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The full bench of Brazil’s Supreme Court is set to review on Wednesday (25) a decision by Justice Flávio Dino limiting the payment of indemnity allowances not expressly provided for by law, commonly referred to as “penduricalhos,” or add-on benefits.

The case comes a day after Chief Justice Edson Fachin met with Chamber of Deputies Speaker Hugo Motta (Republicans of Paraíba) and Senate President Davi Alcolumbre (Brazil Union of Amapá) to discuss a transition rule for the add-ons.

At the meeting, it was agreed that a proposal for a “transition rule” on the “limits of the constitutional salary cap” would be drafted “in the coming days.” Also in attendance were Dino and Justices Gilmar Mendes and Alexandre de Moraes, Deputy Prosecutor-General Hindenburgo Chateaubriand, and the president of the Federal Court of Accounts (TCU), Vital do Rêgo.

Dino’s decision gives the three branches of government 60 days to reassess all remuneration payments and suspend those not expressly provided for in federal, state or municipal rules. A transition rule is expected to be adopted because there would not be sufficient time to comply with the order within two months.

The justice issued the ruling on February 5. The injunction was submitted to the Supreme Court’s full bench, which will now decide whether to uphold the order issued earlier this month. Valor has learned that the Court is likely to uphold the measure. However, adjustments are expected to the deadlines set by Dino, taking into account the agreement reached at Monday’s (23) meeting regarding the “transition rule.”

Supreme Court justices admit behind the scenes that the matter is sensitive and overturning a colleague’s decision could further intensify criticism of the Court, which has grown amid developments in investigations involving Banco Master.

On Monday (23), Justice Mendes also issued a ruling on the add-ons. He determined that indemnity payments may only be made to members of the Judiciary and the Public Prosecutor’s Office when expressly provided for in a law approved by Congress.

Valor has learned that the decision may also be brought before the full bench on Wednesday, so that both Mendes’s and Dino’s orders can be reviewed jointly by the other justices.

That will depend, however, on Fachin. The chief justice may opt not to review any of the cases dealing with the add-ons until progress is made on the transition rule for indemnity payments.

The adoption of a transitional regime for changes to the add-ons is supported by professional associations and by the São Paulo State Court of Justice (TJ-SP), which requested a “reasonable deadline” for the approval of guidelines on the matter.

At the meeting held at the Supreme Court, the speakers of the Chamber and the Senate said it will not be possible to pass a specific law on the add-ons in 2026, given the elections and the priorities already set for this year. Behind the scenes, the possibility was raised that a solution could be addressed within the administrative reform under discussion in the Chamber, though there is still no date for a vote.

Speaking to Valor, Federal Deputy Pedro Paulo (Social Democratic Party, PSD, Rio de Janeiro), coordinator of the administrative reform working group in the Chamber, defended including the issue in the proposal. “We will have to deliberate on this, and now there is pressure from outside in. There are bills under consideration, but I believe we should promptly discuss the administrative reform, which also addresses this [the add-ons], and resolve it at once,” he said.

On Tuesday, Motta said he rules out any possibility of the Chamber legalizing above-cap salaries through bills already under consideration or that may be introduced. “What we have said is that this discussion needs to be carried out in a much broader way. Dino’s decision, now reaffirmed in another case by Justice Gilmar, was appropriate and brings to the table of real Brazil, which faces many challenges, the incompatibility of continuing to pay these add-ons across various levels of the public administration,” he said.

Finance Minister Fernando Haddad said the Supreme Court’s recent decisions represent a “window of opportunity” for Congress to advance a bill aimed at curbing above-cap salaries, sent by the ministry to the Legislature in 2024.

In the Finance Ministry’s view, progress on the bill to curb above-cap salaries is also a way to begin the administrative reform debate in a “proper” manner, targeting public servants with the highest pay—often above constitutional limits.

In his ruling earlier this month, Dino ordered Congress to specify which indemnity payments qualify as exceptions to the public service salary cap. He said that although the Court has already established consolidated case law, there has been an “extraordinary” spread in the payment of installments of an “indemnity nature.”

According to him, the Supreme Court has ruled “hundreds (perhaps thousands) of times” on this type of payment, always upholding constitutional parameters.

The justice also said there is in Brazil a “phenomenon of anomalous multiplication” of add-ons, which he argued does not occur even in the world’s wealthiest countries. “Certainly the end of the Empire of Add-Ons, with effective pay equity, so necessary for valuing public servants and for the effectiveness and dignity of public service, will be more effective and swift,” he wrote.

*By Tiago Angelo, Ruan Amorim, Beatriz Roscoe, Gabriela Guido and Guilheme Pimenta — Brasília

Source: Valor International

https://valorinternational.globo.com/

12/15/202

The final week of votes in Congress this year features a packed agenda of sensitive issues, including the sentencing bill in the Senate, the expulsion of Federal Deputy Alexandre Ramagem (Liberal Party, PL, Rio de Janeiro), who fled to the U.S., and the 2026 budget law, against a backdrop of escalating institutional crisis. Tensions and distrust among the branches of government have intensified amid advancing investigations at the Federal Supreme Court into alleged misuse of parliamentary earmarks and the approach of an election year.

In the words of a seasoned lawmaker, the prevailing mood in Brasília is one of “uncertainty, insecurity and unpredictability,” making it difficult to foresee what may happen even over the course of a month. On Friday (12), the Federal Police’s Transparency operation, which targeted a staffer of the Chamber of Deputies, Mariângela Fialek, known as Tuca, prompted Chamber Speaker Hugo Motta (Republicans of Paraíba) to call an emergency meeting with party leaders to discuss a joint response to the police action. Many lawmakers had already returned to their home states and had to come back to the federal capital.

Motta issued a statement defending the former staffer, stressing that he respects Supreme Court decisions, but that “a careful and correct reading” of Justice Flávio Dino’s ruling “does not point to any act of misuse of public funds.” “None. Any potential misuse, it bears repeating, must be properly investigated,” the statement said.

The operation deepened turbulence between the Chamber and the Supreme Court, as dozens of Federal Police agents circulated through the building to execute search-and-seizure warrants in offices where the staffer worked. Relations had already been strained after the Court annulled a plenary session that kept Federal Deputy Carla Zambelli in office, contrary to a court order. In response, also on Friday (12) the Supreme Court’s First Panel upheld a preliminary injunction by Justice Alexandre de Moraes ordering the loss of Zambelli’s mandate. On Sunday (14), Motta scheduled a meeting with the Chamber’s legal team to consult on the case. Later that afternoon, the Chamber released a statement saying Zambelli had resigned.

Before the crisis escalated, the Chamber’s agenda, under a special voting schedule, included the removals of Ramagem and of Deputy Eduardo Bolsonaro (PL of São Paulo), who moved to the U.S. in March and from there lobbied in favor of Donald Trump’s tariff hikes. There are doubts, however, in both cases. Regarding Ramagem, since the Supreme Court voided the lawmakers’ decision to shield Zambelli, there is uncertainty over whether Motta will submit the case to the plenary. As for Eduardo, the Trump administration’s withdrawal of Magnitsky Act sanctions imposed on Moraes could weigh in his favor.

In parallel, Motta had signaled to the presidential palace the possibility of putting to a vote a proposed constitutional amendment on public security, as well as a bill to cut tax incentives, reported by Deputy Aguinaldo Ribeiro (Progressives Party, PP, Paraíba). But as the Chamber speaker’s relationship with the Workers’ Party (PT) has deteriorated, especially after Sunday’s protests (14) against passage of the sentencing bill, the most likely outcome is that this measure, crucial to the Finance Ministry, will be postponed to 2026.

Lawmakers are also expected to consider the anti-gang bill, which returned from the Senate. On the economic front, there is anticipation around a vote on the complementary bill regulating the tax reform.

Another factor fueling the crisis, the bill that reduces sentences for those convicted over the January 8 attacks, which benefits former President Jair Bolsonaro (PL), is set to be voted on in the Senate plenary on Wednesday (17). Resistance among influential senators persists, and the impact of street pressure against the proposal on lawmakers remains to be seen. Senator Renan Calheiros (Brazilian Democratic Movement, MDB, Alagoas) has already told people close to him that he intends to deliver a forceful speech opposing the measure.

If confirmed, Senate consideration of the sentencing bill is part of a broad behind-the-scenes agreement involving the leaderships of the Chamber and the Senate, and factions within the Supreme Court. The talks excluded the presidential palace, Senate leaders, and the PT, which said they were surprised by the Chamber’s vote on the bill early last week.

One element of the deal was Supreme Court acquiescence to the sentencing text, reported by Federal Deputy Paulinho da Força (Solidarity of São Paulo), who has good communication channels with the justices. Valor learned that some factions within the court viewed the final text as “mathematically” insignificant. For example, the Supreme Court’s understanding is that Bolsonaro’s sentence progression could be reviewed starting at three and a half years. Current law requires four and a half years, based on a sentence of 27 years and three months in prison.

Another item in the agreement involved the Supreme Court stepping back from a preliminary decision by Justice Gilmar Mendes that limited to the Office of the Prosecutor General (PGR) the authority to seek impeachment of Court members. On December 10, Justice Mendes granted a request by the Senate’s legal office to that effect. On the other hand, senators reached an agreement in the Constitution and Justice Committee (CCJ) to propose an update to the rule within six months.

Another commitment, however, was allegedly breached by the Chamber’s plenary: the removal of Federal Deputy Carla Zambelli. In May, the Supreme Court’s First Panel sentenced her to 10 years in prison, initially in a closed regime, for hacking systems and tampering with documents of the National Justice Council (CNJ). The same ruling ordered the loss of her mandate. As lawmakers failed to comply with the court order, the Supreme Court annulled the Chamber’s plenary decision.

At the same time, it is worth recalling that it was precisely the crisis surrounding parliamentary earmarks, stemming from Justice Dino’s decisions at the end of 2024 imposing strict rules on the execution of funds, that delayed the vote on the 2025 budget law. The rapporteur was Senator Ângelo Coronel (Social Democratic Party, PSD, Bahia), who publicly criticized Dino’s decisions. The proposal was only voted on in March, after an understanding brokered by Institutional Relations Minister Gleisi Hoffmann, who had just taken office.

Friday’s Federal Police operation targeted earmarks directly by focusing on Tuca, the congressional aide, whom the Supreme Court identifies as allegedly responsible for the “organization and distribution of resources” from parliamentary earmarks “linked to the secret budget for several years.” The decision adds that she “supposedly” acted under direct orders from the former leadership of the Chamber, citing that the post was held by Federal Deputy Arthur Lira (PP of Alagoas), while noting that this fact “is still under investigation.” Through his press office, Lira emphasized that he is not a target of the probe and that Tuca is no longer his aide.

In addition, behind the scenes, Lira was angered by the decision to keep in office his rival, Federal Deputy Glauber Braga (Socialism and Freedom Party, PSOL, Rio de Janeiro), who received a six-month suspension for breach of decorum. Braga appears, along with other lawmakers, as one of the whistleblowers to the Supreme Court in the alleged secret budget scheme.

Despite the succession of crises, the rapporteur of the 2026 Annual Budget Law (LOA), Federal Deputy Isnaldo Bulhões (MDB of Alagoas), told Valor he sees no crisis scenario in Congress that could hinder next week’s vote. “Everything is fine with the budget, there is nothing to contaminate the vote,” he said.

Along the same lines, the chairman of the Joint Budget Committee (CMO), Senator Efraim Filho (Brazil Union of Paraíba), dismisses the idea that the police operation could prevent the vote. In his view, the schedule devised for earmark payments reinforced “rules on transparency, predictability and traceability of funds.”

*By Andrea Jubé and Murillo Camarotto — Brasília

Source: Valor International

https://valorinternational.globo.com/

Proposal inspired by U.S. law clears Senate and moves to Lower House amid Donald Trump’s tariff war

04/02/2025


The Senate approved a bill establishing legal mechanisms for the Brazilian government to retaliate against potential trade barriers or protectionist measures affecting the competitiveness of Brazilian products in international trade. Known as the Reciprocity Bill, the proposal passed on Tuesday (1) by the upper house now moves to the Chamber of Deputies for analysis.

The initiative gained traction in Congress amid the tariff war promoted by U.S. President Donald Trump. In addition to the previously announced 25% tariffs on Brazilian steel and aluminum imports, Mr. Trump is expected to unveil this Wednesday reciprocal trade tariffs targeting all countries. The U.S. president has dubbed the date “Liberation Day.”

The bill was approved by the Senate’s Economic Affairs Committee (CAE) Tuesday morning and later cleared the full Senate in an expedited process. The plenary vote became possible after the Senate president, Davi Alcolumbre (Brazil Union Party), accepted a request from Senator Randolfe Rodrigues (Workers’ Party), the government’s leader in Congress. This allowed the proposal to be immediately sent to the Lower House. If the bill had been forwarded directly from the CAE, it would have faced a five-day waiting period, as established by the internal rules.

After the vote, Lower House Speaker Hugo Motta (Republicans Party) said lawmakers could vote on the bill in the plenary session later this week. The rapporteur in the house will be Congressman Arnaldo Jardim (Citizenship Party). In the Senate plenary, the rapporteur, Senator Tereza Cristina (Progressive Party), said she hoped the Lower House would vote on the bill as soon as this Wednesday.

“As this is an exceptional matter, we are already in talks with leaders to bring it to a plenary vote this week,” Speaker Motta told reporters.

The proposal was drafted in consultation with the Ministry of Foreign Affairs, the Ministry of Industry and Trade (MDIC), and the private sector. It was inspired by U.S. legislation and grants powers to the Foreign Trade Chamber (CAMEX) to suspend trade and investment concessions, as well as obligations related to intellectual property rights, in response to unilateral policies or practices by countries or economic blocs that negatively affect the international competitiveness of Brazilian products.

The bill also aims to shield Brazil from what Senator Tereza Cristina described as “disguised protectionism,” such as the European Union Deforestation Regulation (EUDR), which will come into effect at the end of the year. The European regulation introduces unilateral measures with environmental requirements that go beyond Brazilian legislation.

The bill establishes criteria for CAMEX’s intervention in response to three types of actions by other countries: “Those that interfere with Brazil’s legitimate and sovereign choices through threats or the application of trade and investment measures; those that violate or undermine benefits granted to Brazil under any trade agreement; and those that impose unilateral measures based on environmental requirements that are more stringent than the environmental protection standards, rules, and parameters adopted by Brazil”—a clear reference to the EUDR.

The proposal also authorizes CAMEX’s Strategic Council (CEC) to adopt countermeasures, such as restricting imports of certain products or suspending concessions, either separately or cumulatively. The text indicates that these countermeasures should be “proportional to the economic impact” caused to Brazil by the initial actions of the targeted countries.

Another provision requires the Ministry of Foreign Affairs to conduct diplomatic consultations to “mitigate or nullify the effects of the measures and countermeasures.” CAMEX will also be responsible for establishing mechanisms to periodically monitor the effects of the adopted countermeasures and the progress of negotiations.

Despite the tariff dispute with the U.S. government, Senator Tereza Cristina argued during the CAE session that the bill does not encourage tariff retaliation and was drafted to apply to all countries, without targeting specific nations or blocs such as the United States or the European Union. “This bill is not a retaliation. It is a protection when Brazilian products are retaliated against,” the senator emphasized when casting her vote.

The CAE president, Renan Calheiros (Brazilian Democratic Movement), also rejected the idea that the approval of the bill constituted an attack on the U.S. but defended the tools it provides to the federal government. “It is undoubtedly a legitimate response to the American tariff hike,” Mr. Calheiros said. “We are equipping Brazilian legislation with reciprocity mechanisms. If the government chooses to adopt reciprocity measures, it will no longer lack the legal framework to do so.”

As previously reported by Valor, the senator’s bill aims to protect all Brazilian goods and products—not just agribusiness—in both economic and environmental terms. The proposal stresses the need for a “clear reaction” by the government and the adoption of a “credible mechanism” to fight barriers and protectionism.

The inclusion of room for negotiation was a new element introduced in Senator Tereza Cristina’s report and differed from the original text authored by Senator Zequinha Marinho (We Can Party). The initial proposal included the concept of environmental reciprocity and sought to create barriers for products from countries with lower environmental protection standards than Brazil’s.

*By Caetano Tonet and Gabriela Guido — Brasília

Source: Valor International

https://valorinternational.globo.com/