WORLD  TRADE  
ORGANIZATION  WT/TPR/S/234/Rev.1 
15 October 2010 
 (10-5320) 
Trade Policy Review Body  
   
 
  
 
TRADE POLICY REVIEW 
 
Report by the Secretariat 
 
HONDURAS 
 
Revision 
 
 
 
 
This report, prepared for the Second Trad e Policy Review of Honduras, has been 
drawn up by the WTO Secretariat on its own responsibility.  The Secretariat has, 
as required by the Agreement establishing the Trade Policy Review Mechanism 
(Annex 3 of the Marrakesh Agreement Establishing the World Trade 
Organization), sought clarification from Honduras on its trade policies and 
practices. 
 
Any technical questions arising from this  report may be addressed to Mr Ricardo 
Barba (Tel.:  022 739 5088) or Mrs Eugenia Lizano (Tel.:  022 739 6578). 
 
Document WT/TPR/G/234 contains the policy statement submitted by 
Honduras. 
 
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  CONTENTS 
 
  Page 
SUMMARY vii 
 (1) E CONOMIC ENVIRONMENT  vii 
 (2) T RADE AND INVESTMENT POLICY FRAMEWORK  viii 
 (3) M EASURES AFFECTING IMPORTS  viii 
 (4) O THER MEASURES AFFECTING TRADE  ix 
 (5) S ECTORAL POLICIES  x 
I. ECONOMIC ENVIRONMENT 1 
 (1) O VERVIEW  1 
 (2) M ACROECONOMIC DEVELOPMENT  1 
 (3) T RADE PERFORMANCE AND INVESTMENT  4 
 (i) Trade in goods and services 4 
 (ii) Foreign direct investment 6 
 (4) O UTLOOK  8 
II. TRADE AND INVESTMENT REGIME 10 
 (1) G ENERAL FRAMEWORK  10 
 (2) T RADE POLICY OBJECTIVES AND FORMULATION  11 
 (3) T RADE LAWS AND REGULATIONS  12 
 (4) I NTERNATIONAL TRADE RELATIONS  12 
 (i) World Trade Organization (WTO) 12 
 (ii) Preferentia l agreements 16 
 (5) I NVESTMENT FRAMEWORK  19 
 A NNEX II.1: A ID FOR TRADE  22 
III. TRADE POLICIES BY MEASURE 28 
 (1) I NTRODUCTION  28 
 (i) Registration, documentation and procedures 28 
 (ii) Customs valuation 30 
 (iii) Rules of origin 30  (iv) Tariffs 31 
 (v) Tariff quotas 37 
 (vi) Other charges affecting imports 37  (vii) Import licensing, permits and other import requirements 37 
 (viii) Import prohibitions 40 
 (ix) Anti-dumping and countervailing measures 40  (x) Safeguard measures 42 
 (xi) Standards and technical regulations 43 
 (xii) Sanitary and phytosanitary measures 46 
 (2) M
EASURES AFFECTING EXPORTS  49 
 (i) Registration, documentation and procedures 49 
 (ii) Export taxes 51 WT/TPR/S/234/Rev.1 Trade Policy Review 
Page iv 
 
 
  Page 
 (iii) Prohibitions, licensing and other restrictions 51 
 (iv) Export subsidies and incentives 52 
 (v) Financing, insurance, and guarantees 54  (vi) Export promotion and marketing assistance 54 
 (3) O
THER MEASURES AFFECTING PRODUCTION AND TRADE  55 
 (i) Incentives 55  (ii) Competition policy and price controls 56 
 (iii) Government procurement 62 
 (iv) State trading an d State enterprises 65 
 (v) Trade-related investment measures 65 
 (vi) Intellectual property rights 65 
IV. TRADE POLICIES BY SECTOR 70 
 (1) A
GRICULTURE  70 
 (i) Main features 70 
 (ii) Measures affecting imports 74  (iii) Measures affecting exports 76 
 (iv) Measures affecting production 76 
 (2) M
ANUFACTURING SECTOR  79 
 (i) Main features 79 
 (ii) Maquila  industry 82 
 (3) S ERVICES  84 
 (i) Main features 84 
 (ii) Financial services 87  (iii) Telecommunications 94 
 (iv) Transport 99 
 REFERENCES 107 
 
APPENDIX TABLES 109 
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   Page 
 
CHARTS 
 
IV. TRADE POLICIES BY SECTOR 
 
IV.1 MFN tariffs applied by Honduras in 2009, by ISIC major groups 81 IV.2 GDP share of the various service subsectors, 2003 and 2009 84 
IV.3 Trade in services, 2003 and 2008 86 
 
TABLES 
 
I. ECONOMIC ENVIRONMENT  
I.1 Main economic indicators, 2003-2009 2 
I.2 Balance of payments, 2003-2009 4 I.3 Foreign direct investment flows, 2004-2009 7 
 
II. TRADE AND INVESTMENT REGIME 
 
II.1 Main trade legislation, 2010 12 II.2 Principal notifications submitted by Honduras pursuant to the WTO Agreements, 
 June 2010  13 
II.3 WTO dispute settlement cases to which Hond uras is or has been a party, June 2010 14 
 
ANNEX II.1:  AID FOR TRADE 
 II.1 SPS issues of interest to Honduran exporters 23 
II.2 Aid-for-Trade flows:  CRS proxies 25 
II.3 Support from donors 26 
 
III. TRADE POLICIES BY MEASURE 
 III.1 Rules of origin, 2010 31 
III.2 Structure of MFN tariffs, 2010 32 
III.3 Summary of MFN tariffs, 2010 33 III.4 Products for which the applied tariffs are higher than the bound tariffs, 2010 34 
III.5 Summary of preferential tariffs, 2010 35 
III.6 Products subject to import licensing, 2010 39 III.7 Subsidies notified to the WTO 53 
III.8 Activities of the CDPC, 2006-2009 57 
III.9 Threshold values for the application of tendering procedures, 2010 63 
 
IV. TRADE POLICIES BY SECTOR  
IV.1 Agriculture, selected indicators, 2003-2009 70 
IV.2 Summary of agricultural measures 73 IV.3 Products subject to price bands, 2010 75 
IV.4 Main indicators relating to the maquila  industry, 2003-2009 82 
IV.5 Breakdown of gross production value of the maquila  industry, 2003-2009 83 
IV.6 Financial legislation, 2009 87 
IV.7 Trends in the commercial banking sector's net loan portfolio and 
 deposits received, 2003-2010 91 IV.8 Total premiums by segment, 2003-2009 93 
IV.9 Insurance market, 2003-2009 94 WT/TPR/S/234/Rev.1 Trade Policy Review 
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  Page 
IV.10 Main legislation on telecommunications, 2010 95 
IV.11 Requirements for the provision of telecommunications services 96 
IV.12 Telecommunications indicators, 2003-2009 98 IV.13 General freight movements, 2007-2008 100 
 
APPENDIX TABLES  
 
I. ECONOMIC ENVIRONMENT 
 AI.1 General merchandise exports and re-exports (f.o.b.) by product, 2003-2009 111 
AI.2 General merchandise imports (c.i.f.) by product, 2003-2009 113 
AI.3 General merchandise exports and re-export s (f.o.b.) by trading partner, 2003-2009 116 
AI.4 General merchandise imports (c.i.f.) by trading partner, 2003-2009 117 
 
II. TRADE AND INVESTMENT REGIME  
AII.1 Description of preferential trade agreements involving Honduras, 2010 118 
 
III. TRADE POLICIES BY MEASURE 
 AIII.1 Main taxes on goods and services which may be applied to imports, October 2009 121 
 
IV. TRADE POLICIES BY SECTOR  
AIV.1 Agricultural support programmes, 2010 124 
AIV.2 Summary of GA TS commitments 128 
AIV.3 Special domestic financial system requirements 130 
 
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  SUMMARY 
 
1. The Honduran trade regime is 
relatively open, with an average tariff of 
6 per cent in 2010, minimal use of non-tariff 
barriers and an absence of contingency measures.  Moreover, the procedures for drafting technical regulations and sanitary and phytosanitary measures have been much 
simplified in recent years.  Since its first Trade 
Policy Review in 2003, Honduras has also made progress in other areas that affect production and trade;  for example, it has adopted legislation on competition policy establishing the Commission for the Defence 
and Promotion of Competition, and has 
modernized the government procurement system.  During the period under review Honduras concluded new preferential trade agreements, notably the Dominican 
Republic-Central America-United States Free 
Trade Agreement (DR-CAFTA), and the further integration of the Central American Common Market (CACM) continues to be its great priority.  Honduras has maintained its traditional strategy of granting refunds to 
exporters, as well as tax concessions via free 
zones aimed at developing the manufacturing sector. 
(1) E
CONOMIC ENVIRONMENT  
2. Recent macroeconomic results have 
been positive for Honduras:  the average 
annual rate of growth of real GDP was 4.5 per cent between 2003 and 2009 (higher than the 3.2 per cent recorded in 1992-2001);  the average annual rate of inflation was 7 per 
cent;  the fiscal deficit fell from 5 per cent of 
GDP in 2003 to 3 per cent in 2009;  and the total external debt balance decreased from 71 per cent of GDP to 23 per cent.  Despite these positive results, about one third of the population still live below the poverty 
threshold, and the economy continues to be 
fragile and exposed to external shocks.  Real GDP is estimated to have fallen by 2.1 per cent in 2009, mainly due to the difficult internal political situation and the 
global economic crisis, which substantially reduced exports and remittances from 
Honduran workers (which accounted for about 17 per cent of GDP in 2009). 
3. The Honduran economy is heavily 
dependent on international trade.  The ratio of 
trade (exports and imports) to GDP is among the highest in the Central American region, with an annual average of 133 per cent during 2006-2008.  The country's merchandise trade 
deficit quadrupled between 2003 and 2008 
due, mainly because the nominal exchange rate remained fixed as from October 2005, 
which caused the real exchange rate to appreciate thereafter with a consequent loss of export competitiveness.  The external current 
account deficit (as a percentage of GDP) rose 
from 7 per cent in 2003 to 13 per cent in 2008;  it is estimated that this deficit fell to 4 per cent in 2009.  To a large extent, the current account deficit has been financed by substantial 
inflows of remittances and foreign direct 
investment. 
4. Honduran external trade is 
characterized by limited diversification, in terms of products and tr ading partners.  The 
country's main export products are those of the 
maquila  industry, which accounted for 
55 per cent of total merchandise exports in 2009, followed by exports of general goods (44 per cent), and other products (1 per cent).  Almost 90 per cent of maquila  exports are 
textile products and these also account for 
about 80 per cent of total maquila  industry 
imports.  The United States is the destination for almost 80 per cent of Honduran maquila  
industry exports, and the origin of 80 per cent 
of imports. 
5. The maquila  industry excluded, the 
main exports are still coffee, bananas, and crustaceans;  agricultural products account for about two thirds of general goods exports.  
Nearly three quarters of the country's total 
imports (excluding maquila ) consist of 
manufactured products, particularly machinery and transport equipment.  Since the entry into force of the DR-CAFTA, the United States has consolidated its position as the main market WT/TPR/S/234/Rev.1 Trade Policy Review 
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  for Honduran exports, absorbing about 
40 per cent of general goods exports.  Due to the intensification of the CACM's integration efforts, since 2007 El Salvador, Guatemala, 
Nicaragua, and Costa Rica have together 
ranked second as a destination for Honduran exports, relegating the European market to third place.  The United States has also consolidated its position as the main source of 
imports of general goods into Honduras, with 
more than one third of the total. 
6. Honduras is a net importer of services, 
with an average annual deficit of about US$240 million during 2003-2009.  Total income from services (mainly travel services) 
increased from US$591 million in 2003 to 
US$896 million in 2009, while total expenditure on services (largely transport and travel services) rose from US$753 million to over US$1.089 billion. 
(2) T
RADE AND INVESTMENT POLICY 
FRAMEWORK  
7. Honduras is a founding Member of the 
WTO and attaches great importance to its participation in the multilateral trading system.  It regards this system as a fundamental 
guarantee of non-discrimination and the 
non-utilization of unilateral trade measures.  Honduras grants at least MFN treatment to all WTO Members.  It has participated actively in the Doha Development Agenda (DDA), 
making proposals both individually and 
collectively with other Members.  Honduran interest in the DDA is focused on issues relating to agriculture. 
8. Honduras has accepted the Fifth 
Protocol to the General Agreement on Trade in 
Services (GATS).  Although Honduras did not participate in the negotiations on basic telecommunications and has not signed the Fourth Protocol to the GATS, it adhered to the Basic Telecommunications Reference Paper in 
2005 and unilaterally submitted new specific 
commitments in that subsector.  None of its trade practices has been challenged under the WTO's dispute settlement mechanism.  On the other hand, Honduras has been a complainant 
in six cases, two of them initiated during the review period, and has participated in other cases as a third party. 
9. Preferential agreements have been 
converted into increasingly important elements of Honduran trade liberalization.  In addition to participating in the CACM, Honduras has free trade agreements with Chile, 
Colombia, United States, Mexico, Panama, 
Dominican Republic, and Chinese Taipei.  The DR-CAFTA entered into force during the review period, as did the agreements with Colombia, Panama, and Chinese Taipei.  Moreover, in May 2010 Honduras and the 
other members of the CACM completed 
negotiations on the Association Agreement with the European Union.  Honduras has also signed agreements with countries that participate in the Latin American Integration 
Association (LAIA), notably a Partial Scope 
Agreement with Venezuela, and together with the other members of the CACM is negotiating free trade agreements with Canada and CARICOM. 
10. Honduran investment legislation 
guarantees national treatment for foreign 
investors;  however, in or der to invest in some 
sectors prior authorization is required from the Government.  Prior authorization is also needed, for reasons of public interest, for 
foreign investment in agricultural and 
agro-industrial activity that exceeds certain limits, in financial services and insurance, and in educational services provided by the private sector.  Honduras has signed several bilateral 
agreements on the promotion and reciprocal 
protection of investments;  it has not signed any double-taxation agreements. 
(3) M
EASURES AFFECTING IMPORTS  
11. Since its last Review, Honduras has 
not made any significant changes in its import 
regime.  Honduran customs procedures are 
governed by the Central American Customs Code, its regulations, and the National Customs Law.  Honduras has adopted Honduras WT/TPR/S/234/Rev.1
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  measures to modernize customs through the 
introduction of authorized economic operators (AEO) and the adoption of a new automated system for the administration of customs 
procedures, which has made it possible not 
only to reduce clearance times but also to increase revenue.  Honduras reserved the right to apply minimum values to imports of several categories of goods until the WTO exemptions 
expired in 2003.  Honduras uses reference 
prices where there is reasonable doubt concerning the value declared. 
12. The average MFN rate applied was 
6 per cent in 2009, almost the same as that recorded in the last Honduran Review 
(6.1 per cent in 2003).  Agricultural products 
(WTO definition) were subject to an average tariff of 11.1 per cent, while the average tariff for non-agricultural products was 5.1 per cent.  The price band system continues to be applied 
for certain staple grains.  The tariff rates range 
from 0 to 164 per cent, but most are less than 40 per cent.  All tariffs are bound:  about 85 per cent of all tariff lines are bound at 35 per cent, with less than 1 per cent at higher levels and the rest at levels below 35 per cent.  
The Secretariat has identified seven tariff lines 
on which the applied rate is higher than the corresponding bound rate. 
13. The Central American Regulations on 
Unfair Trade Practices and on Safeguard 
Measures, adopted by Honduras in 2007, 
constitute the relevant legal framework for these measures.  Honduras did not apply anti-dumping or countervailing duties or safeguard measures during the review period. 
14. Since its last Review, Honduras has 
taken steps to make the formulation and application of technical regulations and sanitary and phytosanitary measures more transparent.  Honduras guarantees the application of sanitary regimes and technical 
regulations that do not constitute technical 
barriers to trade and are intended to ensure the quality and safety of products and services, and has continued with the process of harmonization of sanitary and phytosanitary 
measures at Central American level. 
(4) O
THER MEASURES AFFECTING 
TRADE  
15. Honduras has notified the WTO of 
three subsidy programmes under which it grants tariff and tax concessions.  It may maintain these progra mmes until its per capita 
gross national product (GNP) reaches 
US$1,000 in constant 1990 dollars for 
three consecutive years.  Exporters are still entitled to refunds under the drawback system. 
16. Honduras has notified the WTO that 
between 2004 and 2008 there were no subsidies for exports of agricultural products.  
However, one enterprise continues to benefit 
from the (now suspended) Agricultural Export Zones (ZADE) regime, established in 2001, and exports 100 per cent of its production.  The ZADE are intended to promote 
exclusively export-oriented agricultural 
production, through the establishment of "agricultural export enterprises".  The enterprises included in this regime are exempt from the payment of all customs duties and other internal taxes on the goods they import 
and/or export;  these enterprises are also 
exempt from the payment of income tax.  Honduras does not tax exports;  coffee is subject to an export levy. 
17. In addition to incentives for promoting 
exports, Honduras has support programmes for 
exporters.  These are intended to improve competitiveness and access to international markets and are aimed primarily at agro-industrial products.  Despite the emphasis 
placed by Honduras on promoting exports and 
supporting the small exporter, the country has no official export financing or insurance programmes. 
18. A major change in Honduran trade 
policy since its last Review in 2003 has been 
the adoption of legislation on competition 
policy and the establishment of institutions for its implementation.  This is an important WT/TPR/S/234/Rev.1 Trade Policy Review 
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  initiative since there is a high degree of 
concentration in the Honduran market.  The legal framework for government procurement has not changed substantially since 2003 and 
the same procurement procedures are still in 
place.  The Honduran government procurement system has mechanisms designed to favour domestic enterprises and goods. 
19. Mainly due to the entry into force of 
the DR-CAFTA, the Honduran legal 
framework for intellectual property rights has been amended, primarily with a view to providing greater protection.  Honduras has changed the terms of protection while modernizing the institutions responsible for 
administering intellectual property law and 
training their staff, with a view to facilitating and streamlining the registration procedure. 
(5) S
ECTORAL POLICIES  
20. The agriculture sector's share of 
GDP declined during the review period and its 
growth was erratic.  Nevertheless, it continues to be of great importance for the development of the Honduran economy, absorbing about one third of the economically active population and generating more than 
50 per cent of the foreign currency earned 
from merchandise exports, maquila  excluded.  
Honduras therefore considers it necessary to maintain protection and offers this sector greater tariff protection than other sectors.  
It has retained the price band system and the 
"absorption agreements", which permit the importation of certain grains with tariff preferences if the processors also purchase a specific percentage of the national production 
of these grains.  The country has a number of 
agricultural support programmes that have been notified to the WTO.  Despite the measures to promote the sector, it continues to be characterized by low productivity and modest rates of growth. 
21. The manufacturing sector's share of 
GDP, like that of agriculture, declined during the review period.  The sector's tariff protection is below the average appliedMFN rate.  Honduras also maintains the 
(above-mentioned) special export regimes (maquila ) and support for export marketing to 
promote the development of the manufacturing 
sector. 
22. In 2009, the services sector 
contributed about 53 per cent of GDP (48.1 per cent in 2003).  The main subsectors in terms of their contribution to 
total value added, and in descending order of 
importance, were financial services, trade, and communications.  The composition of the sector has changed since 2003 when the main subsectors were trade and financial services.  Honduras is a net importer of services.  
Exports of telecommunications services 
increased as a result of the entry into the domestic market of a fourth mobile telephony operator at the end of 2008. 
23. Honduras has made limited 
commitments in services.  Its Schedule of 
Specific Commitments under the GATS includes commitments in only four of the twelve categories.  Honduras made specific commitments in business services, financial services, travel and tourism services, and 
transport services.  In 2005, Honduras made 
commitments with respect to communications services under Article XXI of the GATS.  Honduras' commitments do not reflect the present situation, which is more liberal.  
Foreign capital plays an important part in the 
Honduran financial sector.  Moreover, in the telecommunications sector, mobile telephony is mostly controlled by foreign enterprises.  For fixed telephony, there continues to be a 
single State operator, which has granted 
concessions to sub-operators for domestic telephony but maintains exclusive control over international telephony.