the far right, and Workers’ Party candidate, Fernando Haddad, on the far left, disputed the second round of the presidential elections in October. Bolsonaro won, gaining 55 percent of the total votes compared to Haddad’s 45 percent. The local and foreign markets reacted positively to Bolsonaro’s election, especially due to the liberal and pro-business positions held by Paulo Guedes, the incoming Ministry of Finance.

Draft bill amending the Industrial Property regime is sent to Congress: To improve the industrial property system, the government has sent a bill to Congress amending the industrial property regulation framework. The main changes introduced by the draft bill aim to grant stronger protection to industrial property rights and enable more efficient enforcement, as well as establish more efficient and expeditious registration procedures that reduce processing times.

Presidential Instructive on Cybersecurity: President Sebastián Piñera signed a bill on cybersecurity crimes, and issued a Presidential Instructive (instructivo presidencial) giving instructions to public agencies related to cybersecurity. This included urgent measures to be implemented immediately. This latest announcement is in line with other measures implemented by the government. These also include the appointment of a national cybersecurity officer, Mr. Jorge Atton.

Close-Out Netting in derivatives transactions: The Central Bank of Chile enacted new regulations providing general terms and conditions that Derivative Agreements should meet to qualify for close-out netting purposes. It ruled that the parties to Derivative Agreements, who accept the new regime set by the Central Bank through this regulation, will be empowered to agree that the close-out netting provisions of their respective agreements may become effective as a consequence of the occurrence of specific critical situations.

Banking Law Reform: A Banking Law reform was recently approved by Congress and is waiting to be approved by the Constitutional Court. The reform adopts Basel III capital requirements, provides for supervisory governance and amends the banking resolution process.

2018 Elections: The presidential and congressional elections took place in June this year with President Iván Duque taking office on August 7, 2018. Since then, the new administration has prepared a national development plan, began implementing peace agreements and transitional justice, and submitted to Congress bills related to campaign commitments.

Telecommunications Law: This bill provides for the restructuring of the telecommunications sector with the aim of promoting targeted investments to close the digital gap, encouraging the private sector to participate in related projects, as well as addressing deficiencies in the sector.

Tax Reform: This bill aims to create a new structure for public finances, introducing changes to the formula for national expenditures. It also simplifies the tax system, aims to reduce tax evasion, and appoints a new tax authority.

Judicial Reform: This bill aims to improve the speed with which decisions are made in courts, stop corruption, provide judges with further access to case law, legal news and administrative regulations, and improve access to justice.

Political Developments: During July, federal presidential, senatorial and representational elections were held in Mexico. The opposition candidate, Andres Manuel López Obrador, won the presidential election, while his party (MORENA) now holds the majority in the Senate and House of Representatives.

Energy: Mexico’s energy reform has been implemented, and it is expected that in 2018 a number of national and international competitors in the oil distribution industry will begin operations, ending PEMEX’s monopoly.

International Trade: The final rounds of NAFTA re-negotiations took place. The market view is that a favorable agreement was reached between Mexico, the United States and Canada. The final wording of the new treaty has yet to be disclosed.

Antitrust: In September, the Peruvian government passed certain amendments to the Antitrust Law. These set out the grounds for authorizing a “leniency policy” and include economic rewards in exchange for information provided by individuals which proves to be crucial in investigations and sanctions against cartels and other anti-competitive practices.

Compliance: In September, the Peruvian government approved certain amendments to the Criminal Code, which penalize corrupt acts, and practices committed among private parties which adversely affect commercial relations between competitors (hence, corruption activities are criminalized not only when involving the government but within the private level as well). The sanctions apply to partners, owners, management, employees or advisors that participate in these criminal practices.

Tax: In October, Rule XVI of the Peruvian Tax Code came into effect and sets out the limits for tax anti-elusive provisions. The general rules enhance the powers of the Peruvian tax authority (Superintendencia Nacional de Aduanas y de Administración Tibutaria-SUNAT) to seek out and sanction situations where tax payers aim to take advantage of technicalities that assimilate to fraud, simulation or evasion against the Treasury.