TRADE POLICY REVIEW OF HONDURAS
U.S. Statement delivered September 20, 2010
by David Shark
Deputy Chief of Mission
September 20 and 22, 2010
Thank you, Chair. The United States is pleased to welcome Ambassador Melvin Redondon, Ambassador Castillo, and the entire Honduran delegation to the second Trade Policy Review of Honduras. We would first like to recognize the excellent work of the Secretariat and the Government of Honduras in compiling the reports before us. They thoroughly detail Honduras’ key trade policy objectives and developments since its last review in 2003, and they give us a more complete picture of Honduras’ policies affecting trade.
Much has happened since Honduras’ last review in 2003, as the government has continued on a path toward Honduras’ integration into the global economy with a focus on trade liberalization. We look forward to learning more about Honduras’ trade policies during the course of this TPR. We would also like to thank our discussant, Ambassador Javier Garrigues Flórez, for providing helpful and insightful contributions to this review.
The United States and Honduras enjoy a strong trade and economic relationship. Our partnership takes place within the broader context of excellent cooperation on a variety of matters of mutual interest, including global UN peacekeeping efforts, ongoing regional security and counter-narcotics efforts. Trade and economic integration between the United States and Honduras is an important element of our bilateral relations and generates important benefits for both countries and the region. Our bilateral trade in goods was $6.7 billion in 2009.
For many years, our trade relationship with Honduras was driven by the unilateral trade preferences that the United States provides through the Caribbean Basin Initiative trade preferences program. This program has contributed to economic growth and development in Honduras. Our bilateral relationship has changed from one based on unilateral trade preferences to one based on reciprocal free trade through the Dominican Republic – Central America – United States Free Trade Agreement (DR-CAFTA), a regional free trade agreement between the Dominican Republic, the United States, and five Central American countries (Costa Rica, El Salvador, Guatemala, Honduras, and Nicaragua).
Both the Secretariat’s and the government’s reports indicate that Honduras is pursuing a strategy of trade liberalization at the multilateral, regional, and bilateral levels. The United States commends Honduras on the direction of its trade liberalization strategy, as it continues to pursue greater integration in the global economy by opening markets, stimulating domestic production and promoting national efficiency, diversification, and competitiveness. On the multilateral front, Honduras continues to be an important participant in the Doha Round and in the regular work of the WTO. In the Doha Round, Honduras has submitted proposals individually and with other Members, including on market access for agricultural and non-agricultural goods, services and fisheries, intellectual property, trade facilitation and dispute settlement. The Secretariat notes Honduras’ high priority focus on issues related to agriculture.
The Secretariat’s report notes that during the review period, Honduras notified the WTO of three subsidy programs through which it grants tariff and tax concessions. Honduras notified no subsidies for agricultural product exports between 2004 and 2008. The Secretariat also advises that numerous notifications were pending at the end of the first quarter of 2010. We encourage Honduras to complete its notifications with all due speed and inquire what plans Honduras has to complete and submit these notifications.
At the regional and bilateral levels, economic integration and preferential trade agreements have been increasingly important elements of Honduran trade liberalization. Honduras has been seeking to further liberalize trade through preferential agreements with various countries. Significantly, Honduras and other members of the Central American Common Market continue to take steps to deepen Central American economic integration, including actions to strengthen institutions, harmonize regulations, and facilitate trade. Honduras and its Central American partners completed negotiations of an Association Agreement with the European Union in May, and continue negotiating free trade agreements with CARICOM and Canada. During the review period, Honduras also had free trade agreements enter into force with Colombia, Panama and Chinese Taipei. Honduras also has free trade agreements with Chile, Mexico, and the Dominican Republic. We support these undertakings with the expectation that they advance and complement the multilateral trading system.
The DR-CAFTA represents a key trade liberalizing step that Honduras took during the review period. The DR-CAFTA was signed in August 2004 and entered into force for Honduras on April 1, 2006. Under the agreement, the Parties remove tariff and non-tariff barriers to trade and investment, which will strengthen regional trade and economic integration. The DR-CAFTA also includes important disciplines relating to: customs administration and trade facilitation, technical barriers to trade, government procurement, investment, cross-border trade in services, financial services, telecommunications, electronic commerce, intellectual property rights, transparency, and labor and environmental protection.
As noted in the Secretariat’s and the government’s reports, the period of review was an active time for trade policy liberalization and market opening in Honduras. Honduras implemented a number of significant modifications to its domestic trade regime, amending its institutional and legal framework to reinforce the trade liberalization process. During the review period, Honduras enacted a number of new laws and regulations, both domestically and at the level of Central America. Many of these changes were necessitated by commitments that Honduras undertook in the DR-CAFTA and benefit the multilateral trading system as a whole.
In customs administration, the Secretariat’s report notes that Honduras’ customs procedures are governed by the Central American Customs Code, its regulations and the National Customs Law. Honduras has continued with the process of reform, adopting measures to modernize customs by introducing a new automated system for administering customs procedures, which has reduced clearance times and increased revenues.
Honduras’ and the Secretariat’s report note that Honduras has made several amendments to its legal framework for intellectual property rights, changing the terms of protection and modernizing its institutions and procedures to streamline and strengthen administration and protection. In its own report, Honduras notes the need to further strengthen protections. The United States welcomes Honduras’ focus on strengthening protections.
The Secretariat report also recognizes other notable developments in Honduras’ economic policy regime during the period of review that include:
- Increasing the transparency and simplifying the formulation and application of technical regulations and sanitary and phytosanitary measures, working to harmonize SPS measures at the Central American level.
- Adopting competition law and establishing a commission to administer it.
- Modernizing government procurement.
While the United States applauds these positive efforts, there are, nonetheless, specific areas of Honduras’ policy regime where action could lead to improved trade and investment opportunities and flows. We have referred to them in our questions, but would like to touch on some here today.
As the Secretariat’s report suggests, despite the tariff and tax concessions that Honduras provides under its free trade zone (FTZ) regime, the productivity of FTZ firms has been low and their linkages with the rest of the economy are weak. The United States recognizes Honduras’ focus on developing its manufacturing sector and encouraging exports. However, as Honduras’ own report suggests, the country’s economic growth will depend on greater efficiencies and competition and we encourage Honduras to continue developing along the path toward open market policies and greater integration into the global economy.
In closing, I would like to reiterate our appreciation for Honduras’ active participation in the Doha Round negotiations. I would also like to emphasize that we continue to value our close work with the Honduran government and our WTO partners to strengthen and build on the WTO’s rules-based and cooperative foundation. But more work is needed to reach a balanced and ambitious conclusion to the Doha Round. To achieve a Doha outcome that results in the global economic growth necessary to spur development, all key players will need to make meaningful market-opening contributions. As a dynamic economy that sees the benefits that trade liberalization has brought, Honduras stands to gain from new market access opportunities generated by the Doha Round, particularly in advanced developing countries. We look forward to continuing our work with Honduras and other Members to ensure these gains are realized.
We thank the delegation of Honduras for its willingness to consider these points and welcome the opportunity to engage with Honduras and other delegations in a discussion of Honduras’ trade policy regime.