Meanwhile, the move to a market-based exchange rate regime and high global commodity prices have lifted exports to record levels and assured hefty surpluses in the trade and current account balances of the balance of payments, in spite of high import growth. The favorable balance of payments performance and Argentinaís non-payment of its private debt obligations before the defaulted debt exchange in June 2005 allowed a strong accumulation of foreign exchange reserves, which reached nearly $26.9 billion at the end of 2005. The demand for pesos grew a real 148% between November 2002 and November 2005. Argentinaís Central Bank has deftly managed monetary policy in support of a competitive peso but with some problems in the inflation field. Inflation was an estimated 12.0% in 2005. Banks are back in the black, and net credit levels to the private sector are positive. In December 2005, President Kirchner announced that Argentina would pay its $9.8 billion in International Monetary Fund (IMF) debt out of the country's international reserves at the end of the year.

Argentinaís impressive recovery is a function of a number of factors. First, following a decade of market reforms, the economy was fundamentally sound except for the high level of indebtedness. Second, the adoption of a market exchange rate and favorable international commodity and interest rate trends were catalytic factors in the export-led boom. Third, the government has applied moderate fiscal and monetary policies. Argentina has sound fundamentals and should continue to perform well, with growth projected to be 6% for 2006. Nevertheless, slowness in addressing public service contract renegotiations, capacity constraints, potential energy shortages in the face of continued high levels of economic growth, demand for higher wages, inflation and the government's heterodox policies to contain it (including pressure on the private sector for "voluntary" price controls), and a still-weak investment climate are potential obstacles to sustaining the recovery.

Argentina adheres to most treaties and international agreements on intellectual property. It is a member of the World Intellectual Property Organization (WIPO) and the World Trade Organization (WTO). The Argentine Congress ratified the Uruguay Round agreements, including the provisions on intellectual property, as Law 24425 on January 5, 1995. However, extension of adequate patent protection to pharmaceuticals has been a highly contentious bilateral issue. In May 1997, the U.S. suspended 50% of Argentina's generalized system of preferences (GSP) benefits because of its unsatisfactory pharmaceutical patent law. In November 2000, after years of protracted debate, a new patent law took effect, and a number of pharmaceutical patents were issued. This law improved earlier Argentine patent legislation but provides less protection than that called for in the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS).

In April 2002, negotiations between the Governments of the United States and Argentina clarified aspects of the latter's intellectual property system, such as provisions related to the patentability of microorganisms and the import restriction regime. In addition, the Government of Argentina agreed to amend its patent law so as to provide protection for products obtained from a process patent and to ensure that preliminary injunctions are available in intellectual property court proceedings, among other steps. Congress was expected to pass the outstanding amendment by the end of 2003. Finally, on the outstanding issues that remain, including data protection, the U.S. Government retains its right to seek resolution under the WTO dispute settlement mechanism. In return, the U.S. Government is committed to considering all Argentine requests to expand market access for Argentine products as soon as U.S. legislation reauthorizing trade preferences under the GSP is enacted.