Executive Director, AACCLA, U.S. Chamber of Commerce
Executive Director, U.S.-Argentina Business Council, U.S. Chamber of Commerce
November 07, 2023
The below is an expanded English translation of the original op-ed: “EE.UU. puede ser un aliado estratégico para el crecimiento sostenido de la Argentina," published in La Nacion.
The stakes for the business community in Argentina’s upcoming presidential runoff elections are high — and the choices are stark. At the U.S. Chamber’s U.S.-Argentina Business Council (USABC), our business leaders and government stakeholders identified key priorities and promising opportunities for U.S. and Argentina’s economic relationship, regardless of the electoral outcome.
Our two countries have the potential to expand our longstanding and broad bilateral partnership. This year, the U.S. and Argentina celebrate 200 years of diplomatic ties. On the commercial front, U.S.-Argentina trade in goods and services grew to nearly US$30 billion in in 2022, benefiting both countries. Historically, the U.S. has been the main source of foreign direct investment in Argentina, with a stock of US$12.6 billion in 2022. Currently, there are around 300 U.S. companies doing business in Argentina, some of which have operated in the country for over a century.
Despite this solid foundation, the two countries have not yet unlocked the full potential of the bilateral relationship. There are clear challenges, including the external environment and factors such as Argentina’s annual inflation at a record high of over 120%. Restrictions have increased, with mandatory case-by-case import permits and Central Bank approvals required to access the foreign exchange market.
Through the Chamber’s Dear Candidate letter, members of the USABC have identified a series of initiatives and reforms in critical areas. These areas include trade, energy, and innovation, which we believe Argentina’s future government should advance to create favorable economic and investment conditions. We have also identified measures that both governments can take to ensure that the bilateral commercial relationship reaches its full potential.
Our recommendations to the U.S. government include:
First, pursue a Critical Minerals Agreement (CMA) with Argentina: The South American Lithium Triangle, comprised of Argentina, Chile, Bolivia, and Southern Peru, holds 60% of the world’s known lithium deposits. Argentina currently produces 40,000 mt of lithium carbonate and is estimated to triple to 120,000 mt by 2024. But with no U.S.-Argentina free trade agreement (FTA), Argentina-produced critical minerals are disadvantaged — and China’s dominant position in production and processing is likely to endure. The U.S. should consider seeking an agreement on minerals with Argentina based on the principles of reciprocity and mutual benefit.
Second, the U.S. should continue to support constructive engagement between the IMF and the Government of Argentina: U.S. government support is important for efforts to achieve macroeconomic stability, where the IMF is a key player.
Third, the U.S. should support Argentina’s participation in the Americas Partnership for Economic Prosperity (APEP): At the 2022 Summit of the Americas, APEP was created to set a path forward to tackle inequality, foster integration and high-quality employment, and support democratic values. Argentina can both contribute to and benefit from this regional initiative to contribute to increase trade, competitiveness, and to generate hemispheric prosperity.
The Argentine government can also take steps to ensure this partnership continues to be vibrant:
First, the Argentine government should establish a consultative process to address trade impediments: Current trade restrictions are detrimental to further investment, compounding Argentina’s current economic state. Mandatory import licensing requirements create unnecessary trade bureaucracy and uncertainty. As Argentina’s imports are mainly composed of inputs to produce manufactured goods for domestic use and for exports, restrictions jeopardize economic activity, decrease competitiveness, and negatively impact investment.
Second, Argentina should revisit its foreign currency restrictions: Companies unable to access foreign currency are compelled to substantially limit their investments, hiring, and other economic activity in the country. Additionally, limiting companies’ ability to repatriate dividends imposes severe costs: While a large share of profits is reinvested domestically, firms are reluctant to bring capital into any country if they fear they won’t be able to repatriate earnings.
Third, the Argentine government can unleash the country’s economic potential by eliminating export duties and restrictions: To consolidate its profile as a reliable world supplier, Argentina should thoroughly review the policies that discourage exports, starting with export taxes and bans.
Finally, we invite the incoming Argentine government to not only strengthen ties with the U.S. government, but to also work with the U.S. private sector. Argentina’s trade with the U.S. can grow considerably in the right environment. We invite the incoming government to regularly meet with the U.S. private sector and identify strategic sectors we can pursue, be it in space, agriculture, or energy. The U.S. Chamber and our members want to be constructive partners and are ready for business.