Argentina officially the Argentine Republic is a country in South America, bordered by Chile to the west and south, Bolivia and Paraguay to the north and Brazil and Uruguay to the northeast. Argentina is a founding member of the United Nations, Mercosur, the Union of South American Nations, the Organization of Ibero-American States, the World Bank Group and the World Trade Organization, and is one of the G-15 and G-20 major economies. A recognized regional power and middle power Argentina is Latin America's third-largest economy with a "very high" rating on the Human development index Within Latin America, Argentina has the fifth highest nominal GDP per capita and the highest in purchasing power terms.
ARGENTINA REPUBLIC
Capital of Argentina is Buenos Aires. There are other major city namely, Córdoba (pop. 1 350 000), Rosario (pop. 1 158 000), Mendoza (pop. 800 000), Santa Fe (pop. 360 000), Mar del Plata, La Plata, Tucuman. Languages spoken by Argentinean are Spanish (Official), English, Italian, German, French. There is 97% literacy in Argentina. Area of Argentina is Total (2,780,440km2) (1,073,518 sq mi). Currency is Peso ($) (ARS). Gdp of Argentina is Total ($746.927 billion), per capita income of Argentina is ($11,572) and agriculture product produced by Argentina is the Grains, oilseeds and by-products, lemons, soybeans, grapes, corn, tobacco, peanuts, tea, wheat; livestock. On other hand there are many emerging industry namely, Food processing, oil refining, machinery and equipment, textiles, chemicals and petrochemicals.
MODERN HISTORY OF FOREIGN TRADE OF ARGENTINA
Argentina recorded trade surpluses for most of the period between 1900 and 1948, including a cumulative US$1 billion during World War I and US$1.7 billion during World War II. Tax exposed by the administration of President Juan Perón to control trade deficit between 1949 and 1962. The administration of President Arturo Frondizi, encouraged foreign investment so ,due to foreign investment increased in highest standard of living, domestic and foreign investors responded, industrial production more than doubled,
Policies of "free trade" and financial deregulation pursued by Argentina's last dictatorship led to a sudden, record deficit in 1980 and, by 1981, a mountain of bad debts and financial collapse.
Economy Minister Domingo Cavallo enacted the Convertibility Law of 1991. Taking advantage of this low exchange rate, on the lower tariffs on imports and on the reappearance of credit after the free trade liberalization measures taken by President Carlos Menem's administration, Argentine firms and consumers tripled capital goods purchases from 1990 to 1994, while depressed auto sales rose by fivefold.
There were deficit prevailing in Argentina market so central bank forced to borrowing money to protect peso's value against such pressure there were surplus money US$ 1 billion and US$ 6 billion in 2000 as well as 2001 respectively. On 23 December 2001 Argentina government declared a default on US$93 billion of its bonds, the largest sovereign debt default in history.
CRISIS AND RECOVERY
Argentine economy collapse at the end of 2001 and the devaluation of the peso in 2002. As recovery ensued and the exchange rate stabilized around 3 pesos/dollar, exports grew steadily. Imports began recovering sharply in 2003; from 2003 to 2011 the nation's merchandise trade balance recorded a cumulative US$115 billion in surpluses. The nation's perennial trade deficit in manufactures widened during this expansion, however, and exceeded US$30 billion in 2011. Accordingly, the system of non-automatic import licensing was extended in 2011, and regulations were enacted for the auto sector establishing a model by which a company's future imports would be determined by their exports. Import dominated by information technology, major appliances, footwear, and farm machinery.
OVERVIEW OF ARGENTINA MARKET
Argentina is the third largest market in Latin America with a GDP of 386 billion dollars, after Brazil and Mexico. Argentina is one of the richest countries in the world. Argentina is an agricultural power. It produces 100 million tons of food products and exports more than 50 million tons. It is a large exporter of wheat, soya and meat. It is the world's largest exporter of soy oil and sunflower oil, the second largest exporter of corn, third largest producer of beef , soybeans and biodiesel and fourth largest of wheat. Argentina is using at present only 34 million hectares for agriculture. Argentina has a large area -almost equal to that of India- with a variety of fertile soils and climates.
The vast fertile plains, is one of the most productive regions in the world. They are supported by an excellent network of research and development laboratories. Argentina has developed an efficient infrastructure, logistics and network for transportation and shipping. The food processing industries of Argentina are one of the most advanced in the world and globally competitive. Argentina is self-sufficient in energy and a net exporter of oil and gas. It produces 850,000 barrels per day of crude oil of which 300,000 are exported. The Argentine manufacturing industry is relatively large and diversified. It is strong in food processing, automobiles, autoparts, engineering, metallurgy, pharmaceuticals and biotechnology.
Argentina has a population of 40 million. It had the earliest railroads, metro and industrial development. Buenos Aires city was built like the Paris of Latin America with elegant parks, public buildings, apartment blocks, theatres, cafes, restaurants and bars. Argentina celebrated its 25th anniversary of the restoration of democracy in 2008.
In the last nine years (after the 2002 crisis), the macroeconomic fundamentals of the economy have become strong and stable. This has been recognized and commended by external observers, including IMF and World Bank. The Argentines from all walks of life, including political leaders, businessmen, and professionals have, now a new mindset, especially after the historic 2001 crisis. Policy-makers and the people in general are now looking towards the future with confidence, hope and vision.
Indian exporters are invited to explore the potential for exports to Argentina. There is scope for increasing the volume of items already exported as well as for new items. India's imports of soy and sunflower oil as well as copper are expected to increase steadily in the years to come. Wheat would be an import item as and when there is shortfall in Indian production.
Argentina is a major source of edible oils for India. According to the Solvent Extractors Association of India (SEA), the requirement of edible oils in 2006 was 12 million tons of which 7 million were produced domestically and 5 million was imported. India has imported wheat from Argentina from time to time, including purchase of 44 million dollars in 2008. Besides edible oil and wheat, Argentina can be a new source of pulses. The Argentine agribusiness companies are willing to grow these, attracted by the large and growing market in India.
There is no restriction on foreign investment in land in Argentina. A number of foreign companies and individuals own thousands of hectares of land. Sterling Group of NRI Sivasankaran has acquired an olive farm of 1700 hectares in the Catamarca province of Argentina. They have already formed a consortium of 14 companies which proposes to invest in agricultural land in the region. India is going to be under more pressure for agricultural land in future. India´s population increases by 15 million every year and it adds a new Argentina (40 million) every 32 months.
This is in contrast with Argentina which has a small population of 40 million with an area almost equal to that of India. Besides the large area, the Argentine productivity of grains and oilseeds are three times that of India. They have 2 billion barrels of discovered reserves and are currently producing 800,000 bpd. They are also exploring opportunities in Argentina and in other countries of the region. ONGC Videsh Ltd. (OVL) has signed an MOU with their Argentine counterpart ENARSA and jointly seeks opportunities in Argentina and in this region.
IMPORT-EXPORT POLICY OF ARGENTINA
TRADE SUMMARY
The U.S. goods trade surplus with Argentina was $5.4 billion in 2011, an increase of $1.8 billion from 2010. U.S. goods exports in 2011 were $9.9 billion, up 33.7 percent from the previous year. U.S. exports of private commercial services to Argentina were $4.6 billion in 2010 and U.S. imports were $1.5 billion. Sales of services in Argentina by majority U.S.-owned affiliates were $6.3 billion in 2009.
IMPORT POLICIES
Tariffs
Argentina is a member of the MERCOSUR common market MERCOSUR Common External Tariff (CET) averages 11.5 percent and ranges from zero percent to 35 percent ad valorem. In December 2011, the MERCOSUR members agreed to increase import duty rates temporarily to a maximum rate of 35 percent on 100 tariff items per member country. Several U.S. industries have raised concerns about prohibitively high tariffs and other taxes in Argentina on certain products, including apples, distilled spirits, restaurant equipment, and motorcycles. Argentine consumers are now required to pay an additional 10 percent tax on such vehicles imported from outside MERCOSUR.
These compound import duties do not apply to goods from MERCOSUR countries and cannot exceed an ad valorem equivalent of 35 percent. Although the DIEMs expired on December 31, 2010, and the government of Argentina has not formally extended them, they are still being charged. The plan was to take effect in three stages with the first phase to have been implemented no later than January 1, 2012. That deadline was not met, however, and the CCC still must be ratified by MERCOSUR‟s member countries
Nontariff Barriers
Argentina has imposed a growing number of customs and licensing procedures and requirements that makes importing U.S. products more difficult. A number of U.S. companies with operations in Argentina have expressed concerns that the measures have delayed exports of U.S. goods to Argentina and, in some cases, stopped exports of certain U.S. goods to Argentina altogether. During 2011, the government of Argentina increased its reliance on a growth strategy that is based heavily on import substitution. To carry out this strategy, Argentina increased its use of non-automatic import licenses (see more detailed discussion below) and imposed other nontariff barriers. In early January 2012, Argentina announced a new measure requiring companies to file online affidavits and wait for government review and approval before they can import. The measure became effective on February 1, 2012.
Argentina prohibits the import of many used capital goods. Local legislation requires compliance with strict conditions on the entry of those used capital goods that may be imported, which are also subject to import taxes up to 28 percent and a 0.5 percent statistical tax. On December 31, 2010, Argentina reintroduced an import prohibition on used clothing, which is due to expire in 2015.
Import Licensing:
Argentina imposes automatic import licensing requirements on 2,100 tariff lines, In 2011, Argentina continued and expanded the use of non-automatic licenses to protect sectors that the Argentine government deems sensitive. U.S industry representatives complain that the wait time for the issuance of non-automatic licenses often extends beyond 60 days to 100 days or more, partly due to backlog of license applications. Since 2005, the government of Argentina has also required non-automatic import licenses for toys and shoes. Shoe import licenses are valid for only 120 days and, according to exporters, obtaining them involves especially burdensome procedures.
Customs Valuation:
Argentina currently applies reference values to several thousand products. In 2011, goods covered by approximately 50 tariff lines were added to that list of products. The benchmarks establish a minimum price for market entry and dutiable value.
Argentina has stated that the rule is designed to discourage under-invoicing and fraudulent under-payment of customs duties. Customs External Notes 87/2008 of October 2008 and 15/2009 of February 2009 establish administrative mechanisms that restrict the entry of products deemed sensitive, such as textiles, apparel, footwear, toys, electronic products, and leather goods. The tax collection agency (AFIP) charges import duties based on pre-established reference prices on these several thousand products. On October 14, 2011, AFIP issued Note 15/2011, which permits large importers to establish in-house customs services that are pre-approved by the Argentine government in order to establish their own reference prices.
Ports of Entry:
Argentina restricts entry points for several classes of goods, Since the first measure regarding the limitation of ports of entry was formally announced in 2005, several provincial and national legislative authorities have requested the elimination or modification of the specialized customs scheme.
Customs Procedures
In August 2009, AFIP revised certificate of origin requirements for a list of products with non-preferential origin treatment through External Note 4. To receive the most favored nation tariff rate, the certificate of origin must be certified by an Argentine consulate. Simplified customs clearance procedures on express delivery shipments are only available for shipments valued at $1000 or less. These regulations increase the cost not only for the courier, but also for users of courier services. The U.S. Government has raised these policies with the Ministry of Federal Planning, Public Investment and Services, the Directorate of Customs, and the National Administration of Civil Aviation.
EXPORT POLICIES
The Argentine government imposes export taxes on all but a few exports, including significant export taxes on key hydrocarbon and agricultural commodities. Total export tax revenue in 2011 was equal to 15.6 percent of the value of all Argentine exports, including goods not subject to export taxes. The following major agricultural commodities are currently subject to export taxes: soybeans at 35 percent; soybean oil and soybean meal at 32 percent; sunflower meal and sunflower oil at 30 percent; wheat at 23 percent; and corn at 20 percent. The difference in tax rates between raw and processed products appears to create large incentives to process those commodities locally, particularly for soybeans, which are turned in to oil and in turn provide the feedstock for Argentina's rapidly growing biodiesel industry.
Export Registrations
the government of Argentina requires major commodities to be registered for export before they can be shipped out of the country Until 2011, the National Organization of Control of Agricultural Commercialization (ONCCA) administered the Registry of Export Operations for meat, grain (including vegetable oils), and dairy products under the provisions of Resolution 3433/2008. After ONCCA was dismantled in early 2011, administration of the Registry of Export Operations was transferred to the Ministry of Agriculture, but reportedly there have been no major changes to procedures for registering exports. Argentina continues to impose time restrictions on grain and oilseed exports depending on when the export tax is paid. Under applicable regulations, export permits are valid for 45 days after registration is approved.
GOVERNMENT PROCUREMENT
Law 25551 of 2011 establishes a national preference for local industry for most government procurement. In March 2011, the Argentine Senate approved an amendment to Law 25551 extending the entities subject to the "Buy Argentine" regime to include: (a) offices within the Argentine public sector (centralized and decentralized public administration); (b) social security institutions; (c) state-owned companies; (d) private legal entities engaged in public works and licensees and concessionaires of public utilities and other services (fixed and mobile communications, freight transportation, mining, oil and gas, etc.); (e) provincial public entities; and (f) private entities with tax benefits. As of December 2011, the Draft Law was still pending in the Argentine Lower House.
INTELLECTUAL PROPERTY RIGHTS PROTECTION
Argentina continued to be listed on the Priority Watch List in the 2011 Special 301 report. Recently, the Argentina has taken a number of positive and encouraging steps on intellectual property rights (IPR) protection. Argentina has taken steps to address its patent backlog, but it still does not provide adequate protection against unfair commercial use and unauthorized disclosure of undisclosed test and other data generated to obtain marketing approval for pharmaceutical products.
SERVICES BARRIERS
Audiovisual Services
U.S. industry remains concerned with the added costs associated with exporting movies to Argentina due to measures governing the showing, printing, and dubbing of films. Beginning on August 30, 2011, under Resolution 2114/2011, the National Institute of Cinema and Audiovisual Arts is authorized to tax foreign films screened in local movie theaters. In October 2009, the Argentine Congress passed Law 26.522 regulating audiovisual communication services
Law 26.522 would limit foreign ownership of media outlets to 30 percent, require minimum national content of 60 percent to 70 percent, require that all signals owned wholly or partially by the national government be included, set a minimum screen quota for Argentine movies, and require a fee on foreign programmers in the amount of 0.5 percent of annual revenue for acquiring Argentine films.
Insurance Services
Beginning on September 1, 2011, local insurers may only contract reinsurance from locally based reinsurers On October 27, 2011, the Argentine insurance regulator issued Resolution 36.162 requiring that "all investments and cash equivalents held by locally registered insurance companies be located in Argentina." Nevertheless, foreign insurance firms have reported pressure by the Argentine government to sell their dollars for pesos. Many of these companies have liabilities denominated in dollars, making this foreign exchange requirement difficult to meet.
INVESTMENT BARRIERS
Pension System3
The Argentine parliament approved a bill to nationalize Argentina's private pension system and transfer pensioner assets to the government social security agency in November 2008.
Foreign Exchange and Capital Controls
In November 2011, Argentina eliminated the exceptions previously granted to hydrocarbon and mining exporters Revenues from exporting to Argentine foreign trade zones and from re-exporting some temporary imports are still exempted from this requirement. Time limits on fulfilling the obligation to convert to pesos range from approximately 60 days to 360 days for goods (depending on the goods involved) and 15 days for services. A portion of foreign currency earned through exports may be used for foreign transactions. In May 2005, the government issued Presidential Decree 616 revising registration requirements for inflows and outflows of capital and extending the minimum investment time period from 180 days to 365 days.
Non-Payment of Investment Treaty Awards
Nine U.S. firms have pending cases against the government of Argentina in investor-state arbitration under the United States-Argentina BIT, although there are reports that two of those claims have now been settled Investor-state arbitral tribunals have ruled against Argentina in a number of these cases, awarding hundreds of millions of dollars to U.S. investors In 2008, the U.S. Government filed a submission in an arbitration rebutting Argentina's argument and reaffirming its view that Argentina is obligated to pay final ICSID awards immediately. Arbitral tribunals have consistently rejected Argentina's argument.
As a result of Argentina's failure to pay two final ICSID awards, the two U.S. companies to which these awards are owed have filed petitions with the Office of the United States Trade Representative seeking the suspension of all benefits to Argentina under the Generalized System of Preferences (GSP).
ARGENTINA BUSINESS OPPORTUNITIES
here are many Key Industries in Argentina like Food-processing, Motor Vehicles, Consumer Durables, Textiles, Chemicals/Petrochemicals, Printing, Metallurgy, Steel
There are many Key Imports from other company like Machinery, Motor Vehicles, Petroleum and Natural Gas, Organic Chemicals, Plastics
There are Key Exports from Argentina like Soybeans & Derivatives, Vehicles, Petroleum and Gas, Corn, Wheat.
SECTOR OPPORTUNITIES FOR IMPORT- EXPORT WITH ARGENTINA
Telecommunications
Since November 2000, Argentina's telecommunications market has been completely liberalized, creating one of the fastest-growing telecommunications markets in Latin America The telecommunications equipment market is dominated by international companies like Siemens, Ericsson, Alcatel, Motorola and Lucent Technologies. There is also a growing trend for telecommunications companies to offer 'bundled' packages offering voice, cable television and internet services. The number of subscribers to mobile phone lines reached 38.0 million in 2009. Broadband connections have also increased rapidly in recent years, growing by 26 percent in 2009 to reach 3.7 million subscribers.
Food Processing Engineering and Technology
The food processing industry is the main industrial and export sector of Argentina. Major sectors include fat and oil vegetable processing, meat, poultry and beverages Despite strong investment in the Argentine dairy industry throughout the 1990s, economic recession, lack of local finance and difficulty securing offshore credit have all constrained expansion throughout the food processing industry. The beef and sheep meat industry, by contrast, has suffered from an almost total lack of investment. Argentineans are the largest consumers of beef worldwide and the domestic market remains very strong
Building Products
Argentina's building product market has a high growth rate, particularly for new innovative products and standardized building supplies. The largest and most dynamic import items are high quality tiles and finishes, high quality doors and windows, bathroom and kitchen equipment and accessories, high quality wool-based products, saunas, spa pools and other similar equipment and insulation material.
Agritech
Argentina is one of the world's main agricultural and livestock producers, and export agricultural commodities account for about two thirds of the country's total export earnings. Agricultural machinery is a growing market as farmers look to increase yields and productivity gains. Innovative technologies such as GPS soil and crop monitoring systems will lead this drive, and there is also increasing demand for accessories and devices that provide better measurements of seed, agrochemical and fertilizer volumes and requirements. There is large potential for exporters to enter this market, which is currently dominated by imports from the Unites States and Israel.
Education
The majority of Argentines that study abroad are young people between 18 and 30 years of age. India is a fairly new and unknown destination with less than 1 percent of the market share. This is an agent market, with 75 percent of the people that study abroad choosing a school and enrolling using the services of education consultants. It has low fees and a low cost of living, personal safety, the same school year / seasonal cycle, a summer season in India during Argentine school holidays and high education standards.
SUSTAINABILITY
Sustainability awareness by the government is high and there are many new plans underway to implement sustainability practices into all aspects of government and local government, as well as making the public aware of the wider issues of sustainable development. In June 2007 the Argentine Environment Secretary launched the "Sustainable Cities Programmed" which is an initial step towards facilitating local governments to adopt environmentally friendly strategies. Over the past five years, the Argentine government has made ambitious plans to develop renewable energy sources, along with ongoing mineral and mining exploration activities. According to a Pew Global Attitudes survey in 2009, 94 percent of Argentines perceive global warming to be a serious problem. Over 70 percent believe that the environment should be given priority, even if it causes slower economic growth and some loss of jobs.
MARKET ENTRY
For consumer goods, supermarket chains are very important. Most of them will import directly from India if the volumes justify it. For turnkey plants, equipment, technology and engineering products in general, direct sales or direct promotion from India are possible. It is important, however, to prove quick and efficient after-sales service and technical assistance. The 2001-2002 crisis practically terminated the banking sector. Since then, the sector has recovered and is now operating normally, although with strict control from the Central Bank on inflows and outflows of funds.
All these factors - the lack of bank credit, the requirements on money transfer abroad, the high exchange rate - have contributed to the massive drop of imports to Argentina. This is why it is so important to undertake a thorough investigation of commercial partners. Market entry requires a wide range of information. You have to make decisions on all kinds of issues that will ultimately affect your approach to the market
AVAILABILITY OF NATURAL RESOURCES
Argentina is the eighth largest country in the world in terms of surface area and its relevance is even greater if factors relating to the potential its surface area offers are considered (i.e. the proportion of surface area suitable for agriculture, mining resources, etc.)
Arable lands
Agricultural production increased 105% in the period 1990-2003. Principal crops include soybean, wheat, sunflower, and corn. Cultivated surface area increased approximately 52% over the same period, representing significant progress in terms of yields.
Fishing
As a result of the considerable length of the Atlantic coast (4.725 kilometers) and the great variety of species found in the fishing zone make Argentina one of the best fishing areas worldwide. The total capture volume goes beyond 1 million tons and about 80 percent of it is exported.
Forestry
The main factors determining competitive advantages in this activity are present in vast regions of Argentina The diversity of climates and soil types makes it possible to cultivate a wide variety of species. In addition to tree growth rates, the relatively low land value compared to countries such as Brazil and Chile yields high rates of return and exceptional payback periods.
Oil and gas
Not only is Argentina self-sufficient in terms of oil and gas production but it is also able to generate production for export as well. Furthermore Argentina is the world's 10th largest country in terms of gas production and the world's 18th largest exporter of oil. Gas production has increased constantly since the early 90s, doubling early 90s levels in 2003. Although oil production has fallen in recent years, levels are still 50% above the levels recorded 12 years ago.
Mining
The estimated surface area with mining potential totals approximately 750,000 km2, 75% of which has still to be exploited. Argentina has considerable gold, copper, lead, zinc, natural borate, betonies, clay, and ornamental stone deposits. The effective tax rate is 41%, 6 points below the average for the principal Latin American mining nations and almost 20 points lower than that of the major Canadian and Australian mining regions.
