VZCZCXYZ0015
RR RUEHWEB

DE RUEHBU #0388/01 0912123
ZNR UUUUU ZZH
R 012123Z APR 09
FM AMEMBASSY BUENOS AIRES
TO RUCPDOC/USDOC WASHDC
RUEHC/SECSTATE WASHDC 3460
RUCNMER/MERCOSUR COLLECTIVE

UNCLAS BUENOS AIRES 000388 
 
SIPDIS 
SENSITIVE 
 
USDOC FOR 4321/ITA/MAC/OLAC/ROSEN 
STATE FOR ECON WHA/BSC 
 
E.O. 12958: N/A 
TAGS: ETRD ECON WTRO AR
SUBJECT: AMCHAM ARGENTINA'S EXECUTIVE BOARD DISCUSSES LOCAL 
ENVIRONEMNT WITH AMBASSADOR 
 
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Summary 
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¶1. (U) On March 17, 2009, Ambassador Wayne met with Executive Board 
Members from the American Chamber of Commerce in Argentina.  Present 
at the meeting were representatives from IBM, Dow Chemical, WalMart, 
Cargill, Ford, GE, and Duke Energy.  The companies noted challenges 
they face due to the significant decline in domestic demand, 
inflation-driven demands for salary increases that are squeezing 
margins, strong labor unions, increasing GoA non-tariff 
protectionist measures, customs inefficiencies, and the overall 
unpredictability of current GoA administration.  The Board also 
noted GoA pressures to slow member companies' remittance of 
dividends to parent companies in the United States.  They agreed on 
the importance of strong collaboration with the Embassy in the areas 
of Intellectual Property Rights (IPR), Corporate Social 
Responsibility (CSR), forced child labor, and education.  End 
Summary. 
 
 
¶2. (SBU) On March 19, Ambassador Wayne hosted members of the Board 
of the American Chamber of Commerce in Argentina.  This was the 
first meeting of the executive Board under the leadership of the 
newly elected AMCHAM President, Rolando Meninato, who is also the 
President of Dow Argentina.  Mr. Meninato assumed this position from 
Juan Bruchou, President of Citibank Argentina, and it is expected 
that he will lead the Board in a very different manner due to the 
lower profile that Dow attracts in the market. 
 
--------------- 
Sales Slow 
--------------- 
 
¶3. (SBU) Members voiced concerns regarding the global economic 
crisis and its direct effects on their sales in Argentina.  Many 
agreed that January and February 2009 showed similar profits as the 
same months of 2008 but that, by the end of February, a dramatic 
downturn in demand became evident.  WalMart believed that the second 
quarter will be a difficult period, with expectations that the third 
quarter could be worse still.  However, WalMart confirmed they are 
moving forward with expansion plans in Argentina, noting their 
newest WalMart store scheduled to open in Buenos Aires in April 
¶2009.  There was a general consensus that a majority of the firms 
represented were currently operating in the red.  When asked if they 
believed that the current crisis would drive many U.S. firms out of 
Argentine market, all replied "no," referring to the rich history of 
commercial relations that exist between the United States and 
Argentina and the ability of companies to manage the current crisis 
based on lessons learned from past Argentine crises. 
 
¶4. (SBU) Several of the companies, including Ford, WalMart, and 
Cargill, explained that additional pressures such as demands by 
local unions for significant salary increases over the past two 
years were squeezing margins.  Many joked that the GoA's typical 
reaction to this challenge is to tell companies to simply accept 
reduced profitability.  Ford explained that they had success in 
convincing the GoA to allow decreases in salary as an alternative to 
lay-offs.  They also clarified that they have a very "proactive" 
relationship with the GoA, an exception to the rule that they 
attributed to the automotive sector's significant (indeed, almost 
totemic) importance to the Argentine political class and 
manufacturing sector. 
 
 
-------------------------- 
Imports and Protectionism 
-------------------------- 
 
¶5.  (SBU) Other board members stated that navigating Argentine 
Customs is a constant challenge, with significant delays for 
clearance a common phenomena.  Many U.S. companies have complained 
to Emboffs that it can take up to 60 days for product to be cleared 
by Customs.  When asked if the November 2008 creation of a new 
Production Ministry was effective, all agreed that it had no impact 
on business as all decisions are in the hands of a few key GoA 
players, none of which occupy positions in this new Ministry.  This 
led to several comments regarding Argentine Commerce Secretary 
Guillermo Moreno's direct contact with companies and his continued 
insistence on price controls.  All were amazed at the level of 
detail with which he conducts business, often personally calculating 
the "appropriate" cost of products himself. 
 
¶6. (SBU) Several members commented on current trade frictions 
between Argentina and Brazil after Argentina recently enacted import 
restrictions on several Brazilian goods.  Ford stated that President 
Fernandez de Kirchner reviews the automotive sector trade balance 
 
daily and so is very aware of the situation for both automobiles and 
parts.  He stressed that Ford currently received better treatment 
that many other firms as they currently do not have problems 
importing component parts from either Brazil or Mexico.  Others 
stressed that such restrictions are conducted on a sector-by-sector 
basis with many "voluntary" side agreements to restrain trade 
negotiated.  All agreed that, when able, the GoA would enact 
whatever policies it deems necessary to support local manufacturers, 
impacting those foreign companies in direct competition with local 
firms. 
 
------------------------------- 
Access to Dollars and Dividends 
------------------------------- 
 
¶7. (SBU) Several of the companies explained that their U.S. parents 
are demanding accelerating dividend remittances.  Dow stated that 
Secretary Moreno, in an effort to retain scarce foreign currency 
reserves in Argentina, has questioned company officials as to why 
their dividends must be returned to the United States.  Company 
representatives further stated that the GoA has attempted to 
correlate the amount a company is "allowed" to remit to the United 
States with its level of exports.  Cargill explained that they take 
a proactive approach with Moreno concerning this issue, which seems 
to have worked thus far. 
 
¶8. (SBU) Regarding access to dollars, all agreed that the GoA is 
working to control money flows and has its own staff assigned to 
each bank in order to closely monitor the situation.  Many believed 
that dollar purchases in excess of 25 million dollars were being 
denied as the Central Bank has increasingly limited access to 
dollars.  EMBOFFs have heard this from other private sector sources 
as well. 
 
---------------------------- 
G-20, Summit of the Americas 
---------------------------- 
 
¶9. (SBU) The Board was very interested to hear of the recent phone 
call that took place between Presidents Obama and Fernandez de 
Kirchner as they were hopeful for greater open dialogue between our 
two countries.  They were optimistic that the upcoming G-20 and 
Summit of the Americas would be venues for expanded bilateral 
dialogue.  Each clarified that they were not planning on attending 
the Private Business Forum being organized on the margins of the 
Summit of the Americas held in Trinidad and Tobago later this month. 
 
 
-------------------- 
Future Collaboration 
-------------------- 
 
¶10. (SBU) All agreed that increased future collaboration in the 
areas of IPR, CSR, forced child labor issues, and education were 
essential.  Regarding IPR, Amcham CEO Alejandro Diaz spoke of the 
importance of encouraging Argentina to ratify the Patent Cooperation 
Treaty (PCT), which allows an applicant to request a patent in one 
contracting country for use in other signatory countries.  The 
Ambassador mentioned that he was very pleased to work with AMCHAM on 
this year's NGO fair and was confident that it would be another 
successful effort.  He also elaborated on the idea of working with 
the Ministry of Labor and AMCHAM members on highlighting best 
practices in the area of forced child labor.  AMCHAM President 
Meninato replied that members would be happy to do so. 
 
¶11. (SBU) The Ambassador also stressed the need for U.S. companies 
to highlight their CSR, job creation and investment activities in 
Argentina and generate proactive press strategies.  He encouraged 
all to generate releases on positive issues, especially highlighting 
what many considered small investments and expansions. 
 
WAYNE