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

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TRADE AND COMMERCIAL LAW ASSESSMENT DECEMBER 2004 HONDURAS Administration (FDA) issues these certificates, at a cost of $10 per certificate. Certificates must be authenticated three times through notary actions, twice in the exporting country and once by the Honduran Ministry of Foreign Trade. As a result, according to Ministry of Health officials, securing a certificate usually takes about 4 to 8 weeks, at a cost of $80 to $100. The second step involves filing the certificate with the registration at the Ministry of Health. For processed food registration, which can be submitted and approved at four locations throughout the country, approval takes about 20–30 working days, at a fee of $11. For pharmaceuticals and cosmetics, the process is more lengthy, costly, and centralized (in Tegucigalpa). Fees range from $20 to $ 30 for administrative processing with a flat $350 for required laboratory analysis. The laboratory at the Honduran Pharmaceutical College is used for this purpose. Although current regulations state that this process must be completed within 40 working days, this deadline is often missed, and Ministry of Health officials acknowledged that the process can take as long as 6 to 8 months. A staff of 12–14 members, who manually administer all steps in the process, handles registrations. Collected fees, with the exception of those for laboratory analysis, are dedicated to Health Ministry operations. The agency is now rewriting the current law to increase administrative fees by 50–100 percent, which they say will more accurately reflect true costs. ♦ The agency has established a customer service window at Tegucigalpa where the trade community can obtain registration status information. Another such window will soon be established in San Pedro Sula. Unfortunately, this service will not shorten the time it takes for agency personnel to actually determine registration status, which is now approximately 2 days because of a lack of automated tracking systems. Nevertheless, the service will enable traders to get status updates. ♦ The agency, through World Bank funding, is developing an automated operating system within the registration offices to track and control submissions and authorizations. Although this will take at least 1 year to complete, and even more to implement, the modernization process has begun. ♦ ♦ 1) Ministry of Health Operations That Support Trade Facilitation The agency has taken or is now taking steps to modernize and improve its procedures through the following actions: Facilitative procedures for regional products were initiated in August 2004. National registration of some food and beverage products is now accepted as valid within four Central American countries, though Costa Rica is not participating. Under this mutual recognition policy, products can be imported from one country to the next with a certificate of “free sale” from a third country. A dialogue is now under way with the Dominican Republic to establish the same reciprocal procedures. Full accreditation of the laboratory at the Pharmaceutical College is under way. The improvements needed to achieve this accreditation will expedite and improve the quality of laboratory results. ♦ Laboratory fees will soon be based on the product rather than being a flat fee. This fee structure should reduce laboratory fees for routine products. XI-13
TRADE AND COMMERCIAL LAW ASSESSMENT DECEMBER 2004 HONDURAS 2) Ministry of Health Issues to Address Sanitary Phytosanitary regulations are a major factor in improving trade facilitation because of the high percentage of such products traded within the Honduran international trade env ironment. Aggressive pursuit of further modernization efforts to streamline requirements could have significant cost and other benefits. Recommended modernization efforts include the following: ♦ The registration process should be reengineered to better balance safety and facilitation. Representatives from the private sector claim that the current system adds 6–8 percent to the cost of imported food products, and even more to the cost of pharmaceuticals and cosmetics. Emphasis should be placed on adopting the new Central American procedures for elimination of registration requirements on low- and medium-risk commodities to international goods. Because of the current lengthy delays and high costs, many traders circumvent the system through smuggling and false declarations. Some industry representatives state that up to 50 percent of food items at the retail level are unregulated. This puts the legitimate trader at a severe competitive disadvantage and can force the smaller importer out of business or into the black market. Also, the length of the registration process (a minimum of 2–8 months) restricts the range of goods that can be imported. Specifically, the long process prevents seasonal or closeout items from being offered to the consumer through legitimate channels. ♦ ♦ The World Bank project to automate the registration operation should do more than automate the current system. A working group of trade and agency staff should review each step of the process and determine the cost of that step and whether it could be eliminated or streamlined. The goal should be a significant reduction in registration cost and time. The design of the automated system should accommodate this reengineered process. Quality controls measures should be instituted to check the work of laboratory and procedural personnel. Currently, favoritism and politics influence the process. It is necessary to implement a system based on professionalism and integrity. ♦ A special waiver or procedures should be considered for retail outlets/importers who import products directly from wholesalers rather than directly from manufacturers. The current process makes it difficult to secure the required documents for registration. Because the products will be analyzed and tested by national authorities, such procedures would have no negative implications for public health. ♦ Resistance to change should be overcome among many staff members. The agency should push more aggressively to modernize its procedures. ♦ Clear, uniform, and predictable import regulations should be made available to the trade community on a timely basis. The SPS process itself is not well defined, making it subject to interpretation, which increases the opportunity for favoritism. In addition, there is no system for communicating procedural changes to the trade community; thus, the importer often becomes aware of a new requirement only when his or her registration papers are rejected. XI-14
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