Honduras WT/TPR/S/120
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III. TRADE POLICIES AND PRACTICES BY MEASURE
(1) INTRODUCTION
1. The successive reforms carried out by Honduras since the early 1990s have resulted in a
relatively liberal trade regime.  Tariffs have been steadily lowered, giving an unweighted average
MFN tariff of 6 per cent in early 2003.  Nevertheless, tariffs show escalation and maximum rates of
between 40 to 55 per cent apply to certain products.  Honduras has bound its entire tariff schedule.The majority of these bindings, however, are at 35 per cent and consequently far exceed the rates
applied;  a limited number of tariffs may be in excess of the bound rates.  The predictability of
conditions of access to the Honduran market would improve if the liberalization of recent years is
further reinforced.
2. A price band system is in operation that establishes variable ad valorem  tariffs for imports of
sorghum, maize and their by-products.  Likewise, importers are granted tariff reduction on certain
staple grains when they purchase a given quan tity of domestic production.  Imports of certain
products to be used in developing free-trade zones, tourism or mining operations are duty free.
3. The various rules of origin that apply under the preferential trade agreements to which
Honduras is party may increase production costs an d the cost of administering these agreements.
Honduras has made considerable progress in terms of customs valuation and procedures.  The
WTO Agreement on Customs Valuation has been applied since February 2000 and no minimum
values have been used since 2003.  Customs procedures have been automated.
4. No import quotas are applied and only a few products are subject to licensing requirements.
Nor have any anti-dumping, countervailing or safeguard measures been applied.  Honduras has not
notified WTO of its acceptance of the Code of Good Practice annexed to the Agreement on Technical
Barriers to Trade or of any technical regulations, even though a number of regulations are in force,having been adopted under various laws.  The application of sanitary and phytosanitary measures has
been the subject of questions in the WTO.
5. Honduras has a number of instruments to promote exports and attract investment, primarily
the free-trade zone, industrial zone and temporary admission regimes.  The first two are broadly
similar and exempt companies established in free-trade zones whose products are destined for exportfrom paying customs duties and other taxes.   Honduras reserved the right to apply the special
procedure agreed at the Doha Ministerial Conference to maintain export subsidies in relation to its
free-trade zone, industrial zone and temporary admission regimes.  In addition, the export of wood
from certain forests that has not been incorporated into finished products, furniture or manufactured
furniture parts is prohibited.
6. Honduras is not party to the WTO Plurilateral  Agreement on Government Procurement.  The
Law on Government Procurement entered into force in mid-2001, but the institutional structure
provided under the Law has not yet been established.  In general, international public tenders are only
issued in situations requiring "special expertise".  The Law sets a margin of preference for domestic
producers and products.
7. Honduras does not have a general legal framework relating to competition policy.  State
participation is significant in various sectors such as telephony and electricity, where the level of
competition appears to be limited (see Chapters IV(4) and IV(5).  In addition, the Government
controls the prices of a limited number of products and is empowered to fix the prices of essential
products and some "essential" inputs.  The WTO Agreement on Trade-Related Aspects of Intellectual
Property Rights (TRIPS) was incorporated into Hon duran legislation through the ratification of theWT/TPR/S/120 Trade Policy Review
Page 34
Marrakesh Agreement.  New laws on copyright and industrial property entered into force in 1999.  In
2001, the TRIPS Council examined Honduran legislation on intellectual property rights.
(2) MEASURES AFFECTING IMPORTS
(i) Registration, documentation and procedures
8. The key legal instruments relating to customs registration, documentation and procedures are
the Customs Law (Decree No. 212-87 of 29 November  1987) and the Second Protocol to the Uniform
Central American Customs Code (CAUCA III) and its Regulations1.  When CAUCA III and its
Regulations came into effect, all provisions of the Customs Law that were inconsistent with the
CAUCA and its Regulations were repealed.  The Executive Directorate of Revenue, attached to the
Ministry of Finance, is responsible for implementing Honduras' customs policy.
9. Goods imported into Honduras must be covered by the single customs declaration (DUA),
with the exception of goods from the Central American Common Market (CACM), which must be
covered by the Central American single customs form (FAUCA).  The DUA must contain the
following information:  the identity of the exporter , importer, customs agent and shipper;  the country
of origin;  the cargo manifest number;  a description of the goods, including the tariff code, weight
and customs value;  the characteristics of the p ackaging used to transport the goods;  the customs
regime requested;  and the applicable customs duty.  Pursuant to Article 84 of the CAUCA
Regulations, the DUA must be accompanied by a commercial invoice, shipping documents (such as a
bill of lading, consignment note, airway bill or other equivalent document), a declaration of the
customs value of the goods, a certificate of origin for goods entering Honduras under one of the
preferential schemes to which Honduras is party and any licences required for the goods being
imported.  The authorities have indicated that the intervention of a customs agent is required to import
goods whose c.i.f. value exceeds US$500.  The invo lvement of a customs agent is not necessary for
imports from CACM countries.
10. In order to operate in Honduras, customs agencies must be registered with the Executive
Directorate of Revenue and must provide the services of at least one licensed customs agent.  In
addition, agencies must deposit a sum of L200,000 (approximately US$11,500 using the average
exchange rate in May 2003) as security to the State.
11. Thirteen of the 17 Honduran customs offices, which, together account for 98 per cent of
Honduras' customs revenue, are equipped with AS YCUDA++, an automated customs administration
system developed by the United Nations Conference on Trade and Development.  ASYCUDA++
allows customs agents to send import declarations in electronic format to the customs authorities
24 hours a day, 365 days a year.  For this purpose, the Ministry of Finance has an agreement with theNational Federation of Honduran Customs Agents (FENADUANAH) for the use of ADUANETT, a
telecommunications network belonging to FENADUANAH that links up the entities involved in
customs procedures (customs offices, customs agents, shipping companies and banks).
12. Once the customs brokers have transmitted their declaration, ASYCUDA++ subjects the
declared goods to either a green, yellow or red procedure.  According to the authorities, the procedureto which the goods are subject is determined on the basis of a risk analysis that takes into account
criteria such as the country of origin, the produc t and the customs agent.  Under the green procedure,
                                                     
1 The amendments to the Uniform Central American Customs Code (CAUCA) contained in the Second
Protocol were approved by Resolution No. 85-2002 of the Central American Tariffs and Customs Council,19 June 2002.  The CAUCA Regulations are contained in Resolution No. 101-2002 of the Central AmericanTariffs and Customs Council, 12 December 2002.Honduras WT/TPR/S/120
Page 35
the system issues a payment slip that allows the cu stoms agent to pay the relevant duties at a bank.
The slip is then submitted to the customs official  together with the receipt of payment, the import
declaration and the supporting documents.  If the documentation is in order, the customs official
issues a clearance permit allowing the agent to withdraw the goods from customs.
13. When the system selects the yellow or red procedures, no payment slip is issued.  The
customs agent must present himself to the customs of ficial and hand over the declaration so that the
documentation can be examined in the case of the yellow procedure and a physical inspection can be
carried out in the case of the red procedure.  If no anomaly is detected, the customs official issues an
inspection certificate, a payment slip and, once the corresponding payment has been made, a clearance
permit.  According to the authorities it generally takes 24 hours for goods to clear customs, although it
may take up to three days.  They have also pointed out that the customs procedures applicable toimports are the same for all Honduras' trading partners.
14. The appeals procedures are set out in Articles 227 to 235 of the CAUCA Regulations.  Any
complaints about a decision issued by the customs ad ministration must be addressed in writing to the
relevant customs administrator.  Appeals must be submitted to the Director of the Executive
Directorate of Revenue, whose decisions are subject to appeal before the Ministry of Finance.According to the authorities, 2,212 appeals agains t Honduran customs decisions were made between
1997 and 2002.
15. In 2001, in the context of the Central American economic integration process, two joint
customs offices were established by El Salvador and Honduras (El Amatillo and El Poy).  Each of
these offices consists of a building where officials from both countries carry out migration, import,
export and/or transit procedures through binational windows
2.  Furthermore, Honduran officials have
been transferred to the peripheral customs posts in Tecún Umán in Guatemala and Peñas Blancas inNicaragua to monitor goods destined for Honduras.
16. Honduras has notified the WTO that it has no laws or regulations governing preshipment
inspection
3.
(ii) Customs valuation
17. When accepting the Agreement Establishing the World Trade Organization, Honduras
invoked Article 20.1 of the Agreement on Customs Valuation in order to delay application of its
provisions for a period of five years from 1 January 1995.
18. The authorities confirmed that Honduras has been applying the WTO Agreement on Customs
Valuation since 1 January 2000.  In accordance with the provisions of this Agreement on special and
differential treatment for the developing country Members of the WTO, Honduras decided to delaythe application of the computed value method and to adopt reservations relating to the application of
certain disciplines
4.  The authorities have indicated that Honduras has been applying the computed
value method since 1 January 2003.
                                                     
2 Secretariat for Central American Economic Integration (SIECA), (2002) Informe de las Actividades y
Avances del Proceso de Unión Aduanera entre Guatemala, El Salvador, Honduras and Nicaragua , 17 June.
3 WTO document G/PSI/N/1/Add.5 of 3 February 1997.
4 WTO document WT/LET/1/Rev.1 of 2 March 1995.WT/TPR/S/120 Trade Policy Review
Page 36
19. Pursuant to the decision adopted by the WTO Committee on Customs Valuation, Honduras
applied minimum values to used clothing and other worn articles classified under tariff headings
63.09 and 63.10 until 1 January 2002 and to retreaded or used tyres classified under tariff
heading 40.12, used domestic appliances classified under tariff headings 84.18, 84.50, 84.51 and
85.166000 and used vehicles other than railway or tramway rolling-stock and parts and accessories
thereof (Chapter 87) until 1 January 20035.  The authorities confirmed that Honduras has not applied
minimum values since that date.
20. Honduras has not submitted replies to the list of questions on customs valuation6.
21. Under the Free-Trade Agreement between Mexico and El Salvador, Guatemala and
Honduras, the value of imported goods is determined  in accordance with the principles of the
WTO Customs Valuation Code.  Where a Member State applies minimum values, the Agreementprovides for the exchange of information and the holding of consultations to ensure that the
application of minimum values does not pose a barrier to trade between the parties.  Since it entered
into force, the Free-Trade Agreement between Central America and the Dominican Republic has
prohibited the use of minimum values to determine the value of goods from one of the parties.
(iii) Rules of origin
22. Honduras notified the WTO that it does not apply non-preferential rules of origin
7.  The
preferential rules of origin that it applies are set out in the Central American Rules of Origin of
Goods8, notified to the WTO in August 19969, the Free-Trade Agreement between Mexico and
El Salvador, Guatemala and Honduras, and the Fr ee-Trade Agreement between Central America and
the Dominican Republic.
23. The general principle governing the determination of origin of goods containing inputs from
outside the territories covered by the two preferential agreements is a change in tariff classification.Nevertheless, the rules of origin applying to the same product may vary, depending on the way in
which each agreement supplements the criterion on a change in tariff classification with additional
criteria.  While the Central American Regulations, do not generally set out additional requirements
other than a change in tariff classification, the Free-Trade Agreement with Mexico and, to a lesser
extent, the Free-Trade Agreement with the Dominican Republic establish additional requirements,such as regional content.  The existence of two or  more divergent origin regimes may lead, on the one
hand, to an increase in the cost of administering the agreements, and on the other, to the loss of
economies of scale because domestic exporters seeking to comply with various different origin
regimes have to maintain two or more production lines.
                                                     
5 WTO document G/VAL/15 of 29 November 1999.
6 This list appears in WTO document G/VAL/5 of 13 October 1995.
7 WTO document G/RO/N/3 of 27 July 1995.
8 Resolution No. 20-98 (Council of Ministers for Economic Integration (COMIECO VII) of
5 March 1998 and amendments thereto – Resolution No. 27-98 (COMIECO) of 18 December 1998;  ResolutionNo. 30-98 (COMIECO XI) of 18 December 1998;  and Resolution No. 90-2002 (COMIECO XXIII) of23 August 2002.
9 The notification by Honduras is contained in WTO document G/RO/N/10 of 16 August 1996.Honduras WT/TPR/S/120
Page 37
(iv) Tariffs
(a) Structure and levels
24. In the context of this review, the authorities confirmed that Honduras grants all its trading
partners MFN treatment, with the exception of those countries with which it has preferential trade
agreements.
25. The nomenclature used by Honduras for the classification of goods is based on the Central
American Tariff System  (SAC), which is common to the member countries of the Central American
Common Market (CACM).  In turn, the SAC is based on the Harmonized Commodity Description
and Coding System (HS).  The second and third revi sions of the HS were incorporated into the SAC
in September 1996 and August 2002 respectively10.  The SAC's harmonization with the third revision
of the HS came into force in Honduras on 1 October 2002.  In May 2003, Honduras had harmonizedapproximately 77 per cent of its customs duties with the tariffs contained in the SAC, which
comprises the following four bands:  zero per cent for raw materials and intermediate and capital
goods not produced in the region;  5 per cent for raw materials produced in the region;  10 per cent for
intermediate and capital goods produced in the region;  and 15 per cent for finished goods.
26. All the import duties applied by Honduras are ad valorem  and are applied on the c.i.f. value
of goods.  In May 2003, the arithmetic average MFN applied by Honduras was 6.1 per cent
(Table III.1).
27. Of the 6,259 lines that make up the Honduran tariff, 47 per cent are duty free.  Only 26 tariff
headings do not fall within the zero to 15 per cent band.  Tariffs above 35 per cent are applied to
products such as certain types of poultry meat, rice, cane sugar and cigarettes.  Yellow maize
(1005.9020), white maize (1005.9030), sorghum (1007.0090), cereal groats (1103.1310, 1103.1390)
and corn flour (1102.2000) are subject to a price band system.  The tariffs applied to these productsvary in accordance with a reference price (see Chapter IV(2)(ii)).
Table III.1
Summary analysis of the Honduran tariff, May 2003
Applied tariffs, 2003a
Number of
linesAverage tariff
applied (%)Range
(%)Standard
deviation (%)Coefficient of variation
Total 6,259 6.1 0-55 6.7 1.1
By WTO category
Agricultural products 923 10.1 0-55 7.8 0.8
Live animals and animal products 121 14.6 0-50 9.8 0.7
Dairy products 31 12.6 0-15 4.6 0.4
Coffee and tea, cocoa, sugar, etc. 165 10.9 0-40 5.7 0.5
Cut flowers and plants 59 5.6 0-15 7.0 1.3
Fruit and vegetables 201 13.1 0-15 4.5 0.3
Cereals 23 13.9 0-45 16.8 1.2
Beverages and spirits 54 13.5 0-30 5.4 0.4
Tobacco 19 8.7 0-55 12.3 1.4
Non-agricultural products (excl. petroleum) 5,313 5.4 0-15 6.2 1.2
Table III.1 (cont'd)
                                                     
10 Resolution No. 22-96 (Council of Ministers for Economic Integration and Regional Development
(COMRIEDRE IV)), 22 May 1996, and Resolution No. 89-2002 of the Central American Tariff and CustomsCouncil, 23 August 2002.WT/TPR/S/120 Trade Policy Review
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Applied tariffs, 2003a
Number of
linesAverage tariff
applied (%)Range
(%)Standard
deviation (%)Coefficient of variation
Textiles and clothing 932 11.3 0-15 5.0 0.4
Leather, rubber, footwear and travel goods 207 7.6 0-15 5.7 0.7
By ISIC sectorb
Agriculture and fishing 398 8.1 0-24.2c6.4 0.8
Mining 106 2.3 0-15 3.8 1.6
Manufacturing industry 5,754 6.0 0-55 6.7 1.1
By HS section
01 Live animals and animal products 283 11.1 0-50 8.1 0.7
02 Vegetable products 371 10.0 0-45 7.4 0.7
03 Fats and oils 53 8.3 0-15 5.6 0.7
04 Prepared foodstuffs, etc. 269 11.7 0-55 6.4 0.5
05 Mineral products 176 3.6 0-15 4.7 1.3
06 Products of the chemical industries 919 1.8 0-15 4.2 2.3
07 Plastics and rubber 330 4.5 0-15 4.8 1.1
08 Hides and skins, leather 108 8.3 0-15 5.5 0.7
09 Wood and articles of wood 90 7.8 0-15 5.6 0.7
10 Pulp, paper etc. 285 5.2 0-15 5.5 1.1
11 Textiles and textile articles 914 11.1 0-15 5.3 0.5
12 Footwear and headgear 63 12.5 0-15 4.6 0.4
13 Articles of stone 160 6.4 0-15 6.7 1.0
14 Precious stones, etc. 54 7.5 0-15 6.1 0.8
15 Base metals and articles thereof 693 3.1 0-15 5.0 1.6
16 Machinery and equipment 901 2.4 0-15 5.0 2.1
17 Transport equipment 159 6.2 0-15 5.4 0.9
18 Precision instruments 245 3.8 0-15 5.7 1.5
19 Arms and ammunition 21 12.6 5-15 4.4 0.3
20 Miscellaneous manufactured articles 156 10.7 0-15 5.6 0.5
21 Works of art, etc. 9 13.3 5-15 3.5 0.3
a. In order to incorporate the products under the price band system into the Honduran MFN tariff calculation, the simple average
tariff applied in 2002 was calculated for each of these products, on the basis of information provided by the Honduranauthorities.
b. ISIC Classification (Rev.2), excluding electricity (1 line).
c. This value corresponds to the rate applied to products subject to the price band system.
Source : WTO Secretariat estimates based on information provided by the Honduran authorities.
28. Using the WTO definition, the average MFN tariff rates applied in the agricultural and non-
agricultural sectors (including petroleum) were 1 0.1 and 5.4 per cent respectively.  According to the
ISIC (Revision 2) definition, agriculture, including hunting, forestry and fishing, enjoys the greatest
protection followed by manufacturing.  Average MFN tariff rates of 8.1 and 6 per cent respectively
were applied to these sectors.  In the mining and quarrying industries, the average MFN tariff was2.3 per cent.
29. As Chart III.1 indicates, the breakdown of tariff lines to the ISIC two-digit level depicts
marked escalation for some industries, in particular textiles, clothing and leather, whose average
MFN rates are 2 per cent for products at the first stage of processing, 10.3 per cent for semi-processed
products, and 13.3 per cent for fully-processed products.  For wood and wood products, including
furniture, the rates average zero per cent in the case of products at the first stage of processing, 7.3 per
cent for semi-processed products, and 11.9 per cent for fully-processed products.  The average ratesHonduras WT/TPR/S/120
Page 39
applied to paper and paper products, printing and publishing, are zero per cent at the first stage of
processing, 4.9 per cent for semi-processed products, and 7.4 per cent for fully-processed products.
Chart III.1
Escalation of manufactured products, 2003
0.02.04.06.08.010.012.014.016.0
Foodstuffs, tobacco
Textiles, clothing, leatherWood processing industries Paper, printing, publishing
Chemical products, petroleum
Mineral products
Basic metal industries
Manufactured metal  products
Other manufacturing industriesPercentage
Source:  WTO Secretariat estimates based on data provided by the authorities.
NOT APPLICABLESemi-processed products
Processed productsRaw materials
30. The escalation in Honduran tariffs for certain sectors results in high levels of effective
protection for producers of processed goods and consequently acts as an incentive for further
processing, which could undermine efficient use of resources.
(b) Bindings
31. Honduras has bound its entire tariff schedule.  The predictability of conditions for access to
the Honduran market is decreasing as there is a marked difference between the tariffs applied and
those bound, even though the harmonization of tariffs among CACM member countries provides a
degree of stability to the tariffs applied by Honduras.  To some extent, the difference between the
applied and the bound tariffs is the result of the unilateral tariff reductions undertaken by Hondurassince 1995.  Approximately 85 per cent of the tariff  schedule is bound at 35 per cent.  Less than one
per cent is bound at higher levels ranging from 40 to 60 per cent, and the remainder is bound at levelsWT/TPR/S/120 Trade Policy Review
Page 40
below 35 per cent.  Honduras has introduced the changes to the 1996 Harmonized System into its
schedule of concessions11.
32. The rates applied in 2003 to the following tariff headings may be higher than the respective
bound rates:  0405.1000 (butter, bound rate:  8 per cent;  applied rate:  15 per cent), 3808.1010
(insecticides in the form of tablets and candles and fly papers, bound rate:  7 per cent;  applied rate:
10 per cent), 7210.6110 and 7210.6910 (certain flat-rolled products of iron or steel, bound rate:  8 percent;  applied rate:  15 per cent).
33. Pursuant to Article XXVIII.5 of the GATT 1994, Honduras has reserved the right to modify
its schedule of concessions (Schedule XCV) during the three-year period commencing
1 January 2003
12.
(c) Preferential tariffs
34. In March 2003, Honduras was applying preferen tial tariffs to imports from the CACM,
Mexico, the Dominican Republic, Colombia and Venezuela.
35. Under the General Treaty on Central American Economic Integration, the vast majority of
products  from CACM countries are duty free.  The exceptions to the free-trade regime among these
countries are set out in Annex A to the General Treaty on Central American Economic Integration.Imports from CACM countries of products listed in Annex A are subject to import controls or
customs duties, as indicated in Table III.2.  On 1 January 2003, wheat flour (SAC 1101.00.00) was
removed from Annex A and CACM countries no longer apply licences or tariffs to imports of wheat
flour from the region
13.
36. Table III.3 shows the average preferential tariffs granted by Honduras to Mexico and the
Dominican Republic in May 2003, under the respective free-trade agreements (see also
Chapter II(4)(ii)).
Table III.2
Goods subject to special import arrangements under the CACM, June 2003
Tariff item Description Measure
Arrangement common to all five countries
09.01.1 Coffee, not roasted Subject to import duties (DAI)
17.01
17.01.11.0017.01.91.0017.01.99.00Cane sugar, refined or unrefined
CaneContaining added flavouring or colouring matterOtherImport controls
Bilateral arrangement with Guatemala
09.01.2 Roasted coffee Subject to import duties
22.08 Distilled alcoholic beverages Subject to import duties
Table III.2 (cont'd)
                                                     
11 WTO document WT/LET/403 of 12 October 2001.
12 WTO document G/MA/144 of 26 February 2003.
13 Resolution No. 01-2002 of the Executive Committee for Economic Integration, 27 September 2002.Honduras WT/TPR/S/120
Page 41
Tariff item Description Measure
27.10
27.1227.1327.15Petroleum products (except mineral solvents
(27.10.11) and asphalt  (27.13.20.00), which may
be freely traded between the States party)Subject to import duties
Bilateral arrangement with El Salvador
09.01.2 Roasted coffee Subject to import duties
22.07
22.08.90.10Ethyl alcohol, denatured or undenatured Import controls
22.08 except 22.08.90.10 Distilled alcoholic beverages Subject to import duties
27.10
27.1227.1327.15Petroleum products (except mineral solvents
(27.10.11) and asphalt  (27.13.20.00), which may
be freely traded between the States party)Subject to import duties
Bilateral arrangement with Nicaragua
09.01.2 Roasted coffee Subject to import duties
22.08 Distilled alcoholic beverages Subject to import duties
27.10
27.1227.1327.15Petroleum products (except mineral solvents
(27.10.11) and asphalt  (27.13.20.00), which may
be freely traded between the States party)Subject to import duties
Bilateral arrangement with Costa Rica
09.01.2 Roasted coffee Subject to import duties
22.07
22.08.90.10Ethyl alcohol, denatured or undenatured Import controls
22.08 except 2208.90.10 Distilled alcoholic beverages Subject to import duties
27.10
27.1227.1327.15Petroleum products (except mineral solvents
(27.10.11) and asphalt  (27.13.20.00), which may
be freely traded between the States party)Subject to import duties
Source: Resolution No. 44-99 of the Council of Ministers for Economic Integration (COMIECO), 17 September 1999.
Table III.3
Average tariffs under the main Honduran preferential agreements, May 2003
Average tariffs (%)
Number of lines MFN Mexico Dominican Republic
Total 6,259 6.1 4.2 1.2
By WTO category
Agricultural products 923 10.1 7.1 1.6
Non-agricultural products (excl. petroleum) 5,313 5.4 3.7 1.1
By ISIC sectora
Agriculture and fishing 398 8.1 4.1 0.4
Mining 106 2.3 0.9 0.0
Manufacturing 5,754 6.0 4.3 1.2
Table III.3 (cont'd)WT/TPR/S/120 Trade Policy Review
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Average tariffs (%)
Number of lines MFN Mexico Dominican Republic
By HS section
01 Live animals and animal products 283 11.1 6.4 1.4
02 Vegetable products 371 10.0 6.3 1.3
03 Fats and oils 53 8.3 7.1 5.1
04 Prepared foodstuffs, etc. 269 11.7 8.8 1.4
05 Mineral products 176 3.6 1.9 0.8
06 Products of the chemical industries 919 1.8 0.8 0.0
07 Plastics and rubber 330 4.5 2.9 0.0
08 Hides and skins, leather 108 8.3 4.4 0.0
09 Wood and articles of wood 90 7.8 3.1 0.0
10 Pulp, paper, etc. 285 5.2 3.0 0.1
11 Textiles and textile articles 914 11.1 11.1 6.1
12 Footwear and headgear 63 12.5 7.0 0.0
13 Articles of stone 160 6.4 3.8 0.0
14 Precious stones, etc. 54 7.5 0.0 0.0
15 Base metals and articles thereof 693 3.1 1.8 0.0
16 Machinery and equipment 901 2.4 1.3 0.0
17 Transport equipment 159 6.2 3.2 0.0
18 Precision instruments 245 3.8 1.9 0.0
19 Arms and ammunition 21 12.6 12.6 0.0
20 Miscellaneous manufactured articles 156 10.7 5.7 0.0
21 Works of art, etc. 91 3 . 3 0 . 4 0.0
a ISIC Classification (Revision 2), excluding electricity (1 line).
Source: WTO Secretariat estimates based on data provided by the Honduran authorities.
(v) Tariff quotas
37. Honduras does not apply tariff quotas, having not included any products in its Uruguay
Round schedule of concessions relating to tariff quotas for agricultural products.
38. There is a scheme, known as "absorption agreements", through which producers and
processors negotiate a reference price for certain staple grains.  Once the domestic supply of these
grains has been exhausted at the reference price, a quota is introduced that allows processors who
have purchased a share of the domestic supply to import this product at a preferential rate.  The
authorities have indicated that absorption agreem ents have been implemented for maize, rice and
sorghum.
(vi) Other charges affecting imports
39. In addition to customs duties, imports are subject to internal taxes, inter alia , the sales tax, the
production and consumption tax and various selective taxes.  The main characteristics of the taxes that
affect imports are outlined in Table III.4.Honduras WT/TPR/S/120
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Table III.4
Honduras:  Main taxes on goods and services, June  2003
Tax and legal basis Type of tax Exemptions Rate
Sales tax  (Decree
No. 24-63;  most
recent amendment:
Decree No. 51-2003Applied at the import
stage and throughout the
sales process; zero rate
for goods and services
intended for export.- Products that are included in the basic basket
(approximately 150 food products)
- Pharmaceutical products for human use
- Machinery, equipment and spare parts for electricity
generation
- Petrol and other petroleum by-products- Books and newspapers;  scientific, technical and cultural
reviews;  exercise books, school materials, artisticpaintings and sculptures;  some handicrafts; domestically-
produced flowers;  musical scores;  bovine skins and
hides for small industries and handicrafts
- Tools, equipment, accessories and spare parts used for
agricultural and livestock production, pharmaceutical
products for veterinary use, agrochemicals, fertilizers,
fungicides, herbicides, pesticides, insecticides,concentrates for animal use, mixtures for animals, alfalfa,
dried fodder, fish meal, meat and bone meal, coconut and
wheat bran and all other ingredients for animal use, seeds
and bulbs for planting
- Live animals and frozen semen of animal origin
- Machinery and apparatus for the dairy industry and
spare parts thereof
- Raw materials and materials needed for the production
of articles exempt from tax
- Goods intended as fixed assets (right to fiscal credit)
- Electricity, drinking water and sewage services;
professional and teaching services;  hospitalization,
ambulance and medical diagnostics services;  landtransport of passengers;  banking and financial services
and services relating to personal insurance and
reinsurance;  hairdressing and beauty services; rental ofresidential and some commercial property up to the value
of L5,000;  rental with purchase option and sale/purchase
of propertyGeneral rate of 12%;
15% in the case of
beer, spirits
("aguardiente "),
blended spirits and
other alcoholic
beverages, cigarettesand other tobacco
products
Production and
consumption tax
(IPC) on sparkling
beverages (DecreeNo. 3-1958;  most
recent amendment
Decree No. 51-
2003)Specific tax on domestic
and imported productsNone US$0.026 per litre
IPC on beer (Decree
No. 3-1958;  most
recent amendmentDecree No. 51-
2003)Specific tax on domestic
and imported productsNone US$0.201 per litre
IPC on rum and
spirits("aguardiente ")
(Decree No. 51-
2003)Specific tax on domestic
and imported productsNone US$0.43 per litre a
IPC on blended
spirits (Decision No.
152; most recent
amendment: Decree
No. 51-2003)Specific tax on domestic
and imported productsNone US$2.6 per litre
IPC on wine
(Decree No. 51-
2003)Specific tax on domestic
and imported productsNone US$0.201 per litre
Table III.4 (cont'd)WT/TPR/S/120 Trade Policy Review
Page 44
Tax and legal basis Type of tax Exemptions Rate
IPC on cigarettes
(Decree No. 106-55;
most recentamendment: Decree
No. 51-2003)Tax on domestic and
imported productsNone 45%
Selective
consumption tax(Decree No. 58-82;
most recent
amendment: Decree
No. 194-2002)Tax on some 50 products None 10%
Single annual
vehicle registration
tax  (Decree No 18-90;  most recent
amendment: Decree
No. 194-2002)Tax on the c.i.f. value of
imported vehiclesNone 2% for the first five
years after import,
after which the tax iscalculated according to
the vehicle's engine
capacity
Tax on petroleumby-products (Decree
No. 131-98,
amended by Decree
No. 19-2003)Specific tax on domestic
and imported productsPrivate electricity producers Tax per gallon in US$:
Premium-grade petrol1.0570Regular-grade petrol
1.0530
Diesel fuel0.5047Bunker fuel0.3350Kerosene0.2950LPG0.2100AvJet0.0300
Tax on the
ownership of coin-
operated gamesmachinery (Decree
No. 194-2002)Specific five-yearly tax
on the ownership of
games machineryGames machinery regulated by the Law on Casinos and
Games of Chance or HazardL30,000
Tourist services tax
(Decree No. 131-98)Tax on hotel
accommodation, carrental and other tourist
servicesNone 4%
Insurance premiums
taxTax on life, health,
liability, accident,household and freight
insuranceNone 12%
Tax on tickets for
public entertainmentand sporting events
(Decree No. 3-1958)Sales tax on tickets for
public entertainment andsporting events, circuses
and night clubsNone 12%
a Under the regulation of the Law on Tax Equity administered by the Ministry of Finance.
Source:  WTO Secretariat estimates based on data provided by the Honduran authorities.
40. Pursuant to the Sales Tax Law (Decree No. 24 of 20 December 1963) and the amendments
thereto, sales of domestic products and imports are subject to a sales tax.  The taxable base for
domestic products (goods and services) is their value, exclusive of direct financing costs, insurance,
transport costs, commission and security.  The taxable base for imported products is their c.i.f. value
plus customs duties, selective consumption tax, specific taxes and other import charges.  According toArticle 6 of the Law on Tax Equity (Decree No. 51-2003 of 3 April 2003), "in the case of beer,
sparkling water and soft beverages, the [sales] tax shall apply to the selling price at the distribution
stage, inclusive of the value of the production and consumption tax".  In the case of cigarettes andHonduras WT/TPR/S/120
Page 45
other tobacco products, "the [sales] tax shall be calculated on the basis of the wholesale price minus
the production and consumption tax"14.  The sales tax applicable to imports of sparkling and soft
beverages, beer, spirits (" aguardiente "), blended spirits and other alcoholic beverages and cigarettes is
apparently calculated on the basis of the price at which the corresponding domestic product is sold to
the distributor (or wholesaler)15.
41. Goods and services intended for export are taxed at a zero rate.  Producers may request a
refund of the sales tax they paid when they purchased the inputs and services used to produce such
products.  Non-governmental and private non-pr ofit-making organizations, municipalities and
members of the diplomatic corps who have been ac credited by the Government of Honduras are also
entitled to sales tax refunds.
42. Domestically-produced flowers are exempt from sales tax.  Furthermore, used goods sold on
the domestic market are not subject to this tax, unless the goods are imported.
43. The selective consumption tax applies to some 120 products, including tea, wine, olive oil,
fish preparations and conserves, caviar, beauty pr oducts, jewellery, microwave ovens and certain toys.
The rate of the selective consumption tax was reduced from 20 per cent to 10 per cent when the Law
on Financial Stability and Social Protection (Decree No. 194-2002) entered into force in June 2002.
44. The domestic production and import of sparkling beverages, beer, rum, blended spirits, spirits
("aguardiente "), wine and cigarettes are subject to the production and consumption tax.  With the
entry into force of the Law on Tax Equity, the rates of this tax, which were ad valorem , became
specific (see Table III.4).  The Law on Tax Equity also introduced a tax on the sale of domestically-
produced and imported cigarettes equivalent to 45 per cent of the final consumer price (exclusive of
sales tax) published by cigarette producers and importers in the Official Journal and in a widely
circulated national newspaper.
45. In Honduras, certain services such as tourism and insurance premiums are also taxed (see
Table III.4).
46. In 2001, the total revenue from the Honduran sales, production and consumption and selective
consumption taxes amounted to just over L12,630 million (approximately US$807 million, using the
average exchange rate in 2001), equivalent to 70 per cent of the total tax revenue.  Approximately20 per cent was generated by imports.
(vii) Import licensing, permits and other import requirements
47. Honduras has notified the WTO that licences are not required to import goods into the
country
16.
48. Imports of certain goods are subject to the non-automatic procedures described in Table III.5.
None of these has been notified to the WTO, nor ha s Honduras replied to the questionnaire referred to
in Article 7 of the WTO Agreement on Import Licensing Procedures17.
                                                     
14 Article 6 of the Law on Tax Equity.
15 Ministry of Finance (3 July 2002), Instrucción Técnica Tributana .
16 WTO document G/LIC/N/1/HND/1 of 3 December 1996.
17 The questionnaire on import licensing proced ures appears in WTO document G/LIC/3 of
7 November 1995.WT/TPR/S/120 Trade Policy Review
Page 46
Table III.5
Main import procedures and documents, May 2003
Product Procedure or document Responsible entity Waiting time Legal basis
Food and beverages Sanitary registration Ministry of Health 30 days Health Code and Regulations
on the Sanitary Control of
Foodstuffs
Animals, plants and their by-productsPlant or animal health
import authorizationSENASA 1 day Decision No. 1618-97 and
Central American Customs
Regulations
Medicines Sanitary registration Ministry of Health 30 days Health Code, Regulations on
the Registration of Medicines
and Regulations on Drugs
and Narcotics
Cosmetics Sanitary registration Ministry of Health 30 days Health Code, Regulations on
the Registration of Medicines
Hazardous chemicalsubstancesSanitary registration Ministry of Health .. ..
Seeds Registration of the importer SENASA 30 minutes Decision No. 1942 and
Resolution No. 37-00
Veterinary products
(pesticides, pharmaceutical
and biological products, food
supplements, raw materials)(1) Registration SENASA 24 working days Executive Decision No.  08-
96
(2) Animal health permit SENASA 72 business hours Executive Decision No.  08-
96
Biotechnological products Registration SENASA 24 working days Executive Decision No. 08-
96 and Decision No. 1570-98
Pesticides (agrochemical,
biological, biotechnological
or related substances)(1) Registration SENASA 1 month Decision No. 942-98
(2) Business permit SENASA 1 month Decision No. 642-98
(3) Authorization SENASA 1 month Decision No. 642-98
(4) Import authorization SENASA 24 hours Decree No. 157-94
.. No data available.
Source : WTO Secretariat on the basis of information from the TRAINS database  of the United Nations Conference on
Trade and Development (UNCTAD) (July 2000) and information provided by the Honduran authorities.
49. Imports of certain toxic pesticides and other hazardous chemicals are subject to the prior
informed consent procedure established by the Rotterdam Convention, while imports of specimens of
wild flora and fauna are subject to a licensing  system in accordance with the Convention on
International Trade in Endangered Species of Wild Fauna and Flora.
(viii) Prohibitions and other restrictions
50. The import of a certain number of products is prohibited in Honduras on grounds of health,
safety, public morality or environmental protection.  The import of drugs, narcotics, psychotropics
and pornography is prohibited.  The Ministry of Security, the Armed Forces and Weaponry is the onlybody empowered to import and authorize the import of military weapons, revolvers, pistols and other
firearms and similar devices under tariff headings 9301, 9302.0000 and 9303.
(ix) Anti-dumping and countervailing measures
51. Since 1995, Honduras has regularly notified the WTO Committees on Anti-Dumping
Practices and on Subsidies and Countervailing Measures that it has not applied anti-dumping orcountervailing duties.  The authorities have indicated that they have received requests for dumping
investigations into biscuits, alcohols, sugar and wooden toothpicks.  None of these requests led to the
initiation of an investigation.Honduras WT/TPR/S/120
Page 47
52. The instruments that form the Honduran legal framework on anti-dumping and countervailing
measures are:  the Agreement on Implementation of Article VI of the General Agreement on Tariffs
and Trade (GATT) 1994, the WTO Agreement on Subsidies and Countervailing Measures, the
Central American Regulations on Unfair Business Practices18, the Free-Trade Agreement between
Mexico and El Salvador, Guatemala and Honduras, and the Free-Trade Agreement between Central
America and the Dominican Republic.  Honduras has notified the WTO of its laws and regulations inthat regard and has replied to the questions formulated by some Members in connection with that
notification
19.
53. One of the explicit objectives of the Central American Regulations on Unfair Business
Practices is "to develop the provisions established in the WTO Agreements20".  The Regulations
govern the application of anti-dumping or c ountervailing measures between CACM members and
between those members and non-member countries.  When a member of the CACM adopts an anti-
dumping or countervailing measure against another member, the latter may submit a complaint to the
Executive Committee for Economic Integration, which may request the Secretariat for Central
American Economic Integration (SIECA) for in formation on the case before formulating a
recommendation.
54. The Regulations also give CACM member countries affected by exports of dumped or
subsidized goods to another member country the opportunity to request the SIECA to initiate a
regional procedure21.  In such cases, the SIECA is responsible for conducting the investigation when
the country importing the dumped or subsidized products does not initiate an investigation within a
specific period.  After concluding its investigation, the SIECA submits its recommendations to the
Executive Committee for Economic Integration, which determines what measures should be taken.
According to the authorities, at May 2003, there ha d been no regional procedures involving Honduras.
55. The Directorate-General of Economic Integration and Trade Policy of the Ministry of
Industry and Trade is the authority responsible for initiating and carrying out investigations into anti-
dumping and countervailing measures.
(x) Safeguard measures
56. Since the entry into force of the Marrakesh Agreement, Honduras has not applied any
safeguard measures, nor has it initiated any procedures in that regard.
57. The WTO Agreement on Safeguards and the Central American Regulations on Safeguard
Measures22 form the Honduran legal framework on safeguards.  Honduras has notified the WTO of its
                                                     
18 Resolution No. 12-95 (COMRIEDRE II) of 12 December 1995.
19 The Honduran notification appears in WTO document G/ADP/N/1/HND/1 of 29 March 1995.  The
questions are contained in the following WTO documents: G/ADP/W/202-G/SCM/W/209 of 28 November1995 and G/ADP/W/194-G/SCM/W/201 of 24 November 1995.  The answers are contained in WTO documentsG/ADP/W/241-G/SCM/W/251 of 5 January 1996 and G/ADP/W/242-G/SCM/W/252 of 5 January 1996.
20 Article 2 of the Central American Regulations on Unfair Business Practices.
21 Chapter III of the Central American Regulations on Unfair Business Practices.
22 Resolution No. 19-96 (COMRIEDRE IV) of 22 May 1996.WT/TPR/S/120 Trade Policy Review
Page 48
relevant legislation and has replied to the pertinent questions put by WTO Members23.  The Free-
Trade Agreement between Mexico and El Salvador, Guatemala and Honduras and the Free-Trade
Agreement between Central America and the Do minican Republic also contain provisions on
safeguards.
58. The Central American Regulations on Safeguard Measures, whose aim is to develop
provisions to implement Article XIX of the GATT 1994, governs the application of safeguardmeasures between CACM members and "third parties", i.e. countries that do not belong to the
CACM.  The Regulations establish that the Council of Ministers for Economic Integration may veto
the application of a provisional or definitive safeguard measure adopted by a member country
24.
Unlike the Central American Regulations on Unfair Business Practices, the Central American
Regulations on Safeguard Measures do not give the SIECA any role in the investigation process.
59. In accordance with Chapter VIII of the Free-Trade Agreement between Mexico and El
Salvador, Guatemala and Honduras, when one of the parties to the Agreement adopts safeguard
measures in conformity with WTO rules, it must exempt the other parties to the Agreement if their
imports are not "substantial" and do not contribute significantly to the injury.  For imports from a
party to be considered substantial, the party must be one of the main suppliers of the product underinvestigation.  The principal supplier countries are those which, combined, represent 80 per cent of
the total imports of the product under investigation in the importing party.
60. The authority responsible for carrying out safeguard investigations is the Directorate-General
of Economic Integration and Trade Policy of the Ministry of Industry and Trade.
61. Honduras has reserved, but not used, the right to apply the transitional safeguard mechanism
allowed by the provisions of the WT O Agreement on Textiles and Clothing
25.
(xi) Standards and other technical requirements
(a) Standards and technical requirements
62. In Honduras, the main legal provisions relating to standardization, metrology, certification
and verification are the Consumer Protection Law (Decree No. 41-89 of 7 April 1989) and its
Regulations (Decision No. 264-89) and the WTO Agreement on Technical Barriers to Trade (TBT).
In accordance with Article 15.2 of the TBT Agreement, Honduras has indicated that the Agreementforms part of its domestic legislation
26.   None of the Honduran institutions involved in
standardization activities has notified the WTO of its acceptance of the TBT Code of Good Practice
for the Preparation, Adoption and Application of Standards.
63. Honduras applies the Central American Regulations on Standardization Measures, Metrology
and Authorization Procedures27.  The Free-Trade Agreement between Mexico and El Salvador,
                                                     
23 The notifications by Honduras are contained in WTO documents G/SG/N/1/HND/1 and
G/SG/N/1/HND/2 of 29 March 1995 and 19 June 1997 respectively.  Replies by Honduras to the questions putby members are contained in WTO document G/SG/Q1/HND/3 of 26 January 1998.
24 WTO document G/SG/Q1/HND/3 of 26 January 1998.
25 WTO document G/TMB/N/9 of 1 March 1995.
26 WTO document G/TBT/2/Add.50 of 22 October 1998.
27 Resolution No. 37-99 (COMIECO XII) of 17 September 1999.Honduras WT/TPR/S/120
Page 49
Guatemala and Honduras and the Free-Trade Agreement between Central America and the
Dominican Republic also contain provisions on standardization and metrology.
64. Under the Consumer Protection Law, the Ministry of Industry and Trade is responsible for
"setting and enforcement of quality standards, weights and measures regulations and efficiency
requirements that must be met by goods and services made available in Honduras"28.  The Law
provides for the establishment of an inter-inst itutional commission comprising representatives of
public, private and consumer organizations involved in standardization and quality control activities
to assist the Ministry of Industry and Trade in carrying out these tasks.  The inter-institutional
commission is empowered, inter alia , to formulate and coordinate standardization programmes at the
national level and to propose the adoption of technical regulations to the competent public bodies.
65. In March 2003, Honduras had 10 standards on sewage treatment and petroleum and chemical
products (see Table III.6).  A number of other standards were being developed.  All Honduran
standards are voluntary in nature.
66. As regards the formulation of Honduran standards, the authorities have indicated that the
inter-institutional commission comprises technica l working committees responsible for developing
specific draft standards.  Once a draft has been finalized, it is submitted for public consultation for aperiod of 60 days through a notice in the Official Journal and a nationally-circulated newspaper.  Any
comments received are transmitted to the technical committee for its consideration.  The inter-
institutional commission is responsible for approving draft standards.
67. According to the authorities, when the aim of an approved standard is the protection of
human, animal or plant health or consumer protection, the inter-institutional commission proposes to
the competent State authority that the standard be converted into a regulation, which is mandatory.
Regulations may also be formulated at the Centra l American level.  There is no exhaustive list of
Honduran regulations.  At June 2003, Honduras had not notified the WTO of any technical
regulations.
68. Honduras has regulations - also applicable to imported products - requiring that certain
minerals or vitamins be added to products such as salt, sugar and flour
29.
                                                     
28 Article 5 of the Consumer Protection Law.
29 Law on the Fortification of Wheat Flour (Decree No. 307 of 18 May 1960);  Regulation on the
Fortification of Wheat Flour (Decision No. 944 of 22 November 1960);  Law on the Fortification of Sugar withVitamin A (Decree No. 385 of 28 October 1976);  Regulations of the Law on the Fortification of Sugar withVitamin A (Decree No. 1761 of 1 January 1978);  Salt Iodization Law (Decree No. 304 of 16 May 1960);Regulations for the Implementation of Decree No. 304 (Decision No. 531 of 16 June 1961).WT/TPR/S/120 Trade Policy Review
Page 50
Table III.6
Standards and standardization projects in Honduras, March 2003
Name of the technical
working committee
(CTT) responsible for
developing thestandardization projectArea of work References Situation in March 2003
Petroleum products Petroleum-based fuels ISO, ICAITI, ASTM, SAE Honduran standard
Petroleum products Lubricating oils for petrol and
diesel enginesISO, ICAITI, ASTM, SAE Honduran standard
Sewage treatment Plastics; PVC tubes, classified
according to pressureCAPRE/ANDESAPA, ISO,
ASTMHonduran standard
Sewage treatment Plastics;  rigid PVC tubes for
supplying waterCAPRE/ANDESAPA, ISO,
ASTMHonduran standard
Sewage treatment Inspection hole covers CAPRE/ANDESAPA, ISO,
ASTMHonduran standard
Sewage treatment Disinfection of main water-
transporting pipelinesCAPRE/ANDESAPA, ISO,
ASTMHonduran standard
Chemical products Hydrated chemical lime used for
water purificationCAPRE/ANDESAPA,
AWWA, ANSIHonduran standard
Chemical products Aluminium sulphate used for
water purification and for treatingresidual, domestic and industrial
waterCAPRE/ANDESAPA,
AWWA, ANSIHonduran standard
Chemical products Hypochlorites used for  water
purificationCAPRE/ANDESAPA,
AWWA, ANSIHonduran standard
Labelling Labelling of packaging for water
and iceCodex Alimentarius, FDA,
national legislationHonduran standard
Metrology Products for calibrating fuel
pumpsAwaiting approval
Quality Management Prize Quality management prize Veracruz Prize for Quality;
Mission Statement of theHonduran Institute for Quality;
Argentine Prize for Quality;
IberoAmerican Prize for
QualityAwaiting approval
Poultry farming Absorption of water and
tripolyphosphates in chicken meatCodex Alimentarius, ICAITI,
FDACTT meetings
Sewage treatment Concrete pipes for sewage and
drainageCAPRE/ANDESAPA, ISO,
ASTMCTT meetings
Sewage treatment Disinfection of main water-
transporting pipelinesCAPRE/ANDESAPA, ISO,
ASTMCTT meetings
Sewage treatment Pipes, attachments and
accessories for sewage and
drainageCAPRE/ANDESAPA, ISO,
ASTMCTT meetings
Building materials Steel bars ASTM, ICAITI CTT meetings
Building materials Portland cement ASTM, ICAITI CTT meetings
Environment ISO Series 14000 ISO CTT meetings
Quality management ISO Series 9000 ISO CTT meetings
Metrology International System of Units IRAM, INTECO, ICAITI,
ASTM, FDA, NOMCTT meetings
Metrology Flow meters CAPRE/ANDESAPA CTT meetings
Table III.6 (cont'd)Honduras WT/TPR/S/120
Page 51
Name of the technical
working committee
(CTT) responsible fordeveloping thestandardization projectArea of work References Situation in March 2003
Metrology Packaged products; verification
of net mass and drained mass, and
the permissible variations thereinICAITI, NIST CTT meetings
Micronutrients Boiled corn flour Codex Alimentarius CTT meetings
Micronutrients Salt Codex Alimentarius, ICAITI,
COGUANOR, NCRCTT meetings
Micronutrients Sugar Codex Alimentarius, ICAITI,
domestic legislation,WHO/PHO, INCAP,
NORDOMCTT meetings
General matters Presentation of the technical
regulations or standards of the
Central American Customs UnionISO Meetings of the Central American
Customs Union
Source: WTO Secretariat estimates based on data provided by the Honduran authorities.
Acronyms:
ANDESAPA: Andean Association of Drinking Water and Sanitation Companies and Institutions
ASTM: American Society for Testing and Materials
CAPRE: Regional Coordinating Committee for Drinking Water and Sanitation Institutions in Central America,
Panama and the Dominican Republic
COGUANOR:  Guatemalan Standards Commission
FDA: United States Food and Drug AdministrationIAAC:  Interamerican Accreditation Cooperation
ICAITI:  Central American Institute of Industrial Research and Technology
INCAP:  Institute of Nutrition of Central America and PanamaINTECO:  Costa Rican Institute of Technical Standards
IRAM:  Argentine Standardization Institute
ISO:  International Organization for Standardization
NCR:  Costa Rican Standard
NOM:  Mexican Official StandardNORDOM:  Dominican Standard
NSO:  Salvadoran Official Standard
WHO:  World Health OrganizationPHO:  Pan American Health Organization
SAE:  Society of Automotive Engineers
UNIT:  Uruguayan Institute of Technical Standards
69. Random border checks are made by the Ministry of Agriculture and Livestock, the Ministry
of Health and the Ministry of Finance to ensure  that imports comply with Honduran regulations.
70. As regards the conformity assessment infrastructure, Honduras has seven inspection and
testing bodies, five of which are in the public sector and two mixed.  In general, Honduras accepts the
results of other countries’ testing and inspection procedures30.  There is no product certification body
nor any national programme for laboratory accreditation.
71. Honduras, through the Honduran Science and Te chnology Council (COHCIT), is a subscriber
member of the International Organization for Standardization (ISO)31 and a member of the Pan
American Commission for Technical Standards (COPANT) and the International Telecommunication
                                                     
30 Carmiña Lodoño (1999), Free Trade Area of the Americas (FTAA)  Conformity Assessment
Infrastructure , NIST Special Publication 941, July.
31 ISO established the subscriber membership cat egory for countries with very small economies.
Subscriber members pay reduced membership fees.WT/TPR/S/120 Trade Policy Review
Page 52
Union (ITU).  It also belongs to the Interameri can Metrology System.  In addition, COHCIT is an
associate member of the Interamerican Accreditation Cooperation.
72. The authorities have indicated that the Directorate-General of Economic Integration and
Trade Policy of the Ministry of Industry and Trade is responsible for implementing the notification
commitments made by Honduras to the WTO.  The Directorate-General of Production and
Consumption of the Ministry of Industry and Tr ade serves as the enquiry point for technical
regulations, standards and conformity assessment procedures in all areas except those relating to food
and beverages and pharmaceutical, chemical, cosmetic and biological products.  The enquiry points
for these sectors are, respectively, the Department of Foodstuffs Control and the Pharmaceuticals
Department, both of which are attached to the Ministry of Health.
(b) Marking, labelling and packaging
73. The Consumer Protection Law stipulates that packaged products marketed in Honduras must
bear printed information providing the name of the product, the manufacturer's name, the country of
origin, the public retail price, date of preparation and expiry, contents, weight or measure, ingredients
and a warning if the product could cause disease or  addiction.  In addition, Honduras has special
regulations on the labelling of certain products such as foodstuffs, meat, fish, milk and dairy products,beverages, seeds and veterinary products (see Table AIII.1).
74. In mid-2003, in the context of the Central American economic integration process, labelling
standards for pharmaceutical products for human use, cigarettes, distilled and fermented alcoholic
beverages and pre-packaged food were under consideration.
(c) Sanitary and phytosanitary requirements
75. The main provisions concerning sanitary and phytosanitary measures in Honduras are set out
in Table III.7.  In addition, the WTO Agreement on the Application of Sanitary and PhytosanitaryMeasures (SPS Agreement), the Central American Regulations on Sanitary and Phytosanitary
Measures and Procedures, the Free-Trade Agreement between Mexico and the Republics of
El Salvador, Guatemala and Honduras and the Fr ee-Trade Agreement between Central America and
the Dominican Republic form part of the Honduran legal framework in this area.
76. The Health Code stipulates that the Ministry of  Health is responsible for determining national
health policy and for standardizing, planning and coordinating all public and private activities related
to health.  This includes organizing the control, inspection and monitoring services that are necessary
in order to comply with domestic provisions on food and beverages.  The Code empowers the
Ministry to adopt measures at ports and borders and in transit areas to prevent the introduction into
Honduras or the spread abroad of diseases that could be transmitted to humans.Honduras WT/TPR/S/120
Page 53
Table III.7
Principal sanitary and phytosanitary laws and regulations of Honduras, May 2003
Title Legal instrument Date of entry into force
Health Code Decree No. 65-91 28 May 1991
Regulations on the Sanitary Control of Foodstuffs Decision No. 0077-93 8 June 1993
Regulations on the Sanitary Control of Street Food .. 8 March 1993
Regulations on the Health Registration of Chemical, Pharmaceutical,
Cosmetic and Biological ProductsDecision No. 2368 21 August 1992
Regulations for Pharmaceutical Establishments Decision No. 344 3 December 1991
General Regulations on Environmental Health Decision No. 0094 11 June 1997
Law on Plant and Animal Health Decree No. 157-94 4 November 1994
Regulations on Agricultural Quarantine Decision No. 1618-97 11 March 1998
Regulations on Diagnostics, Surveillance and Phytosanitary Campaigns Decision No. 002-98 4 November 1998
Regulations on the Registration, Use and Control of Pesticides and Like
SubstancesDecision No. 642-98 12 March 1998
Seeds Law Decree No.1046 15 July 1980
Regulations of the Seeds Law Decision No. 1942 ..
Regulations on Animal Health Inspection and Certification of Fish and
Aquatic ProductsDecision No. 1081 23 September 1999
Regulations on the Sanitary Inspection and Certification of Milk and
Dairy ProductsDecision No. 656-01 9 July 2001
Regulations on the Inspection of Meat and Meat Products Decision No. 078-00 15 March 2000
Regulations on the Prevention, Control and Eradication of Velogenic
Newcastle DiseaseDecision No. 998-99 3 September 1999
Regulations for the Campaign to Prevent, Control and Eradicate Avian
SalmonellosisDecision No. 997-99 3 September 1999
Regulations on the Control and Eradication of Bovine Brucellosis and
TuberculosisDecision No. 1735-97 15 October 1997
SENASA General Regulations Decision No. 588-01 27 June 2001
Regulations on Charges for the Services Provided by SENASA Decision No. 985-97 21 May 1997
Regulations on Biosafety with Emphasis on Transgenic plants Decision No. 1570-98 ..
Resolution on the Preparation of a Pest Risk Analysis Resolution No. 013-
2001..
.. No data available.
Source : Information provided by the Honduran authorities.
77. The aim of the Law on Plant and Animal Healt h, is "to ensure the protection and safety of
plants and animals and protection of their products and by-products against the harmful action of pests
and diseases of economic, quarantine and human significance"32.  The Law gives the National
Agricultural Health Service (SENASA), which is attached to the Ministry of Agriculture andLivestock, responsibility for implementing and monitoring compliance with the provisions of the
Law.  Its functions include, inter alia :  the inspection and certification of products of animal or plant
origin and the facilities in which they are produced, both in Honduras and abroad;  the quarantine
control of imports and exports; the sanitary and quality control of seeds, biological products,
chemicals, pharmaceuticals and foodstuffs for animal and plant use;  the control and supervision ofequipment used for agricultural inputs;  the adoption and implementation of plant and animal health
measures for national and international trade in plants, animals and related products;  and the signing
of agreements with countries that produce plants, animals and their by-products for the Honduran
market recognizing sites and facilities as being in compliance with the requirements set by SENASA.
                                                     
32 Article 1 of the Law on Plant and Animal Health.WT/TPR/S/120 Trade Policy Review
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78. In order to carry out these functions, SENASA is empowered, inter alia :  to issue, in
coordination with the Ministry of Public Health, the regulatory procedures and standards for the
registration, import, manufacture, formulation, packaging, containers, transportation, storage, sale, use
and export of pesticides, veterinary products, animal feed, seeds and agrochemical, biological,
biotechnological or like products;  to ban or restrict the import, production, sale and use of products or
materials for animal or agricultural use which prove to be highly hazardous to human health,production and the environment;  and to confiscate, return, treat, destroy or impose quarantine on
products that, on grounds of duly substantiated doubts, could pose a risk to human health, agriculture
or the environment.
79. Decision No. 0141 of 4 March 1992 created the National Codex Alimentarius Committee of
Honduras, which is responsible, inter alia , for recommending the adoption in Honduras of standards
relating to food hygiene practices and other issues referred by the Codex Alimentarius Commission.
The Committee is attached to the Ministry of Agriculture and Livestock and comprises two
representatives of each of the following entities:  the Ministry of Health, the Ministry of Natural
Resources and the Environment, the Ministry of Industry and Trade, the Ministry of Agriculture and
Livestock, and the Central Bank of Honduras.  The Committee also comprises two representatives ofthe private sector and higher education, as well as a representative of the National Environment
Committee.
80. The agricultural quarantine officials of the Ministry of Agriculture and Livestock monitor
compliance with plant and animal health regulations at the border.  In this task, they receive the
backing of the authorities of the Executive Directorate of Revenue, which are obliged to withhold
imports that do not fulfil the relevant requirements and to notify the agricultural quarantine officials.
Products that do not meet the plant and animal health regulations are placed in quarantine or returnedto their country of origin, slaughtered or destroyed.  Under Article 15 of the Regulations on
Agricultural Quarantine, SENASA has the power to take provisional precautionary measures such as
entry restrictions and rejection "in cases where there is no scientific or technical evidence to suggest
that a pest or disease could be controlled with the applicable plant or animal health measures".
Animals, plants, products and by-products of animal or plant origin and products and inputs foragricultural use may enter Honduran territory only at the points authorized by SENASA.  Means of
transport coming into Honduras are also subject to  plant and animal health inspections and control.
81. Honduras applies plant and animal health measures to imports of various products.  With
regard to the import of organisms obtained thr ough biotechnology, the Regulations on Agricultural
Quarantine assign SENASA the task of establishing the relevant regulations.  In order to register andimport veterinary products prepared using biotechnol ogy, specific information must be supplied about
the processing procedures and about the "official control measures", including a copy of the
legislation in the manufacturing country
33.
82. Between January 1995 and December 2002, Honduras notified four sanitary and
phytosanitary measures to the WTO.  Three of these measures concern trade in poultry and poultryproducts and by-products
34.  The fourth applies to rice in the husk35.  The authorities have indicated
that the latter measure is not in force.
                                                     
33 Article 19 of the Regulations on the Control of Veterinary Products.
34 WTO documents G/SPS/N/HND/2, G/SPS/ N/HND/3 and G/SPS/N/HND/4 of 29 April 1997,
12 October 2000 and 9 May 2001, respectively.
35 WTO document G/SPS/N/HND/1 of 29 November 1996.Honduras WT/TPR/S/120
Page 55
83. Two WTO Members drew the attention of the Committee on Sanitary and Phytosanitary
Measures to the difficulties of market access which, in their view, are the result of certain sanitary
measures adopted by Honduras for the import of poultry products.  The United States of America
complained of alleged discrimination between the standards for control of salmonella applied to
imported versus domestic poultry products36.  Costa Rica questioned the consistency of certain
sanitary measures adopted by Honduras allowing the entry into Honduras of poultry products onlyfrom countries free of the four avian diseases with the rules laid down in the SPS Agreement
37.
84. In the context of the Central American economic integration process, various CACM
members have identified the barriers to trade that result from certain Honduran measures, including
those relating to the sanitary and phytosanitary certification of dairy products and potatoes and import
licensing for chicken sausages and powdered milk38.
85. Honduras has not signed mutual recognition agreements on sanitary and phytosanitary
measures.  The authorities have indicated that, in the context of the Central American economic
integration process, negotiations are being held with a view to achieving mutual recognition of disease
surveillance and control procedures.
86. In the framework of the WTO Agreement on the Application of Sanitary and Phytosanitary
Measures, Honduras appointed the Ministry of Industry and Trade as the national notification
authority and the Ministry of Agriculture and Livestock as the national enquiry point39.  Honduras is a
member of the Codex Alimentarius Commission, the Office International des Epizooties, the
International Plant Protection Convention and the Regional International Agricultural Health
Organization.
(3) MEASURES AFFECTING EXPORTS
(i) Registration and documentation
87. Firms exporting from Honduras are required to fill out a Central Bank export declaration,
which must be submitted together with the commercial invoice and evidence of their tax registration.
A firm exporting for the first time must also include its deed of incorporation.
88. The other export requirements depend on the product and the country of destination.  If the
country of destination belongs to the CACM, the exporter must submit the Central American singlecustoms form.  For exports under the other agreements or preferential regimes benefiting Honduras, a
certificate of origin is required.  Exports to countries outside the CACM must be accompanied by the
single customs declaration.
89. A phytosanitary or animal health certificate is required for exports of products of plant or
animal origin and a CITES certificate may be necessary in some cases.  A Ministry of Healthcertificate authorizing sale and consumption is required for exports of food products;  this is available
only to firms holding a valid sanitary licence and listed in the sanitary register.  Coffee bean exports
                                                     
36 WTO document G/SPS/R/6 of 14 November 1996.
37 WTO documents G/SPS/GEN/347/Rev.1 and G/SPS/GEN/362 of 22 November 2002.
38 Secretariat for Central American Economic Integration (2003), Measures Against Intraregional Free
Trade , document available at www.sieca.org.gt (site visited on 5 May 2003).
39 WTO documents G/SPS/NNA/4 and G/SPS/ENQ/14 of 30 October 2002.WT/TPR/S/120 Trade Policy Review
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must be accompanied by the notice of sale, the certificates of export and origin issued by the
Honduran Coffee Institute and an export certificate from the International Coffee Organization.
Exports of certain products are subject to special permits issued by the Ministry of Trade and Industry
(see section (iii)).
90. Export procedures may be conducted through a single window – the Export Processing Centre
(CENTREX) – in which the Ministry of Agriculture and Livestock, the Central Bank, the Ministry ofIndustry and Trade and the Executive Directorate of Revenue are represented.  CENTREX has single
windows in the cities of Tegucigalpa and San Pedro Sula.
(ii) Taxes and minimum prices
91. Exports are not subject to tax.  The general export tax was abolished in 1996.  In 1998, the
Law to Promote Production, Competitiveness and Support for Human Development (Decree No. 131-
98 of 30 April 1998) abolished the export tax on shrimps, lobsters, and other molluscs and
crustaceans, live animals, and cane and beet sugar.  The law imposing a tax of US$0.04 per 40-pound
net weight box of bananas for export was abolished in 2000.
92. According to the authorities, Honduras  does not apply minimum export prices.
(iii) Prohibitions, licences and other restrictions
93. Under the state of emergency declared by the Government as a result of the damage caused
by Hurricane Mitch in October 1998, the Ministry of Industry and Trade issued various decisions
banning exports of staple grains and other products
40, but these bans have since been lifted.41
94. Decree No. 323-98 of 18 December 1998 prohibits th e export of wood from certain forests
that has not been incorporated into finished products, furniture or manufactured furniture parts.  It also
bans the export of all forestry products from certain forests without due approval from the State Forest
Administration.
95. As a contracting party to the International Convention on International Trade in Endangered
Species of Wild Fauna and Flora (CITES), Honduras has undertaken to prohibit exports of certain
plants and animals threatened with extinction, in accordance with the Convention.
96. A special permit from the Ministry of Industry and Trade is required for exporting cement to
the CACM.
(iv) Subsidies, free-trade zones (FTZs) and the like
97. Honduras has notified the WTO that it did not apply any export subsidies on agricultural
products over the period 1998 to 2001.42
98. Honduras operates two export promotion schemes.  The first is based on the Law Establishing
the Free Zone of Puerto Cortés (Decree No. 356 of 19 July 1976) and the Law Establishing Industrial
                                                     
40 See Decisions Nos 269-B-98, 269-C-98, 269-D-98, 269-E-98 and 269-F-98.
41 See Decisions Nos 317-98, 85-99 and 140-99.
42 WTO documents G/AG/N/HND/11 and G/AG/N/HND/12 of 19 April 2002.Honduras WT/TPR/S/120
Page 57
Export Processing Zones (Decree No. 37-87 of 7 April 1987).  The second is based on the Temporary
Import Regime (Decree No. 37 of 20 December 1984).
99. Support for exports under the FTZ scheme and the temporary import regime is subject to the
disciplines on export subsidies in the Agreement on Subsidies and Countervailing Measures
(SCM Agreement).  As a developing country listed  in Annex VII(b) to the Agreement, Honduras is
exempt from such disciplines until its per capita GNP reaches US$1,000 in constant 1990 dollars forthree consecutive years.
43  In 1999, the country's per capita GNP in constant 1990 dollars rose to
US$681.44
100. Considering that its GNP might possibly exceed the maximum specified in the
SCM Agreement, in December 2001 Honduras reserved its right to use the special procedure agreed
at the Doha Ministerial Conference, in order to maintain export subsidies under its FTZ, industrialprocessing and temporary import regimes.
45  This procedure allows certain WTO developing country
Members to request an extension of the transition period for phasing out their export subsidies.46
Thus, Honduras would have until 2007 (or 2009, should it request a further extension) in order to
bring its FTZ, industrial processing and temporary import regimes into conformity with the
SCM Agreement, even if its per capita GNP were to reach US$1,000 before the end of 2007.
(a) FTZs and industrial processing zones
101. The legal basis for the FTZ scheme was established in July 1976 with the adoption of the Law
Establishing the Free Zone of Puerto Cortés.  With the aim of "facilitating domestic and international
trade and industry", the Law grants a number of tax exemptions to domestic or foreign investors that
set up "commercial and industrial enterprises [...] engaged primarily in export and related or
complementary activities" in the customs area (free-trade zone) established for that purpose in the
municipality of Puerto Cortés, in the north-eas t of the country.  The Law to Promote Production,
Competitiveness and Support for Human Development (Decree No. 131-98 of 20 May 1998)
amended the Law Establishing the Free Zone of Puerto Cortés so as to allow the creation of FTZs in
any part of the country.
102. In order to be regarded as "engaged primarily in export activities" and authorized to set up in
an FTZ, enterprises must be involved in "the mechanical, physical or chemical processing of rawmaterials, semi-processed or finished goods" and export at least 95 per cent of their annual output.  In
                                                     
43 Regarding the inclusion of Honduras in Annex VII(b) to the SCM Agreement, see WTO
document WLI/1000 of 20 January 2001.
44 See Appendix 2 to WTO document G/SCM/38 of 26 October 2001.
45 The notification by Honduras is contained in WTO document G/SCM/N/74/HND of
4 December 2001.  The procedure for granting extensions to certain developing country Members, as providedin Article 27.4, is set forth in WTO document G/SCM/39 of 20 November 2001.
46 The programmes officially eligible for exte nsion under this procedure are export subsidy
programmes:  (a) in the form of full or partial exemptions from import duties and domestic taxes;  (b) that were
already in existence on or before 1 September 2001;  (c) that are provided by developing country Members
whose world market share in exports of goods did not exceed 0.1 per cent and whose GNP for the year 2000, aspublished by the World Bank, was no higher than US$20 billion;  (d) that are othe rwise entitled to request an
extension under Article 27.4;  and (e) to which the procedure established by the Doha Ministerial Conferenceapplies.WT/TPR/S/120 Trade Policy Review
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the case of commercial enterprises, an enterprise is considered to be "primarily engaged in export
activities" where it allocates "no less than 50 per cent of its annual sales to export or re-export".47
103. Under the Law Establishing the Free Zone of Puerto Cortés, including its amendments and
regulations, goods entering FTZs are exempt from customs duties, charges, surcharges, domestic
consumption taxes and other taxes, fees and levies related to customs import and export operations.
Likewise, no taxes are applied on "sales and production" generated in FTZs or on the profits of FTZ-based enterprises.  These exemptions are granted for an unlimited period of time.
104. The Regulations of the Law on Free Zones requires FTZ-based enterprises to comply with
Honduran health and environmental regulations and to grant their employees all the benefits provided
under the current labour legislation.
105. The sale of goods or services from the FTZs to Honduran customs territory is subject to
payment of customs duties and other taxes and must not exceed the statutory limits, i.e. 5 per cent of
total annual output for industrial enterprises and 50 per cent of total annual sales for commercial
enterprises.  According to the au thorities, the customs duties payable are based on the value of each
product, including value added in the FTZ.
106. FTZ-based enterprises also enjoy simplified customs procedures.  On entry into the country,
goods destined for an FTZ are not subject to the selection mechanism described in section 2(i) and are
delivered directly to the FTZ, on submission of the single customs declaration for free zones and
industrial export processing zones, the commercial invoice and the bill of lading.  When the goods
arrive in the zone, there is no need to go through a customs agent to obtain the entry permit, which is
issued by the FTZ customs authorities.
107. Exports are cleared by means of the single customs declaration for free zones and industrial
export processing zones and the commercial invoice.  Once the FTZ customs office has issued theexport permit, the Honduran customs office at the point of exit only checks for any irregularities
during the transit of the goods through Honduran customs territory.
108. Any private entity seeking to operate an FTZ is required to sign an operating agreement with
the Executive Directorate of Revenue.  Once the agreement has been concluded, the operator may
construct office buildings, factories, warehouses and other facilities;  lease property and plots of landfor the construction of such buildings;  and set up, contract and manage any public services needed in
the FTZ.  Profits generated by the activities of FTZ operators are free of taxes and fiscal and
municipal charges or levies for an unlimited period of time.
109. In addition to the FTZ scheme, Honduras has privately owned and administered industrial
processing zones, the organization, operation a nd control of which are regulated by the Law
Establishing Industrial Export Processing Zones and its regulations.
110. To set up in an industrial processing zone, domestic or foreign enterprises are required to
export their entire output.  Enterprises providing goods or services to enterprises inside the zone may
establish themselves there as well.
111. Industrial or commercial enterprises based in industrial processing zones enjoy the same tax
exemptions as FTZ enterprises for an unlimited pe riod of time.  Unlike FTZ operators, however,
whose benefits are granted for an indefinite period of time, enterprises operating in industrial
processing zones are exempt from income tax for 20 years and from municipal taxes for 10 years.
                                                     
47 Article 2 of the Regulations of the Law on Free Zones, Decision No. 81-99 of 29 July 1999.Honduras WT/TPR/S/120
Page 59
They may import goods free of duty and other taxes if the goods are "exclusively applied to or
incorporated in the development and exploitation" of the industrial processing zone, provided that the
goods are not produced in Honduras, and subject to authorization by the Ministry of Industry and
Trade.48
112. According to the authorities, en terprises in the industrial processing zones may export, for end
use or final consumption in Honduran customs territory, goods that have undergone any form ofprocessing and are not produced domestically, subject to authorization from the Ministry of Industry
and Trade and payment of the relevant customs duties and other taxes.
113. Any private entity seeking to establish and operate an industrial export processing zone is
required to apply for authorization from the Ministry of Industry and Trade.  It must provide evidence
inter alia  that its "sole purpose" is to operate such a zone, and that it has "the property required for the
purposes of the industrial export processing zone" and the technical and financial resources for the
"development of the necessary infrastructure [...] to create a minimum of 5,000 new jobs over a period
of five years".
49  The applicant must also carry out an economic study "justifying the establishment of
the [...] industrial export processing zone".50
114. In reviewing an application, the Ministry of Industry and Trade and, within its sphere of
competence the Ministry of Finance, must ensure inter alia  that the project is justified in the public
interest and by the general and local circumstances;  the enterprise has the capacity to provide users of
the industrial processing zone with the services needed to conduct their activities, including labour
services;  and that the project guarantees the security of the State's fiscal interests.
115. Pursuant to Article 23 of the Law Establishing Industrial Export Processing Zones, enterprises
located in such zones are required to grant their workers "all the benefits laid down in the existing
labour laws".  Moreover, "in order to be introduced into the industrial export processing zone, allmerchandise of domestic origin must fulfil all the requirements and formalities laid down in the
customs legislation and other Honduran laws and regulations".
51
(b) Temporary import regime
116. In addition to the free-trade zones, Honduras also uses the temporary import regime to
promote its exports.
117. The temporary import regime provides for the suspension of customs duties, the general sales
tax and other taxes and surcharges on the import of raw materials, semi-processed goods, packaging
and other inputs for producing goods and services for export, including to the Central American area
and the free zones.  Suspension of payment of the above taxes and charges also applies to imports of
machinery, equipment, tools, spare parts and accessories used exclusively to assemble, process,modify or produce articles intended for export, as well as sample books, instructional material,
patterns and models.  Enterprises that do not export their products but sell them to other Honduran
enterprises that incorporate them into export products are also eligible under the temporary export
regime.  The term "temporary" is not defined in the legislation.  According to the authorities, capital
                                                     
48 Article 11 of the Law Establishing Industrial Export Processing Zones.
49 Article 4 of the Law Establishing Industrial Export Processing Zones.
50 Article 6 of the Law Establishing Industrial Export Processing Zones.
51 Article 17 of the Law Establishing Industrial Export Processing Zones.WT/TPR/S/120 Trade Policy Review
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goods entering the country under the regime may remain in Honduras without paying customs duties
or the sales tax for an indefinite period, provided that they are not disposed of.
118. Imports of raw materials of agricultural, forest, livestock or marine origin are not free of duty
and other import taxes where such materials are produced in Honduras "under satisfactory
conditions".52
119. Simplified customs procedures apply to imports entering the country under the temporary
import regime.  The importer is required to present a temporary import certificate to the customs
authorities, indicating the tariff nomenclature an d the volume of the goods.  Once the customs
administration has approved the certificate and ascertained that the importer has deposited a guarantee
in the form of a promissory note, a customs bond, or a fixed or floating insurance policy in favour of
the State, the goods may enter the country.
120. Profits from exports under the temporary import regime used to be exempt from income tax
for a period of 10 years, but this fiscal benefit was abolished by the Law on the Restructuring of
Revenue Mechanisms (Decree No. 135-94 of 28 October 1994).
121. The Ministry of Industry and Trade is responsible for approving enterprises wishing to be
included in the temporary import regime.  It reviews each application in the light of the economicbenefits to Honduras in terms of job creation, wages, generation of value added, net foreign exchange
earnings, and vocational training.
(v) Financing, insurance and guarantees
122. In the context of this review, the authorities stated that Honduras had no official export
financing or insurance programmes.
123. The National Fund for Production and Housing (FONAPROVI), a second-tier public financial
institution established in 1997, operates the National Complementary Guarantee Fund (FONGAC),which guarantees up to L1 million (around US$57,370 at the May 2003 exchange rate) in agricultural
loans for the purchase of irrigation systems, agricultural machinery, facilities or working capital.  The
State finances up to 8 per cent of the cost of the complementary guarantee.  FONAPROVI also
manages the Land Access Programme Complementary Guarantee Fund, guaranteeing up to 30 per
cent of the amount of loans granted to small farmers for the purchase of land.
124. The Central American Bank for Economic Integration (CABEI) runs a variety of financial
support programmes for the promotion of Central American exports.  These programmes, whose main
features are described in Table III.8, are available to production sectors in Honduras through CABEI-
approved financial institutions.  Over the past six years, the CABEI has contributed around
US$210 million towards the financing of the Honduran export sector.
                                                     
52 Article 23 of the Regulations on the Temporary Import Regime, Decision No. 545-87 of 6 May 1987.Honduras WT/TPR/S/120
Page 61
Table III.8
Central American Bank for Economic Integration:  Export promotion programmes benefiting Honduras, May 2003
Title of
programmeDestination of
creditAmount Term Interest ratesTotal
disbursed up
to 31.12.2002
(US$)
Programme insupport of
Central American
productionsectors (PSEP)Fixed investment
projects and
working capital for
various sectors,including exportsectors80 per cent of the
project (100 per cent
for the purchase of
machinery orequipment to expandinstalled capacity)Fixed
investment:  up
to 8 years, with
a grace period ofup to 1 year6-month LIBOR
base rate, plus
CABEI and financial
intermediary'smarginsAround 150
million
Programme insupport ofCentral American
exportable
production(PAPECA)Working capital,
pre-and post-shipment, imports
of inputs, opening
/confirmation ofletters of creditand capital goodsUp to 100 per cent Up to 180 days
for short-termoperations;  up
to 3 years for
capital goods6-month LIBOR
base rate, plusCABEI and financial
intermediary's
marginsAround 50
million
Programme in
support of
Central Americanmicro- and small
enterprises
(PROMYPE)Export sectors Up to US$75,000
(small enterprises)
and up to US$10,000(micro-enterprises)Fixed
investment:  up
to 5 years;working capital:
up to 2 years,
with a 6-monthgrace periodMarket rates Around 5
million
Programme insupport of small
and medium
enterprises(ICDF)Export sectors Up to US$500,000;
up to 70 per cent for
the expansion of
installed capacityFixed
investment:  up
to 5 years;
working capital:up to 2 years,
with a 6-month
grace periodMarket rates Around 5
million
Source: WTO Secretariat, based on information provided by the CABEI.
(vi) Export promotion and marketing assistance
125. The Ministry of Industry and Trade has a Directorate-General of Foreign Trade and
Investment Promotion.  The Directorate-General is responsible, inter alia , for providing the private
sector with information on trade promotion events, including international fairs, trade missions and
training events;  making arrangements with international organizations and institutions involved in the
promotion of foreign trade for technical assistance for sectors with export potential;  developing
sector and product market profiles;  and advising domestic enterprises in search of markets andpossible strategic alliances.
126. The Ministry of Agriculture and Livestock has a Business Promotion Centre which, inter alia ,
organizes meetings between international entrepreneurs and local producers;  holds international trade
and marketing methodology seminars;  carries out market analyses for agricultural products;  and
provides marketing training for producers and other participants in the production chain.
127. Private export promotion bodies include the Foundation for Investment and Development of
Exports (FIDE) (see Chapter II(3)).  The FIDE keeps the Honduran Exporters Register, a database
listing around 600 Honduran companies wishing to export, and the Trade Information Centre in
Tegucigalpa, which supplies information on economic, legal and business matters to Honduran and
foreign enterprises.
53  Since 1999, the FIDE has been implementing a programme in support of the
production sector and small enterprises, under which it helps micro-, and small and medium
                                                     
53 The Honduran Exporters Register is available at:  www.hondurasinfo.hn.WT/TPR/S/120 Trade Policy Review
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enterprises to enhance their production processes, train their management and operational staff, and
raise funds.  The programme is due to be completed in August 2003.
(vii) Measures applied in third markets
128. Pursuant to Article 6 of the WTO Agreement on Textiles and Clothing, the United States and
Honduras reached an agreement, covering the period 1995 to early 1998, on restraint measures on
Honduran exports of cotton and man-made fibre underwear and women's and girls' wool coats.54
129. Honduras enjoys preferential access to various foreign markets under the Generalized System
of Preferences and the Caribbean Basin Initiative, which consists of a range of unilateral trade
preferences granted by the United States to several Central American and Caribbean countries
(see Chapter II(4)(ii)).
130. The United States has also allocated Honduras a little over 0.9 per cent of the in-quota share
of its tariff-rate quota for raw cane sugar for the period October 2002 to September 2003.55  Honduras'
share amounts to 10,530 metric tonnes.
131. In March 2003, Nicaragua temporarily suspended a discriminatory 35-per cent tax applied
since 1999 on imports from Honduras as a result of a border dispute.56
(4) OTHER MEASURES AFFECTING PRODUCTION AND TRADE
(i) Competition policy
132. Honduras' main statutory provisions govern ing competition are to be found in the
Constitution, the Commercial Code  (Rule No. 73-50 of 16 January 1950) , the Criminal Code (Decree
No. 144-83 of 23 August 1983) and the Cons umer Protection Law (Decree No. 41-89 of
7 April 1989).  An initial draft law on the promotion of competition, submitted to Congress in 1996,
was never approved.  A second draft law has been prepared but has not yet been submitted to
Congress for review.57
133. Article 339 of the Constitution prohibits "monopolies, monopsonies, oligopolies, cornering
and similar practices in industrial and commercial activity".  Nonetheless, for reasons of public order
and social interest, the State may reserve the right to "operate certain basic industries, undertakings
and services of public interest".58
134. Although some provisions of the Commercial Code appear to promote free competition by
requiring traders not to conduct their activities in such a way as to cause prejudice to the public or the
national economy, others condone collusive practices.  Article 423 permits "agreements that restrict
                                                     
54 WTO documents G/TMB/N/140 and G/TMB/N/144 of 20 February 1996.
55 Federal Register, Vol. 67, No. 153, of 8 August 2002.
56 Nicaragua suspende en forma temporal el arancel , Tiempo Digital, 12 March 2003.
57 Economic Commission for Latin America and the Caribbean (2002), Políticas de competencia y de
regulación en el Istmo Centroamericano , Serie Estudios y Perspectivas de la CEPAL, No. 11, Mexico, D.F.,
November.
58 Article 332 of the 1982 Constitution of the Republic of Honduras.Honduras WT/TPR/S/120
Page 63
the commercial activity of a trader to a place or region and a particular type of trade",59 while
Article 424 permits "agreements between companies that regulate the general terms and conditions
regarding the quantity and quality of production or the characteristics of services provided to the
public".60  Both types of agreement are limited to a period of 10 years.  According to the authorities,
the purpose of these provisions is to provide start-up support for producers.
135. The Consumer Protection Law contains several provisions restricting monopolistic practices.
Article 6 of the Law prohibits "cornering or any ot her scheme that tends to drive up prices of goods
and services, as well as speculative action likely to restrict the supply or circulation of goods and
services".  There are also sectoral competition provisions which apply to telecommunications,
electricity and financial services in particular (see Chapter IV(4) and IV(5)).
136. The Directorate-General of Production and C onsumption at the Ministry of Industry and
Trade is responsible for investigations and administ rative action in the event of infringement of the
Consumer Protection Law.  Criminal cases are hear d by the Special Prosecutor for Consumer Affairs,
attached to the Public Prosecutor's Office.61  Under the Criminal Code, acts or procedures that
obstruct "free competition in the production and marketing of goods" are punishable by three to
five years of imprisonment and fines ranging between L50,000 to L100,000 (between US$2,870 andUS$5,740 at the average May 2003 exchange rate).
62
137. The Law on the Streamlining of Administrative Procedures (Decree No. 255-2002), adopted
in July 2002, introduced various reforms aimed at streamlining procedures for the establishment of
enterprises in Honduras (see Chapter II(3)).
(ii) Government procurement
138. Honduras is not party to the WTO Plurilateral  Agreement on Government Procurement, but it
takes part in the WTO Working Group on Transparency in Government Procurement.
139. With the entry into force in October 2001 of the Law on Government Procurement (Decree
No. 74-2001 of 1 June 2001), Honduras established a new legal framework for government
procurement "based on disclosure, transparency, free competition and equality", and designed to
"update and ensure the reliability of State procurement procedures".63  These objectives are of
particular significance because, according to studies carried out by the World Bank Institute at therequest of the Honduran Government, "[i]n Honduras, corruption to affect the outcome of public
procurement is quite common".
64
                                                     
59 Article 423 of the Commercial Code.
60 Article 424 of the Commercial Code.
61 Economic Commission for Latin America and the Caribbean (2002), Políticas de competencia y de
regulación en el Istmo Centroamericano , Serie Estudios y Perspectivas de la CEPAL, No. 11, Mexico, D.F.,
November.
62 Article 299 of the Criminal Code, Decree No. 144-83.
63 Law on Government Procurement.
64 World Bank Institute (2002), Governance and Anti-corruption in Honduras:  An Input for Action
Planning , 9 January.WT/TPR/S/120 Trade Policy Review
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140. The new Law on Government Procurement and its Regulations (Executive Decision
No. 055-2002 of 15 May 2002) govern contracts for public works and the supply of goods or services,
including advisory services, concluded by the Government and its departments, autonomous or
decentralized institutions, municipalities, the Legislature, the Judiciary, and any other publicly funded
State body.  The following are excluded from the sc ope of the Law:  the provision of services by
public officials;  the provision of public services involving payment of a charge;  governmenttransactions with individuals for sale to the public of revenue stamped paper, stamps, alcohol and
other taxable goods;  cooperation contracts or agreements concluded by the Central Government with
decentralized institutions, municipalities or other public bodies;  and loans and other public credit
operations.
141. The Law on Government Procurement provides for the creation of the Contracting and
Procurement Regulatory Office.  The Office's functions include establishing and updating the Register
of State Suppliers and Contractors;  developing and implementing rules and operational procedures
governing the contracting and procurement system;  drawing up standard specifications, contracts and
manuals for the pre-selection of contractors;  designing and implementing computer record systems
for the circulation of information needed in the cont racting process;  providing technical assistance to
the public sector for the application of internal c ontrol mechanisms;  preparing yearly studies on the
prices of goods and services;  and keeping the authorities up to date on the implementation of
government procurement procedures.  In the context of this review, the authorities reported that, as at
May 2003, no budget had been allocated to the Contracting and Procurement Regulatory Office,
although its director had been appointed and three officials, on loan from another government body,
were working on the Register of State Suppliers and Contractors.
142. The authorities also indicated that by May 2003 some 800 contractors, including 111 foreign
companies, had been entered in the Register.
143. The Law stipulates that all contractors are subject to the same requirements for entry in the
Register of State Suppliers and Contractors kept by the Contracting and Procurement Regulatory
Office.  Only contractors listed in the Register are eligible to bid.  Entry in the Register is free of
charge and is valid for three years.
144. The Law establishes the following three procurement procedures: tendering (public or
private), competitive bidding (public or private), and direct adjudication.  A public call for bids is
issued in the case of public tendering and public competitive bidding.  In the case of private tendering
and private competitive bidding, an express, direct call for bids is made to specific, qualified bidders.
The selection values for each of the three procedures are established in the country's General Revenueand Expenditure Budget (see Table III.9).  The contracting authorities may issue private invitations to
tender in the event of a shortage of essential goods, in "unforeseen" circumstances or for reasons of
"extreme urgency".  The Law also allows private co ntracting if there are no more than three qualified
suppliers or contractors, if there are fewer bids than the number stipulated in the specifications for
public tendering, or if it is necessary to guarantee the security of the facilities where the service is tobe provided.  There must be at least three bidders in the case of private tendering and private
competitive bidding.Honduras WT/TPR/S/120
Page 65
Table III.9
Threshold values for the application of tendering procedures, May 2003
Type of procurement Amount Tendering procedure
Public works and advisory services L1 million or more Public
L500,000 or more, but less than L1 million Public or private
Provision of goods and services More than L250,000 Public
More than L100,000, up to L250,000 Private
More than L30,000, up to L100,000 Direct (at least three
quotations)
Up to L30,000 Direct (at least two quotations)
Note: In May 2003, the average exchange rate was L17.43 to the US dollar.
Source: WTO Secretariat, based on data provided by the Honduran authorities.
145. In the case of tendering or competitive bidding for a value not exceeding L100,000 , the
authorities may award the contract through direct adjudication (see Table III.9 above).  The
procedures here are different from the formal requirements applicable to tendering and competitive
bidding.  Direct adjudication may also be used in emergency situations (as defined in Article 9 of the
Law);  for the procurement of specialized scientific, technical or artistic works, spare parts or other
special goods and services for which the owner of the registered patent or trademark has exclusive
manufacturing or sales rights;  or when tendering or competitive bidding concerns secret Government
operations, minting, or printing of money.  Private tendering, private competitive bidding and directadjudication are subject to the authorization of the President of the Republic or the relevant governing
body, depending on the contracting entity involved.
146. The assessment of bids may be based solely on price or it may include additional factors such
as financing terms, environmental benefits or the availability of spare parts and services.  When
additional factors are considered, the specifications must indicate the manner in which each factor willbe assessed.  When a contract is not awarded to the lowest bidder, the Law requires the administrative
authority to provide the grounds for its decision, which the competent higher authority then has to
approve.  Companies wishing to challenge an adjudication must exhaust all administrative channels
before a case can be brought before the national courts.
147. International public tendering is limited to cases where "special expertise is required, or other
reasons warrant the participation of foreign contractors".
65  Nevertheless, it would appear that foreign
companies based outside Honduras are allowed to take part through agents, representatives or
distributors, who must be Honduran nationals or Honduran commercial companies, that is, companies
"whose share capital is mainly Honduran, in a proportion of at least 51 per cent".66  In situations
"defined as exceptional by the higher competent authority", that is, "situations in which goods orservices are urgently required so as not to hinder the normal provision of public services, or in
emergencies"
67, foreign contractors do not have to use concessionaires in order to take part in an
international tender.  It would appear that foreig n enterprises located in Honduran territory may also
take part, provided that they meet the civil and trade law requirements for operating in Honduras.
                                                     
65 Article 42 of the Law on Government Procurement.
66 Article 4 of the Law on Representatives, Distributors and Agents of National and Foreign
Enterprises, Law No . 549 of 24 November 1977.
67 Article 26 of the Regulation to the Law on Government Procurement.WT/TPR/S/120 Trade Policy Review
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148. When assessing bids for public works, the authorities add 7.5 per cent of the value of the
tender to bids submitted by foreign contractors.68  In a tender for goods or services, the value of bids
for imported goods or services is increased by the amount of the import duties or, if the goods and
services are duty free, by 15 per cent of the value of the bid.  Goods are considered to be of foreign
origin when the cost of inputs, labour and foreign services used in manufacturing them exceeds 60 per
cent of the price of the goods.  This does not apply when assessing bids from countries to whichHonduras grants national treatment under its free-trade agreements.
149. In addition to establishing a preferential margin for domestic bids, the Law on Government
Procurement provides several means of increasing participation by Honduran companies and
professionals in public tenders.  The Law specifies that conditions of tendering should consider
"alternative goods manufactured in Honduras which, from a technical standpoint, would be suitable assubstitutes, provided that they can be purchased at a lower price";
69  contracts financed exclusively
with national funds should be tendered solely to Honduran contractors;  and tender documents should
establish "conditions that allow domestic manufacturers to compete on an equal footing with factories
in other countries that receive duly proven subsidies or incentives".70  The Law also stipulates that
projects valued at over L50 million (around US$2.87 million at the May 2003 exchange rate) may betendered in portions not exceeding L15 million (around US$861,000 at the May 2003 exchange rate)
each.
150. The Law on Government Procurement contains a clause on the transfer of technology, urging
contracting authorities to ensure that foreign ente rprises or individuals that have been awarded a
government contract provide for increased participation by and greater responsibility for Honduran
professionals, as well as a local-content clause requiring foreign enterprises to involve Honduran
personnel in consultancy contracts tendered in Honduras.
151. Public invitations to tender are published in the Official Journal or at least in a national
newspaper.  In the case of international tendering, the information is also published abroad.  The
Regulations stipulate in this regard that the deadline for entering bids must be "long enough not to
restrict bidder participation".  Specifications must be based on the standard specifications established
by the Contracting and Procurement Regulatory Office and must be drawn up "in such a way as tofoster competition and equal opportunities between bidders".
71  Bids must be submitted in Spanish.
152. Article 21-02 of the Free-Trade Agreement betw een Mexico and El Salvador, Guatemala and
Honduras provides that "eighteen months after the entry into force of the Agreement the Parties shall
start negotiations with a view to introducing a chapter on government procurement that guarantees
broad coverage and application of the national treatment principle among the Parties".  According tothe Honduran authorities, these negotiations have not yet begun.  The Free-Trade Agreement with the
Dominican Republic also contains provisions regulating government procurement.
(iii) Price fixing, production controls and marketing agreements
153. Pursuant to Decision No. 139-97 of 11 June 1997, the Honduran State controls the marketing
margins for medicines and other pharmaceutical products for human use, as well as the maximum
                                                     
68 Article 128 of the Regulation to the Law on Government Procurement.
69 Article 147.2 of the Law on Government Procurement.
70 Article 147.3 of the Law on Government Procurement.
71 Article 40 of the Law on Government Procurement.Honduras WT/TPR/S/120
Page 67
selling price of roast and ground coffee (Decision No. 25-98 of 23 January 1998).  There is a
mechanism for setting prices at the various stages of processing of petrol, light diesel fuel, kerosene,
heating oil and liquefied petroleum gas.72  The State fixes the prices for fuel transport and electricity,
telephone and water rates.
154. Under the Consumer Protection Law (Decre e No. 41-89 of 7 April 1989), including its
amendments and regulations, the State is empowered to fix maximum selling prices for "essentialconsumer goods" and "inputs indispensable for the country's economic activities".  The former are
defined as "goods essential to maintain people's livelihoods, including household necessities and
services indispensable for everyday life";  the latter comprise "raw materials, inputs, containers,
packaging and semi-processed goods needed to produce essential consumer goods".  The Government
made use of this possibility for one month after Hurricane Mitch struck in October 1998.  ExecutiveDecree No. 74-2001 of 28 December 2001 likewise establishes a procedure for justification and
approval of maximum selling prices for various essential consumer goods, including rice, beans,
maize, sugar, salt, eggs, butter, poultry meat, beef and milk.  The measure remained in effect for
45 days.
(iv) State trading and State enterprises
155. Honduras has notified the WTO that it has no State trading enterprises within the meaning of
Article XVII of the GATT.
73
156. The Honduran State has a share in various public utility sectors, including telephony,
electricity (see Chapter IV(4) and (IV)(5)) and drinking water supply.  Under Article 9 of the
Framework Law on the Electricity Sub-Sector (D ecree No. 158-91 of 4 November 1994), the National
Electricity Company (ENEE) has exclusive authority to conclude electricity import and export
contracts.
(v) Incentives
(a) Fiscal and financial incentives
157. As explained in section (3)(iv), Honduras ha s two schemes providing fiscal incentives for
exporting goods.  The Law on Tourism Incentives (Decree No. 314-98 of 18 December 1998),
including its amendments, also offers a range of fiscal incentives to encourage national and foreigninvestment in the development of the tourism sector.
158. Enterprises eligible under the Law on Tourism Incentives are companies located in areas
deemed by the Honduran Tourism Institute to have tourism potential, which are engaged in activities
directly related to tourism and which provide services such as accommodation (e.g. hotels, lodges and
time-share apartments);  inward tourism;  air and water passenger transport;  vehicle rental;  andrecreation, with the exception of casinos, nightclubs or private clubs, discotheques, games rooms,
cinemas or television rooms, billiard parlours, gymnasiums, saunas and the like, Internet cafés and
teaching centres.  Convention centres and Honduran craft workshops and shops are also eligible for
incentives under the Law.
159. The Law on Tourism Incentives provides 10-year income tax exemption for projects that are
"new", i.e. projects by Hondurans or foreigners "that do not involve expansion, remodelling, change
                                                     
72 Decision No. 131-98 of 16 June 1998.
73 WTO document G/STR/N/7/HND of 24 January 2002.WT/TPR/S/120 Trade Policy Review
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of ownership, or the like".74  Moreover, beneficiaries under the Law pay no duty or other taxes on
imports of printed materials for the promotion of tourism projects or of Honduras as a tourism
destination;  new motor vehicles for sole use within the enterprise;  new and used aircraft and boats;
new goods and equipment needed for tourism construction and the launching of tourism projects (with
a few exceptions);  and replacement goods and equipment for a period of 10 years.
160. Expansion, remodelling or replacement projects carried out by established entrepreneurs
whose activities fall within the scope of the Law are also eligible for the above benefits, with the
exception of income tax exemption.  The Law further provides that persons whose activities are not
directly related to tourism but who invest in new projects involving the remodelling or expansion of
convention centres or hotels may deduct up to 15 per cent of their investment returns for tax purposes
over a period of 10 years.
161. The Ministry of Tourism authorizes the granting of benefits under the Law on Tourism
Incentives.  Those interested in making use of the Law must apply to the Ministry with full details of
the project they wish to develop.  Before issuing its final decision, the Ministry consults other
government bodies, including the Honduran Tourism Institute.
162. Pursuant to the General Mining Law (Dec ree No. 292-98 of 30 November 1998), imports of
equipment, machinery, spare parts and inputs for the development of mining operations in Honduras
(with the exception of petroleum by-products and vehicles not required for production) are duty free.
The Law also establishes a tax regime for the Honduran mining and metal industries.
163. Honduras runs an incentives scheme to prom ote private-sector involvement in forestry,
reforestation and woodland protection (see Chapter IV(2)(iii)).
164. Financial incentives for banana producers are provided under the Law on Incentives for
Banana Producers (Decree No. 57-91 of 20 May 1991) and its amendments (see Chapter IV(2)(iii)).
(b) Support, assistance and credit programmes
165. Honduras operates various programmes in support of the rural sector, aimed at speeding up
the reconstruction of production units affected by hurricane Mitch in 1998.  Between 1998 and
mid-2001, the Government spent a total of US$397.8 million, essentially on programmes to finance
and restructure the debt of the rural sector and rehabilitate the irrigation and land transportinfrastructure.  Between 1998 and August 2001, US$466.6 million were allocated for programmes to
boost agricultural output through "structural transformations in the production process, resource
conservation [and] risk prevention and mitigation"
75 (see Chapter IV(2)(ii)).
166. For the period June 2000 to May 2001, Honduras notified the following programmes as
domestic agricultural support measures:  rehabilitation programme for farm holdings affected byhurricane Mitch;  revitalization programme for areas affected by drought in the Guayape Valley
(Department of Olancho);  and the national sustainable rural development programme (see
Chapter IV(2)(ii)).
76  The amounts notified totalled a little over US$580,000.
                                                     
74 Article 5 of the Law on Tourism Incentives.
75 See Secretariat of the Ministry of the Presidency (no date), Informes de avance a tres años del Mitch .
Available at:  www.sdp.gob.hn.
76 WTO document G/AG/N/HND/10 of 19 April 2002.Honduras WT/TPR/S/120
Page 69
167. In 2003, Honduras adopted the Law on Financial Support for Agricultural Producers (Decree
No. 68-2003), thus consolidating the previous decrees on financing for agriculture (Decrees Nos.
28-2000, 32-2001 and 81-2002) (see Chapter IV(2)(ii)).
168. Another Government priority is to help micr o-, small and medium enterprises in Honduras
build their production capacity.  Between 1998 and March 2003, US$21 million were disbursed in
favour of such enterprises.  The bulk of the amount was channelled through three programmesdesigned to finance the acquisition of fixed assets and working capital, namely the credit and
technical assistance programme in support of rura l micro-enterprises (PROCA TMER), the rural sector
financing programme in support of food security (FINSA), and the credit programme in support of the
informal sector (PASI).
169. The PROCATMER provides loans of up to US$10,000 for four years for the purchase of
fixed assets.  The maximum amount granted under the FINSA is US$2,500 for 18 months for working
capital and US$5,000 for one year for fixed assets.  Under the PASI, the maximum amount is
US$13,000 for 18 months for working capital and for seven years for fixed assets.  The interest rates
for final users vary between 20 and 30 per cent.
170. The Central American Bank for Economic Integration (CABEI), acting through approved
financial institutions, has various schemes in support of micro, and small and medium enterprises in
Central America.  In addition to the programme in support of micro and small enterprises
(PROMYPE) and the programme in support of small and medium enterprises (ICDF) (see
section (3)(v)), the CABEI operates two other sc hemes – a fund in support of small industry in
Central America (FAPIC), which provides credit facilities and technical assistance for small
industries, and the Spain/CABEI microcredit programme, which helps enterprises affected by
Hurricane Mitch to restore their production capacity.  Up to June 2002, a total of US$27.1 million hadbeen disbursed to 3,922 Honduran enterprises under all four schemes – i.e. 21 per cent of the total
funds allocated through the programmes.
(vi) Trade-related investment measures
171. Honduras has notified the WTO that it does not apply any measures inconsistent with the
Agreement on Trade-Related Investment Measures.
77
172. Processors that acquire a share of domestic production of certain staple grains benefit from
import tariff reductions (section (2)(v)).  Under Decree No. 323-98 of 18 December 1998, Honduras
prohibits the export of wood from certain forests that has not been incorporated into finished products,
furniture or manufactured furniture parts.
(vii) Intellectual property rights
(a) Introduction
173. The Honduran Constitution provides for the prot ection of intellectual property (Article 133).
The WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) entered into
force in Honduras on 1 January 2000.  Considerable efforts have been made in recent years to
improve the protection of intellectual property righ ts in Honduras, with new industrial property and
copyright legislation.  Honduras is a signatory to various international intellectual property
instruments and is a Member of the World Intelle ctual Property Organization (WIPO) (Table AIII.2).
                                                     
77 WTO document G/TRIMS/N/1/HND/1 of 4 October 1995.WT/TPR/S/120 Trade Policy Review
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174. Pursuant to Article 63 of the TRIPS Agreement, Honduras has notified the WTO Members of
its intellectual property laws and regulations and has supplied information on its domestic
enforcement system (Tables AIII.3 and AIII.4).  On the basis of those notifications, the Council for
TRIPS reviewed Honduras' intellectual property legislation in 2001.78  In addition to its multilateral
undertakings, Honduras has entered into commitments on intellectual property rights under its various
free-trade agreements.
175. The Ministry of Industry and Trade is responsible for formulating and implementing
Honduran intellectual property policy.  The Directorate-General of Intellectual Property (DIGEPIH),
attached to the Ministry of Industry and Trade, serves as the enquiry point for the purposes of
Article 69 of the TRIPS Agreement.79  The task of the DIGEPIH, which comprises the Office for the
Administration of Copyright and Related Rights and the Industrial Property Registry, is to guarantee
and strengthen the protection of intellectual property rights, to ensure fulfilment of the country's
international commitments, and to take part in bilateral and multilateral negotiations on intellectual
property.
176. According to data provided by the Industrial Pr operty Registry, most of the rights which were
registered and for which applications were filed up to December 2002 were trademarks, followed bytrade names, advertising signs and patents.  Only a small number of patents are granted (Table III.10).
As in most countries, owners of trademarks, patents and industrial designs are predominantly
foreigners.
80  The number of patents issued in Honduras has increased in recent years, as can be seen
from Table III.10.
Table III.10
Record of patent and trademark registrations
Registrations 1902-1993 1994 –2002 Total
Patents 3,410      715  4, 125
Trademarks 62,515 35,604 98,119
Source : Information provided by the Honduran authorities.
(b) Copyright and related rights
177. The Law on Copyright and Related Rights (Decree No. 4-99-E), which implements the
TRIPS Agreement, protects all original creations in the literary and artistic fields, including computer
programs and databases.  The Law protects both original and derived works, including databases and
computer programs.  It provides for no exception to or exemption from national treatment for
foreigners who publish their works in Honduras.  The Law protects the rights of Honduran authors,those of foreign authors residing in Honduras, and foreign works first published in Honduras.  The
rights of foreigners whose works were first published abroad are protected under international
conventions or, in the absence thereof, on the basis of the reciprocity principle.
178. Honduran legislation recognizes the principle of copyright protection without requiring any
registration formalities, and it protects authors' moral and economic rights.  Moral rights include theright to withdraw a work from circulation or to suspend any authorized form of use of the work,
                                                     
78 The questions addressed to Honduras and the replie s given in the context of the review are contained
in WTO document IP/Q/HND/1 of 30 January 2002.
79 WTO document IP/N/3/Rev.6 of 1 March 2002.
80 Information based on data from the DIGEPIH.  Available at:  www.sict.gob.hn/digepih.Honduras WT/TPR/S/120
Page 71
subject to compensation for any prejudice that may be caused to third parties.  Economic rights
(reproduction, translation, adaptation, broadcasting, communication to the public, sale, hiring out,
loan, import, etc.) include, in the case of works of fine art or original manuscripts of writers or
composers, the right to receive 5 per cent of the selling price of works sold by public auction or
through the business of an art dealer.  As regards related rights, performers, phonogram producers and
broadcasting organizations enjoy the rights provided under Article 14 of the TRIPS Agreement.
179. The Law also grants phonogram producers the exclusive right to authorize or prohibit direct
or indirect reproduction, communication and distribution to the public of the originals or copies of
their phonograms through sale or transfer of ownership, hiring out, lending, importing, or making the
phonograms available to the public by any means and in any form (Article 118 of the Law).
180. Economic rights are protected for the whole of the author's life and for 75 years following his
death, or, in the case of a work whose term of protection cannot be calculated on the basis of the life
of the author, for 75 years from the date of disclosure or publication of the work.  An exception is
made for photographic works, which are protected for 50 years.  The Law enacted in 2000 extends the
term of protection for works and related rights from 50 to 75 years.  The term of protection for related
rights is 75 years.
181. The DIGEPIH's Office for the Administration of Copyright and Related Rights establishes the
rules protecting copyright and related rights, which are entered in a register kept by the Office since
1994.  It is also in charge of initiating administrative proceedings and applying penalties in the event
of infringement.  Between 1997 and 2002, a total of 407 artistic and musical works, 390 literary
works, 45 software programs, 42 phonograms, and 37 cinematographic works, videograms and the
like were entered in the Copyright Register.  Apart from Honduran nationals, applications for
registration were filed by nationals of El Salvador, Nicaragua, Japan, the United States andSwitzerland.
(c) Patents
182. The Industrial Property Law (Decree Law No. 12-99-E) regulates the use of patents, utility
models and industrial designs in Honduras.
81  This Law repeals the previous legislation dating back to
1993.  To be considered patentable by the Honduran Industrial Property Registry, an invention mustbe new, involve an inventive step and be capable of industrial application.  To be considered new, the
invention may not have been disclosed or made available to the public, anywhere in the world, prior
to the date of filing of the patent application in  Honduras or to the date of filing of the foreign
application whose priority is claimed.  An invention is regarded as involving an inventive step if it is
not obvious;  it is considered capable of industrial application if it can be produced or used in any typeof industry.
183. Essentially biological processes for the breeding or reproduction of plants, animals or
varieties thereof, including genetic processes, plant varieties and species and animal species and
breeds, are not patentable under Honduran law, nor are diagnostic, therapeutic and surgical methods.
Honduran legislation does not provide for the exclusion of inventions from patentability on the basisof public order or morality.  However, this does not mean that the marketing of such inventions
cannot be prevented.
184. A patent confers on its owner the right to exclude third parties from working the patented
invention.  The rights thus conferred may be asserted only against acts performed by third parties for
industrial or commercial purposes.  The patent owner may therefore initiate proceedings against
                                                     
81 Notified to the WTO in 2001.  WTO document IP/N/1/HND/I/1 of 13 June 2001.WT/TPR/S/120 Trade Policy Review
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anyone who, without his authorization, makes, offers for sale, sells or uses the patented product or
imports it with a view to using, selling or offering it for sale.  Patents are granted for a term of
20 years from the filing of the application.  This term may not be extended.  The average time taken
between filing an application and granting a patent is 12 months for pharmaceutical and chemical
products already patented in other countries.
185. The Law allows the granting of compulsory licences to work patents, for reasons of public
interest, national emergency, national security, nutrition or public health.  A compulsory licence may
also be issued where the patent has not been worked  in Honduras for four years following the filing of
the application or for three years following the granting of the patent, whichever period expires later,
provided that the person applying for the licence furnishes evidence of having sought to obtain a
contractual licence from the patent owner and has been unable to obtain such a licence on reasonableconditions and within a reasonable period of time.  Licences to work patents relating to semi-
conductor technology are issued solely to a public authority, or another party acting on its behalf, for
public non-commercial use, or to remedy a practice determined to be anti-competitive.  Compulsory
licences are granted predominantly for the supply of the domestic market;  they are not exclusive and
may not be transferred or sub-licensed.  Prior to th e issuing of a compulsory licence, the owner of the
patent is allowed a period of two years to begin exploiting the patented product or process.  According
to the authorities, no compulsory licences have been granted in Honduras.
(d) Utility models
186. Utility models are governed by Articles 23-27 of the Industrial Property Law.  The Law
contains a definition of utility models, which exclud es chemical or metal processing and substances.
Utility models are protected through patents, which are granted for 15 years from the date on which
the application was filed.  A utility model is considered patentable where it is new and capable ofindustrial application.
(e) Industrial designs
187. Industrial designs are protected under Articles 28-34 of the Industrial Property Law for a term
of five years from the date on which the application was filed.  The term may be extended for two
further periods of equal duration.  Protection is conferred through registration and covers industrialdesigns that are considered original and capable of industrial application.
(f) Trademarks
188. Honduras protects trademarks and other distinctive signs provided that they are registered in
the Industrial Property Register.  All matters pertaining to trademarks, collective trademarks,
commercial advertising slogans and signs, trade names, emblems, geographical indications,proceedings and penalties for infringement, and unfair competition are regulated by the Industrial
Property Law.
189. The rights conferred by trademark registration remain in effect for 10 years from the date of
registration, a term which may be renewed indefinitely for successive 10-year periods calculated from
the date on which it last expired.  The Industrial Property Law extends the scope of trademarkprotection to include all well-known distinctive sign s.  The owner of a trademark may, under contract,
grant a licence to use the trademark to one or more persons, with or without exclusivity, for a specific
territory or area.  The contract licensing use of the trademark must be registered.Honduras WT/TPR/S/120
Page 73
(g) Layout-designs of integrated circuits
190. Honduras has not yet adopted any specific provisions to regulate the protection of layout-
designs (topographies).  A draft law on the protecti on of layout-designs of integrated circuits was
submitted to the National Congress on 14 October 1999 for approval, which was still pending in
June 2003.  The draft law contains 34 articles.  It incorporates basic provisions on topographies,
including general provisions and basic principles on applications and examination, nullification,cancellation, transfers and licences, criminal liability, and damages, and extinction of rights.  Pending
the approval of the legislation, protection is granted for a term of 10 years from the date of the first
commercial exploitation of the design, as required by Article 38 of the TRIPS Agreement, which
forms part of Honduran legislation.
82  In the event of unlawful importation, the right holder may
request the application of precautionary measures, as provided in the Industrial Property Law.
(h) Protection of plant varieties
191. Plant varieties are protected solely by patents granted by the Ministry of Agriculture and
Livestock through the Seed Certification Departme nt of the Directorate-General of the National
Agricultural Health Service (SENASA).  The SENASA is also responsible for the National Plant
Variety Register.
192. Legislation to protect plant varieties was submitted to the National Congress on
14 October 1999.  The draft law on the protection of new plant varieties establishes the bases and
procedures for protecting the rights of plant breeders, including provisions on breeders' rights and
obligations, applications, transfer of rights, emergency licensing, administrative procedures and
infringements.  The SENASA will be in charge  of implementing and interpreting the law for
administrative purposes.  The draft law has been notified to the WTO.83
(i) Protection of undisclosed information
193. Articles 73-78 and 170-173 of the Industrial Property Law and Articles 214 and 215 of the
Criminal Code protect industrial and trade secrets, which are understood to mean undisclosed
information within a person's control that can be used for a production, industrial or commercial
activity and is capable of being transmitted to a third party.  Such protection does not require
registration and is afforded whether or not the secrets are fixed on a material medium.  Industrialsecrets are protected indefinitely if the constituent information is not generally known or readily
accessible and is kept secret by the lawful holder.
194. There are no provisions allowing a third party to use undisclosed information protected under
the law without the authorization of the lawful holder of the secret or information.  However, an
exception is made in cases where disclosure is necessary to protect the public or where appropriatesteps have been taken to ensure that the data or secret information is protected against unfair
commercial use by third parties.
(j) Geographical indications
195. Geographical indications and appellations of origin are governed by Articles 123-125 of the
Industrial Property Law, which stipulates that a geographical indication may not be used in the courseof trade in relation to a product or service where the indication is false or misleading with regard to
                                                     
82 WTO document IP/Q/HND/1 of 30 January 2002.
83 WTO document IP/N/1/HND/P/1 of 25 October 2002.WT/TPR/S/120 Trade Policy Review
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the geographical origin of the product or service or if its use might create confusion or induce in the
mind of the public unjustified expectations with regard to the origin, source, characteristics or
qualities of the product.
196. The Law establishes a procedure for the registration of geographical indications and
appellations of origin.  A geographical indication may be registered as a trademark solely if it is
sufficiently arbitrary and distinctive with regard to the products or services to which it applies.Simple indications of source and appellations of origin or signs that may be misleading as to origin,
nature or quality may not be used as trademarks or components thereof.
(k) Enforcement of intellectual property rights
197. The Law on Copyright establishes administrative, civil and criminal procedures for claims
relating to copyright infringement.  The penalties include written warning and payment of damagesfor any injury caused, with custodial sentences of up to six years in cases classified as offences;  and
fines ranging from 10 to 200 units of minimum wage in cases involving administrative sanctions
(Table AIII.4).  Pursuant to the Customs Code, th e release into circulation of infringing imported
products may be suspended.
198. Parallel imports are not, in principle, prohibited under the intellectual property legislation,
although the owner of an intellectual property right may oppose such imports.  The Draft Regulations
on the Procedure Governing Special Requirements Relating to Border Measures was notified to the
WTO in October 2002.
84  The procedure was under review in June 2003.
199. Some of Honduras' trading partners such as the United States have reported problems arising
from copyright infringement, especially regarding books, compact discs and software, and the
ongoing problem of illegal regist ration of well-known trademarks.85  In 1998, Honduras was placed
on the Watchlist of the United States Government following the latter's annual review under the"Special 301" act, although Honduras was removed from the list in August of that same year.
Because of difficulties in controlling piracy of television broadcasts, in April 1998, Honduras was
deprived of part of its preferences under the United States Generalized System of Preferences and the
Caribbean Basin Initiative.  These benefits were restored in June of that same year as a result of
Honduran Government action against piracy.
200. An inter-institutional commission has been set up in order to combat piracy through
coordinated action to protect, monitor and safeguard intellectual property rights.  Inter-institutional
regulations against piracy were tabled for review and approval by the Office of the President in
June 2003.  These regulations will place the Inter-Institutional Commission against Piracy – currently
acting de facto  – on an official footing.
201. As regards border measures of an administrative nature, the Executive Directorate of Revenue
has adopted a draft regulation on procedures for applying precautionary measures, which provides for
the possibility of preventing the import or export of products infringing intellectual property rights;
this may be requested in writing by the right holder, using the services of a legal representative.
                                                     
84 WTO document IP/N/1/HND/E/1 of 25 October 2002.
85 United States Trade Representative (2003), National Trade Estimate Report on Foreign Trade
Barriers, Washington, D.C., pp. 161 and 162.