Argentina's economy has sustained a robust recovery following the severe 2001/2002 economic crisis, with five consecutive years of over 8 percent growth in real gross domestic product (GDP).
Argentina posted real GDP growth of 8.8 percent in 2003, 9.0 percent in 2004, 9.2 percent in 2005, 8.4 percent in 2006, and an estimated 8.5 percent in 2007.Argentina should continue to perform well, with the Central Bank of Argentina’s consensus survey forecasting 6.6 percent real GDP growth for 2008.
The Government published single-digit inflation figures two years running: 9.8 percent for 2006 and 8.5 percent for 2007.However, many private economists’ estimates are significantly higher.Inflation will continue to be a concern in 2008.
Argentina’s economic expansion continues to create jobs, and unemployment continues to decline, down from a 21.5 percent peak in 2002 to 7.5 percent during the fourth quarter of 2007, according to official government statistics. Central Bank estimates place this figure at slightly below 7 percent in 2008.
Total Argentine exports increased at an annual rate of 20 percent in 2007, compared to 15 percent in 2006, 16 percent growth in 2005, 15 percent growth in 2004, and almost 17 percent growth in 2003.A 14 percent increase is expected in 2008.
Argentine exports to the U.S. increased by 20 percent in 2005 to $4.5 billion but declined 13.3 percent in 2006 to $4 billion largely due to lower hydrocarbon exports; 2007 exports to the U.S. are expected to remain in the $4 billion range.
Total Argentine imports increased 31 percent in 2007, compared to 19 percent in 2006, 28 percent in 2005, and 62 percent in 2004.
U.S. exports to Argentina jumped 52 percent to $3.4 billion in 2004, 18 percent to $4.0 billion in 2005, and 15.8 percent to $4.8 billion in 2006.U.S. exports to Argentina in 2007 were estimated at $5.3 billion.
The U.S. is Argentina's second largest trading partner after Brazil and competes with Spain for the top investment spot.
Argentina has maintained a strong primary fiscal surplus for five consecutive years and continues to accumulate foreign exchange reserves.The government projects a primary fiscal surplus of about 3.5 percent in 2008; a $46 billion foreign exchange reserve cushion (as of December 2007) helps insulate the economy from external shocks.
In January 2006 Argentina repaid the International Monetary Fund (IMF) in full and in January 2007 reached an agreement to repay its $1 billion debt to Spain over six years.
Argentina’s banking system, devastated by the economic recession and financial crisis, rebounded dramatically in 2004, continued to perform well in 2005, and returned to solvency in 2006.The ratio of private bank non-performing loans has fallen to an historic low of approximately 2.5 percent, and profits for the overall banking system are among the highest levels achieved in over a decade.
U.S. investment is concentrated in IT and telecommunications, agribusiness, energy, petrochemicals, food processing, household products, and motor vehicle manufacturing.
Under the 1994 U.S.-Argentina Bilateral Investment Treaty, U.S. investors enjoy national treatment in all sectors except real estate in border areas, air transportation, shipbuilding, nuclear energy, uranium mining, and fishing.
Argentina is a member of the Common Market of the South (MERCOSUR-, which includes Brazil, Paraguay, and Uruguay.Bolivia, Chile, Colombia, Ecuador, Peru, and Venezuela joined the pact as associate members.Venezuela was accepted as full-fledged member in July 2006 (though its membership has yet to be ratified by the Brazilian and Paraguayan legislatures), and has four years to adapt to the MERCOSUR Common External Tariff scheme.
As a member of the , Argentina signed the Agreement on Technical Barriers to Trade (TBT), affirming its obligations relative to technical regulations and conformity assessment procedures.
MERCOSUR (Common Market of the South) gradually eliminated almost all non-tariff restrictions and other limitations to trade among its members (Argentina, Brazil, Paraguay and Uruguay).
Argentina and its MERCOSUR partners established a common external tariff (CET) on goods originating in non-member countries that currently ranges from zero to 20 percent for most products.However, some categories of goods, such as automobiles, have a CET of 35 percent.The average tariff is approximately 14 percent.
Prior government approval is required for imports of sensitive goods such as pharmaceuticals, foodstuffs, insecticides, veterinary products, medical devices, defense materials, cosmetics and toiletries, and others.
Certain types of special vehicles, publications, shoes, carpets, paper and automobiles to be used as prototypes also require prior government approval to be imported into Argentina.
Many food-related and agricultural imports, such as livestock, plants, bulbs, cuttings, rhizomes, roots, grains, and plant products require a sanitary certificate issued by an appropriate authority in the exporting country.
Argentina continues to ban imports of poultry meat and other poultry products, with few exceptions such as day-old chicks.It also currently imposes anti-dumping duties on imports of U.S. polyvinyl chloride.
Most recently, the government imposed new non-automatic licenses on toys, soccer balls, footwear parts, some used equipment, and bicycle tires and tubes, requiring importers to obtain an import certificate reviewed by Argentine government authorities.
A few sensitive products must be imported through specifically identified customs points of entry.Such products include drugs, medicines, vines and their parts for experiment or research purposes, and cotton fiber and seeds.
The Argentine government requires certificates of origin on a broad range of imports generally covering but not limited to consumer goods, textiles, apparel and footwear, printing machines, and machine tools.
Commercial invoices must be presented in Spanish (one original and three copies), with the caption "Original Invoice."
The bill of lading should be issued (at minimum) in one negotiable copy.
Packing lists are necessary for customs clearance in Argentina and must describe the contents of each package. A packing list is not necessary for goods imported in bulk, such as such as coal, petroleum, sand, etc., or for articles identical in kind, characteristics, composition, weight, etc.
Argentina is not included in the A.T.A. (Temporary Admission) Carnet program of the U.S. Council for International Business, which allows the importation of goods, display booths, and literature for display in local trade shows for subsequent re-export.
Labels of all products sold in country should be in Spanish, with the exception of foreign words/phrases of common usage in trade. Imported products may keep the original label of country/language of origin but should have a sticker/label attached to the package in Spanish.Indication of net content in labeling must be in the metric system.
Used capital goods must be refurbished in the country of origin or the country of export.
Safety regulations and mandatory certification apply to all electric apparatus over 50 volts, as well as toys, lighters, bicycles, shoes, gas appliances and products, construction steel, elevators, energy consumption and noise labeling of appliances, closures for dangerous products, and personal protective equipment.
There is a quota system and the special regime for auto parts imports in the automotive industry.Temporary quotas on organic chemicals (HS code 2915.90), fluoride of aluminum (2826.12), and petroleum resins (3911.10) also affect U.S. exports.
A Bilateral Common Automotive Industry Regime with Brazil establishes preferential market access treatment for both countries.
Transparency International has identified corruption in Argentina as a significant problem, particularly in procurement, regulatory systems, tax collection, and health care administration.
Argentina does not have a bilateral tax treaty (Treaty for the Mutual Avoidance of Double Taxation) with the United States, but it does have double taxation treaties with the following countries: Australia, United Kingdom, Denmark, Germany, Belgium, Austria, France, Italy, Sweden, Switzerland, Spain, Canada, Chile, Bolivia, Brazil, Finland, Norway, and the Netherlands.
The zero percent import duty on a broad range of new capital goods produced in non-MERCOSUR countries, such as the United States, was implemented in 2003, renewed in 2006, and will remain will remain in effect until at least December 31, 2008.
Some goods not produced within the four MERCOSUR countries (Argentina, Brazil, Paraguay, Uruguay), such as newsprint and books, and certain petroleum products, also pay zero percent import duties on entering the Argentine market.
Ex-Im Bank is open for short and medium-term financing for U.S. exports to private sector clients in Argentina.Long-term (15 years) financing is available for environmental projects on a case-by-case basis.
The Overseas Private Investment Corporation (OPIC) offers assistance to U.S. private investors in the form of political risk insurance, as well as loans and loan guarantees for their direct investment in Argentina.
Leading U.S. exports to Argentina in 2006 were boilers, machinery, etc. and parts thereof (26.6%); organic chemicals (12%); electric machinery etc., sound equipment, TV equipment and parts thereof (10.3%);and plastics and articles thereof (6%).
The following sectors offer the most significant growth potential for U.S. exporters: agricultural machinery, equipment and parts; electrical power systems; food processing and packaging equipment and parts; information technology; medical equipment and supplies; mining machinery and equipment; pleasure boats; plastics production machinery; security and safety equipment; telecommunication equipment; travel and tourism services (For more information, see Chapter 4: Leading Sectors for U.S. Export and Investment)
The following agricultural sectors offer the most significant growth potential for U.S. exporters: animal genetics (bovine semen), food ingredients, and planting seeds. (For more information, see Chapter 4: Leading Sectors for U.S. Export and Investment)
U.S. companies typically market their products and services through an Argentine agent/representative or distributor.
After analyzing the product and its uses, and defining the potential customers, U.S. companies intending to export to Argentina should identify the geographical areas where the major users of the product reside.
Segmentation is key. It is increasingly difficult to establish a "typical customer", due to new consumption habits and to the dynamics of income distribution and demography.
Personal relationships are fundamental when doing business in Argentina. Success requires taking the time to develop a close personal relationship with the representative, agent, or distributor.
U.S. companies intent on exporting to Argentina should consider economic, demographic, and cultural characteristics that distinguish it from other Latin American countries.
Marketing U.S. products and services in Argentina requires a high level of research, preparation, and involvement.
An important component of the marketing-mix is promotion.Companies are encouraged to visit or exhibit at local and regional trade shows, and to visit trade shows in the U.S. attended by Argentine buyers.
Always use a professional translator, and if possible, have a native Argentine speaker, such as your agent or distributor, review any materials before using them in the Argentine market.
Below are some practical tips to successfully approach Argentine consumers:
Appoint a representative or distributor
Have Spanish-language capacity in firm
Furnish materials in Spanish
Have a long term outlook
Personalize your approach
Be consistent in attention to service and delivery
Provide fair credit terms
Dot your I's and cross your T's (lawyers and accountants)
Protect your trademarks
Do not take no for an answer/ frequent visits and follow-ups
The U.S. Commercial Service in Argentina provides a wide range of services to help U.S. companies enter and expand operations in the country. Click here to learn more about them.
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