RESTRICTED
WORLD TRADE G/SCM/Q2/HND/2
23August 1996
ORGANIZATION(96-3339)
Original: Spanish Committee onSubsidies andCountervailing Measures
SUBSIDIES
Replies ofHONDURAS toQuestions from the
EUROPEAN COMMUNITIES1Regarding Honduras 'NewandFullNotification2
Thefollowingcommunication,dated30July1996,hasbeenreceivedfromthePermanentMission
ofHonduras.
_______________
Inrelation tothequestions bytheEuropean Community inthecontext ofthereview ofincentive
schemes applied byHonduras, theGovernment ofHonduras submits herewith itsreplies, inaccordance
withArticle 25.9oftheAgreement onSubsidies andCountervailing Measures.
(a) Could Honduras explain whythese programmes were notnotified totheWTO?
Asamember oftheWorld Trade Organization (WTO), Honduras hasbeenamending its
economic policy toadapt itasfaraspossible totherulesimposed bytheWTO Agreements. Regarding
thespecial caseofincentives under theTemporary Import Regime (RIT), Industrial Processing Zones
forExport Trade (ZIP) andFreeZones (ZL), Honduras wishes topoint outthatthese incentive
programmes werealready inforce before itacceded tothe1947 General Agreement andduring the
accession process in1994Honduras explained theeconomic policy objectives pursued bysuchschemes,
aswellastheirscope; seedocuments L/7028, L/7160/Rev.1 andL/7299.
Inaddition, taking intoaccount theinitial reviews, aswellastheprovisions ofArticle 25.6
oftheAgreement onSubsidies andCountervailing Measures, Honduras notified thatitdidnotapply
anysubsidies within themeaning ofArticle 1.1noranyspecific subsidies within themeaning ofArticle 2
andthatittherefore considered nosubsidies subject tonotification requirements were applied.
Nevertheless, following thereviews ofsome other Member countries, theGovernment ofHonduras
considers thatcertain situations needtobeelucidated and,asadeveloping country withapercapita
income oflessthanUS$1,000, itismaking great efforts toundertake anin-depth analysis ofthese
programmesinordertoseewhethersubsidiesthatarenotinconformitywiththeAgreementonSubsidies
andCountervailing Measures areapplied. Ifthisproves tobethecase, therelevant notification will
bemade. Honduras would liketodraw attention, however, totheprovisions ofArticle 25.7ofthe
aforementioned Agreement, which statethatthenotification ofameasure doesnotprejudge either its
legalstatus under GATT 1994 orunder theAgreement onSubsidies andCountervailing Measures,
itseffects orthenature ofthemeasure itself.
1G/SCM/Q2/HND/1.
2G/ADP/N/1/HND/2-G/SCM/N/1/HND/2.G/SCM/Q2/HND/2
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(b) Could Honduras supply notification under Article 25,using thestandard format?
Asmentioned inthereply totheprevious question, when Honduras hasconcluded itslegal
examination oftheincentives granted under these programmes, itwillfulfil itscommitments under
Article 25oftheAgreement onSubsidies andCountervailing Measures, inconformity withthemodel
questionnaire fornotifications indicated indocument G/SCM/6.
(c) Could Honduras clarify what thecriteria foreligibility areandhowprojects areselected
forGovernment subsidies?
Forinformation purposes, theGovernment ofHonduras explains below therequirements
concerning applications forRIT, ZIPandZL:
Temporary Import Regime (RIT)
Pursuanttodomesticlegislation,enterpriseswishingtobenefitfromaTemporaryImportRegime
(RIT) mustsubmit anapplication totheMinistry oftheEconomy andTrade, containing thefollowing
information:
- Name, registered name ordesignation, national taxregistration, nationality, domicile,
fulladdress, telephone number andother general information ontheapplicant andhis
legalrepresentative;
- designation oftheperson applying fortheRIT;
- themachinery andequipment which itisproposed toimport under theRIT,showing
thetariff heading andtheirroleintheproduction process;
- description oftheproducts tobeexported, showing theirvolume andvalue, together
withanestimate ofthevolume andvalue overthenextthree (3)years, indicating the
major markets fortheexports;
- percentage ofimported goods orinputs tobeusedintheproduction process; estimated
percentage ofwastage andlosses; description ofthegoods tobeprocessed under
complementarity and/or subcontracting arrangements;
- timetable formaking andexporting theproducts withtheimported inputs;
- number ofworkers tobeemployed, giving anestimate oftheannual wages andsalaries
andsocial benefits forthefirstthree (3)years ofoperation;
- estimate oftheannual netrevenue inforeign currency tobeearned bytheenterprise 's
exports overthefirstthree (3)years ofoperation;
- where appropriate, anindication oftherawmaterials ofdomestic origin tobeused
bytheenterprise;
- briefdescription oftheproduction process;
- special request forthegranting ofanimporter 'sand/or exporter 'slicence;G/SCM/Q2/HND/2
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- anyother information which theMinistry oftheEconomy andTrade requires inorder
todecide upon theapplication.
After receiving theapplication, theMinistry oftheEconomy andTrade undertakes aneconomic
analysis oftheenterprise showing thebenefits tobeobtained byHonduras inthefollowing areas:
- Creation ofnewjobs, showing thenumber andtypeofjobs, theannual wages and
salaries tobepaidbytheenterprise;
- generation ofvalue added;
- netforeign currency earnings;
- training oftheworkforce.
Industrial Processing Zones forExport Trade (ZIP)
InthecaseofIndustrial Processing Zones forExport Trade (ZIPs), wewishtoclarify that
thebenefits accruing toanenterprise under theZIPregime aretheresult ofthepurchase orleasing
agreement, whatever itstitleorcontractual form, between theenterprise concerned andthecompany
operating theZIP. Requests tooperate aZIParesubmitted totheMinistry oftheEconomy andTrade.
Thefollowing isrequired inorder tooperate aZIP:
- Establishment asapublic limited company withfixed capital, underwritten andpaid
upinanamount notlessthanL2,000,000 (US$165,289.26 attheexchange rateof
L12.10 toUS$1.00);
- thesolepurpose ofthecompany must betoexploit theZIP;
- proof thattheproperty required forthepurposes oftheZIPisavailable;
- proof thatthetechnical andfinancial resources forpromotion, supply ofservices and
development ofthenecessary infrastructure areavailable inorder tocreate aminimum
of5,000 newjobsoveraperiod offive(5)years.
Anapplication tooperate aZIPmust contain thefollowing information:
- Thedraftpublic deed, articles andstatutes;
- thefinancial andadministrative structure andestimates oftheenterprise 'sperformance
overten(10)years;
- aneconomic study justifying thesetting upoftheZIP;
- plans oftheZone andproposed installations, showing therelevant capacity and
specifications.
Inaddition, theMinistry oftheEconomy andTrade must ensure that:
- Thepublic interest andthegeneral andlocalcircumstances justify theauthorization
toestablish aZone;G/SCM/Q2/HND/2
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- thefinancial, organizational, management andadministrative bases constitute a
reasonable guarantee ofthesecurity oftheState'sfiscal interests;
- thecapacity isavailable toprovide theusers oftheZIPwiththeservices theyrequire
fortheindustrial processing ofexports, including promotion andemployment oflabour;
and
- theproposed installations provide satisfactory guarantees offiscal control.
FreeZones (ZL)
Natural orlegal persons wishing tobecome established intheFreeZone must obtain an
authorization from theAdministrative Institution inorder tocarry outanyoralloftheoperations
allowed.
(d) With respect tothesupport forexport activity programmes, could Honduras provide the
timetable howthese subsidies willbephased out?
With regard tothecommitment toabolish export subsidies, Honduras willtakeadvantage of
thespecial periods provided fordeveloping countries inArticle 27.4. Nevertheless, intheparticular
case oftheTemporary Admission Regime, exemption from corporate taxwasabolished by
Decree No.135-94 asfrom 1994 forallnewenterprises thattookadvantage ofthisregime asfrom
thatdate.