Within an uncertain global economic context, Argentina and the United Kingdom (UK) evaluate their current trade relationship and consider potential moves to strengthen ties. In early March 2020, officials from both sides met in Buenos Aires to explore further opportunities in the bilateral relationship.
This was the first meeting between officials under the Presidencies of Boris Johnson and Alberto Fernández. Fernández took office in Argentina in December 2019.
The departure of the United Kingdom from the European Union and its consequent search for new trade allies – plus Argentina’s desire to combat financial challenges and secure new trade channels for its businesses – spurs this activity.
Understand the latest developments in Argentina-UK trade relations, and where opportunities lie for businesses to use Argentina as a local hub for trade in Latin America.
Strengthening Argentina-UK trade relations
Argentina is one of the largest economies in Latin America, and has been a focal point for British trade and investment. Argentina is considered a popular hub for British companies expanding into the region.
In March 2020, UK Deputy Foreign Secretary for Europe and the Americas Wendy Morton met with with Argentina’s Deputy Foreign Minister Pablo Tettamanti and Production Minister Matias Kulfas in Buenos Aires to discuss opportunities to strengthen Argentina-UK trade relations.
The discussion points of this meeting addressed the potential to increase trade activity in a number of areas, including:
- oil and gas
- mining
- agriculture
- transport
- financial services
- insurance
- public services.
Officials also discussed potential to increase engagement in public-private projects, and climate change and human rights initiatives.
Importantly, the Argentine government had only recently announced its agenda to recover sovereignty of the Falklands/Malvina Islands. This intent is reflected in 3 separate bills also announced by the government in early March. While there is potential to develop current Argentina-UK trade relations, it appears that the UK may need to cooperate with Argentina on this matter.
Potential partners in railway projects
UK Ambassador to Argentina, Mark Kent, affirmed the country’s interest in cooperating with Argentina on projects to develop railway infrastructure. This statement came after a meeting between a British trade mission and Ricardo Lissalde, Head of Administration of Railway Infrastructure Society of the State (ADIFSE).
The focus project for this potential cooperation is the railway to Vaca Muerta, which is home to a significant shale formation in Argentina. This formation attracts the largest proportion of investment in energy matters in Argentina. At present, 30 local and international companies are already investing in shale mining.
History of bilateral trade relations
Argentina-UK trade relations date back to the 1800s. UK-Argentina bilateral trade amounts to US$1.5bn, of which US$1.2bn in goods and there are hopes that this amount will increase.
When the expansion of world trade occurred, which spanned from around 1850 to 1920, Argentina focused on the export of raw materials, such as wool, cereals and meat, with United Kingdom being one of its main destinations. The United Kingdom made investments directed mainly at transport infrastructure in Argentina.
British capital railroads traveled the interior of Argentina facilitating the arrival from the interior of the food produced by the provinces, to the Port of Buenos Aires from where they were exported.
The refrigeration industry characterized the commercial activity between both countries, in which Argentina provided meat and the United Kingdom the capital for the refrigeration plants. There was a total economic complementation and in that sense several agreements were signed in relation to this commercial activity, by which Great Britain undertook to import Argentine meat.
Over time, Argentina considered that there were a wide variety of sectors in which British cooperation would be welcome, such as, for example, railway transport equipment, electric power plants and materials for road construction. Argentina was the United Kingdom’s most important trading partner in Latin America.
British-owned oil company Shell has had a presence in Argentina since 1914. Its main activities are the exploration and production of oil and gas, the refining of crude oil , the commercialization of fuels and lubricants. Operating for more than 100 years in the country, in 2019 it announced an investment of $3 billion into Argentina in the next five years.
Main imports and exports between Argentina and the United Kingdom
The main product that Argentina exports to the British is soybean meal. Other relevant products in the exchange are corn, rice, wines, fruits and, in a small percentage, cuts of meat.
The United Kingdom ranks as the second export destination for Argentine wines. The United Kingdom has managed to become the second market in imports worldwide and today represents more than 10% of the exports of Argentine bottled wines. For 5 decades the United Kingdom was the main market for Argentine meats and today it is a large consumer of beef.
Of the first ten products exported, all are agro-industrial.
Regarding the imports of British origin that our country receives, 19% of the imported value corresponds to pharmaceutical products, followed by purchases of machines, apparatus and mechanical devices (15%), instruments and apparatus for optics, photography or cinematography (8 %), fine pearls and precious and semi-precious metals and stones (7%), chemical products (6%) and automobiles (6%).
Opportunities for business and traders between Argentina and the UK
Argentina holds a number of trade agreements with prominent economies and blocs within Latin America, making it an ideal hub for expanding businesses to establish themselves and access regional opportunities. Key opportunities for trade with Argentina for UK companies include:
- oil and gas
- agriculture
- renewable energy
- finance.
The country’s commercial centres are also churning out a high level of technology and innovation thanks to its introduction of the Knowledge Economy Law, aimed at boosting this technological development and investment from tech businesses.
Expanding business abroad or securing new trade channels poses many advantages for businesses, including in diversifying their customer base. During uncertain economic conditions, expansion in trade connections between countries offer new opportunities for companies looking for development and security.
Take advantage of Argentina-UK trade relations with expert guidance
It’s important to understand and comply with all local requirements and regulations to do business domestically and engage in international trade. Failure to comply can result in financial or other penalties for your business.
Though challenging, business owners can manage this risk by engaging with local trade law and corporate specialists experienced in supporting foreign business development and expansion in Argentina.
At Biz Latin Hub, our team of bilingual legal and accounting professionals offer a full suite of market entry and back-office solutions to support your successful integration and establishment within Argentina. We’re equipped with a depth of knowledge of Argentine trade and commercial regulations, and offer specialist guidance to ensure your business operates in full compliance of its obligations.
Contact our Argentina team here at Biz Latin Hub for more information and personalized assistance.
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