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Monday, September 22, 2003 Online Edition 37
Free Trade: an opportunity or a threat?

Pablo Dominguez, Director of the Department of Scientific Investigation during his inaugural speech at the XV Scientific Week, which hosted the ALCA/CAFTA forum.

By ROSIBEL PACHECO

Free Trade in the Americas (ALCA) and the Central American Free Trade Agreement (CAFTA) were the main focus of a forum held at the beginning of September. The discussion aimed to foster a critical conscience concerning the global actions framing social, economic, and political life in Honduras.

The Vice Minister of Industry and Commerce Irving Guerrero, the executive director of the Honduran Council of Private Business (COHEP), the Director of Central American Postgraduate Studies in Economy Alcides Hernandez, and the President of the Association of Professionals in Honduras Marlon Urtecho all attended the event

The Vice Minister of Industry and Commerce said that ACLA aims to achieve free commercial trade between 34 countries. Central America must deal with the United States since the latter is the principle business associate of the former. The U.S. is Honduras’ principal investor, having invested US$117 million in the period from 2000-2001. Its clear objective is the creation of new jobs, but the minister said that negotiations are complex.

Honduras has a 35 percent import tariff, which is the lowest in Central America. The COHEP representative said that as a result of the policy of being open to international trade and not negotiating opportunist protection barriers, Honduras has a US$ 2.2 billion deficit. COHEP does not endorse treaties such as ALCA and CAFTA, but they do approve of negotiations. In his dissertation, the COHEP representative said that ALCA was signed in Miami in 1994 and was conceived as a great dream for a free trade zone. It sought to promote prosperity, to eliminate obstacles to international commerce, to encourage mutual support in environmental policies, and it aimed to obtain concrete results by the year 2010. He pointed out that ALCA means opportunities but also threats to productive sectors. He indicated some of the following as difficulties:

• The fact that U.S. policy is local (each state has its own laws)
• The principal opposition will be from American trade union groups
• The U.S. Congress grows increasingly more protective of its own country
• Strong competition with Mexico, given its geographic position

A free trade treaty is a juridical instrument that relates to tariffs. The idea is to establish tariff average. In terms of access to markets, agreement has not been reached on a variety of issues, since no party wants to give up its particular protections: Honduras its corn, Nicaragua its peanuts, etc.

Dr. Alcides Hernandez said that in recent years more than 50 percent of investment has been for Costa Rica and other Central American countries, excluding Honduras because of deficiencies in infrastructure, such as roads and ports, which make the transportation of machinery impossible. He said that there is a lack of clarity on the part of U.S. negotiators, as well as an indifference to the consolidation of Central American integration. The negotiations are being carried out in a symmetrical framework; yet coffee exports in Honduras have deteriorated. The asymmetry runs so deep; we have to have some reciprocity.

Marlon Urtecho summed up his institution’s position in the following manner: It seeks to strengthen the internal regulations of each board with an open attitude and in accordance with the way it is managed in other countries. There is a permanent representative and negotiator with up to date information on all the details of negotiation (ALCA) at a Central American level. There needs to be uniform regulations for each board with the purpose of developing professionalism and maintaining the quality of area services.

But questions still remain. How well prepared are we to confront the professional tasks? How can we win the respect of the international community? How can we negotiate a free trade agreement if we continue to project the image of a poor country?

According to Utrecho, we would be better off negotiating as a unified Central America. He said that in Honduras it is difficult to work as a unified group due to the prevalence of mistrust and egocentrism.

“We are alone, we work alone, we think alone, and we cannot confront the globalized world alone,” he said.

All of the speakers agreed that one high level negotiator is a guarantee for any country. Honduras must prepare to negotiate at a high level, with prudence and shrewdness.
 

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Monday, September 15, 2003 Online Edition 36
Sustainable Development in Agriculture… Can Honduras meet the challenge?

An experimental fish farm in the grounds of Zamorano helps diversify agricultural methods in Honduras

By LISA McKIDDIE

The United Nations’ Division for Sustainable Development estimates that by 2025, 83 per cent of the global population will live in the developing world, where the capacity of resources and technology to sustain them remains uncertain.

In Honduras, which has a particularly high population growth rate of 2.32 per cent, agricultural productivity is low and natural resources are swallowed up at an alarming rate. The challenges faced by the Central American nation are complex and varied, but agricultural experts who gathered last weekend at Zamorano, the Agricultural School of Latin America, are hopeful that with adequate guidance, they can be overcome.

Priorities for Honduran agriculture include boosting productivity, increasing per capita income in the agricultural sector, and manufacturing competitive products for the world market. However, these goals must be achieved with minimal damage to the environment in order to avoid compromising the ability of future generations to meet their own needs.

If these goals are met, the agricultural sector will be able to maintain the growing population, increase its contribution to the economy through exports, and help reduce poverty.

The Challenges: Poor growth, low productivity and environmental destruction

The Gross Domestic Product (GDP) of Honduras has grown in recent years. But over the last 30 years, the agricultural sector’s contribution to the GDP has declined, with a growth rate of minus 0.01 per cent.

Agriculture is dominated by the cultivation of corn, beans and coffee, but these products are worth little on the international market. Corn is in low demand and beans tend to be consumed internally rather than exported.

Only seven products make up 92 per cent of crops cultivated in rural Honduras. This lack of diversity leaves the agricultural sector vulnerable to fluctuations in the world market and failure of one crop has a devastating impact.

In Honduras, more than 60 per cent of corn and more than 70 per cent of beans are still cultivated using traditional methods. Agriculture remains dependent on intensive manual labor, which cannot compete with technological methods of cultivation and thus perpetuates low productivity.

Honduras would benefit from a system like that in the U.S. where small farms have consolidated to create one big producer. About 86 per cent of Honduran farms consist of less than one acre of land, owned by families who cannot even produce enough food to meet their own needs, let alone compete in the open market.

Deforestation and drought are also major environmental threats to sustainable development in Honduras, a country in which 3896 acres of forest are lost every year. The rapid depletion of Honduran natural resources is one of the chief causes of drought and crop failure throughout the country.

The Permanent Committee of Contingencies, the U.N. Fund for children, the World Food Program and the European Union have warned that 150 000 Honduran families are on the verge of starvation as a result of January’s prolonged drought. These families live in the least developed parts of the country where deforestation proceeds at an intense rate and the water basins and rivers are dry.

The path to sustainable agriculture for Honduras

Investment and diversification are essential foundations for the development of agriculture. The support of the government, banks, businesses, development organizations and universities is needed to encourage both of these activities throughout the sector.

Co-operatives have already proved successful in Honduras, enabling small farms to split the cost of new technology. Wider use of shared technology would enable farmers to further reduce their dependency on manual labor and increase productivity.

The environmental threat to sustainable agriculture in Honduras is being addressed; steps have been taken to protect remaining forests and natural reserves have been established in various parts of the country. However, much more needs to be done in order to halt the exhaustion of natural resources.

Environmental projects cannot be completely successful without the integration of forestation policies and water policies; the lack of co-ordination in governmental operations must be rectified. Decentralization of policy-making is also necessary because different territories need different strategies, so that local motives and incentives can be identified and immediate impact can be seen.

The new Water Law, passed only a few weeks ago in Congress, is an example of successful delegation of responsibilities to municipalities. The Law was criticized by the press, which said that the municipalities would steal money from the central government. However, its advantages have been scientifically proved. Each municipality understands the needs and idiosyncrasies of its basin, and is therefore fully capable of managing its own supply.

Identifying the problems and needs of rural Honduras is the first step along the path towards a developed, productive and sustainable agricultural sector. However, the most challenging and most important part of the process is the dissemination of this knowledge to all sectors of society. Agricultural efficiency can only be achieved once all participants in the chain of investment, production, manufacturing, exports and consumption are made fully aware of the needs of rural Honduras.

Policymakers and investors, who currently take little interest in agriculture, need to be informed about the principles behind sustainable development, in order to achieve a change of attitude towards the agricultural sector in government and financial circles.

Educators also need to take part in rural development projects in order to strengthen output at a community level. They must help producers understand the concept of sustainable development, creating a rural workforce that can reconcile the agricultural needs of the country with local needs.

An institution with great potential to direct future agricultural development is in fact one of the most deficient in society – the Honduran educational system.

Honduras needs to provide a secure learning atmosphere for children, and to encourage them to recognize the importance of agricultural development. If they are to become leaders in sustainable agriculture, they also need technical education and access to information about innovation, productive employment and environmental issues. Since they are the future of the country, an investment in their education cannot fail to yield results.

The students and teachers of Zamorano currently participate in several local initiatives in rural communities throughout Honduras. The university is also connected with eight regional educational institutions, 14 national educational institutions, and ten youth groups. Their commitment has had an impact, but knowledge in every sector of society still needs to be raised significantly to widen its scale.

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