Executive Summary

Argentina is the third largest country in Latin America and one of the wealthiest in the region, possessing abundant human and natural resources, highly diversified industries, and a population of 43 million people. The country has the second largest shale gas resources and fourth largest shale oil resources worldwide, and presents significant investment and trade opportunities, particularly in infrastructure, health, agriculture, information technology, energy, and mining.

Since entering office in December 2015, the Macri Administration has focused on rebuilding investor confidence and attracting investment as key to economic recovery. Macri and his economic team acted quickly to correct macroeconomic imbalances, including unifying the exchange rate, lifting currency controls, improving the accuracy and transparency of government statistics, reducing distortionary import and export restrictions, and resolving the long-standing bond holdouts dispute that allowed Argentina to exit default and reenter international capital markets after 15 years. The Macri Administration has improved government transparency, increased dialogue with stakeholders, including the private sector, unions, and political opposition, as well as strengthened coordination between the national and provincial governments. The government took steps to improve Argentina’s regulatory framework to facilitate business creation and trade particularly for small and medium-sized enterprises, and to increase competition in the communications, gas and energy, auto, and aviation sectors. It also took some measures to strengthen protection of intellectual property rights, but long-standing deficiencies remain.

The Macri government took steps to reintegrate Argentina into the international community, including reestablishing consultations with the International Monetary Fund (IMF), which lifted its censure of Argentina in November 2016; agreeing to chair the World Trade Organization Ministerial Conference in December 2017 and to assume the G20 Presidency in 2018; hosting the World Economic Forum in Latin America in April 2017; pursuing an EU-MERCOSUR trade agreement; expanding economic cooperation with numerous partners including Mexico, Chile, Brazil, Japan, South Korea, Spain, Canada, and the United States; becoming an observer in the Pacific Alliance; and increasing constructive engagement with the Organization for Economic Cooperation and Development (OECD) with an eye towards eventual membership. Argentina has notified its intention to ratify the World Trade Organization (WTO) Trade Facilitation Agreement, which is pending congressional approval.

To showcase Argentina as “open for business,” the country convened nearly 2,000 leading business and world leaders in September 2016 for the first Argentine Business and Investment Forum. Since the beginning of the Macri Administration, the private sector has announced planned investments for the 2016-2019 time period totaling approximately USD 45.6 billion. Moody’s in March 2017 upgraded the Government of Argentina’s rating from stable to positive, but maintained the issuer rating at B3 (speculative). Standard & Poor’s recently upgraded its sovereign rating for Argentina from B- to B.

Argentina and the United States continued to expand bilateral commercial and economic cooperation, specifically through the Trade and Investment Framework Agreement (TIFA), the Commercial Dialogue, and the Digital Economy Working Group, in order to improve and facilitate public-private ties and communication on trade and investment issues, including market access and intellectual property rights. Argentina and the United States continue to discuss pending trade disputes, including a 2012 WTO case stemming from Argentina’s import policies. More than 500 U.S. companies operate in Argentina, and the United States continues to be the top investor in Argentina with more than USD 13 billion of foreign direct investment as of 2015.

The policies laid out by the Macri Administration over the past year have led to slight improvements in Argentina’s macreconomic performance, with the latest private and official estimates projecting a mild economic recovery of 2.5-3.5 percent GDP growth for 2017. Inflation clocked in at 40 percent for 2016 but is on a downward trend. The IMF, World Bank, and private economic consultants have issued reports forecasting economic recovery and declining inflation to continue through 2018. Despite these improvements, key challenges remain, such as the need to further slow inflation, reduce the fiscal deficit, improve competitiveness, increase access to financing, further liberalize trade, and strengthen the country’s institutional framework.

Table 1

Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2016 95 of 175 http://www.transparency.org/
World Bank’s Doing Business Report “Ease of Doing Business” 2016 116 of 190 doingbusiness.org/rankings
Global Innovation Index 2016 81 of 128 https://www.globalinnovationindex.org/
U.S. FDI in Partner Country ($M USD, stock positions) 2015 USD 13,323 http://www.bea.gov/
World Bank GNI Per Capita 2015 USD 12,460 http://data.worldbank.org/

Policies Towards Foreign Direct Investment

The Macri government actively seeks foreign direct investment. To improve the investment climate, the Macri Administration has enacted reforms to reduce economic distortions, increase capital markets efficiencies, and improve the transparency of regulatory and administrative processes. It expanded economic and commercial cooperation with key partners including Mexico, Chile, Brazil, Japan, South Korea, Spain, Canada, and the United States, and deepened its engagement in international fora such as the G20, WTO, and OECD.

Over the past year, Argentina issued new regulations in the gas and energy, communications and technology, aviation, and automobile industries to improve competition and provide incentives aimed to attract investments to those sectors. The government also announced a number of infrastructure development plans, including Plan Belgrano for the northern region and Plan Patagonia for the southern provinces of the country. Argentina is also seeking investments to build out its fiber optic network and increase internet connectivity through its Federal Digital Plan.

Foreign and domestic investors generally compete under the same conditions in Argentina. The amount of foreign investment is restricted in specific sectors such as aviation and media. Foreign ownership of rural productive lands, bodies of water, and areas along borders is also restricted.

Argentina has a national Investment and Trade Promotion Agency that provides information and consultation services to investors and traders on economic and financial conditions, investment opportunities, and Argentine laws and regulations. The agency also provides matchmaking services and organizes roadshows and trade delegations. The agency’s web portal provides detailed information on available services (http://www.produccion.gob.ar/agencia ). Many of the 24 provinces also have their own provincial investment and trade promotion units to attract and facilitate investments in their provinces.

The Macri Administration welcomes dialogue with investors. Argentine officials regularly host roundtable discussions with visiting business delegations and meet with local and foreign business chambers. During official visits over the past year to the United States, China, and Europe, among others, Argentine delegations often met with host-country business leaders.

Limits on Foreign Control and Right to Private Ownership and Establishment

Foreign and domestic commercial entities in Argentina are regulated by the Commercial Partnerships Law (Law No. 19,550), the Argentina Civil and Commercial Code, and rules issued by the regulatory agencies. Foreign private entities can establish and own business enterprises and engage in all forms of remunerative activity in nearly all sectors. Full foreign equity ownership of Argentine businesses is not restricted, for the most part, with exception to the air transportation and media industries. The share of foreign capital in companies that provide commercial passenger transportation within the Argentine territory is limited to 49 percent per the Aeronautic Code Law No. 17,285. The company must be incorporated according to Argentine law and domiciled in Buenos Aires. In the media sector, Law No. 25,750 establishes a limit on foreign ownership in television, radio newspapers, journals, magazines and publishing companies to 30 percent.

Law No. 26,737 (Regime for Protection of National Domain over Ownership, Possession or Tenure of Rural Land) restricts foreign ownership to a maximum of 15 percent of all national productive land. Individuals or companies from the same nation may not hold over 30 percent of that amount. Individually, each foreign individual or company faces an ownership cap of 1,000 hectares (2,470 acres) in the most productive farming areas, or the equivalent in terms of productivity levels in other areas. Section 11 of the law establishes that “for the purposes of this law and according to the Bilateral Investment Treaties (BITs) underwritten by the Republic of Argentina that are in force at the time this law becomes valid, the acquisition of rural land shall not be considered an investment as it is a non-renewable natural resource provided by the host country.” The law also establishes that a foreigner cannot own land that contains big and permanent extensions of water bodies, are located in riversides or water bodies with such features, or are located near a Border Security Zone.

Argentina does not maintain an investment screening mechanism for inbound foreign investment.

Other Investment Policy Reviews

Argentina was last subject to an investment policy review by the OECD in 1997 and a trade policy review by the WTO in 2013. The United Nations Conference on Trade and Development (UNCTAD) has not done an investment policy review of Argentina.

Business Facilitation

Since entering into office in December 2015, the Macri Administration has enacted reforms to normalize financial and commercial transactions and facilitate business creation and cross-border trade such as by eliminating capital controls, reducing export taxes and import restrictions, streamlining business administrative processes, decreasing tax burdens, increasing businesses’ access to financing, and streamlining customs controls.

The Argentine government is rolling out implementation of several new customs tools to facilitate cross-border trade across. It notified its intention to ratify the WTO Trade Facilitation Agreement (TFA) by submitting Category A TFA commitments to the WTO in May 2016 and Category B commitments in March 2017. TFA ratification is pending Congressional approval.

The Macri Administration enacted a law in July 2016 that streamlined administrative processes and reduced tax burdens on small and medium-sized enterprises (SME). The SME law also increased funding for the SME financial assistance program.

The Argentine Congress on March 29, 2017 approved the Entrepreneurs’ Law, which allows for the creation of a simplified joint-stock company (sociedad por acciones simplifacada) within 24 hours. A simplified joint-stock can be formed by a single share-holder. As of reporting, the law is still pending implementation regulations and has not yet entered into force. More information is available at http://www.produccion.gob.ar/todo-sobre-la-ley-de-emprendedores/ .

Foreign investors seeking to set up business operations in Argentina follow the same procedures as domestic entities. To open a local branch of a foreign company in Argentina, the parent company must be legally registered in Argentina. Setting up a limited liability company (LLC) takes an estimated 50 days to complete about 18 procedures. There are no restrictions on full foreign equity ownership. Argentine law requires at least two equity holders, with the minority equity holder maintaining at least a five-percent interest. The Argentine Constitution and Foreign Investment Act stipulate that foreigners may invest in Argentina without prior approval an under the same conditions as local investors. In addition to the procedures required of a domestic company, a foreign company establishing itself in Argentina must legalize the parent company’s documents, register the incoming foreign capital with the Argentine Central Bank, and obtain a trading license. Compliance with Central Bank regulations facilitates the repatriation of funds.

A company must register its name with the Office of Corporations (IGJ or Inspeccion General de Justicia). The IGJ provides online services for name verification at https://www2.jus.gov.ar/igj-homonimia/Principal.aspx . The company must certify its founding partners’ signatures before a public notary. The company is not obliged to notarize its bylaws, which can be formally constituted in a private document, but must register them with the Office of Corporations. At least 25 percent of the subscribed capital must be deposited with the headquarter offices or the branch of the National Bank of Argentina (Banco de la Nacion Argentina) corresponding with the company’s domicile. The deposit can be withdrawn once the company’s by-laws are registered by the Office of Corporations. The company must also publish a notice in the official gazette (Boletin Oficial), pay an incorporation fee with the National Bank of Argentina, and submit the invoice to the Public Registry of Commerce.

Companies located in the City of Buenos Aires must register their by-laws and other documents related to their incorporation with the City’s Public Registry of Commerce. The Company must file the proposed Articles of Association and By-laws, the publication in the Official Gazette, evidence of managers’ and syndics’ (if applicable) acceptance of position, evidence of the deposit of the cash contributions in the National Bank of Argentina, evidence of compliance with the managers’ guarantee regime (filing of managers’ performance bonds), and evidence of the reservation of the corporate name for approval with the City’s Office of Corporations. This process can take between five to 45 working days.

Once the IGJ registers the company, the company must request that the College of Public Notaries submit the company’s accounting books to be certified with the IGJ. The company’s legal representative must obtain a fiscal code and a tax identification number from the federal tax agency (AFIP by its Spanish acronyms) and register for social security. This procedure can be done online at www.afip.gob.ar  or by submitting the sworn affidavit form No. 885 to AFIP.

The enterprise must also provide workers’ compensation for its employees. The agency that regulates and controls these types of insurance is the Workers’ Compensation Agency (Aseguradora de Riesgos del Trabajo). The company must register and certify their accounting of wages and salaries with the General Bureau of Labor, within the Ministry of Labor.

Outward Investment

Argentina does not have a governmental agency to promote Argentine investors to invest abroad nor does it have any restrictions for a domestic investor investing overseas.

Bilateral Investment Treaties

Argentina has a Bilateral Investment Treaty (BIT) with the United States, which entered into force on October 20, 1994. The text of the Argentina-United States BIT is available at http://2001-2009.state.gov/documents/organization/43475.pdf .

Currently, Argentina has 52 BITs in force, including with Australia, United Kingdom, China, Denmark, Germany, Belgium, France, Italy, Sweden, Russia, Canada, Bolivia, Brazil, Finland, Norway, and the Netherlands. In November 2016, Argentina and Japan announced continuing negotiations towards a bilateral investment treaty.

During 2016-2017, Argentina continued discussions to strengthen bilateral commercial, economic, and investment cooperation with a number of countries, including China, France, Italy, Spain, Singapore, Chile, Mexico, Costa Rica, Japan, the Netherlands, South Korea, Peru, Brazil, Colombia, and the United States.

Argentina and the United States signed a Memorandum of Intent (MOI) to establish a bilateral Commercial Dialogue and a TIFA in March 2016. Bilateral talks are ongoing through both mechanisms. Argentina does not have a Free Trade Agreement with the United States.

Through the Southern Common Market (MERCOSUR), Argentina has Free Trade Agreements with Israel, Peru, Bolivia, and Chile. MERCOSUR has Trade Framework Agreements with Morocco and Mexico, and Preferential Trade Agreements with the Southern African Customs Union (SACU), Mexico, Colombia, Ecuador, Venezuela, and India. MERCOSUR is currently pursuing a Free Trade Agreement with the European Union and has initiated free trade discussions with Canada and South Korea. The bloc is also in talks to expand on its agreements with India and SACU.

Argentina has Preferential Trade Agreements with Mexico and Chile that were established before MERCOSUR and thus, grandfathered into Mercosur. Argentina is engaged in ongoing negotiations to expand on these agreements towards freer trade.

Bilateral Taxation Treaties

Argentina does not have a bilateral tax treaty with the United States.

In December 2016, Argentina signed a Tax Information Exchange Agreement with the United States, which increases the transparency of commercial transactions between the two countries to aid with combating tax and customs fraud. The United States and Argentina are in negotiations to sign a Foreign Account Tax Compliance Act (FATCA) inter-governmental agreement.

In November 2016, Argentina signed an agreement to exchange tax information with Switzerland.

In 2014, Argentina committed to implementing the OECD single global standard on automatic exchange of financial information. Argentina is expected to implement the standard in 2017.

Argentina has signed 16 double taxation treaties, including with Germany, Canada, Brazil, Russia, and the United Kingdom. Argentina also has customs agreements with numerous countries. A full listing is available at http://www.afip.gov.ar/institucional/acuerdos.asp .

In general, national taxation rules do not discriminate against foreigners or foreign firms (e.g., asset taxes are applied to equity possessed by both domestic and foreign entities). Government tax authorities scrutinize tax declarations of foreign corporations operating in Argentina with the intent of curbing the use of offshore shell corporations to shelter profits and assets from taxation. This has led to tax disputes with foreign-owned firms that have structured their operations in a manner they believe to be consistent with Argentine law, while minimizing total corporate tax obligations to all of the countries in which they operate.

Transparency of the Regulatory System

The Macri Administration has taken measures to improve public dialogue and government transparency.

President Macri created the Ministry of Modernization, tasked with conducting quantitative and qualitative studies of government procedures, and finding solutions to streamline bureaucratic processes and improve transparency.

In June 2016, the Argentine government published the first “The state of the State” report that provided an analysis of the budget, employment, inventory, procurement contracts and deficiencies of all national ministries and agencies. The national Tax Agency, Anti-corruption Office, and other governmental agencies continue to conduct ongoing audits of government operations. The full report can be viewed at http://www.casarosada.gob.ar/elestadodelestado/ .

In September 2016 Argentina enacted a Right to Access Public Information Law (No. 27,275) that mandates all three governmental branches (legislative, judicial and executive), political parties, universities, and unions that receive public funding to provide non-classified information at the request of any citizen. The Law also created the Agency for the Right to Access Public Information to oversee compliance.

In the bilateral Commercial Dialogue, Argentina and the United States are sharing best practices to improve the incorporation of public consultation in the regulatory process as well as regulatory coherence. Similarly, through the bilateral Digital Economy Working Group, Argentina and the United States are sharing best practices for establishing a multi-stakeholder approach towards rulemaking in the telecommunications sector.

Legislation can be drafted and proposed by any citizen and is subjected to Congressional and Executive approval and constitutional compliance before being passed into law. Argentine government authorities and a number of quasi-independent regulatory entities can issue regulations and norms within their mandates. There are no informal regulatory processes managed by non-governmental organizations or private sector associations. Rulemaking has traditionally been a top-down process in Argentina, unlike in the United States where industry organizations often lead in the development of standards and technical regulations.

Ministries, regulatory agencies, and Congress are not obligated to provide a list of anticipated regulatory changes or proposals nor share draft regulations with the public nor establish a timeline for public comment. They are also not required to conduct impact assessments of the proposed legislations and regulations.

Since 2016, the Office of the President and various ministries sought to increase public consultation in the rulemaking process; however, public consultation is non-binding and has been done in an ad-hoc fashion. Some ministries and agencies have developed their own processes for public consultation, such as publishing the draft on their websites, directly distributing the draft to interested stakeholders for feedback, or holding public hearings.

Once the draft of a bill is introduced into the Argentine Congress, the text can be viewed online at the websites of the chamber where the bill was introduced. The lower chamber’s website is located at http://www.diputados.gov.ar/ , and the senate’s website is at http://www.senado.gov.ar/ .

All final texts of laws, regulations, resolutions, dispositions and administrative decisions must be published in the Official Gazette (https://www.boletinoficial.gob.ar ), as well as in newspapers and the websites of the Ministries and agencies. These texts can also be accessed through Infoleg (http://www.infoleg.gob.ar/ ), overseen by the Ministry of Justice. Interested stakeholders can pursue judicial review of regulatory decisions.

Argentina requires public companies to adhere to International Financial Reporting Standards (IFRS).

Argentina is a member of UNCTAD’s international network of transparent investment procedures. The municipalities of Lomas de Zamora, Berazategui, and Chubut participate in the UNCTAD’s Business Facilitation Program and provide detailed information on administrative procedures applicable to income generating operations, including the number of steps, name and contact details of the entities and persons in charge of procedures, required documents and conditions, costs, processing time, and legal bases justifying the procedures. More information can be found here: http://ldz.eregulations.org/ http://berazategui.eregulations.org/ , and http://chubut.eregulations.org/ .

Argentina subjects imports to automatic or non-automatic licenses that are managed through the Comprehensive Import Monitoring System (SIMI or Sistema Integral de Monitoreo de Importaciones), established in December 2015 by the National Tax Agency (AFIP) through Resolutions 5/2015 and 3823/2015. The private sector has complained of delays in getting some products that are subjected to non-automatic licenses into the country. Companies note that engaging the government on individual cases tends to resolve the delays. The United States has significant questions about whether the adoption of the SIMI brings Argentina’s import licensing measures into compliance with its WTO obligations, and the United States is working with Argentina to address these concerns.

The resolutions require that importers submit electronically to SIMI detailed information about goods to be imported into Argentina. Once the information is submitted, the relevant Argentine government agencies can review the application through a “Single Window System for Foreign Trade” and make any observations or request additional information. The number of products subjected to non-automatic licenses has been modified several times, resulting in a net increase since the beginning of the SIMI system. As of April 2017, Argentina maintains non-automatic import license requirements on about 12,000 12-digit tariff lines as defined by the Mercosur common nomenclature, including sectors and products the government deemed import-sensitive such as automobiles, paper and cardboard, iron and steel, nuclear reactors, toys, textiles, apparel, and footwear. The resolutions do not provide a maximum time period for the Argentine authorities to issue a decision on import license applications. Automatic import licenses are valid for 180 days from the date of approval, while non-automatic licenses are valid for 90 days. The full text of Resolution 5/2015 with the affected tariff lines can be accessed at: http://www.infoleg.gob.ar/infolegInternet/anexos/255000-259999/257251/norma.htm .

International Regulatory Considerations

Argentina is a member of the Southern Common Market, MERCOSUR, which was formed in 1991 and includes Brazil, Paraguay, Uruguay and Venezuela (currently suspended). As pro-tempore president of MERCOSUR for the first half of 2017, Argentina is seeking to increase regulatory cooperation and trade facilitation with Brazil and the rest of the MERCOSUR bloc.

Argentina has been a member of the Latin American Integration Association (ALADI for Asociacion Latinoamericana de Integracion) since 1980.

Argentina has been a member of the WTO since 1995, and voiced its intention to deepen its engagement with the OECD. Argentina submitted Category B Trade Facilitation Agreement commitments to the WTO in March 2017, but ratification of the TFA is pending Congressional approval. Argentina notifies technical regulations, but not proposed drafts, to the WTO Committee on Technical Barriers to Trade.

Legal System and Judicial Independence

According to the Argentine constitution, the judiciary is a separate and equal branch of government. In practice, there have been instances of interference by previous administrations in the judicial process. Companies have complained about lack of transparency and reliability in courts, and that past Argentine administrations used the judiciary system to pressure the private sector. The Macri administration has publicly expressed its intent to improve transparency and rule of law in the judicial system, and the Justice Minister announced in March 2016 the “Justicia 2020” initiative to reform the judiciary.

Argentina follows a Civil Law system. The Civil and Commercial Code provides regulations for civil and commercial liability, including ownership of property and intellectual property claims.

Domestic investment dispute adjudication is available through local courts or administrative procedures. The current judicial process is lengthy and suffers from significant backlogs. Many foreign investors prefer to rely on private or international arbitration when those options are available. Claims regarding labor practices are processed through a labor court, regulated by Decree No. 106/98. Contracts often include clauses designating specific judicial or arbitral recourse for dispute settlement. In 2014, Argentine government passed a new Civil and Commercial Code that has been in effect since August 2015.

The requirements for the enforcement of foreign judgments are set out in section 517 of the National Procedural Code, which provides that a judgment issued by a foreign court can be enforceable in Argentina if all the of the following apply:

The judgment is final in the jurisdiction in which it was issued and is issued by a competent court or tribunal in accordance with the Argentine rules of international jurisdiction, as a consequence of the filing of either a:

  • personal action (that is, an action seeking to enforce a personal right derived from a contract, quasi-contract or tort); or
  • legal action in rem (accion real) related to a personal property moved to Argentine territory during or after the trial carried out in the foreign country.

The defendant was duly summoned and given the chance to defend.

The judgment is eligible for recognition under the laws of the country where it was issued and complies with the authenticity conditions required by national laws.

The judgment does not affect Argentine principles of public policy.

The judgment is not incompatible with a judgment given before or simultaneously by an Argentine court or tribunal.

Laws and Regulations on Foreign Direct Investment

According to the Foreign Direct Investment Law No. 21,382, foreign investors may invest in Argentina without prior governmental approval, under the same conditions as investors domiciled within the country. Foreign investors are free to enter into mergers, acquisitions, green-field investments, or joint ventures. Foreign firms may also participate in publicly-financed research and development programs on a national treatment basis. Incoming foreign currency destined for investment must be registered with the Central Bank of Argentina (www.bcra.gov.ar ). There is no official executive or other interference in the court that could affect foreign investors.

All foreign and domestic commercial entities in Argentina are regulated by the Commercial Partnerships Law (Law No. 19,550) and the rules issued by the commercial regulatory agencies. All other laws and norms concerning commercial entities are established in the Argentina Civil and Commercial Code.

Further information about Argentina’s investment policies can be found at the following websites:

Argentina is also a party to several bilateral and multilateral treaties and conventions for the enforcement and recognition of foreign judgments, which provide requirements for the enforcement of foreign judgments in Argentina, including:

  • UN Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 (New York Convention), ratified by law No. 23,619 (1988).
  • Treaty of International Procedural Law, approved in the South-American Congress of Private International Law held in Montevideo in 1898, ratified by Argentina by law No. 3,192.
  • Treaty of International Procedural Law, approved in the South-American Congress of Private International Law held in Montevideo in 1939-1940, ratified by Dec. Ley 7771/56 (1956).
  • Panamá Convention of 1975, CIDIP I: Inter-American Convention on International Commercial Arbitration, adopted within the Private International Law Conferences – Organization of American States, ratified by law No. 24,322 (1995).
  • Montevideo Convention of 1979, CIDIP II: Inter-American Convention on Extraterritorial Validity of Foreign Judgments and Arbitral Awards, adopted within the Private International Law Conferences – Organization of American States, ratified by law No. 22,921 (1983).
  • International Center for Settlement Investment Disputes (ICSID) Convention, ratified by Argentina in 1994.

Competition and Anti-Trust Laws

The National Commission for the Defense of Competition and the Secretary of Commerce, both within the Ministry of Production, have enforcement authority of competition law (Law 25,156). The law is aimed at ensuring the general economic interest and promotes a culture of competition in all sectors of the national economy.

Expropriation and Compensation

Section 17 of the Argentine Constitution affirms the right of private property and states that any expropriation must be authorized by law and compensation must be provided. The United States-Argentina BIT states that investments shall not be expropriated or nationalized except for public purposes upon prompt payment of the fair-market value in compensation.

Argentina has a history of expropriations under previous administrations. The most recent occurred in March 2015 when the Argentine Congress approved the nationalization of the train and railway system. In a high-profile case in 2012, Argentina expropriated 51 percent of oil and gas company YPF from Spanish-owned Repsol. The state takeover of the company was widely criticized by the European Union, and increased investor caution. The government settled with Repsol approximately two years later in 2014, which the Argentine Congress approved on April 23, 2014.

In December 2008, the Argentine parliament also passed legislation nationalizing the Spanish-owned flag air carrier Aerolineas Argentinas. At the time, the airline was in financial distress and the then-owner, Grupo Marsans S.A., reached a settlement to transfer full ownership of the company to the Argentine government. A number of companies that were privatized during the 1990s under the Menem Administration were renationalized under the Kirchner Administrations, including the postal service (Correo Argentino), Thales Spectrum, a water utility (Aguas Argentinas), and an energy transportation company (Transener).

In October 2008, Argentina nationalized Argentina’s private pension funds, which amounted to approximately one-third of total GDP, and transferred the funds to the government social security agency.

Dispute Settlement

ICSID Convention and New York Convention

Argentina is signatory to the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, which the country ratified in 1989. Argentina is also a party to the International Center for Settlement Investment Disputes (ICSID) Convention since 1994.

There is no specific domestic legislation providing for enforcement under the 1958 New York Convention and for the enforcement of awards under the ICSID Convention. Companies that seek recourse through Argentine courts may not simultaneously pursue recourse through international arbitration.

Investor-State Dispute Settlement

The Argentine government officially accepts the principle of international arbitration. Argentina has a Bilateral Investment Treaty with the United States that entered into force in 1994, this bit has a chapter on Investor-State Dispute Settlement.

Argentina is a member of the ICSID, the United Nations Commission on International Trade Law (UNCITRAL), and the World Bank’s Multilateral Investment Guarantee Agency (MIGA).

Investment Disputes

Argentina defaulted on USD 82 million in 2002 following its 2001 financial crisis. The government restructured 92 percent of its sovereign debt in 2005 and 2010 for a mix of new bonds with a substantial loss in net present value. Some bondholders did not participate in the 2005 and 2010 swaps and sought to settle its outstanding debt for the actual amount owed plus interest through U.S. courts. The Macri Administration re-engaged in negotiations with the holdout creditors, and by the end of February 2016, had reached preliminary agreements with most of its creditors, which the Argentine Congress approved on March 31, 2016. This allowed the Argentine government to finalize its settlement with the holdouts and fulfill the requirements for Federal Court of the Southern District of New York to lift the injunction against Argentina, paving the way for Argentina to regain access to international capital markets.

On May 14, 2016, the Argentine government announced the settlement of an outstanding arbitration award for a U.S. company that had been granted by ICSID in 2014. Argentina currently has four pending arbitral cases filed against it in by U.S. investors in the ICSID. For more information on the cases brought by U.S. claimants against Argentina, go to: https://icsid.worldbank.org/en/Pages/cases/AdvancedSearch.aspx# 

In May 2014, Argentina reached agreements with the Paris Club group of creditors to repay USD 9.7 billion in arrears over the next five years, including USD 642 million owed to the United States.

In 2014, Argentina’s Federal Supreme Court of Justice denied the recognition and enforcement of a judgment of a New York court (which ordered Argentina to pay a certain amount of money) on the grounds of public policy violation, as the Argentina court concluded that the foreign decision did not take into consideration the specific restructuring process of public debt required under local rules and in accordance with the Argentine Constitution.

Local courts cannot enforce arbitral awards issued against the government based on the public policy clause. There is no history of extrajudicial action against foreign investors.

International Commercial Arbitration and Foreign Courts

Alternative dispute resolution (ADR) mechanisms can be stipulated in contracts. Argentina also has ADR mechanisms available such as the Center for Mediation and Arbitrage (CEMARC) of the Argentine Chamber of Trade. More information can be found at: http://www.intracen.org/Centro-de-Mediacion-y-Arbitraje-Comercial-de-la-Camara-Argentina-de-Comercio—CEMARC–/#sthash.RagZdv0l.dpuf 

Argentina does not have a specific law governing arbitration, but it has adopted a mediation law (Law No. 24.573/1995), which makes mediation mandatory prior to litigation. Some arbitration provisions are scattered throughout the Civil Code, the National Code of Civil and Commercial Procedure, the Commercial Code, and three other laws. None of these laws contain definitions of domestic or international arbitration, nor do they regulate the severability of the arbitration agreement from the main contract nor require the confidentiality of arbitration or the impartiality of arbitrators. The Code of Civil and Commercial Procedure states that when parties have not agreed on the applicable procedural rules, the arbitration must be conducted under the same procedural rules as those that govern cases litigated in court. The following methods of concluding an arbitration agreement are non-binding under Argentine law: electronic communication, fax, oral agreement, and conduct on the part of one party. Generally, all commercial matters are subject to arbitration. There are no legal restrictions on the identity and professional qualifications of arbitrators. Parties must be represented in arbitration proceedings in Argentina by attorneys who are licensed to practice locally. The grounds for annulment of arbitration awards are limited to substantial procedural violations, an ultra petita award (award outside the scope of the arbitration agreement), an award rendered after the agreed-upon time limit, and a public order violation that is not yet settled by jurisprudence when related to the merits of the award. On average, it takes around 21 weeks to enforce an arbitration award rendered in Argentina, from filing an application to a writ of execution attaching assets (assuming there is no appeal). It takes roughly 18 weeks to enforce a foreign award.

The requirements for the enforcement of foreign judgments are set out in section 517 of the National Procedural Code.

No information is available as to whether the domestic courts frequently rule cases in favor of state-owned enterprises (SOE) when SOEs are party to a dispute.

Bankruptcy Regulations

Argentina’s bankruptcy law was codified in 1995 in Law 24,522. The full text can be found at: http://www.infoleg.gov.ar/infolegInternet/anexos/25000-29999/25379/texact.htm . Under the law, debtors are generally able to begin insolvency proceedings when they are no longer able to pay their debts as they mature. Debtors may file for both liquidation and reorganization. Creditors may file for insolvency of the debtor for liquidation only. The insolvency framework does not require approval by the creditors for the selection or appointment of the insolvency representative or for the sale of substantial assets of the debtor. The insolvency framework does not provide rights to the creditor to request information from the insolvency representative but the creditor has the right to object to decisions by the debtor to accept or reject creditors’ claims. Bankruptcy is not criminalized; however, convictions for fraudulent bankruptcy can carry two to six years of prison time.

The World Bank’s 2017 Doing Business Report ranked Argentina 116 among 189 countries for the effectiveness of its insolvency law. This is a drop of 21 places from its ranking of 95 in 2016.

Investment Incentives

Government investment incentives do not make any distinction between foreign and domestic investors.

The Argentine government offers a number of investment promotion programs at the federal, provincial, and municipal levels to attract investment to specific economic sectors such as capital assets and infrastructure, innovation and technological development, and energy, with no discrimination between national or foreign-own enterprises. They also offer incentives to encourage the productive development of specific geographical areas. Argentina’s investment promotion programs and regimes can be found at http://inversiones.gob.ar/atencion-al-inversor, http://www.investandtrade.org.ar/?lang=en http://www.produccion.gob.ar , and http://www.economia.gob.ar .

The Investment and International Trade Promotion Agency provides cost-free assessment and information to investors to facilitate operations in the country. More information can be found at http://www.produccion.gob.ar/agencia/  and http://www.investandtrade.org.ar/?lang=en .

The National Fund for the Development of Micro, Small and Medium Enterprises provides low cost credits to small and medium-sized enterprises for investment projects, labor, capital, and energy efficiency improvement, with no distinction between national or foreign-owned enterprises. More information can be found at https://www.argentina.gob.ar/produccion .

Some of the investment promotion programs require investments within a specific region or locality, industry, or economic activity. Some programs offer refunds on Value-Added Tax (VAT), accelerated depreciation of capital goods for investors, or other tax incentives for local production of capital goods. Argentina also has free trade zones and a Special Customs Area in province of Tierra del Fuego Province.

For programs for specific provinces, see:

Foreign Trade Zones/Free Ports/Trade Facilitation

Argentina has two types of tax-exempt trading areas: Free Trade Zones (FTZ), which are found throughout the country, and the more comprehensive Special Customs Area (SCA), which covers all of Tierra del Fuego Province.

Argentine law defines an FTZ as a territory outside the “general customs area” (GCA, i.e., the rest of Argentina) where neither the inflows nor outflows of exported final merchandise are subject to tariffs, non-tariff barriers, or other taxes on goods. Goods produced within a FTZ generally cannot be shipped to the GCA unless they are capital goods not produced in the rest of the country. The labor, sanitary, ecological, safety, criminal, and financial regulations within FTZs are the same as those that prevail in the GCA. Foreign firms receive national treatment in FTZs.

Under the current law, the Argentine government may create one FTZ per province, with certain exceptions. More than one FTZ per province may be allowed in sparsely populated border regions (although this provision has not been fully utilized). Thus far, the Argentine government has permitted FTZs in many of the 23 Argentine provinces. The most active FTZ is in La Plata, the capital of Buenos Aires Province. Merchandise shipped from the GCA to a FTZ may receive export incentive benefits, if applicable, only after the goods are exported from the FTZ to a third country destination. Merchandise shipped from the GCA to a FTZ and later exported to another country is not exempt from export taxes. Any value added in an FTZ or re-export from an FTZ is exempt from export taxes.

Products manufactured in an SCA may enter the GCA free from taxes or tariffs. In addition, the government may enact special regulations that exempt products shipped through an SCA (but not manufactured therein) from all forms of taxation except excise taxes. The SCA program provides benefits for established companies that meet specific production and employment objectives. The SCA program applies only to Tierra del Fuego Province and is scheduled to expire at the end of 2023. The Argentine Congress passed a law in November 2009 establishing a value-added tax rate of 21 percent on cell phones, televisions, digital cameras and other electronic items not produced in the southern Tierra del Fuego foreign trade zone.

Performance and Data Localization Requirements

Argentina does not mandate local employment requisites nor does it apply such schemes to senior management and boards of directors. There is no excessively onerous visa, residence, work permit, or similar requirements inhibiting mobility of foreign investors and their employees. Under Argentine Law, conditions to invest are equal for national and foreign investors.

Argentina has local content requirements for specific sectors. Requirements are applicable to domestic and foreign investors equally. Argentine law establishes a national preference for local industry for most government procurement if the domestic supplier’s tender is no more than five percent to seven percent higher than the foreign tender. The amount by which the domestic bid may exceed a foreign bid depends on the size of the domestic company making the bid. The preference applies to procurement by all government agencies, public utilities, and concessionaires. There is similar legislation at the sub-national (provincial) level.

Argentina maintains certain measures aimed at encouraging domestic production. For example, the Argentine National Mining Agency (Agencia Nacional de Mineria) requires mining companies registered in Argentina to use Argentine-flagged vessels to transport minerals and their industrial derivatives for export from Argentina. Argentina’s Mining Law (No. 3/2012) requires that mining companies registered in Argentina to set up import-substitution departments that prioritize local purchases and services in the design and completion of engineering projects.

On November 16, 2016, the government passed a private-public partnership law (No. 27,328) that regulates public-private contracts. The law lowers regulatory barriers to foreign investment in public infrastructure projects with the aim of attracting more foreign direct investment; however, the law contains a “Buy Argentina” clause which mandates at least 33 percent local content for every public project.

The Argentine government provides tax benefits for companies that use at least 60 percent (or 30 percent in some cases) local content in electric power generation projects based on renewable energy sources such as wind and solar, via Resolutions 123/2016 and 313/2016. Argentina law (Law No. 27,263) provides tax incentives to auto manufacturers for the purchases of locally-produced auto parts and accessories for use in auto production.

The Media Law, enacted in 2009 and amended in 2015, requires advertising and publicity materials, including radio and TV (via airwaves and cable) advertisements, to include a minimum of 60 percent local content. The Media Law also establishes a 70 percent local production-content requirement for companies with radio licenses. Additionally, the Media Law requires that 50 percent of the news and 30 percent of the music that is broadcast on the radio be of Argentine origin. In the case of private television operators, at least 60 percent of broadcast content must be of Argentine origin. Of that 60 percent, 30 percent must be local news and 10 to 30 percent must be local independent content.

In November 2015, the government issued Resolution 1219, which went into effect in May 2016, requiring mobile and cellular radio-communication equipment manufacturers operating in Tierra del Fuego to incorporate certain percentages of local content into their production processes and products, including batteries, screws, chargers, technical manuals, and packaging and labelling. The percentage of local content required ranges from 10 to 100 percent depending on the process or item. For a detailed description of local content percentage requirements, see: http://servicios.infoleg.gob.ar/infolegInternet/anexos/255000-259999/255494/norma.htm . In cases where local supply is insufficient to meet local content requirements, companies may apply for an exemption.

There are not any requirements for foreign IT providers to turn over source code and/or provide access to encryption. Nor does the government prevent companies from freely transmitting customer or other business-related data outside the country’s territory.

Argentina does not have forced localization of content in technology or requirements of data storage in country.

Real Property

Secured interests in property, including mortgages, are recognized and common in Argentina. Such interests can be easily and effectively registered. They also can be readily bought and sold. Argentina manages a national registry of real state ownership (Registro de la Propiedad Inmueble) at http://www.dnrpi.jus.gov.ar/ . There are no specific regulations regarding land lease and acquisition of residential and commercial real estate by foreign investors. Law No. 26,737 (Regime for Protection of National Domain over Ownership, Possession or Tenure of Rural Land) establishes the restrictions of foreign ownership on rural and productive lands, including water bodies. Foreign ownership is also restricted on land located near borders.

No data is available on the percent of all land that does not have clear title.

Legal claims may be brought to evict persons unlawfully occupying (squatting) real property, even if the property is unoccupied by the lawful owner. However, these legal proceedings can be quite lengthy, and until the legal proceedings are complete, evicting the squatters is problematic. The title and actual conditions of real property interests under consideration should be carefully reviewed before acquisition.

Argentine Law No. 26.160 prevents the eviction and confiscation of land traditionally occupied by indigenous communities in Argentina, or encumbered with an indigenous land claim. Indigenous land claims can be found in the land registry. Enforcement is carried out by the National Institute of Indigenous Affairs, under the Ministry of Social Development.

Intellectual Property Rights

The government of Argentina adheres to most treaties and international agreements on intellectual property (IP) and belongs to the World Intellectual Property Organization and the World Trade Organization. The Argentine Congress ratified the Uruguay Round agreements, including the provisions on intellectual property in Law 24425 on January 5, 1995.

Argentina remained on the Priority Watch List in the 2017 Special 301 Report. Despite some recent progress, Argentina continues to present long-standing and well-known deficiencies in IP IP protection and enforcement, and is a challenging market for IP-intensive industries. A key challenge in Argentina is the lack of effective IP enforcement by the national government. Argentine police do not take ex officio actions, prosecutions can stall, cases may languish in excessive formalities, and even when a criminal investigation reaches final judgment, infringers do not receive deterrent sentences. In terms of physical counterfeiting and piracy, the notorious market of La Salada in Buenos Aires is one of the largest open-air markets in Latin America offering high rates of counterfeit and pirated goods, and it continues to thrive. La Salada is listed in the 2016 Notorious Markets Report. While optical disc copyright piracy is widespread, Internet piracy continues to be a growing concern and criminal enforcement for online piracy is nearly nonexistent. As a result, IP enforcement online in Argentina consists mainly of right holders trying to convince cooperative Argentine online providers to agree to take down specific infringing works, as well as attempting to seek injunctions in civil cases. Copyright holders also cite widespread use of unlicensed software by Argentine private enterprises and the government.

There are a number of ongoing challenges to innovation in the agricultural chemical, biotechnology, and pharmaceutical sectors, including with respect to patent pendency, scope and term of patent protection, and meaningful enforcement options. There is a substantial backlog of patent applications resulting in long delays to register rights and Argentina does not provide provisional protection for pending patents. Pursuant to a highly problematic 2012 Joint Resolution establishing guidelines for the examination of patents, Argentina summarily rejects patent applications for categories of pharmaceutical inventions that are eligible for patentability in other jurisdictions, including in the United States. Additionally, to be patentable, Argentina requires that processes for the manufacture of active compounds disclosed in a specification be reproducible and applicable on an industrial scale. Resolution 283/2015, introduced in September 2015, also limits the ability to patent biotechnological innovations based on living matter and natural substances. The United States remains concerned that Argentina does not appear to provide adequate protection against the unfair commercial use, as well as unauthorized disclosure, of undisclosed test or other data generated to obtain marketing approval for pharmaceutical or agricultural chemical products. These measures limit the ability of companies investing in Argentina to protect their IP and appear inconsistent with international practice.

Over the last year, Argentina took noteworthy steps to improve IP protection and enforcement including legislative initiatives, enforcement operations, procedural enhancements for patent protection, and the creation of bilateral engagement mechanisms. The Government of Argentina introduced several legislative proposals to improve the protection and enforcement of IP: a bill to provide for landlord liability and enhance enforcement in non-conventional, or informal, marketplaces such as La Salada; a bill to amend the trademark law to increase criminal penalties for counterfeiting carried out by criminal networks; and a bill to enhance protection for industrial designs. Other legislative initiatives including regulation of collective management organizations, criminal sanction including for anti-circumvention measures, and the creation of a federal specialized IP prosecutor’s office are reportedly in the drafting stages. While these legislative initiatives are welcome, others raise questions and potential concerns. Though well intentioned, elements of various legislative proposals to update the national seed law may negatively affect the ability to protect and enforce plant variety rights and other IP and a bill regarding responsibilities of ISPs may discourage effective action against piracy over the Internet. With respect to enforcement operations, the city of Buenos Aires conducted operations to close illegal street vendors but the lack of a national IP enforcement strategy limits successes to targeted neighborhoods in the capital.

The National Institute of Industrial Property (INPI) has taken steps to confront its lengthy patent examination backlog. In September 2016, INPI issued a regulation creating expedited procedures for patent applicants that have obtained patents in other jurisdictions. INPI is also hiring more patent examiners and working towards digitalization of internal procedures and a more efficient online application management system. In addition to collaborating with other international patent offices, INPI and the USPTO commenced in March 2017 a Patent Prosecution Highway pilot program to increase efficiency and timely review of patent examinations. The Governments of Argentina and the United States established a bilateral Innovation and Creativity Forum under the Trade and Investment Framework Agreement and held productive first meetings in December 2016. The United States is hopeful that the important steps Argentina has taken as well as its plans for future progress will bear tangible results, thereby creating a more attractive environment for investment and innovation.

For statistics on illegal sales in Argentina, go to the following link: http://redcame.org.ar/seccion/relevamiento-venta-ilegal 

For additional information about national laws and points of contact at local IP offices, please see WIPO’s country profiles at http://www.wipo.int/directory/en/ .

Capital Markets and Portfolio Investment

The Macri Administration enacted a series of macroeconomic reforms (unifying the exchange rate, settling with holdout creditors, annulling most of the trade restrictions, lifting capital controls, to mention a few) to improve the investment climate. Argentina also signed several bilateral agreements and memoranda of understanding with other countries aimed to increase inward foreign direct investment.

The Argentine Securities and Exchange Commission (CNV or Comision Nacional de Valores) is the federal agency that regulates securities markets offerings. Securities and accounting standards are transparent and consistent with international norms. Foreign investors have access to a variety of options on the local market to obtain credit.

The Buenos Aires Stock Exchange is the organization responsible for the operation of Argentina’s primary stock exchange, located in Buenos Aires City. The most important index of the Buenos Aires Stock Exchange is the MERVAL (Mercado de Valores).

In 2016, the government of Argentina issued national debt for a total of USD 40 billion of which about half was issued in dollars, forty five percent was issued in local currency, and the rest in Euros.

U.S. banks, securities firms, and investment funds are well-represented in Argentina and are dynamic players in local capital markets. In 2003, the government began requiring foreign banks to disclose to the public the nature and extent to which their foreign parent banks guarantee their branches or subsidiaries in Argentina. In November 2012 the Argentine Congress approved a new law to amend regulations over the domestic financial markets. That law expands the local capital market, but it also provides for greater regulatory intervention in financial deals and corporate administration of listed companies. A new draft proposal of the capital market law is awaiting congressional approval that would remove the over-reaching regulatory intervention provisions and ease restrictions on mutual funds and foreign portfolio investment in domestic markets.

The private pension fund system – consolidated in 1995 – provided a growing base for capital markets until the 2001-2002 economic and financial crises. Following the 2005 debt restructuring, private pension funds once again became significant players in domestic capital markets. The Cristina Fernandez de Kirchner government’s nationalization of the private pension funds’ assets in November 2008 shut down the funds’ investment activities, however. As a result of the nationalization, Argentina’s Social Security Agency (ANSES) has held large equity stakes in domestic and foreign firms trading on the local stock exchange, but the situation is reversing with ANSES starting to sell some of its private stock.

Money and Banking System

The Macri Administration promulgated new financial regulations, such as the elimination of capital controls and market exchange restrictions, to improve the functionality of the financial system. The Argentine government also eliminated the requirement that banks lend part of their portfolios at below market rates and lifted caps on bank fees. Argentina has a relatively sound banking sector based on diversified revenues, well-contained operating costs, and a high liquidity level. The main challenge for banks is to rebuild long-term assets and liabilities. Banks are suffering from low credit demand due to the slowdown of the economy and continued high unemployment. The largest bank is the Banco de la Nación Argentina. Non-performing private sector loans constitute less than two percent of banks’ portfolios. The ten largest private banks have total assets of approximately ARS 1,146 billion (USD 72 billion). Total financial system assets are approximately ARS 2,645 billion (USD 167 billion). The Central Bank of Argentina acts as the country’s financial agent and is the main regulatory body for the banking system.

Foreign Exchange and Remittances

Foreign Exchange

President Macri issued a number of regulations that lifted all capital controls and reduced trade restrictions. Federal Tax Agency Resolution No. 3,819, issued in December 2015, eliminated all foreign exchange restrictions. In January 2017, the government issued Resolution 1 that eliminated the requirement that capital inflows into Argentina remain in the country for minimum of 120 days. Now there is no regulation that prohibits, restricts, or limits cash flow transfers from investment.

Per Resolution 36,162 of October 2011, locally registered insurance companies are mandated to maintain all investments and cash equivalents in the country. The government modified the regulations in 2012 and further required the insurance companies to put 30 percent of their investments into government-specified projects. This requirement was eliminated by President Macri’s government in January 2016. Insurance companies can now invest in any projects of their choosing as long as they are in Argentina.

Since December 2016, the Argentine Central Bank limits banks’ dollar-denominated asset holdings to 25 percent of their net worth.

The Argentine Central Bank requires that hard currency earnings on exports, both from goods and services, must be converted into pesos in the local foreign exchange market and deposited into local bank within 10 years according to Resolution 47/2017 issued in January 2017. Revenues earned on re-exports of some temporary imports and on exports to Argentine foreign trade zones are exempted from this requirement.

Since December 2015, Argentina has a managed floating exchange rate regime in which the Central Bank may intervene to reduce volatility in the domestic foreign exchange market, which generally is determined by demand and supply.

Remittance Policies

According to Resolutions No. 3,819/2015 and 1/2017, companies and investors have no official restrictions on money conversion, remittances, or repatriation of their earnings.

Sovereign Wealth Funds

The Argentine Government does not maintain a Sovereign Wealth Fund.

The Argentine government has state-owned enterprises (SOEs) or significant stakes in mixed-capital companies in the following sectors: civil commercial aviation, water and sanitation, oil and gas, electricity generation, transport, paper production, satellite, banking, railway, shipyard, and aircraft ground handling services. A list of state-own enterprises, enterprises under concession and enterprises with state participation can be found here: https://www.argentina.gob.ar/SIGEN .

By Argentine law, a company is considered a public enterprise if the state owns 100 percent of the company’s shares. The state has majority control over a company if the state owns 51 percent of the company’s shares. The state has minority participation in a company if the state owns less than 51 percent of the company’s shares. Argentine Law 25.156 regulates state-owned enterprises and enterprises with state participation.

Through the government’s social security agency (ANSES), the Argentine government owns stakes ranging from one percent to 31 percent in 46 publically-listed companies. U.S. investors also own shares in some of these companies. As part of the ANSES takeover of Argentina’s private pension system in 2008, the government agreed to commit itself to being a passive investor in the companies and limit the exercise of its voting rights to 5 percent, regardless of the equity stake the social security agency owned. In April 2011, the Argentine government removed the five percent cap and moved to increase ANSES’ influence over these companies by nominating members for their boards of directors and exercising influence over issues such as dividend payments. A list of such enterprises can be found at: http://fgs.anses.gob.ar/participacion 

State-owned enterprises purchase and supply goods and services from the private sector and foreign firms. Private enterprises may compete with SOEs under the same terms and conditions with respect to market share, products/services, and incentives. Private enterprises also have access to financing terms and conditions similar to SOEs. SOEs are subject to the same tax burden and tax rebate policies as their private sector competitors. SOEs are not currently subject to firm budget constraints under the law, and have been subsidized by the central government in the past; however, the Macri Administration is working to reduce subsidies in the energy, water, and transportation sectors. Argentina does not have regulations that differentiate treatment of SOEs and private enterprises. Argentina has observer status under the WTO Agreement on Government Procurement and, as such, SOEs are subject to the conditions of Argentina’s observance.

Argentina is not part of the Government Procurement Agreement (GPA) within the framework of the WTO.

OECD Guidelines on Corporate Governance of SOEs

Argentina does not have a specified ownership policy, guideline or governance code for how the government exercises ownership of SOEs. The country generally adheres to the OECD Guidelines on Corporate Governance of SOEs. The practices for SOEs are mainly in compliance with the policies and practices for transparency and accountability in the OECD Guidelines.

Argentina does not have a centralized ownership entity that exercises ownership rights for each of the SOEs. The general rule in Argentina is that requirements that apply to all listed companies also apply to publicly-listed SOEs.

Privatization Program

No information available on Argentina’s privatization program. The current government has not developed a privatization program, although there is speculation that the administration may try to look into the issue in the future.

There is an increasing awareness of corporate social responsibility (CSR) and responsible business conduct (RBC) among both producers and consumers in Argentina. RBC and CSR practices are welcomed by beneficiary communities throughout Argentina. There are many institutes that promote RBC and CSR in Argentina, the most prominent being the Argentine Institute for Business Social Responsibility (http://www.iarse.org/ ), which has been working in the country for more than 15 years and include among its members many of the most important companies in Argentina.

Argentina is a member of United Nation’s Global Compact. Established in April 2004, the Global Compact Network Argentina is a business-led network with a multi-stakeholder governing body elected for two-year terms by active participants. The network is supported by the United Nations Development Program (UNDP) Argentina in close collaboration with other UN Agencies. The Global Compact Network Argentina is the most important RBC/CSR initiative in the country with presence in more than 20 provinces. More information on the initiative can be found at: http://pactoglobal.org.ar 

Foreign and local enterprises tend to follow generally accepted CSR/RBC principles. Argentina subscribed to the Declaration on the OECD Guidelines for Multinational Enterprises on April 1997.

Many provinces, such as Mendoza and Neuquen, have or are in the process of enacting a provincial CSR/RBC law. A national CSR/RBC bill was presented to the Argentine Congress in 2013. As of reporting, the bill is still in committee discussions in the congressional lower house. There have been many previously unsuccessful attempts to pass a CSR/RBC Law. Distrust over the State’s role in private companies had been the main concern for legislators opposed to these bills.

According to the World Bank’s worldwide governance indicators, corruption remains an area of concern in Argentina. In the latest Transparency International Corruption Perceptions Index (CPI) that ranks countries and territories by their perceived levels of corruption, Argentina ranked 95 out of 176 countries in 2016. This is an improvement from its 2015’s ranking of 107 out of 175. According to Transparency International, Argentina has weak enforcement of anti-corruption measures. Allegations of corruption in provincial as well as federal courts remained frequent. Lack of transparency, autonomy, and clear rules in the selection of judges as well as inefficiencies and pervasive delays compromise the judicial system and create the potential for political influence. Few Argentine companies have implemented anti-foreign bribery measures beyond limited codes of ethics. In March 2017, the executive branch introduced a Corporate Liability Bill to the Argentine Congress to criminalize Argentine companies that pay bribes in return for successful bids. At the time of this report, the Lower House’s respective committees were analyzing this bill.

Argentina’s legal system incorporates several measures to address public sector corruption. The government institutions tasked with combatting corruption include the Anti-Corruption Office (ACO), the National Auditor General, and the General Comptroller’s Office. Public officials are subject to financial disclosure laws, and the Ministry of Justice’s ACO is responsible for analyzing and investigating federal executive branch officials based on their financial disclosure forms. The ACO is also responsible for investigating corruption within the federal executive branch or in matters involving federal funds, except for funds transferred to the provinces. While the ACO does not have authority to independently prosecute cases, it can refer cases to other agencies or serve as the plaintiff and request a judge to initiate a case.

Since assuming office, President Macri made combating corruption and improving government transparency a priority objective for his administration. Laura Alonso, a Former National Deputy for the Republican Proposal Party (President Macri’s political party, PRO by its Spanish acronym) was appointed as the head of the ACO with a mandate to improve public policy and leave the prosecution of corrupt officials to the judiciary. In September 2016, Congress passed a law on public access to information. The law explicitly applies to all three branches of the federal government, the public justice offices, and entities such as businesses, political parties, universities, and trade associations that receive public funding. It requires that responses to citizen requests for public information must be answered within 15 days, with an additional 15-day extension available for “exceptional” circumstances. Sanctions apply for noncompliance. The law also mandates the creation of the Agency for Access to Public Information, an autonomous office within the executive branch. President Macri also proposed a series of criminal justice and administrative reforms. Chief among these are measures to speed the recovery of assets acquired through corruption, plea-bargaining-type incentives to encourage judicial cooperation, and greater financial disclosure for public servants. In early 2016, the Argentine government reaffirmed its commitment to the Open Government Partnership (OGP) and reengaged the OECD Working Group on Bribery.

UN Anticorruption Convention, OECD Convention on Combatting Bribery

Argentina is a party to the Organization of American States’ Inter-American Convention against Corruption. It ratified the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions in 2001 (Anti-Bribery Convention). Argentina also signed and ratified the UN Convention against Corruption (UNCAC) and is an active participant in UNCAC’s Conference of State Parties. Argentina is an active participant in the Mechanism for Follow-up on the Implementation of the Inter-American Convention against Corruption (MESICIC).

Argentina is a member of the OECD Working Group on Bribery, the organization that monitors compliance with the OECD Anti-Bribery Convention. A high-level mission of the Anti-Bribery Working Group visited Argentina in April 2016 and concluded that the package of legislative reforms and the Justice 2020 plan announced by the Macri government had the potential to address the Working Group’s recommendations that have been outstanding for over a decade. The Working Group’s supplemental Phase 3bis evaluation of Argentina in March 2017 made further recommendations to improve Argentina’s fight against foreign bribery, including suggested amendments to the draft corporate liability law that would bring it into compliance with OECD standards.

Since Argentina became a Party to the OECD Anti-Bribery Convention in 2001, ten allegations of Argentine individuals or companies bribing foreign officials have surfaced. Three of the allegations are under investigation. An investigation into one allegation was not opened because of a lack of information. Investigations into two allegations ended without charges. A seventh allegation was determined not to involve foreign bribery, but rather other offences after an investigation. At the time of OECD’s last reporting in December 2014, it remains unconfirmed whether the remaining cases involve foreign bribery.

Resources to Report Corruption

  • Oficina Anticorrupción, Ministerio de Justicia y Derechos Humanos
  • anticorrupcion@jus.gov.ar
  • Tucumán 394
    Código Postal (C 1049 AAH)
    Ciudad Autónoma de Buenos Aires,
    República Argentina

Demonstrations are common in metropolitan Buenos Aires and in other major cities and rural areas. Protesters on occasion block streets, highways, and major intersections, causing traffic jams and delaying travel. Public demonstrations, strikes, and street blocking barricades increased in 2017 in response to economic and political issues. While demonstrations are usually non-violent, individuals sometimes seek confrontation with the police and vandalize private property. Groups occasionally protest in front of the U.S. Embassy or U.S.-affiliated businesses. In February 2016, the Ministry of Security approved a National Anti-Street Pickets Protocol that provides guidelines to prevent the blockage of major streets and public facilities during demonstrations. Argentine law enforcement conducted relatively peaceful removals of protestors from major highways during the April 6, 2017 national strike in Buenos Aires. Political violence is not widely considered a hindrance to the investment climate in Argentina.

Argentina has been a member of the International Labor Organization since 1919.

Argentine workers are among the most highly educated in Latin America. Argentina has relatively high social security and other labor taxes. As of the last quarter of 2016 the unemployment rate was 7.6 percent according to official government statistics.

Labor laws are considered highly protective of workers in Argentina. Organized labor plays an active role in labor-management relations and in the Argentine political system. Argentine law affords unions the right to negotiate collective bargaining agreements and offers recourse to mediation and arbitration. The Ministry of Labor ratifies collective bargaining agreements, which covered roughly 75 percent of the formally employed work force. While negotiations between unions and industry are largely market-driven, they occasionally require mediation by the Ministry of Labor.

Standoffs between management and union activists do occur. Many managers of foreign companies say that they have good relations with their unions. Others have complained that the challenges posed by strong unions can hinder further investment by their international headquarters. In some sectors such as oil and gas and aviation, multiple unions exist and often cause internal power disputes that can impede the companies’ operations. During 2017, the government successfully implemented new labor regulations for workers in the private oil and gas sector in Neuquén Province for shale gas exploitation, which led to a decrease in labor costs. The government intends to adapt these agreements to other sectors.

Labor-related demonstrations in Argentina occurred periodically in 2016 and early 2017. These were mainly due to public sector layoffs, which expanded to private sector in the second half of 2016. Reasons for the recent strikes include job losses, high taxes, loss of purchasing power, and wage negotiations.

There are no special laws or exemptions from regular labor laws in the Foreign Trade Zones.

The Labor Ministry has hotlines and an online website to report labor abuses. The Superintendent of Labor Risk (Superintendencia de Riesgos del Trabajo) has oversight of health and safety standards. Unions also play a key role in monitoring labor conditions, reporting abuses and filing complaints with the proper authorities. Argentina has a Service of Mandatory Labor Conciliation (SECLO), which falls within the Ministry of Labor, Employment and Social Security. Provincial governments and the city government of Buenos Aires are also responsible for labor law enforcement.

In 2014, Congress passed a law that reduced small business employers’ required contributions. This move came as part of the government’s effort to fight under-the-table or unregistered workers. Also in 2014, Congress passed the Supply Law against “business abuse” that entitles the executive branch to set earning margins and prices during the different stages of the economic process.

The minimum age for employment is 16. In rare cases, labor authorities may permit younger children to work as part of family groups, mainly in the agricultural sector. Children between the ages of 16 and 18 may work in a limited number of job categories and for limited hours if they have completed compulsory schooling, which normally ends at age 18. Children under 18 cannot be hired to perform perilous, arduous, or unhealthy jobs. The law requires employers to provide adequate care for workers’ children during work hours to discourage child labor. Updated official figures of child labor were not available. The last available statistics from 2012 showed a decrease from 7.8 percent in 2004 to 3.4 percent in 2012. Argentina has a National Commission for the Eradication of Child Labor under the Ministry of Labor and Social Security (https://www.argentina.gob.ar/trabajo/trabajoinfantil/conaeti . The Department of Labor’s 2015 Worst Form of Child Labor for Argentina can be accessed online . The Department of State’s 2016 Human Rights Report for Argentina can be accessed online.

Argentine Law prohibits discrimination on the grounds of sex, race, nationality, religion, political opinion, union affiliation, or age. The law also prohibits employers, either during recruitment or time of employment, from asking about a worker’s political, religious, labor, and cultural views or sexual preference. These national anti-discrimination laws also apply to labor relations and other social relations.

The Argentine government signed a comprehensive agreement with the Overseas Private Investment Corporation (OPIC) in 1989. The agreement allows OPIC to insure U.S. investments against risks resulting from expropriation, inconvertibility, war or other conflicts affecting public order. Currently, OPIC has three loan projects in Argentina – the latest was signed in 2012. Argentina is also a member of the World Bank’s Multilateral Investment Guarantee Agency (MIGA).

Table 2: Key Macroeconomic Data, U.S. FDI in Host Country/Economy

Host Country Statistical Source* USG or International Statistical Source USG or International Source of Data:
BEA; IMF; Eurostat; UNCTAD, Other
Economic Data Year Amount Year Amount
Host Country Gross Domestic Product (GDP) ($M USD) 2016 508,264 2015 583,169 www.worldbank.org/en/country 

*Host Country source: INDEC. http://www.indec.gob.ar/ftp/cuadros/

(GDP in current prices expressed in dollars)

Foreign Direct Investment Host Country Statistical Source* USG or International Statistical Source USG or international Source of data:
BEA; IMF; Eurostat; UNCTAD, Other
U.S. FDI in partner country ($M USD, stock positions) 2015 23,062 2015 13,323 BEA data available at http://bea.gov/international/direct_investment_
*Host country source: BCRA
Host country’s FDI in the United States ($M USD, stock positions) N/A N/A 2015 10 BEA data available at http://bea.gov/international/direct_investment_
Total Inbound Stock of FDI as % Host GDP 2015 18% 2015 16% http://unctad.org/en/Pages/DIAE/World%
*Host country source: BCRA

Table 3: Sources and Destination of FDI

No information from the IMF’s Coordinated Portfolio Investment Survey (CPIS) is available for Argentina. According to the UNCTAD World Investment Report 2016, the total stock of FDI is Argentina at the end of 2015 was estimated at USD 93.9 billion. Total FDI inflows were estimated at USD 11.7 billion and outward FDI flows amounted to USD 1.1 billion.

Table 4: Sources of Portfolio Investment

Portfolio Investment Assets
Top Five Partners (Millions, US Dollars)
Total Equity Securities Total Debt Securities
All Countries 23,418 100% All Countries 14,100 100% All Countries 9,318 100%
United States 22,371 95.5% United States 13,397 95% United States 8,973 96.3%
Brazil 493 2.1% Luxemburg 357 2.5% Brazil 273 2.93%
Luxembourg 357 1.5% Brazil 220 1.56% Germany 39 0.42%
Spain 60 0.26% Spain 60 0.4% Mexico 15 0.16%
Germany 39 0.17% China, P. R. 22 0.15% Chile 11 0.12%
  • Economic Section
  • U.S. Embassy Buenos Aires
  • Avenida Colombia 4300
  • (C1425GMN)
  • Buenos Aires, Argentina
  • +54-11-5777-4747
  • ECONBA@state.gov
2017 Investment Climate Statements: Argentina
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U.S. Department of State

The Lessons of 1989: Freedom and Our Future