INTRODUCTION Argentina lives in a democracy since 1986. Before this year lived it under a military regime. In the nineties under the presidency of Menem the country experienced a great increase in the liberalization of trade. Argentina has a free market economic system. Due to the recent privatization program, the State now has a very limited role in the economy. According to the Competitiveness Report of the World Economic Forum Argentina is classified as one of the most open, least protectionist countries in the world. Its currency is convertible to the US dollars and there is total freedom for moving capital internationally. Argentina has conducted one of the most intensive privatization programs in the world. The telephone company, airlines, most railroads, electric power production companies (including hydroelectric power plants), the Argentine oil company YPF (bought by the Spanish company Repsol) steel mills, ports, TV stations and most public services were transferred recently to the private sector. Consistent with Fundacion Invertir the combined value of privatized firms amounts more to more than US$ 30 billions. Many foreign firms have participated in this large-scale privatization program. Foreign investors do not need to seek any kind of prior approval and are free to repatriate full amount of their capital and earnings any time. Foreign and domestic companies are treated equally. Under the law, they have access to all economic sectors and are eligible for incentive program and state procurement. II. TRADE PATTERN It is hard to state the type of trade that exists between Argentina and Brazil in the automobile industry because both countries import and export cars of the same brand and very similar models. Volkswagen produces some of its model of cars in Argentina and some others model in Brazil. The reason for this is to achieve economies of scale; each country specializes in a certain model of car, by doing so they reduce the cost of each additional unit.