(*) By Cristian Galarza, owner at ASAP

Current situation of imports in Argentina

Cristian Galarza is a recognized expert in international logistics, dedicated to the Gaming sector. He is director and partner of ASAP, a company that provides logistics services with offices in Argentina, Panama, Mexico and Colombia, and along with an extensive network of agents, operates throughout Latin America.

Contacto: [email protected]

Argentina 
| 18/09/2013

Since early last year, the already problematic imports in Argentina got even worst by imposing the need to obtain approvals for each import you may want to perform. While the regime is still quite messy, the only rule that exists is that which provides the legal framework to this new system but that still lacks of its “rules of engagement”.

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There are no regulations. The information is handled by the Secretary of Commerce in a verbally fashion, either in personor by telephone), the proven practice has shed somelight.

A year after the initial “kick off” of the Import´s affidavit (DJAI´s), the mysteryof the commitments, agreements and compensations has been unveiled. Over the last year, the Secretary of Commerce demanded that importers make commitments to export a dollar for every dollar they intended to import. At the same time, some importers reached exporters who had positive export balances (meaning they have exported more than what they have imported) in ordertosign agreements that would allow them to meet their commitments. 

The big question was what would happen tothe companies that had signed commitments with the Secretary of Commerce and had not been able to meet them.Since early this year, officials within the Secretary of Commerce have been contacting importers who have not been able to fulfill their commitments in order to let them know that  they should seek to compensate last year’s imports if they want to obtain approvals for the current year.

So: what is needed today in Argentina in order to be authorized to import? It has become clear that there are no given procedures, andthat everything that can be said or done about it,is inferred from theday to day operations. Nevertheless, we can point out the following:

- If a company was able to import during last year, then it will need to compensate its importsfrom such periodto be able to submit itscommitmentfor 2013 (regardless if last year it signed  - or not-an export commitment)

- To perform imports during 2013, the importer will need to commit toexport every dollar for each dollar it intends to import, regardless the exports are of their own or of any third parties (in which case the company shouldsubscribean agreement with such third party).

- The direct consequence of the above mentioned is that an “exports balance” market has boomed since last year, in which exporterssell their balances to importers in order to allow the latters to perform the imports they seek to.

- Although the costs of these balances may vary according to their size, the needs ofboth parties, together with some other issues; we can say that the price to obtain such balances is about 10% of the authorizationtheimporter obtains (today´s common practice is that theimporter will pay the agreed percentage only when they get the approval for their DJAI´s, without any obligation of paying if there are no approvals).

- The importermust certify periodically their exports to the Secretary of Commerce in order to keep their approvals flowing.

The above mentioned is for thegenerality of cases. But it is true that some companies, for whatever reason, get approvals fortheir DJAI´s without having signed neither agreements nor commitments. But such cases should not be considered the rule, since they are actually the exception and are notcoveredby any specific rules.

It is also true that even having signed commitments and agreements, importers often encounter rejections to their affidavits and must bear delays to get their authorizations. Butthere is an undeniable truth: thishappens because Argentina has an adverse trade balance, which is why the Secretary of Commerce authorizes imports whenforeign currency from exports flows in, banning them when such flow diminishes. Meaning if no money comes in, then there is no money for anyone...

In short,the question of whether it is possible to perform imports in Argentina, should be answered as a yes, but assuming an extra costof about 10%. It’s as ifimport duties had increasedby 10%, in addition to having to achieve the already mentioned export balance. But we can say that today who signs an agreement withan exporter, sooner or later gets their DJAI’s approved.

From all the above we may infer that the national government has createda system of subsidies thatis handled privately, because while it is true that the importers require these agreements in order to import, it is also true that exporters have lost competitiveness due to exchange rate backwardness together with the rising costsin the domestic market. The consequence is that sometimes exports are unviable.

Nobody knows how long this system will keep going.The government seems determined to keep it by any means, but the lack of stability suggests that at least they will need to amendit. But while currency shortage remains, it seems like (this way or any other) the restriction of imports is the method that Argentina will apply.

By Cristian Galarza