Introduction

The country analysis report on Argentina provides a wide array of analytical inputs to analyze the country's performance, and the objective is to help the reader to make business decisions and prepare for the future. The report on Argentina analyzes the political, economic, social, technological (PEST) structure of Argentina. The report provides a holistic view of Argentina from historical, current and future perspective.

Features and Benefits

Understanding gained from the country analysis report on Argentina can be used to plan business investments or market entry apart from a holistic view of the country. Political section on Argentina provides inputs about the political system, key figures in the country, and governance indicators. Economic section on Argentina outlines the economic story of the country to provide a balanced assessment on core macro-economic issues. Social section on Argentina enables understanding of customer demographics through the income distribution, rural-urban segmentation and centers of affluence, healthcare and educational scenario in the country. Technological section on Argentina provides strategic inputs on information communications and technology, technological laws and policies, technological gaps, patents data and relevant laws.

PEST ANALYSIS

A scan of the external macro-environment in which the firm operates can be expressed in terms of the following factors: Political Economic Social Technological

The acronym PEST (or sometimes rearranged as "STEP") is used to describe a framework for the analysis of these macro environmental factors. A PEST analysis fits into an overall environmental scan as shown in the following diagram:

ENVIRONMENTAL SCAN

EXTERNAL ANALYSIS

INTERNAL ANALYSIS

MACRO ENVIRONMENT

MICRO ENVIRONMENT

IN THE ORGANIZATION

P.E.S.T

POLITICAL FACTORS

The Argentine Constitution of 1853 mandates a separation of powers into executive, legislative, and judicial branches at the national and provincial level. The political framework is a federal representative democratic republic, in which the President is both head of state and head of government, complemented by a pluriform multi-party system. Executive power resides in the President and the Cabinet. The President and Vice President are directly elected to four-year terms and are limited to two terms. Cabinet ministers are appointed by the President and are not subject to legislative ratification. The current President is Cristina Fernndez de Kirchner, with Julio Cobos as Vice President. Legislative power is vested in the bicameral National Congress, comprising a 72member Senate and a 257-member Chamber of Deputies. Senators serve six-year terms, with one-third standing for re-election every two years. Members of the Chamber of Deputies are elected to four-year terms by a proportional representation system, with half of the members standing for re-election every two years. A third of the candidates presented by the parties must be women. The judiciary is independent of the executive and the legislature. The Supreme Court has seven members appointed by the President in consultation with the Senate. The judges of all the other courts are appointed by the Council of Magistrates of the Nation, a secretariat composed of representatives of judges, lawyers, the Congress and the executive. Though declared the capital in 1853, Buenos Aires did not become the official Capital until 1880. The 1994 amendment of the Argentine Constitution included a limited form of devolution to Buenos Aires. The national government reserved control of the Argentine Federal Police (the federally administered city force), the Port of Buenos Aires, and other faculties, however. Argentina is divided into twenty-three provinces and one Autonomous City. Buenos Aires Province is divided into 134 Partidos, while the remaining Provinces are divided into 376 departments. Departments and Partidos are further subdivided into municipalities or districts. With the exception of Buenos Aires Province, the nation's provinces have chosen in recent years to enter into treaties with other provinces, forming four federated regions aimed at fostering economic integration and development: Center Region, Patagonic Region, New Cuyo Region, and the Argentine Greater North Region.

Political factors include government regulations and legal issues and define both formal and informal rules under which the firm must operate. Some examples include: tax policy employment laws environmental regulations trade restrictions and tariffs political stability

TAX POLICY: Income tax in Argentina is collected solely by the Government of Argentina, to the exclusion of the Provinces of Argentina. Argentina uses a system of progressive taxation on personal income that is collected as a deferred tax, a flat rate tax on business income (company tax, 35%), and a stamp tax of 1.5% on the total value of real property, whether it gained or lost value (rather than 1.5% being applied only to realized capital gains); there is also an ad valorem property tax on other assets such as vehicles. There is also a 0.6% tax on all bank transactions. Argentinas income tax system contains a complex array of deductions and offsets, and is administered by the Administratin Federal de Ingresos Pblicos (AFIP). In 2005, the wealth tax (0.5% to 2.5%), value-added tax (21%; up from 18% in 1994), and excise taxes on electronics, tobacco, alcohol, soft drinks, perfumes, jewelry, precious stones, vehicles, tires, mobile phone services, insurance policies, gasoline, lubricating oils, and other items. There is no inheritance tax. Corporate taxes are levied at 35% for domestic and foreign companies. Provincial and municipal governments impose various taxes. EMPLOYMENT LAWS: Argentina is a federal constitutional republic with a population of approximately 40.1 million. In October 2007 the country held national presidential and legislative elections, and voters elected President Cristina Fernandez de Kirchner in generally free and fair multiparty elections. Civilian authorities generally maintained effective control of the security forces. RESPECT FOR HUMAN RIGHTS Section 1 Respect for the Integrity of the Person, Including Freedom From: Arbitrary or Unlawful Deprivation of Life Disappearance
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Torture and Other Cruel, Inhuman, or Degrading Treatment or Punishment Arbitrary Arrest or Detention Denial of Fair Public Trial Arbitrary Interference with Privacy, Family, Home, or Correspondence

Section 2Respect for Civil Liberties, Including: Freedom of Speech and Press Freedom of Peaceful Assembly and Association Freedom of Religion Freedom of Movement, Internally Displaced Persons, Protection of Refugees, and Stateless Persons

Section 3Respect for Political Rights: The Right of Citizens to Change Their Government Elections and Political Participation Government Corruption and Transparency

Section 4Governmental Attitude Regarding International Investigation of Alleged Violations of Human Rights

and

Nongovernmental

Section 5Discrimination, Societal Abuses, and Trafficking in Persons

Section 6: Worker Rights The Right of Association The Right to Organize and Bargain Collectively Prohibition of Forced or Compulsory Labor Prohibition of Child Labor and Minimum Age for Employment Acceptable Conditions of Work

TRADE RESTRICTIONS AND TARIFFS:

TRADE SUMMARY The U.S. trade deficit with Argentina was $734 million in 2003, a decrease of $868 million from $1.6 billion in 2002. U.S. goods exports in 2003 were $2.4 billion, up 546 percent from the previous year. Corresponding U.S. imports from Argentina were $3.2 billion, down 0.6 percent. Argentina is currently the 39th largest export market for U.S. goods. U.S. exports of private commercial services (i.e., excluding military and government) to Argentina were $1.7 billion in 2002 (latest data available) and U.S. imports were $593 million. The stock of U.S. foreign direct investment (FDI) in Argentina in 2002 was $11.3 billion, down from $15.8 billion in 2001. U.S. FDI in Argentina is concentrated largely in the manufacturing, finance, and utilities sectors. IMPORT POLICIES Argentina made significant progress in reducing tariffs and non-tariff barriers during the 1990s. Starting in late 2000 the government implemented and overturned trade policies frequently enough to foster uncertainty and confusion in the exporting and importing community. In January 2002, then-President Eduardo Duhalde abandoned Argentina's quasi-currency board system, known as "convertibility," which had pegged the peso to the dollar at a one-to-one rate since 1991 and replaced it with a market-based (floating) exchange rate system. This resulted in a 70 percent devaluation of the peso. The collapse of the decade-long convertibility regime triggered a 56 percent drop in imports and a 3 percent decline in exports due to uncertainty and lack of financing. The peso has appreciated 22 percent in 2003. The government implemented an increasing variety of capital and exchange controls throughout 2002. These measures inhibited access to foreign exchange to pay for imports. As of September 2002, the government retained strict controls on the release of foreign exchange to pay for imports of 2,700 products. During 2003, most of the exchange market controls for imports were relaxed or abolished. Imports can now be paid in advance regardless of the type of good involved. However, importers must show that imported products entered Argentina within 180 days of payment, though there is an exception for capital goods worth more than $50,000 for which the time frame increases to 270 days. There are no restrictions on payments for services imports (such as freight, insurance, technical assessment, professional fees, etc.). Purchases of foreign currency to settle debt services owed to foreign creditors are permitted within 15 days of each scheduled payment. Imports of used clothing are prohibited except for donations to government or religious organizations. A tariff of 21.5 percent is imposed on textile and apparel products entering the Argentine market. In addition to this tariff, Argentina maintains a complex array of variable and specific duties that further inhibit market access for textile and apparel products. Importers should expect to pay an aggregate of approximately 35 percent in import tariffs. Argentina also
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prohibits the importation and sale of used tires, and used or refurbished medical equipment such as imaging equipment. TARIFFS Tariffs average approximately 11 percent. A statistical fee of 0.5 percent is added to some e products. A limited number of imports is banned altogether, such as re-manufactured auto parts. Tariffs on toys were significantly increased in January 1999, and again in November 2001, particularly those originating in countries that are not members of the World Trade Organization (WTO).On January 1, 1995, MERCOSUR became a customs union by establishing a common external tariff (CET) covering 85 percent of traded goods. MERCOSUR will gradually phase in coverage of the CET through 2006, when all products should be included in the customs union. In 1999, most trade between Brazil and Argentina became duty-free under the intraMERCOSUR duty phase-out schedule. However, several sensitive sectors, such as sugar, autos, and telecommunications equipment are included on either Brazil's or Argentina's exception list and are still subject to customs duties. Customs Procedures Argentina abides by the WTO Agreement on Customs Valuation. Argentina has import monitoring mechanisms, similar to an import licensing regime, which affect roughly one-fifth of its imports, principally textiles, toys, and footwear. U.S. firms also complain of cumbersome certificate of origin requirements, particularly in the electronics and textile sectors. STANDARDS, TESTING, LABELING AND CERTIFICATION AGRICULTURAL PRODUCTS In 2002, Argentina banned the import of all chicken products from the United States. This decision was based on an outbreak of Newcastle Disease in the states of California, Nevada, Arizona, and Texas. Although there was no import of chicken meat from the United States in 2002, this ban affected the import of chicken cartilage, worth $5 million annually. The United States requested recognition as being free of Newcastle Disease in December 2003 and is waiting for a response from Argentina. Argentina has continued to delay issuing the final authorization for imports of citrus fruit, pears, and cherries from the U.S. In addition, import restrictions remain in place for swine genetics. Argentina also prohibits the import of seed potatoes, claiming Phytosanitary concerns. In October 2002, Argentina's Phytosanitary and Food Safety Agency (SENASA) issued Resolution 816/02 that could require audits of the animal and plant facilities of countries exporting animal and plant products to Argentina. In 2003, SENASA agreed to postpone implementation of this regulation for 180 days. SENASA states that there will be no change in the trade after the 180 days. Exports of U.S. pet food and of U.S. semen and embryos to Argentina are restricted based on Resolution 117, which concerns risks of BSE. The Argentine National Food Institute (equivalent of the U.S. Food and Drug Administration) began
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requiring imports produced with U.S. milk to be accompanied by a special certificate after December 2003. NON-AGRICULTURAL PRODUCTS Argentina's Standards Institute (IRAM) bases some of its voluntary standards on international standards. These voluntary standards are in some cases compatible with U.S. or European standards. In general, Argentine buyers usually accept products with U.S. product certificates or which meet U.S. standards. In early 1998, Argentina began mandating compliance with new safety certifications on a wide range of products. Argentina has issued regulations that affect U.S. exports of low voltage electrical products (household appliances, electronics products and electrical materials), toys, and covers for dangerous products, gas products, construction steel, personal protective equipment and elevators. The procedures for compliance often appear inconsistent, redundant and non-transparent. Regulations that require product re-testing are particularly cumbersome and costly and are especially problematic for U.S. small- and mediumsized companies. Argentina's certificate of origin regulations require separate certificates for each of the countries involved in manufacturing the various components of a final product. In some cases, Argentina has failed to fulfill the notification and comment requirements of the WTO Agreement on Technical Barriers to Trade (TBT) in its implementation of these measures. INTELLECTUAL PROPERTY RIGHTS (IPR) PROTECTION PATENTS Argentina's lack of adequate and effective patent protection has been a long-standing irritant in the bilateral trade relationship. Argentina is listed on the 2003 Special 301 Priority Watch List.The National Intellectual Property Institute (INPI) started to approve pharmaceutical patents in October 2000. INPI has been extremely slow since that time in issuing pharmaceutical patents to products with commercial value. Bilateral trade negotiations between the United States and Argentina did not resolve the issue of protection of confidential and proprietary data developed by pharmaceutical companies and submitted to INPI. In April 2002, negotiations between the governments of the United States and Argentina clarified aspects of the latter's intellectual property system, such as provisions related to the patentability of microorganisms and its import restriction regime. In December 2003, Argentinas Congress passed an amendment to its patent law to provide protection for products obtained from a process patent and to ensure that preliminary injunctions are available in intellectual property court proceedings, among other steps. The United States has explicitly reserved its right to seek resolution on the outstanding issues that remain, including data protection, under the WTO dispute settlement mechanism.

COPYRIGHTS Argentina's copyright laws provide generally good protection. Argentina adopted legislation in 1999 to ratify the World Intellectual Property Organization (WIPO) Copyright Treaty and the WIPO Performances and Phonograms Treaty, though some implementation issues remain. An agreement between the Argentine government and the software industry to legalize unlicensed software in use in government offices was never finalized. Enforcement of copyrights on recorded music, videos, books and computer software remains inconsistent. Argentine Customs and other government authorities generally cooperate with industry efforts to stop shipments of pirated merchandise, but inadequate resources and slow court procedures have hampered the effectiveness of enforcement efforts. The legal framework regarding Internet piracy provides few incentives to investigate and punish those who post infringing materials. Inadequate border controls further contribute to the regional circulation of pirated goods. SERVICES BARRIERS Argentina enacted broad liberalization in the services sector as part of its economic reform program in the 1990s, though some barriers continue to exist. For example, the Argentine government obliges cable/pay television operators to register their programming with a government body. In addition, restrictions regarding the showing, printing and dubbing of films have inhibited U.S. exports. A further barrier is the practice of charging ad valorem customs duties based on the value of authors' rights, rather than solely on the value of the physical materials being imported, which is the WTO standard. Argentina has committed to allow foreign suppliers of non-insurance financial services to establish all forms of commercial presence. Argentina has also committed to provide substantially full market access and national treatment to foreign suppliers of non-insurance financial services. The only significant remaining issue involves lending limits for foreign bank branches that are based on local paid-in capital, not parent bank capital. This effectively removes the rationale for establishing in branch form. This issue has become largely moot due to the ongoing banking crisis that began in December 2001 with the freezing of bank accounts and the subsequent devaluation and asymmetric pacification from dollars into pesos of deposits, loans and other assets. Most professionals must enroll in local associations or must maintain a local address for a certain period of time prior to establishment of operations. There are nationality restrictions for some internal shipping, private security companies and education providers. Provinces can impose their own barriers on the provision of services.

INVESTMENT BARRIERS Pursuant to WTO rules, Argentina notified the WTO in 1995 that it maintained measures inconsistent with its obligations under the WTO Agreement on Trade-Related Investment Measures (TRIMS). These measures deal with local content and trade balancing in the automotive industry. In November 2001, following the conclusion of the five-year TRIMS Agreement transition period, the WTO granted Argentina and several other countries additional time to bring their policies fully into compliance with the TRIMS Agreement. The extension granted to Argentina and the others expired at the end of 2003, and the United States is now seeking to confirm whether the measures in question have been eliminated. Under the bilateral investment treaty (BIT) between the United States and Argentina, which entered into force in 1994, investors of either country may seek binding international arbitration of claims that a host government violated certain obligations of the treaty. Several U.S. investors have initiated dispute settlement under the BIT in response to measures imposed by Argentina during the financial crisis that began in 2001. ELECTRONIC COMMERCE Argentina has taken steps to lower the cost of Internet usage and has shown interest in U.S. electronic commerce initiatives in the FTAA and the WTO. Despite supporting electronic commerce, Argentina does not participate in the WTO Information Technology Agreement (ITA). In addition, Argentina does not allow the use of electronically produced airway bills, slowing the customs processing of critical just in-time shipments and interfering with Argentina's ability to conduct electronic commerce transactions. Recent advances legalizing digital signatures will enhance the chances to advance in the airway bill issue.

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ECONOMIC FACTORS
Economic factors affect the purchasing power of potential customers and the firms cost of capital. The following are examples of factors in the macro economy: Economic Growth Interest Rates Exchange Rates Inflation Rate

INTEREST RATE
The benchmark interest rate in Argentina was last reported at 9 percent. In Argentina, interest rate decisions are taken by The Central Bank of Argentina (Banco Central de la Repblica Argentina, BCRA). From 1995 until 2010, Argentina's average interest rate was 9.77 percent reaching an historical high of 125.00 percent in August of 2002 and a record low of 0.95 percent in April of 2004.

GDP GROWTH RATE

The Gross Domestic Product (GDP) in Argentina expanded 2.50 percent in the second quarter of 2011 over the previous quarter. Historically, from 1993 until 2011, Argentina's average quarterly GDP Growth was 0.96 percent reaching an historical high of 3.70 percent in March of 2003 and a record low of -5.70 percent in December of 2001. Argentina is the third largest national economy in Latin America. Argentina has abundant natural resources, a well-educated population, an export-oriented agricultural sector and a relatively diversified industrial base. Domestic instability and global trends, however, contributed to Argentina's decline from its noteworthy position as the world's 10th wealthiest nation per capita in 1913 to the world's 47th wealthiest in 2008. This page includes: Argentina GDP Growth Rate chart, historical data, forecasts and news. Data is also available for Argentina GDP Annual Growth Rate, which measures growth over a full economic year.

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INFLATION RATE
The inflation rate in Argentina was last reported at 9.8 percent in October of 2011. From 1944 until 2010, the average inflation rate in Argentina was 215.46 percent reaching an historical high of 20262.80 percent in March of 1990 and a record low of -7.00 percent in February of 1954. Inflation rate refers to a general rise in prices measured against a standard level of purchasing power. The most well known measures of Inflation are the CPI which measures consumer prices, and the GDP deflator, which measures inflation in the whole of the domestic economy. This page includes: Argentina Inflation Rate chart, historical data and news.

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SOCIAL FACTORS
Social factors include the demographic and cultural aspects of the external macro environment. These factors affect customer needs and the size of potential markets. Some social factors include: Health Consciousness Population Growth Rate Age Distribution Career Attitudes Emphasis On Safety

Demographics Profile 2011: Population: 41,769,726 (July 2011 est.) Age structure:
0-14 years: 25.4% (male 5,429,488/female 5,181,289) 15-64 years: 63.6% (male 13,253,468/female 13,301,530) 65 years and over: 11% (male 1,897,144/female 2,706,807) (2011 est.)

Median age:
total: 30.5 years male: 29.5 years female: 31.6 years (2011 est.)

Population growth rate: 1.017% (2011 est.) Birth rate: 17.54 births/1,000 population (2011 est.) Death rate: 7.38 deaths/1,000 population (July 2011 est.) Net migration rate: 0 migrant(s)/1,000 populations (2011 est.)

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Urbanization
urban population: 92% of total population (2010) rate of urbanization: 1.1% annual rate of change (2010-15 est.)

Sex ratio
at birth: 1.052 male(s)/female under 15 years: 1.05 male(s)/female 15-64 years: 1 male(s)/female 65 years and over: 0.7 male(s)/female total population: 0.97 male(s)/female (2011 est.)

Infant mortality rate

total: 10.81 deaths/1,000 live births male: 12.08 deaths/1,000 live births female: 9.48 deaths/1,000 live births (2011 est.)

Life expectancy at birth

total population: 76.95 years male: 73.71 years female: 80.36 years (2011 est.)

Total fertility rate: 2.31 children born/woman (2011 est.) HIV/AIDS - adult prevalence rate: 0.5% (2009 est.) HIV/AIDS people living with HIV/AIDS: 110,000 (2009 est.) HIV/AIDS deaths:
2,900 (2009 est.)

Major infectious diseases

degree of risk: intermediate food or waterborne diseases: bacterial diarrhea, hepatitis A water contact disease: leptospirosis (2009)

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Nationality
noun: Argentine(s) adjective: Argentine

Ethnic groups:

white (mostly Spanish and Italian) 97%, mestizo (mixed white and Amerindian ancestry), Amerindian, or other non-white groups 3%

Religions: nominally Roman Catholic 92% (less than 20% practicing), Protestant 2%,
Jewish 2%, other 4%

Languages: Spanish (official), Italian, English, German, French Literacy

definition: age 15 and over can read and write total population: 97.2% male: 97.2% female: 97.2% (2001 census)

School life expectancy (primary to tertiary education)

total: 16 years male: 15 years female: 17 years (2007)

Education expenditures: 4.9% of GDP (2007) Maternal mortality rate: 70 deaths/100,000 live births (2008) Children under the age of 5 years underweight: 2.3% (2005) Health expenditures: 9.5% of GDP (2009) Physicians density: 3.155 physicians/1,000 population (2004) Hospital bed density: 4 beds/1,000 population (2005)

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TECHNOLOGICAL FACTORS

Technological factors can lower barriers to entry, reduce minimum efficient production levels, and influence outsourcing decisions. Some technological factors include: R&D Activity Automation Technology Incentives Rate Of Technological Change

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REFERENCES

http://www.jgva.com/PEST_es.pdf http://en.wikipedia.org/wiki/Argentina http://en.wikipedia.org/wiki/Taxation_in_Argentina http://www.state.gov/g/drl/rls/hrrpt/2008/wha/119145.htm http://www.tradingeconomics.com/argentina/gdp-growth http://www.tradingeconomics.com/argentina/inflation-cpi http://www.tradingeconomics.com/argentina/interest-rate http://www.indexmundi.com/argentina/demographics_profile.html

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