Americas Brief newsletter:15-21 May 2019

This edition of the Americas Brief analyses a ban on facial recognition technology in San Francisco's public sector, calls for 'civil disobedience' in Nicaragua, and fuel shortages in Venezuela.

United States & Canada

United States - San Francisco imposes facial recognition technology ban
United States - Severe weather poses threat to life in Texas, Oklahoma
United States & China - US grants Huawei three-month partial reprieve
United States, Mexico & Canada - Removal of metals duties eases trade risks

Mexico, Central America & Caribbean

Costa Rica & United States US FAA downgrades Costa Rica air safety rating
Nicaragua Calls for protests, civil disobedience after opposition leader killed

South America

Brazil Mining giant warns of dam collapse in Minas Gerais state
Colombia Indefinite truck drivers strike heightens risk of travel disruption
Venezuela Army oversees fuel distribution as shortages worsen
Venezuela & United States US suspends passenger and cargo flights

United States & Canada

Facial recognition

United States San Francisco imposes facial recognition technology ban UNITED STATES Political risk: Low

14 May: The city legislature of San Francisco, California, voted 8-1 to ban local government agencies, including the police, from using facial recognition technologies. The rule is part of the city's new anti-surveillance law which comes into force in June.

Why it matters: The decision does not impact businesses or private users, while San Francisco International Airport (SFO) and the Port of San Francisco are not affected, as these are run by federal, not local, agencies. The ban is likely to be followed by similar legislative initiatives at local- and state level, particularly supported by pro-privacy campaigners. Critics of the technology believe it is unreliable, especially when applied to women and individuals with darker skin tones. Firms which develop, supply or use facial recognition technology should factor the decision into strategic planning and monitor local legislative developments for similar policy proposals.

United States � Severe weather poses threat to life in Texas, Oklahoma UNITED STATES Natural hazard risk: Elevated

20 May: Dozens of tornadoes were recorded in parts of the states of Texas and Oklahoma, affecting at least two million people, with the US National Weather Service warning the risk from such storms was the highest in the region for years and with more expected to develop in the next few days. According to the federal government's Weather Prediction Center, the area under greatest threat reaches some 650km from Stillwater, Oklahoma, to Snyder, Texas, where heavy rainfall from powerful thunderstorms could lead to flash flooding. In addition, more than 50 million people are at risk from severe weather, including high winds, hail and flash flooding, across the south-central states. Air travel has been disrupted due to flight cancellations and the redeployment of aircraft to protect them from storm damage.

Why it matters: A2 Global advises all companies and their staff in the affected regions to follow the instructions of local emergency service and law enforcement agencies while monitoring media outlets for updated information. Those in the areas identified at the highest levels of risk should seek shelter in locations designed to withstand the impact of tornadoes. Road movements in these areas should be restricted to emergency travel only. Airline passengers departing or planning to visit the affected regions should check with their carriers to assess the status of their flight.

United States & China � US grants Huawei three-month partial reprieve UNITED STATES Political risk: Low CHINA Political risk: Medium

20 May:

The US Department of Commerce granted Chinese telecommunications giant Huawei Technologies Co Ltd (Huawei) a three-month partial reprieve from trade restrictions it imposed on the company on 15 May. The reprieve, which expires on 19 August, allows Huawei to purchase US products to maintain existing networks and provide software updates to smartphones.

Why it matters:

The reprieve aims to reduce the immediate disruptive impact on Huawei's customers, particularly mobile phone users who would otherwise be unable to download software updates. The reprieve does not, however, allow Huawei to purchase goods from US suppliers to make new products. A2 Global considers that a further extension to the reprieve is possible, yet highly dependent on progress in Sino-US trade negotiations and on the legal status of detained Huawei CFO Meng Wanzhou. Suppliers and consumers of Huawei products should adjust immediate operational planning and monitor further updates.

United States, Mexico & Canada � Removal of metals duties eases trade risks UNITED STATES, MEXICO & CANADA

19 May:

The US removed its tariffs on steel and aluminium imported from Mexico and Canada, following an agreement on 17 May. Concurrently, Mexico and Canada removed their retaliatory tariffs on the same metals, as well as tariffs on US consumer goods. The duties 25 per cent on steel and 10 per cent on aluminium had been in place for approximately one year.

Why it matters:

The removal of the tariffs serves both economic and political purposes. Firstly, it clears the way for the Canadian and Mexican legislatures to ratify the USMCA North America's renegotiated trade pact ahead of Canada's federal election, which must take place before 21 October. Secondly, it de-escalates the US's trade tensions with its second and third biggest trading partners, thereby counterbalancing the escalating commercial conflict with China. Firms with North American operations should adjust strategic planning and anticipate the ratification of the USMCA in the three-month outlook. Businesses which trade in steel and aluminium should adjust operational, strategic, and financial planning immediately.

Mexico, Central America & Caribbean

Airport

Costa Rica & United States US FAA downgrades Costa Rica air safety rating UNITED STATES Aviation risk: Low COSTA RICA Aviation risk: Medium

13 May: The US Federal Aviation Authority (FAA) announce that Costa Rica does not meet the International Civil Aviation Organization (ICAO) safety standards, and downgraded it to the FAA's Category 2 rating. This decision followed a reassessment of Costa Rica's civil aviation authority, the DGAC, in October 2018.

Why it matters: As a Category 2 country, Costa Rican carriers can continue to fly existing routes to the US. However, they cannot establish new services. US airlines are not impacted. The decision likely reflects an FAA assessment that its Costa Rican counterpart has significant failings in areas such as technical expertise, trained personnel, record-keeping, and inspection procedures. Airlines and insurance companies should factor the FAA's decision into risk assessments.

Nicaragua Calls for protests, civil disobedience after opposition leader killed NICARAGUA Travel risk: High

17 May: The National Blue and White Unity (UNAB) movement an alliance of groups opposed to President Daniel Ortega's government called for a series of protests and acts of civil disobedience, after an influential opposition leader was shot dead in a failed prison rebellion. US citizen Eddy Montes, who was born in Nicaragua but served in the US army, was shot by security forces on 16 May amid an attempted uprising at a prison in the capital Managua.

Why it matters: Nationwide violent civil unrest began in April 2018, when Ortega's proposed pension reform sparked a broad, nationwide movement against his government. UNAB has encouraged its large number of followers to participate in sit-ins and marches, and boycott shopping centres the latter likely seen as a means to deflate the economy. Furthermore, it has called on private enterprises not to pay taxes in a so-called 'fiscal strike'. Individuals and companies with interests in Nicaragua should factor the heightened protest risk and proposed consumer boycott into two-week operational planning. Staff with planned visits to the country should postpone non-essential travel in the same period.

South America

Brazil Mining giant warns of dam collapse in Minas Gerais state BRAZIL Travel risk: Elevated

17 May: Brazilian mining giant Vale S.A. warned that the Superior Sul dam which it operates near Baro de Cocais municipality, in the south-eastern state of Minas Gerais, is at risk of imminent collapse. This is due to a gradual slippage in the embankment of a nearby mine. Since February, hundreds of local residents have been evacuated from the dam's vicinity. Why it matters: The Superior Sul dam is approximately 60km north-east of the dam near the town of Brumadinho, which collapsed in January, killing more than 230 people and devastating the nearby natural environment. Firms with operations in surrounding areas of Minas Gerais state, including in the capital Belo Horizonte, should factor the heightened risk of collapse into immediate operational planning. Logistics managers should monitor local updates and instruct hauliers to avoid routes in the proximity of Baro de Cocais, including MG-436 and MG-129, in the one-week outlook.

Colombia Indefinite truck drivers strike heightens risk of travel disruption COLOMBIA Travel risk: High

20 May: Truck drivers represented by at least 30 unions launched an indefinite strike and began protesting across eight departments on 20 May. Striking drivers stopped working throughout the day, many parking their vehicles at the roadside. A union spokesman said that drivers would not be blocking roads. Further demonstrations are likely on major highways and in large cities, including the capital Bogot and second-largest city of Medelln. Unions have called the strike over highway insecurity, complaints over the administration of vehicle registrations, and to demand an improvement to vehicle parking spaces.

Why it matters: Despite the claims of the unions, the risk of roadblocks cannot be ruled out. Individuals in the impacted departments should monitor updates, anticipate disruption on major highways, avoid all demonstrations and allow additional time for travel. Do not attempt to pass any roadblock, which could elicit a violent response from protesters. Firms should notify clients of likely delays to deliveries, where applicable.

Venezuela Army oversees fuel distribution as shortages worsen VENEZUELA Political risk: Extreme

21 May: According to local press reports, fuel shortages worsened in the past 72 hours, leading to long queues at petrol stations. On 19 May, soldiers began overseeing the sale of petrol in urban areas, including Maracaibo, Puerto Ordaz and Punto Fijo; soldiers reportedly limited sales to 20-40 litres per vehicle. In response, residents reportedly staged violent protests and erected roadblocks in cities including San Cristobal and Mrida. The capital Caracas has not been affected. In a separate development, university lecturers represented by the FAPUV union launched a 72-hour strike on 21 May. Members are protesting against 'violations of their fundamental rights', including access to water and electricity. They will hold marches and demonstrations in major urban areas.

Why it matters: The fuel shortages are likely to worsen in the two-week outlook, as these are a result of a sharp fall in domestic refining and a reduction in fuel and dilutant imports. Firms operating in Venezuela should factor fuel shortages into operational planning and review contingency plans. Individuals in the country should monitor updates, avoid all protests, and allow additional time for travel.

Venezuela & United States US suspends passenger and cargo flights VENEZUELA Travel risk: Extreme UNITED STATES Travel risk: Medium

15 May: The US Department of Transportation issued an order suspending all commercial passenger and cargo flights between the US and Venezuela. The order is in part based on reports of civil unrest and violence in and around Venezuelan airports.

Why it matters: While American Airlines was the last major US carrier to suspend its direct flights to Venezuela in March, several Venezuelan carriers, including Laser Airlines and Avior Airlines, had been offering flights between Miami and Caracas. Venezuela is an extreme risk destination. A2 Global advises against non-essential travel there amid the political, economic, and humanitarian crisis. Individuals requiring travel between the US and Venezuela, however, can continue to fly via third countries. The most convenient layover location is Panama City, which has regular flights to Caracas with Copa Airlines.