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Trade-Related Policies and Practices in Honduras

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Trade-Related Policies and Practices in Honduras Munich Personal RePEc Archive Trade-Related Policies and Practices in Honduras Lord, Montague J. USAID January 2001 Online at https://mpra.ub.uni-muenchen.de/41169/ MPRA Paper No. 41169, posted 09 Sep 2012 18:03 UTC Honduras Policy Enhancement and Productivity (PEP) Project Trade-Related Policies and Practices in Honduras Contract Number: 522-C-00-00203-00 Submitted to: USAID, Tegucigalpa, Honduras Prepared by: Greta R. Boye and Montague J. Lord Tegucigalpa, February 2001 TRA DE-RELATED PO LIC IES A ND PRA C TIC ES IN HO NDURA S Table of Contents Table of Contents................................................................................................................ii Figures, Tables and Boxes .................................................................................................iv Acronyms and Abbreviations .............................................................................................v Executive Summary..........................................................................................................vii Part I Introduction ....................................................................................................... 1 A. Background......................................................................................................1 B. Recent Developments ......................................................................................1 C. Organization of the Study................................................................................7 Part II Legal and Institutional Framework................................................................. 8 A. Institutional Structure ......................................................................................8 B. Legal Framework for Trade and Investment Promotion ...............................12 C. Trade and Investment Policy Objectives .......................................................19 Part III Import Policies and Practices ....................................................................... 22 A. Tariff Measures..............................................................................................22 B. Para-Tariff Measures .....................................................................................28 C. Import Bans ...................................................................................................28 D. Other Trade Control Measures ......................................................................28 Part IV Measures Affecting Exports ......................................................................... 31 A. Export Policy Instruments...............................................................................31 B. Effective Rates of Protection ..........................................................................32 C. Tariff-Induced Biases on Exports ...................................................................35 D. Other Trade Control Measures........................................................................35 E. Effective Exchange Rates ...............................................................................38 Part V Recommendations.......................................................................................... 40 A. Overview........................................................................................................40 B. Summary of Policy Recommendations .........................................................41 C. Designing National Trade and Investment Strategies ...................................46 D. Deepening Tariff Reforms.............................................................................50 E. Remaining Agenda for Trade Control Measures...........................................52 F. Enhancing Export Stability, Diversification and Competitiveness ...............55 G. Implementation Arrangements ......................................................................59 ii TRA DE-RELATED PO LIC IES A ND PRA C TIC ES IN HO NDURA S Annex A Organizational Charts .............................................................................60 Annex B Trade Control Measures...........................................................................67 Annex C Technical Notes .......................................................................................82 Annex D Meetings Conducted ................................................................................86 Appendix Tables............................................................................................................88 References ................................................................................................................103 iii TRA DE-RELATED PO LIC IES A ND PRA C TIC ES IN HO NDURA S List of Figures 1.1 Globalization of the World Economy.....................................................................3 1.2 World Trade Relative to Output .............................................................................3 1.3 Honduras: Distribution of Trade, 1999...................................................................4 1.4 Foreign Direct Investment/GDP .............................................................................5 1.5 Trade Taxes/Total Taxes.........................................................................................5 3.1 Distribution of SAC Tariff Rates, 2000................................................................24 4.1 Price and Quantity Effects of NTBs .....................................................................36 4.2 Relative Price of Non-Tradeables to Tradeables ..................................................38 List of Tables 1.1 Honduras: Key Economic Indicators, 1990-99.......................................................2 1.2 Honduras: Export Prices, 1996-99..........................................................................6 1.3 Honduras: Export Performance, 1990-99 ...............................................................6 2.1 Exports Under Preferential Schemes by Partner, Quarter I 2000 .........................13 2.2 Exports Under Preferential Schemes by Product, Quarter I 2000 ........................14 3.1 Import Value and Hypothetical Revenue by Tariff Band, 1999...........................24 3.2 Comparison of Tariff Rates Among CACM Countries and Their Major Trading Partners....................................................................................................26 4.1 Honduras: Effective Rates of Protection for Selected Products ...........................34 4.2 Anti-Export Bias ...................................................................................................35 4.3 Honduras: Price-Comparison Measure of Trade Control Measures, 1999...........37 4.4 Real Effective Exchange Rates of Central American Countries, 1990-99 ...........39 4.5 Honduras: International Competitiveness Indices, Total and Regional 1990-99 .39 List of Boxes 2.2 Trade and Investment Incentives ..........................................................................16 2.3 Legislation Related to Investment Promotion.......................................................17 3.1 Characteristics of Honduras’ Tariff Structure.......................................................22 3.2 Honduras’ Bilateral Agreements...........................................................................26 3.3 Import Barriers in Honduras and Other Selected Developing Countries .............30 5.1 Honduras: Recommended Trade Policies and Supporting Macroeconomic and Structural Adjustment Policies .............................................................................41 5.2 Proposed Trade and Investment Policies ..............................................................42 5.3 Proposed Institutional Strengthening Activities ...................................................45 5.4 Sequencing of Proposed Trade Policy Reforms ...................................................59 iv TRA DE-RELATED PO LIC IES A ND PRA C TIC ES IN HO NDURA S Acronyms and Abbreviations BCIE Central American Bank for Economic Integration BDV Brussels Definition of Value CACM Central American Common Market CAANEP National High-Level Advisory Committee of the Private Sector CBI Caribbean Basin Initiative CBTEA Caribbean Basin Trade Enhancement Act CECOMI Business Committee for International Trade Negotiations COHEP Honduran Private Sector Council EPZ Export processing zone ERP Effective rate of protection EU European Union FDI Foreign direct investment FEER Fundamental equilibrium exchange rate FTAA Free Trade Agreement of the Americas GATT General Agreement on Tariffs and Trade GDP Gross domestic product ERP Effective rate of protection FIDE Foundation for Investment and Development of Exports FPX Honduran Federation of Producers and Exporters of Non-Traditional Agricultural Products FTZ Free trade zone GDP Gross domestic production GOH Government of Honduras GSP Generalized System of Preferences HIPC Heavily Indebted Poor Countries (Initiative) HS Harmonized System IDB Inter-American Development Bank IDA International Development Association IMF International Monetary Fund IPR Intellectual property rights MFA Multi-Fibre Arrangement MIT Ministry of Industry and Trade MSMEs Micro, Small and Medium Size Enterprises NAFTA North American Free Trade Agreement NAUCA Nomenclature for Central America NRP Nominal rate of protection NTBs Non-tariff barriers NTMs Non-tariff measures PCT Patent Cooperation Treaty PEP Policy Enhancement and Productivity (Project) PTMs Para-tariff
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