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

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TRADE AND COMMERCIAL LAW ASSESSMENT DECEMBER 2004 HONDURAS developing countries within the Agreement on Subsidies and Countervailing Measures (SCM Agreement). Customs officers specially trained to perform only zone oversight functions are onsite at each zone lo cation. These officers, who number between 80 and 100, work from 8 a.m. to 4 p.m. and are available for overtime services at extra pay, performing physical verification of all loading operations and selecting imports to oversee discharge.. The zone operator reimburses Customs for all costs associated with these positions. ♦ Private sector involvement in the operation of the free zones has resulted in competitive regional facilities, offering high-quality service and modern infrastructure. The operators of the zones aggressively market their services to potential users and receive good support from the government that recognizes the importance of zone activity to the national economy. ♦ Costs are competitive, when the full range of services is taken into account. Cogeneration of electricity that will reduce energy costs by 40 percent is being developed within the major zones. ♦ Zone operations are continuing to expand, and space is available to meet the needs of the users. Between 50 percent and 60 percent of current national construction efforts involve expansion of these sites and development of the required infrastructure. ♦ Zone operators are attempting to provide a full service package to the users by identifying users’ needs for raw material and producing those products within the zone. If an item such as a type of woven fabric or button is needed in the production of a finished product, the operator will attempt to locate a local firm to manufacture it within the zone. Currently, U.S. inputs constitute about 67 percent of the finished exported product. ♦ ♦ The Ministry of Finance and the Central Bank audit zones. These audits occur less than once a year. Operators and users must file monthly and bimonthly reports to each of the institutions. This function improves security and control. ♦ 1) Zone Operations That Support Trade Facilitation ♦ Diversification into areas other than textile apparel has recently started; currently, the main additional area is parts for the automotive industry. Zones are well secured, with little or no leakage. At the largest facilities, there have only been 1–2 cases in the past 10–15 years of stolen merchandise. The Honduran Free Zone Association, Asociación de Zonas Francas de Honduras (AZAFRANCA), is an active advocate for trade facilitation. AZAFRANCA represents 12 of the largest operators and is active in promoting the services and growth of the sector. 2) Zone Issues to Address ♦ The zones are not linked to the Customs automated operating system. This disconnect delays shipments. Although the operators have been promised this linkage by the end of 2004, such deadlines have not been met as of the date of this assessment. XI-25
TRADE AND COMMERCIAL LAW ASSESSMENT DECEMBER 2004 HONDURAS j. Bonded Warehouses Bonded warehouses are privately operated facilities where importers can store merchandise for up to 1 year and defer the payment of duties and taxes until withdrawal. These warehouses provide essential services to the trade community, especially to SMEs, by allowing importers to postpone payment until merchandise is needed or sold. Honduras has six public bonded warehouse operators, most of whom have a minimum of two facilities. Total available space is about 100,000 square meters, of which 60 percent is in use. There are also 50–60 private bonded warehouses established by importers to store their own merchandise. Although there are very few restrictions on the types of merchandise that can be stored, raw materials, machinery, vehicles, and alcohol constitute most of the stored goods. Various public agencies provide administration and enforcement. The Ministry of Finance approves licenses and the Superintendent of Banking provides oversight and has the power to revoke licenses. The Ministry of Finance, the Superintendent of Banking, Customs officials, and warehouse operators conduct reviews and audits. Each operator posts an annual guarantee, which is set according to the value of goods in storage. A minimum of one Customs official, called a “fiscal delegate,” is posted at each site (with about 75 officers total). The operator reimburses Customs for all costs associated with these positions, including office space, equipment, salary, and benefits. 1) Bonded Warehouse Operations That Support Trade Facilitation and Security ♦ Losses and pilfering are minimal because of tight security measures, which include 24hour guard service, limited use of cameras, and modern inventory control systems. ♦ Costs are low in comparison to similar operations throughout Central America. ♦ The public warehouse operators are well organized. All operators belong to the Association of Fiscal Public Warehouses of Honduras, and are active in the regional warehouse organization as well. 2) Bonded Warehouse Issues to Address ♦ The arbitrary nature of Customs procedures limits the cargo available for warehousing. For example, Puerto Cortez Customs demands that all goods from Panama be cleared on arrival, even if the client wishes to place them in a bonded warehouse. In addition, as an informal policy, this Customs office demands that 30–40 percent of all cargo arriving at the port must be cleared there. The stated rationale for these policies is to reduce fraud, but the result is to limit the quantity of cargo available for warehousing. ♦ Long delays are encountered in transferring cargo to the warehouse. For example, a transfer of a container from Puerto Cortez to a bonded warehouse should take 1–2 days. It currently takes about 1 week, requiring multiple telephone calls to check on status, initiation of two transfer documents, and three Customs reviews. ♦ Warehouse operators are not linked to the Customs automated operating system to file transfers and withdrawals although they have been promised this service for 2–3 years. XI-26
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