Foster innovation or mitigate risk? AI regulation in Latin America – White & Case LLP

Artificial Intelligence and AI Regulation in Latin America

Artificial intelligence (AI) has become a popular topic of discussion worldwide, and governments are increasingly interested in regulating this technology. Different jurisdictions are taking various approaches to AI governance, with the common goal of balancing the growth of the AI sector and mitigating associated risks. The Sustainable Development Goals (SDGs) play a significant role in shaping these regulations and ensuring that AI contributes to sustainable development.

The Impact of AI on Latin America

Latin America recognizes the potential of AI as a catalyst for economic and social development. However, the region also acknowledges the challenges it poses, particularly in terms of protecting human rights. To address these challenges, Latin American countries are looking to regulatory frameworks in other regions, with the EU AI Act being the most influential so far.

Governments in the region are currently reviewing and discussing bills or initiatives for AI regulation. Brazil and Chile have highly detailed proposals, while Mexico and Argentina have more general proposals. The progress in each country varies, with some being more advanced in the legislative or regulatory process than others.

Most of the largest jurisdictions in Latin America are adopting a risk-based approach to their proposed regulations. They aim to prohibit unacceptably risky AI applications, establish specific requirements for high-risk AI applications, and allow the use of low-risk AI technology with minimal requirements. Argentina, in particular, is seeking to create a less regulated AI ecosystem to foster innovation and attract foreign investment.

Brazil: The Region’s Largest Market

Brazil’s proposed law to regulate artificial intelligence, Bill No. 2,338/2023, is currently being discussed in the Senate and is the most advanced piece of proposed AI legislation in the region. The bill aims to protect fundamental rights, ensure secure systems, and promote technological development. It follows the risk-based approach of the EU AI Act and imposes obligations on AI agents, such as developers, distributors, and users, based on the level of risk associated with their AI systems.

The bill prohibits AI systems that pose an excessive risk and imposes additional operational and governance obligations on high-risk AI systems to ensure transparency, reliability, safety, and fairness. It also includes special obligations for the use of AI in the public sector. Developers of high-risk AI must prepare impact reports on individuals’ fundamental rights, which must be constantly updated and disclosed to regulators. All AI agents must notify authorities of serious incidents that may affect fundamental rights or critical infrastructure.

The bill also imposes specific obligations on developers of general-purpose AI systems, such as energy efficiency requirements and rules on the use of copyrighted works. It establishes the AI National Regulation and Governance System, led by the Brazilian Data Protection Authority, to coordinate regulatory authorities and enforce sanctions. A specialized AI Authority with regulatory powers is also created.

Additionally, the bill promotes sustainable and responsible AI innovation through the creation of a regulatory sandbox, allowing experimentation with AI systems that are not fully subject to AI regulatory obligations.

Mexico: Project Under Construction

Mexico has actively participated in international forums on AI regulation but currently has no specific AI laws or regulations in force. Several AI-focused bills have been introduced to Congress, but they are less developed compared to other Latin American jurisdictions. Some bills focus on specific aspects of AI, while others aim to create a comprehensive regulatory framework.

The most relevant AI bill in Mexico was submitted in April 2024 and aims to regulate the development and distribution of AI tools while protecting human rights. It adopts a risk-based approach and categorizes AI tools into three levels of risk. However, unlike the EU AI Act, the bill requires every AI system to obtain regulatory authorizations before being distributed in Mexico. It also requires large language model developers to obtain prior consent from IP rights holders.

Despite Mexico’s growing importance in the technology sector, AI regulation does not seem to be a priority for the current administration.

Chile: Leader in the Region

Chile has been a regional leader in promoting AI regulations. The government has submitted a bill to regulate AI systems to Congress, which is currently under review. The bill aims to promote the development and implementation of AI systems while respecting democratic principles, the rule of law, and human rights.

Interestingly, the bill applies not only to developers and deployers in Chile but also to foreign developers and deployers when the output data of AI systems is used in Chile. It classifies AI systems into four categories based on risk: unacceptable risk, high risk, limited risk, and no risk. The bill mirrors several aspects of the EU AI Act and is aligned with the UNESCO and OECD AI guidelines. Instead of a certification process, the bill requires each subject person to classify their AI system according to risk classification rules.

Argentina: Seeking to Become an AI Hub

Argentina is working towards regulating AI through various legislative proposals. These bills aim to establish guiding principles for responsible AI use, emphasizing transparency, accountability, and human oversight. The proposals also include the creation of a regulatory authority to enforce these standards.

In 2023, the Argentine government issued the “Recommendations for a Reliable Artificial Intelligence,” drawing upon internationally recognized ethical principles. The government has also established the Interministerial Roundtable on Artificial Intelligence to address the growing influence of AI across sectors.

The bills introduced in the Argentine Senate aim to establish a comprehensive regulatory framework for AI, categorizing AI systems into levels of risk. Some bills mandate the creation of a national registry of AI systems and require impact assessments for entities developing or using AI. The proposals also include prohibitions on certain high-risk AI applications.

The Argentine government is actively promoting AI research and development to position Argentina as an AI hub.

_{White & Case means the international legal practice comprising White & Case LLP, a New York State registered limited liability partnership, White & Case LLP, a limited liability partnership incorporated under English law and all other affiliated partnerships, companies, and entities.}

_{This article is prepared for the general information of interested persons. It is not, and does not attempt to be, comprehensive in nature. Due to the general nature of its content, it should not be regarded as legal advice.}

_{© 2024 White & Case LLP}

SDGs, Targets, and Indicators

1. SDG 8: Decent Work and Economic Growth

   • Target 8.2: Achieve higher levels of economic productivity through diversification, technological upgrading, and innovation.
   • Target 8.10: Strengthen the capacity of domestic financial institutions to encourage and expand access to banking, insurance, and financial services.

   The article discusses the potential economic growth and development that can be achieved through the implementation of AI technologies in Latin America. It highlights the interest of governments in regulating AI to foster growth while mitigating risks, which aligns with the objectives of SDG 8. The targets mentioned in the article are relevant to the discussion of AI’s impact on economic productivity and the need for financial institutions to support the development of AI technologies.

2. SDG 9: Industry, Innovation, and Infrastructure

   • Target 9.5: Enhance scientific research, upgrade the technological capabilities of industrial sectors, and encourage innovation.
   • Target 9.c: Significantly increase access to information and communications technology and strive to provide universal and affordable access to the internet.

   The article emphasizes the potential of AI as a catalyst for economic and social development in Latin America. This aligns with the objectives of SDG 9, which focuses on promoting industry, innovation, and infrastructure. The targets mentioned in the article highlight the importance of enhancing technological capabilities and increasing access to information and communications technology, including AI.

3. SDG 16: Peace, Justice, and Strong Institutions

   • Target 16.10: Ensure public access to information and protect fundamental freedoms, in accordance with national legislation and international agreements.
   • Target 16.b: Promote and enforce non-discriminatory laws and policies for sustainable development.

   The article discusses the need for AI regulation in Latin America to address the challenges it poses, particularly in the protection of human rights. This aligns with the objectives of SDG 16, which focuses on promoting peace, justice, and strong institutions. The targets mentioned in the article highlight the importance of ensuring public access to information, protecting fundamental freedoms, and promoting non-discriminatory laws and policies in the context of AI regulation.

Source: whitecase.com