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WORLD TRADE
WT/TPR/S/234/Rev.1
15 October 2010
ORGANIZATION
(10-5320)
Trade Policy Review Body
TRADE POLICY REVIEW
Report by the Secretariat
HONDURAS
Revision
This report, prepared for the Second Trade Policy Review of Honduras, has been
drawn up by the WTO Secretariat on its own responsibility. The Secretariat has,
as required by the Agreement establishing the Trade Policy Review Mechanism
(Annex 3 of the Marrakesh Agreement Establishing the World Trade
Organization), sought clarification from Honduras on its trade policies and
practices.
Any technical questions arising from this report may be addressed to Mr Ricardo
Barba (Tel.: 022 739 5088) or Mrs Eugenia Lizano (Tel.: 022 739 6578).
Document WT/TPR/G/234 contains the policy statement submitted by
Honduras.
Honduras
WT/TPR/S/234/Rev.1
Page iii
CONTENTS
Page
SUMMARY
I.
II.
vii
(1)
ECONOMIC ENVIRONMENT
vii
(2)
TRADE AND INVESTMENT POLICY FRAMEWORK
viii
(3)
MEASURES AFFECTING IMPORTS
viii
(4)
OTHER MEASURES AFFECTING TRADE
ix
(5)
SECTORAL POLICIES
x
ECONOMIC ENVIRONMENT
1
(1)
OVERVIEW
1
(2)
MACROECONOMIC DEVELOPMENT
1
(3)
TRADE PERFORMANCE AND INVESTMENT
(i)
Trade in goods and services
(ii)
Foreign direct investment
4
4
6
(4)
OUTLOOK
8
TRADE AND INVESTMENT REGIME
10
(1)
GENERAL FRAMEWORK
10
(2)
TRADE POLICY OBJECTIVES AND FORMULATION
11
(3)
TRADE LAWS AND REGULATIONS
12
(4)
INTERNATIONAL TRADE RELATIONS
(i)
World Trade Organization (WTO)
(ii)
Preferential agreements
12
12
16
(5)
INVESTMENT FRAMEWORK
19
ANNEX II.1:
III.
AID FOR TRADE
22
TRADE POLICIES BY MEASURE
28
(1)
INTRODUCTION
(i)
Registration, documentation and procedures
(ii)
Customs valuation
(iii)
Rules of origin
(iv)
Tariffs
(v)
Tariff quotas
(vi)
Other charges affecting imports
(vii)
Import licensing, permits and other import requirements
(viii)
Import prohibitions
(ix)
Anti-dumping and countervailing measures
(x)
Safeguard measures
(xi)
Standards and technical regulations
(xii)
Sanitary and phytosanitary measures
28
28
30
30
31
37
37
37
40
40
42
43
46
(2)
MEASURES AFFECTING EXPORTS
(i)
Registration, documentation and procedures
(ii)
Export taxes
49
49
51
WT/TPR/S/234/Rev.1
Page iv
Trade Policy Review
Page
(iii)
(iv)
(v)
(vi)
(3)
IV.
Prohibitions, licensing and other restrictions
Export subsidies and incentives
Financing, insurance, and guarantees
Export promotion and marketing assistance
OTHER MEASURES AFFECTING PRODUCTION AND TRADE
(i)
Incentives
(ii)
Competition policy and price controls
(iii)
Government procurement
(iv)
State trading and State enterprises
(v)
Trade-related investment measures
(vi)
Intellectual property rights
51
52
54
54
55
55
56
62
65
65
65
TRADE POLICIES BY SECTOR
70
(1)
AGRICULTURE
(i)
Main features
(ii)
Measures affecting imports
(iii)
Measures affecting exports
(iv)
Measures affecting production
70
70
74
76
76
(2)
MANUFACTURING SECTOR
(i)
Main features
(ii)
Maquila industry
79
79
82
(3)
SERVICES
(i)
Main features
(ii)
Financial services
(iii)
Telecommunications
(iv)
Transport
84
84
87
94
99
REFERENCES
107
APPENDIX TABLES
109
Honduras
WT/TPR/S/234/Rev.1
Page v
Page
CHARTS
IV.
TRADE POLICIES BY SECTOR
IV.1
IV.2
IV.3
MFN tariffs applied by Honduras in 2009, by ISIC major groups
GDP share of the various service subsectors, 2003 and 2009
Trade in services, 2003 and 2008
81
84
86
TABLES
I.
ECONOMIC ENVIRONMENT
I.1
I.2
I.3
Main economic indicators, 2003-2009
Balance of payments, 2003-2009
Foreign direct investment flows, 2004-2009
II.
TRADE AND INVESTMENT REGIME
II.1
II.2
Main trade legislation, 2010
Principal notifications submitted by Honduras pursuant to the WTO Agreements,
June 2010
WTO dispute settlement cases to which Honduras is or has been a party, June 2010
II.3
2
4
7
12
13
14
ANNEX II.1: AID FOR TRADE
II.1
II.2
II.3
SPS issues of interest to Honduran exporters
Aid-for-Trade flows: CRS proxies
Support from donors
III.
TRADE POLICIES BY MEASURE
III.1
III.2
III.3
III.4
III.5
III.6
III.7
III.8
III.9
Rules of origin, 2010
Structure of MFN tariffs, 2010
Summary of MFN tariffs, 2010
Products for which the applied tariffs are higher than the bound tariffs, 2010
Summary of preferential tariffs, 2010
Products subject to import licensing, 2010
Subsidies notified to the WTO
Activities of the CDPC, 2006-2009
Threshold values for the application of tendering procedures, 2010
IV.
TRADE POLICIES BY SECTOR
IV.1
IV.2
IV.3
IV.4
IV.5
IV.6
IV.7
Agriculture, selected indicators, 2003-2009
Summary of agricultural measures
Products subject to price bands, 2010
Main indicators relating to the maquila industry, 2003-2009
Breakdown of gross production value of the maquila industry, 2003-2009
Financial legislation, 2009
Trends in the commercial banking sector's net loan portfolio and
deposits received, 2003-2010
Total premiums by segment, 2003-2009
Insurance market, 2003-2009
IV.8
IV.9
23
25
26
31
32
33
34
35
39
53
57
63
70
73
75
82
83
87
91
93
94
WT/TPR/S/234/Rev.1
Page vi
Trade Policy Review
Page
IV.10
IV.11
IV.12
IV.13
Main legislation on telecommunications, 2010
Requirements for the provision of telecommunications services
Telecommunications indicators, 2003-2009
General freight movements, 2007-2008
95
96
98
100
APPENDIX TABLES
I.
ECONOMIC ENVIRONMENT
AI.1
AI.2
AI.3
AI.4
General merchandise exports and re-exports (f.o.b.) by product, 2003-2009
General merchandise imports (c.i.f.) by product, 2003-2009
General merchandise exports and re-exports (f.o.b.) by trading partner, 2003-2009
General merchandise imports (c.i.f.) by trading partner, 2003-2009
II.
TRADE AND INVESTMENT REGIME
AII.1
Description of preferential trade agreements involving Honduras, 2010
III.
TRADE POLICIES BY MEASURE
AIII.1
Main taxes on goods and services which may be applied to imports, October 2009
IV.
TRADE POLICIES BY SECTOR
AIV.1
AIV.2
AIV.3
Agricultural support programmes, 2010
Summary of GATS commitments
Special domestic financial system requirements
111
113
116
117
118
121
124
128
130
Honduras
SUMMARY
1.
The Honduran trade regime is
relatively open, with an average tariff of
6 per cent in 2010, minimal use of non-tariff
barriers and an absence of contingency
measures.
Moreover, the procedures for
drafting technical regulations and sanitary and
phytosanitary measures have been much
simplified in recent years. Since its first Trade
Policy Review in 2003, Honduras has also
made progress in other areas that affect
production and trade; for example, it has
adopted legislation on competition policy
establishing the Commission for the Defence
and Promotion of Competition, and has
modernized the government procurement
system. During the period under review
Honduras concluded new preferential trade
agreements,
notably
the
Dominican
Republic-Central America-United States Free
Trade Agreement (DR-CAFTA), and the
further integration of the Central American
Common Market (CACM) continues to be its
great priority. Honduras has maintained its
traditional strategy of granting refunds to
exporters, as well as tax concessions via free
zones aimed at developing the manufacturing
sector.
(1)
ECONOMIC ENVIRONMENT
2.
Recent macroeconomic results have
been positive for Honduras: the average
annual rate of growth of real GDP was
4.5 per cent between 2003 and 2009 (higher
than the 3.2 per cent recorded in 1992-2001);
the average annual rate of inflation was 7 per
cent; the fiscal deficit fell from 5 per cent of
GDP in 2003 to 3 per cent in 2009; and the
total external debt balance decreased from
71 per cent of GDP to 23 per cent. Despite
these positive results, about one third of the
population still live below the poverty
threshold, and the economy continues to be
fragile and exposed to external shocks.
Real GDP is estimated to have fallen by
2.1 per cent in 2009, mainly due to the
difficult internal political situation and the
global economic crisis, which substantially
WT/TPR/S/234/Rev.1
Page vii
reduced exports and remittances from
Honduran workers (which accounted for about
17 per cent of GDP in 2009).
3.
The Honduran economy is heavily
dependent on international trade. The ratio of
trade (exports and imports) to GDP is among
the highest in the Central American region,
with an annual average of 133 per cent during
2006-2008. The country's merchandise trade
deficit quadrupled between 2003 and 2008
due, mainly because the nominal exchange
rate remained fixed as from October 2005,
which caused the real exchange rate to
appreciate thereafter with a consequent loss of
export competitiveness. The external current
account deficit (as a percentage of GDP) rose
from 7 per cent in 2003 to 13 per cent in 2008;
it is estimated that this deficit fell to 4 per cent
in 2009. To a large extent, the current account
deficit has been financed by substantial
inflows of remittances and foreign direct
investment.
4.
Honduran
external
trade
is
characterized by limited diversification, in
terms of products and trading partners. The
country's main export products are those of the
maquila industry, which accounted for
55 per cent of total merchandise exports in
2009, followed by exports of general goods
(44 per cent), and other products (1 per cent).
Almost 90 per cent of maquila exports are
textile products and these also account for
about 80 per cent of total maquila industry
imports. The United States is the destination
for almost 80 per cent of Honduran maquila
industry exports, and the origin of 80 per cent
of imports.
5.
The maquila industry excluded, the
main exports are still coffee, bananas, and
crustaceans; agricultural products account for
about two thirds of general goods exports.
Nearly three quarters of the country's total
imports (excluding maquila) consist of
manufactured products, particularly machinery
and transport equipment. Since the entry into
force of the DR-CAFTA, the United States has
consolidated its position as the main market
WT/TPR/S/234/Rev.1
Page viii
for Honduran exports, absorbing about
40 per cent of general goods exports. Due to
the intensification of the CACM's integration
efforts, since 2007 El Salvador, Guatemala,
Nicaragua, and Costa Rica have together
ranked second as a destination for Honduran
exports, relegating the European market to
third place.
The United States has also
consolidated its position as the main source of
imports of general goods into Honduras, with
more than one third of the total.
6.
Honduras is a net importer of services,
with an average annual deficit of about
US$240 million during 2003-2009. Total
income from services (mainly travel services)
increased from US$591 million in 2003 to
US$896 million in 2009, while total
expenditure on services (largely transport and
travel services) rose from US$753 million to
over US$1.089 billion.
(2)
TRADE AND INVESTMENT POLICY
FRAMEWORK
7.
Honduras is a founding Member of the
WTO and attaches great importance to its
participation in the multilateral trading system.
It regards this system as a fundamental
guarantee of non-discrimination and the
non-utilization of unilateral trade measures.
Honduras grants at least MFN treatment to all
WTO Members. It has participated actively in
the Doha Development Agenda (DDA),
making proposals both individually and
collectively with other Members. Honduran
interest in the DDA is focused on issues
relating to agriculture.
8.
Honduras has accepted the Fifth
Protocol to the General Agreement on Trade in
Services (GATS). Although Honduras did not
participate in the negotiations on basic
telecommunications and has not signed the
Fourth Protocol to the GATS, it adhered to the
Basic Telecommunications Reference Paper in
2005 and unilaterally submitted new specific
commitments in that subsector. None of its
trade practices has been challenged under the
WTO's dispute settlement mechanism. On the
Trade Policy Review
other hand, Honduras has been a complainant
in six cases, two of them initiated during the
review period, and has participated in other
cases as a third party.
9.
Preferential agreements have been
converted into increasingly important elements
of Honduran trade liberalization. In addition
to participating in the CACM, Honduras
has free trade agreements with Chile,
Colombia, United States, Mexico, Panama,
Dominican Republic, and Chinese Taipei.
The DR-CAFTA entered into force during the
review period, as did the agreements with
Colombia, Panama, and Chinese Taipei.
Moreover, in May 2010 Honduras and the
other members of the CACM completed
negotiations on the Association Agreement
with the European Union. Honduras has also
signed agreements with countries that
participate in the Latin American Integration
Association (LAIA), notably a Partial Scope
Agreement with Venezuela, and together with
the other members of the CACM is negotiating
free trade agreements with Canada and
CARICOM.
10.
Honduran
investment
legislation
guarantees national treatment for foreign
investors; however, in order to invest in some
sectors prior authorization is required from the
Government.
Prior authorization is also
needed, for reasons of public interest, for
foreign investment in agricultural and
agro-industrial activity that exceeds certain
limits, in financial services and insurance, and
in educational services provided by the private
sector. Honduras has signed several bilateral
agreements on the promotion and reciprocal
protection of investments; it has not signed
any double-taxation agreements.
(3)
MEASURES AFFECTING IMPORTS
11.
Since its last Review, Honduras has
not made any significant changes in its import
regime. Honduran customs procedures are
governed by the Central American Customs
Code, its regulations, and the National
Customs Law.
Honduras has adopted
Honduras
measures to modernize customs through the
introduction of authorized economic operators
(AEO) and the adoption of a new automated
system for the administration of customs
procedures, which has made it possible not
only to reduce clearance times but also to
increase revenue. Honduras reserved the right
to apply minimum values to imports of several
categories of goods until the WTO exemptions
expired in 2003. Honduras uses reference
prices where there is reasonable doubt
concerning the value declared.
12.
The average MFN rate applied was
6 per cent in 2009, almost the same as that
recorded in the last Honduran Review
(6.1 per cent in 2003). Agricultural products
(WTO definition) were subject to an average
tariff of 11.1 per cent, while the average tariff
for non-agricultural products was 5.1 per cent.
The price band system continues to be applied
for certain staple grains. The tariff rates range
from 0 to 164 per cent, but most are less than
40 per cent. All tariffs are bound: about
85 per cent of all tariff lines are bound at
35 per cent, with less than 1 per cent at higher
levels and the rest at levels below 35 per cent.
The Secretariat has identified seven tariff lines
on which the applied rate is higher than the
corresponding bound rate.
13.
The Central American Regulations on
Unfair Trade Practices and on Safeguard
Measures, adopted by Honduras in 2007,
constitute the relevant legal framework for
these measures. Honduras did not apply
anti-dumping or countervailing duties or
safeguard measures during the review period.
14.
Since its last Review, Honduras has
taken steps to make the formulation and
application of technical regulations and
sanitary and phytosanitary measures more
transparent.
Honduras guarantees the
application of sanitary regimes and technical
regulations that do not constitute technical
barriers to trade and are intended to ensure the
quality and safety of products and services,
and has continued with the process of
WT/TPR/S/234/Rev.1
Page ix
harmonization of sanitary and phytosanitary
measures at Central American level.
(4)
OTHER
TRADE
MEASURES
AFFECTING
15.
Honduras has notified the WTO of
three subsidy programmes under which it
grants tariff and tax concessions. It may
maintain these programmes until its per capita
gross national product (GNP) reaches
US$1,000 in constant 1990 dollars for
three consecutive years. Exporters are still
entitled to refunds under the drawback system.
16.
Honduras has notified the WTO that
between 2004 and 2008 there were no
subsidies for exports of agricultural products.
However, one enterprise continues to benefit
from the (now suspended) Agricultural Export
Zones (ZADE) regime, established in 2001,
and exports 100 per cent of its production.
The ZADE are intended to promote
exclusively
export-oriented
agricultural
production, through the establishment of
"agricultural export enterprises".
The
enterprises included in this regime are exempt
from the payment of all customs duties and
other internal taxes on the goods they import
and/or export; these enterprises are also
exempt from the payment of income tax.
Honduras does not tax exports; coffee is
subject to an export levy.
17.
In addition to incentives for promoting
exports, Honduras has support programmes for
exporters. These are intended to improve
competitiveness and access to international
markets and are aimed primarily at
agro-industrial products. Despite the emphasis
placed by Honduras on promoting exports and
supporting the small exporter, the country has
no official export financing or insurance
programmes.
18.
A major change in Honduran trade
policy since its last Review in 2003 has been
the adoption of legislation on competition
policy and the establishment of institutions for
its implementation. This is an important
WT/TPR/S/234/Rev.1
Page x
initiative since there is a high degree of
concentration in the Honduran market. The
legal framework for government procurement
has not changed substantially since 2003 and
the same procurement procedures are still in
place.
The
Honduran
government
procurement system has mechanisms designed
to favour domestic enterprises and goods.
19.
Mainly due to the entry into force of
the DR-CAFTA, the Honduran legal
framework for intellectual property rights has
been amended, primarily with a view to
providing greater protection. Honduras has
changed the terms of protection while
modernizing the institutions responsible for
administering intellectual property law and
training their staff, with a view to facilitating
and streamlining the registration procedure.
(5)
Trade Policy Review
MFN rate.
Honduras also maintains the
(above-mentioned) special export regimes
(maquila) and support for export marketing to
promote the development of the manufacturing
sector.
22.
In 2009, the services sector
contributed about 53 per cent of
GDP (48.1 per cent in 2003). The main
subsectors in terms of their contribution to
total value added, and in descending order of
importance, were financial services, trade, and
communications. The composition of the
sector has changed since 2003 when the main
subsectors were trade and financial services.
Honduras is a net importer of services.
Exports of telecommunications services
increased as a result of the entry into the
domestic market of a fourth mobile telephony
operator at the end of 2008.
SECTORAL POLICIES
20.
The agriculture sector's share of
GDP declined during the review period and its
growth was erratic. Nevertheless, it continues
to be of great importance for the development
of the Honduran economy, absorbing about
one third of the economically active
population and generating more than
50 per cent of the foreign currency earned
from merchandise exports, maquila excluded.
Honduras therefore considers it necessary to
maintain protection and offers this sector
greater tariff protection than other sectors.
It has retained the price band system and the
"absorption agreements", which permit the
importation of certain grains with tariff
preferences if the processors also purchase a
specific percentage of the national production
of these grains. The country has a number of
agricultural support programmes that have
been notified to the WTO. Despite the
measures to promote the sector, it continues to
be characterized by low productivity and
modest rates of growth.
21.
The manufacturing sector's share of
GDP, like that of agriculture, declined during
the review period.
The sector's tariff
protection is below the average applied
23.
Honduras
has
made
limited
commitments in services. Its Schedule of
Specific
Commitments
under
the
GATS includes commitments in only four of
the twelve categories. Honduras made specific
commitments in business services, financial
services, travel and tourism services, and
transport services. In 2005, Honduras made
commitments with respect to communications
services under Article XXI of the GATS.
Honduras' commitments do not reflect the
present situation, which is more liberal.
Foreign capital plays an important part in the
Honduran financial sector. Moreover, in the
telecommunications sector, mobile telephony
is mostly controlled by foreign enterprises.
For fixed telephony, there continues to be a
single State operator, which has granted
concessions to sub-operators for domestic
telephony but maintains exclusive control over
international telephony.