Argentina presents investment and trade opportunities, particularly in infrastructure, health, agriculture, information technology, energy, and mining; however, soaring debt and a failure to implement critical structural reforms have prevented the country from maximizing its economic potential, though the country has taken steps to diminish bureaucratic procedures. Market reactions to the 2019 Argentine presidential elections deepened the country’s economic crisis, stalling reform efforts and leading to a rollback of some market-driven growth policies and the imposition of capital and export controls. In late 2019, the government reprofiled some of the country’s local law debt payments. Argentina’s economy contracted for the second year in a row in 2019, as unemployment and poverty grew and annual inflation rose to 53.8 percent.
Following a victory in the October 2019 general election, President Alberto Fernandez took office on December 10, 2019. His economic agenda at the beginning of 2020 focused on restructuring the country’s sovereign debt and providing support to vulnerable sectors. The Fernandez administration increased taxes on foreign trade, further tightened capital controls, and pulled back from former President Mauricio Macri’s fiscal austerity measures, expanding fiscal expenditures. Citing a need to preserveArgentina’s diminishing foreign exchange reserves and raise government revenues for social programs, the Fernandez administration passed a sweeping “economic emergency” law that included a 30 percent tax on purchases of foreign currency and all individual expenses incurred abroad, whether in person or online.
The country began a nationwide quarantine on March 20 to combat the COVID-19 pandemic, shortly after the first case was confirmed on March 3. As of early May, the government anticipated a 6.5 percent drop in real Gross Domestic Product (GDP) growth for 2020, though the full economic impact will largely depend on how long quarantine restrictions last and whether the government reaches agreement with its private bondholders to avoid a sovereign default. The Argentine government issued a series of economic relief measures to mitigate the economic impact of the quarantine, primarily focusing on informal workers that account for approximately 40 percent of the labor force. The government’s self-declared insolvency has sharply limited its access to credit, obligating it to finance the pandemic-related stimulus measures by monetary issuance, which may hamper its efforts to restrain inflation and maintain a stable exchange rate. As a result of the crisis, industry and unions are analyzing changes to labor agreements and requesting government tax reforms. U.S. companies frequently point to a high and unpredictable tax burden and rigid labor laws, which make responding to changing macroeconomic conditions more difficult, as obstacles to further investment in Argentina. In April, the government reprofiled foreign currency local law debt. In early May, the Minister of Economy announced the government has sought to restructure its debt to private creditors by May 22 and to reschedule its Paris Club debt. The Minister also stated the government intends to seek a new program with the International Monetary Fund (IMF), to which it owes $44 billion from a Standby arrangement the government signed in 2018.
In 2019, Argentina fell two places in the Competitiveness Ranking of the World Economic Forum (WEF), which measures how productively a country uses its available resources, to 83 out of 141 countries, and 12 out of the 20 countries in the Latin American and Caribbean region. As a MERCOSUR member, Argentina signed a free trade and investment agreement with the EU in June 2019. Argentina has not ratified the agreement yet. In May, Argentina proposed slowing the pace and adjusting the negotiating parameters of MERCOSUR’s ongoing trade liberalization talks with South Korea, Canada, and other partners to help protect vulnerable populations and account for the impact of the ongoing COVID-19 pandemic. Argentina ratified the WTO Trade Facilitation Agreement on January 22, 2018. Argentina and the United States continue to expand bilateral commercial and economic cooperation, specifically through the Trade and Investment Framework Agreement (TIFA), the Commercial Dialogue, and under the Growth in the Americas initiative, in order to improve and facilitate public-private ties and communication on trade, investment, energy, and infrastructure issues, including market access and intellectual property rights. More than 300 U.S. companies operate in Argentina, and the United States continues to be the top investor in Argentina with more than USD $15 billion (stock) of foreign direct investment as of 2018.
Singapore maintains an open, heavily trade-dependent economy, characterized by a predominantly open investment regime, with strong government commitment to maintaining a free market and to actively managing Singapore’s economic development. U.S. companies regularly cite transparency and lack of corruption, business-friendly laws and regulations, tax structure, customs facilitation, intellectual property protections, and well-developed infrastructure as attractive features of the investment climate. The World Bank’s Doing Business 2020 report ranked Singapore as the world’s second-easiest country in which to do business. The Global Competitiveness Report 2019 by the World Economic Forum ranked Singapore as the most competitive economy globally. Singapore actively enforces its robust anti-corruption laws and typically ranks as the least corrupt country in Asia and one of the least corrupt in the world. Transparency International’s 2018 Corruption Perception Index placed Singapore as the fourth least corrupt nation. The U.S.-Singapore Free Trade Agreement (USSFTA), which came into force on January 1, 2004, expanded U.S. market access in goods, services, investment, and government procurement, enhanced intellectual property protection, and provided for cooperation in promoting labor rights and environmental protections.
Singapore has a diversified economy that attracts substantial foreign investment in manufacturing (petrochemical, electronics, machinery, and equipment) and services (financial services, wholesale and retail trade, and business services). The government actively promotes the country as a research and development (R&D) and innovation center for businesses by offering tax incentives, research grants, and partnership opportunities with domestic research agencies. U.S. direct investment in Singapore in 2018 totaled $219 billion, primarily in non-bank holding companies, manufacturing (particularly computers and electronic products), and finance and insurance. Singapore remains Asia’s largest recipient of U.S. FDI. The investment outlook remains positive due to Singapore’s involvement in Southeast Asia’s developing economies. Singapore remains a regional hub for thousands of multinational companies and continues to maintain its reputation as a world leader in dispute resolution, financing, and project facilitation, particularly for regional infrastructure development. In 2019, U.S. companies pledged $4 billion in future investments in Singapore’s manufacturing and services sectors.
Looking ahead, Singapore is poised to attract foreign investments in digital innovation and cybersecurity. The Government of Singapore (hereafter, “the government”) is investing heavily in automation, artificial intelligence, and integrated systems under its Smart Nation banner and seeks to establish itself as a regional hub for these technologies. Singapore is also a well-established hub for medical research and device manufacturing.
In recent years, the government has tightened foreign labor policies to encourage firms to improve productivity and employ more workers that are Singaporean. The government introduced measures in the 2019 and 2020 budget to further decrease the ratio of mid- and low-skilled foreign workers to local employees in a firm. These cuts, which target the service sector, were taken despite industry concerns about skills gaps. To address some of these concerns, the government has introduced programs that partially subsidize the cost to firms of recruiting, hiring, and training local workers. Singapore is heavily reliant on foreign workers who make up more than 20 percent of the workforce. The COVID-19 outbreak has been concentrated in dormitories for low-wage workers in Singapore, which may accelerate the government’s efforts to reduce the number of foreign workers.
Switzerland is welcoming to international investors, with a positive overall investment climate. The Swiss federal government enacts laws and regulations governing corporate structure, the financial system, and immigration, and concludes international trade and investment treaties. However, Switzerland’s 26 cantons (analogous to U.S. states) and largest municipalities have significant independence to shape investment policies locally, including incentives to attract investment. This federal approach has helped the Swiss maintain long-term economic and political stability, a transparent legal system, extensive and reliable infrastructure, efficient capital markets, and an excellent quality of life for the country’s 8.4 million inhabitants. Many U.S. firms base their European or regional headquarters in Switzerland, drawn to the country’s low corporate tax rates, productive and multilingual workforce, and well-maintained infrastructure and transportation networks. U.S. companies also choose Switzerland as a gateway to markets in Eastern Europe, the Middle East, and beyond. Furthermore, U.S. companies select Switzerland because hiring and firing practices are less restrictive than in other European locations, and due to the availability of a skilled workforce.
In 2019, the World Economic Forum rated Switzerland the world’s fifth most competitive economy. This high ranking reflects the country’s sound institutional environment and high levels of technological and scientific research and development. With very few exceptions, Switzerland welcomes foreign investment, accords national treatment, and does not impose, facilitate, or allow barriers to trade. According to the OECD, Swiss public administration ranks high globally in output efficiency and enjoys the highest public confidence of any national government in the OECD. Switzerland’s judiciary system posts the shortest trial length of any of the OECD’s 37 member countries. The country’s competitive economy and openness to investment brought Switzerland’s cumulative inward direct investment to USD 1.3 trillion in 2018 (latest available figures) according to the Swiss National Bank, although nearly half of this amount is invested in regional hubs or headquarters that further invest in other countries.
Many of Switzerland’s cantons have used tax incentives to attract investment to their jurisdictions, including tax waivers for new firms for up to ten years in some cases. However, following criticism from the European Union – as a bloc, Switzerland’s top trading partner – this practice was strongly curtailed by a new law passed in 2019. The Federal Act on Tax Reform and Swiss Pension System Financing (TRAF) entered into force on January 1, 2020, obliging cantons to offer the same corporate tax rates to both Swiss and foreign companies. However, the law allows cantons to continue to set their own cantonal rates and offer incentives for corporate investment through deductions and preferential tax treatment, for example for income derived from patents or expenses related to research and development.
Individual and corporate tax rates vary widely across Switzerland’s cantons. In 2019, Zurich, which is sometimes used as a reference point for corporate location tax calculations within Switzerland, had a combined corporate tax rate of 21.15 percent, which includes municipal, cantonal, and federal tax. The effective tax rate in Zurich was expected to fall to 19.7 percent in 2020, according to PricewaterhouseCoopers. The United States and Switzerland have a bilateral tax treaty, for which a new protocol on information sharing was ratified in 2019.
Key sectors that have attracted significant investments in Switzerland include IT, precision engineering, scientific instruments, pharmaceuticals, medical technology, and machine building. Switzerland hosts a significant number of startups, including a sizeable ecosystem for companies in blockchain and distributed ledger technologies.
Switzerland is a highly innovative economy with strong overall intellectual property protection. Switzerland enforces intellectual property rights linked to patents and trademarks effectively, and new amendments to the country’s Copyright Act to strengthen online copyright enforcement led to Switzerland’s removal from USTR’s Special 301 Watch List in 2020.
Some formerly public Swiss monopolies continue to retain market dominance despite partial or full privatization. As a result, foreign investors sometimes find it difficult to enter these markets (e.g. telecommunications, certain types of public transportation, postal services, alcohol and spirits, aerospace and defense, certain types of insurances and banking services, and salt). The Swiss agricultural sector remains protected and heavily subsidized, with direct subsidy payments comprising two-thirds of an average farm’s profits. However, this is starting to change: newly negotiated trade agreements, including between the European Free Trade Association (of which Switzerland is a member) and Mercosur, contain provisions which would open Swiss markets to new levels of agricultural imports.
Liechtenstein’s investment conditions are identical in most key aspects to those in Switzerland, due to its integration into the Swiss economy. The two countries form a customs union and Swiss authorities are responsible for implementing import and export regulations.
Both Liechtenstein and Switzerland are members of the European Free Trade Association (EFTA, including Iceland and Norway), an intergovernmental trade organization and free trade area that operates in parallel with the European Union (EU). Liechtenstein participates in the EU single market through the European Economic Area (EEA), unlike Switzerland, which has opted for a set of bilateral agreements with the EU instead.
Liechtenstein has a stable and open economy employing 39,653 people (2018 – latest figures available), exceeding its domestic population of 39,137 (2018) and requiring a substantial number of foreign workers. In 2018, 70.4 percent of the Liechtenstein workforce were foreigners, mainly Swiss, Austrians and Germans, most of whom commute daily to Liechtenstein. Liechtenstein was granted an exception to the EU’s Free Movement of People Agreement, enabling the country not to grant residence permits to its workers.
Liechtenstein is one of the world’s wealthiest countries. Liechtenstein’s gross domestic product per capita (at current USD) amounted to USD 179,258 in 2018. According to the Liechtenstein Statistical Yearbook, the services sector, particularly in finance, accounts for three-fifths of Liechtenstein’s jobs, followed by the manufacturing sector (particularly mechanical engineering, machine tools, precision instruments, and dental products), which employs nearly 40 percent of the workforce. Agriculture accounts for less than 1 percent of the country’s employment.
Liechtenstein’s corporate tax rate, at 12.5 percent, is one of the lowest in Europe. Capital gains, inheritance, and gift taxes have been abolished. The Embassy has no recorded complaints from U.S. investors stemming from market restrictions in Liechtenstein. The United States and Liechtenstein do not have a bilateral income tax treaty.