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

TRADE AND COMMERCIAL LAW ASSESSMENT DECEMBER 2004
HONDURAS
XI. FLOW OF GOODS AND SERVICES
Recently, Honduras has taken some strides in facilitating trade. Indications are that a number of
aspects of the trading system have improved, including (a) development of a stronger customs
agency; (b) development of open markets nationally, regionally, and internationally; (c)
improved relationships between the public and the private sectors; (d) efficient trade-related visa
and immigration processes; and (e) adequate basic infrastructure for current trade volumes.
Nevertheless, the trade-related institutions still encumber traders with trade transaction costs in
the form of delays and administrative burdens. By eliminating the unwarranted and onerous
constraints embodied in laws, regulations, and procedures, Honduras can capture greater savings
and efficiencies. In fact, improving the trade facilitation environment can reduce trade costs by
as much as 15 percent of the value of traded goods. Even in Honduras’s relatively small market,
where somewhat over $6 billion in goods and services were exchanged in 2003 169 , improved
trade facilitation can lead to significant savings. In turn, these savings can improve Honduran
economic development in a number of ways: (a) making Honduran exports more competitive,
resulting in more exports; (b) lowering prices for Honduran consumers; and (c) enhancing
Honduras’s overall attractiveness as an investment opportunity.
The United States is the dominant trade partner of Honduras. In 2003, 53 percent of its import
trade and 69 percent of its export trade was with the United States. 170 Honduras has based much
of its economic stability and future on the maquila textile apparel industry, which represents the
majority of the country’s U.S. exports.
The following discussion evaluates Honduras’s current status of trade facilitation and identifies
areas where Honduras can reduce trade transaction costs. The assessment looks at the efficiency
and security of cross-border flows of goods, services, people, and money and the infrastructure
that supports these flows. Currently, trade-related people and money flows pose few problems.
Major areas in which improvement could lead to significant results include (a) the development
of a professional civil service, especially among key trade-related agencies; (b) professionalizing
relevant agencies and implementing strong integrity measures; (c) better integrating and
simplifying processes among all trade-related agencies; (d) implementing and updating key
functions, such as risk assessment; (e) improving the security environment; and (f) enhancing
infrastructure.
A. INTRODUCTION
In 2003 flows of goods amounted to more than $6 billion. Of these goods flows, $1.37 billion
was exported while $2.80 billion was imported. Services include $1.09 billion in exports, and
$687 million in imports. Free zones accounted for $560 million of service exports (51 percent),
which are included because they are a value-added category. Tourism makes up another $291
million in service exports (27 percent). 171
169 Economic Intelligence Unit (2004), Country Profile for Honduras.
170 Id.
171 Id.
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