VZCZCXYZ0001
OO RUEHWEB

DE RUEHBU #1558/01 3192022
ZNR UUUUU ZZH
O 142022Z NOV 08
FM AMEMBASSY BUENOS AIRES
TO RUEHC/SECSTATE WASHDC IMMEDIATE 2463
RUCNMER/MERCOSUR COLLECTIVE
RUCPDOC/USDOC WASHINGTON DC
RUEHRC/DEPT OF AGRICULTURE USD FAS WASHINGTON DC

UNCLAS BUENOS AIRES 001558 
 
SIPDIS 
 
STATE FOR EEB/TPP/BTA 
USTR/GBLUE, KDUCKWORTH 
USDOC FOR 4322/ITA/MAC/OLAC/PEACHER 
 
E.O. 12958: N/A 
TAGS: ETRD EINV EAGR ECON AR
SUBJECT: ARGENTINA: 2009 NATIONAL TRADE ESTIMATE 
SUBMISSION 
 
Ref:  STATE 119763 
 
¶1. (U) Per reftel, the following is Post's submission to 
USTR's 2009 National Trade Estimate. 
 
TRADE SUMMARY 
 
The U.S. goods trade surplus with Argentina was $1.4 
billion in 2007, an increase of $563 million from $797 
million in 2006. U.S. goods exports in 2007 were $5.9 
billion, up 22.6 percent from the previous year. 
Corresponding U.S. imports from Argentina were $4.5 
billion, up 13.0 percent. Argentina is currently the 33rd 
largest export market for U.S. goods. 
 
U.S. exports of private commercial services (i.e., 
excluding military and government) to Argentina were $2.2 
billion in 2006 (latest data available), and U.S. imports 
were $1.0 billion. Sales of services in Argentina by 
majority U.S.-owned affiliates were $2.9 billion in 2005 
(latest data available), while sales of services in the 
United States by majority Argentina-owned firms were $25 
million. 
 
The stock of U.S. foreign direct investment (FDI) in 
Argentina was $13.1 billion in 2006 (latest data 
available), up from $11.0 billion in 2005. U.S. FDI in 
Argentina is concentrated in financial services, 
agribusiness, energy, petrochemicals, food processing, 
household products, and motor vehicle manufacturing. 
 
NOTE to USTR: While NTE preparation guidance received 
from the State Department instructs us not to update the 
Trade Summary section, we suggest the alternative final 
sentence above, which was published in the Dept. of 
State's 2008 Investment Climate Statement.  We also note 
on FDI that USDOC's Bureau of Economic Analysis 2007 
estimates the historical cost of the stock of U.S. FDI in 
Argentina (direct investment income excluding capital 
gains and losses and without a current-cost adjustment to 
earnings) at $14.9 billion in 2007, up from $13.9 billion 
in 2006 
(http://www.bea.gov/international/datatables/ usdctry/usdc 
try.htm). Also, the Argentine Investment Agency, which 
uses press reports to rank country investors, listed the 
United States as "the most active country investor" in 
¶2007. 
 
IMPORT POLICIES 
 
Tariffs 
 
Argentina's import tariffs range from 0 percent to 35 
percent, with an average applied tariff rate (according 
to Argentine tax authority AFIP) of 17 percent (vs. 14% 
in 2007). Argentina is a member of MERCOSUR, a customs 
union formed in 1991 and comprised of Argentina, Brazil, 
Paraguay, and Uruguay. MERCOSUR's common external tariff 
(CET) averages 10.6 percent (according to the Foreign 
Ministry) and ranges from 0 percent to 35 percent ad 
valorem, with a limited number of country-specific 
exceptions. MERCOSUR issued a decision in September 2007, 
adopted by Argentina in October 2008, to increase the CET 
to either 26 or 35 percent (from a prior ceiling of 20 
percent) on several hundred tariff lines of textiles, 
footwear, and automobiles and parts. Currently, Argentina 
maintains exceptions to the CET on capital goods (for 
which the CET is 14 percent but for which Argentina 
allows duty-free entry), computing and telecommunications 
goods, sugar and an additional diversified group of 100 
products. Tariffs may be imposed by each MERCOSUR member 
on products imported from outside the region which 
transit one or more MERCOSUR member nations before 
reaching their final destination. Full CET product 
coverage, which would result in duty-free movement within 
MERCOSUR, was originally scheduled for implementation in 
2006, but has been deferred until 2009. 
 
In 2007, Argentina imposed a specific duty safeguard on 
imports of recordable compact discs, which is scheduled 
to be phased out by May 2010. 
 
Nontariff Barriers 
 
New customs and licensing procedures and requirements 
imposed by the government of Argentina in October 2008, 
 
combined with a series of measures implemented in July 
2007 and August 2007, could make importing U.S. products 
and products from third-country U.S affiliates more 
difficult.  The measures include additional inspections, 
port-of-entry restrictions, the expanded use of reference 
prices, and requirements for importers to have invoices 
notarized by the nearest Argentine diplomatic mission 
when imported goods are below reference prices. A number 
of U.S. companies with operations in Argentina have 
initially expressed concern that the October 2008 
measures could delay and make more costly intermediate 
and final good imports from the U.S. and from their 
third-country affiliates. While measures introduced in 
2007 applied mainly to goods from China, India, Hong 
Kong, North and South Korea, Indonesia, Malaysia, 
Pakistan, the Philippines, Taiwan, Thailand, Singapore, 
and Vietnam, the 2008 measures are not country-specific. 
In response to Embassy inquiries, Argentine government 
officials have affirmed that all of these measures are 
non-discriminatory and WTO-consistent. 
 
Customs External Note 87/2008 of October 2008 establishes 
administrative mechanisms that could restrict the entry 
of products deemed sensitive, such as textiles, apparel, 
footwear, toys, electronic products, and leather goods, 
among others.  The stated purpose of the measure is to 
prevent under-invoicing.  While restrictions are not 
country-specific, they are to be applied more stringently 
to goods from countries considered "high risk" for under- 
invoicing, and to products considered at risk for under- 
invoicing as well as trademark fraud.  The full text of 
the Note is at 
http://www.infoleg.gov.ar/infolegInternet/ane xos/145000- 
149999/145766/norma.htm.  In October discussions with 
Embassy, U.S. company members of the American Chamber of 
Commerce Trade Committee noted no additional unusual 
import processing delays and agreed to alert us to any 
significant changes in import processing times related to 
the new measures. 
 
Another measure, signed by the Secretary of Industry and 
Trade on October 29, 2008 (but not published as of 
November 5), will impose new "automatic" licenses on 1200 
different types of consumer goods, which collectively 
represented approximately $3.1 billion in imports in 2007 
(about 7% of total imports that year).  Products affected 
include food and drink, pet food, computer and audio 
equipment, cars, bicycles, cameras, mattresses, 
telephones, toys and watches.  The licenses will, 
according to public comments by the Secretary, be issued 
48 to 72 hours after application. 
 
Customs Resolution 52 of 2007 restricts the ports-of- 
entry for numerous goods, including sensitive goods 
classified in 20 Harmonized Tariff Schedule (HTS) 
chapters (e.g. textiles, shoes, electrical machinery, 
metal and certain other manufactured goods, and watches). 
Partial limitations on ports-of-entry are applied to 
plastic household goods, leather cases and apparel, 
porcelain and ceramic tableware and ornaments, household 
glass goods, imitation jewelry, household appliances, 
pots and pans, computers, car parts, motorcycles and 
parts, bicycles and parts, lamps, and toys. The 
government of Argentina has listed products limited to 
certain ports-of-entry, and the ports-of-entry applicable 
to those products available at 
http://www.infoleg.gov.ar/infolegInternet/ane xos/130000- 
134999/131847/norma.htm . 
 
Depending on their country of origin, many of these 
products are also subject to Customs External Note 58 of 
2007, which revised some reference prices and set new 
ones on over seven thousand tariff lines. This Note 
expands selective, rigorous "red channel" inspection 
procedures (via Resolution 1907 of 2005 and amplified by 
Customs External Note 55 in 2007) to a broader range of 
goods and requires importers to provide guarantees for 
the difference of duties and taxes if the declared price 
of an import is lower than its reference price. 
 
Customs External Note 57 of 2007, which the government of 
Argentina indicated was designed to discourage under- 
invoicing and fraudulent under-payment of customs duties, 
requires importers of any goods from designated countries 
which are invoiced below the reference prices to have the 
invoice validated by both the exporting country's customs 
 
agency and the appropriate Argentine Embassy or Consulate 
in that country. The government of Argentina has made the 
list of reference prices and applicable countries (the 
Annex to Customs External Note 58) available at 
http://www.infoleg.gov.ar/infolegInternet/ane xos/130000- 
134999/131630/notaext58-2007-sup.doc. 
 
Since 2005, the government of Argentina has required 
nonautomatic licenses on shoes, requiring certificates 
that are valid for only 120 days and whose issuance 
involves procedures that, according to the private 
sector, are burdensome. There is an automatic license 
requirement for most footwear imports; the government of 
Argentina says this requirement is needed for 
informational purposes. Some U.S. companies, however, 
claim it is designed to delay footwear imports. 
 
Also since 2005 the government has required nonautomatic 
import licenses for toys. Obtaining a license requires 
review by three different offices in the Ministry of 
Economy. The process generally takes 120 days, partly due 
to a backlog. Once issued, the certificates are valid for 
60 days. Previously high and variable specific duties on 
toys were reduced to a maximum 35 percent ad valorem 
equivalent tariff in January 2007. 
 
Since 2005, the government of Argentina has solicited 
private sector companies to negotiate and abide by 
sector-specific voluntary price caps aimed at limiting 
price increases on key components of the consumer price 
index (CPI), especially in the basic consumption basket. 
Sectors in which voluntary price accords have been 
negotiated include a variety of foodstuffs, personal 
hygiene and cleaning products, and pharmaceuticals. 
Informally controlled gasoline and diesel fuel prices 
have risen significantly in 2008 but remain significantly 
below prices in neighboring countries.  The government, 
which had largely frozen public utility electricity and 
natural gas rates since 2002, has recently allowed 
selective increases targeting industrial and large users, 
through these rates remain significantly below those of 
neighboring countries. 
 
Argentina prohibits the import of many used capital 
goods. Used capital goods which can be imported are 
subject to a 6 percent import tariff. Some used machinery 
imports are allowed, but only if repaired or rebuilt. The 
Bilateral Automobile Pact also bans the import of used 
self propelled agricultural machinery, unless it is 
rebuilt. Imports of used clothing are prohibited through 
June 2010, except when donated to government or religious 
organizations, as established by Resolution 367 in 2005. 
Argentina prohibits the importation and sale of used or 
re-treaded tires, used or refurbished medical equipment, 
including imaging equipment, and used automotive parts. 
 
A fee of 0.5 percent to fund the government of 
Argentina's compilation of trade data is assessed on most 
imports (90 percent of all harmonized system tariff 
lines). 
 
Customs Procedures 
 
Argentina subscribes to the WTO Agreement on Customs 
Valuation. There are certificate of origin requirements 
for a long list of products with non-preferential origin 
treatment, as established in 2008 by the Federal 
Administration for Public Revenue's (AFIP's) External 
Note 2 (which replaced External Note 13 from 2006), 
including textiles, motorcycles, steel products and 
household appliances. 
 
In 2005, AFIP Resolution 1811 modified the import-export 
regime applied to couriers. Previously, a simplified 
procedure for customs clearance applied to the 
international operations expedited couriers' shipments of 
up to $3,000. Resolution 1811 reduced this maximum to 
$1,000. Additionally, couriers now are considered 
importers and exporters of goods, rather than 
transporters, and also must declare the tax 
identification codes of the sender and addressee, both of 
which render the process more time consuming and costly. 
These regulations increase the cost not only for the 
courier, but also for users of courier services.  Post 
has raised these issues with the Ministry of Federal 
Planning, Public Investment and Services; the Directorate 
 
of Customs; and the Secretariat of Air Transport. 
 
EXPORT POLICIES 
 
Following the 2002 currency devaluation, the government 
of Argentina imposed export taxes on all but a few 
exports, including significant export taxes on key 
hydrocarbon and agricultural commodity exports, in order 
to generate revenue and increase domestic supplies of 
these commodities to constrain domestic price increases. 
In many cases, the export tax for raw materials is higher 
than that of the processed product to encourage 
development of domestic value-added production. Crude 
hydrocarbon export taxes are indexed to world commodity 
benchmarks. Total export tax revenue in 2007 was equal to 
11.8 percent of the value of all Argentine exports (up 
from 10.3 percent in 2006), including goods not subject 
to export taxes. 
 
Other export taxes continue to be actively managed by the 
government of Argentina. In November 2007, export taxes 
on the following major agricultural commodities were 
increased: soybeans to 35 percent; soybean oil and 
soybean meal to 32 percent; corn to 25 percent; wheat to 
28 percent; sunflower seeds to 32 percent; and sunflower 
meal and sunflower oil to 30 percent. The export tax on 
biodiesel was increased from 5 to 20 percent in 2007, 
with a 2.5 percent rebate. The differential taxes between 
raw and processed products create large incentives to 
process those commodities locally -- particularly 
soybeans, which are turned into oil and in turn provide 
the feedstock for Argentina's rapidly growing biodiesel 
industry. 
 
In 2008, the Argentine Congress passed legislation to 
retroactively increase taxes on agricultural exports that 
were registered prior to the increase in export taxes in 
November 2007 and during the period March to July 2008 
(under a variable export tax regime that was subsequently 
suspended in July 2008).  The government of Argentina is 
now seeking to retroactively collect additional export 
taxes on an estimated 24 million tons of grain exports. 
Embassy raised these efforts to retroactively collect 
export taxes with senior government officials, noting 
that they prejudice U.S. company interests and adversely 
affected Argentina's investment climate. 
 
Along with applying high export taxes, the government of 
Argentina requires export registration for major 
commodities before an export sale can be shipped. This 
process has been used to control the quantity of goods 
exported, thereby manipulating domestic supply. Prior to 
the increases in export taxes in November 2007, the 
export registration process was closed for soybeans, 
corn, and wheat. Export registrations of wheat, corn, 
beef and dairy products continue to be subject to 
periodic restrictions to guarantee domestic supplies. 
The government of Argentina also implemented in May 2008 
additional time restrictions on grain and oilseed exports 
(Resolution 543).  Under current requirements, exporters 
are required to export the product within 45 days of 
registration, with an extension of this time period only 
possible for exporters who pay the export tax withi two 
days of receiving the export license. 
 
Export taxes on beef, as well as restrictions on beef 
exports, have been applied with the aim of increasing 
local supply and avoiding further increases in domestic 
beef prices. The government of Argentina increased 
controls on beef exports in the first half of 2008 in 
order to guarantee domestic supplies.  While increasing 
the beef export quota to approximately 45,000 tons a 
month, the government also implemented a new system by 
which beef packing plants are required to have at least 
75 percent of their warehouse capacity full to be able to 
export the excess above that level.  The National 
Organization of Control of Agricultural Commercialization 
(ONCCA, a government agency) administers the Registry of 
Export Operations (ROE) under the provisions of 
Resolution 3433/2008 of August 27, 2008.  All exports 
must be registered and the government has the authority 
to reject or delay exports depending on domestic price 
and supply conditions. 
 
Exporters may claim reimbursement for some domestically 
paid taxes, including value added tax (VAT) 
 
reimbursements. The average non-VAT export reimbursement 
rate is 4.2 percent of export value. The government 
eliminated some non-VAT reimbursements for food products 
(including milk and dairy products, and vegetable oils) 
in 2005 to influence domestic prices of those goods, and 
reinstated some in 2006. 
 
STANDARDS, TESTING, LABELING, AND CERTIFICATION 
 
The government of Argentina banned import of all products 
of ruminant origin, including beef and lamb, from the 
United States after a case of Bovine Spongiform 
Encephalopathy (BSE) was discovered in Washington State 
in December 2003. In August 2006, Argentina issued 
Resolution 315, in which it adopted import requirements 
consistent with the World Organization for Animal Health 
(OIE) requirements with regard to BSE for dairy products, 
bovine semen and embryos, hides and skins, and other 
similar products.  The government of Argentina has not, 
however, implemented revised OIE requirements approved in 
May 2007, under which the OIE classified the United 
States as controlled risk for BSE. The United States 
continues to engage with the relevant Argentine 
government agencies to open its market for all beef and 
beef products from the United States on the basis of the 
OIE guidelines and the OIE's classification of the United 
States as controlled risk for BSE. 
 
Although Argentina accepts imports of some poultry 
products, including day-old chicks, Argentina continues 
to delay issuance of health certificates that would allow 
the resumption of imports of poultry meat and products 
from the United States. Argentina has banned imports of 
U.S. poultry products since 2002 when imports were 
stoppe as a result of an outbreak of Exotic Newcastle 
Disease. 
 
In 2002, Resolution 816 established a framework for all 
agricultural product imports overseen by the Argentine 
Animal and Plant Inspection and Food Safety Agency 
(SENASA). This resolution authorizes SENASA to inspect 
those processing/packing plants that intend to export to 
Argentina. In 2006 and 2007, SENASA requested several 
plant inspections prior to issuance of import permits. 
The United States is currently seeking SENASA recognition 
of equivalency for the U.S system, rather than undergoing 
plant-by-plant inspections. 
 
Argentina's Standards Institute (IRAM) aligns the bulk of 
Argentine standards with U.S. or European norms. Since 
Argentina began mandating compliance with new national 
safety certifications on a wide range of products in 
early 1998, U.S. exports of low-voltage electrical 
products (household appliance, electronics, and 
electrical materials), toys, covers for dangerous 
products, gas products, construction steel, personal 
protective equipment, bicycles and elevators have been 
negatively affected. Many U.S. exporters continue to find 
the procedures for compliance to be inconsistent, 
redundant, and nontransparent. Enforcement by Customs of 
a regulation mandating the use of a national standards 
with respect to plugs for low-voltage equipment, as 
established by IRAM rules 2073/2063, and Customs 
homologation required by the Secretariat of 
Communications to ensure that telecommunications and 
radio equipment meet regulatory requirements, can result 
in long delays and do not apply to domestic producers. 
 
Regulations that require product testing can be 
cumbersome and costly for small and medium-sized U.S. 
companies. Argentina's certificate of origin regulations 
require separate certificates for each of the countries 
involved in manufacturing the various components of a 
final product. 
 
In 2000, Resolution 287 established strict labeling 
requirements for footwear and textiles with respect to, 
inter alia, print size, attachment to the garment, and 
information contained (including country of origin and 
importer name). Importers complain that such requirements 
significantly delay import processing. 
 
INTELLECTUAL PROPERTY RIGHTS (IPR) PROTECTION 
 
Argentina's lack of adequate and effective intellectual 
property protection remains a concern for the United 
 
States. Argentina has been on the Special 301 Priority 
Watch List since 1996. Although cooperation has improved 
between Argentina's enforcement authorities and the U.S. 
copyright industry, and the Argentine Customs authority 
has taken steps to improve enforcement, the United States 
encourages stronger IPR enforcement actions to combat the 
widespread availability of pirated and counterfeit 
products. Civil damages are nondeterrent and in criminal 
cases the judiciary is reluctant to impose deterrent 
penalties, such as prison sentences. 
 
Argentine customs and other government authorities 
generally cooperate with U.S. industry efforts to stop 
shipments of pirated merchandise. In 2007, Argentine 
customs, in close collaboration with the private sector, 
instituted a program in which registered trademark owners 
are notified of imports using their trademarks. Working 
with those trademark owners, customs authorities have 
significantly increased seizures of goods with 
counterfeit trademarks. However, insufficient resources 
and slow court procedures have hampered the overall 
effectiveness of enforcement efforts. End-user piracy of 
business software, motion picture piracy, and book piracy 
remains widespread. The legal framework regarding 
Internet piracy provides few incentives to investigate 
and punish those who post infringing materials. 
 
Inadequate border controls further contribute to the 
regional circulation of pirated goods. Argentine customs 
authorities are authorized to detain imported merchandise 
based on the presumption of copyright or trademark 
violations.  Law 25986, passed in December 2004, expanded 
this authority to detain imported goods presumed to 
violate all other intellectual property rights, including 
patents or industrial designs. However, regulations to 
implement this law have  not yet been issued.  Further, 
in March 2007, the Executive branch proposed a 
modification to Law 25986 which would explicitly limit 
such intervention to copyrights and trademarks. This 
proposal has been approved by some congressional 
committees, but has not yet been considered by either 
full chamber of Congress. 
 
Patents 
 
The National Intellectual Property Institute (INPI) 
started to grant pharmaceutical patents in October 2000. 
Although issuance of pharmaceutical patents has been slow 
since that time, INPI took a number of steps to reduce 
the backlog, including the implementation in 2005 of 
fast-track procedures and opportunities in 2005 and 2007 
for companies to prioritize their patent applications 
before INPI. Representatives of U.S. companies with 
significant interest in patented product sales in 
Argentina say that the patent issuance process has slowed 
in 2008, and that the backlog of patent applications is 
growing.  Embassy has highlighted the impact of this 
growing backlog on U.S. company interests to government 
officials. 
 
The United States remains concerned about the lack of 
protection for the safety and efficacy data developed by 
pharmaceutical companies and required to be submitted to 
ANMAT (the Argentine equivalent of the U.S. Food and Drug 
Administration) for the approval of pharmaceutical 
products. Argentina amended its patent law in December 
2003, as required by a May 2002 agreement between 
Argentina and the United States. The intention of the 
amendment was to provide protections for process patents 
and to ensure that preliminary injunctions were available 
in intellectual property court proceedings. However, the 
injunctive relief process has thus far been too slow to 
be an effective deterrent to patent. 
 
Copyrights 
 
Argentina's copyright laws generally provide good 
protection, but copyright piracy remains a significant 
problem. Argentina ratified the World Intellectual 
Property Organization (WIPO) Copyright Treaty and the 
WIPO Performances and Phonograms Treaty in 1999, though 
some implementation issues remain. The government has yet 
to fully comply with an agreement with the U.S. private 
sector to eliminate unlicensed software used in 
government offices. 
 
Enforcement of copyrights on recorded music, videos, 
books and computer software remains inconsistent. The 
International Intellectual Property Alliance estimates 
that the trade losses in 2007 were $310.7 million, an 
increase from $268 million in 2006. 
 
Biotechnology 
 
The United States and Argentina have been closely allied 
in the area of agricultural biotechnology, including as 
co-complainants in a WTO dispute challenging the EU 
moratorium on transgenic crops and in discussions on 
implementation of the Cartagena Biosafety Protocol. 
However, the Argentine government has not enforced an 
intellectual property regime to ensure that companies 
developing new biotechnology crops are reasonably 
compensated and guarantee future investment in 
agricultural biotechnology. Argentina currently produces 
approximately 47 million tons of soybeans from 
biotechnology seed, the vast majority of which, according 
to U.S. private sector estimates, are produced without 
payment to the U.S. owners of the technology. Efforts are 
currently underway to rectify this situation. Post is 
actively working with the Secretary of Agriculture, as 
well as with interested U.S. companies, to support these 
efforts. 
 
SERVICES BARRIERS 
 
Argentina enacted broad liberalization in the services 
sector as part of its economic reform program in the 
1990s, but some barriers still exist. In addition, 
restrictions regarding the showing, printing and dubbing 
of films add cost to U.S. exports, as does the practice 
of charging ad valorem customs duties on U.S. exports 
based on the estimated value of the copyrights in 
Argentina rather than solely on the value of the physical 
materials being imported, which is the WTO standard. In 
practice, companies temporarily import one copy of a film 
and produce multiples copies locally, which they claim 
increases the cost of exporting movies to Argentina. 
 
Under the WTO General Agreements on Services (GATS), 
Argentina has committed to allow foreign suppliers of 
noninsurance financial services to establish all forms of 
commercial presence and has committed to provide market 
access and national treatment to foreign suppliers of 
noninsurance financial services. The only significant 
remaining barrier is the limit on lending for foreign 
bank branches based on local paid-in capital, as opposed 
to the parent bank's capital. 
 
Inland water shipping is reserved for Argentine flag 
carriers. Any foreign firm entering the market must 
nationalize vessels, pay high import duties, and follow 
strict local union regulations on nationality of the 
crew. 
 
Insurance 
 
In general, commercial presence of foreign insurance 
firms is permitted under the same conditions required for 
local firms. Law 20091, however, establishes that the 
branches or agencies of foreign insurance firms will be 
authorized to perform insurance activities in Argentina 
only if there is reciprocity in the respective countries' 
laws. Argentine residents cannot acquire life, medical, 
or patrimony insurance abroad and foreign suppliers 
cannot publicize their services within Argentina. 
 
There is also a restriction on foreign insurance firms 
insuring goods owned or used by the national, provincial, 
or municipal governments, independent agencies, and 
people or firms that were granted concessions. The 
insurance for such goods has to be engaged with local 
firms. 
 
GOVERNMENT PROCUREMENT 
 
Law 25551 of 2001 establishes a national preference for 
local industry for most government purchases if the 
domestic supplier bid is no more than 5 percent to 7 
percent (the latter figure for small or medium-sized 
businesses) higher than the foreign bid, and applies to 
tender offers by all government agencies, public 
utilities, and concessionaires. There is similar 
 
legislation at the provincial level, resulting in entry 
barriers for foreign firms. 
 
Argentina is not a signatory to the WTO Agreement on 
Government Procurement, but it is an observer to the WTO 
Committee on Government Procurement. 
 
INVESTMENT BARRIERS 
 
Brazil and Argentina's common automotive policy 
(Bilateral Automobile Pact), introduced in 2002 and 
modified in 2004, 2006, and 2008, significantly restricts 
bilateral trade in automobiles and automotive parts. 
(Under the 2008 accord, in effect until 2013, for each 
$100 of exports Brazil sells to Argentina, Argentina may 
ship up to $250 worth of vehicles and auto parts back to 
Brazil.  For each $100 of Argentine exports, the 
Brazilian auto industry can ship up to $195 to 
Argentina.) There is substantial U.S. investment in 
automobile manufacturing in Argentina, as well as 
significant trade of U.S. cars between their U.S. 
affiliates in Argentina and Brazil. These U.S. firms have 
optimized their regional production, in some cases 
through substantial investment in new Argentine 
production facilities, in line with evolving Bilateral 
Automobile Pact restrictions. 
 
In line with WTO rules, Argentina in 1995 notified 
measures (related to a prior bilateral auto pact with 
Brazil) inconsistent with its obligations under the WTO 
Agreement on Trade Related Investment Measures (TRIMS). 
The notified measures dealt with local content and 
balancing trade flows in the automotive industry. The 
notification allowed Argentina to maintain such measures 
for a five-year transitional period, which the WTO later 
extended until December 31, 2003. 
 
President Christina Fernandez de Kirchner announced 
October 21 that her administration would submit a bill to 
Congress to nationalize Argentina's private pension 
system.  Such a nationalization would impact the 
interests of U.S. companies with significant investment 
in Argentine private pension fund management.  The 
decision is currently pending consideration by the 
Argentine Congress. 
 
Exchange and Capital Controls 
 
Hard currency export earnings, both from goods and 
services, must be cleared in the local foreign exchange 
market, with some exceptions. Time limits to fulfill this 
obligation range from approximately 60 days to 360 days 
for goods (depending on the goods involved) and 135 
working days for services. For certain capital goods and 
situations where Argentine exports receive long-term 
financing not exceeding 6 years, Argentina exporters face 
more liberal time limits. The maximum foreign exchange 
clearance allowed for hydrocarbons exports is 30 percent 
of total revenues. There is no maximum for exports of 
certain minerals, re-exports of some temporary imports, 
and exports to Argentine foreign trade zones. Foreign 
currency earned through exports may be used for some 
foreign debt payments. 
 
Argentina has expanded its capital control regime since 
2003, with the stated goal of avoiding the potentially 
disruptive impact of large short-term capital flows on 
the nominal exchange rate. In June 2003, Argentina 
imposed a registration requirement for inflows and 
outflows of capital, and a 180 day minimum investment 
period. In May 2005, the government issued Presidential 
Decree 616 and extended the minimum time period to 365 
days. The Decree also expanded the registration 
requirement to include "all types of debt operations of 
residents that could imply a future foreign currency 
payment to nonresidents" and requires that all foreign 
debt of private Argentine residents, with the exception 
of trade finance and initial public debt offerings that 
bring foreign exchange into the market, must include 
provisions that the debt need not be repaid in less than 
365 days.  As part of the capital controls, in 2004 the 
BCRA issued several specific, narrowly applied new 
controls on capital flows.  Argentine residents are 
restricted to net currency purchases of USD 2 million per 
month.  Institutional investors are restricted to total 
currency transactions of USD 2 million per month, 
 
although transactions by institutions acting as 
intermediaries for others do not count against this 
limit. 
 
The Ministry of Economy implemented Decree 616 through 
resolutions in 2005 and 2006 which imposed more 
restrictive controls on the following classes of inbound 
investments: inflows of foreign funds from private sector 
debt (excluding foreign trade and initial public 
offerings of stock and bond issues); inflows for most 
fiduciary funds; inflows of nonresident funds that are 
destined for the holding of Argentine pesos or the 
purchase of private sector financial instruments 
(excluding foreign direct investment and the primary 
issuance of stocks and bonds); and investments in public 
sector securities purchased in the secondary market. 
These inflows are subject to three restrictions: (a) they 
may not be transferred out of the country for 365 days 
after their entry; (b) proceeds from foreign exchange 
transactions involving these investments must be paid 
into an account in the local financial system; and (c) a 
30 percent unremunerated reserve requirement, meaning 30 
percent of the amount of such transactions must be 
deposited in a local financial entity for 365 days in an 
account that must be denominated in dollars and pay no 
interest. As of September 2006, a deposit is not required 
for capital inflows aimed to finance energy 
infrastructure works. Furthermore, as of January 2008, a 
deposit is not required for inflows for the purchase of 
real estate property by foreigners as long as the foreign 
exchange liquidation occurs on the day of settlement (and 
transfer of the title). Violations are subject to 
criminal prosecution. In October 2007, the Central Bank 
introduced new control measures, banning all foreign 
entities from participating in Central Bank initial 
public offerings; however, foreign firms may still trade 
Central Bank debt instruments on the secondary market. 
 
Bilateral Investment Treaty 
 
Fifteen U.S. investors have submitted claims to investor- 
state arbitration under the United States-Argentina 
Bilateral Investment Treaty. Some of these cases claim 
that measures imposed by Argentina during the financial 
crisis that began in 2001 breached certain BIT 
obligations. 
 
ELECTRONIC COMMERCE 
 
Argentina has a legal framework for digital signatures. 
The Digital Signature Law 25506 of 2001 was implemented 
by Presidential Decrees 2628 of 2002 and 724 of June 
¶2006. Argentina has accepted digital signatures since 
early 2004, but requires that they are verified by a 
certified licensor. According to the U.S. private sector, 
this has facilitated transactions and its use has 
increased rapidly. 
 
Since 2006, Decree 724 has allowed the Argentina 
government agencies to act as certified licensors and to 
issue certificates for government officials or private 
individuals, establishing conditions for use of digital 
signatures between public organizations and the 
community. The Decree also eliminated the requirement 
that each entity with the authority to certify digital 
signatures be backed by liability insurance. Argentina 
does not allow the use of electronically produced air 
waybills, limiting their ability to speed up customs 
processing and the growth of electronic commerce 
transactions. 
 
Electronic invoicing became available in Argentina as of 
January 16, 2006, through the Federal Administration of 
Public Taxes (AFIP) Resolution 1956 of 2005. This new 
procedure allows replacement of the traditional paper 
invoice with an electronic one, which can be sent via the 
Internet. The resolution establishes eligibility 
requirements for companies to obtain authorization to use 
electronic invoicing, such as having appropriate 
information technology systems and infrastructure to send 
and store originals, duplicates, and receipts and to keep 
digital records/registry of all documentation sent and 
received. 
 
WAYNE