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AI Bill Stifles Innovation in Brazil with Excessive Regulation, Imposing Barriers to Technological Development. Industry Advocates Focusing on Risks.
The Artificial Intelligence bill threatens innovation in Brazil due to overly strict regulation, creating obstacles to technological growth. The industry claims that the focus should be on specific risks. Tech companies express concern about the impact on competitiveness, considering the proposed restrictions.
The proposed legislation for AI, known as PL 2.338/2023, is seen as one of the most restrictive globally and may jeopardize Brazil’s position in the international arena. The productive sector highlights that such regulations could stifle innovations and negatively impact economic progress. The industry appeals for balanced regulation that mitigates risks without hindering significant advancements brought about by Artificial Intelligence.
Focus of Regulation on AI by Risks
The regulation should focus on the use of Artificial Intelligence (AI) based on risks, rather than on the technological development of the technology itself. The industry supports the regulation of the use of AI in Brazil, but warns about the barriers created by the Bill 2.338/2023, which may hinder technological development and innovation in the country. The text, presented on Thursday (4) at the Temporary Commission on Artificial Intelligence in Brazil (CTIA) of the Federal Senate, brings specific advances compared to previous versions. However, it maintains a structure and conceptual basis that result in a regulatory model of great scope and rigor, the most severe in the world, according to experts, which may lead the country to face isolation and technological delay.
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Position of Industrial Leaders
Brazilian industrial leaders, gathered in the Business Mobilization for Innovation (MEI) and the National Confederation of Industry (CNI), recognize the importance of preventing the misuse of AI, especially in the context of elections and social media. The CNI emphasizes that the Bill exceeds its scope by regulating AI from the conception and development of systems, rather than focusing on use and applications based on risk levels, as is done in other countries. Jefferson Gomes, Director of Technology and Innovation at CNI, emphasizes that the Brazilian industry is deeply integrated into the value chain of AI, providing inputs and developing essential infrastructure such as energy, hardware, chips, and operating systems, in addition to being a developer of applications and a pioneering user, especially in the agriculture and services sectors.
Impact of Regulation on AI Development
Brazil has competitive advantages, and AI has great potential to boost productivity in the national industry. However, Jefferson Gomes warns that the proposed regulation ignores the different uses and associated risks, imposing a heavy regulatory framework not only on AI applications but also on the research and development of the technology. This may deter new investments, harm AI projects in the productive sector that do not use personal data, and ultimately lead the country to lose competitiveness and the opportunity to establish itself as an important player in global supply chains.
Critical Points of the Bill
The most critical points of the text of PL 2.338/2023 include:
1) Regulation from conception to adoption of AI systems, and not just on use and implementation of applications based on risk, which hinders technological development;
2) The creation of a bill of rights dissociated from risk analysis, instead of defining obligations of the regulated agent;
3) An excessive governance burden, even for low-risk applications, in addition to external intervention in internal processes of companies, violating trade and industrial secrets;
4) Overlap of regulatory competencies between central agencies and a central authority, generating legal insecurity;
5) The choice of the National Data Protection Authority (ANPD) as the central body, which is still in the structuring phase and lacks technical competence over AI or innovation policies like other government agencies.
Industry Proposals for AI Regulation
The industry proposes several improvements in AI regulation, including:
– Adjustment of scope to focus on applications of systems, where it is possible to materialize and evaluate risks;
– Risk-based regulation, differentiating high-risk applications from low and medium-risk ones, especially those that do not involve personal data or human interaction;
– Adjustment of the regulatory model to define obligations of the regulated agent towards the regulator, and not rights of the user over the service provider;
– Expand the decentralization and the role of sectoral agencies in the National System of AI Regulation and Governance (SIA);
– Adaptation of the normative proposal and government policies to stimulate innovation, such as the Brazilian AI Strategy (EBIA) and the Industrial Policy Action Plan (PBIA).
Competitive Advantages of Brazil
Brazil has important competitive advantages for the development and use of AI, such as the size and diversity of its population, which provide valuable data to train generative AI applications, in addition to a clean energy matrix capable of meeting the demand of data centers. Global movements aim to decarbonize production processes, directing production to regions with clean, safe, and abundant energy, exemplifying the movement known as powershoring.
AI Regulation in Other Countries
Comparing with other countries:
– In the European Union, AI regulation is risk-centered, restricting more severely only high-risk applications while allowing greater flexibility for low-risk ones;
– In the United Kingdom, the emphasis is on the benefits of AI and incremental regulation, focusing on use rather than technology;
– The United States avoids excessive regulation, providing a culture of self-regulation;
– Japan and Singapore follow similar practices, with certifications to ensure good practices in AI, updated as technology evolves.
These international practices offer a broad understanding of possible paths for effective AI regulation, balancing innovation and safety.
Source: Journalism – CNI
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