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This first Trade Policy Review of Honduras has shed considerable light
on its trade and investment policies and practices, also contributing
to a better understanding of the economic and institutional framework
within which they are formulated and implemented. We owe this to the
documentation prepared for the meeting, to the active participation of
the Honduran delegation led by Dr. Núñez, and to the constructive
comments of the discussant and the Members.
Members expressed their support for Honduras' ongoing economic and
institutional reform efforts, including trade and investment
liberalization. Honduras has shown discipline in the conduct of
monetary policy, and has become more closely integrated into the
global economy. However, Members noted Honduras' large trade deficit
and encouraged it to diversify its production and export base,
including by taking further advantage of unilateral trade preferences
offered by some trading partners.
Members noted with concern the modest rate of economic growth, partly
the result of a series of external shocks. As a result, living
standards have stagnated, and poverty continues to affect a large
proportion of the population. To achieve faster growth, Members
referred to the need to redress the fiscal imbalance, to improve
regulatory transparency, and to persevere with efforts to restructure
the economy. Reaching an agreement with the IMF was also considered
important, as was support from the international community.
Members took note of Honduras' commitment to the multilateral trading
system, and commended the steps it has taken to implement its WTO
obligations. They welcomed Honduras statement that the multilateral
trading system represents the main instrument to ensuring
non-discriminatory access to foreign markets. Honduras was invited to
complete its WTO notification commitments, in particular with respect
to technical regulations, which Honduras engaged to do as soon as
possible.
Noting Honduras' rapidly growing network of preferential trade
agreements, Members expressed the view that these agreements should
complement multilateral efforts. Some Members welcomed the growing
integration within the Central American Common Market, including
through the establishment of a customs union. They were worried,
however, that the negotiation of independent free-trade agreements
might be incompatible with a common market. A few Members also asked
questions regarding Honduras' institutional capacity to negotiate and
implement a number of agreements in parallel.
Members praised Honduras for its application of the WTO Agreement on
Customs Valuation and efforts to modernize customs procedures, and
sought further details on the latter. They commended Honduras for not
using contingency measures, for its low applied average MFN tariff,
and for binding the full tariff schedule. Honduras was encouraged to
lower its bindings in the context of the Doha Development Agenda. Its
use of a price-band system for certain agricultural imports gave rise
to questions.
Interest was expressed on Honduras' application of other trade
measures, including technical regulations, quantitative restrictions
on imports and wood exports, and on "absorption agreements". The
effects on trade of certain sanitary measures were of concern to some
Members. Honduras' efforts to enhance transparency in government
procurement were welcomed. Some Members noted that Honduras had
adopted new intellectual property legislation and enhanced IPR
protection, and considered that Honduras would benefit from adopting
competition policy legislation.
Members recognized the important contribution that free trade zones (FTZs)
had made to the generation of investment and employment in Honduras.
However, attention was drawn to the impact on fiscal revenue and the
possible economic distortions, which could arise from the FTZ Regime.
Members commended Honduras' efforts to liberalize and open its
services sectors, but some referred to some market access impediments.
Although reforms have been introduced, it was pointed out that the
financial sector remained institutionally weak. Members also remarked
on the reforms in the telecommunications and electricity sectors.
Members observed that commitments under the GATS did not reflect the
actual openness in services, in part as a result of unilateral
liberalization. Honduras indicated that it was preparing a new, more
ambitious schedule. This would improve the predictability of Honduras'
legal framework.
Members also sought clarification on several specific issues,
including:
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trade policy formulation, the role of civil society, and environmental
considerations; and
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criteria for the authorization of foreign investment.
The delegation of Honduras provided written and oral answers to the
questions posed during the Review and undertook to supply replies in
writing to any outstanding issues. The replies provided made a
considerable contribution to the review and Members clearly
appreciated them.
This brings us to the conclusion of the first Review of Honduras. It
has given Members a better understanding of the numerous reforms
undertaken by Honduras in recent years, and of the challenges that lie
ahead. I am heartened by Honduras' statement that it sees its closer
integration in the world economy as an instrument to further its
economic development.
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