Article posted by Alfredo Fierro, for UKTI Buenos Aires
8 November 2012

Login or Register
to contact this user

Doing Business in Argentina

Produced by the UKTI Team in Buenos Aires

Contact: Alfredo Fierro

Email: alfredo.fierro@fco.gov.uk

Last Updated: 07/11/2012

The purpose of the Doing Business guides, prepared by UK Trade & Investment (UKTI) is to provide information to help recipients form their own judgments about making business decisions as to whether to invest or operate in a particular country. The Report’s contents were believed (at the time that the Report was prepared) to be reliable, but no representations or warranties, express or implied, are made or given by UKTI or its parent Departments (the Foreign and Commonwealth Office (FCO) and the Department for Business, Innovation and Skills (BIS)) as to the accuracy of the Report, its completeness or its suitability for any purpose. In particular, none of the Report’s contents should be construed as advice or solicitation to purchase or sell securities, commodities or any other form of financial instrument. No liability is accepted by UKTI, the FCO or BIS for any loss or damage (whether consequential or otherwise) which may arise out of or in connection with the Report.

Are you a member of a UK company wishing to export overseas? Interested in entering or expanding your activity in the Argentine market? Then this guide is for you!

The main objective of this Doing Business Guide is to provide you with basic knowledge about Argentina; an overview of its economy, business culture, potential opportunities and an introduction to other relevant issues. Novice exporters, in particular will find it a useful starting point.

Further assistance is available from the UKTI team in Argentina. Full contact details are available at the end of this guide.

Important Information – Sanctions and Embargoes

 

Some countries maybe subject to export restrictions due to sanctions and embargoes placed on them by the UN or EU. Exporting companies are responsible for checking that their goods can be exported and that they are using the correct licences.

 

Further information is available on the Department for Business, Innovation & Skills (BIS)

Introduction………………………………………………………………………………………. 4

Strengths of the market……………………………………………………………………. 4

Opportunities in Argentina…………………………………………………………………. 5

Trade between UK and Argentina………………………………………………………… 5

Economic Overview………………………………………………………………………….. 6

Population………………………………………………………………………………………. 7

Political Overview…………………………………………………………………………….. 8

Getting here and advice about your stay……………………………………………… 8

Getting here……………………………………………………………………………………. 9

Your stay………………………………………………………………………………………… 9

Preparing to Export to Argentina…………………………………………………………. 10

How to do business in Argentina…………………………………………………………. 11

What companies should consider when doing business…………………………. 11

Gateways/Locations – Key areas for business……………………………………… 11

Market entry and start up Considerations…………………………………………… 11

Customs and Regulations………………………………………………………………… 11

Legislation and Local Regulations……………………………………………………… 13

Responding to Tenders……………………………………………………………………. 14

Recruiting and Retaining Staffing……………………………………………………… 15

Documentation………………………………………………………………………………. 15

Labelling and Packaging Regulations…………………………………………………. 16

Getting your Goods to the Market……………………………………………………… 16

Standards and Technical Regulation………………………………………………….. 17

Intellectual Property Rights………………………………………………………………. 18

Business Etiquette, Language and Culture……………………………………………. 18

Language……………………………………………………………………………………… 18

Meetings and Presentations……………………………………………………………… 18

Negotiations………………………………………………………………………………….. 19

What are the challenges?…………………………………………………………………… 20

Getting Paid – Terms of Payment………………………………………………………. 20

How to Invest in Argentina…………………………………………………………………. 20

Financial Assistance……………………………………………………………………….. 20

Contacts…………………………………………………………………………………………. 21

Resources/Useful Links……………………………………………………………………… 22

Country Information……………………………………………………………………….. 22

Culture and communications……………………………………………………………. 22

Customs & Regulations……………………………………………………………………. 22

Economic Information……………………………………………………………………… 22

Export Control……………………………………………………………………………….. 23

Export Finance and Insurance………………………………………………………….. 23

Intellectual Property……………………………………………………………………….. 23

Market Access……………………………………………………………………………….. 23

Standard and Technical Regulations………………………………………………….. 23

Trade Statistics……………………………………………………………………………… 23

Travel Advice…………………………………………………………………………………. 23

Introduction

 

Argentina shares with Chile the southernmost tip of South America and the world’s third longest border. It is the world’s eighth largest country in terms of surface and stretches, from tip to toe, a distance of 4,000 km, a distance similar to that between London and Baghdad.

Beside from the recurrent images of tango, football, good wines and beef, Argentina is also the world’s 21st largest economy (IMF WEO 10/12), the second largest in South America: twice the size of Chile, the Czech Republic, Norway or Portugal and three times the size of Finland to name but a few. Its 40.1 million inhabitants generate the second highest per capita GDP in South America, currently US$ 18,205 (IMF WEO 10/12).

The capital of Argentina is Buenos Aires. It is a sophisticated and buoyant city of 12.8 million, influential in the region and jointly ranked with Mexico and Sao Paulo ranked as the top city in Latin America according to Loughborough University’s Globalisation and World Cities research project (2010).

The Argentine economy has grown eight of the last nine years with an average growth of 7.2% and with estimates of over 2.5% growth for 2012 and higher for 2013.
 

Strengths of the market

In brief these are:

  • Argentina is the second largest economy in South America
  • Varied and significant reserves of natural resources (food, minerals, hydrocarbons)
  • Second manufacturing capability (in output and diversity) in South America
  • Qualified labour and work force
  • Level of sophistication of the market
  • Part of Mercosur, the common market of southern South America
  • Entry route to other Spanish speaking markets in South America
  • Buenos Aires is the hub for the country so your one stop shop in most industry sectors
  • Familiar, European business culture
  • One of two countries in Latin America with direct daily flights from the UK
  • 3 hour time difference with the UK (4 hours during Argentina’s winter/UK summer)

 

Opportunities in Argentina

Argentina offers a wide range of business opportunities. It has a large industrial base that has been favoured in recent years by a number of measures. This means that although opportunities for the exports of finished products abound, they will be in different niches and subsectors and not all across the board.

Target sectors identified by UK Trade & Investment are listed below, However, a wide range of UK goods and services are demanded in Argentina where they have a reputation for quality and innovation:

  • Airports
  • Audiovisual/Advertising
  • Education and Training
  • Environment & Water
  • Food and Drinks
  • ICT (Mobile + Internet)
  • Life Sciences (CRO + Telemedicine)
  • Music
  • Non conventional oil and gas
  • Railways
  • Renewables
  • Security
  • Sustainable Construction

 

Trade between UK and Argentina

Argentina’s foreign trade is more or less evenly divided between Mercosur (the Common Market of the South), the EU, NAFTA and Asean countries.

UK Exports to Argentina in 2011 grew by 16% year on year to £414m. The list of products exported from the UK is varied. The UK’s top ten exports to Argentina are:

  • Medicines and pharmaceutical products
  • Chemical materials
  • Road vehicles
  • Power-generating equipment
  • Specialist industrial machinery
  • Miscellaneous manufactured articles
  • Organic chemicals
  • General industrial machinery
  • Beverages
  • Professional and scientific instruments

In 2011, Argentina exported £589m to the UK, a decrease of 6% compared to 2010. Argentina exports to the UK include animal feedstuffs, meat, fruit & vegetables, beverages and vegetable oils. The UK is Argentina’s largest European market for wines.

British exports to Argentina in the first half of 2012 have decreased by two percent in comparison to the first six months of the previous year. This is a relatively low reduction, in the context of Argentine measures designed to make importing more difficult and that have reduced overall Argentine imports in the same period by 6% and those of Argentina’s largest trading partners by figures over 10%

According to the Argentine Central Bank, in 2010, the UK was the 12th largest investor in Argentina, investing over US $2 billion. There are over 100 fully owned British subsidiaries operating in Argentina. UK companies continue to have an important stake in sectors such as pharmaceuticals (GlaxoSmithKline, AstraZeneca), financial services (HSBC, RSA & Willis), consumer goods (Unilever, Reckitt Benckiser), and energy (BP and Shell). Some of these companies have been operating in Argentina for over 100 years.

 

Economic Overview

Argentina is well known for its economic crises. What is less known is its ability to bounce back rapidly. The last of these crises took place in 2001/02 when GDP fell by 11%, the currency devaluated to a fourth of its value and Argentina defaulted on its sovereign debt. Since then, Argentina’s economy has grown by over 7% every year except 2009 when it contracted by 3%. 2012 is expected to finish with a growth of between 2.5 and 3% Argentina has repaid its debt with IMF and in two stages reached an agreement with 93% of its private creditors. Asides from this 7% referred to as “hold outs”, Argentina is still in arrears with an approximate US$ 6 billion debt to the Paris Club, the lack of payment of which can be attributed largely to political rather than economic reasons.

Imports exceeded pre-crisis levels in 2004 and international reserves reached an all time record of US$ 52.6 billion in February 2011. International reserves currently (September2012) stand at US$ 45.1 billion. Argentina also has a healthy balance of payment with exports exceeding imports by US$ 11billion in 2011. Much of this economic activity has been supported by record world prices for grains, of which Argentina is one of the top 5 global exporters.

Argentina is resource rich, self sufficient in foodstuffs, power and has substantial reserves of oil & gas. It is the world’s top ten producer of 26 agricultural commodities (FAO 2010). It also boasts South America’s second largest industrial base both in terms of output and variety of goods produced. Currently some of the most promising business opportunities are to be found in adding value to Argentina’s export sectors such as agriculture, oil & gas, petrochemicals and design.

Argentina is also an online power. Spanish is the world´s third most prolific online language and the one with the highest per capita spending power per cyber-user. Argentina produces 50% of the World’s online Spanish language content, and Facebook penetration is 12th highest in the world. It has the highest mobile phone penetration in the America’s (150%, more than the UK) and the highest Android penetration which offers great opportunities for British content on the networks. Large public works like the replication of a second 10,000km broadband backbone will increase business opportunities in these market sectors.

On the bilateral front there are areas where the UK really shines. As an example, 120 British acts have played in Buenos Aires in the last 20 months including a worldwide record of ten consecutive shows for Roger Waters’ The Wall performed in front of a total 700,000 people and for which the artist himself raised US$ 40 million.

Science and innovation collaboration presents significant opportunities too. Argentine innovation investment per capita outstrips all other South American countries except Uruguay and Brazil (eg by a ratio of nearly 2:1 compared to Chile and 7:1 compared to Colombia).The British economy benefits from a large number of Argentine technicians and innovators based in UK companies and research institutes, and the high quality of collaborations (e.g. Argentina researchers’ articles with UK partners are more successful than those they have with any of their other top-ten collaborators [source: Royal Society]).

Argentina is one of the five members of MERCOSUR, the Southern Cone Common Market, which came into effect on 1 January 1995 with a programme for the phased elimination of internal tariffs and the introduction of a common external tariff. With a population of 274 million, the 2011 total output from the five Mercosur countries was US$ 3,325 bn, making this grouping the world’s fifth largest economy and equalling 74% of the South American output. Mercosur comprises Brazil, Argentina, Paraguay, Uruguay and Venezuela. Bolivia, Chile and Peru are associate members. Mercosur internal trade has increased annually, but relations have been strained in the past few years by the effects of the Brazilian and Argentine devaluations and internal trading disputes as well as by the other members suspending Paraguay while they examine the legality of their Presidential change. Mercosur is negotiating a trade agreement with the EU, but progress has stalled in recent years.

 

Population

Argentina has 40.1 million people of which 12.8 million live in the Greater Buenos Aires area. The next largest cities are Cordoba, and Rosario with populations of above 1 million each. Vast parts of Argentina, notably Patagonia in the South, are sparsely populated with less than one inhabitant per square kilometre.

Within Latin America, Argentina has one of the lowest population growth rates at 0.91% and a life expectancy rate of 76 years.

 

Political Overview

Argentina is a federal republic with a Constitution that is similar to the USA’s. Democracy is firmly established, with seven presidential elections having been held since the end of the military dictatorships in 1983.

The foundation for Argentina’s economic resurgence in the 1990s, after decades of political instability and economic mismanagement had left the country with hyper-inflation, was the 1991 Convertibility Law. This established a currency board, fixing the exchange rate at one Argentine peso to one US dollar, with the two currencies fully convertible. This monetary regime was accompanied by structural reform, including trade liberalisation, large-scale privatisations and deregulation.

After ten years in power, under Carlos Menem, the Partido Justicialista (Peronists) lost the October 1999 elections to the left-of-centre Alliance candidate, Fernando de la Rua, who was inaugurated as President in December 1999. However, internal difficulties and a worsening economic crisis led to the resignation of President De La Rua on 20 December 2001, two years before the end of his presidential term. De La Rua’s resignation resulted in a period of political instability with 5 presidents in two weeks. It is important to note that the political crisis was solved following the rule of law to choose the five people who took the country’s highest office.

The Argentine Legislative Assembly then swore in Eduardo Duhalde from the Partido Justicialista as President on 2 January 2002. Duhalde had been selected to serve out De La Rua’s term of office to the end of 2003, although in June 2002 he announced that presidential elections would be brought forward to April 2003. Duhalde floated the Argentine peso, which led to a substantial devaluation of the peso against the US dollar.

President Nestor Kirchner was elected in 2003 and led a government characterised by a programme of economic renewal, public works and job creation. Cristina Fernandez de Kirchner, his wife, followed him in office from December 2007 onwards and in the Presidential elections of October 2011 she was re-elected for a second four year term with 55% of the votes, roughly ten percent more than those she had in her first election four years before and over 35% points more than the following candidate.

 

Getting here and advice about your stay

FCO Travel Advice

The FCO website has travel advice to help you prepare for your visits overseas and to stay safe and secure while you are there.

For advice please visit the FCO Travel section

 

Getting here

 

Buenos Aires is well served by various international airlines offering daily direct flights to Europe, the US and the rest of Latin America. There are also flights to Australia, Dubai, Qatar and South Africa several times a week.

British Airways serves London-Buenos Aires route with direct daily flights. Daily flights with connections via Frankfurt, Madrid, Milan, Paris, Rome, and Sao Paulo are also available from Air France, Alitalia, Iberia, KLM, Lufthansa, and TAM.

The main international airport is Ministro Pistarini, though it is better known as Ezeiza (EZE). Ezeiza is 32 kilometres or about an hour from the centre of Buenos Aires.

On arriving at Ezeiza, it is better to hire a remise (a private hire car) at one of the remise stands (e.g. Manuel Tienda Leon) located directly outside the customs area. The fare should be pre-paid at the remise stand and cost about AR$270(approximately £38 at prices and exchange rate current in September 2012) to the city centre. Ignore approaches by drivers soliciting in the arrivals hall.

There is no visa requirement for holders of UK passports visiting Argentina for short stays on business or tourism but British passport holders born in Argentina must also produce their Argentine passports on arrival. Visitors whose passports are due to expire within six months of their departure are advised to obtain a new passport before travelling. It is also advisable for travellers to carry with them a photocopy of the key pages of their passport but keep the original document in the hotel for safe keeping. Those applying for work and/or residence permits are advised to contact the Argentine Embassy in London as follows:

Argentine Consulate
65 Brook Street
London W1K 4AH
Tel: +44 (0)20 7318 1340
Fax: +44 (0)20 7318 1349
email: fclond@mrecic.gov.ar

 

Your stay

The city of Buenos Aires site (www.bue.gov.ar ) has a microsite that can help you plan your visit. The site is available in English and offers city maps, lists of hotels, restaurants, and downloadable audio guides to tour different parts of the city.

You may also wish to check out the sites for international travel guides including Time Out (http://www.timeout.com/buenos-aires), Lonely Planet and others which offer a wealth of advice on where to stay and go while in Buenos Aires.

 

Preparing to Export to Argentina

Argentina is an exciting market but not one without redtape or complications. For this reason, the choice of a good local agent and/or distributor is key as they will be able to better advice you on how to navigate without too many complications into success in the market.

Argentines give high importance to establishing good personal relations with their business contacts. For this reason, it is important to ensure continuity and that written and oral communications are from the same person. Spanish language is desirable but not always essential. Personal contact is the key to establishing effective business relations.

British companies wishing to succeed in the Argentine market are advised to undertake as much market research and planning as possible before leaving the UK.

UKTI’s team in Buenos Aires can provide a range of services to British-based companies wishing to grow their business in the Argentine market. Our services include the provision of market information, validated lists of agents/potential partners, key market players or potential customers; establishing the interest of such contacts in working with the company; and arranging appointments. In addition, they can also organise events for you to meet contacts or promote your company and its products/services.

You can commission these services which are chargeable and operated by UK Trade & Investment (UKTI) to assist British-based companies wishing to enter or expand their business in overseas markets. Under this service, the Embassy’s Trade & Investment Advisers, who have wide local experience and knowledge, can identify business partners and provide the support and advice most relevant to your company’s specific needs in the market.

To find out more about commissioning work, please contact your local UKTI office. See www.uktradeinvest.gov.uk

 

How to do business in Argentina

 

What companies should consider when doing business

Companies should be open minded and attentive to the requests from their agents and representatives in the market both as to formal issues (labelling, export documents, etc) as well as to commercial practices (packaging, means of transport, training, product launches, etc). Small deviations from the instructions could end of costing a small fortune both in direct costs as well as in time generated by the additional red tape and complications.

 

Gateways/Locations – Key areas for business

Greater Buenos Aires with 12.8 million inhabitants is by far Argentina’s largest commercial centre. Although specific industry sectors may require you to travel inland to the Provinces, it is most likely that initial business will take place in the city of Buenos Aires.

 

Market entry and start up Considerations

We can not stress enough the importance of a good agent, distributor, or representative and of following their advice to enter the market in a cost effective way. Local assembly or sub manufacturing as well as the use of duty free areas could be a good way to reduce the financial burden of steep landing costs as well as to negotiate some commercial barriers such as those imposed by non automatic import licences.

 

Customs and Regulations

Argentine Customs adhere to the Harmonised System (HS) for classification of goods. The import duties are ad-valorem and are based on the CIF value.

Argentina, Brazil, Uruguay and Paraguay formed MERCOSUR, an economic trading bloc and customs union in 1995. The vast majority of goods imported from non-MERCOSUR countries attract a common external import tariff that ranges from 0 to 32 percent, with the average rate being 14%. Exceptionally, some key categories do not attract a single common rate and the MERCOSUR member countries aim to converge towards a common external tariff for these goods.

Minimum specific duties (known as DIEM), as established by the Argentine Customs authorities, are used to determine the ad-valorem duties on textiles, clothing and footwear and are expressed in US$ per kilograms. The overall duty rate for DIEM sensitive goods originating from the UK does not exceed 35 percent.

Asides from the duties, imports into Argentina suffer levies and advanced tax payments that make the landed cost typically be 70-80% above the cost and freight (CNF) price of the goods placed in Buenos Aires. Approximately 30% of these costs, may be recovered at the end of the financial year depending on the situation vis a vis tax credits and debits of the importer.

In order to keep customs clearance costs low and avoid fines and demurrage charges it is advisable to await detailed shipping instructions from the importer before shipping. Facilities at the major ports are good. The smaller ports are a lot more basic but are nevertheless well regarded by South American standards. Applications for customs clearance must be lodged within 15 days of the estimated arrival of the goods. If not, a fine of 1% of CIF value may be liable. Storage charges accrue from the day of arrival and it is therefore advisable to get all the necessary documentation to the customs agent as soon as possible. Storage charges at the airports are especially high. Goods not claimed after a period, are considered abandoned and may be sold at a public auction.

Before placing an order, importers in Argentina have to first present the Argentine Customs (AFIP) with an electronic Sworn Statement of Intention to Import (DJAI by its initials in Spanish or DJAS to import services). The certificate has to indicate prices, amounts, dates and means of payment for the proposed operation. Customs will proceed to approve these operations within 72 hours with a maximum additional delay of ten days should the case merit it. In most cases, DJAIs are approved within the specified term. Anecdotal evidence suggests that in the cases in which they are not approved, importers will make slight changes and present the request on a different day, iterating this procedure until the approval is granted.

Goods listed under 591 tariff codes will also need to obtain a non automatic import licence (NAIL). Without this license, goods are not allowed to enter Argentina and could be confiscated by the customs authorities after 15 days in port warehouses. NAILs are designed to reduce and closely monitor the level of imports and increase Argentina’s trade surplus. Although formal rules do not state so, in practice, import requests from companies who are exporting or promise to export a sum similar or larger than that of their imports are looked upon more favourably by the authorities. Likewise, companies who present a plan to replace imports with locally manufactured goods (manufactured by themselves or others) will see their requests for NAILs considered more favourably.

These measures together with additional procedures for importers to obtain foreign currency are aimed at reducing capital flight (Argentina has lost over US$ 7 billion in reserves in the eighteen months leading to September 2012), collecting an additional US$ 12 billion to repay debts maturing during 2012 and increase tax collection.

Importers demanding hard currency must obtain an approval from the tax authorities (AFIP) to do so. If all papers are in order (DJAI, NAILs and the tax authority determines the company can justify the source for the money) payment is allowed five days before the due date stated in the commercial invoice or 270 days if no payment date is specified. Advanced payments are limited to one year in advance but exceptions can be applied should the manufacturing of the product require a longer lead time.

Given these new rules, local manufacturing and/or regional distribution of products could facilitate business in the market.

The European Union has compiled a list of trade barriers in the market. Although not all items will affect all companies, for a comprehensive list of these measures please access the following site:

http://madb.europa.eu/madb_barriers/barriers_result.htm?sectors=none&countries=AR&measures=none

 

Legislation and Local Regulations

The majority of agency and distribution agreements are flexible and can be negotiated individually. Most companies will prefer exclusive agreements, largely as most international business is conducted in the City of Buenos Aires and determining commission payments and evaluating the effort of more than one agent over an overlapping territory could easily lead to disputes.

There are few restrictions on setting up companies although bureaucracy and the variety of taxes and regulations can make it complex. Obtaining professional help is strongly advised especially as this will reduce the risk of long and possibly expensive wrangling at a later date. Legal processes in Argentina can be as expensive as in the UK but can take even longer.

Foreign and Argentine companies are treated equally under Argentine law and regulations. An Investment Promotion and Protection Agreement is in place between the UK and Argentina as well as a double taxation agreement that allows some taxes paid in one country to be deducted as an advance payment in the other country.

There is no single preferred business structure in Argentina and there are many ways of setting up a business; a corporation, a branch, a partnership, joint venture or sole proprietorship, the choice will depend largely on the type of operation.

The high level of sophistication in the market offers the alternative of licensing arrangements and joint ventures to develop business in Argentina and provide a gateway into MERCOSUR. This might be a logical second step for exporters, particularly if they have already established a firm and successful foothold in the market.

Following the Presidential elections of 23 October 2011, Argentina has introduced measures obliging mining and oil companies to repatriate the hard currency generated by their sales and limiting who is allowed to buy foreign currency.

The government has also asked many of the large companies in Argentina to voluntarily limit the payment of dividends abroad. In practice, when companies present the tax authorities (AFIP) and the Central Bank (BCRA) with a request for remitting funds abroad, the payment of interests is allowed, whereas that of profits/dividends and royalties, is limited. In the cases in which the company already has the required hard currency to be transferred, the operation is not objected. Companies wanting to make transfers to pay consultancy fees, will find their requests scrutinised in depth. This follows the Central Bank’s discovery that 95% of the total transfered overseas under these headings were intra company operations totalling US$ 11 billion.

Additional measures require those demanding hard currency to obtain an approval from the tax authorities with the objective of reducing capital flight, there is concern that these measures could become further barriers to trade. Overseas operations with credit cards will also be charged an additional 15% (indirectly affecting the exchange rate used for these operations) as an advanced tax on imports that the credit card holder may be able to offset against other tax payments or claim back depending on the expense in question.

These measures, alongside sometimes complicated and non transparent import procedures are being used effectively as a means to both generate an additional surplus of hard currency that have allowed Argentina to pay off over US$ 7 billion of debts maturing this year without using its reserves as well as to protect the domestic market.

In December 2011, the Argentine Congress approved a law to limit foreign ownership of land to 1,000 hectares in key areas of the country. It also sets a limit of 15% of total land being owned by foreigners. The legislation, designed largely to avoid tax evasion, allows foreign ownership by those who have lived in Argentina for over ten years, by those married to an Argentine citizen or by Argentine companies regardless of the nationality of their owner.

 

Responding to Tenders

In Argentina tenders issued by the public sector can be public or private depending on the amount of the contract to be tendered. In the case of a public tender, it will be advertised in the local printed media and will follow a very formal procedure. In the case of a private tender, offers will be received by invitation only. In both cases, a long set of formalities will be required including having a local representative in the market, presenting current and past financial statements, experience lists, demonstration of the possibility of offering an in country guarantee for the product, technical approvals (if pertinent), etc.

The process is bureaucratic so make sure you follow the advice of your local agent, representative or partner as you could easily be disqualified over a technicality.

In the case of documents that need to be legalised, both Argentina and the UK are signatories of The Hague Convention of 1961 abolishing the requirement of the legalisation of foreign public documents. In practice this means that a document signed by a recognised authority in the UK, may obtain an apostille from the Foreign & Commonwealth Office in London and will then deemed of legal value in Argentina. For more information on legalisation services, please visit the FCO’s website on www.fco.gov.uk .

 

Recruiting and Retaining Staffing

It is reasonably easy to find good, well-educated staff. English is increasingly used as a business language but it still may be difficult to find staff with a high level of business English. Recruitment is similar to the UK with a range of recruitment agencies and headhunting organisations.

Labour law is complex and changing. It is strongly recommended that legal advice be taken before entering into any contractual arrangement.

Pay is generally lower than in the UK but higher than in the rest of Latin America. Wages are increasing substantially every year accompanying a real inflation of over 20% per year whilst the exchange rate remains stable. Salaries are quoted monthly and like France 13 months are paid, the thirteenth ‘month’ is divided and paid in two six-month instalments in June and at Christmas. Labour costs in Argentina are a significant cost to business. Employer and employee contributions to social benefits are high and employees are responsible for compulsory contributions to health and pension schemes. For employees, contributions of around 17% can be expected and employers contribute between 18% – 30%, you should obtain professional advice.

Residential and work authorisation is necessary for all foreigners who wish to work in Argentina from the outset. Tourists can only reside for up to three months and obtaining work and residential authorisations can be bureaucratic and time-consuming for individuals and those registering a company. Seeking professional advice is recommended.

 

Documentation

Export documentation is formally the same as to export to any other country: packing lists, bills of lading, commercial invoices, certificates of origin, banking documents, test results, etc. The main difference lies in the definition of the goods used in these documents. A description of the goods that is deemed not clear for Argentine customs authorities could bring additional costs and delays and could even complicate payment as they could be considered discrepancies by the participating financial institutions.

For these reasons, it is extremely important to closely follow the instructions sent by the importer in Argentina.

 

Labelling and Packaging Regulations

As with documentation (above), labelling and packaging details should be agreed with the importer to avoid delays in clearing the goods.

Imports of textiles, apparel and footwear are subject to special labelling requirements and are carefully monitored by Argentine Customs. The label must be in Spanish with details of fabric content, care instructions, importer’s registration number, country of origin, etc. Foodstuffs, pharmaceutical, cleaning products and cosmetics need to be registered with the Argentine health authorities and require a similar label listing the ingredients, expiration date and full importer details.

According to the Commercial Loyalty Law, packaged products sold in the country need to include, in a visible place on the package or label, the product description; the country of manufacture; its quality, purity or composition; and its net size. If the products are not packaged it is not mandatory to indicate size, nor, when simple observation shows the product type, description and size. This information must be in Spanish and sizes must be metric (kilograms, metres, litres) although additional units can also be included.

 

Getting your Goods to the Market

Samples worth less than US$1,000 (AR$4,500) do not incur customs duty but do attract handling and storage charges. For samples over US$1,000 normal customs duties and clearance procedures apply. If samples are under the limit, the package should clearly state “Sample with no commercial value” (“Muestras sin valor comercial” in Spanish). Exporters should avoid sending samples to potential customers in Argentina unless they are specifically requested to and clear instructions and delivery instructions agreed. Most companies will baulk at having to pay customs duties plus charges for samples they have not requested. Samples of medical supplies and foodstuffs are subject to special health regulations and the importer must be notified to secure the necessary import licence.

It is important to highlight that these charges plus in some cases additional customs charges will have to be borne by the recipient of the goods in Argentina even if the goods have been shipped under an “all expenses paid” clause via DHL or any of the other international courier services. For this, we cannot stress enough the importance of not shipping any goods into Argentina without the express consent of the recipient.

Temporary imports by visiting exporters can be handled in one of three ways:

  • Small samples, valued at below US$1,000 (AR$4,500) can be considered as part of a passenger’s baggage and not therefore subject to duty (but will still require an invoice stating that they are goods with no commercial value).
  • Goods between US$1,000 (AR$4,500) and US$5,000 (AR$22,500) are subject to a simplified temporary import permit, requiring the authority of a locally registered customs broker to sign a bond for import duties.
  • Goods over US$5,000 (AR$22,500), or sent to Argentina by commercial freight, require a temporary import permit signed by the local importer, the customs broker and an insurance company bond.

In the case of the shipment of orders of goods into the markets, make sure you follow the advice and instructions of your agent and/or customer, especially with regards to shipping documents, banking documents, presentation and packaging of the goods, etc. in order to avoid delays and additional costs when clearing Argentine customs.

 

Standards and Technical Regulation

The Argentine standards authority is IRAM (www.iram.org.ar), website in Spanish only). Most IRAM standards are similar to German DIN and Euronorm standards. The testing of electrical and other products need to be done in the market at the INTI (National Industrial Technology Institute Laboratories). Carrying out these type tests can be expensive and requires a local representation and guarantee. A way around this could be if your product has already been tested at an international laboratory approved by IRAM.

Electricity is supplied at 220 volts, 50 cycles AC. Lamp fittings are the screw type. Incandescent bulbs are being phased out of the market with their availability highly limited after May 2011. Plug fittings are either two round pins (similar to the European style, but not identical) or a flat three-pin type (Australian style).

In the first half of 2012, Argentina introduced a new requirement under the scope of the Resolution 92/1998 (electric and electronic products operating up to 1000V AC or 1500V DC, with power consumption rated up to 5 KVA , and installations materials rated up to 63 A). Starting on the 1st of July 2012, foreign manufacturers and importers of ICT products are required to submit a physical non-revenuable test sample with the Certification Body (CB) Test report to a CB local in order to obtain Argentina’s “S-Mark” safety license. Local certification bodies will verify the CB test reports against a physical product sample before issuing safety certificates.

 

Intellectual Property Rights

Manufacturers are strongly advised to patent their inventions and register their trademarks in Argentina. Applications should be made through a patent or trademarks agent in the UK or in Argentina. The registration of all agreements relating to the use of patents and trademarks is compulsory. Patent and trademarks can be problem areas; local legal advice is advised.

Business Etiquette, Language and Culture

 

Language

Spanish is the official language of Argentina. Some senior staff in larger businesses understand English but not all. Nor do many Government officials.

Interpreters are expensive. You should expect to pay in excess of £180 for the services of a good interpreter for about six hours, and around £200 for eight hours. Some will consider a short meeting to be a half-day’s work. UKTI Buenos Aires can provide a list of interpreters.

 

Meetings and Presentations

In general, European business practices are followed. Although local standards on punctuality differ and you may be kept waiting, it is advisable for foreigners to be punctual at meetings. If you think you will be delayed, it is better that you call ahead.

Hours of business are generally static throughout the year. However, it is difficult to secure time with decision makers during the summer months of January and February when many Argentines are away on holiday and both the private and public sector organisations tend to run at reduced capacity. Visitors should think carefully before visiting during these months.

Offices: 09.00 – 18.00 Monday to Friday

Banks: 10.00 – 15.00 Monday to Friday

Shopping Centres: Monday to Sunday: 10:00 – 22.00

Greetings can be effusive, starting with an extended handshake at the first encounter. Once a friendship has been established men will embrace and greet women with a kiss. Women exchange a kiss. Argentines communicate in close proximity, do not back away.

Conservative attire for women is important in business. Men should wear blazers and a long sleeved shirt for casual dress, unless advised otherwise. Business cards are essential.

Many Argentines value the person with whom they do business more than the name of the company. If you change your negotiating team you may undermine the entire contract.

In Argentina full stops are used to punctuate thousands and commas to indicate decimal points. Also the “$” is used to show Argentine pesos (AR$), whereas “U$S” is used to show US dollars. Thus “$1.000,10” is one thousand Argentine pesos and 10 centavos.

Be aware that Argentines are sensitive to the use of “America” when referring to the United States. They regard “American” as a term that applies to the whole of North, Central and South America.

Argentines are used to last minute planning so don’t feel awkward to ring for a last minute meeting or to propose changes as, although not ideal, it will be understood and chances are your contact will be accommodating to the new circumstances.

 

Negotiations

Be prepared to discuss all aspects of a contract simultaneously rather than sequentially.

Unless you are dealing with a very large and/or international contract, common practice will be to negotiate the agreement with your local customer/agent and once you have agreed on the basics, let the lawyers and others participate and give it its legal shape.

Make sure that you have a local lawyer for contract issues. UKTI Buenos Aires can provide you with a list of lawyers and credit rating companies.

Especially in the case of joint ventures, investments or long-term contracts, be careful in agreeing ways for an out of court settlement as the Argentine judiciary can be lengthy and expensive. Argentine law allows for cases to be settled outside Argentine courts as well as for mediation (both domestic and international) clauses to be part of a contract.

 

What are the challenges?

Getting Paid – Terms of Payment

Letters of Credit are recommended when starting operations and for most Argentine companies these are not an unusual requirement. It is important however to understand that Letters of Credit are expensive in Argentina and local customers may wish to move into other payment forms including advance payments. For certain products the government has set minimum import terms of up to 360 days from Bill of Lading. Many companies are coping with these restrictions by paying from foreign bank accounts and/or will accept important advance payments as a way forward.

For further information on payments by Argentine companies overseas, please refer to the Legislation and Local Regulations section above in this report.

You may also wish to explore the credit history of your local importer. This may be done by using the services of one of the many credit rating agencies established in the market, a list of which may be obtained from UKTI Buenos Aires.

A less thorough but quicker check of the credit-worthiness of an Argentine company may be explored via the on-line database offered by the Argentina’s Central Bank’s “Consulta a la Base de Deudores” (Debtors Database) at www.bcra.gov.ar (Spanish only). In order to use this facility, you will need the tax number (CUIT) for the company you are checking.

Once in the market business payment terms are generally short, bank credit is generally unavailable and commercial credit is limited. Should payment terms not be met, means other than litigation should be tried. The enforcement of claims by litigation is long and costly and should be avoided unless the amounts involved are substantial. If no settlement is possible, the names of suitable lawyers prepared to act on behalf of foreign companies can be obtained from UKTI Buenos Aires. The intervention of a lawyer and, by implication, the threat of legal action, can often produce results before the case goes to court. There are several debt collection agencies that charge a high percentage of the amount of debt required.

 

How to Invest in Argentina

Financial Assistance

The main incentives to enter the market are given by the size of the market and that it is part of Mercosur, the common market of the south and a back door into other markets in the region, notably Brazil, the world’s 9th largest economy.

Certain industries such as the mining industry also have the advantage of special regimes with bespoke preferences such as advanced depreciation of assets, market protection schemes (automotive, shoes, etc) and others.

Greenfield operations proposing import substitution through local manufacturing, could also be eligible for “Plan Bicentenario” funds, namely soft loans at reduced interest rates well under the current market inflation.

Contacts

If you have a specific export enquiry about Argentina which is not answered by the information on this report, you may contact:

UK Trade & Investment Enquiry Service

Tel: +44 (0)20 7215 8000

Fax: +44 (0)141 228 3693

Email: enquiries@ukti.gsi.gov.uk

If you prefer to contact the team in Argentina direct, contact:

UKTI Buenos Aires

Dr Luis Agote 2412

Director, UKTI Argentina

+54-11-48082200

Baires.askcomm@fco.gov.uk

UK Trade & Investment can help you make the most of these opportunities and help you plan your approach to the market. You may find out more about the range of services available to UK companies trading internationally through your local International Trade Team.

We hope that you have found this guide useful. For further information, please contact your International Trade Adviser or one of the UKTI team in Argentina.

 

Resources/Useful Links

Business Link: International Trade

Business Link’s International Trade pages provide an overview of export basics including licensing, customs procedures, classifying and movement of goods, other regulatory information and export paperwork issues. It also introduces exporters to the UK Trade Tariff.

Essential reading for exporters!

Find out more at: http://www.businesslink.gov.uk/bdotg/action/layer?r.s=tl&r.lc=en&topicId=1079717544

 

Country Information

BBC Website:

http://news.bbc.co.uk/1/hi/country_profiles/default.stm

FCO Country Profile:

http://www.fco.gov.uk/en/travel-and-living-abroad/travel-advice-by-country/country-profile/

 

Culture and communications

CILT – National Centre for Languages – Regional Language Network in your area:

http://www.cilt.org.uk/workplace/employer_support/in_your_area.aspx

Kwintessential culture guides:

http://www.kwintessential.co.uk/

 

Customs & Regulations

HM Revenue & Customs: www.hmrc.gov.uk

Import Controls and documentation (SITPRO): http://www.sitpro.org.uk

 

Economic Information

Economist:

http://www.economist.com/countries/

 

Export Control

Export Control Organisation:

http://www.berr.gov.uk/whatwedo/europeandtrade/strategic-export-control/index.html/strategic-export-control/index.html

 

Export Finance and Insurance

 

ECGD: http://www.ecgd.gov.uk/

 

Intellectual Property

Intellectual Property Office:

www.ipo.gov.uk

 

Market Access

Market Access Database for Tariffs (for non-EU markets only):

http://mkaccdb.eu.int/mkaccdb2/indexPubli.htm

SOLVIT – Overcoming Trade Barriers (EU Markets only)

www.bis.gov.uk/EUMarketAccessUnit

 

Standard and Technical Regulations

British Standards Institution (BSI): http://www.bsigroup.com/en/sectorsandservices/Disciplines/ImportExport/

National Physical Laboratory: http://www.npl.co.uk/

Intellectual Property – http://www.ipo.gov.uk/

 

Trade Statistics

National Statistics Information: http://www.statistics.gov.uk/hub/index.html

UK Trade Info: https://www.uktradeinfo.co.uk/
 

Travel Advice

 

FCO Travel: http://www.fco.gov.uk/en/travel-and-living-abroad/

NHS: http://www.nhs.uk/nhsengland/Healthcareabroad/

Travel health: http://www.travelhealth.co.uk/


Rate this article

Article posted by Alfredo Fierro, for UKTI Buenos Aires
8 November 2012

Login or Register
to contact this user