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

TRADE AND COMMERCIAL LAW ASSESSMENT DECEMBER 2004
HONDURAS
X. INTERNATIONAL TRADE
A. INTRODUCTION
Honduras has basic international trade conventions in place, as well as a regional integration
commitment and several free trade agreements. It became a member of the World Trade
Organization (WTO) in 1995 and is a charter member of the General Treaty on Central
American Economic Integration, now in its fourth decade of application. Honduras is committed
to a functional customs union. It has free trade agreements with Mexico, Chile, and the
Dominican Republic. Most of its exports enter the United States, Europe, and Japan duty-free
under GSPs unilaterally established by those destination markets.
The customs rules and practices of Honduras, including sanitary and phytosanitary controls, and
the effectiveness of the Honduran customs agency are reviewed in detail in the “Flow of Goods
and Services” section.
In general, Honduras’s laws and practices regarding international trade have not developed to
take into account recent events in the area. Thus, the country has not overhauled its laws to
incorporate recent rules into an effective, functioning national regime for international trade. The
advent of CAFTA could act as an incentive to such reforms.
Honduras’s lack of legal and administrative structures for application of countervailing duties
illustrates the country’s current framework for international trade law. The WTO sets standards
for appropriate trade in goods, permitting recipient countries to impose tariffs to offset improper
competitive advantages that imports may have gained through subsidies in the country of origin
or through dumping at prices below those prevailing in their home market. A member nation
must implement the WTO standards by establishing a national regime of laws and administrative
procedures. Although the WTO sets the standards and provides a review process by which an
affected nation can challenge their application by a given country in a given case, it has no
original enforcement mechanisms. If a given country does not promulgate laws and institute
administrative procedures by which it may impose countervailing duties, imports of goods to that
country will never suffer countervailing duties, no matter how obvious a subsidy or dumping
may be in the case of a given imported good.
Countervailing duties imposed by national administrative processes frequently provide the basis
for negotiations between the exporting country and the importing country, leading to reduced
countervailing duties on several products going in both directions and achieving benefits for both
countries.
To participate in this negotiating process, however, each country must have its own national
system of trade laws, or it will have no countervailing duties from which to negotiate. In such a
one-sided situation, exporters from the country without a trade-law system must suffer
countervailing duties against their products without any hope for negotiated relief, while
subsidized and dumped goods from the other country continue to penetrate their market immune
to such tariffs.
X-1