RESTRICTED
WORLD TRADE G/TRIMS/N/1/ARG/1
10April 1995
ORGANIZATION(95-0872)
Original: Spanish Committee onTrade-Related Investment Measures
NOTIFICATION UNDER ARTICLE 5.1OFTHE AGREEMENT
ONTRADE-RELATED INVESTMENT MEASURES
Argentina
Thefollowing communication, dated 30March 1995, hasbeenreceived fromthePermanent
Mission ofArgentina.
_______________
REGIME GOVERNING THE AUTOMOTIVE INDUSTRY INARGENTINA
1. Introduction
Theregime governing theArgentinian automotive industry isbased onLawNo.21,932 of
26January 1979, which established aplanforrestructuring thesector withasystem ofadvantages
andobligations, subject totheregulations issued bythecompetent authority. ThisLawpermits the
establishment ofminimum percentages ofnational content interms ofdutiable value, aswellasthe
implementation ofsystems under which imports areoffset bytheexports oftheindustry installed in
thecountry.
TheDecree establishing regulations under thisLawthatiscurrently inforce isNo.2677 of
20December 1991, asamended byDecrees Nos. 683of6May1994, 1179 of15July1994, 1830
of14October 1994and2278 of23December 1994; thecompetent authority istheDEPARTMENT
OFINDUSTRY, under theauthority oftheMINISTRY OFTHEECONOMY AND PUBLIC WORKS
AND SERVICES.
2. General features oftheregime
Theautomotive regime inArgentina isbased ontheconcept ofthespecialization oftheindustry
with, asitsprincipal instrument, asystem ofcounter-trade between automotive assemblers based in
andoutside thecountry. Thesystem basically consists ofpermitting enterprises toimport parts, as
wellascomplete vehicles, withrelief fromduties, provided thattheyexport products toanequivalent
value.
Thissystem isbased ontheideathatArgentinian enterprises operated inaclosed market in
which theyhadtosupply abroad range ofproducts, asaresult ofwhich theydidnotdevelop production
scales enabling them toachieve asuitable levelofproductivity forsuchacompetitive sector. Under
thescheme, thedomestic industry canspecialize inthemanufacture ofspecific models forthedomestic
market andforexport, andcansupplement itssupply withvehicles manufactured inother countries.
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3. Theproduction ofmotor vehicles
Automotive assemblers ("terminates") canproduce vehicles with components thatare
manufactured inthecountry orimported. Under theterms ofLawNo.21,932, theirproduction,
measured interms ofdutiable value, mustinclude aminimum content oflocally manufactured parts.
Thispercentage issetat60percentforcategory "A"vehicles and58percentforcategory "B"vehicles,
under theterms ofDecree No.2677/91. ThisDecree alsosetslocalcontent requirements forparts,
sub-assemblies andunits. Achange inthemethod ofcalculating domestic content iscurrently under
discussion withaviewtoharmonizing thesystem withBrazil, where itisbased onf.o.b. value.
Under theterms ofDecree No.2278/94, parts ofBrazilian origin which havebeenoffset by
exports canbeconsidered asbeing ofdomestic origin forthecalculation ofdomestic content. The
countertrade canbeundertaken bytheautomotive assemblers themselves orbyindependent autoparts
manufacturers, towhich authorization hastobeextended bytheNational Directorate ofIndustry.
InBrazil, Argentinian partsareconsidered tobeofBrazilian origin forthecalculation ofnational
content, eveninthecaseofthecarro popular ,avehicle ofunder 1000 ccwhich isexempt from
numerous taxes inthatcountry.
4. Exports byassemblers
Exports ofcomplete vehicles aremultiplied byafactor of1.2fortheircalculation inthetrade
balance. Furthermore, 40percentoftheinvestments incapital assets ofnational origin made by
subsidiary enterprises canbeassimilated toexports forthesame purpose (Decree No.683/94).
Exports byautomotive assemblers ortheirassociated enterprises havetoinclude aminimum
content ofparts produced byindependent autoparts manufacturers (25percent), under theterms of
Decree No.2677/91.
Exports byindependent autoparts manufacturers through assemblers canbeincluded inthe
latter'strade balance provided thattheyareexported totheirparent company, associated enterprises
ordistribution network under theterms ofanagreement between bothparties.
5. Imports byassemblers
Imports byautomotive assemblers havetobeoffset byexports oroperations which canbe
assimilated toexports forthatpurpose. Imports byautomotive assemblers arecovered byatariff
reduction, under which theypaya2percentdutyonparts from outside theMERCOSUR zoneand
2percentplusanadditionalpercentageforcoveragewiththecommonexternaltariffsetbyMERCOSUR
forcomplete vehicles. Tariffs fortradeinpartswithin theMERCOSUR zonearesetatzeropercent.
Thematerials purchased byautomotive assemblers inthelocalmarket mustbeofnational origin
forthepurposes ofDecree No.2677/91 inorder tobecounted inthedomestic content oftheproduct;
moreover, theymust nothavebeencovered byacountertrade arrangement. Nevertheless, Decree
No.683/94 exempts assemblers from thisrequirement when theparts havealready beenoffset by
countertrade byindependent autoparts manufacturers.
Automotiveassemblerswhicharenotbasedinthecountrycanoffsetimportsofcompletevehicles
through countertrade programmes against exports oftheirownautomotive products orexports which
thirdparties allow them tocount intheirownbalance. Thetariff payable onthese vehicles is18per
centplusanadditional percentage forconvergence withthecommon external tariff established by
MERCOSUR.