WT/REG393/2  
 
9 January 2020  
(20-0263) Page: 1/9 
Committee on Regional Trade Agreements  
 Original: English/Spanish  
 
 
FREE TRADE AGREEMENT  BETWEEN PERU AND HONDURAS  
(GOODS AND SERVICES)  
QUESTIONS AND REPLIE S 
 The following communication, dated 18 December  2019, is being circulated at the request of 
the delegations of Peru and Honduras . 
 
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Questions from the delegation of Brazil  
 
Bilateral safeguards  
 
1.1.  What are the criteria used by the investigating authorities to determine that the 
increased imports constitute a substantial cause of serious injury, or threat thereof, to 
the domestic industry?  
The general criteria are set out in the Peru -Honduras Free Trade Agreement (FTA) in Chapter 8 : 
Trade Defence , Section A: Bilateral Safeguard Me asures . 
 
However, for Peru, the specific criteria for the investigation procedure are established in 
Article  24 of Supreme Decree No. 008-2009-MINCETUR "adopting procedures for implementing 
bilateral safeguards and safeguards relating to textiles pursuant to the integration agreements and 
international trade agreements signed by Peru ": 
 
Article 24: In the investigation to determine whether increased imports of a particular  product 
have caused or are threatening to cause serious injury, all relevant factors of an objective and 
quantifiable nature having a bearing on the situation of th e industry  concerned shall be taken into 
account , in particular : 
 
a) the rates and amounts of the increase in imports of the product concerned, in absolute terms 
and in relation to domestic production and consumption ; 
 
b) the share of the domestic market taken by increased imports ; 
 
c) the impact on the domestic industry of the like or directly competitive products, as evidenced 
by changes in the economic factors identified in Article s 10.6 and 10.7;  
 
d) the price of the imports, especially in order to determine whether there has been significant 
underpricing in relation to the ordinary price of the like or directly competitive domestic 
product ; 
 
e) other factors which, although not related to import trends, have a causal relationship with 
the injury or threat of injury to the domestic industry concerned . 
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  Moreover, Articles 25 and 26 of the above -mentioned Supreme Decree read as follows : 
 
Article 25: If factors other tha n increased imports are at the same time causing serious injury 
or a threat of serious injury to the domestic industry concerned, such serious injury shall not be 
attributed to increased imports.  
 
Article 26: When there is an alleged threat of serious injury, the investigating authority shall 
examine whether it is foreseeable that the case may become one of serious injury  to the domestic 
industry concerned, taking  into account the data on the domestic industry, in addition to factors 
such as the  rate and amount of the increase in the contracting Party's exports to Peru, in absolute 
and relative terms, the actual or potential export capacity, and the likelihood that the exports 
resulting from that capacity are destined for the Peruvian market.  
 
It should be noted that , to date , the Peruvian investigating authority has not initiated 
investigation procedures  regarding  the application of bilateral safeguard measures . 
 
As to Honduras , the general criteria are set out in the Peru -Honduras FTA in Chapter 8 : Trade 
Defence , Section A: Bilateral Safeguard Measures . It should also be noted that , to date , the 
Honduran  investigating authority has not initiated investigation procedures regard ing the application 
of bilateral safeguard measures . 
 
Honduras does not have a specific , domestic  law on protect ing domestic  production through 
safeguard measures.  
 
Honduras may initiate a procedure to adopt  safeguard measures  under an FTA , within the 
World Trade Organization, or under the Central American Regulations on Safeguard Measures, 
depending on the origin of the goods.  
 
If the goods come  from a country  outside Central America , producers in Honduras may request  
in writing, with the support o f their domestic industry, that the competent authority to apply a 
safeguard measure. The Central American Regulations on Safeguard Measures, which apply to  Costa 
Rica, El Salvador, Guatemala, Honduras, Nicaragua, and Panama, cover such  procedures . 
 
In gen eral, FTAs recognize  countries'  WTO rights and obligations re lating  to safeguards. As a 
result , these agreements rarely  include  new substantial or procedural aspects of safeguards  and 
simply state  that each member country retains  its rights and obligations under  the WTO Agreement. 
The appe llate bodies are the judicial bodies  of each country,  the WTO Dispute Settlement Body, or 
the bodies established under  the FTAs. 
 
Intellectual property rights  
 
1.2.  In light of the agreement in force between Chile and five other Central American 
countries (El  Salvador, Honduras, Nicaragua, Guatemala and Costa Rica), how have Peru 
and Honduras addressed the protection of the geographical indication "pisco" for Peru, 
since protection had been already gra nted for the Chilean beverage under the above -
mentioned agreement?  
The trade agreement between Peru and Honduras, which has been in force since 2017, 
contains a specific provision in Article 9.4 of Chapter 9 on intellectual property , whereby both 
countries recognize and assume an obligation to protect the list of  geographical indications  (GIs) 
contained in Annex 9.4 , which expressly includes the GI "Pisco".  In particular, Article 9.4.5 provides 
that: 
 
"5. The names listed in Section B of Annex 9.4 are geographical indications that are protected 
in Peru, in accordance with Article 22.1 of the WTO TRIPS Agreement. Subject to the 
requirements and procedures for their protection  that are provided for in Honduran domestic 
legislation,  and in accordance  with the WTO TRIPS Agreement, these names shall be protected 
as geographical indications on Honduran territory ." 
 
Notwithstanding the above, it should be noted that the GI "Pisco" had been registered as a 
Peruvian GI with the National Intellectual Property Office of Honduras since 2006 , prior to the signing 
of the Peru -Honduras trade agreement . The GI "Pisco" for Peru is  therefore fully recognized.  WT/REG393/2  
 
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  1.3.  Regarding the provisions on biodiversity, does the agreement establish that the 
origin must be disclosed when the intellectual property asset is "based" or "directly 
based" on genetic resource s (GRs), on traditional knowledge (TK) or on traditional 
cultural expressions (TCEs)?  Can an intellectual property right be revoked due to lack of 
disclosure?  
Article 9.5 indicates that any rights to intellectual property generated from biological or genetic 
resources or products  derived therefrom , and/or traditional knowledge of indigenous or local 
communities of one of the parties, shall comply with the releva nt domestic and international rules. 
 
In particular, Article 9.5.7 provides that applications for patents based on such resources and 
knowledge must  provide proof of legal access thereto and disclose  the origin of the resource and/or 
traditional knowledge accessed, if the domestic  legislation of any of the parties so require s. 
 
Moreover , Peruvian legislation states that , for genetic resources,  access to such resources 
shall be proven  through  an access  contract (Articles 16 and 17 of Decision No. 391 of the Andean 
Community approving the Common Regime on Access to Genetic Resources) and, for traditional 
knowledge, through  a licen ce (Article 7 of Law No. 27811 establishing the regime for protection of 
the collective knowledge of indigenous peoples relating  to biological resources). These documents 
indicate the origin of the biological resource or traditional knowledge. In order to grant the right, the 
intellectual property authority must receive these doc uments together with the application for patent  
registration ( in accordance with  the second supplementary  provision of Decision No. 391 and the 
second supplementary  provision of Law N o. 27811).  
 
Notwithstanding the above, under Peruvian l egislation  in general,  a patent may be revoked 
by the intellectual property authority in the event that  false or inaccurate information , such as access 
documents , is submitted in the patent application ( under  Article 8 -A of Legislative Decree No. 1075 
and the second supplementary  provision of Decision No. 391 and the second supplementary  
provision of Law No. 27811).  
 
In Honduras, there is no special domestic  legislation on traditional knowledge and biological 
and genetic resources. However, there is ancilla ry legislation , such as Article No. 61 of the Law on 
Copyright and Related Rights, which provides for the protection of Honduran traditional and popular 
culture , in all its forms, as a matter of national heritage. The Law for  the Protection of the Cultural  
Heritage of the Nation, Decree No. 220 -97, dated 29 December 1997, establishes the following as 
cultural heritage:  cultural manifestations  of existing  indigenous peoples, their languages, their 
historical traditions, their knowledge and techniques, their forms of organization, their value 
systems, their religious practices and the places associated with such practices ; as well as  existing  
cultural manifestations of vernacular origin that are of anthropological and historical interest, 
religious organizatio ns and celebrations, music and dance, prototypes of craft smanship  and culinary 
art, and oral tradition s. 
 
Moreover , by means of  Decree No.41 -13, Honduras adopted  Agreement No.  21-DGTC of 
9 October 2012 containing the Nagoya Protocol on Access to Genetic Resources and the Fair and 
Equitable Sharing of Benefits Arising from their Utilization to the Convention on Biological Diversity 
(Nagoya Protocol)  of 29 October 2010, signed in Nagoya, Japan.  
 
Competition policy  
 
1.4.  The c hapter on competition policy provides for notification of any competition -
related activity applied in a Party that may be of interest to the other Party, at an early 
stage if possible.  
a. To what extent a Party has the discretion to determine whether or not an activity 
is of interest to the other Party?  
The effect s on the interests of the other Party shall be determined in accordance with the 
relevant domestic  legislation.  
 
b. The chapter on competition also provides for the possibility of consultations. May 
a Party decline a request for consultations, or are they binding on the requested 
Party?  WT/REG393/2  
 
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  Under  Article 11.6, each Party shall, at the request of the other Party, initiate consultations . 
 
Questions from the delegation of Canada  
 
Government procurement  
 
1.5.  Paragraph 5.27 , in Section 5.8 of the Factual Presentation, on Government 
Procurement states: "The Parties endeavour to cooperate to achieve a better 
understanding of their public procurement systems and to facilitate access for their 
respective suppliers. To this end, each Party will provide the other Party and its suppliers 
information on training and guidance programmes on public procurement 
(Article  10.20)."  
a. Are there specific areas that the training and guidance programmes wi ll cover in 
order to support suppliers from the respective Parties?  
To date , there have been no cooperation -related  activities under Article 10.20. However, the 
underlying intention of this Article is to make existing virtual and in-person  training program mes 
available to the Parties , so that suppliers from the other Party can access these  programme s, as well 
as existing virtual guides that include information on how to participate in tendering  processes . 
These guides primarily cover  the conditions for part icipation and the registration requirements for 
suppliers, the identification of business opportunities in public  procurement e-portals, and other 
information on how to  successfully participate in tendering  processes covered by the FTA. 
 
b. What training and guidance programs have been implemented thus far?  
See reply above . 
 
1.6.  Chapter 10, Article 10.8: Information on Intended Procurements , Paragraph 6 , 
states: "For greater certainty , this Article is not intended to pre clude  a procuring  entity 
from preparing, adopting or applying technical specifications to promote the conservation 
of natural resources or protect the environment ." 
a. Are there any similar provisions for social considerations in tender evaluation 
(e.g. support for SMEs, labo ur, women and gender, indigenous rights)?  
There are no specific provision s on the areas mentioned  above.  
 
b. If not, would the Committee on Government Procurement consider discussing 
the incorporation of additional social considerations into a potential futur e Peru -
Honduras FTA in its next committee meeting?  
The Committee on Government Procurement has not yet met, and  a prior i it is unclear which 
topics might  be addressed  at its next meeting . However, all the countries seek to conduct  activities 
that will enab le them to make the most  of the business opportunities that exist in the public markets 
of the Parties , and to identify existing barriers or limitations that could undermine  due 
implementation of the  Agreement's chapter on government  procurement.  
 
1.7.  Chapter 10, Article 10.19: Participa tion of Micro, Small and Medium -sized 
Enterprises , Paragraph s 1 and 2 state:  
 "1. The Parties  recognize the importance of the participation of micro, small and 
medium -sized enterprises in public procurement . 
 
 2. The Parties  also recognize the importance of business alliances between suppliers 
of each Party, and in particular of  micro, small and medium -sized enterprises, 
including the joint participation in tendering procedures."  
 
 Recognizing the importance of the participation of MSMEs, what measures, if any, 
are taken to specifically support MSMEs in bidding in public procurem ent contracts?  
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  To date , there have not been any  joint cooperation activit ies aimed at enabling  MSMEs to 
participate in the public market of the other Party. Consequently , the only existing programmes or 
measures are those established under  domestic  regulations , which are applicable only within  the 
national territory of the Parties  in question . 
 
1.8.  Chapter 10, Sec tion F: General Notes  states, for Honduras and Peru, respective ly:  
 "This Chapter does not apply to government procurement programmes supporting 
 micro, small and medium -sized enterprises"; and  
 
 This Chapter does not apply to public procurement programmes supporting  micro  
 and small enterprises."  
 
 Can Honduras and Peru specify what public procurement programs supporting 
MSMEs are excluded from Chapter 10 provisions?  
 
In Peru, Legislative Decree No. 1414 authorizes the Ministry of Production to establish 
procurement implementing units with a view to promoting and facilitating  the access of micro and 
small enterprises  (SMEs)  to public procurement . 
 
It should be noted that this Decree  is regulated by Supreme Decree No. 004 -2019-PRODUCE.  
 
In Honduras, the Law to Support Micro and Small Enterprises, approved by Decree No. 145 -
2018, seeks  to promote SMEs  through employment -generating incentives. Benefits for SMEs include 
exemption from individual , industrial and commercial taxes; municipal ta xes; and exemption from  
fees for operating and construction permits.  
 
By means of  Executive Decree No. PCM -034-2019, the National Service for Entrepreneurship 
and Small Businesses (SENPRENDE) was created on 5 July 2019  in order to  consolidat e Honduran 
government support services for  MSMEs  in terms of formalization, financial inclusion and technical 
assistance  in a single institution . 
 
Chapter 12 – Investment  
 
1.9.  Article 12.10 (expropriation and compensation) states: In addition to other criteria, 
an expropriation is only allowed: a) in the case of Honduras, for the public interest or 
necessity, and b) in the case of Peru, for public necessity or national security.  
a. Why do Honduras and Peru have different requirements for expropriating?  
In Peru, the Constitution refers to "public ne cessity " and "national security" , whereas in 
Honduras, there is provision for expropriation through measures equivalent to expropriation or 
nationalization "for public necessity  or interest", in accordance with Ar ticle 106 of the Honduran 
Constitution.  
 
b. Does it mean that Peru could not expropriate for public interest, unless it also 
rises to the level of necessity or of a national security issue?  
For Peru, t he terms "public necessity " and "national security" are si mply clarifications , which  
seek to establish an explicit reference to Peruvian  legislation . 
 
Article 12.11 - Transfers  
 
1.10.   The article closely follows Article 9.9 of the Comprehensive and Progressive 
Agreement for Trans -Pacific Partnership (CPTPP), to which P eru is a Party. However, it 
does not include an obligation for the Parties to permit returns in kind.  
 Why did the Parties choose not to address returns in kind?  
 
Returns  in kind are permitted under  Article 12.11(1)(b).  
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  1.11.   Article 12.18.6 (Conditions and Limitations on Consent of Each Party) states: For 
greater certainty, the claimant cannot submit a claim under this section if it has already 
brought a claim under an administrative or judicial tribunal or any other binding dispute 
resolutio n mechanism.  
a. Can the Parties explain why they see this provision as "for greater certainty" 
(i.e. that it would be true even in the absence of Article 12.18.6)?  
Article 12.18.6 provides that if the claim has been submitted to an administrative or judicial 
tribunal or any other binding dispute resolution  mechanism, the claimant cannot submit the same 
claim under Section B of the Dispute Resolution  Mechanism in the investment chapter of the 
Agreement. Moreover , this could be true, or interpreted this way, even in the absence of Article 
12.18.6  because the paragraphs preceding  Article 12.18.6 (conditions and limitations on consent of 
each Party) provide that arbitration cannot be initiated over a claim if the claimant , on its own behalf  
or the behalf of an ente rprise, has brought the same claims before  an administrative or judicial 
tribunal of the State receiving the investment.  
 
b. How could an investor bring a claim that a Party has violated the minimum 
standard of treatment obligation (Article 12.4) as it relat es to due process, such 
as a fundamental breach of due process in judicial and administrative 
proceedings?  
If an investor, prior to submitting  a claim for  arbitration, has brought a claim before  an 
administrative or judicial tribunal  and the claim  has been  addressed , but the investor believes that 
the tribunal did not observe  its rights as an investor under domestic legislation  because of  a breach 
of law or due process, the investor  may initiate arbitration.  
 
Questions from the delegation of Colombia  
 
Rules of origin  
 
1.12.   Paragraph 3.25 states the following in relation to the  rules of origin :  
"3.25. Bilateral cumulation applies between the Parties  (Article 3.6). Diagonal cumulation 
with Costa Rica, El Salvador, Gua temala and Panama is allowed if:  
i. a trade agreement is in force between Peru and the above -mentioned 
countries, and the corresponding rules of origin are fulfilled according to the 
Agreement,  
ii. the material being cumulated is not excluded from the tariff libe ralization 
programme under the agreement between the importing Party  and the country 
supplying the originating materials, and  
iii. iii. for textiles in HS 50 -63, both the material and the good are duty -free 
under the Agreement and all other agreements between t he importing Party  
and the country supplying the originating materials ." 
 
 Does diagonal cumulation currently apply to the countries referred to in 
paragraph  3.25? If so, how do the Parties  monitor these operations? Which document 
(the bilateral certificate, the certificate of origin of the country with which it cumulates, 
or another document) certifies the origin of the inputs? What impact has this had on trade 
flows between Honduras and Pe ru? 
 
Currently, diagonal cumulation could be applied only to Costa Rica and Panama. The 
operations in which diagonal cumulation is used are monitored  through verification of origin.  
 
It should be noted that  as goods have not been exported under the cumulat ion provision  of 
the Peru -Honduras FTA , its impact  cannot be measured.  
 
1.13.   Paragraph 3.26: Subject to negotiation of the conditions that the Parties  deem 
necessary for its application, cumulation could be also extended to goods and materials 
from countries or  a group of countries with whom both Parties  have a trade agreement.  WT/REG393/2  
 
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   Has the extended cumulation referred to in paragraph 3.26 already been regulated 
by the Parties ? Are there currently any identified products that are subject to such 
cumulation, and if s o, with which countries?   
 
As this provision has not been implemented to date, there is no identified country or product.  
 
Questions from the delegation of Ecuador  
 
Characteristic elements of the agreement  
 
Background information  
 
1.14.   With respect to page 8, paragraph 2.1: "In 2010, negotiations aiming at the 
establishment of free trade agreements between Peru on one side, and Costa Rica, El 
Salvador, Guatemala, Honduras and Panama on the other side were launched. While 
negotiations wer e conducted jointly by all Parties , it was agreed that they would result in 
separate bilateral agreements":  
 With regard to the bilateral agreements, are there differences in terms of the 
negotiated scopes or chapters, or were the subjects or scopes of the  FTAs established for 
all four countries? Are there subjects or areas that are not covered by the FTA with 
Honduras, but by the FTAs with the other countries?  
 
At the beginning of the negotiation process, on 16 October 2010, the General Negotiating 
Framewo rk between Peru, Costa Rica, Honduras, Guatemala and Panama was signed with a view to  
creating a free trade area. The Framework provided for the joint negotiation, as much as possible, 
of the statutory part and the bilateral negotiation  of the list of access to markets for goods, services, 
investment and public procurement . 
 
As a result, the  tariff reduction schedules are bilateral . With regard to  services, the Agreement 
between Peru and Panama has specific chapters on financial services, maritime services and 
telecommunications that the Agreements with Honduras and Guatemala do not c ontain . As to 
investments, the annexes on non -conforming measures , as well as public procurement  thresholds 
and coverage,  are bilateral . 
 
It should be noted that the negotiation s between Peru and El Salvador ha ve not yet concluded.  
 
1.15.   With respect to paragraph 3.9, page 10, on the mandatory notification of any new 
import li censing procedures or any changes to existing ones as a condition for the 
application of the licensing scheme:  
 In the absence of a notification, would the licensing scheme not be applied even at 
the most -favoured -nation (MFN) level?  
 
Since 1996, Peru has been notifying the World Trade Organization that it does not maintain  
import licences. Consequently , there is no need to notify such licences  under this Agreement.  
 
1.16.   With respect to page 16, paragraph 3.26: "Subject to negotiation of the conditions 
that the Parties  deem necessary for its application, cumulation could be also extended to 
goods and materials from countries or a group of countries with whom both Parties  have 
a trade agreement":  
 In addition to the diagonal cumulation with Costa Rica, El Salvador, Guatemala and 
Panama, under what mechanisms would extended cumulation be achieved? Are there any 
conditions that must be met, or procedures or processes that must be followed?  
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  Under the Peru -Honduras FTA, in order for extended cumulation  to be applicable : 
 
• there must be a preferential trade agreement between Peru and Honduras, respectively , and 
the same country or group of non -party countries . Such agreements must contain equivalent 
provisions allowing for extended cumulation ; 
• the applicable rules of origin under the Peru -Honduras FTA must be met  (by the materials 
under cumulation); and  
• the relevant conditions considered to be necessary by both Peru and Honduras must be 
agreed upon. 
 
It should be noted that the latter conditions have yet to be agr eed upon and t hat therefore 
extended cumulation is not applicable.  
 
Questions from the delegation of the United States  
 
Provisions on trade in goods  
 
Import duties and charges, and quantitative restrictions  
 
General provisions  
 
1.17.   Paragraph 3.7:  Peru states that it will retain its price band system on agricultural 
products. Even after EIF, see paragraph 3.16, footnote 11, 34 lines will remain dutiable.  
Why did Peru retain its price band system on agricultural products rather than eliminate 
it, as  Peru has done in a prior bilateral agreement?  
The tariff elimination program applied to Honduras was the outcome  of a negotiation reflect ing 
the balance of the negotiation s between the two countries. For Peru , each negotiation process is 
unique and  its final outcome  is evaluated independently from other  processes. The elimination of 
the price band system in other agreements is thus the result of  different contexts and balances 
between the negotiating Parties .  
 
Provisions on trade in services  
 
Scope and de finitions  
 
1.18.   Table 4.1:  Could Honduras please explain why all insurance and insurance -related 
services and banking and other financial services are excluded from this agreement?  
During the negotiation  period , the Parties  did not consider the inclusion of the f inancial 
services sector in that process to be a matter of priority . Since  it is the practice of both Parties  to 
give special treatment to  the financial services  provided by financial institutions (such as banking 
and insurance -related se rvices) in a specific  chapter, the negotiation s did not cover  that chapter.  
 
1.19.   Table 4.2:  Could Peru please explain why all insurance and insurance -related 
services and all banking and other financial services are excluded from this agreement?  
See reply abov e. 
 
Intellectual property rights  
 
1.20.   Paragraph 5.33:  The Factual Presentation states that the Parties are free to 
determine the conditions of access to their genetic and biological resources in accordance 
with domestic and international rules (Article 9.5). A ccess will be subject to previous 
consent by the Party based on mutually agreed terms. They also commit to respect, 
preserve and maintain the traditional knowledge, innovations and practices of their 
indigenous and local communities. Access to traditional knowledge associated with 
biological and genetic resources will also be subject to previous consent by their holders 
also on mutually agreed terms. Any IPR granted in connection with these will be in 
accordance with relevant domestic and international rule s. Proof of legal access to such 
resources or knowledge and the disclosure of their origin shall be required in the context WT/REG393/2  
 
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  of a patent application, if domestic legislation so requires.  Does the domestic legislation 
in Peru and Honduras require such disclo sure?  
Peruvian legislation states that , for genetic resources,  access to such resources shall be proven  
through  an access contract (Articles 16 and 17 of Decision No. 391 of the Andean Community 
approving the Common Regime on Access to Genetic Resources) and, for traditional knowledge, 
through  a licen ce (Article 7 of Law No. 27811 establishing the regime for protection of the collective 
knowledge of indigenous peoples relating  to biological resources). These documents indicate the 
origin of the biological resource or traditional knowledge. In order to grant the right, the intellectual 
property authority must receive  these documents together with the application for patent  
registration ( in accordance with  the second supplementary  provision of Decision No. 391 and the 
second supplementary  provision of Law N o. 27811).  
 
As to Honduras, the replies from 1.3 also apply.  
 
Electronic commerce  
 
1.21.   Paragraph 5.40:  Please explain why did the Parties chose not to include a chapter 
on E-Commerce?  
When negotiations began in 2010,  Honduras and Peru agreed on a simple structure with a 
limited number of groups or topics  for negotiation , which did not include the negotiation of a  chapter 
on e-commerce.  
 
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