Capital - Buenos Aires (GMT-3) Largest City - Buenos Aires Population - 40,301,927 est. Languages - Spanish Demonym - Argentine Currency - Argentine Peso (ARS) GDP per capita - $15,000 est. Calling Code - +54 Internet TLD - .ar
Argentina, officially the Argentine Republic [(Spanish: República Argentina), Nación Argentina (Argentine Nation) for many legal purposes)], is a South American country, second in size in the continent to Brazil and eighth in the world. Argentina occupies a continental surface area of 2,766,890 km² (1,078,000 sq mi) between the Andes mountain range in the west and the southern Atlantic Ocean in the east and south. It is bordered by Paraguay and Bolivia in the north, Brazil and Uruguay in the northeast, and Chile in the west and south. The country claims the British controlled territories of the Falkland Islands (Spanish: Islas Malvinas) and South Georgia and the South Sandwich Islands. Under the name of Argentine Antarctica, it claims 969,464 km² (374,312 sq mi) of Antarctica, overlapping other claims made by Chile and the United Kingdom.
Economy
Argentina benefits from rich natural resources, a highly literate population, an export-oriented agricultural sector, and a diversified industrial base. Although one of the world's wealthiest countries 100 years ago, Argentina suffered during most of the 20th century from recurring economic crises, persistent fiscal and current account deficits, high inflation, mounting external debt, and capital flight. Beginning in 1998, with external debt equivalent to more than 400% of annual exports, the economy slowed and ultimately fell into a full-blown depression; investors' fears grew in the wake of Russia's debt default, Brazil's devaluation, and the political discord caused by then-President Carlos MENEM's unpopular efforts to run for a constitutionally prohibited third term. The government of Fernando DE LA RUA, elected President in late 1999, tried several measures to cut the fiscal deficit and instill confidence and received large IMF credit facilities, but nothing worked to revive the economy. Depositors began withdrawing money from the banks in late 2001, and the government responded with strict limits on withdrawals. When street protests turned deadly, DE LA RUA was forced to resign in December 2001. Interim President Adolfo Rodriguez SAA declared a default - the largest in history - on Argentina's foreign debt, but he stepped down only a few days later when he failed to garner political support from the country's governors. Eduardo DUHALDE became President in January 2002 and announced an end to the peso's decade-long 1-to-1 peg to the US dollar. When the peso depreciated and inflation rose, DUHALDE's government froze utility tariffs, curtailed creditors' rights, and imposed high taxes on exports. The economy rebounded strongly from the crisis, inflation started falling, and DUHALDE called for special elections. Nestor KIRCHNER was elected President, taking office in May 2003, and continued the restrictions imposed by DUHALDE. With the reemergence of double-digit inflation in 2005, the KIRCHNER administration pressured businesses into a series of agreements to hold down prices. The government also restructured its debt in 2005 and paid off its IMF obligations in early 2006, reducing Argentina's external debt burden. Real GDP growth averaged 9% during the period 2003-06, bolstering government revenues and keeping the budget in surplus.
Market Overview
Argentina’s recovery after the profound economic crisis of 2001/2002 has been far more robust than anticipated by leading international and domestic analysts.
Recovery started in the second quarter of 2002, and there have been eighteen consecutive quarters of growth since then. Real gross Domestic Product (GDP) grew 8.8 percent in 2003, 9 percent in 2004, and 9.2 percent in 2005. Experts estimate that 2006 GDP growth will be slightly above 8.5 percent. Argentina should continue to perform well in 2007, with real growth projected at the 6-7 percent range.
The Government of Argentina achieved its goal of keeping inflation within single digits in 2006, at 9.8 percent. However, inflation was kept from exceeding 10 percent thanks to price control agreements, particularly on meat and dairy products. Inflation will continue to be a concern in 2007.
The expansion is creating jobs; unemployment dropped from 20.4 percent in the first quarter of 2003 to an estimated 9.6 percent in the fourth quarter of 2006. Argentine exports to the U.S. increased by 22 percent to $3.8 billion in 2004, and 20 percent in 2005 to $4.5 billion. Argentine exports to the U.S. in 2006 were estimated at $4 billion.
U.S. exports to Argentina jumped 52 percent to $3.4 billion in 2004, and 18 percent to $4.0 billion in 2005. U.S. exports to Argentina in 2006 were estimated at $4.7 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 and continues to accumulate foreign exchange reserves.
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 the next six years.
Industrial production has accumulated 64 percent growth since the first quarter of 2002 (equivalent to an annual rate of 11 percent). Argentine industrial and construction activity, which grew 7.8 percent and 22.2 percent respectively in 2005, continued to perform well in 2006. Industrial activity grew 8.3 percent, driven by the automotive sector, and construction activity increased by 17 percent.
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 profitability in 2006. Although access to credit for small and mediumsized enterprises (SMEs) at reasonable interest rates is scarce, mortgage and personal loans are increasing. Credit in pesos from local banks to the private sector grew 56 percent between June 2003 and June 2006.
There are no restrictions on the release of foreign exchange and advance payment for imports is allowed.
U.S. investment is concentrated in financial services, telecommunications, energy, petrochemicals, food processing, and motor vehicle manufacturing. • Under the 1994 U.S.-Argentina Bilateral Investment Treaty, U.S. investors enjoy national treatment in all sectors except shipbuilding, fishing, nuclear power generation, and uranium production.
Argentina is a founding member of the Association for Latin American Integration (ALADI-Asociación Latinoamericana de Integración), which was created with the long-term goal of establishing a Latin American Common Market.
Argentina is also member of the Common Market of the South (MERCOSURMercado Común del Sur), 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, and has four years to adapt to the MERCOSUR Common External Tariff scheme.
As a member of the World Trade Organization (WTO), Argentina signed the Agreement on Technical Barriers to Trade (TBT), affirming its obligations relative to technical regulations and conformity assessment procedures.
Market Challenges
MERCOSUR (Common Market of the South) gradually eliminated almost all nontariff restrictions and other limitations to trade among its members (Argentina, Brazil, Paraguay and Uruguay). As of 2006, over 99 percent of all MERCOSUR tariff lines had been reduced to zero.
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.
Domestic taxes (i.e. excise taxes) are levied on tobacco, alcoholic beverages, soft drinks, syrups, extracts and concentrates, television sets, tape recorders, record players, and microwave appliances, among other products.
Prior government approval is required for imports of sensitive goods such as pharmaceuticals, foodstuffs, insecticides, veterinary products, medical devices, and 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 a competent authority in the exporting country.
Argentina continues to delay issuance of health certificates that would allow the resumption of exports of poultry meat and products from the United States. It also currently imposes anti-dumping duties on imports of U.S. polyvinyl chloride; and in 2005 imposed non-automatic import licenses on toys, requiring importers to obtain a certificate reviewed by three different offices in the Secretariat of Industry.
The Argentine government requires certificate 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 coal, petroleum, sand, etc., or for articles that have identical characteristics, composition, weight, etc.
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.
Used capital goods must be refurbished in the country of origin or the country of export.
Safety regulations and mandatory certification apply to low voltage electrical equipment, toys, shoes, gas appliances and products, steel used for construction, elevators, energy consumption, appliances, closures for dangerous products, and personal protective equipment.
The quota system and the special regime for auto parts imports constitute a major non-tariff barrier in the automotive industry.
A Bilateral Common Automotive Industry Regime with Brazil establishes preferential market access treatment for both countries to protect the MERCOSUR automobile industry.
Market Opportunities
The zero percent import duty on a broad range of new capital goods produced in non-MERCOSUR countries, such as the United States, will remain in effect until 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.
Leading U.S. exports to Argentina in 2005 were Nuclear reactors, boilers, machinery, etc. and parts thereof (27%); Organic chemicals (11.3%); Electric machinery etc., Sound equipment, TV equipment and parts thereof (9.9%), and Plastics and articles thereof (5.9%).
The following sectors offer the most significant growth potential for U.S. exporters: Agricultural Machinery, Equipment and Parts, Airport and Ground Support Equipment , Residential Building Materials and Supplies, Books and Periodicals , Electric Power Systems , Financial Services, Food Processing and Packaging Equipment and Parts, Information Technology, Medical Equipment and Supplies, Mining Machinery and Equipment, Pleasure Boats, Plastics Production Machinery, Security Equipment, Telecommunication Services, Travel and Tourism Services.
The following agricultural sectors offer the most significant growth potential for U.S. exporters: Animal Genetics (Bovine Semen), Food Ingredients, and Planting Seeds.
