U'S' Commercial Service Buenos Aires

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U.S. Commercial ServiceBuenos Aires
Argentina Emerging Opportunities
Briefing by Brian Brisson, Commercial Counselor
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Country Profile

• Size 1.1 million square miles
• Population 39.5 million, almost 90 urban
• Literacy rate 97
• Federal republic with 23 provinces and one
  autonomous capital district

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Trade Investment Profile

• The U.S. is Argentina's second largest trading
  partner after Brazil and is virtually tied with
  Spain for the top investment spot
• Argentina is an attractive market for U.S. trade
  due to its size, diversity and proximity to other
  Mercosur markets
• Argentina offers abundant natural resources,
  infrastructure and human capital

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Principal Challenges
1. Increase tax revenues
Source Ministerio de Economia
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Principal Challenges
2. Contain inflation
Source World Bank, Ministerio de Economia
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Principal Challenges
3. Reduce poverty and unemployment
Source INDEC
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Principal Challenges
4. Maintain high economic growth
Source Ministerio de Economia
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Political Challenges-Kirchners Approach

• Increase investment to 22-23 of GDP
• Currently at 22 of GDP
• Keep inflation between 7 11
• Reduce bilateral debt
• Build an Argentina for Argentines
• Social policy is a priority

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The Economy in 2007/08

• GDP USD258 billion
• 2008 forecast USD294 billion
• Per capita GDP USD6,540
• GDP growth 8.6 in 2007
• Forecast GDP growth 8.7 for 2008
• Unemployment decreased from 21.5 in May 2002 to
  8.8 in 3Q 2007.

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The Economy in 2007

• Increasing salaries (22.2 average growth in
  formal, informal and public sector)
• Government wants to spur growth through
  investment in infrastructure, increased domestic
  demand and higher salaries.

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Bilateral Trade in 2005/6

• Argentine exports to the U.S. increased by 22 to
  3.8 billion in 2004, and 20 in 2005 to 4.5
  billion
• U.S. exports to Argentina jumped 52 percent to
  3.4 billion in 2004, and 18 to 4.0 billion in
  2005

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Bilateral Trade in 2007

• Argentine exports to the U.S. increased 3.7
  during 2007
• U.S. exports to Argentina increased by 20.9 in
  2007

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Import tariffs

• Ad-valorem tariffs average approximately 13 in
  Argentina
• A statistical fee of 0.5 is added to most
  products
• All goods imported for resale face
• 21 or 10.5 Value Added Tax (VAT) (depending
  upon the product)
• 10 or 5.5 Advanced VAT (depending upon the
  product)
• 3 Anticipated Profits Tax
• Goods imported directly by end-users are exempted
• Export taxes average 10.2.

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Average Tariff Rates by Type of Products
 

 
Capital Goods Duty Free

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Direct Import Costs
 
 
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Composition of Argentine Imports - 2007
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Import Payments

• Scarce trade financing available
• EX-IM bank recently re-opened for short- and
  medium-term lending to the private sector
• Domestic companies most often use retained
  earnings to finance investments and imports
• Wire transfers are the most common form of payment

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Best Prospects for US Exports

• Electric Power Systems
• Agricultural Machinery
• Industrial Chemicals
• Food Processing and Packaging Equipment
• Medical Equipment and Supplies
• Residential Building Materials and Supplies

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Best Prospects for US Exports

• Information Technology
• Mining Machinery and Equipment
• Telecommunication Equipment and Services
• Travel and Tourism Services / Hotel Restaurant
• Plastics Production Machinery
• Security and Safety Equipment

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Keys to Success in Argentina

• Identify qualified representative or distributor
• Spanish language capacity in firm/materials
• Long-term outlook
• Importance of personal relationships

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Conclusions

• Argentine market offers targeted market potential
• Economy is rebounding
• Secure payment terms are crucial
• U.S. Government trade agencies ready to assist

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U.S. Commercial ServiceBuenos AiresPhone
(54-11) 5777-4367 Fax [phone]
E-mail Buenos.Aires.Office.Box_at_mail.doc.gov
www.BuyUSA.gov/Argentina/en
Contact Information