In 1995, the United States trade deficit with Honduras was $161 million, $75
million more than that in 1994. U.S. merchandise exports to Honduras were $1.3
billion in 1995, up $269 million or 26.6 percent from those in 1994. Honduras
was the United States' fiftieth largest export market in 1995. U.S. imports from
Honduras totaled $1.4 billion in 1995, a 31.4 percent increase from those in
The stock of U.S. foreign direct investment in Honduras was $198 million in
1994, about seven percent less than it was in 1993. U.S. direct investment in
Honduras is largely concentrated in manufacturing, finance and banking.
Honduras is a member of the Central American Common Market (CACM), which also
includes Costa Rica, El Salvador, Guatemala and Nicaragua. The CACM members are
working toward the full implementation of a common external tariff (CET) which
ranges between 5-20 percent for most products. However, in 1995 the members of
the CACM agreed to reduce the CET to O-15 percent, but allowed each member
country to determine the timing of the changes. With the exception of certain
items, there are no duties for products traded among CACM members.
Sanitary and Phytosanitary Restrictions
Although all import licensing requirements have been eliminated, Honduras has
resorted to a sanitary system that effectively denies market access to U.S.
chicken parts. The Government of Honduras has committed formally not to use
sanitary and phytosanitary standards to artificially restrict U.S. imports of
chicken, rice and corn. Despite that commitment, the Honduran Government
continues to restrict the issuance of sanitary and phytosanitary permits for
chicken parts. The Government of Honduras has, however, discontinued its
"discretionary" use of phytosanitary permits to control rice and corn imports.
Importers have tested the Government of Honduras's newly liberalized import
regime and the results have been encouraging, so far.
Agricultural Price Bands
Honduras implemented a price band mechanism for yellow corn, sorghum, rice
and soybeans in August 1992. Similar to the price band practices of other
countries in the region, the Honduran Government calculates the price band from
a time series built on international prices for the prior 60 months on a given
product. The fifteen highest and lowest prices are eliminated, with the
remaining highs and lows establishing the price band. Imports entering with
values within the defined band are assessed a 20 percent tariff. Imports
entering with prices above the band are assessed lower duties, according to a
predetermined schedule; those imports priced below the band are assessed a
higher tariff. The U.S. Government has strongly opposed this policy, which
limits access of U.S. agricultural products.
Customs Documentation and Clearance Procedures
The Government of Honduras maintains a discriminatory automobile import
regime based on engine size, which imposes a steep tax on many U.S.-made
vehicles, particularly four-wheel drive vehicles. In October 1994 the Honduran
Congress approved legislation that made progress toward reducing discrimination
based on engine size. The Government of Honduras no longer requires "consular
invoicing" in accordance with its WTO commitments. The Honduran Government
instructed its consulates in June of 1995 to end the practice of charging
consular fees for the legalization of commercial import documents and instructed
customs to no longer require consular certification.
LACK OF INTELLECTUAL PROPERTY PROTECTION
In 1995, Honduras was identified in the "special mention" category of the
U.S. Government's annual Special 301 review due to a lack of effective
intellectual property rights (IPR) protection. Since 1992, Honduras has been the
subject of a continuing review under the Generalized System of Preferences (GSP)
for deficiencies in its IPR regime. On September 1, 1993, the Honduran Congress
approved comprehensive copyright, trademark and patent legislation. The U.S.
Government continues to monitor the adequacy and effectiveness of IPR protection
in Honduras, particularly copyright protection. In addition, substantial
progress was made in 1995 toward concluding a Bilateral Intellectual Property
Rights Agreement with the United States.
The piracy of books, sound and video recordings, compact discs, computer
software, and television programs is widespread in Honduras. In 1992 the U.S.
Government accepted a petition filed by the Motion Picture Export Association of
America (MPEAA) under the GSP which alleged widespread video/cable television
piracy estimated at $2.5 million in lost revenue per year. Although Honduras
enacted a reformed copyright law in August 1993 that addressed many of the
substantive concerns raised in the GSP petition, the law is inadequate in
establishing effective criminal penalties for copyright infringement and
contained some technical problems related to cable television piracy. Since
then, significant progress has been made toward curbing cable piracy and
currently 95 percent of the cable market is legal. However, the payment of
royalties by local cable companies to U.S. copyright holders has been late, or
in some cases, local companies have not concluded royalty contracts. In May of
1995 the Government of Honduras submitted to Congress major U.S.-backed reforms
of their copyright laws designed to reduce the piracy of cable television
signals. This legislation is still under consideration.
The patent law enacted in September 1993 provides full and effective patent
protection for pharmaceuticals, although the patent term of seventeen years from
the date of application must be extended by at least three years to meet
The illegitimate registration of well-known trademarks is a persistent
problem in Honduras, in spite of 1993 modifications to the trademark law.
The government procurement law (Decree No. 148.5) governs the contractual and
purchasing relations of Honduran state agencies. Under this law, foreign firms
are given national treatment for public bids and contractual arrangements with
state agencies. In practice, U.S. firms frequently complain about the
mismanagement and lack of transparency of Honduran Government bid processes.
These deficiencies are particularly evident in telecommunications,
pharmaceuticals and energy public tenders.
Any foreign investment may be rejected, based upon the presumed effect on
economic activity, market stability and other factors. Establishment of banks
and of life insurance companies is subject to approval by the Central Bank, in
accordance with market needs; foreign ownership of other insurance companies is
limited to 40 percent. Under Honduran law, special government approval must be
obtained to invest in the tourism, hotel, and banking services sectors. In
addition, under the 1992 investment law, special government approval must be
obtained for foreign investment in the forestry, telecommunications, air
transport and aquaculture industries. This law also requires majority Honduran
ownership in certain areas, such as investments in commercial fishing, direct
exploitation of forest resources, local transportation, and those areas
benefiting directly from the national agrarian reform law. Foreign investors are
prohibited from holding a majority stake in foreign exchange trading companies.
Moreover, foreign owners may not hold a seat or provide direct brokerage
services in either of Honduras' two stock exchanges. Furthermore, the Honduran
Government prohibits the establishment of investments of less than 150,000
The United States and Honduras also concluded negotiations on a bilateral
investment treaty (BIT), which was signed on July 1, 1995. When ratified by both
the U.S. and Honduran Congresses, the BIT will address a number of