FOREWORD

To attempt to enter a foreign market without at least a reasonable working knowledge of the laws under which the entrant must conduct his business may prove to be a costly experience. "Ignorance of the law excuses no man," as to either liabilities unwittingly incurred or profits lost; and while it is not the purpose to present here an exhaustive treatise of the laws of Brazil, this monograph will serve as a guide to the exporter who is seeking a practical exposition of those laws with which he will come in daily contact—the laws of commerce. The object of this compilation is only to provide a practical handbook; to proceed without the advice of competent legal counsel well versed in this practice would entail grave risk.

In the Republic of Brazil, American goods and services of many varieties find a ready welcome and an expanding market of vast potentialities. United States exports to Brazil in 1937 were valued at $68,631,000, an increase of 131 percent over the $29,728,000 valuation for the depression year 1933. The growth in these 4 years reflects the steady betterment which has taken place in Brazilian economic conditions, and the improved buying power of the Brazilian people. Expansion was especially marked in 1937, when, according to United States statistics of exports by months, shipments to Brazil increased continuously from $4,162,000 in January to $7,879,000 in December.

This monograph was prepared under the general supervision of Guerra Everett, Chief of the Division of Commercial Laws.

ALEXANDER V. DYE, Director,

Bureau of Foreign and Domestic Commerce.

TRADING UNDER THE LAWS OF BRAZIL

INTRODUCTION

Brazil, the largest political division of South America, is somewhat larger than the United States, excluding Alaska, is nearly 3 times the size of Argentina and 65 times the size of England. Its extreme dimensions are, from north to south 2,695 miles and from east to west 2,691 miles. According to late calculations, its area is 3,285,318 square miles, comprising about three-sevenths the area of the entire South American Continent.

According to the census of 1920, the capital city, Rio de Janeiro, had a population of 1,157,873, although it has recently been estimated as high as 1,800 0C0; and the population of the entire country has recently been estimated at 40,000,000.

DISCOVERY OF BRAZIL

Brazil was discovered and settled by the Portuguese, who gave the country its language and its basic racial type. After Vasco de Gama's discovery of an all-water route to the Indies and the Spice Islands, the Portuguese Crown despatched a formidable armada under the command of Pedro Alvares Cabral and subject to instructions framed by the already famous Vasco de Gama himself. To avoid the calms encountered off the Gulf of Guinea, Cabral bore so far to the west that, on April 22, 1500, the mainland of South America was sighted and immediately claimed by Portugal.

BRAZIL THE NATION

The first systematic effort to establish an organized government in Brazil was in 1532. This resulted in failure, and the Crown realized that a closer relationship must be established between its huge colony and the mother country. As a result of this decision, royal control was decreed in 1549 under Thomé de Souza at the city of Bahia, which remained the capital of the country for the next 200 years.

Brazil is the only instance of a colony's becoming the seat of government of its own mother country. In 1807, under pressure from Napoleon, Dom John VI sailed from Portugal, accompanied by the royal family. After spending a short time in Bahia, he proceeded to Rio de Janeiro, where he established the seat of government of the Portuguese Crown. In 1821, forced to return by serious revolts at home, Dom John sailed for Lisbon 2 days after appointing his son, Dom Pedro I, regent over Brazil. The latter

abdicated April 7, 1831, in favor of the heir apparent Dom Pedro II, then only 5 years of age.

During 1822, in open defiance of the Crown of Portugal, Dom Pedro I formed the Brazilian Empire, which collapsed in 1889. On November 15 of the latter year, a revolt of a portion of the Army was the signal for the complete collapse of the Empire; Dom Pedro II formally abdicated, and he and his family were banished to Europe.

The cause of the overthrow of Dom Pedro II remains somewhat obscure; his regime was constructive, he had instituted many innovations resulting from his creative ideas, and as a ruler he may be described generally as a man of sound pronouncements.

The leader of the revolt against Dom Pedro II was a prominent military figure, Marshal Deodoro da Fonseca. Decisions of great importance were reached during the 14 months in which he exercised a strict dictatorship. The church and state were separated, civil marriage was introduced, and a constituent assembly was summoned, which in 1891 adopted a constitution modeled closely after that of the United States.

Until 1889, therefore, 113 years after we had declared our independence, Brazil remained under the reign of a royal European family-a monarchy, despite the republican form of government which had been fought for and adopted by neighboring countries.

I. FEDERAL CONSTITUTION OF 1937

A new constitution, published November 11, 1937, in the Jornál do Commercio, was decreed by the President of the Republic of the United States of Brazil. According to its preamble, it was brought into existence "with the support of the armed forces and bowing to the inspirations of national opinion, both justifiedly apprehensive before the dangers which threaten our unity and of the rapidity with which the decomposition of our civil and political institutions is being accomplished." The President "resolves to assure the Nation its unity" by "decreeing the following constitution." This differs. perceptibly from the preamble to the constitution of 1934, which reads in part:

We, the representatives of the Brazilian people, placing our trust in God, met together in national constituent assembly to organize a democratic regime which may assure to the Nation unity, liberty, justice, and social and economic well being, decree and promulgate the following Constitution * *

THE LEGISLATIVE POWER

The new legislative power is exercised "by the National Parliament, with the collaboration of the Council of National Economy and of the President of the Republic." (Art. 38.) This differs from the 1934 enactment, which provided that the legislative power be exercised by a Chamber of Deputies, with the collaboration of the Federal Senate. Under the present arrangement, the Senate apparently has been eliminated, the National Parliament now being composed of a Chamber of Deputies and the Federal Council (Conselho Federál). The latter is composed of State representatives (one from each State, elected by its legislative assembly) and 10 members appointed by the President. The term of office of a member of the Federal Council is 6 years. (Art. 50.) The distinct reference in article 50 of the new constitution to a legislative assembly of each State gives rise to a discrepancy between the text of the new constitution itself and press notices which declare that all State legislatures have been abolished.

COUNCIL OF NATIONAL ECONOMY

The Conselho da Economia Nacionál is to be composed of representatives from various lines of business, selected for their special qualifications, from professional associations, and from syndicates recognized by law; equality of representation is guaranteed to both employers and employees alike. (Art. 57.)

3