Give an overview of the country’s economy, its structure and main characteristics, and prevailing government economic policy, particularly as regards foreign investment.
The Republic of Argentina is organized as a federal republican democracy with a presidential political system.
The Constitution provides an executive branch headed by the president, a judicial branch and a legislative branch. The main driver of economic and social policies is the executive branch. The president is elected by direct vote and serves a four-year term, which may be renewed once.
Argentina has 23 provinces and the federal capital that functions as another province. Argentina is the eighth largest country in the world and the second largest in Latin America, with a population of 43 million people.
Historically, under the first Constitution of 1853, modelled on the ideas and ideals of Juan Bautista Alberdi, Argentina was liberal and open to trade and commerce with all the “nations of the world”. In 1930 Argentina’s Gross Domestic Product (“GDP”) was four times that of its neighbour Brazil and similar to that of rich European countries such as France, Germany and the United Kingdom.
This period of political, constitutional and economic stability lasted from 1853 until 1930. In 1930 Argentina had its first coup d’état, which subsequently lead to different populist governments and different interruptions to the Constitution by subsequent coup d´états. The period of political instability and interruptions to the Constitution lasted until 1983 with the election of President Raúl Alfonsin, who nevertheless had two failed military attempts to impose a dictatorship.
Argentina has a mixed economy, balanced between services, agriculture and industrial production.
Argentina’s economic problems began with the first coup d’état and continue today, with some periods of economic stability. A vicious circle of fiscal deficit, high inflation, large public debt and increased regulations and taxes has characterized the recent economic history of Argentina.
In the 2015 presidential elections, the political coalition leaded by Mauricio Macri tightly won the run-off presidential elections, changing the economic and political landscape of Argentina and putting an end to 12 years of leftist government led by Mrs. Cristina Kirchner and her late husband.
Since his inauguration, Mr. Macri has tackled the main economic obstacles left by the Kirchner administration; he has lifted the foreign exchange controls, tackled inflation, sorted out the claims for the sovereign debt with the so-called holdouts and successfully carried out the largest tax amnesty in the world.
Mr. Macri wants to open up the economy and attract foreign direct investment and has made several state visits promoting trade and foreign investment into Argentina. He has also pledged to have a free trade agreement concluded between the European Union and the Mercosur trade union before the end of 2017.
Describe the legal framework and legal culture in your jurisdiction as regards business and commerce.
The Argentine Constitution was adopted in 1853 and has been amended in 1949 and 1994. The Constitution provides for a tripartite system of government.
Argentina’s legal system is continental, based on the Napoleon Code. The original Civil Code was enacted in 1869 and was influenced by the French and Chilean Civil Codes. In 1862 the Commercial Code was enacted. The Commercial Code regulated commercial companies and individuals, bankruptcy, insurance, and general commercial matters.
These two Codes were the main legal sources regulating businesses and individuals until August 1, 2015 when the new Argentine Civil and Commercial Code entered into force. This new Civil and Commercial Code introduced a wide range of modifications, which have an impact on different areas of the law and public life:
Following the 1853 Constitution, Argentina has been historically considered an investment friendly jurisdiction. Private property is protected by the Constitutions with standards even more stringent than those of the fifth-amendment of the US Constitution; private property cannot be taken for public use without an expropriation law (providing grounds for public use) and prior just compensation.
However, private property has not been properly protected in Argentina. Contracts between private parties have been affected in its terms, currency and equivalence of consideration (in the aftermath of the 2001 crisis) by the public powers (executive and legislative); and subsequently, these effects to private property have been acquiesced by the judiciary. In addition, public contracts executed by the government have been similarly affected and defaulted, and compliance of such contracts has been suspended sine die. All these restrictions and attacks on private property have been consented by the highest judicial authorities.
Confiscatory taxes have been imposed and approved by the judiciary. Private parties have been confiscated in clear violation of the Constitution, and the use of private property has been prevented, again without judicial protection.
Are there restrictions on foreign investment?
A top priority for the Macri government is to attract foreign direct investment (FDI) inflows to improve the nation’s productive capacity, increase employment, and restore economic growth. Immediately upon entering office on 10 December 2015, the Macri administration began to correct macroeconomic imbalances and reduce market distortions, such as reducing trade restrictions, lifting exchange controls, unifying the exchange rate, and revising economic reporting data.
Official government statements indicate that the government will continue pursuing a path of reform to improve the investment climate and increase business confidence in order to attract investment inflows.
Foreign and domestic investors generally compete under the same conditions in Argentina.
Which industry sectors are regulated or controlled by the government?
The government controls and regulates several industries - for example, oil and gas, through the national company YPF. It also has companies in other relevant sectors, such as Correo Argentino SA (mail), Ferrocarriles Argentinos (trains) and Aerolíneas Argentinas (airplanes). In other industries, the government implements a regulation, such as in energy and power and telecommunications.
Who are the key industry regulators, and what are their powers?
The key industry regulators in Argentina are:
What are the other main enforcement authorities relevant to businesses (eg, competition authority, tax authority, fraud and corruption prosecutor, data protection authority)?
Other relevant enforcement authorities in Argentina relevant to business are the Argentine Tax Authorities (AFIP), the Argentine Business’ Entities Controlling Body (IGJ), the Financial Information Unit (UIF), National Industrial Property Institute (INPI), and the National Securities Commission (CNV).
On which areas have regulators particularly focused their recent enforcement activities?
In the past year, regulators of the Financial Information Unit have been very active as compared to other enforcement agencies.
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