RESTRICTEDWORLD TRADE
ORGANIZATIONG/VAL/W/44
4 November 1999
(99-4768)
Committee on Customs Valuation Original:  Spanish
STATEMENT BY HONDURAS REQUESTING A
DEROGATION ON MINIMUM VALUES
The following communication, dated 1 November 1999, has been received from the
Permanent Mission of Honduras.
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Pursuant to Article 20.2 and A nnex III, paragr aph 2, of the Agreement on Implementation of
Article VII of the General Agreement on Tariffs and Trade 1994, I have the honour to inform you that
the Government of Honduras has decided to enter a re servation to enable it to retain minimum values
for a transitional period of three years.
In this connection, the document justifying the reservation in question is attached.G/VAL/W/44
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STATEMENT BY HONDURAS ON THE FORMULATION OF A RESERVATION
CONCERNING MINIMUM REFERENCE VALUES
I. INTRODUCTION
As everyone is aware, up to the end of October 1998 Honduras was maintaining sustained
economic growth, managing to cut down the rates of inflation and unemployment and developing a
sound fiscal and monetary policy which predicted excellent performance for the years ahead.  All
macroeconomic indicators pointed to economic recovery over the medium term.  Despite the efforts
made, the damage sustained last year as a result of the disasters caused throughout our whole
productive infrastructure by Hurricane Mitch, which destroyed 80 per cent of the road infrastructure
and left thousands of families homeless, meant that the resources previously channelled towards
economic recovery were used to meet the populati on's basic priorities in food, disease prevention and
construction of shelters, and the reconstruction of the road infrastructure and the country's production
base.
II. ADVANCES IN THE REFORM PROCESS
In its process of economic liberalization, our country has embarked on a Customs
Modernization Programme which includes an ambitious project of reforms and the adaptation of its
legislation on customs valuation consistent with th e rules of the World Trade Organization (WTO).  A
draft law has been finalized and submitted to Congress for adoption by 30 December 1999.  Under
this draft law, Honduras will be able to apply the Valuation Agreement from 1 January 2000, except
for a small list of goods for which it is entering a reservation to retain their value on the basis of theminimum reference prices during a minimum transitional period of three years, in accordance with the
terms of Annex III, paragraph 2, to the WTO Agreement on Customs Valuation.
It should be noted that the minimum reference values will be applicable solely to imports with
a declared value manifestly below the reference value, for which reason the imports that will beaffected by this reservation are in actual fact very few in number.
III. DESCRIPTION OF PRODUCTS ON WHICH THE RESERVATION IS TO BE
ENTERED
The goods with minimum reference values consist essentially of used goods, specifically the
following:
1. Retreaded or used tyres of tariff heading 40.12;
2. Worn clothing and other worn articles of tariff headings 63.09 and 63.10;3. Domestic appliances of tariff headings 84.18, 84.50, 84.51 and 85.16.60.00;4. Vehicles other than railway or tramway rolling-stock, and parts and accessories
thereof, of Chapter 87.
The tariff headings are those of the Harmonized System Nomenclature.
IV. GROUNDS FOR THE REQUEST BY HONDURAS
(a) The declared values for tyres usually do not represent even 5 per cent of the cost of a new
tyre.  In addition, the tyres are so worn that they do not meet the safety requirements for this
type of product.  Particularly, the lack of proper papers and the minimum value declared byG/VAL/W/44
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the importer for such products constitute unfair competition for importers of new articles of
this kind.
(b) Imports of worn clothing have an adverse impact on the economy and directly affect the
development of small- and medium-sized indus try engaged in manufacturing clothing and
footwear.  Furthermore, our te xtile sector, which creates a large number of job sources, is
seriously affected by the competition from imports of these products, for which minimum
values are declared and for which the tax authority does not have sufficient human and
material resources to determine the real transaction value and thus minimize the adverse
effects of cheap imports on domestic production.
Moreover, in a country with six million inhabitants and an economically active population of
two million, about 10 per cent are small employers who create approximately five jobs per
firm and some manufacture clothing and footwear for the majority of the population not in aposition to purchase imported products.  They are seriously affected by imports of used
products.
(c) As for imports of used domestic appliances, many of which have been got rid of in the
developed countries because of the extent to which they affect the ozone layer, Honduras,pursuant to the provisions of the Montreal Protocol, to which we are signatories, is under an
obligation to establish restrictive measures to shift consumer preferences to new or used
articles that meet environmental protection requirements.
(d) Reference prices are retained for motor vehicles in order to limit imports for the following
reasons:
- These goods are usually supplied through the informal sector, a group which in most
instances does not provide proper papers for sales, and virtually no method or concept
of value can be applied, thus causing unfair competition for the firms engaged in
normal trade in new vehicles.
- Since they are "second-hand" products with a great deal of wear and tear, in most
cases they create health problems and environmental contamination, giving rise to
conditions that are in no sense beneficial to the quality of life of the inhabitants of
developing countries.
- Furthermore, additional measures have to be taken to protect the consumer and the
environment, and are also necessary to prevent road accidents, which generally occurbecause these vehicles are very old models with worn parts.
V. CONCLUSIONS
Despite these problems, Honduras, as a nation mindful of its commitments towards the
international community, stands ready to apply the Agreement on Implementation of Article VII ofthe General Agreement on Tariffs and Trade as from 1 January 2000, even though it might entail
some fiscal sacrifice for our vulnerable economy, for which reason we appeal to Members'
understanding and solidarity, since our problem on this occasion is confined strictly to the application
of minimum values for a small number of goods and for a transitional period, which could be cut
down as we refine our information exchange and improve our risk analysis systems.
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