Trade and Commercial Law Assessment - Honduras - Economic ...

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TRADE AND COMMERCIAL LAW ASSESSMENT DECEMBER 2004 HONDURAS h. ♦ ANDI is working to establish industrial estates, where human resources, technical training, and facilities can be co-located for collective use. Co-location in one industrial park will allow producers to gain economies of scale in raw material purchases, tooling to modernize styles, and quality control implementation. The initial project will be for shoe manufacturers, many of whom are small. ♦ The Honduran Association of Private Enterprise, Consejo Hondureño de la Empresa Privada (COHEP) represents 51 major business organizations and seeks to make private enterprise more competitive by initiating sectoral training on CAFTA challenges and opportunities. 2) Importer-Exporter Issues to Address ♦ As an overall constituency, exporters are not well organized. The export community is splintered and polarized into various organizations. The lack of a single, representative organization inhibits the presentation of an effective collective voice on policy and procedures affecting the export community, particularly because there is little communication between the groups. For example, Asociación Nacional de Exportadores de Honduras (ANEXHON), the National Association of Exporters, has limited membership and represents mainly industrial producers. The maquila industry has its own association, as do agricultural producers of nontraditional products. Other associations represent coffee and banana growers. ♦ One major export-related problem is the lack of information and knowledge within the agricultural sector about Sanitary and Phytosanitary Standards (SPS) requirements for exporting products to the United States. As a result, there is a general perception that such standards are too high and can never be successfully met. Private efforts could significantly improve this knowledge gap. ♦ Honduras lacks a designated organization for quality control standards to educate manufacturers and producers in international industry requirements and assist them with implementation. This is a basic requirement for global competitiveness, and assistance will be needed in this area, particularly by SMEs. Customs Brokers Honduras has an adequate supply of brokers, including 212 licensed individual brokers. Although some brokers provide professional service at a reasonable rate, the quality of service within the profession is reported to be generally poor. Approximately 75 percent of brokers meet CAUCA broker requirements, including a university degree and an exam-certified or customsspe cialized degree. Brokers must be bonded ($1,400 per year per customs processing site). The standard tariff for fees throughout the industry ranges from 2.5 percent to .40 percent of CIF value, well within the regional fee range for these services. 1) Customs Broker Operations That Support Trade Facilitation ♦ Brokers must pass a rigorous examination, which sets high standards for knowledge. In 2004 only 7 of 80 applicants passed the examination. ♦ Brokers are required to be electronically connected to Customs. XI-23
TRADE AND COMMERCIAL LAW ASSESSMENT DECEMBER 2004 HONDURAS i. ♦ Because of training and the need to meet CAUCA standards, corruption within the community appears to have decreased recently. ♦ The Honduran National Federation of Customs Brokers, FENADUANAH, is an active advocate for trade facilitation. The organization represents most brokers (197 of 212 licensed brokers). XI-24 broker ♦ FENADUANAH is making concerted efforts to improve the quality of services provided by its members. It recently hosted a 7-month course at two locations, holding classes on Friday evenings and all day Saturday. Of the 212 licensed brokers, 205 attended and 145 received a diploma for successful completion. ♦ FENADUANAH took the initiative to establish working groups between public agencies and the private sector to reform customs procedures. (This work is now under the umbrella of CIEMSA, the recently established private-public trade facilitation committee.) ♦ Relations with Customs are generally good. The federation receives advance notification of changes in procedures but is not sought for input into policy-making. Monthly meetings are conducted with Customs to resolve problems. 2) Customs Brokers Issues to Address ♦ The professional quality of a large number of Honduran brokers is poor, and Customs is a weak regulator. Private sector representatives interviewed for this assessment estimate that 40 percent of the sector is still considered to be incompetent or corrupt. Customs currently suspends 2–3 licenses every 6 months for a period of 59 days. However, suspension is ineffective in dealing with the problem, and FENADUANAH and Customs should join efforts to improve the quality of the sector and take actions to revoke licenses. ♦ The partnership between Customs and the broker community needs to be strengthened. Brokers must be more active in the development of policies and procedures. At a minimum, Customs and brokers should share draft Customs procedures. Free Zones Customs officials mentioned that in 1976 Honduras granted the government the authority to establish free zones that included significant tax incentives for manufacturers. In 1987 Honduras approved privately operated free zones, which could be established anywhere within the country. The maquila industry operates mainly in these private zones. Eighty percent of all zones are located in the north coast, between San Pedro Sula and Puerto Cortez. Altogether Honduras has 25–30 operating zones, providing service to about 225 companies. Approximately 10–12 zones house about 50 percent of the users, with the others being relatively small operations. The larger zones offer a wide range of services, including banking, employee training, personnel services, and infrastructure. Curren tly, the tax benefits and incentives granted to these operations are secure until 2007, with extension possible until 2009 if granted by the WTO under the procedures applicable to
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