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

TRADE AND COMMERCIAL LAW ASSESSMENT DECEMBER 2004
HONDURAS
CEIMSA will first seek to depoliticize the selection and promotion of Customs officers to
increase professionalism throughout the ranks. CIEMSA will develop qualification standards
to
be used in each of these personnel actions
and recommend continued private involvement in
these processes. This approach, if successful, could then be used as a standard for other
government agencies. Although there appears to be presidential support for this initiative, the
required legal changes will be difficult to achieve because of the strength of the beneficiaries of
the current system.
To remain competitive, Honduras should consider revising its labor and environmental laws. The
current legislation was adopted many years
ago for the banana industry and was designed to
protect workers. The restrictions it places on the employer in regard to such issues as termination
and productivity need to be balanced with the needs of the industry to be competitive within the
region and internationally. The strongest labor union is at Puerto Cortez, where the average cost
to the port authority for each employee on its rolls is currently $3,900 per month, including all
benefits.
Customs Union Issues. Part of the effort to achieve regional harmonization and integration has
been the development of a regional Customs Union. The evolution of the Central American
Customs Union is now at a critical stage. The primary benefits of the union thus far accrue to
Central American merchandise, making the union relatively less beneficial to Honduras than the
other members because Honduras has the lowest trade volume with its neighbors. However, a
customs union could result in significant benefits to Honduras through increased trade flows
through its port, and enhanced economic power through the union as a result of economies of
scale, compared with the economic fragmentation of the individual countries.
To achieve the 2005 goal of implementing a real Customs Union in regard to international
arriving from or exported to countries outside Central America, the following crucial and
complicated issues must be addressed:
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goods
♦ Lack of a uniform international trade policy among the Central American countries. Free
trade agreements (FTA) are negotiated on an individual country basis. Some of the five
CAFTA countries have FTAs with Panama, Chile, Canada, and Taiwan. Although the
agreements with the same country have identical Rules of Origin, not all of the countries
in the region have such agreements. This lack of uniformity in tariff treatments
complicates the integration process.
♦ Tariffs and taxes are not harmonized
within Central America for goods imported from
outside the CACM. For example, medicines are free of duty in some countries while
subject to 5 percent duty in others. The duty on dairy products in Costa Rica is 65
percent, in Honduras 35 percent. Value-added taxes also vary.
♦ The organization of Customs within the Customs Union has not been defined. Will
Customs be a regional organization? Will officers at the outer borders continue to work
for their national administrations? Will officers at the inner borders be eliminated?
♦ When movement towards the Customs Union was reactivated and implemented several
years ago, SPS issues were not addressed. SPS requirements vary significantly between
countries, and pests and plagues present in some countries have been eradicated in others.