The United Kingdom (UK) is the second largest economy in Europe and one of the world's ten largest economies by GDP. According to the World Trade Organization, it is the sixth largest importer and 15th largest exporter of goods, and the second largest exporter and the largest importer of commercial services.
The Observatory of Economic Complexity indicates that from 2017 to 2022, Argentina's exports to the United Kingdom have increased at an annualized rate of 1.54% and imports increased at an annualized rate of 6.68%. While in this period the main exported products have remained stable in category, those imported have varied, except for palladium, which has maintained its leadership in merchandise purchased from the United Kingdom.
“Historically, the trade balance of goods exchange between Argentina and the United Kingdom has been positive for Argentina”, comments Alejandro Chiappe, Advisory Services Partner and representative of Grant Thornton Argentina at BritCham. “In fact, the goods trade balance in the United Kingdom is negative. Not so in services, where it has a large surplus and financial and business services are very important”.
In the last 5 years, trade exchange between Argentina and the United Kingdom was around US$ 1,250 million. Although our country exports more than it imports, in the last two years the trade surplus did not exceed US$35 million.
Argentina is the UK's main supplier of flour and pellets from soybean oil extraction (17.8%). This by-product of the oilseed industry is used as livestock feed due to its high protein content. In 2023, exported US$ 246.77 million and in the first eight months of 2024 US$ 195.81 million were shipped.
Argentine wine, especially Malbec, finds a very relevant place in the UK and has gained importance over Australian and Chilean wines, which entered the British market earlier.
“The United Kingdom is the second largest importer of wines in the world”, says Julia Adano, Lead Tax Partner and Agribusiness spokesperson at Grant Thornton Argentina. “It is a very competitive market, with the presence of multiple regions and varieties, and despite the tariff disadvantages, Argentine production is very well positioned”.
In addition to a standard VAT rate (20%), Argentine wines are subject to a third-country duty that depends on the alcohol content, whether it is sparkling or not, and whether it is bottled or in bulk. Thus, taxes can represent up to 60% of the final price. Direct competitors outside the EU such as Chile, New Zealand and Australia have treaties and agreements that grant them better access conditions to the UK and zero tariffs.
Argentine export of non-sparkling wines, grape must in which fermentation has been prevented or stopped by adding alcohol, in containers with a capacity <= 2l. has decreased since 2022. While in 2021 Argentina sold bottled wine to the United Kingdom for US$ 94.88 million, in 2022 sales were US$ 80.68 million and in 2023, US$ 69.15 million. Despite this downward trend, our country continues to be positioned as the tenth supplier to the British market for these products.
The agricultural industry finds in the United Kingdom an interesting market for cereals, seeds and fruits. Argentine exports consist mainly of corn and peanuts. Argentina is one of the main corn suppliers to the UK, accounting for 10.3% of British imports and positioning itself as its fourth supplier. As for peanuts, seeds represent 96.86% of sales in the “seeds and fruits” category and positions Argentina as the 11th supplier. In 2023, the export of corn was US$22.88 million and that of peanuts was US$55.72 million, decreasing and increasing respectively, compared to the previous year.
The fifth category of products that Argentina exports the most to the UK is “bran, sharps and legume residues”. In 2022, Argentina was the world’s leading exporter, and the UK was the third largest importer globally. That year, Argentina sold this product to the UK for US$ 66.49 million. In the first eight months of 2024, the export amount was US$ 12.85 million.
The United Kingdom is a large consumer of meat, both beef, pork and poultry, but Argentina's share in this market is very low: it is ranked eighth in the list of chilled meat suppliers and 14th in frozen meat. "Although the quality of Argentine meat and its good positioning throughout the world are undeniable, Ireland is the natural market and leads in these categories with a share level of 82% and 72%", Adano points out. "Argentina's low share is largely due to Ireland's predominance and the high tariffs that imports outside the Hilton quota -which is currently 111 tons per year- must pay".
Regarding Argentine imports from the United Kingdom, palladium is the element that for the last 15 years has remained among the three most purchased goods. “Although it is not one of the main producers, the United Kingdom is positioned as one of the main exporters”, says Estanislao de León, Audit Partner and Energy and Natural Resources industry spokesperson at Grant Thornton Argentina. “The British industry refines metals from this group and produces alloys for the jewellery, automotive and information technology industries”.
Medicines, fungicides, blood fractions and immunological products, fuel, rhodium, ferromolybdenum, whisky, gas turbine parts and piston turbines are some of the items that have led British exports to Argentina.
| Import January - August 2024 (Source: INDEC) | ||
|---|---|---|
|
Code
|
Description
|
US$ million
|
|
84082030
|
Piston engines, diesel or semi-diesel, for motor vehicles, of a cylinder capacity > 2500 cm3 and <= 3500 cm3
|
57.32
|
|
84119900
|
Parts of gas turbine
|
20.60
|
|
71102100
|
Unwrought or in powder form palladium
|
15.54
|
|
30024992
|
Toxins for human health
|
15.38
|
|
84118200
|
Gas turbines of a power > 5000 KW
|
12.28
|
“The Brexit has not changed the trade landscape; the European Union continues to be the main supplier and destination of British goods and services. It is an attractive market for Argentina and one that opens the doors to the Commonwealth and the Middle East”, highlights Fernando Fucci, Managing Partner of Grant Thornton Argentina and Director of the International Business Centre.
The UK economy is open to trade. However, the sectors where Argentina already has a strong presence do not present greater opportunities for participation.
“For some industries, permanence is more important than the introduction of new products”, says Adano. “This is the case of the wine industry, where Argentina is mainly associated with Malbec, which makes other strains or organic wine lines difficult to position. But not the case of the agro-livestock industry, where regional fruit and sheep production industries meet the high-quality standards demanded by British consumers and could find a market”.
Despite Argentina's capacity to sell more, due to population size, consumer behaviour and geopolitical reasons, the United Kingdom trades mainly with countries in the European Union, the United States and China. Therefore, the increase or opening of new markets is mainly conditioned by the supply: if some traditional suppliers cannot take on new export contracts or are prevented from fulfilling previous commitments, Argentina could respond and satisfy that demand.
However, markets can currently be explored for other national industries such as energy and natural resources, the knowledge industry, and regional economies activities.
In 2022, the United Kingdom consumed 1,789 million litres of biodiesel, which represents a market opportunity for Argentina. “Imports of Argentine biodiesel pay a tariff that ranges between 25 and 33%, due to antidumping measures established by the Trade Remedies Authority”, indicates Gabriel Righini, Audit Partner and Energy and Natural Resources industry spokesperson at Grant Thornton Argentina. “However, this tariff is being reviewed and it is estimated that the final resolution will be known in February 2025. If it is favourable for Argentina, in the coming years we could see an increase in exports to the United Kingdom”.
The Argentine science and innovation industry is highly regarded by the UK. Both countries have a long history of collaboration. “During the COVID-19 pandemic, we have worked closely with the United Kingdom on the exchange of data and genomic sequencing to produce the active ingredient of the ‘Oxford Vaccine’”, Chiappe exemplifies. “In addition, there is other joint research in health and biological sciences. The field of life sciences, thanks to the excellence of Argentine talent, has the capacity to take the trade relationship between both countries beyond and boost commercial exchange in products and services with added value”.