Draft Law for the Amendment of the “Buy Argentine” Regime

On March 30, 2011, the Senate approved Bill No. S-1425/09 (the "Draft Law") whose purpose is to amend the regime known as "Buy Argentine", created by Law No. 25,551, regulated by Decree 1600/2002 and complemented by Decree-Law No. 5340/1963 and Law No. 18,875 and its regulations (the "Regime").

The Regime provides preferences for the acquisition of local goods and for the hiring of services provided by local companies.

• The content of the Draft Law

  The following is a summary of the most relevant amendments to the Regime included in the Draft Law:
  • The Draft Law broadens the scope of entities included in the Regime (the “Subjects of the Regime”) which would extend to the following:
    • The Argentine Public Sector, which includes:
      • Centralized and decentralized public administration, including Social Security Institutions;
      • state-owned Companies, State-owned Corporations, Corporations with State-owned majority, Mixed-Economy Companies and all other business organizations where the Argentine Government has a majority of shares or in the corporate decision-making process;
      • any non-business governmental entity with financial autarchy, with legal status and its own assets, including non-governmental public entities, in which the National Government has majority of asset control or for decision-making, and
      • trust Funds totally or mostly set up with goods and/or funds of the Argentine Government.
    • Private legal entities and any other legal form of association, performing or operating public works, as well as licensees, concessionaires and permit holders of public utilities under federal jurisdiction.
    • Entities to whom the Argentine Government has granted licenses to provide the following services:
      • Fixed-line and/or mobile telecommunications, broad-band Internet service, television signal through Internet;
      • the generation, transmission and / or distribution of electricity;
      • freight transportation, and
      • mine, oil or energy production.
    • Provincial public entities, the City of Buenos Aires and Municipal Governments, their decentralized entities, contractors, concessionaires, licensees and private or public permit holders for the performance of the activities mentioned in (ii) and (iii) above, when those entities use funds from the Argentine Public Sector under the condition of applying the Regime.
    • Private entities which receive direct tax benefits or subsidies from any entity of the National Public Sector, if application of the Regime were condition for the granting of those benefits.
  • The Draft Law maintains, as a principle, that a good is deemed national if it has been produced or extracted in Argentina and if the cost of the raw materials, supplies and imported material included in it does not exceed forty per cent (40%) of the gross production value of the relevant good. However, the Draft Law provides that the regulatory authority may reduce or increase the percentages for assessing the national origin of the goods by 15% (the percentage may be reduced only when there is no local production of the relevant goods).
  • The preferences set forth by the Regime for the purchase, rental or leasing of goods of national origin are increased by the Draft Law.
  • The Subjects of the Regime shall implement procedures that ensure participation of suppliers of national goods and services. For the acquisition of foreign goods, a certificate granted by the Regime’s authority that verifies the price of such goods and the compliance with the Regime shall be required.
  • The Draft Law creates a registry which includes associations, unions and business chambers that represent national manufacturers. Consultation of this registry shall be mandatory for the Subjects of the Regime which shall also contact the entities included in the registry prior to drafting the technical bidding terms and conditions.
  • The Draft Law increases the penalties for breach of the Regime.

• Congressional approval of the Draft Law.

  The Draft Law has been approved by the Senate and is now subject to review by the Lower House, which may:
  • Reject it, in which case the Draft Law may not be discussed again during the current congressional year,
  • amend it, in which case it will be returned to the Senate, or
  • approve it without amendments, in which case it will be sent to the Executive for its promulgation or veto.