By Larry Luxner
USHUAIA, Argentina -- First-time visitors to the world's southernmost city expect to see penguins, cormorants and sea wolves. They're surprised when -- in addition to the fauna -- they discover streets lined with duty-free shops and row after row of factories turning out Philco TV sets, Grundig car stereos and Aurora washing machines.
The reason behind this facade of prosperity is simple: Law 19640, a tax incentive program aimed at spurring investment and tourism in Ushuaia, capital of the chilly island province of Tierra del Fuego.
Under Law 19640, passed in 1972, Ushuaia was declared a special customs zone, exempting the town from value-added tax and income tax. As a result, Ushuaia's main street, Calle San Martín, blossomed into a duty-free haven, with shops selling Christian Dior perfume, Roberta di Camerino cosmetics, imported liquor and Argentine leather handbags. Among the largest stores are El Globo Naranja, which offers a wide selection of luxury gift items at duty-free prices, and Albatros, which specializes in perfumes.
At a corner store up the street from the Quality Inn's Hotel Albatros, a pack of Marlboro costs 60 cents, and a 700-ml bottle of Tia Maria sells for $10. Likewise, a bottle of Johnnie Walker Red goes for $15, Johnnie Walker Black $24, Drambuie $18 and Bailey's Irish Cream $16. All these prices are about half of what one would expect to pay in Buenos Aires -- a six-hour flight to the north.
Yet the town of 40,000 is living on borrowed time, say observers. Law 19640 has succeeded in bringing the factories and shops, but is quickly being made irrelevant by the Southern Common Market (Mercosur), a customs union that links the economies of Argentina, Brazil, Paraguay and Uruguay.
"The assembly industry is disappearing because it doesn't make sense," says Felix Zumelzu, executive director of the American Chamber of Commerce in Buenos Aires. "It was a completely artificial situation. Before, we had very high import barriers, and these guys could bring in parts tax-free, put them together and sell them here. The government eliminated all these privileges. Within Mercosur, there's going to be free zones, but only for sending merchandise outside the four countries."
With manufacturing withering away, Tierra del Fuego is promoting tourism more than ever before -- and pushing the area's spectacular scenery, which thankfully is impervious to tax laws and customs regulations.
Topping the list of Ushuaia's attractions is the wild beauty of Tierra del Fuego National Park, which begins at Kilometer 3,063 -- the southern terminus of Argentina's National Route 3. Here, one can leisurely walk along the shoreline of the Beagle Channel in complete solitude, passing eagles, wild rabbits and quartz rock formations, never knowing for sure whether the frigid sea only a few miles away is the Atlantic or the Pacific. Further out by boat is the Harberton Ranch, the southernmost sheep station in the world and a tourist attraction in its own right.
On a globe, in fact, Ushuaia is so far south you can hardly find it. Fifty-five degrees south of the equator, the pioneer town is closer to the South Pole than to Argentina's northern border with Bolivia. Even in February -- at the height of the Argentine summer -- residents have to bundle up in windbreakers, sweaters and parkas to protect themselves from the howling winds. In winter, the thermometer can dip to 10 degrees below zero. It's no wonder that in the past, so few people have made Ushuaia their home.
Yet Jules Verne, Charles Darwin and Emilio Salgari all found inspiration in Tierra del Fuego; so have modern-day scientists researching the so-called "ozone hole" over Antarctica. Tourists like Ushuaia because it offers them a rare chance to navigate the Beagle Channel in a catamaran, and to experience South America's longest night (on June 21, it lasts nearly 17 hours). Ushuaia is also the jumping-off point for expensive tours to Antarctica, a relatively short 800 miles to the south.
Other attractions include the glaciers around Calafate, cross-country skiing just 20 minutes from downtown Ushuaia, and the "Trensito," a miniature, narrow-gauge train once used to carry prisoners; today, for a $25-per-person charge, it ferries visitors through once-inaccessible areas of the national park.
In Ushuaia itself, attractions include the "Museum at the End of the World," the Saint Christopher tugboat lying in the Beagle Channel off Calle Maipú between 9 de Julio and Triunvirato streets, and the 19th-century Volver restaurant and coffee shop.
During the 1993-94 season, according to the Tierra del Fuego provincial tourist board, about 50,000 tourist visited Ushuaia; 83% of them arrived by air, 12% by land and 4% by ship. Their average length of stay varied from 2.64 days for Americans to 3.28 days for Europeans and 4.76 days for Argentines. Nearly half of all tourists to Ushuaia were, in fact, Argentines. The rest consisted mainly of Germans, Swiss, Americans, British and other Europeans, though Argentina's high prices and extreme distance from most major tourist markets tend to discourage travel to the area.
Tourism will really get a boost, however, once a new airport is completed by early 1996. A planned 9,000-foot runway would be large enough to accommodate refueling of Boeing 747s flying the polar route between Sydney and Buenos Aires.
If present trends continue, say provincial officials, tourism income will hit $40 million by 2000, even more so if the airport is completed. According to the analysis, a new internaitonal airport could increase tourist arrivals to more than 100,000 by the year 200, and "would mark a milestone in the history of tourism."