WT/TPR/S/120 Trade Policy Review
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II. TRADE AND INVESTMENT REGIME
(1) INTRODUCTION
1. Honduras acceded to the General Agreement on Tariffs and Trade (GATT) in 1994 and
signed the Agreement Establishing the World Tr ade Organization (WTO) in 1995.  It has regularly
submitted notifications to the WTO, although there are still some gaps, and it has accepted the Fifth
Protocol to the General Agreement on Trade in Services (GATS).  In order to facilitateimplementation of the WTO Agreements, Honduras has adapted a number of its national regulations
to the multilateral rules.  These modifications are part of more general measures taken to modernize
the legal regime for trade and investment through the adoption of amendments or new national laws
or within the framework of international agreements .  Honduras has also stepped up its efforts to fight
corruption.  It has taken major steps to reorganize and strengthen its human resources in order toimprove its limited institutional capacity for the formulation of trade policy and the implementation of
trade agreements.  This combined action should also help Honduras to boost trade and investment
flows with the rest of the world.
2. Free trade agreements have become increasingly important for Honduras’ trade relations.  It
belongs to the Central American Common Market (CACM) and has free-trade agreements withMexico and the Dominican Republic.  In early 2003, together with other members of the CACM,
Honduras was negotiating free-trade agreements (FTAs) with Canada, Chile, the United States,
Panama, and all the other countries in the Western hemisphere, with the exception of Cuba, in the
context of the Free Trade Area of the Americas (FTAA).  Preferential agreements have therefore
become key elements in Honduras’ trade liberalizati on.  As is the case for other countries, however,
the growing number of such agreements raises concerns as to their impact on the transparency of
market access and possible trade-distorting effects.  The burden imposed by the negotiation andadministration of a growing number of preferential agreements is of special concern in the case of
Honduras given its limited institutional capacity to take part in numerous trade negotiations and
observe the commitments undertaken.  In this connection, the authorities have indicated that Honduras
considers the negotiation and administration of preferential agreements to be consistent with its
multilateral commitments and that they encourage economic growth and development.
(2) 
TRADE POLICY FORMULATION AND IMPLEMENTATION
(i) General legal and institutional framework
3. The Constitution of the Republic of Honduras has been in force since 1982 and it states that
the fundamental bodies of the State (the Executive, the Legislature, and the Judiciary) are independent
of each other as far as their functions and powers are concerned.  The head of the Executive is thePresident, elected by the people, who is assisted by three Presidential Appointees (or Vice-Presidents)
and the Council of Ministers.  The President’s term of office is four years without any possibility of
re-election and it begins on 27 January following the date of the elections.  Some of the President's
main responsibilities are to uphold the Constitution and ensure that it is respected, and to direct
foreign policy.  The President has ministries to assist in carrying out executive functions.  TheExecutive is empowered , inter alia , to conclude international treaties and agreements, to put them
before the National Congress for ratification, and to monitor compliance.  The President is also
responsible for regulating tariffs pursuant to the law.
4. The Legislature is composed of a National Congress, a unicameral collegiate body made up of
128 deputies elected by universal suffrage every four years.  Its main functions include preparing,
decreeing, interpreting, amending and repealing laws and approving the General Revenue andHonduras WT/TPR/S/120
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Expenditure Budget annually on the basis of a draft submitted by the Executive.  International treaties
have to be ratified by Congress, which may approv e or reject them, but may not make reservations.
5. In the area of foreign trade, the National Congress is responsible for preparing, decreeing,
interpreting, amending and repealing laws, approving or rejecting international treaties concluded by
the Executive, determining by means of a law those cases in which subsidies are granted for reasons
of public interest or as a tool for economic and social growth, authorizing ports, creating or abolishingcustoms offices and free-trade zones following a proposal by the Executive, and regulating trade by
sea, land and air.
6. Independent magistrates and judges are empowered  to administer justice on behalf of the
State.  The Judiciary is composed of a Supreme Court of Justice, Appeals Courts, and the Courts
determined in the law.  The Supreme Court of Justice is composed of chambers, including theConstitutional, Criminal, Labour and Civil Chambers.  It comprises 15 titular judges and
seven alternates, elected by Congress for a term of seven years.  Courts of Justice are responsible for
judging and implementing rulings and for applying the law in specific cases.  Where there is
inconsistency between a constitutional rule and an or dinary legal rule, the former prevails;  legal rules
also take precedence over any other subordinate regulation.
7. For the purposes of political administration, the Republic of Honduras is divided into
18 departments, in each of which the Executive appoints a titular governor and an alternate.  The
departments in turn are divided into autonomous m unicipalities administered by councils elected by
direct suffrage, pursuant to the law.  The law de termines the organization and functioning of the
municipalities and the exercise of their prerogatives is independent of State authority provided that
they are not contrary to the law.  The municipaliti es are accountable to the courts for any abuse they
may commit either individually or collectively, without prejudice to administrative liability.
8. In recent years, Honduras has been fostering the transparency of public office.  As part of this
strategy, the Honduran authorities have indicated that analyses undertaken for the purpose of planning
in this area show that corruption is per se  one of the most serious obstacles to economic development
and for citizens it is the third worst problem in Honduras, after crime and the high cost of living.
1
Corruption is encountered to a greater extent in public services, in State capture for the purpose of
influencing laws and regulations, in the purchase of public offices, in government procurement, in
smuggling, and in the misappropriation of funds intended for sectors that are important for national
development.
9. The National Anti-Corruption Council was set up in February 2001 and re-established in
February 2002 with the principal aim of promoting the implementation of policies that lay down the
institutional bases for combating corruption in accord ance with the guidelines and action set out in the
National Anti-Corruption Strategy and its relevant Action Plan.2  The Council is composed of
representatives of the three arms of the State and various sectors of civil society.  It has an Executive
Secretariat, which in turn has a Technical Unit.  The Council receives financial support from a
                                                     
1 National Anti-Corruption Council (2002), Estrategia Nacional Anticorrupción ', Honduras, February,
pp. iv-v and Section II(D).
2 The National Anti-Corruption Council was created by Executive Decree No. 015-2001 of
16 February 2001.WT/TPR/S/120 Trade Policy Review
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number of governments and institutions abroad.3   A draft law on the National Anti-Corruption
Council has been put before Congress.
10. In January 2003, a High Court of Audit came into effect for external control so as to
guarantee legal, efficient, effective and economic management and use of financial resources:  to
ensure honest and ethical practices by public servants and individuals in their dealings with the State;
and to monitor the proper administration of national assets.  A constitutional amendment was requiredin order to set up the Court, which has taken over the responsibilities previously assigned to the
Administrative Probity Directorate, the National Comptroller’s Office, and the Assets Office.  The
Court has functional and administrative autonomy vis-à-vis  the State authorities and is only subject to
the Constitution of the Republic.  The Law on the High Court of Audit provides sanctions of three to
15 years imprisonment to punish unlawful acquisition of wealth.  The Central American Bank forEconomic Integration provides the Court with financial support for its organizational set-up.  The
Honduran authorities have indicated that World Bank resources were used to finance a draft law
submitted to the National Congress in May 2002 and to finance an audit model that will be put into
effect in due time.
(ii) Trade policy objectives and formulation
11. In the context of its participation in the Doha negotiating round and in the negotiations on
bilateral and regional agreements, Honduras promotes a policy of open trade focusing on integration
into the global economy and development of the Central American integration process.  For example,
in 1993, the Central American Common Market was revived and Honduras has taken part in several
negotiations on other bilateral and regional agreements (section (4)(i) sets out Honduras’ objectives at
the WTO).  At the domestic level, Honduras has taken measures to update and adapt its trade
legislation to the current international provisions, especially those concerning intellectual propertyrights.  After hurricane Mitch (1998), priorities were redefined in the Master Plan for National
Reconstruction and Transformation, the Poverty Reduction Strategy (PRS) and the new 2002-2006
Government Plan, with the main aims, inter alia ¸ of boosting opportunities for investment and
improving the Honduran economy’s integration into international trade flows on competitive terms.
12. Decree No. PCM-008-97 of 2 June 1997 provides that the Ministry of Industry and Trade
(SIC), through the Under-Secretariat for Economic  Integration and Foreign Trade (SIECE), has
competence for regulating foreign trade, promoting exports and investment, and defining and
implementing trade policy in Honduras.  Pursuant to Executive Decree No. CM-002-2001, the SIC is
responsible for formulating, implementing and evaluating economic integration and bilateral, regional
or interregional trade policies, including the negotiation and, where appropriate, conclusion of thenecessary agreements or treaties, coordinating the latter activity with the Ministry of Foreign Affairs.
The Permanent Mission of Honduras in Geneva is part of the SIC and represents Honduras at the
WTO.
13. The SIECE, as a subsidiary body, has four Directorates-General:  (i) the Directorate-General
of International Negotiations, in charge of negotiat ing bilateral and multilateral trade agreements and
coordinating the formulation of negotiating strategies;  (ii) the Directorate-General of Economic
Integration and Trade Policy, responsible for trade policy towards Central America, administering
regional integration, participation in regiona l decision-making bodies, and following-up and
monitoring intra-regional trade;  (iii) the Directorate-General of Treaty Administration, in charge of
implementing and following-up trade and investment agreements concluded by Honduras;  and (iv)
                                                     
3 Specifically, the Governments of Canada, the United Kingdom, Sweden, the Inter-American
Development Bank (IDB), the World Bank, the United Nations Development Programme (UNDP) and theUnited States Agency for International Development (USAID).Honduras WT/TPR/S/120
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the Directorate-General of Foreign Trade and In vestment Promotion, responsible for promoting
Honduran exports and foreign investment in Honduras.  During the first half of 2003, the Directorates
of International Negotiations, Economic Integration and Trade Policy, and Treaty Administration,
were working as a single Directorate in operational terms.
14. In general, the SIC faces significant institutional problems in meeting the objectives of
several concurrent trade negotiations and implementing the ensuing trade agreements.  Consequently,institutional strengthening of the SIC has begun, w ith the support of the Inter-American Development
Bank, the Central American Bank for Economic Integration, and the United States Agency for
International Development.
15. As part of its task of formulating, drafting and implementing trade policy, the SIC coordinates
action with other international-trade-related State institutions and private sector organizations.  Thepublic sector institutions with which the SIC coordi nates the formulation of trade policy are:  the
Ministry of Finance;  the Executive Directorate of Revenue (DEI);  the Central Bank of Honduras;
the Ministry of Agriculture and Livestock;  the Ministry of Natural Resources and the Environment;
the Ministry of Foreign Affairs (formulation, coordination, implementation and evaluation of foreign
policy);  the Ministry of Health;  and the Ministry of Tourism.  It also coordinates action with theNational Telecommunications Commission, the Ministry of Public Works, Transport and Housing,
the National Banking and Insurance Commission, the Merchant Marine, and the Honduran Postal
Service.
16. A National Tariff Commission was established by Decree No. 222-92 as an ancillary advisory
body for the Executive so as to ensure proper application of the Central American Tariff and Customs
Regime.  The Decree gives the SIC responsibility for domestic policy on all matters related to the
implementation of the Central American Tariff and Customs Agreement.
17. In April 2003, the National Foreign Trade Commission was created with responsibility for
making recommendations to the President of the Republic on trade negotiations. The Council is
chaired by the Minister for the President’s Office and also includes the Ministers for Industry and
Trade, Agriculture and Livestock, Foreign Affairs, and Finance, and the President of the Central
Bank.  Representatives of the organized labour sector , farmers’ unions and private enterprise members
also attend.
18. The Government holds consultations with the following private sector organizations for the
purpose of formulating foreign trade policy:  the Honduran Private Enterprise Council (COHEP), the
Chambers of Commerce and Industry, especially those in Tegucigalpa and San Pedro Sula, the
National Association of Industrialists (ANDI), the Foundation for Investment and Development ofExports (FIDE), the Honduran Chamber of Insurers, the Honduran Association of Banking
Institutions (AHIBA), professional bodies, and the Honduran Maquila  Industry Association, inter
alia.  These organizations coordinate consultations with the Government through the COHEP.  There
is no independent body which regularly examines trade policy and its impact on the economy.
(iii) Main trade laws and regulations
19. The Constitution takes precedence over all other laws.  According to the Constitution, an
international treaty becomes a law of the Republic of Honduras once it has been ratified, published in
the Official Journal, and has met the requirement s for its entry into force.  The provisions in
international treaties are, therefore, admissible before the national courts.  If there is a conflict
between a treaty or agreement and the law, the form er prevails.  Honduras states that arbitral and
judicial rulings of an international nature are admissible and automatically enforceable.WT/TPR/S/120 Trade Policy Review
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20. All international treaties must be approved by the National Congress before they are ratified
by the Executive, unless the Executive has sole competence for the question concerned.  Under
Article 55 of the Guatemala Protocol on administrative acts, decisions taken by the Council of
Ministers for Economic Integration are directly enforceable by States party.  Where an international
agreement affects a constitutional provision, it must be approved following the same process as that
governing revision of the Constitution before it can be ratified by the Executive.
21. In Honduras, there is no foreign trade law as such.  Trade regulations in certain areas (for
example, customs procedures, anti-dumping or safeguards) incorporate into domestic legislation the
provisions of the legal texts agreed at the Central American or multilateral level.  Honduras adopted
new legislation or introduced amendments into existing laws in specific areas such as customs
valuation or intellectual property in order to ad apt its legislation to its Uruguay Round commitments
(see Chapter III).
(3) FOREIGN INVESTMENT REGIME
22. The Investment Bureau in the Ministry of Industry and Trade is responsible for formulating
and implementing Honduras’ investment policy.  In recent years, Honduras has been striving to
promote foreign and domestic investment in order to assist its economic and social development.Honduras has enacted legal and institutional reform s in order to boost investment and these extend
national treatment to foreign investors, as well as providing investors with greater legal security when
making and managing their investments.  Administrative reforms have also been introduced to
facilitate registration procedures and formalities for investment through the creation of a single
window for investors.  Both Honduran and foreign private investors enjoy a number of fiscal
advantages.
23. The 1992 Investment Law (Decree No. 80-92 of 29 May 1992) governs the investment
regime in Honduras and its basic objective is to promote and guarantee both Honduran and foreign
investment.  The Law is implemented through the Regulations on the Investment Law (Resolution
No. 345-92 of 10 September 1992).  The Investment La w gives foreign investors national treatment in
accordance with its underlying principle that private enterprises, whether Honduran or foreign, must
be treated in the same way;  nevertheless, there are some exceptions.
24. The Investment Law guarantees freedom of ownership to Hondurans and foreigners, except in
areas specified in the Constitution and in some other laws.  These exceptions include a ban on
foreigners owning land situated less than 40 km. from the Honduran coast or border, pursuant to
Article 107 of the Constitution.  Since 1991, however, foreigners have been able to purchase land in
“tourist zones” for the building of private homes or for the development of tourism projects approvedby the Ministry of Tourism.
25. The Investment Law and its Regulations limit investment by foreigners in small enterprises
whose share capital (excluding land, buildings and vehicles) does not exceed L150,000 (around
US$9,000).
4
26. The Investment Law and its Regulations impose other restrictions on investment for a number
of reasons.  For example, Article 51 provides that prior authorization from the Government is
required, for reasons of public interest, for investment in agricultural or agro-industrial activities that
exceed certain limits, in financial services and insura nce, and in educational services supplied by the
private sector.  There are also restrictions on foreign participation in tendering for government
procurement and differences in national treatment regarding the taxation of dividends, which amounts
                                                     
4 Article 49 of the Investment Law.Honduras WT/TPR/S/120
Page 21
to 15 per cent for foreign investors and 10 per cent for Honduran investors, although it was recently
decided to lower this amount gradually over a period of three years until the rate for national and
foreign investors becomes the same.5
27. An authorization is also required for both Honduran and foreign private investment in the
following areas:  health services supplied by the private sector;  telecommunications;  generation,
transmission and distribution of electricity;  air transport;  hunting, fishing and agriculture;exploitation of forest resources;  research, survey ing and exploitation of mines, quarries, petroleum
and their by-products.
28. The Investment Law guarantees, inter alia :  the opportunity to purchase foreign exchange for
imports of goods and services, debt repayments abroad, payment of dividends and repatriation of
capital; the right of ownership without any restrictions other than those established in the Law;freedom to produce and market goods and services and set prices;  and freedom to take out insurance
in Honduras or abroad.
29. The Investment Law provides that all invest ment, whether by Hondurans or foreigners, must
be registered with the Ministry of Industry and Trade.  The registration certificate gives the investor
the right to benefit from the guarantees afforded by the Law.  Registration is for statistical purposesand is immediate, except in those sectors where prior authorization from the competent body is
required.  In the latter case, the Ministry submits the application for authorization to engage in the
activity to the competent authority, which must take a decision within a maximum of 60 days,
pursuant to the relevant legal provisions;  if the decision is favourable, the interested party may seek
registration of the investment.
30. Honduras’ investment policy lays down export re quirements solely for enterprises benefiting
from the free-trade zone and temporary import regimes (Chapter III(3)(iv)).
31. Honduran legislation grants fiscal incentives for investment in certain tourism projects (see
Chapter III(4)(v)).
32. The framework for investment in Honduras is completed by bilateral, regional and
multilateral agreements that give foreign investors guarantees and protection.  The free-trade
agreements negotiated by the CACM with Chile (Chapter X), the Dominican Republic (Chapter IX),and the free-trade Agreement between Guatemala, El Salvador, Honduras and Mexico (Chapter XIV)
contain special provisions on investment.  Honduras belongs to the World Bank’s Multilateral
Investment Guarantee Agency (MIGA).
33. By March 2003, Honduras had concluded 12 bilateral agreements on promotion and
reciprocal protection of investment, all of which are in force (Table II.1).  An agreement with Cuba is
awaiting approval and six agreements, with Austria, Egypt, Italy, Jordan, Peru, and the United Arab
Emirates are at different stages of negotiation or approval.
                                                     
5 Pursuant to the 2002 Law on Financial Balance and Social Protection, Decree No. 194-2002.WT/TPR/S/120 Trade Policy Review
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Table II.1
Treaties and agreements concluded by Honduras on the promotion and reciprocal protection of investment
Country Date of signature Date of approval Decree No. Entry into force
United Kingdom 07.12.1993 17.10.1994 176-94 18.02.1995
Switzerland 14.10.1993 30.05.1993 94-95 10.08.1995
Spain 18.03.1994 25.05.1995 73-95 22.09.1995
Germany 21.03.1995 30.05.1996 93.96 03.08.1996
Chile 11.11.1996 18.02.1997 9.97 07.07.1997
China 26.06.1996 21.07.1998 197-98 30.09.1998
France 28.04.1998 28.08.2000 108-2000 22.09.2000
United States 01.06.1995 11.08.1988 207-98 28.11.2000
Netherlands 15.01.2001 17.01.2002 241-2002 …
Republic of Korea 24.10.2000 24.04.2001 40-2001 29.05.2001
Ecuador 26.07.2000 24.04.2001 44-2001 08.06.2001
Cuba 09.08.2001 Pending
Source :  Information provided by the authorities.
34. The measures on privatization have been limited so far, confined to the international airports
in Honduras, which have been the subject of a private management concession since 2000, and the
water service in San Pedro Sula, with a concession given to the firm Aguas de San Pedro Sula.  As far
as telecommunications are concerned, a private enterprise supplies mobile telephony services and a
second concession has been granted for this service, which it is hoped will start to operate at the end
of 2003 (see Chapter IV(5)(iii)).
35. The Foundation for Investment and Development of Exports (FIDE) engages in activities to
promote exports and investment.  It is a private non- profit-making institution set up in 1984 to provide
support for industrial development and the tourism sector.  Its major activity is assistance to foreign
firms wishing to invest in Honduras and it prov ides information on the investment climate,
establishing contacts with local entities and giving legal assistance.  In 1988, the FIDE created the
Industrial Development Group of Honduras (GDI-Hondur as) to help enterprises establish “offshore”
operations in the areas of manufacturing and tourism.  The FIDE has offices in Miami, United Statesof America.  It keeps a register of exporters a nd administers a programme for the promotion of small
enterprises created with Inter-American Developmen t Bank funds, providing technical assistance and
training.
36. Despite the progress Honduras has made in improving its legal, institutional and
macroeconomic framework in order to attract more foreign investment, a number of problems remainbefore there can be a substantial increase in investment.  Certain studies and analysts have drawn
attention to problems such as legal insecurity, the low level of education, the existence of
inconsistencies in applying some statutory benefits for investors, and the persistence of excessively
bureaucratic practices.  To remedy the latter problem, a Law on streamlining administrative
procedures was adopted (Decree No. 255-2002) to facilitate administrative procedures for investmentand other activities.
37. It has also been noted that the time require d to set up an enterprise in Honduras (between
three to five months) is much longer than in other Central American countries because an excessive
number of State bodies is involved (including the Supreme Court) and the problems currently raised
by the customs service hamper both imports and exports.  The same source also indicates that the fees
charged by attorneys, corresponding to 3 per cent of the amount invested, discourage investment.
38. A study by the Foreign Investment Advisory Se rvice (FIAS) highlights five areas in which
measures could be adopted to help Honduras attract more foreign direct investment that would have a
greater impact on the country’s socio-economic development.  The study indicates that such measures
would lead to a marked improvement in the investment climate and would dissipate the negativeHonduras WT/TPR/S/120
Page 23
impressions that currently dissuade foreign investors.   The five areas are the following:  a more open
economy in order to encourage competition;  deregulation, particularly in the business sector;  an
improved legal system, in particular the judicial system, protection of private property, access to
information of a legal nature, and the process of drafting and implementing laws;  privatization of the
infrastructure;  and better education.  Regarding opening up of the economy, the study recommends
improving the functioning of the customs service and lowering tariffs.
(4) INTERNATIONAL RELATIONS
(i) World Trade Organization
39. Honduras ratified the Marrakesh Agreement Establishing the World Trade Organization on
14 December 1994 and deposited its instrument of ratification with the WTO on 1 March 1995.
Consequently, the WTO Agreements have become  laws of the Republic of Honduras.  As a
developing country, Honduras has utilized the transitional periods allowed under various WTO
Agreements.  As a minimum, Honduras grants MFN treatment to all its trading partners.
40. In accordance with the commitments it has undertaken, Honduras has submitted notifications
to the WTO, but in March 2003 it still had to submit notifications in areas such as customs valuation,
import licensing, quantitative restrictions, technical barriers, and trade-related investment measures(Table II.2).
41. Honduras took part in the negotiations on financial services held within the framework of the
GATS and accepted the Fifth Protocol annexed to the GATS.  The Fifth Protocol was signed on
19 April 1999 and ratified by Legislative Decree No. 60-99.  Honduras did not participate neither did
it make any offers in the negotiations on basic telecommunications.  It did not participate either in the
Information Technology Agreement.
6
42. During preparations for the Seattle Ministerial Conference, Honduras, together with other
developing countries, requested the inclusion of issu es relating to the following in the negotiations on
agriculture and services:  improved market access for the principal agricultural exports of developing
countries;  greater flexibility and more opportunities to allow developing countries to utilize domestic
support in the agricultural sector;  and improved access to services markets in sectors and modes of
supply of interest to developing countries, especially those concerning the movement of physicalpersons.
7  Likewise, together with other countries, Honduras put forward a proposal on a special
regime applicable to tourism services in order to prevent anti-competitive practices in the context of
the GATS.8
                                                     
6 Document G/IT/1/Rev 26 of 22 January 2003.
7 WTO document WT/GC/W/120 of 4 December 1998.
8 WTO document WT/GC/W/372 of 14 October 1999.WT/TPR/S/120 Trade Policy Review
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Table II.2
Notifications submitted by Honduras pursuant to the WTO Agreements, February 2003
WTO Article WTO document – date (latest
document if submitted regularly)Description of the requirement
Agreement on Agriculture
Article 18.2 G/AG/N/HND/12-  19.04.02 Table ES.1 – Export subsidies
Article 18.2 G/AG/N/HND/11 - 19.04.02 Table ES.2 – Total exports in relation to export
subsidies
Article 18.3 G/AG/N/HND/10/Rev.1 -20.09.02 Table DS.1-Domestic support measures
Article 18.3 G/AG/N/HND/13 - 20.09.02 Table DS.2-Domestic support measures
Agreement on Implementation of Article VI of the GATT (anti-dumping)
Article 18.5 G/ADP/N/1/HND/1 - 29.03.95 Incorporation of the Agreement into domestic
legislation
Articles 18.5 and 32.6 of the Agreementon Subsidies and CountervailingMeasuresG/ADP/N/1/HND/2 - 05.05.95
Agreement on Implementation of Article VII of the GATT (customs valuation)
Article 20.2 G/VAL/2/Rev.15 - 21.10.02 Invocation of special provisions available to
developing country Members
Annex III.2 G/VAL/15 – 29.11.99 Invocation of special provisions available to
developing country Members
Annex III.3 G/VAL/2/Rev.15 Invocation of special provisions available to
developing country Members
Article 22 Not notified Laws and regulations
Annex III.4 G/VAL/2/Rev.15 Invocation of provisions available to developing
country Members
Agreement on Import Licensing Procedures
Articles 1.4(a) and/or 8.2(b) G/LIC/N/1/HND/1 - 03.12.96 Laws and regulations
Article 7.3 Not notified Replies to questionnaire
Agreement on Preshipment Inspection
Article 5 G/L/223/Rev.8 - 05.06.02 Laws and regulations
Article 5 correction G/L/223/Rev.8/Corr.1 – 17.07.02 Laws and regulations
Annex III G/L/223/Rev.9 - 12.11.02 Laws and regulations
Annex III correction G/L/223/Rev.9/Corr.1 – 10.12.02 Laws and regulations
Quantitative restrictions (Decision on Notification Procedures for Quantitative Restrictions)
WTO document G/L/59 Not notified Initial and biennial report
Agreement on Rules of Origin
Article 5 and Annex II(4) G/RO/N/10 - 16.08.96 Non-preferential and preferential rules
Agreement on Safeguards
Article 12.6 G/SG/N/1/HND/1 - 29.03.95 Laws and regulations
Article 12.6 G/SG/N/1/HND/2 - 19.06.97 Laws and regulations
Agreement on Sanitary and Phytosanitary Measures
Article 7, Annex B G/SPS/N/HND/4 - 09.05.01 Publication of regulations
General Agreement on Trade in Services
Article III.3 Not notified Notification of enquiry points
Article III.4 Not notified Notification of enquiry points
State trading (Understanding on the Interpretation of Article XVII)
Article XVII(4)(a) G/STR/N/7/HND - 24.01.02 A nnual State trading activities
Agreement on Subsidies and Countervailing Measures
Article 25 and Article XVI.1 of the
GATTG/SCM/N/3/HND - 15.01.96 Annual report on subsidies
Article 28.1(a) G/SCM/N/2/HND - 25.04.95 Replies to questionnaire
Table II.2 (cont'd)Honduras WT/TPR/S/120
Page 25
WTO Article WTO document – date (latest
document if submitted regularly)Description of the requirement
Article 27.4 G/SCM/N/74/HND - 04.12.01 Request for extension
Article 32.6 G/SCM/N/1/HND/1 - 27.03.95 Laws and regulations
Articles 18.5 and 32.6 G/SCM/N/1/HND/2 - 05.05.95 Laws and regulations
Agreement on Technical Barriers to Trade
Article 10.1 and 10.3 G/TBT/ENQ/20 - 13.03.02 Notification of enquiry points
Article 10.1 and 10.3 G/TBT/ENQ/21 - 29.11.02 Notification of enquiry points
Article 15.2 G/TBT/2/Add.50 - 22.10.98 Measures adopted to implement the Agreement
Annex 3C Not notified Notification of acceptance of the Code of Good
Practice
Agreement on Textiles and Clothing
Article 6.9 G/TMB/N/140 - 20.02.96 Bilateral agreement with the United States
Article 6.9 G/TMB/N/144 - 20.02.96 Bilateral agreement with the United States
Article 2.6 and 2.7(b) G/TMB/N/59 - 28.04.95
G/TMB/N/59/Add.1 - 15.02.96List of products to be included in the first stage of
integration
Article 2.8(a) and 2.11 G/TMB/N/321/Add.1 – 19.10.98 List of products to be included in the second stage
of integration
Article 2.8(b) and 2.11 G/TMB/N/419 - 18.01.02 List of products to be included in the third stage of
integration
Agreement on Trade-Related Investment Measures
Article 5.1 G/TRIMS/N/1/HND/1 - 04.10.95 Laws and regulations
Article 6.2 Not notified Laws and regulations
Agreement on Trade-Related Aspects of Intellectual Property Rights
IP/C/5 IP/N/6/HND/1 - 03.05.01 Replies to questionnaire
Article 63.2 IP/N/1/HND/I/1 - 13.06.01 Laws and regulations
Article 63.2 IP/N/1/HND/C/1 - 13.06.01 Laws and regulations
Article 63.2 IP/N/1/HND/1 - 23.10.02 Laws and regulations
Article 63.2 IP/N/1/HND/E/1 - 25.10.02 Laws and regulations
Article 63.2 IP/N/1/HND/P/1 – 25.10.02 Laws and regulations
Source :  WTO Secretariat.
43. At the Doha Ministerial Conference in 2001, when referring to the negotiations on
agriculture, Honduras underlined the importance of  including special and differential treatment for
developing countries as an integral part of the negotiations and of making a clear reference to the
“Development Box” and the need to resolve food security problems in developing and least-developed countries.
9  Honduras considers that the provisions on special and differential treatment
must be legally binding if developing and least-developed countries are to be integrated into the
multilateral trading system.  It expressed its interest in seeing that the negotiations on access for non-
agricultural products lead to the elimination of non-tariff barriers and they should commence after a
study has been conducted to ascertain the impact of tariff reductions on local industries and on theeconomies of developing countries.  Honduras also emphasized the need to adopt a joint declaration
on giving Members the possibility of adopting the requisite measures to promote public health in the
interests of the population.
44. As regards services, Honduras reaffirmed its position that the ultimate purpose of the
negotiations should be to enhance the participation of developing countries by liberalizing the sectors
and modes of supply of major interest to them so as to ensure an overall balance of rights and
obligations.  Honduras also expressed its disagreeme nt with holding negotiations on issues related to
                                                     
9 WTO document WT/MIN/(01)/ST/62 of 11 November 2001.WT/TPR/S/120 Trade Policy Review
Page 26
trade and the environment and core labour standards because it considers that they would create
further barriers to trade and would limit the market access opportunities of developing countries.10
45. In line with its statement durin g the Doha Ministerial Conferen ce, Honduras, together with a
group of other developing countries, is putting forward proposals on special and differential treatment
and on “green box” measures during the current WTO negotiations (see Chapter IV(2)(ii)).
46. No Honduran trade practice has been the subject of a complaint under the WTO dispute
settlement mechanism.  Honduras has, however, taken part in four dispute settlement procedures as a
complainant and in a larger number of cases as a third party (Table II.3).
Table II.3
WTO dispute settlement cases to which Honduras is or has been a party, 1996-February 2003
Case Brought against/by Measures adopted (date) WTO document
Cases in which Honduras was/is a complainant
Regime for the importation, sale
and distribution of bananasEuropean Communities/
Guatemala, Honduras,
Mexico and the United StatesRequest for the holding of
consultations (October 1995)WT/DS16/1-7
Regime for the importation, sale
and distribution of bananasEuropean
Communities/Ecuador
Guatemala, Honduras,
Mexico and the United StatesRequest for the holding of
consultations (February 1996);circulation of the Panel report
(May 1997);  notification of
appeal (June 1997);  adoptionof the reports of the Panel and
the Appellate Body (September
1997)WT/DS27/1-61
WT/DS27/HNDWT/DS27/AB/RWT/DS27/R/GTMWT/DS27/R/HND
Regime for the importation, sale
and distribution of bananasEuropean Communities/
Guatemala, Honduras,
Mexico, Panama and the
United StatesRequest for the holding of
consultations (January 1999)WT/DS158/1-3
Measures affecting imports from
Honduras and ColombiaNicaragua/Honduras and
ColombiaRequest for the holding of
consultations (June 2000)WT/DS201/1-2
Cases in which Honduras was/is a third party
Anti-dumping investigation
regarding Portland cement from
MexicoGuatemala/Mexico Request for the holding of
consultations (October 1996);circulation of the Panel report
(June 1998);  notification of
appeal (August 1998);adoption of the reports of the
Panel and the Appellate Body
(November 1998)WT/DS60/1-12
WT/DS60/RWT/DS60/AB/R
Measures affecting textiles and
apparel productsUnited States/European
CommunitiesRequest for the holding of
consultations and participation
in the consultations (June
1997);  notification of amutually agreed solution
(February 1998)WT/DS85/1-9
Table II.3 (cont'd)
                                                     
10 WTO document WT/MIN/(01)/ST/62 of 11 November 2001.Honduras WT/TPR/S/120
Page 27
Case Brought against/by Measures adopted (date) WTO document
Measures affecting textiles and
apparel products (II)United States together with
El Salvador, Dominican
Republic, Hong Kong,
China, Pakistan, Honduras,
Japan, Switzerland and IndiaRequest for the holding of
consultations (November
1998);  notification of a
mutually agreed solution (July
2000)WT/DS151/1-10
Sections 301-310 of the Trade Act
of 1974United States/European
CommunitiesRequest for the holding of
consultations (November
1998);  circulation of the Panel
report (December 1999);adoption of the Panel report
(January 2000)WT/DS152/1-14
WT/DS152/R
Definitive anti-dumping measures
on grey Portland cement from
MexicoGuatemala/Mexico Request for the holding of
consultations (January 1999);circulation of the Panel report
(October 2000);  adoption of
the Panel report (November
2000)WT/DS156/1-4
WT/DS156/R
Import measures on certain
products from the European
CommunitiesUnited States/European
CommunitiesRequest for the holding of
consultations (March 1999);
circulation of the Panel report(July 2000);  notice of appeal
(September 2000);  adoption of
the reports of the Panel and
Appellate Body (January 2001)WT/DS165/1-13
WT/DS165/RWT/DS165/AB/R
Section 306 of the Trade Act of
1974 and Amendments theretoUnited States/European
CommunitiesRequest for the holding of
consultations and participation
in the consultations (June 2000)WT/DS200/1-13
Measures affecting
telecommunications servicesMexico/United States Request for the holding of
consultations (August 2000);
establishment of the Panel
(April 2002)WT/DS204/1-4
Price band system and safeguard
measures relating to certain
agricultural productsChile/Argentina Request for the holding of
consultations (October 2000);
circulation of the Panel report
(May 2002);  notification ofappeal (June 2002);  adoption
of the reports of the Panel and
the Appellate Body (October
2002)WT/DS207/1-12
WT/DS207/RWT/DS207/AB/R
Generalized System of Preferences European
Communities/ThailandRequest for the holding of
consultations and participation
in the consultations (December
2001)WT/DS242/1-6
Source :  WTO Secretariat.
47. Among the most important cases in which Honduras took part as a complainant are the
regime for the importation, sale and distribution of bananas (three cases) against the European
Communities and the case on measures affecting imports from Honduras and Colombia against
Nicaragua.  The latter case refers to Law No. 325 of the Government of Nicaragua and its
implementing regulations, which impose a tax on goods and services from Honduras and Colombia.11
(ii) Preferential agreements
48. As already mentioned, free-trade agreements (FTAs) have come to play an increasingly
important role in Honduras’ trade relations.  H onduras has signed agreements with the Dominican
Republic and Mexico in addition to those within the CACM.  In early 2003, together with other
                                                     
11 WTO document WT/DS201/1, G/L/387, S/L/85 of 13 June 2000.WT/TPR/S/120 Trade Policy Review
Page 28
members of the CACM, Honduras was negotiating FTAs with Canada, Chile, the United States, and
Panama, and with all the other countries in the Western hemisphere, with the exception of Cuba,
within the framework of the Free Trade Area of the Americas (FTAA).  In addition to the ongoing
negotiations mentioned, Honduras initiated ne gotiations for a Honduras-Cuba Partial Scope
Agreement (in May 2003, these negotiations were temporarily suspended).  With a view to these
negotiating processes, in March 2003, it was decided to appoint a chief negotiator for FTAs to beresponsible for coordinating and conducting consultations with production sectors in order to define
Honduras’ negotiating position.
49. With regard to the settlement of trade disputes, Honduras has drawn attention to a case
against Nicaragua in which Honduras presented a comp laint to the Central American Court of Justice
(6 December 1999), which gave a ruling favourable to Honduras (28 November 2001) to the effectthat Nicaragua must eliminate the 35 per cent tariff imposed on 2 December 1999.
12  In April 2003,
Nicaragua suspended application of the aforementioned tax.  There have not yet been any dispute
settlement cases brought under the free trade agr eements with Mexico or the Dominican Republic.
(a) Central American Common Market (CACM)
50. Honduras has been a member of the Central American Common Market (CACM) since 1961.
The other members are Costa Rica, Guatemala, El Salvador, and Nicaragua.  There have been far-
reaching changes in the Central American integration process over the past five years, in particular,
the ratification and entry into force of the Guatemala Protocol to the General Treaty on Central
American Economic Integration (in August 1995).  The Protocol defines the objectives, principles and
means of action for achieving economic union, the goal set by Central America’s Presidents to
complement the Tegucigalpa Protocol.  The CACM agreements contain ambitious objectives and
accords which aim to eliminate the majority of barriers to intraregional trade.  In 2002, most productsfrom the region were already subject to a zero tari ff and, according to the Secretariat for Central
American Economic Integration Secretariat in 2001, the average tariff in the region was 7.3 per cent.
51. Despite the progress made, some of the CACM’s trade liberalization objectives have been
limited by exceptions contained in bilateral agreements between countries members of the CACM.
For example, as far as Honduras’ bilateral trade with each of the other CACM countries is concerned,Honduras has determined exceptions to free trade as described in Chapter III(2)(iv).
52. In addition, in some sectors, Central American intraregional trade is still facing considerable
technical barriers.  The Council of Ministers for Economic Integration therefore initiated a process to
ensure transparency as regards technical barriers to trade.  Each country identified the barriers it had
encountered in each of its other CACM trading partners and these were placed on the Internet site ofthe Secretariat for Central American Economic Integration.
13  At the outset, 60 technical barriers to
trade in the region were identified.  In May 2003, the number had fallen to 16.  The barriers that still
have to be overcome as regards access to the H onduran market include, for example, restrictions on
sanitary and phytosanitary certification of dairy pr oducts and potatoes from Guatemala, restrictions on
granting import permits for chicken sausages and powdered milk from El Salvador, restrictive
                                                     
12 Nicaragua claimed injury as a result of Honduras’ ratification of the López-Ramírez treaty defining
the maritime borders between Colombia and Honduras and therefore imposed a 35 per cent tax on imports of
products from Honduras.
13 Secretariat for Central American Economic Integration Medidas Contrarias al Libre Comercio Intra-
regional available at http://www.sieca.org.gt/SIECA.htm (see Central American Economic Integration, Free
Trade, Barriers), Guatemala, 13 March 2003.Honduras WT/TPR/S/120
Page 29
requirements relating to the submission of original goods permits and restrictions on the import of
poultry products from Costa Rica.
53. With regard to other initiatives taken to strengthen the CACM agreements, under the
Guatemala Protocol to the General Treaty on Central American Economic Integration, in 1996 El
Salvador and Guatemala took measures to establish a customs union between their countries.
Subsequently, in June 2000, Honduras and Nicaragua jo ined in these efforts, followed by Costa Rica
in 2002.  The level of tariff harmonization in the form of a common external tariff in the five CACM
countries was 77 per cent of the tariff schedule in May 2003.  These initiatives also include ambitious
objectives that will probably require more time to implement such as the establishment of a common
foreign trade policy;  the elimination of intra-Central American border posts;  and the free movement
of all goods and services related to trade in goods by 31 December 2003.
54. Over the past five years, the regional trade rules have been adapted to the WTO commitments
undertaken by each Central American country.  By the end of 2002, new Central American
regulations had been adopted in the following spheres:  origin of goods;  unfair trade practices;
safeguard measures;  standardization and metrology measures and authorization procedures;  sanitary
and phytosanitary measures and procedures;  as well as an agreement on trade in services andinvestment.  Until December 1999, Honduras applied its own Valuation Law, but since January 2000
it has applied Article VII of the GATT on customs valuation (Chapter III(2)(ii)).
55. In March 2002, the regulatory section of a Cent ral American Treaty on Investment and Trade
in Services was signed and in September negotiations on the list of reservations to the Treaty began.
On 27 February 2002, an Amendment to the Tegucigalpa Protocol was signed establishing a trade
dispute settlement mechanism in the CACM.  The Amendment was ratified by Honduras under
Decree No. 329-2002 of 30 September 2002.  It was deposited with the Secretariat for CentralAmerican Integration (SICA) on 26 March 2003;  after it had been deposited, the Ministry of Industry
and Trade, in Decision No. 90-2003, took steps for it s publication with a view to incorporating it into
Honduran law.
56. As part of their policy on foreign trade relations, countries members of the CACM have
continued to negotiate and sign agreements with trading partners in the Western hemisphere.
(b) FTA between Guatemala, Honduras, El Salvador, Nicaragua and Costa Rica, and the
Dominican Republic
57. Together with the other members of the CACM, on 16 April 1998 Honduras signed a FTA
with the Dominican Republic.  The agreement was ratified by the Honduran Congress on 16 October
2001 and by the Dominican Republic on 15 March 2001, and entered into force for Honduras on19 December 2001.  Trade relations between Honduras and the Dominican Republic are governed by
this agreement.
58. On 4 February 2000, Honduras signed the first Protocol to the FTA, which includes
definitions of specific rules of origin and determines the treatment applicable to goods and services
produced under the free-trade zone regime and other special regimes;  it also identifies someexceptions in the case of government procurement.  Subsequently, on 20 February 2001, Honduras
signed the second Protocol, which identifies the products excluded and those subject to the reduction
programme.  The FTA covers the following areas:  market access for goods;  rules of origin;  customs
procedures;  safeguard measures;  unfair practices;  sanitary and phytosanitary measures;  technical
regulations;  investment;  trade in services;  government procurement;  intellectual property;
competition policy;  and settlement of disputes.WT/TPR/S/120 Trade Policy Review
Page 30
59. As is the case in other Central American countries, the vast majority of imports from the
Dominican Republic enter duty-free.  A limited number of products, however, are not duty free,
including: poultry meat and edible offal;  powdered milk;  onions;  beans;  coffee;  rice;  wheat flour;
animal or vegetable oils or fats;  sugar cane;  tomato concentrate;  malt beer;  ethyl alcohol;  tobacco
and cigarettes;  and petroleum by-products.  In 2003, the average preferential tariff on products from
the Dominican Republic was 1.2 per cent (see Chapter III(2)(iv)).
(c) FTA between Honduras, Guatemala, El Salvador, and Mexico
60. The FTA between Honduras (as part of the Northern Triangle, together with Guatemala and
El Salvador) and Mexico was signed on 29 June 2000, approved by the National Congress on
20 February 2001, ratified by the Executive on 20 April 2001, it entered into force for Honduras and
Mexico as of 1 June 2001.  The agreement covers the following areas:  market access for goods;customs procedures;  rules of origin;  technical regulations;  sanitary and phytosanitary measures;
special measures;  safeguards;  investment;  trade in services;  intellectual property;  and settlement of
disputes.  It also includes a special safeguard for sensitive agricultural goods.
61. The tariff reduction programme is asymmetrical and should end after 11 years.  Over 65 per
cent of exports from Honduras, Guatemala and El  Salvador, and around 50 per cent of Mexican
exports of industrial goods received duty-free treatment from the outset;  in 2005, 80 per cent and
65 per cent of exports respectively will receive such treatment.  In 2003, the average preferential tariff
applicable to goods from Mexico was 4.2 per cent, corresponding to two percentage points less than
the average MFN rate (see Chapter III(2)(iv)).
62. The market access negotiated under the FTA is:  52 per cent immediate access, 28 per cent
subject to a reduction programme, although some 19 per cent of the total tariff schedule is excluded
from the programme.  Honduras excludes the followin g:  water without added sugar, ethyl alcohol,
pig and pig meat, weapons, rice, live poultry, pou ltry meat, tuna, bananas, cacao in powder form,
coffee, lime and cement, beer, beans, ice cream, iron and steel, eggs, aromatized syrup or with added
colouring, dairy products, raw timber, maize, mayonnaise, sorghum, textiles and made-up articles,
tomatoes, vehicles, cigarettes, wheat flour, fuel and lubricants, and sugar.
(d) Partial scope agreements within the LAIA framework
63. Within the framework of the Latin American Integration Association (LAIA), Honduras has
two partial scope agreements on tariff preferences based on Article 25 of the Montevideo Treaty.
These are the AAP.A25TM No. 9 Colombia/Hond uras agreement, signed on 30 May 1984 (on
13 June 2001, a Second Protocol Amending the Part ial Scope Agreement was signed);  and the
AAP.A25TM No. 16 Venezuela/Honduras agreement, signed on 8 April 1986 (in force since29 September 1986).
(e) Trade agreements being negotiated
64. Guatemala, Honduras, El Salvador, Nicaragua and Costa Rica have agreed on the regulatory
framework for a FTA with Chile.  Each country is negotiating rules of origin and market access
separately, as well as reservations on services.  Honduras is currently negotiating these issues and it isestimated that the negotiations will conclude during the second half of 2003.  The agreement will
cover the following areas:  market access for goods;  rules of origin;  customs procedures;  safeguard
measures;  unfair practices;  sanitary and phytosanitary measures;  technical regulations;  trade in
services;  competition policy;  government procurement;  and settlement of disputes.Honduras WT/TPR/S/120
Page 31
65. On 6 March 2002, Guatemala, Honduras, El Salvador, Nicaragua and Costa Rica agreed on
the regulatory framework for a FTA with Panama. The agreement will cover the following areas:
market access for goods;  rules of origin;  customs procedures;  safeguard measures;  unfair practices;
sanitary and phytosanitary measures;  technical regulations;  investment;  trade in services;  financial
services;  telecommunications;   competition policy;  government procurement;  intellectual property;
and settlement of disputes.  The negotiation of the bilateral annexes on terms of market access,specific rules of origin, and reservations on services and investment is pending.  In mid-2003, trade
between the two countries was still taking place under the Free Trade and Preferential Trade
Agreement, in force since 1976 and expanded in December 2000.  The expansion consists of four
parts, namely, products that can be freely traded without restriction in both senses;  products that
benefit from preferential treatment but are also subject to import controls;  products subject to quotas;and products subject to import controls.
66. Honduras is also negotiating a trade agreement with Canada, together with Guatemala, El
Salvador and Nicaragua.  The negotiations were launched in December 2000.  By May 2003, there
had been seven negotiating rounds and it is hoped to conclude the process during the second half of
2003.
67. On 8 March 2003, negotiations began on a FTA between Guatemala, Honduras, El Salvador,
Nicaragua and Costa Rica, and the United States.  By May 2003, there had been four negotiating
rounds in which proposals on the various issues to be included in the agreement were exchanged:
market access;  rules of origin and customs procedures;  safeguards;  technical barriers to trade;
sanitary and phytosanitary measures;  settlement of disputes and institutional provisions;  investment;
services;  intellectual property;  government procurement;  and labour and environmental provisions.
There has also been an exchange of offers on market access for goods, services, investment andgovernment procurement.  The Honduran authorities hope that the negotiations will be concluded at
the end of 2003.
68. The possibility of concluding an association agreement with the European Union is also
envisaged.  At the XIXth Ministerial Conference of the San José Dialogue, Central America and the
European Union, in May 2003, a joint communiqué was adopted in which it was decided to initiate afirst Round of negotiations on a Political Dialogue and Cooperation Agreement with a view to
creating conditions that would allow negotiation of a mutually beneficial Association Agreement,
including a free-trade agreement.
69. Honduras also participates in the negotiations on the Free Trade Area of the Americas
(FTAA), an initiative launched in December 1994 with the aim of gradually eliminating barriers totrade in goods and services in the Western hemisphere, which are expected to conclude in December
2004.
14  Honduras participates unilaterally in the FTAA negotiations or jointly with Guatemala, El
Salvador and Nicaragua (CA4).
(f) Other arrangements
70. In addition to the integration programmes negotiated, Honduras benefits from unilateral
concessions granted by a number of developed countries, in particular under the Generalized System
of Preferences (GSP).  In the case of the European  Union, in addition to the GSP, like other Central
American countries, Panama, Belize and the Andean Community, Honduras benefits from a special
regime known as the Special Arrangements for Combating Drug Production and Trafficking for a
                                                     
14 Information on the integration process in the Western hemisphere can be found on the FTAA web
site at http://www.alca-ftaa.org.WT/TPR/S/120 Trade Policy Review
Page 32
specified number of agricultural and industrial products as an incentive to efforts to combat drug
trafficking.  The regime comes to an end on 31 December 2004.
71. Since 1983, the United States has granted Honduras and other countries unilateral preferences
under the Caribbean Basin Initiative (CBI).  The 1990 reform of the CBI extended the benefits
indefinitely and allowed accumulation for the purposes of definition of origin.  The coverage of
products was expanded in May 2000 by means of new legislation (Trade and Development Act of2000), which recognizes the importance of exporting made-up articles to the United States for the CBI
countries (Chapter IV(3)).  Originally, in 1983, customs duties were abolished for all products except
textiles and clothing, footwear, prepared tuna in hermetically-sealed packages, petroleum and
petroleum products, clocks and parts thereof.  The 2000 Act eliminated the other tariff barriers applied
to products from Central America and the Caribbean, with the exception of textile articles;  wovenfabrics in particular are excluded and the yarn used for knitted articles must be of United States origin.
Expanded access in the textiles and clothing sector will expire in September 2008 or when the FTAA
or a bilateral trade agreement enters into force.
72. In 2001, the principal exports under the CBI were:  clothing, cigarettes, disposable medical
clothing, and melons.  These products correspond to Honduras’ main exports to the United States.Under the CBI programme, Honduras has become a ma jor exporter of clothing to the United States,
coming in second place (after Mexico) in terms of total volume of clothing exports in 2000.  The
considerable benefits of the CBI preferences for clothing products can also be seen in the fact that
exports of clothing accounted for 45 per cent of Honduras’ total volume of exports to the United
States during the period January-August 2001 (US$952 million).  In 2000, Honduras was also the
third most important source of imports into the United States under the CBI, with total imports
amounting to US$3,100 million.
15  Since the end of 2000, however, as a result of the economic
slowdown in the United States, growth in exports en joying preferences under the CBI appears to have
declined.  In the textiles and clothing sector, however, there has been a recovery with growth of
6.4 per cent during the year ending 28 February 2003.16
                                                     
15 USTR (2001), Fourth Report to Congress on the Operation of the Caribbean Basin Economic
Recovery Act .  Office of the United States Trade Representative, Washington D.C., December.
16 United States Department of Commerce.