WINDS OF CHANGE IN LATIN AMERICA

For years, Lula’s digital regulatory agenda has been undermining U.S. economic and national security interests, as Brazil has imported Europe’s regulatory model, punishing American companies and inviting China to fill the void. Brazil’s discriminatory behavior has even prompted a Section 301 investigation. 

Despite warnings from the administration and the investigation, Brazil appears determined to continue down this ill-advised, discriminatory path. Last month, Brazil’s Congress voted to fast-track a sweeping competition bill modeled on Europe’s Digital Markets Act. By approving an “urgency” procedure, lawmakers cleared a path to bypass committee review and move directly toward a full floor vote.

The proposal would create a new regulatory regime for large digital platforms by amending Brazilian competition law to create a new unit within the Administrative Council for Economic Defense. The new unit would have the authority to designate firms of “systemic relevance in digital markets” and then impose “special obligations” on these companies before any violation ever occurs. 

By using arbitrary thresholds such as market value and user base, rather than proven misconduct, to single out companies to designate as systemically relevant, the bill is specifically designed to target a small set of global firms, most of them American technology companies such as Amazon, Google, and Apple. This gives Brazilian regulators immense control over the operations of the designated firms, which would be subject to a list of potential obligations that is both sweeping and non-exhaustive — obligations that the rest of the market does not face. 

In addition to being blatantly discriminatory, the legislation represents a flagrant disregard for the Trump administration’s trade priorities and creates a wide opening for China to deepen its foothold in Brazil. Chinese telecom giant Huawei, which is backed by the Chinese Communist Party, now controls nearly half of Brazil’s 5G architecture and has embedded itself across fiber networks, cloud services, and data centers. ByteDance, the Chinese parent company of TikTok known for its covert collection of Americans’ data, is preparing similar investments that would make Brazil a “pillar” of its Western Hemisphere operations.

This posture extends well beyond the competition bill. Brazil’s telecom regulator is now testing network fees and direct regulation of cloud services, data centers, and IT infrastructure, and its regulatory posture frequently aligns with Beijing’s interests.

Last month, in another step toward becoming one of the world’s most aggressive digital protectionists, Brazil became the lone holdout blocking a longer term renewal of the World Trade Organization’s 1998 moratorium on tariffs on electronic transmissions — a cornerstone of the global digital economy. 

Brazil is now advancing an artificial intelligence bill that would impose some of the most restrictive rules on American companies in the world. It has already frozen large-scale AI investment in the country.

And, although Lula promoted REDATA — a policy intended to attract global data-center investment — at an AI summit in Delhi last month, his government recently tried to raise taxes and tariffs on imported semiconductors and essential data-center equipment, a decision so controversial it has been temporarily rolled back. 

This comes even as the United States has exempted key Brazilian exports, including Embraer aircraft, from reciprocal tariffs to strengthen the partnership — only for Brazil to answer that olive branch by making it harder for American companies to operate there.

Yet the administration can and must still keep the pressure on the Brazilian government to ensure a fairer and more reciprocal relationship — and fast. 

As I have previously argued, all of these developments will soon be judged against the findings of the administration’s Section 301 investigation. The outcome of this case will not only carry significant implications for Brazil but also set an important precedent for how the U.S. might respond to other countries engaging in unfair trade practices around the world.

FORMER BRAZILIAN SPY CHIEF AND BOLSONARO ALLY ARRESTED BY ICE IN US, CLAIMS PERSECUTION

Lula himself has every political reason to correct course. With Brazil heading into an election year, a public rupture with its largest democratic trading partner — and a critical market for Brazilian exports — would carry real consequences at home. 

The canceled White House meeting does not change the underlying facts of the U.S.-Brazil trading relationship, nor the shared interest both countries have in keeping it open, transparent, and fair. If Brazil continues down Europe’s regulatory path, the administration must be prepared to compel a course correction. 

Ashley Baker is the executive director of the Committee for Justice. Her areas of expertise include antitrust law, technology policy, and the courts. Her writing on these subjects has appeared nationwide in publications such as USA Today, the Boston Globe, Fox News, the Hill, RealClearPolitics, Law360, and elsewhere. Ms. Baker is also the founder of the Alliance on Antitrust coalition. She has testified before the U.S. Senate Judiciary Committee on the topic of antitrust law. X: @andashleysays