RESTRICTEDWORLD TRADE
ORGANIZATIONG/SCM/Q3/HND/6
1 May 2002
(02-2480)
Committee on Subsidies and
Countervailing MeasuresOriginal:  Spanish
SUBSIDIES
Requests Pursuant to Article 27.4 of the Agreement on
Subsidies and Countervailing Measures
Replies to the Questions Posed by AUSTRALIA1, the EUROPEAN COMMUNITIES2,
the UNITED STATES3, JAPAN4 and SWITZERLAND5 Concerning the
Notification of HONDURAS6
The following communication, dated 26 March 2002, has been received from the Permanent
Mission of Honduras.
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The Government of Honduras thanks the distinguished delegations of Australia, the European
Communities, the United States, Japan and Switzerland for their questions concerning the list of
programmes notified by Honduras to the WTO with a view to reserving its right to use the procedures
established in document G/SCM/39, pursuant to  Article 27.4 of the Agreement on Subsidies and
Countervailing Measures.
Honduras, as a country listed in Annex VII(b), submitted its reservation in document
G/SCM/N/74/HND with a view to using the procedures referred to in document G/SCM/39, in the
event that Honduras should graduate from that Annex.  In addition, we submitted all the
documentation referred to in paragraph 6(b), in accordance with paragraph 1(a) of document
G/SCM/39.
In view of its status as a country listed in Annex VII, Honduras wishes to emphasize that it
has merely reserved the right to use the procedures established in document G/SCM/39 and that it is
not requesting an extension under paragraph 1(b) of that document.  Accordingly, the Government of
Honduras is transmitting its replies voluntarily and in the interest of transparency, to the questions
posed by the aforementioned delegations.
                                                     
1 G/SCM/Q3/HND/2.
2 G/SCM/Q3/HND/3.
3 G/SCM/Q3/HND/4.
4 G/SCM/Q3/HND/5.
5 G/SCM/Q3/HND/1.
6 G/SCM/N/74/HND.G/SCM/Q3/HND/6
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QUESTIONS POSED BY AUSTRALIA
Australia submits the following as an initial set of questions/comments.  We reserve our
right to ask further questions on this request at a later stage.
With regard to the initial comment made by the distinguished delegation of Australia, the
Government of Honduras wishes to clarify that, at this time, it is not requesting an extension under
paragraph 1(b) of document G/SCM/39, but it has merely reserved the right to use the procedures
established in that document should it graduate from Annex VII.
1. What are the criteria in order to qualify for tax and import duty exemptions under the
Law on the Free Trade Zone of Puerto Cortés?  When was this law promulgated?
Reply
The following is a summary of the criteria in order to qualify for and enjoy tax and import
duty exemptions under the Law on Free Trade Zones:
Natural or juridical persons seeking to benefit from this Law should submit, through a legal
representative, an application to the Ministry of Trade and Industry containing:
- The main activity in which the enterprise will be engaged;- its location, including exact address and telephone number;- products it will manufacture and markets to which it will export.
The Law on the Free Trade Zone of Puerto Cortés (ZOLI) was promulgated by Decree No.
356 of 19 July 1976 and amended by Decree No.131-98 of 20 May 1998, the Law on Promoting
Manufacturing and Competitiveness and Support for Human Development, pursuant to which the
official name of "Free Trade Zone of Puerto Cort és" was changed to "Law on Free Trade Zones", and
the benefits and provisions of the Law were extended to the whole country.
2. Are the tax and import duty exemptions under the Law on Export Processing Zones
contingent on export of goods from Honduras?  When was this programme introduced?
Reply
The incentives provided to exporters under the Law on Export Processing Zones are not
contingent on export of goods from Honduras.  This programme was introduced on 27 April 1987, by
Decree No. 37-87.
QUESTIONS POSED BY THE EUROPEAN COMMUNITIES
The European Communities pose the following questions without prejudice to the final
position on the request and reserve the right to  ask further questions in the course of the
consultations.
With regard to the initial comment made by the distinguished delegation of the European
Communities, the Government of Honduras wishes to clarify that, at this time, it is not requesting an
extension under paragraph 1(b) of document G/SCM/39, but it has simply reserved the right to use the
procedures established in that document should it graduate from Annex VII.G/SCM/Q3/HND/6
Page 3
1. Please indicate whether the programmes provide for other forms of subsidies than
exemption of import duties and internal taxes (e.g. grants, provision of goods or services).
Reply
The programmes notified in document G/SCM/N/74/HND do not provide other forms of
subsidies and exemption of import duties and internal taxes.
2. Do the programmes provide for a condition to use domestic goods?  If yes, please
describe the relevant provision.
Reply
No.
QUESTIONS POSED BY THE UNITED STATES
1. Could Honduras please provide sufficient details regarding these programmes to
determine whether the programmes qualify for the special procedures of G/SCM/39?
Reply
Honduras is a country listed in Annex VII and, on 20 November 2001, it submitted a
reservation to use the special procedures of G/SCM/39 in the event that it should graduate from that
Annex.
In the reservation contained in document G/SCM/N/74/HND, Honduras submitted the list of
programmes eligible for extension, all of which comply fully with G/SCM/39, paragraph 2.  We
should point out that my Government has already submitted information on these programmes, both
in document G/SCM/Q2/HND/2, of 23 August 1996, and during the accession process of Honduras to
GATT in 1947, contained in documents L/7028, L/7160/Rev.1 and L/7299.  The Government of
Honduras is currently working to prepare and pres ent a complete notification of these programmes,
together with the replies to the subsidy notification questionnaire pursuant to Article 25 of the
Agreement on Subsidies and Countervailing Measures.
2. Please explain whether these programmes provide any other incentives apart from the
full or partial exemption from import duties and internal taxes.
Reply
The programmes notified in document G/SCM/N/74/HND do not provide any other
incentives apart from the exemption from import duties and internal taxes.
3. Please provide the normal customs duty, consumption tax and income tax rates
companies would normally pay absent these programmes.G/SCM/Q3/HND/6
Page 4
Reply
(a) Normal customs duty
Type of goods Customs duty
Raw materials 0%
Semi-finished goods 10 and 5%
Machinery, equipment, parts and accessories 0%
(b) Other taxes
Sales tax rate:  12%
(c) Income tax rate
Juridical persons and individual traders
Income bracket
LempirasRate
From 0.01 to 200,000.00 15%
Exceeding 200,000.00 25%
4. Are subsidies under any of these programmes contingent upon the use of domestic
goods?
Reply
No.
5. Could Honduras please provide statistical data on the number of companies that benefit
from each of these programmes, the industry se ctors represented by these companies, and the
value of exports for these companies?
Reply
Exports under the Special Regimes, and No. of Benefiting Companies
1997 1998 1999 2000
PROGRAMME RIT ZIP RIT ZIP RIT ZIP ZOLI RIT ZIP ZOLI
Exports *
793.73 460.83 753.01 894.31 604.05 988.38 NA 695.44 887.36 NA
N° of
benefiting
companies 299 104 254 114 246 145 NA 222 136 55
* In US$ million
NA:  not available
6. Please describe the duration of the subsidies under these programmes.G/SCM/Q3/HND/6
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Reply
The benefits enjoyed by companies under the RIT, ZOLI and ZIP programmes currently
apply indefinitely.  However, companies operating under the RIT no longer enjoy an exemption fromincome tax, in accordance with Decree No. 135-94 of 28 October 1994.
QUESTIONS POSED BY JAPAN
Could Honduras please provide the years when ZOLI, ZIP and RIT were established?
Reply
1. The Law on the Free Trade Zone of Puerto Cortés (ZOLI) was adopted by Decree No. 356 of
19 July 1976.  The Law was amended by Decree No. 131-98 of 20 May 1998, pursuant to which the
official name of ZOLI was changed to "Free Zones" and the benefits and provisions of ZOLI were
extended to the whole country.
2. The Temporary Import Regime (RIT) was established by Decree No. 37 of 20 December
1984 and amended by Decree No. 190-86, of 31 October 1986 and Decree No. 135-94 of
28 October 1994.
3. The Law on Export Processing Zones (ZIP) was adopted by Decree No. 37-87 of
27 April 1987.
QUESTIONS POSED BY SWITZERLAND
Switzerland takes note of Honduras's reservation of rights under the procedures set out
in G/SCM/39.  We would like to encourage Ho nduras to fully comply with the transparency
requirements of Article 25 of the SCM and to submit a full notification of its existing subsidy
programmes as early as feasible.
Reply
We take note of the concern of the distinguished delegation of Switzerland.  In this respect,
my Government is currently working to prepare and present a complete notification of these
programmes, together with replies to the subsidy notification questionnaire pursuant to Article 25 of
the Agreement on Subsidies and Countervailing Measures.
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