USA-Argentina Industrial Supply & Trade - Manufacturers, Exporters & Importers Industrial Supplies, Equipment & Machinery

How the Trade with US Started

Argentina is considered as the second largest country in Latin America ranking next to Brazil. It is also the third most populous nation in South America with Brazil and Mexico occupying the top two spots. Argentina is among the more highly developed countries in the Western Hemisphere. Its economy has gradually shifted from an exclusive dependence on the large-scale production of livestock and agricultural goods to one in which the industrial and service sectors are now dominant. Since the 1950's, it has been one of the world's principal trading nations.

Foreign trade and commerce have been major components of Argentina's economy since the earliest times. There were evidently overlapping economic periods which are distinguished in its economic history. From 1600 to 1750, wild cattle and horses were hunted for hides and from 1700 to 1850, large herds of semi-domesticated animals became the backbone of the large-scale ranch system. From the colonial period to the end of the 19th century, fats and salted meats were processed in large vats and sold as food for slaves in plantations in the Americas and as food to be eaten on sailing ships.

Manufacturing employs about 25% of Argentina's labor force. Meat packing and food processing are among the major manufacturing industries together with textiles, cement, petroleum, chemicals, iron and steel, automobiles and machinery. Mining employs a minute percentage of the labor force while minerals account for about 2% of the Gross National Product (GNP).

Argentina ranks among the world's top dozen producers of wheat, rye, corn and linseed. Livestock production is also among the world's highest. Nearly 60% of its land area is used for agriculture, half of which are privately owned while the rest are mostly in corporate, state or institutional ownership. About 25% of its land is covered by forests found in the northern subtropical areas where the most valuable products are timber, pine, larch and oak. The fishing industry has expanded and have changed the dietary habits of Argentinians who largely-favored meat.

Argentina had always enjoyed a favorable balance of trade but in the 1970's there were frequent trade deficits. In an attempt to control the problem, import volume was cut and currency controls were imposed in the early 1980's. Current imports were mainly raw materials, chemicals and machinery. When the nation was able to cope up with the deficit, exports and imports were rehabilitated and the United States was one of the predominant nations which helped Argentina get back to its stature in world trade.

Major Exports and Imports for Argentina and the United States

The United States and Argentina did not merely open international trade for commodities but they also offered each other commercial services as well. The growing trade between these two countries made Argentina rank 33rd among the largest market for US products. The latter, on the other hand was Argentina's second largest trading partner for the year 2006. For the year 2007, the following data were gathered by the US Census Bureau as to the trade between Argentina and US:

2007 Statistics for US Exports to Argentina. The twelve-month period for the year 2007 showed a total of $5.86 billion for the exports of commodities from US to Argentina. The monthly breakdown are as follows: January - $399.2 million; February - $355.1 million; March - $480.5 million; April - $433.2 million; May - $482.7 million; June - $452.3 million; July - $529.6 million; August - $500.7 million; September - $578.6 million; October - $556.2 million; November - $514.3 million; and December - $573.5 million.
2007 Statistics for US Imports from Argentina. For the year 2007, a total of $4.49 billion was noted for the twelve-month period ending December 2007. Specifically, monthly statistics were shown as follows: January - $336.3 million; February - $333 million; March - $395.1 million; April - $349 million; May - $376.5 million; June - $273.5 million; July - $387.6 million; August - $355.1 million; September - $311.4 million; October - $301.1 million; November - $556.8 million; and December - $511.6 million.

This data shows a lot of good definitions between the balance of trade among the two nations. As evidence to this, they have continually prospered their foreign trade by way of improving their statistics for the year 2008 where it depicted an export from US to Argentina amounting to $4.53 billion for the period ending July 2007 while the imports gave a total of $3.22 billion for the same period. The merchandise trade between these two countries particularly focused on the following products for 2006:

Argentina Exports to US. Wine products topped the chart which amounted to $93.5 million for the year 2006, up by 36.2% from 2005. It was followed by alcoholic beverages, non-alcoholic beverages and processed coffee.
Argentina Imports from US. Argentina's imports from US in the year 2006 amounted to $4.8 billion with chemical fertilizers occupying the first spot posing a total amount of $875.2 million dollars, an increase of 18% from 2005.

Argentina Bilateral Investment Treaty

This particular agreement was signed in November 14, 1991 and took full effect on October 20, 1994. It specifically provided for terms and conditions on world trade between the United States and the Argentine Republic. It was a pact taken by both countries in order to protect and encourage investment flows and correct flaws of economic trade as well. The Bilateral Investment Treaty (BIT) had the following provisions:

On investments. Both sides should benefit from a special kind of treatment where one party receives all the fruits of its investment in the territory country. Investments should be from performance requirements, in like manner, extending to the use of local products as well as exported goods. Investment funds may also be converted into the currency deemed fit for the transaction.
On nationals and companies. The BIT specifically says that companies may hire top professionals to lead the firm regardless of nationality and depending on their own choice. Nationals and companies are also given equal rights and their investments have access to binding international settlements or arbitrations without the necessity to raise the case in local courts.
On debt-equity conversion programs. This is the first US BIT program that specifically handles this kind of objective which enables the investor to purchase debts of a country at a discount and at the local currency equal to the face value of the loan. The US was supportive enough of the Argentine Republic's need for such a scheme thus; they had included a debt protocol saying that any deferral of transfers under the debt-equity conversion would not be superseded by the pact's transfers for delay.

Trade Conflict between US-Argentina Relations

Foreign trade conflicts specifically affected certain areas of global business between the United States and Argentina. Both, however, have exerted an extra mile to settle the dispute immediately to make their trade as free-flowing as ever.

The following sectors had some disparities:

Textiles, apparel and footwear. It was found out in October 1996 that Argentina applied specific duties on these three categories which directed to 3% statistical tax on all imports and labeling requirements. The US government found it necessary to establish a settlement panel in January 1997 to address labeling requirements of Argentina. These were carefully investigated and the World Trade Organization (WTO) informed the US that Argentina have already revoked the necessary custom duties and labeling requirements.
Non-agricultural products. In the early part of 1998, Argentina started to change the mandates on certifications and guidelines regarding exports and imports of non-agricultural products. International business as well as US trade relations was affected. The latter saw some non-transparent and inconsistent procedures regarding their exports of electrical products, toys, energy efficiency, covers of dangerous products, gas products, protective equipment, elevators and construction materials such as steel.

Other debatable issues extended to Intellectual Property Rights such as patents, copyrights and trademark. It also had some service and other investment barriers which have gravely affected the trade between the two nations. However, they have stood the disputes and settled all of them accordingly through the help of the WTO.

What Happens Next between US-Argentina Trade Relations

The Bilateral relations between the two nations are seen to have future challenges. Just like any other relationship which undergoes a certain complication hiatus, the United States and Argentina are faced with so many compelling circumstances. These, however, are no longer called barriers by this time as they have both exerted efforts to bridge the gap. While others may be rejoicing that these two countries had some issues, it is not at all a hindrance for their economic partnership

The future has a lot of things in store for the two as they are trying to improve their ranks in each other's global trade. Nobody will ever predict the improvements that will take place between the investor relations of these countries. They are bounded by a Bilateral Investment Treaty which will certainly walk them off the walls of international business. There is nothing impossible to their willingness to raise their standings in their specific financial system.

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