Soon, Argentina will face a crucial election for its future. The US -Argentina Business Council ( USABC ) of the United States Chamber of Commerce, based in Washington DC, believes that a solid and close economic-trade relationship between both countries is fundamental so that Argentina can get out of its current crisis. The organization believes that the US can be a strategic ally for sustained economic growth in Argentina.
The US and Argentina have a long history of commercial relations
This year, the United States and Argentina celebrate two hundred years of diplomatic relations, and the private sector has made a vital contribution to developing a prosperous and mutually beneficial relationship. More than three hundred American companies are based in Argentina, some of which have been in the South American nation for over one hundred years. The United States has historically been the primary source of foreign direct investment in Argentina, with an investment stock estimated at 16 billion dollars. The United States is also Argentina’s third trading partner – after Brazil and China – which in 2022 represented almost $30 billion in trade in goods and services.
However, the bilateral economic relationship has yet to reach its full potential. With an increasingly complex business environment marked by record annual inflation, increasingly strict controls, and trade barriers, trade is declining. Restrictions have increased through mandatory import permits and increasingly limited access to the foreign exchange market. These circumstances can be detrimental to continuing economic growth in Argentina.
The USABC has identified a series of initiatives and reforms in areas linked to trade, energy, and innovation that it believes, regardless of who is elected president in the upcoming contest, the future government of Argentina should promote to achieve its enormous potential, and with which the Council is fully committed to collaborating.
On the part of the United States, the USABC believes that a Critical Minerals Agreement (CMA) should be promoted with Argentina. This country’s lithium carbonate production is estimated to triple to 120,000 tons by 2024. However, without a free trade agreement or CMA with the United States, American companies will not be able to benefit from the inflation reduction law and will not see Argentina as a competitive supplier of lithium.
A Critical Minerals Agreement will fortify economic growth in Argentina
That is why the USABC proposes to develop an ambitious work agenda that mobilizes the Argentine and US diplomacies to take concrete steps toward signing a CMA. Furthermore, the organization firmly supports the IMF agreement with Argentina. With inflation above 150%, a growing fiscal deficit, and a significant contraction in economic activity, the USABC urges the United States government to continue supporting the IMF program to promote economic growth in Argentina.
Likewise, the United States – Argentina Business Council believes including Argentina in the Alliance for Economic Prosperity in the Americas (APEP) is essential. At the 2022 Summit of the Americas, APEP was launched to address inequality, foster integration, generate high-quality employment, and foster democratic values. The USABC proposes that the US authorities invite Argentina to join APEP at this initial stage.
The Council believes that the Argentine government should implement an open and transparent consultation process to address trade obstacles. It is evident that the economy is in a critical situation, but current trade restrictions discourage investment and growth. Mandatory import licenses generate unnecessary costs, bureaucracy, and uncertainty, which harms economic activity and job creation, affects competitiveness, and discourages investment in promoting Argentina’s economic growth.
Access to foreign exchange markets is critical to sustained growth
Furthermore, the country must lift exchange restrictions. Companies that cannot access the foreign exchange market practically cannot operate, and by limiting their ability to repatriate dividends, the incentives to invest in Argentina are blurred and constitute a further impediment to the country’s sustained growth.
Finally, Argentina must unleash its full export potential by eliminating duties and restrictions on exports. To consolidate its profile as a reliable global supplier of food, minerals, and energy, the country must thoroughly review measures that discourage exports, starting with eliminating or reducing export duties and prohibiting the export of certain products.
The United States – Argentina Business Council invites the next government to deepen its relationship with the US private sector and actively work on a joint agenda in strategic sectors for both countries, such as agribusiness, biotechnology, energy, and aerospace.
US trade and investment can grow significantly in the right business climate and contribute considerably to Argentina’s economic growth. In that sense, the USABC believes and shares the perspective of Argentine political leaders that a structural change is necessary that allows Argentina to achieve its promising future. The USABC appreciates that each of the leading candidates for the country’s presidency recognizes, in their own way, this reality, and the organization has a firm commitment to helping Argentina emerge from the current crisis and resume sustained economic growth, the elimination of poverty, and the prosperity of its people.
The United States Chamber of Commerce and its member companies want to be key partners that support positive steps on this new path for economic growth in Argentina.