Mood optimistic for CAFTA

Anette Emanuelsson
Honduras This Week

Anette Emanuelsson/Honduras This Week
The port in Puerto Cortes is the first Central American port to implement the Container Security Initiative which can help Honduras become a shipping hub for the CAFTA region.

"A historic occasion." That is how CAFTA negotiators Regina Vargo and Melvin Redondo chose to describe the coming into force of the US-Central American Free Trade Agreement on April 1st. They were two of the speakers at a CAFTA forum organized last Monday by the newspaper El Heraldo and the US Embassy.

Regina Vargo, who negotiated the agreement for the US, painted a picture of two economies already tied together before CAFTA. First, Honduras is the third largest exporter of textile and clothes to the US. Second, 20 percent of the Honduran GDP is made up by money sent home by Hondurans living in the US.

Vargo emphasized that the agreement is a tool; not a magic wand. "But I think Honduras is particularly well-positioned to take advantage of it right now," she said, mentioning for example the recent debt relief given to Honduras through the Heavily Indebted Poor Countries Initiative, which hopefully will free up resources for education and social services, while CAFTA is expected to attract investors and create jobs.

Many of the new jobs are expected in the textile industry - a key sector during negotiations since it accounts for 40 percent of the Honduran GDP. After a decade of increasing trade, Honduran textile exports to the US fell in 2005, while China increased its share of the US textile market from 17 to 24 percent. "The speed and the extent of the competition from China have been a bit startling," Vargo said. "There is no way that Central America can compete with China on the basis of production cost alone, but with duty-free access to US market and with the geographic proximity I think we have a tool to provide a critical competitive edge to this industry."

However, Vargo emphasized that preferential US market access alone is not enough to attract investors to Honduras - they also want stability, a well-educated workforce, and a sound legal system. "Capital is a coward and it tends not to search for child labor, instability and dirt-cheap wages," she said.

One of the critical areas for investors is infrastructure and Vargo cited the improvements made to the port in Puerto Cortes as a competitive advantage for Honduras. Last year, Puerto Cortes became the first port in Central America to implement the so-called Container Security Initiative (CSI), a program intended to increase security for containers shipped to the United States from around the world. Today, 75 percent of cargo containers headed for the US either originate or have their containers shipped through CSI ports. "There is a real opportunity here to develop a regional shipping hub," said Vargos.
Next speaker at the forum was Melvin Redondo, who represented Honduras in the CAFTA negotiations.

He talked about the need to diversify the Honduran export industry, and said that Honduras has already demonstrated her ability in that area. "20 years ago, nobody thought we would export electronic car parts or sushi. They thought that bananas and coffee were our only export capacities. Surprise! Honduras has the capacity to export all of the above and much more," Redondo said.

And the numbers prove him right. In 1990, non-traditional exports accounted for less than 20 percent of Honduras' total exports. Today, that number is closer to 80 percent as Honduras has moved away from coffee and bananas alone.

But traditional agricultural products are still important to the Honduran economy and many of them will be protected by tariffs for another 15 years - dairy products for another 20 years. According to Redondo, that will be enough time for the agricultural sector to develop and provide added value to their products.

The Honduran negotiator was also optimistic about the trade agreement speeding up Central American integration. "The rest of the world sees us as Central America, which as a region represents more commerce than Brazil. We should no longer think as competing economies but as collaborating economies."

Not represented at the forum were the many groups opposed to the free trade agreement. The day before the entering in force of CAFTA, several civil society organizations marched through Tegucigalpa, staging a protest outside the building housing President Manuel Zelaya's office.

"Honduras has a trade deficit with all the Central American countries. If we can't even compete with them, how will we be able to compete with the US?" said Carlos Reyes, coordinator of the Popular Bloc, an alliance of anti-globalization organizations that participated in the protests.

On the question what should be done to make the best of the situation, now that CAFTA is already a fait accompli, Carlos Reyes said the Popular Bloc is not giving up yet. "Now we will fight the implementation."

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IADB to cancel debt to Honduras

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It is to be a total and immediate cancellation of debt to Honduras, as well as to Bolivia, Guyana, Haiti and Nicaragua.

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They added that this must be done 'without imposing economic conditions and with urgency since the delay costs lives'.

La Tribuna

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La Tribuna

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Manuel Zelaya has announced an budget of 100,000 Lempiras to reactivate the land.

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La Tribuna

Coffee prospects looking hot for 2006

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The improvement in international prices has made possible a rise in volume, and thus the value of the product exported between the 1st of October 2005 and the 31 of March 2006.

According to a press release made by the Honduran Coffee Institute (Ihcafé), the value of exported coffee reached $201.9 million in the first period of this year for the coffee industry, far superior to the $136.9 million raised in the same period in the 2004/2005 season.

A spokesman for Ihcafé declared that "these results are satisfactory for all the parties involved in the producing and marketing of coffee."

El Heraldo

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La Prensa

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La Tribuna

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El Heraldo

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 El Heraldo

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La Prensa

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La Prensa