VI. TRADE REGULATIONS AND STANDARDS A. TARIFFS AND IMPORT TAXES Honduras' customs administrative procedures are burdensome. There are extensive documentary requirements and red tape involving the payment of numerous import duties, customs surcharges, selective consumption taxes, consular fees and warehouse levies. The duty assessed by the Honduran government at the time of Customs clearance ranges between five to 20 percent for most items. Sensitive items such as automobiles will be assessed a higher rate. Duties are payable by the importer at the time of Customs clearance. B. CUSTOMS VALUATION Customs valuation are calculated on CIF values. C. IMPORT LICENSES Although all import licensing requirements have been eliminated, Honduras has an onerous phyto-sanitary requirement system that effectively denies market access to U.S. agricultural products such as chicken parts and corn. In the bilateral negotiations on Honduras' GATT accession the Government of Honduras committed to using GATT consistent measures to protect basic grains and poultry. D. EXPORT CONTROLS There is a one percent export tax on the FOB value of goods exported from Honduras, although certain exceptions exist. Banana exports must pay a variable levy of seven to thirteen percent of their value. E. IMPORT/EXPORT DOCUMENTATION Documents required for importing in Honduras: -Commercial Invoice -Bill of Lading (for ocean or surface freight) -Airway Bill (for air freight) -Certificate of Origin or Certificate of Title for vehicles -Honduras consular legalization of the commercial invoice and bill of lading or airway bill, or a consular invoice -Phyto-sanitary certificate (where appropriate) By law, no import permits or quotas are imposed. However, all surface shipments to Honduras must be legalized by a consulate of Honduras. The issuing consulate requires the legalization of both the commercial invoice and the bill of lading. A company must submit in Spanish the original commercial invoice plus three copies which include a detailed description of the items to be exported including the name of the vessel, sailing date, names of the departure and final destination porters, gross and net weight in kilograms, and country of origin. For ocean freight or surface freight, the original bill of lading must also be submitted in Spanish along with three copies. For air freight, the original airway bill mustalso be submitted in Spanish along with three copies. A company may request a consular invoice instead of the legalization of the commerciial invoice and the bill of lading or airway bill. Documents may be legalized in the following Honduran consulates: Baltimore, Houson, Los Angeles, New York, and Miami. There is a nominal variable fee for the legalization based on the Free on Board (FOB) value; an expedited service is available for an aditional fee. The Honduran Government insists that phyto- sanitary permits be obtained for imported foodstuffs. All commercial imports must also be accompanied by proof that the dollars used to purchase them were acquired from the Honduran commercial banking system. Honduran law requires all exporters (except for free trade zone or export processing zone exporters) to inform the Central Bank, in advance, about the quantity, value, and destination of the goods to be exported, as well as the probably date of export and the value and currency of anticipated export revenues. F. TEMPORARY ENTRY The temporary import law (RIT), enacted in 1984, allows exporters to bring raw materials and capital equipment into Honduran territory exempt from customs duties and consular fees -- as long as the product is to be exported outside of Central America. This law also provides a 10 year tax holiday on profits from these exports under certain conditions. G. LABELING, MARKING REQUIREMENTS Honduran law requires that all processed food products be labeled in Spanish and registered with the Ministry of Health. Although the laws are indifferently enforced at the present time, such requirements may discourage some suppliers. H. PROHIBITED IMPORTS The Honduran Government forbids the import of items that compete with certain domestic industries. These protected industries vary over time, but at present include footwear and basic grains. I. STANDARDS (E.G. ISO 9000 USAGE) The Honduran Government does not follow or apply any specific set of standards for the approval of products for sale in the country. hwoever, such internaitonally recognized standards as ASTM, ISO 9000, UL or SAE are well accepted by local professional bodies, including the Honduran College of Civil Engineers as well as the College of Electrical, Mechnical and Chemical Engineers. J. FREE TRADE ZONES/WAREHOUSES A company that locates in a free trade zone, industrial park or export processing zone (ZIP) is exempt from payment of import duties on goods and capital equipment, charges, surcharges, selective consumption taxes, and sales taxes. In addition, the production and sale of goods within these areas are exempt from Honduran and municipal taxes. Firms operating in these zones are exempt from income tax for 20 years and municipal taxes for 10 years. K. SPECIAL IMPORT PROVISIONS There are no special import provisions aside from those mentioned above. L. MEMBERSHIP IN FREE TRADE ARRANGEMENTS Honduras is a member of the Central American Common Market (CACM), which also includes Costa Rica, El Salvador, Nicaragua, and Guatemala. Panama, although not a full member of the CACM, has participated in the activities of the CACM. This group is currently negotiating free trade agreements with Mexico, Venezuela, and Colombia. Honduras benefits from a two preferential trade arrangements with the United States. Special export arrangements have been established through the Caribbean Basin Initiative (CBI I & II) and the Generalized System of Preferences (GSP). Both of these programs provide unilateral and temporary duty-free trade preferences to designated countries, including Honduras, by the United States. Recently, the U.S. government proposed new legislation to Congress that would enhance the CBI program. The Interim Trade Program (ITP) would grant further trade concessions, primarily in the textiles area. In return for NAFTA-like treatment for textiles and other miscellaneous items to the Caribbean Basin nations, the ITP would require the commitment of the Caribbean Basin countries on a bilateral basis to make commitments mainly in the following areas: bilateral investmeent treaties, intellectual property rights, workers' rights, and the environment. In August 1994, the Interim Trade Program bill was still under debate in the House of Representatives and Senate.