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Argentina: Market Profile

Picture: Argentina factsheet
Picture: Argentina factsheet

Recent Developments

  • To attract productive foreign direct investment that leads to job creation and to promote the development and diversification of domestic exports, Argentina has put numerous incentive programmes into place which have been designed to facilitate domestic and foreign investment in the country. These programmes are implemented by the national, provincial and municipal authorities and include sector incentives as well as relocation, innovation, technological development, employment, investment financing and export promotion incentives. More information on the investment environment and the relevant regulations can be found at Invest in Argentina.
  • Under the country’s investment development strategy, industries such as food and beverages, renewable energies, biotechnology, software and IT, creative industries, wine industry, automotive industry, technical and professional services and capital goods are the key priority sectors.
  • The inflows of foreign direct investment (FDI) to Argentina exceeded US$5.7 billion in 2016, with China contributing US$182 million. As of the end of 2016, China’s total stock of FDI to Argentina exceeded US$1.9 billion, up from US$157 million in 2007. Hong Kong, holding a FDI stock of US$123 million in 2016, was Argentina’s fourth largest Asian investor, behind the Chinese mainland, Japan and Singapore.
  • Hong Kong’s total exports to Argentina slid by 6% to US$539 million in the first ten months of 2017, while its imports from Argentina increased by 4% to US$192 million.

Current Economic Situation

Stalled by capital flight, weaken external demand driven in part by the deep recession in Brazil, soaring prices and a plummeting currency, the Argentine economy has been facing economic hardship in recent years. But signs of improvements are observed as the recent reforms and changes in economic policy to unify the exchange rates (official and parallel), normalise relations with foreign creditors, realign utility prices closer to cost, remove distortions on trade and capital mobility, and improve transparency and governance start to gain traction.

As such, a more stable peso, the gradual lifting of the country’s currency controls and rising international commodity prices are underpinning the Argentine economy. As the various reforms proposed by the new president are restoring confidence of international investors and creditors, the Argentine economy is forecast to see better prospects over the longer term. For both 2017 and 2018, the Argentine economy is expected to see economic growth of 2.5%.

Trade Policies

According to Argentina’s Customs Code, importers and exporters must be listed in the registry of importers and exporters at the Argentine Customs (Dirección General de Aduanas (DGA)). Argentina applies import duties and a range of indirect taxes on import and local transactions. Products imported for consumption are generally subject to import duties, statistical tax, value-added tax, excise duties and anticipated profits tax. As a member of the Southern Common Market (Mercosur) customs union, Argentina utilises the Mercosur Common Nomenclature (NCM) classification, which is consistent with the Harmonised System (HS) classification.

On 1 January 1995, Argentina, along with other Mercosur members (i.e. Brazil, Paraguay, Uruguay and Venezuela which became a member in July 2012), implemented the Common External Tariff (CET). Most imports from non-Mercosur members are then subject to CET which ranges from zero to 35%. Argentina has adopted a July 2015 decision by the Common Market Council to extend the mechanism that allows Mercosur countries to have a national list of exceptions to the CET. In the case of Argentina, this exception will apply to up to 100 tariff lines through 31 December 2021. The new list of tariff lines includes a range of items classified in HS Chapters 7, 11, 12, 13, 15, 20, 22, 28, 29, 31, 32, 37, 38, 39, 40, 45, 48, 54, 58, 59, 70, 72, 73, 78, 84, 85 and 87.

Apart from free trade agreements with a range of countries, including Bolivia, Chile and Colombia, Ecuador, Mexico and Peru under Mercosur, Argentina also provides certain duty breaks to members of the Latin American Integration Association (ALADI) for goods not covered under the aforementioned agreements.

While the new president has proposed to carry out various trade and fiscal reforms, Argentina currently applies minimum specific import duties (DIEMs) on a range of imports from all destinations apart from Mercosur countries. DIEMs are applied only when the duty that results from their application is greater than that resulting from ad valorem tariff. Products currently subject to DIEMs include textile, apparel, footwear and certain toys.

Argentina has two types of import licences – automatic and non-automatic. On 21 December 2015 the Comprehensive Import Monitoring System (Sistema Integral de Monitoreo de Importaciones (SIMI)) replaced the DJAI (Declaración Jurada Anticipada de Importación, or sworn advance import declaration) system for managing and processing import licences in Argentina. The Argentinean government is issuing automatic licences through SIMI for imports for consumption within Argentina of products under virtually all tariff lines. Non-automatic import licences are required for a range of goods due to their sensitive nature. These licences are typically issued within ten days unless the application is incomplete, in which case authorities have up to 30 days to complete their review and make a decision. The government also recently increased from 90 days to 180 days the period of validity of non-automatic licences and amended the list of items subject to non-automatic licencing.

In August 2005, DGA established a system whereby imports of textiles, apparel, footwear and toys for consumption would be processed by certain “specialised” customs ports. Argentinean authorities argued at the time that this system was meant to, among other things, enhance effective customs oversight and reduce contraband activities and tax evasion. The range of products covered by this system was expanded on 24 August 2007 per Resolution 50/2007 to include such items as tableware and kitchenware, luggage and bags, leather apparel, glassware, imitation jewellery, certain appliances, tools, electrical machinery and equipment, certain automotive parts, bicycles, motorcycles, watches and lamps. In addition, the number of customs ports authorised to process textile and apparel merchandise was reduced from 13 to 11 while the number of ports authorised to process footwear was cut from eight to seven.

The DGA issued a resolution that, effective from 5 February 2010, amended the scope of products covered by this system and expanded the list of authorised ports. One of the most notable changes was the removal of HS Chapter 85 from the list and its replacement with headings 8508, 8509, 8510, 8516, 8519, 8521, 8523, 8527, 8528, 8531, 8536 and 8544, which has resulted in the elimination of a total of 34 four-digit headings under chapter 85 from the list. On the other hand, the DGA added to the list a large number of ports to the list, including seven new ports to process footwear and textiles and apparel, eight new ports to process tools and other items of HS chapters 82 and 83, and five new ports to process clocks and watches.

On the other hand, Argentinean authorities have a long-standing practice of setting reference/criterion values for a broad range of imported merchandise, which are purportedly aimed at preventing the under-invoicing of imports. The latest examples include three administrative notices (General Resolutions 3696/2014, 3697/2014 and 3699/2014) amending or establishing new criterion values for men’s and boys’ synthetic fibre trousers, shorts, and bib and brace overalls; men's & boys' cotton knitted shirts; and combs, hair-slides and the like. Imports with a declared value lower than the criterion value require payment of a guarantee equivalent to the difference in duties to be paid on the declared value and the criterion value. The list of products subject to criterion values is frequently modified and covers imports from a range of countries. An updated list of current criterion values is available at http://www.afip.gob.ar/Aduana/valoracion/valores.criterios.pdf.

In November 2004, Argentina signed an agreement with China where it committed to grant market economy status to mainland China for purposes of anti-dumping (AD) and countervailing (CV) duty investigations. However, it appears that Argentina has not amended its legislation to treat the Chinese mainland as a full market economy country. In fact, AD duty investigations of mainland Chinese products are still conducted in accordance with Decree 1219/2006, which sets forth investigative procedures for non-market economy and transition economy countries and requires the use of cost and pricing structures from a surrogate market economy country.

As it now stands, Argentina imposed a number of AD measures on imports from the Chinese mainland, including ceramic tiles, bicycle tyres, spanners and wrenches, pipe fittings, dishware, water pumps, porcelain insulators and microwave ovens, along with a number of investigations and expiry or changed circumstances reviews. However, Argentina did not apply any AD measures on imports from Hong Kong or CV measures on imports from both Hong Kong and the Chinese mainland.

Argentine authorities also implement, on an informal basis, a trade balancing/one-to-one matching requirement that, in many instances, requires importers to commit to export one dollar’s worth of merchandise for every dollar’s worth of merchandise they import into Argentina and/or make certain investment in the country. There is no formal legislation in Argentina governing these practices, however. Rather, Argentine authorities are pursuing many of these efforts by holding meetings with importers and manufacturers in various sectors.

Regarding product standards and regulations, all goods – domestic or imported – must be marked with the name and description of the product, the country of origin, the quality, purity or blending description, and the net weight on the label. In addition, there are separate labelling requirements for perishable goods, inflammables and other selected products. Since 1998, technical regulations governing safety and mandatory certification have been adopted in Argentina for electrical equipment, toys, footwear, gas appliances and products, construction steel, bicycles, elevators and personal protective equipment, among others. Examples of technical regulations adopted at the Mercosur level that have been recently implemented in Argentina include regulations on colorants in personal hygiene and cosmetic products (Order 1608/2013), migration requirements for food contact plastic containers (Joint Resolution 117/2012) and inorganic contaminants in food (Joint Resolution 116/2012).

Resolution 92/1998 established mandatory safety requirements for most electrical and electronic equipment that fall within the range of 50-1,000 volts AC or 50-1,500 volts DC, including household appliances, audio/video equipment, lighting fixtures and information technology equipment (eg printers, scanners, monitors, etc.). These products must bear the national certification mark, known as the “S” Mark, as well as the mark of the certification organisation accredited by the Argentine Accreditation Organisation.

Furthermore, Argentina also has specific labelling requirements for a range of products, regulated by various agencies. For instance, under Mercosur’s technical regulations establishing labelling requirements for textile and apparel products, subject merchandise will have to include the following information in a label, stamp, decal, print or similar means that is permanent, indelible, legible and clearly visible: (i) name or registered brand and tax identification of the domestic producer or importer; (ii) country of origin; (iii) fibre content (fibres accounting for less than 10% of the total may be listed as “other fibre(s)”); (iv) care labelling instructions; and (v) size or dimensions, as applicable. This information will have to be presented in the language of the country of consumption but could also be presented in another language(s).

Since November 2011 Argentine authorities have issued several regulations modifying and further restricting access to the country’s foreign exchange market. These involve the newly created (published in the Official Bulletin on 17 November 2014) inter-agency Unit for the Follow-up and Traceability of Foreign Trade Operations (Unidad de Seguimiento y Trazabilidad de las Operaciones de Comercio Exterior) which is tasked to verify the price and the amount of the goods and services exported and imported together with the entry and exit of foreign currency.

Free trade zones have been established in Argentina since 2004. However, most of them only carry out storage and service activities. So far, the only special free trade zone is located in Rio Grande, Province of Tierra del Fuego. Against the Free Trade Zone standing, imports of parts and components into Tierra del Fuego Free Trade Zone are free of import duties, while goods produced in the Free Trade Zone can be imported duty-free into the rest of the Argentine territory. By receiving the “Made in Argentina” origin qualification, goods produced in the Tierra del Fuego Free Trade Zone will also be granted a preference margin within Mercosur.

Hong Kongs Trade with Argentina [1]

Hong Kong’s total exports to Argentina slid by 6% to US$539 million in the first ten months of 2017, after tumbling by 31% to US$639 million in 2016. Major exports to Argentina in January-October 2017 included telecommunications equipment and parts (shared 54% of the total), computers (12%), parts & accessories of office machines/computers (6%), toys, games and sporting goods (4%), office machines (3%), electrical machinery & apparatus (2%), watches and clocks (2%) and measuring, checking, analysing & controlling instruments & apparatus (2%).

On the other hand, Hong Kong’s total imports from Argentina increased by 4% to US$192 million in the first ten months of 2017, after falling by 8% to US$238 million in 2016. Leading imports from Argentina in January-October 2017 included fresh, chilled or frozen meat and edible meat offal (shared 43% of the total), leather (41%) , fresh, chilled or frozen meat of bovine animals (5%), fresh or dried fruit and nuts (not including oil nuts) (2%) and telecommunication equipment and parts (2%).

Table: Hong Kong Trade with Argentina
Table: Hong Kong Trade with Argentina

[1] Since offshore trade has not been captured by ordinary trade figures, these numbers do not necessarily reflect the export business managed by Hong Kong companies.

Content provided by Picture: Russell Mak