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

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TRADE AND COMMERCIAL LAW ASSESSMENT DECEMBER 2004 HONDURAS 2. ♦ ♦ with 80 percent of the goods released the day of arrival. There are banks onsite, and payments are made directly to the bank, which notifies Customs electronically of receipt. Cooperation among trade-related agencies appears to be fair. A site administrator indicated that he frequently meets with other co-located agencies and with representatives of private sector parties. Las Manos, the border port with Nicaragua, has operating hours that facilitate trade. It is open 24 hours a day/7 days a week, with the main staff onsite from 6 a.m. to –10 p.m. and one officer on duty between 10 p.m. and –6 a.m. Officials clear about 150 trucks a day, working in groups, with one group working 1 week and the second group working the following week. A total staff of 20 officers is assigned to the site. The following issues cover major challenges and impediments that Customs must address in order to improve the flow of goods and provide efficient service to the trade community. a. ♦ The Customs agency does not have a professionalized workforce and is extraordinarily politicized, particularly at field locations. There is no apparent career path because officers are often assigned for the duration of an administration and, in any case, do not have sufficient training or Customs expertise required to work in today’s complex trade environment. Customs personnel practices must be reviewed to provide a career path that creates incentives for development of personnel. In addition, decision-making within the government is too centralized, and more authority should be delegated to field offices. Because much of the business community is centered outside the capital, centralized decision-making slows the movement of goods. It is anticipated that pressure from the Committee on Customs Modernization will promote this process. ♦ ♦ Customs Management and Operational Issues to Address Customs Management The current institutional system for handling integrity is inadequate, and Customs is widely viewed as the most corrupt agency in a public system troubled by corruption. The consensus within the trade community is that Customs officers are often promoting vested interests and self-enrichment. Customs officials must improve the agency’s integrity. It is crucial that Customs be seen as working in the interest of the government and the trade community, not for themselves or for private or public parties to whom they owe their position. The integrity law (Código de Etica y Conducta), produced in consultation with the Inter-American Development Bank, should be passed by the legislature and firmly implemented as soon as possible. Poor funding is another major issue. Employee salaries are very low. Currently officers receive around US $300 a month and managers around US $600. There is little incentive to do a good job when salaries are the lowest in the region. Modern customs agencies require modern equipment both in terms of automation and examination. Less intrusive examination tools would give customs personnel the confidence they need to ensure that goods are not smuggled and would also expedite shipments by allowing examination without intrusive and time-consuming removal of goods from containers. Customs XI-7
TRADE AND COMMERCIAL LAW ASSESSMENT DECEMBER 2004 HONDURAS b. ♦ facilities also need to be upgraded. Currently, Customs does not receive the funding it is entitled to by law. It now receives somewhat over 2 percent of the revenue collected for Customs operations. According to Customs officials, the law provides for 3 percent, but because of national budget problems, Customs does not receive the full amount. An additional source of funding (beyond what the agency receives from the national budget) is revenues received from auctions of seized and abandoned goods. However, there needs to be outside funding identified for Customs, in the form of WTO-compliant user fees, that would be dedicated to Customs modernization, equipment purchase, upgrade of facilities, increase of employee salaries, and incentive awards for excellent service. Customs officials’ cooperation with the private sector needs improvement. This function is essential for improved trade facilitation. Customs should have regular meetings with the private sector to address areas of mutual concern and should work with the private sector to reduce documentary requirements and cumbersome procedures. Currently, it appears that meetings occur only when problems arise. ♦ Training efforts also need improvement. Customs has a training facility, which currently trains new recruits and outside personnel in Customs functions. The facility also provides training to brokers and shippers in Customs procedures. This capacity is important for any customs agency; however, its utility is undermined by the lack of a professional customs staff. In addition, training of Customs personnel is wasted because of the regular turnover. Currently, employees provide all instruction and create the materials for the training. There is a full-time staff of six, including the director, but there are no full-time trainers. Technical training in classification, valuation, fraud detection, computer training, and CAFTA requirements is necessary. Improvement in this area is critical. The European Union (EU) will provide support for a regional training academy in Honduras beginning next year. The EU will provide equipment and expertise for train-the-trainer courses. ♦ Honduras does not have reliable trade statistics that business can use to make critical decisions. Statistical data is not readily available and is not available in sufficient detail for credible market analysis. Customs Operations and Procedures ♦ Automation of vessel manifests is necessary. Currently, no vessel manifests are downloaded to either the port authority or the Customs automated operating system. Instead, print copies are given to the port authority, and the carriers manually input manifest data into the Customs system. This manual process leads to input errors, which can delay cargo. ♦ Examination rates have been reduced, as have the number of discrepancies. However, conversations held during this assessment indicate that the examination rate is still too high. (The current rate is approximately 40 percent.) In addition, although discrepancies are falling, there is no indication whether this is due to increased compliance, lack of expertise in identifying discrepancies, or nonproductive examination criteria. Cargo release procedures also are unsatisfactory. Cargo is generally released on the same day the declaration is filed, with a maximum 2-day processing time if physical examination is XI-8
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