We have witnessed significant challenges and transformation in Latin America in the past year. Businesses across the region have grappled with political tensions, macroeconomic uncertainty, high interest rates and shifting regulatory landscapes—as well as the boom in AI.
The elections in Latin America in 2024 are now behind us, though, as expected, the results have led to as many questions about the future as they have to answers. We are particularly focused on Venezuela and are hopeful that the democratic aspirations of the people of Venezuela will be respected. The US presidential election has also now concluded, and its outcome could have significant consequences for many jurisdictions.
In this year's edition of Latin America Focus, we will explore some of these complex dynamics and consider how companies can adapt to changes and capitalize on trends to forge a path through this ever-changing environment.
We begin with a look at our extensive pro bono efforts in the region, which focus on promoting justice, equality and the rule of law. From upholding the fundamental human rights of children with incarcerated mothers to advocating for the rights of asylum seekers, our projects underscore the importance of legal awareness and access to justice. In 2023 alone, we logged more than 1,900 pro bono hours in Latin America, reflecting our dedication to making a meaningful impact.
As artificial intelligence continues to accelerate globally, Latin America is no exception. Our second piece examines how the region is navigating the balance between fostering innovation and implementing AI regulations to mitigate risk. Brazil, Mexico, Chile and Argentina are each exploring regulatory frameworks—with varying amounts of progress—aligned with their policy priorities. These efforts are crucial, as AI is projected to contribute significantly to the region's GDP, driving economic and social development.
Next, we provide an overview of investment and disputes trends. Foreign investment remains a critical driver of growth in Latin America, though political volatility often leads to investor-state disputes, particularly when investment-hostile policies replace more favorable ones. However, the region continues to attract robust investment in sectors such as mining, renewable energy and data centers. Navigating these complexities requires a well-integrated investment protection strategy to safeguard interests and foster long-term growth.
We then turn to the pressing issue of water security, with many regions facing scarcity and aging infrastructure. Brazil and Chile are leading the way in unlocking private investment to tackle these challenges through public-private partnerships (PPPs). These initiatives are essential to improving access to clean water and sanitation, which remain critical for sustainable development and public health. We are optimistic that meaningful reforms in other countries, including Mexico, will help PPPs or other structures gain similar traction there to ensure long-term water security.
Lastly, we consider the booming data center industry in Latin America, whose rapid growth brings challenges, particularly in securing necessary resources like power and water. Countries such as Mexico, Chile and Brazil are at the forefront here, addressing these issues through innovative financing and strategic planning. The expansion of data centers not only supports the digital economy but also presents significant investment opportunities in the region.
We look forward to discussing these and other issues with you.
Lending a local hand: White & Case pro bono in Latin America
Foster innovation or mitigate risk? AI regulation in Latin America
As AI regulations emerge around the world, Brazil, Mexico, Chile and Argentina explore the best approaches to regulating the technology according to their policy priorities.
Artificial intelligence is probably the most popular discussion topic of our times. And it is certainly something that governments around the world are interested in regulating. Some jurisdictions have already enacted specialized AI statutes, while others are taking their time to examine the best approach to AI governance. A common objective across jurisdictions is to achieve an adequate balance between fostering growth of the AI sector and adequately mitigating risks associated with AI.
According to The Economist, Latin America is expected to gain 5.4 percent of GDP—equal to US$0.5 trillion—as a result of AI by 2030
Latin America has recognized AI's potential as a catalyst for economic and social development while seeking to address the challenges it poses, particularly in the protection of human rights. As part of their respective legislative and regulatory processes to tackle AI regulation, Latin American countries have looked to regulatory frameworks in other regions. The EU AI Act—the first major comprehensive, mandatory AI regulation, which came into effect in August 2024—has so far been the most influential.
Governments in the region are currently reviewing and discussing bills or initiatives of specific AI regulation. Some jurisdictions, such as Brazil and Chile, already have highly detailed proposals, while the rest of the largest LatAm jurisdictions, including Mexico and Argentina, have more general proposals. The rate of progress is noticeably more advanced in some countries, while in others there has been scant progress in the legislative or regulatory process.
Most of the largest jurisdictions in Latin America are following a risk-based approach for their proposed regulations, seeking to prohibit unacceptably risky AI applications, setting out specific requirements for high-risk AI applications—such as regulatory approvals or disclosure requirements—and allowing the use of low-risk AI technology, subject to no (or minor) requirements. Some jurisdictions, such as Argentina, are deliberately seeking to create a less regulated AI ecosystem to foster innovation and attract foreign investment.
The bill aims to protect fundamental rights and ensure the implementation of secure systems for the benefit of individuals, democracy and technological development. It follows the EU AI Act's risk-based approach and imposes obligations on "AI agents"—namely developers, distributors and users—based on whether their AI system classifies as excessive or high risk. Similar to the EU law, AI systems that pose an excessive risk are prohibited, and high-risk AI systems must comply with additional operational and governance obligations to ensure transparency, reliability, safety and fairness. The proposal also contemplates special obligations for the use of AI in the public sector.
Developers of high-risk AI are required to prepare impact reports on individuals' fundamental rights. These reports must be public, constantly updated throughout the AI system life cycle and disclosed to regulators. All AI agents must notify authorities of serious incidents that may affect fundamental rights, critical infrastructure or individuals.
The bill also imposes specific obligations on developers of general-purpose AI systems, many of which are not included in the EU AI Act, such as requirements for AI systems to use energy efficiently, specific provisions regarding generative AI—including the need to indicate when content is AI-generated—and rules on the use of copyrighted works.
In terms of enforcement, the bill creates the AI National Regulation and Governance System, whose main objective is to coordinate regulatory authorities and application of sanctions. It will be led by the Brazilian Data Protection Authority and includes several sectoral public authorities. The bill also provides for a specialized AI Authority with substantial regulatory powers including issuing warnings, imposing fines, publicly disclosing violations of the law and prohibiting the use of certain databases.
Finally, the Brazilian AI bill also seeks to promote sustainable and responsible AI innovation, including through the creation of a regulatory sandbox, which authorizes experimentation with AI systems that would not be fully subject to AI regulatory obligations.
While Mexico has actively participated in international forums on AI regulation, currently there are no specific AI laws or regulations in force, and its proposed AI regulation is less developed than in other LatAm jurisdictions. A few AI-focused bills have been introduced to Congress by individual legislators rather than by the government itself. Some of these are limited to very specific aspects of AI, such as prohibition of deep fakes, while others seek to create a more comprehensive regulatory framework.
The most relevant AI bill to date was submitted in April 2024 by a senior legislator. It aims to regulate the development and distribution of AI tools and to ensure the protection of human rights, and sets forth that both Mexican and foreign AI developers and deployers are subject to its provisions. Even though it mirrors some of the EU AI Act's main principles, Mexico's bill seems to be more restrictive. For instance, despite adopting a risk-based approach and categorizing AI tools according to three different levels of risk—unacceptable, high and low—the bill requires every AI system to obtain regulatory authorizations before being distributed in Mexico. Notably, the bill requires large language model developers to obtain prior consent from IP rights holders of the information used to train such models.
Despite Mexico's continually growing importance in the region's technology sector, the enactment of AI laws does not seem to be a priority for the new administration.
Chile has been a regional leader in promoting AI regulations. Earlier this year, its government submitted to its Congress a bill to regulate AI systems, which is currently under review. The bill's purpose is to promote the development and implementation of AI systems while respecting democratic principles, the rule of law and human rights.
Interestingly, as proposed, the bill would apply not only to developers introducing AI systems into Chile or deployers domiciled in Chile, but also to foreign developers and deployers when the output data of AI systems is used in Chile.
Following the risk-based approach of the EU AI Act, the Chilean bill classifies AI systems into four categories:
Unacceptable risk: AI that is incompatible with human rights—for example, social scoring or subliminal manipulative systems—and is consequently prohibited
High risk: AI that may adversely affect the health and safety of people, but which is permitted under certain requirements, such as data governance rules for data model training or human supervision mechanisms
Limited risk: AI that poses no significant risks of manipulation or error, and which is permitted provided it complies with certain transparency provisions
No risk: AI that shows no apparent risk and is therefore unregulated
The bill mirrors several aspects of the EU AI Act and is aligned with the UNESCO and OECD AI guidelines. However, instead of requiring AI technologies to go through a certification process before entering the market, as required by the EU AI Act's "conformity assessment," the Chilean bill requires each subject person to classify its AI system in accordance with risk classification rules.
Argentina: Seeking to become an AI hub
Argentina is working toward regulating AI through various legislative proposals. These bills, also inspired by the EU AI Act, aim to establish guiding principles for responsible AI use, emphasizing transparency, accountability and human oversight. Additionally, they propose creating a regulatory authority to enforce these standards.
In 2023, prior to the EU AI Act, the Argentine government issued the "Recommendations for a Reliable Artificial Intelligence," drawing upon internationally recognized ethical principles to ensure that AI is used in a manner that benefits society. A key component of the recommendations is a "graphic scheme of stages of AI projects" that promotes transparency and accountability throughout a project's development life cycle. While government bodies have issued non-binding directives on AI matters, there are currently no binding resolutions in place. The government also established the Interministerial Roundtable on Artificial Intelligence to address the growing influence of AI across various sectors.
Today, bills introduced in the Argentine Senate aim to establish a comprehensive regulatory framework for AI under a risk-based approach similar to the European model, categorizing AI systems into levels of limited, minimal, high and unacceptable risk. Notably, some of these bills mandate the creation of a national registry of AI systems, requiring all entities developing or using AI to register and undergo impact assessments. Furthermore, it proposes outright prohibitions on certain high-risk AI applications.
President Javier Milei has voiced strong support for AI, and his administration has announced initiatives to promote AI research and development to promote 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.
View full image: AI regulation in Latin America (PDF)
View full image: Leading Latin American countries in Al readiness (PDF)
View full image: Territorial applicability of Latin American AI regulations (PDF)
