RESTRICTED  WORLD TRADE  
ORGANIZATION  WT/TPR/G/234 
16 August 2010 
 (10-4207) 
Trade Policy Review Body Original:   Spanish 
  
 
   
 
TRADE POLICY REVIEW 
 
Report by 
 
HONDURAS 
 
   
Pursuant to the Agreement Establishi ng the Trade Policy Review Mechanism 
(Annex 3 of the Marrakesh Agreement Establishing the World Trade 
Organization), the trade policy statement by Honduras is attached. 
 
 
Note: This report is subject to restricted circ ulation and press embargo until the end of the first 
session of the meeting of the Trade Policy Review Body on Honduras. Honduras WT/TPR/G/234
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  CONTENTS 
 
  Page 
I. INTRODUCTION................................................................................................................ ..................... 5 
II. ECONOMIC AND TRADE POLICY ENVIRONMENT ........................................................................ 5 
III. TRADE POLICY DEVE LOPMENTS 2003 -2010 ................................................................................. 12 
(1) M ULTILATERAL TRADING SYSTEM ............................................................................................ 12 
(2) R EGIONAL TRADE ...................................................................................................................... 15 
(i) Trade agreements cu rrently in force ........................................................................... 15 
(ii) Trade agreements curren tly entering into force .......................................................... 18 
(iii) Trade agreements curr ently being negotiated ............................................................. 18 
IV. CONCLUSION ................................................................................................................. ...................... 18 
V. FUTURE POLICY DIRECTIONS .................................................................................................... ..... 19 
 
 Honduras WT/TPR/G/234
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  I. INTRODUCTION 
1. As part of an economic policy designed over two government terms, between 2003 and 2009 
the Republic of Honduras engaged in a number of activities to ignite a process of economic, political 
and social change that would create an economy cap able of generating high an d sustained growth, and 
thus allow for poverty reduction and the deve lopment of physical and human capital. 
2. Since its last Trade Policy Review in 2003, H onduras has amended its institutional and legal 
framework to reinforce the trade liberalization process, enacting a large number of new laws and 
regulations, both domestically and at the Central Amer ican level.  Based on resolutions issued by the 
Central American Council of Ministers of Ec onomic Integration (COMIECO), the following 
instruments, among others, have b een amended and approved in Honduras and the rest of the region:  
the Central American Uniform Customs Code (CAUC A) and its regulations;  regulations on customs 
valuation of merchandise, unfair trade practices, and safeguard measures;  the Central American 
Regulations on the Origin of Goods;  Technical Re gulations for Mutual Recognition in relation to 
Hygiene Products, Cosmetics, Food and Beverages;  and Microbiological Criteria for Food Safety.  In addition, the Central American Dispute Settlement M echanism was amended;  the results of the fourth 
amendment to the Nomenclature of the Harmoni zed Commodity Description and Coding System 
were incorporated into the Central American Tariff System (SAC);  and many alterations were made 
to import duties (DAI). 
3. During the same period, trade agreements were negotiated and im plemented with the 
United States, Colombia, Chinese Taipei, Chile and Pa nama, to add to those already in force with 
Mexico and the Dominican Republic;  and negotiations  with the European Union were also brought to 
a conclusion. 
4. Honduras has participated both as a complainant and as a third-party in disputes brought 
before the WTO Dispute Settlement Body.  It has also submitted a number of proposals in other 
WTO committees. 
5. Honduran trade policy continues to be pr emised on opening markets to increase its 
participation in international trade.  It is also striving to maintain a stable macroeconomic framework 
to generate conditions for growth to combat povert y.  New trade agreements have been signed, and 
substantial progress has been made in negotiations to establish the Central American Customs Union. 
6. The Ministry of Industry and Trade (SIC) continues to have responsibility for formulating and 
implementing the country's trade policy, acti ng through the Under-Secretariat for Economic 
Integration and Foreign Trade in coordination w ith other government bodies and with the country's 
private sector. 
7. The following sections describe economic trends in  Honduras since its last review, and report 
on trade policy actions, both multilateral and regional, and future policy directions. 
II. ECONOMIC AND TRADE POLICY ENVIRONMENT 
Macroeconomic policies applied since 2003 Honduran economic development 
8. The Honduran economy grew by an average of 5.6 per cent per year in 2003-2008, fuelled 
mainly by high levels of private consumption and investment, and by goods and services exports.  In WT/TPR/G/234 Trade Policy Review 
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  2009 however, the international economic and fina ncial crisis, compounded by domestic political 
upheaval, caused economic activity to shrink by 2.1 per cent. 
9. The year-on-year inflation rate, measured at th e end of each year, averaged 7.4 per cent in 
2003-2009, in particular reflecting inflationary pressures caused by the oil and food price shocks in 
2008, which, in conjunction with strong domestic dema nd, pushed inflation up to 10.8 per cent in that 
year.  Nonetheless, the central government's subsid y policy and the stability of the nominal exchange 
rate since 2005 have helped to restrict average in flation to single figures.  In 2009 the year-on-year 
rate dropped back to 3 per cent in the wake of  faltering domestic demand and lower food and fuel 
prices. 
10. The external current account deficit grew every year from 2005 to 2008 to peak at 12.9 per 
cent of GDP, despite substantial inflows of family  remittances;  it was mostly financed by foreign 
direct investment (FDI).  In 2009, however, the gap narrowed to 4 per cent of GDP, as a result of the global economic and financial crisis, combined with lower oil prices and the domestic political 
instability prevailing during the year. 
Monetary, credit and exchange-rate policies 
11. To achieve these results, the Central Bank of  Honduras (BCH), which sets the country's 
monetary, credit and exchange-rate policy, in troduced measures under the Triennial Poverty 
Reduction and Growth Facility (PRGF), signed with the International Monetary Fund (IMF) in early 
2004.  These included control of inflation, relative exchange-rate stability and measures to consolidate 
public finances designed and implemented by the Ministry of Finance. 
Monetary and credit policies 
12. Monetary policy, conducted mainly through ope n-market operations, succeeded in sterilizing 
family remittance inflows, which in 2003 and 2004 grew by 10.1 per cent and 35.6 per cent, 
respectively.  Moreover, inflationary pressures fue lled by the behaviour of exogenous variables, such 
as higher oil prices, led the monetary authorit y to support open-market operations by raising 
mandatory investment requirements.  During this period, the BCH's key policy goal was to maintain 
domestic price stability. 
13. In 2005, a new monetary policy framework was introduced, which is currently being applied 
by the BCH.  This includes:  (a) separation of ope n-market operations aimed at managing short-term 
liquidity in the national financial system from those targeting long-term or structural liquidity;  (b) definition of a short-term interest rate as an operational variable and signal to the market of the 
authorities' monetary policy stance (the monetary pol icy rate (MPR));  and (c) design and application 
of the methodology for forecasting the financial system's liquidity needs. 
14. In addition, permanent credit facilities and perm anent investment facilities were instituted as 
tools to control overnight liquidity in the domestic  banking system.  The joint effect of these actions 
enabled the central bank to narrow the spread between the interest rate set as an operational target and 
the rates actually prevailing on the interbank money market. 
15. In the new monetary-policy framework, open- market operations gene rated a substantial 
increase in the balance of central bank bills (LBCHs)  outstanding.  This succeeded in containing the 
inflationary pressures caused by higher fuel prices and potential aggregate demand growth fuelled by 
the inflow of external funds into the economy, while  trying not to hinder the revival of lending and its Honduras WT/TPR/G/234
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  inevitable positive effect on domestic productive activit y, by fostering more favourable conditions on 
the financial and money markets. 
16. The authorities' monetary policy stance is signalled more clearly in the new policy 
framework, since economic agents can infer this by merely by tracking a rate as an operational 
variable. 
17. A more stable macroeconomic framework, refl ected in the robust external position (BCH 
reserve assets equivalent to 4.8 m onths of imports), low inflation (7.7 per cent at end-2005), together 
with a smaller fiscal deficit (2.2 per cent of GDP ) and a favourable international economic climate, 
inaugurated a period in which monetary policy targ eted economic growth in addition to its main 
objective of ensuring price stability.  To that end,  the BCH lowered the MPR from 7 per cent to 6 per 
cent in three stages during 2006, which in turn eased interest rates on the interbank market and the 
rates on bonds sold in BCH auctions.  As result,  open-market operations absorbed less liquidity. 
18. At the same time, the add itional reserve requirement on foreign-currency liabilities was 
reduced by five percentage points in 2006, to pr ovide domestic-currency liq uidity to the national 
financial system and continue to harmonize fore ign-currency reserve requirements with those 
prevailing elsewhere in Central America. 
19. These expansionary measures fuelled a sharp incr ease in lending to the private sector, which 
helped to finance growth rates above 6 per cent in the real economy in 2006 and 2007.  Low inflation made it possible to sustain measures to promote faster economic growth, and it was only in the second half of 2007 that external inflation combined  with domestic demand pressures caused local price 
increases to gather pace.  In r esponse, the BCH raised the MPR from 6 per cent to 9 per cent at the 
end of the first half of 2008, and also temporarily  increased the mandatory investment requirement in 
local currency by four percentage points. 
20. Nonetheless, the crisis on international financial markets forced the BCH to change the course 
again, to guarantee access to credit by cutting the MPR to 7.75 per cent in late 2008 and then to 
3.5 per cent at the end of the first half of 2009. 
21. To promote growth in the country's productiv e sectors and avert further increases in the 
domestic prices of goods and services, a differential reserve requirement was instituted for deposits in 
national and foreign currency, to main tain adequate levels of liquidity  in the financial system.  Under 
this measure, financial institutions holding at least 60 per cent of their local-currency loan portfolio in 
productive activities rather than consumer and trade credit, were subject to a 0 per cent reserve 
requirement.  At the same time, the additional reserve requirement in foreign currency for banks 
holding at least 60 per cent of their loan portfo lio in productive activities was fixed at 9 per cent. 
22. Also, to combat price hikes among domestic a nd foreign goods and services, the BCH set the 
local-currency mandatory investment rate at 9 per ce nt in 2008.  In addition to holding their reserve 
requirement in registration accounts at the BCH, banks  were allowed to fulfil these obligations by 
counting up to five percentage points from thei r holdings of Honduran government bonds, and up to 
two percentage points from new lending operations in  local currency to support the production of 
basic grains and productive activities (agricultu re, pre-export, maquila, housing construction and 
small and medium-sized enterprises). 
23. Another economic growth stim ulus measure was the creation of BCH-Banhprovi Trust Fund 
on 18 December 2008, to provide financial support to the housing, microcredit and other productive WT/TPR/G/234 Trade Policy Review 
Page 8 
 
 
  sectors.  The total amount of BCH funding made available to the country's productive sectors was 
L10 billion, of which L9 billion had b een released as of end-June 2010. 
24. Nonetheless, the political events that unfolded in Honduras in 2009 undermined confidence in 
lending to investors, and excess liquidity started to put the central bank's net international reserves at 
risk.  Accordingly, the monetary policy adopted in  the second part of the year tended to absorb or 
reaccommodate excess liquidity in the financial system. 
25. Pursuant to the central bank's objectives, and in  coordination with fiscal policy, a number of 
policy measures were adopted, including the following: 
• Local-currency reserve requirement was set at 6 per cent. 
• Mandatory investment was raised by three percentage points to a total of 12 per cent 
payable in Honduran government bonds. 
• In addition to maintaining the 12 per cen t reserve requirement on foreign-currency 
liabilities, institutions in the national fina ncial system have to hold an additional 
2 per cent reserve in liquid assets at t op-rated financial institutions abroad. 
• Mandatory foreign-currency investments were increased from 6 per cent to 
10 per cent. 
26. These measures allowed for a recomposition of liq uidity in the banking system, moving away 
from highly liquid instruments represented by cash surp luses that were easily convertible into foreign 
currency, towards much healthier and better supervised  investment in the new loan portfolio, together 
with the new reserve requirements in government bonds and BCH bills. 
27. As of June 2010, the measures described above we re still in force, and steps were being taken 
to sign a new arrangement with the IMF, to foster  greater consistency and certainty both among local 
economic agents and among international lendi ng organizations and foreign investors. 
Exchange-rate policy 
28. Since 1994 public auctions had been held th rough the Public Foreign Currency Auction 
System (SAPDI) to ensure foreign exchange is allo cated fairly at an exchange rate based on supply 
and demand.  The base price was altered in line with  the trend of the benchmark exchange-rate in the 
previous five auctions. 
29. Since 2005, the exchange-rate formula has undergone a number of changes to respond to the 
situation prevailing in the Honduran economy, in which family remittances grew by around 
50 per cent in 2006.  It was then decided to introdu ce an adjustment factor in cases where the monthly 
accumulation was greater than programmed.  This has r esulted in a stable exchange rate of L18.89 per 
dollar since September 2005. 
30. Nonetheless, although exchange-rate stability has been a factor in restraining domestic 
inflation over the last few years ( pass through ), it has also made imports artificially cheaper, which, in 
conjunction with an expansionary monetary po licy in 2006-2008, has spawned a growing trade 
deficit.  The gap widened further in 2008 as a resu lt of the food and oil price shocks, to represent 
21.9 per cent GDP.  Since then, the global economic and financial crisis, together with lower oil Honduras WT/TPR/G/234
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  prices and the domestic political crisis in 2009, have  allowed for a temporary correction in the trade 
deficit. 
 
 
 
31. In the fourth quarter of 2009, the SAPDI was replaced by the Electronic Foreign-Exchange 
Trading System (SENDI), which allows foreign- exchange purchase and sale offers to be submitted 
electronically, thus reducing transaction costs and speeding up the process. 
Fiscal policy 
32. Fiscal policy in 2003-2009 can be divided in two stages.  In the first, lasting from 2003 to 
2006, higher direct taxes (the Tax Equity Law introducing the Temporary Solidarity Contribution Tax, among others), supported by qualitative improvements in revenue  collection and reduction of tax 
evasion, boosted tax revenue from 13.7 per cent of GDP in 2003 to 15.2 per cent in 2006.  
This revenue expansion was also assisted by a high er level of economic activity (average growth of 
5.8 per cent in the four-year period).  Current expe nditure trended in the opposite direction to income, 
falling by 0.2 percentage points to a level of 16 per cent of GDP in 2006.   This was partly the result of 
the measures contained in the Public Finance Rationalization Law (Decree No. 19-2003), which, 
among other things, placed a ban on creating new jobs in 2004-2006 and imposed ceilings on wages 
paid to civil servants. Honduras:  exports and imports, 2000-2009  
30 40 50 60 70 80 90 100 
2000 2001 2002 2003 2004 2005 2006 2007a/ 2008b/ 2009c/ 
Source : BCH. (Percentage of GDP at constant prices)  
a     Revised  
b     Preliminar y 
c     Estimated  Exports Imports21.9
8.9 Import-export gapWT/TPR/G/234 Trade Policy Review 
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33. Revenue growth and expenditure c ontainment, assisted by higher levels of external transfers, 
helped reduce the fiscal deficit from 4.7 per cent of GDP in 2003 to 1.1 per cent in 2006, the lowest 
level in the decade. 
34. In the second stage, from 2007 to 2009, fiscal imbalances started to deepen, as current 
expenditure climbed to 19 per cent of GDP in 2009.   The key components of fiscal expenditure are 
wages and salaries, and current transfers through elec tricity and fuel subsidies, the latter mainly in 
2007 and 2008.  These subsidies helped to contai n inflationary pressures and improve family 
disposable income.  Nonetheless, the defi cits the national electricity company ( Empresa Nacional de 
Energía Eléctrica ) caused by rising international oil prices,  led to adjustments in rates and closer 
targeting of the subsidy. 
35. The quality of expenditure deteriorated, with wages and salaries growing from 9.2 per cent of 
GDP in 2007 to 11.1 per cent in 2009, partly ow ing to the rise in the minimum wage.  Revenues 
tracked the slowdown in economic activity, to reach a level of 14.4 per cent of GDP in 2009.  The 
fiscal deficit in that year was equivalent to 6.5 per cent of GDP, which is normal in most countries 
that implemented fiscal stimulus programmes;  but in Honduras it is not clear that any plan has been 
developed to deal with the crisis. 12 16 20 24 28 
2003 2004 2005 2006 2007 2008 2009 Total central government inco me and expenditure, 2003-2009  
(Percentage of GDP) 
Source :  Sefin.  Total income Total ex penditure  Honduras WT/TPR/G/234
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  36. Much of the shortfall between government revenue and expenditure was financed by 
domestic debt, which grew from L6,508,000,000 in 2007 to L22,988,300,000 in late 2009.  The 
unsustainable financial situation that resulted in the fiscal sector led the National Congress of the 
Republic to approve the Law to Strengthen Revenues,  Social Equity and Rationalization of Public 
Expenditure in early 2010, which contained a num ber of measures such as improvements in tax 
collection, tax administration efficiency, support for national production and expenditure 
rationalization. 
Wage and employment policy 
37. In the domain of employment policy during the review period, a tripartite agreement was 
reached between private enterpri se, the Government and one of the country's three labour union 
federations, to create an executive decree allowing differentially lower wages to be paid in less 
developed zones, to encourage job creation and at the same time facilitate local development through 
investment in productive and social infrastructure. 
38. This employment policy is based on the Nati onal Decent Work Programme, which forms part 
of a broader scope State policy in line with the P overty Reduction Strategy (PRS), and the Country 
Vision Strategy (Executive Decree No. PCM 5-20 07), which aimed to create over 400,000 new job 
opportunities throughout Honduras. 
39. In this case the Ministry of Industry and Trade is responsible for setting up, according to 
specific criteria, investment and employment zones (ZIE) in which the differential wage mechanism 
can be applied (Executive Decision No. 027- STSS-06 of 25 March 2006);  for creating and 
implementing differentiated end-user electricity rates that provide incentives to investment for 
ZIE-declared zones;  and, lastly, for calling upon the National Vocational Training Institute to train 
skilled workers to meet the demand from firms wishing to invest in the ZIEs. 
40. The departments in which the wages paid will be about US$0.12 less than the minimum 
hourly wage generally in force for free zones are:  Santa Bárbara, Choluteca, El Paraíso, Olancho and Valle.  The arrangement lasts for ten consecutive y ears as from the entry into force of the Executive 
Decision of 25 March 2006. 
41. Wage policy, based on Article 35 of the Mini mum Wage Law, states that wages must be 
adjusted at least once a year, and that an additiona l increase in the minimum wage can be made when 
cumulative inflation exceeds 12 per cent in the first half of the year. 
42. Among other effects, the most recent increase in minimum wages (about 60 per cent) in 2009 
induced price increases mainly in non-tradables (essentially services, such as education, restaurant 
and health services), but not in tradables (includi ng food products such as wheat, maize and rice and 
their derivatives), which benefite d from the drop in prices for food and petroleum by-products in the 
first three quarters of the year. 
 WT/TPR/G/234 Trade Policy Review 
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43. Wage policy, combined with exchange-rate stab ility has led to a continuous improvement in 
minimum wages paid to Honduran people. 
III. TRADE POLICY DEVELOPMENTS 2003-2010 
44. Honduras continues to pursue its goal of fuller integration into a international trade, by 
stimulating domestic production and seeking to expand the availability and supply of goods and 
services through foreign trade, and by promo ting national efficiency, diversification and 
competitiveness, exploiting comparative adva ntages and the opening of new markets. 
(1) MULTILATERAL TRADING SYSTEM  
45. The trade liberalization undertaken by Honduras has enabled it to develop, expand and 
diversify its international trade;  and the model implemented aims to remove barriers to compliance 
with regulations governing the multila teral trading system.  Here it is  important to note that Honduras 
amended its national legislation to fulfil the co mmitments and requirements contained in the common 
institutional framework governi ng multilateral trading relations. 
46. With regard to the Doha Development Ag enda (DDA), Honduras has sponsored several 
proposals and contributions reflecting its priority  national interests in relation to agriculture, 
non-agricultural market access (NAMA);  trade in services, intellectual property, WTO standards, 
trade facilitation and dispute settlement.  It has also defined and identified itself as an integral part of 
the Small and Vulnerable Economies (SVE) grouping;   and it co-authored all the proposals submitted 
by that group, which seek effective special and di fferential treatment, along with other flexibilities 500 1,000 1,500 2,000 2,500 
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009Average real minimum monthly wage, 2000-2009  
(Lempiras at constant December 1999 prices) 
Source :  BCH Honduras WT/TPR/G/234
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  enabling them to protect sensitive s ectors of their economies.  It is also a party to and co-sponsor of 
all the proposals submitted by WTO Member countries forming the G-33. 
Agriculture 
47. These negotiations are a priority for Honduras, si nce agriculture is the economic sector that 
contributes most to national GDP.  It therefore ha s high hopes for achieving a substantial reduction in 
domestic assistance in developed countries and the progressive elimination export subsidies for 
agricultural products, to improve market access for its products.  It is also seeking recognition for 
additional flexibility allowing "special products" ex emption from the tariff reduction process, and the 
creation of a new special safeguard mechanism for developing countries to counteract import surges 
and steep falls in international prices. 
Non-agricultural market access (NAMA) 
48. Honduras's position in these negotiations is repr esented in the proposals it co-sponsored with 
the SVEs, which seek to avoid the application of th e Swiss formula and introduce a band approach to 
tariff reduction, to give the domestic industrial sector time to adjust.  Honduras supported the 
inclusion of the topic of preference erosion in the modalities and believes participation in 
sector-specific negotiations should be voluntary. 
Services 
49. Honduras's goal in these negotiations has been to  attract foreign investment to the country, 
particularly to develop infrastructure services in  both quantity and quality terms to support economic 
activity.  It has also maintained interest in the provision of prof essional, accounting, legal, medical 
and advertising services, where it has a comparative advantage. 
50. With regard to the draft text on services, H onduras has used the SVE framework to express its 
disagreement with certain elements such as:  the in tention to make a factual evaluation of the results 
of the request-offer approach to plurilateral negotia tions;  setting levels of ambition in market access 
and national treatment;  and lobbying for Members to  expand the sectoral and modal coverage of their 
commitments.  It has also stood firm against any attempt to bind the current level of market access 
and national treatment, or to introdu ce any notion of quantitative parameters. 
51. Honduras has presented its initial and revised offers on this topic. 
Intellectual property 
52. Honduras has made considerable efforts to give due protection to intellectual property rights, 
by attempting to modernize its legal, administrative and judicial structure.  Nonetheless, it realizes 
that further efforts are still needed.  In this regard , it considers that any surcharge imposed to create a 
multilateral registration system that involves the pr otection of large volumes of such rights would 
exhaust limited resources, so it is considering cr eating a simple multilateral registration system for 
geographical indications exclusively for wines and spirits, at minimum cost. 
53. Honduras co-sponsored a "joint proposal" to establish a voluntary registration system that 
does not impose any new obligations or alter the rights and obligations of the Agreement on 
Trade-Related Aspects of Intellectual Property Ri ghts (TRIPS), but which gives Members flexibility 
to incorporate their geographical indications pr otection systems in the aforementioned register. WT/TPR/G/234 Trade Policy Review 
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  Trade and the environment 
54. Honduras is participating in these negotiati ons and shares the position held by most 
developing countries in favour of striking a balance under the "triple win" approach in which trade, 
environment and sustainable development all stand to  benefit.  Nonetheless, it is finding it hard to 
identify its potential environmental products.  Fo r the time being, it favours the "environmental 
project" approach, according to its priority developmen t interests.  In the case of the "list approach" 
Honduras argues that this would have to be based on final-use rather than production-methods criteria. 
Trade facilitation 
55. Honduras actively supports these negotiations, cons idering it important to have a framework 
of clear and precise rules to simplify customs procedures and allow trade operators access to all 
information that enables international trade to function more smoothly. 
56. Honduras has worked on and co-sponsored a propos al on special and differential treatment, 
and has produced a proposal for each WTO Member  country to set up a national trade facilitation 
committee.  A national ad hoc group was also set up to provide technical inputs reflecting national 
interests on this subject. 
57. Honduras has carried out technical assistance activities to continue raising awareness among 
the various sectors involved in this negotiation. 
WTO rules 
58. Honduras is participating in the negotiations ai med at fulfilling the mandate to clarify and 
improve WTO rules.  In the case of fishery subsidies,  its key interest is to ensure appropriate and 
effective special and differential treatment for its sp ecific needs, and to obta in technical assistance and 
increase its capacity to meet the requirement to set up and operate a "fisheries management mechanism" and conduct a scientific evaluation of fish populations. 
59. In the proposals on fishery subsidies submitted with  other SVEs, it has reaffirmed the need to 
"exclude from prohibition" subsidies granted to co ver operating costs, and those related to activities 
such as unloading, handling, or preparation in or arou nd the port.  It also stressed the need to exclude 
all forms of government assistance which the SVEs mi ght provide to its national fishermen in certain 
situations. 
60. In the case of Regional Trade Agreements (RTA s), Honduras participated with interest in 
negotiations on the transparency mechanism, to e nhance the efficiency an d transparency of the 
development of regional trade agreements no tified to the WTO.  It has submitted the 
Mexico-Northern Triangle Free Trade Agreement (FTA ) for review under this mechanism;  and it has 
notified DR-CAFTA and the Honduras-Panama FTA, and jointly notified the FTA between 
El Salvador, Honduras, and Chinese Taipei. 
Dispute Settlement Understanding (DSU) 
61. Honduras's special interest in these negotiations is to obtain practical results in areas such as:  
the rights of third parties, mutually agreed soluti ons, the interests of developing countries, including 
special and differential treatment, and effective enfo rcement of the decisions of the relevant bodies.  
Honduras has used the DSU in disputes relating to ba nanas and cigarettes, and has participated as a Honduras WT/TPR/G/234
 Page 15 
 
 
  third party in 13 cases.  It believes the DSU needs strengthening to guarantee the rights of small 
developing countries. 
Aid for Trade 
62. Honduras recognizes the Aid-for-Trade programme and the role it plays through technical 
assistance activities and in trade capacity building.  It needs to be predictable and effective in order to 
support the country's integration into internationa l trade, promote dialogue between its public and 
private sectors, and strengthen its trade capacities.  In 2009, Honduras participated in the national 
dialogue on Aid for Trade to define an international trade integration strategy. 
(2) REGIONAL TRADE  
(i) Trade agreements currently in force 
63. Honduras has implemented a clearly active trade policy, premised on guaranteeing 
preferential access for its exportabl e supply in the main markets, by binding preferences and opening 
up new trade opportunities with strategic partners. 
64. To that end, several free trade agreements ha ve been signed since 2003, and relations have 
been deepened in the fra mework of the Central American integration process, complemented by 
participation in the WTO Doha  Round multilateral negotiations. 
Central American Common Market 
65. Honduras continues to take the actions required of it by its commitment to set up a Central 
American Customs Union, reaching agreements in the various technical groups in which it 
participates to address issues relating to tariffs, agri culture, transport, registration, rules of origin, 
dispute settlement and intellectual property.  It is al so represented at the meetings of the Directors of 
Economic Integration, and in mee tings of the regional directors of  customs, plant health, animal 
health and agricultural health. 
66. Decree No. 145-2008 of 2 October 2008 a pproved the Framework Agreement for 
Establishing the Central American Customs Union, which was deposited at the General Secretariat of 
the Central American Integration System (SG-SICA) on 26 March 2009. 
67. The Agreement defines three stages for achie ving a customs union:  promotion of free 
circulation of goods and trade facilitation;  regulatory modernization and convergence;  and 
institutional development.  In conjunction with other Central American countries, Honduras continues 
to promote actions that will enable it to strengthen trade in the region, by adopting a number of trade 
facilitation measures specified  in the first stage. 
Free Trade Agreement between the United Mexic an States and the Republics of El Salvador, 
Guatemala and Honduras 
68. This Agreement was signed on 29 June 2000 and en tered into force on 1 June 2001, covering 
the following disciplines:  initial and final provisi ons;  national treatment and market access for 
goods;  the agriculture sector;  sanitary and phytosan itary measures;  rules of origin;  customs 
procedures for handling the origin of goods;  safeguard  measures;  unfair international trade practices;  
cross-border trade in services;  financial services;  telecommunications;  temporary entry for business 
persons;  investment;  standardization measures;  intellectual property, transparency;  administration WT/TPR/G/234 Trade Policy Review 
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  of the agreement;  and dispute settlement.  It also includes a chapter on exceptio ns which refers to the 
general exceptions of Article XX of the GATT 1994 a nd those of Article XIV(a), (b) and (c) of the 
GATS, whereby Parties to the Agreement may a dopt measures for reasons of national security, 
disclosure of information and taxation, as well as balance-of-payments and safeguard measures. 
69. Aspects of the Agreement relevant to merc handise trade were notified to the Council for 
Trade in Goods, pursuant to Article XXIV of the GATT 1994 and the Understanding on the 
Interpretation of Article XXIV of  the GATT 1994.  Aspects relating to  services were notified pursuant 
to paragraph 7 of Article V of the GATS. 
70. Following its notification to the WTO, in 2006, this Agreement was sent for review in the 
WTO Committee on Regional Trade Agreements on 14 and 15 September 2009. 
71. Regional activities are currently ongoing as part of a plan of action to achieve convergence 
among the FTAs signed between Centra l American countries and Mexico. 
Central America-Dominican Republic Free Trade Agreement 
72. The FTA between Central America and the Do minican Republic was signed on 16 April 1998 
and entered into force on 15 October 2001.  It covers  the following topics:  initial provisions;  general 
provisions;  national treatment and market access fo r goods;  rules of origin;  customs procedures;  
sanitary and phytosanitary measures;  unfair trade pr actices;  safeguard measures;  investments;  trade 
in services;  temporary entry for business persons;  government procurement;  technical barriers to 
trade;  intellectual property;  competition policy;  dispute settlement;  exceptions;  administration of 
the agreement;  transparency;  and final provisions. 
73. This Agreement has not been notified to the WTO. 
DR-CAFTA Free Trade Agreement 
74. In December 2003, negotiations were completed for the FTA between the 
Dominican Republic, Central America and the Unite d States (DR-CAFTA), which entered into force 
on 1 April 2006.  The disciplines covered in the Agre ement include:  market access;  rules of origin 
and origin procedures, customs procedures and tr ade facilitation;  sanitary and phytosanitary 
measures;  technical barriers to trade;  trade remedies;  government procurement;  investment;  
cross-border trade in services;  financial services;  telecommunications;  electronic commerce;  intellectual property;  labour environment;  tran sparency;  trade capacity building;  and dispute 
settlement. 
75. The Agreement binds preferences previously granted unilaterally by the United States. 
Chile-Central America Free Trade Agreement 
76. The regulations of this Ag reement were signed in 1999 by the Presidents of the 
five Central American countries and Chile.  Decr ee No. 189-2007 of 10 January 2008 approved the 
Chile-Central America Free Trade Agreement, si gned in Guatemala on 18 October 1999.  It entered 
into force on 19 July 2008. 
77. The Agreement covers the following areas:  in itial provisions governing the establishment of 
the free-trade zone and the objectives, general defi nitions, national treatment and market access for 
goods, rules of origin, customs procedures relating to  the origin of goods, safeguard measures, unfair Honduras WT/TPR/G/234
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  trade practices, sanitary and phytosanitary meas ures, standardization measures and metrology, 
investment, cross-border trade in services, air transportation, telecommunications, temporary entry for business persons, competition policy, government pr ocurement, transparency, administration of the 
agreement, dispute settlement, exceptions and fina l provisions on entry into force, amendment, 
accession and termination of the agreement. 
Free Trade Agreement with Chinese Taipei 
78. Through Decree No. 06-2008 of 30 January 200 8, the National Congress approved the FTA 
between Chinese Taipei, the Republic of El Salv ador and the Republic of Honduras, signed in 
San Salvador, El Salvador on 7 May 2007.  Decisi on No. 255-2008 of 7 July 2008 set 15 July 2008 as 
the date for its entry into force. 
79. The Agreement covers the following topics:  initial and general provisions;  national 
treatment and market access for goods;  rules of origin ;  customs procedures relating to rules of origin;  
safeguard measures;  unfair trade practices;  sanita ry and phytosanitary measures;  standardization 
measures, metrology and authorization procedures;  investment;  cross-border trade in services;  temporary entry for business persons;  transparency;  administration of the agreement;  dispute 
settlement;  exceptions;  and c ooperation and final provisions. 
Central America-Panama Free Trade Agreement 
80. The Central America-Panama FTA was signed in  Panama City on 6 March 2002, and was 
approved by the National Congress of the Republic  of Honduras through Decree No. 7-2008 of 
30 January 2008. 
81. The Protocol to the Agreement was signed in Te gucigalpa on 15 June 2007.  The date of entry 
into force of the Agreement and its Protocol  was set for 8 January 2009 through Decision 
No. 464-2008 of 22 December 2008. 
82. The Agreement covers the following topics:  initial and general provisions;  national 
treatment and market access for goods;  rules of orig in;  customs procedures;  safeguard measures;  
unfair trade practices;  sanitary and phytosanitary me asures;  standardization measures, metrology and 
authorization procedures;  investment;  cross- border trade in services;  financial services;  
telecommunications;  temporary entry for business persons;  competition policy;  monopolies and 
State-owned enterprises;  government procuremen t;  intellectual property;  transparency;  
administration of the agreement;  dispute se ttlement;  exceptions and final provisions. 
FTA between the Republic of Colombia and the Repu blics of El Salvador, Guatemala and Honduras 
83. This Agreement was signed on 9 August 2007 in  the city of Medellín, Colombia, and was 
approved by the Honduran National Congress through Decree No. 188-2007 of 10 January 2008.  
It entered into force on 26 March 2010. 
84. The Agreement covers the following topics:  initial and general provisions;  national 
treatment and market access for goods;  rules of orig in;  customs procedures relating to the origin of 
goods;  trade facilitation;  safeguard measures;  anti-dumping and countervailing measures;  sanitary 
and phytosanitary measures;  technical barriers to  trade;  government procurement;  investment;  
cross-border trade in services;  electronic comm erce;  temporary entry for business persons;  
transparency;  administration of the agreement;  dispute settlement;  exceptions;  and cooperation and 
final provisions. WT/TPR/G/234 Trade Policy Review 
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  85. The Agreement has not yet b een notified to the WTO. 
(ii) Trade agreements currently entering into force 
Partial Scope Agreement between th e Republics of Cuba and Honduras 
86. Negotiations of the regulatory text of the Agreem ent were completed in June 2009;  but it was 
impossible to complete negotiations on the schedule of  tariff reductions by that date, and tariff issues 
on a reduced list of interest remain pending.  The negotiations have thus far not resumed. 
Central America-European Union Association Agreement 
87. Negotiations in connection with the Associati on Agreement between Central America and the 
European Union concluded in May 2010 in Madrid , Spain.  The Agreement consists of three 
negotiating pillars:  political;  coopera tion;  and trade.  The discussions covered issues relating to trade 
in goods and in services and right of establishmen t, electronic commerce, intellectual property, 
government procurement, trade and competition, and trade and sustainable development, and it 
addresses issues relating to the economic integrati on of the region.  The Agreement reached also 
includes the Republic of Panama. 
88. As a result of the negotiations, the benefits of the Generalized System of Preferences 
Plus (GSP Plus) which grants tariff preferences to products such as shrimps, pineapple, live plants, 
grapefruit, cigars, melons and others, were consolidated.  The current regime expires on 
31 December 2011.  The Agreement also sets quot as for sensitive products from Central America and 
the European Union. 
89. The aim is to start the legal review stage of th e Agreement in the third quarter of 2010, so that 
it can enter into force in 2012. 
(iii) Trade agreements currently being negotiated 
CA4-Canada Free Trade Agreement 
90. Negotiations with Canada have  been conducted jointly by the CA4 countries (El Salvador, 
Guatemala, Honduras and Nicaragua).  The proce ss began in 1998 and there have been several 
attempts to bring it to a conclusion, with cons tant efforts being made in 2010 to complete the 
negotiations during course of the year. 
Caribbean Community (CARICOM) 
91. Negotiations with the Community of Caribb ean States (CARICOM) have been suspended 
since August 2007. 
IV. CONCLUSION 
92. Honduras has made a number of structural refo rms, such as updating the legal framework 
governing the financial sector and improving the tax and penal codes, together with legal, judicial and 
electoral reforms. 
93. The period 2003-2009 was very important for cons olidating the country's trade policy, based 
on greater integration in the international ec onomy and a more robust legal framework governing Honduras WT/TPR/G/234
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  trade relations.  Progress was made on each of the key areas of the work of the Ministry of Industry 
and Trade (SIC), such as trade negotiations, administ ration of agreements, promotion of external trade 
and investment, and its relations with civil society. 
94. In trade negotiations, Honduras has reached impor tant agreements at the multilateral (WTO), 
regional (Central America) and bilateral (free trad e agreements and association agreement) levels, 
giving it preferential trading conditions and more permanent relations with its trading partners. 
95. Thanks to the trade-policy actions implemented during the current trade policy review period, 
Honduran exports are entering markets with whic h the country signed trade agreements under 
preferential access conditions, thus providing an opportunity to boost economic growth. 
V. FUTURE POLICY DIRECTIONS 
96. Despite its limitations, Honduras re mains determined to adapt to international changes and 
strengthen its current free-market model, seeking to ob tain practical results that would enable its most 
competitive products to gain access to new markets.   In this regard, it expects ongoing multilateral 
negotiations and the DDA to converge on measures en abling it to benefit from trade liberalization and 
integrate more fully into the international economy. 
97. Honduras will continue to exploit the opport unities provided by current FTAs to boost its 
exports, attract investments and thus pr omote economic growth and employment. 
98. To implement its trade policies, Honduras w ill maintain close communication between the 
government and private sectors, paying special attention to the needs of civil society. 
99. It will continue to deepen its integration into  the international economy, and to counteract the 
domestic impact of the global economic crisis.  Measures in this area will aim to strengthen the 
country's ability to cope with the adverse impact of the crisis, and in particular protect existing jobs 
and attract new investments. 
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