According to Jorge Interiano, operations director of the San Pedro Sula-based Asociacion de Maquiladores, the growth rate of maquila (manufacturing and assembly) operations for the year has reached 15 percent. Figures released in mid-August revealed that total export sales for the first five months of 1999 were $808 million dollars, a result in conformity with optimistic expectations advanced by government officials early in the year. In July, a delegation of maquiladores headed by Foreign Minister Roberto Flores Bermudez paid a visit to congressional committees in Washington, D.C. to argue in favor of NAFTA parity. Roberto Leiva, minister without portfolio and a member of the delegation, claimed that the answer offered by congressional leaders was positive and justifies moderate optimism. A source at the Ministry of Economy in Tegucigalpa confirmed that a final decision concerning the issue is scheduled for late September or early October. So far, the exodus of maquiladores to Mexico, predicted by some analysts early in the year, has >failed to materialize. Jesus Canahuati, president of the Asociacion de Maquiladores, pointed out that only 10 companies have closed their doors this year: 50 percent for financial reasons and the rest to set up shop in Mexico. Consequently, it is still estimated that maquila exports could exceed $2,000 million dollars, thus turning maquila into the number one export earner.

Deputy Tourism Minister Jacqueline Foglia recently stated that tourism is gradually recovering from the battering received from Mitch. The main long-distance tourism destination, the Bay Islands, is already back to pre-Mitch occupancy levels and Copan Ruins are expected to reach beyond its present 50 percent occupancy before the end of the year. Ratification of reforms made to constitutional article 107, which has been under public scrutiny ever since its approval last year, was publicly endorsed in early August by Congressional President Rafael Pineda Ponce, who promised to convene a bipartisan majority in the short term. Pineda also

promised to protect the interests and rights of the Garifunas, the main opposition group to the reform. Pineda also pointed out that tourism was now a priority, given the decline of the coffee sector. Minister of Tourism Norman Garcia predicted that the approval of the constitutional reform will generate a capital investment of at least $1,500 million dollars in the medium term. News about the impending ratification was greeted with enthusiasm by Ronald Barahona, president of the Honduras Chamber of Tourism. Figures for the month of January revealed that the number of visitors to Honduras were 22,390 (excluding Central Americans), only 1,236 less than January of 1998.

By WENDY GRIFFIN

For those people interested in Honduran ecology, the year 1992 stands out for many reasons. It was after the 1992 U.N.-sponsored conference on Environment and Development in Rio de Janeiro, Brazil that most Honduran environmental organizations were founded.

During that year the International Development Ethics Association also held its international conference on Biodiversity, Ethnodiversity and Development in Tegucigalpa. Also in 1992, the International Standardization Organization (ISO) based in Switzerland took up its commitment to develop standards for those interested in implementing "sustainable development."

The ISO already had hundreds of standards on air, soil and water quality. What it developed as a result of the Rio conference were generic management systems standards for environmental management, known as ISO 14000. This is similar to the better known generic management system standards for quality, called ISO 9000. While there are several standards in the ISO 9000 family, there is only one standard in the ISO 14000 family, which is called ISO 14001.

In Latin America, one of the first industries to be impacted by these ISO standards was the banana industry, which is Honduras' second most important source of foreign exchange after coffee. Only two years after ISO 14001 was written, Dole Food's banana plantation in Costa Rica became the first agricultural producer in the world to receive certification that its environmental management standards meet the requirements of ISO 14001.

Also in 1998, Dole subsidiaries in Thailand and Ecuador were certified that they met ISO 14001 standards. Dole plans to work with its other subsidiaries so that they can qualify, too. The ISO does not certify companies or plantations. Companies that choose to meet these standards must pay an independent third party to certify that the processes they use to meet their environmental goals is up to ISO standards.

The ISO also points out that ISO 14000 or ISO 14001 is not a label signifying an "environmentally friendly" product. ISO certification is about processes, not the product. The key elements of ISO 14001 standards are environmental policy, planning, implementation and operations, checking and taking corrective action, management review and continual improvement.

Thus the ISO standards being implemented by Dole have several differences from the "Better Banana Project" standards being implemented by Chiquita. For example, which environmental goals will be reached are defined by the Better Banana Project in the case of Chiquita, but are defined by Dole under ISO 14001 standards. Whatever their goal, ISO 14001 management processes should help them to get there. For example, the European Union will import no more bananas grown with pesticides for health reasons, beginning in the year 2000.

For those participating in the Better Banana Project, the auditing for compliance is done by the environmental organizations that sponsor the project. Rainforest Alliance staff member Chris Wille states they have worked for two years with Chiquita's subsidiary in Honduras, the Tela Railroad Company, to implement the new standards. The company has invested millions of dollars, hired excellent environmental staff, created an environmental department, and opened its farms and records to Conservation Agriculture program inspectors.

The ISO points out that it does not do conformity assessment. This is a matter for suppliers (Dole in the case of bananas) and the clients (such as supermarket chains). While the Better Banana project is designed to show the product was produced in an eco-friendly way, including satisfactory worker conditions, the ISO 14001 certification does not guarantee this. However, companies that implement ISO 14001 standards should show movement toward continual improvement in the area of environmental safety.

Adopting ISO 14001 gives the company the several benefits, according to the ISO. These standards reassure customers of a commitment to demonstrable environmental management. It lowers the cost of insurance. Having these standards reduces incidents that can result in liability. The company can demonstrate that it exercised reasonable care in the event of accusations of negligence.

By showing their commitments to environmental impact monitoring, this facilitates getting permits and improves government-industry relations. In Honduras, environmental impact permits have been a major stumbling block for foreign investors such as Harza Engineering and Intermar. As Europe moves toward ISO standards, certification may become a selling tool to meet vendor certification criteria. Seeking ISO environmental management certification shows the company is being responsible and, in Dole's case, on the cutting edge. This helps investor relations.

In Honduras both Dole and Chiquita, through their local subsidiaries of the Standard Fruit Company and the Tela Railroad Company, have traditionally produced only part of the fruit they export. The other part was produced by local growers. But if the local growers do not implement these new environmental standards, too, they will have problems selling their fruit under the Chiquita and Dole labels.

Currently, these standards are little known in Honduras. Information about them on the Internet is available principally in English. Copies of the ISO 14001 standards are available from the Central Secretarial of the ISO, 1 Rue de Varembe, Case Postal 56, CH-1211, Geneve 20, Switzerland (Suiza). E-mail inquiries may be sent to <frost@iso.ch>.

According to Central Bank sources, the economic slowdown begun in earnest in the month of April. At the end of the month, the monthly index of economic activity (IMAE) reflected a negative growth of 0.4 percent, 9.4 points down when compared with the same month in 1998. In February 1999, the IMAE was still positive at 2.5 percent. The sectors showing the largest slowdowns are: industry, transportation, public administration, construction and agricultural. But credit by banks to the private sector was Lps. 28,744 million at the end of May, reflecting an increase of 22 percent over May of 1998. On the same date, the balance of deposits in the banking system was Lps. 29,574 million for an annual increase of 18.9 percent. In comparison to results obtained in December of 1998, the increase was 7.4 percent in credits to the private sector and 11.8 percent in deposits. In marked contrast, the active interest rates at the end of May registered a mean of 30.1 percent, reflecting 0.2 percent increase over rates in May 1998, a fact that seems to suggest that liquidity levels are not only caused by a lack of borrowers but also a reticence by bankers. Furthermore the mean interest paid out for certificates of deposit went down by 0.6 percentage points when compared to May 98.

To the surprise of government officials and executives of multilateral agencies (including the International Monetary Fund), government finances improved during the first semester of 1999. Current government tax revenue grew by Lps. 833,6 million, from Lps. 6,647.7 million collected during the first semester of 1998 to Lps. 7,480.6 million registered at the end of this year's first semester. According to Central Bank sources, tax collection showed clear signs of dynamism with an annual growth rate of 22 percent, jumping from Lps. 5,568.8 million in 1998's first semester to Lps. 6,638.9 million this year. This increase can be explained by the rise in sales tax revenue, which rose from Lps. 1,401.5 million to Lps. 2,303.1 million as a direct result of the 5 percent increase in the sales tax approved by Congress last year by Congress. This rise compensated for the government's loss in income tax revenue, which had been reduced at the same time from 42 percent to 25 percent, in the case of corporations. The decline in income tax revenue for the period was from Lps. 1,898.3 million to Lps. 1,654.4 million. Tax on services and specific activities reflected a rise of Lps. 793.5 million, growing from Lps. 326.4 million to Lps. 1,117.7 million. This is the product of the increase in tax revenues in air transportation, public services and "timbres de contratacion." Import taxes fell by Lps. 94.7 million, from Lps. 928.9 million in the first semester of 1998 to Lps. 834.2 million in the first semester of 1999. Export taxes also contracted substantially from Lps. 51 million to a scarce Lps. 3.4 million, a result that can be explained by the reduction of tariff levels and the decline in exports, particularly bananas.

By WENDY GRIFFIN

Costa Rica and Guatemala have both been able to sell their coffee as "premium," while Honduran coffee has generally not gained name recognition. Currently, there are three niches of coffee marketing in which other Central American growers place their product by seeking special certifications. Honduran coffee growers appear unaware of these trends.

The first certification the other Central American coffee growers seek is "ECO-OK." Five years ago, the Rainforest Alliance and the Inter-American Foundation for Tropical Research started to develop standards for eco-friendly coffee following years of research. About two years ago, they began to encourage growers to seek certification that they produced coffee grown under shade, which protects the habitats of songbirds.

Only a few farms have been certified so far in Panama, Guatemala, Nicaragua and El Salvador, according to the director of the Conservation Agriculture Program Chris Wille. He said they have not worked with farmers in Honduras yet because of limited resources. Also they do not want to over extend partner groups.

Although Honduras has important university level agronomy and botany programs associated with the National University (UNAH) and the Pan-American Agricultural School in El Zamorano, there are no Honduran partners of the Conservation Agricultural Network. This is in contrast to the situation in El Salvador, where the project has World Bank/GEF support and the management of the largest environmental non-governmental organization, Salva Natura.

Those companies or groups whose coffee is certified "ECO-OK" can then sell it to specialty importers of organic shade grown coffee, such as Sustainable Harvest Coffee Co. <http://www.sustainableharvest.com>. This company sells coffee over the Internet and to other companies that seek eco-friendly products, such as coffee for Ben & Jerry's Ice Cream.

Farms that seek this certification are visited to make sure they have adequate shade, have shade of helpful species and the number of bird species is checked. The use of chemicals is also analyzed.

U.S. companies like Starbuck's generally buy coffee that has not been sprayed with pesticides, which might leave a residue. However, in coffee growing the herbicide used to kill the grass and medicinal plants under the coffee is more toxic to workers, the land and the water, so organic certification includes looking at all agro-chemicals.

Growers who wish to sell their coffee as organic should also seek certification. Starbuck requires coffee sold as "Costa Rica Organic Blend" be supplied by growers certified as organic. In Costa Rica, organic certification is given by Eco-Logica, a Costa Rica organization. Other countries seek Quality Assurance International's organic certification. Once they have certification, they can sell their coffee to specialty companies, such as the Ecology Store <http://www.ecologystore.com>.

Other specialty distributors like Equal Exchange also require that coffee be sold under "fair trade" conditions. Under fair trade, most of the value of the coffee goes directly to the growers, usually by eliminating the middlemen. In Honduras, 75 percent or more of the value of coffee goes to the middleman ("coyote") or exporter. Fair trade buyers will often offer credit to help the farmers during the growing stage.

Most producers of fair trade coffee are coffee cooperatives, such as Chajulense in Guatemala and FESACORA, the Salvadoran Federation of Agrarian Reform Cooperatives. None of the Honduran cooperatives apparently have sought fair trade certification, which is accredited by Transfer US. Equal Exchange coffee is sold through the Mennonite Church's fair trade stores, "10,000 villages." (See their web site <http://www.thenthousandvillages.com> for the store nearest you. Coffee can also be ordered over the Internet in the United States.)

In Honduras, it is not possible to order and pay for something by credit card this way, as Honduran law does not permit making credit card payments over the phone.

Many of Honduras' small producers of organic shade coffee like the Tolupans and the Pech do not belong to cooperatives. Their green coffee is bought by middlemen for exporters, and this potentially high-grade specialty coffee is sold together with cheap industrial grade coffee broiling under the San Pedro Sula sun.

Promoting shade-grown coffee is going to be the next big thing environmentally, some coffee marketers believe. Hondurans produce this kind of coffee but miss out on the benefits of specialty niche marketing because they do not know how to go the extra mile and get certification that would make then eligible for this market. The advice the small coffee growers receive, such as using pesticides, herbicides, and switching to sun coffee, is the opposite of what they need to do to access these markets.

For more information on the ECO-OK Coffee Project, contact Rainforest Alliance, 65 Bleecker St., NY, NY 10012-2420. For information on free trade coffee, contact Equal Exchange, 101 Tosca Dr. Staughton, MA 07072 or see their website at <http://www.equalexchange.com>.

Global telephoning is facing increased marketing and technical problems. Iridium, a handheld satellite telephone conceived and designed by American giant Motorola and Japanese designer Kyocera and marketed in Honduras by Celtel, has failed to live up to its marketing expectations. International analysts say its initial pricing policy was unattractive at $3,000 per unit and $3 to $7 dollars a minute, according to the type of service demanded. Furthermore Iridium's telephone unit did not work at all when operated from inside a building, a fact that had not been revealed to customers around the world. As a result, global sales were only one tenth of its annual objective, a fact that prompted Iridium's president to resign last July.

Ceteco, a Dutch conglomerate and owner of Curacao, the largest retailer in Honduras, is experiencing financial difficulties. According to a report published by London's Financial Times, Ceteco was granted protection from its creditors some weeks ago, including from its main provider of funds, a large development fund operating in the south of Holland and Citicorp. In contrast, Curacao's operations in Honduras appear to be rock-solid: its Lps. 200 million lempiras in outstanding loans (drawn from las Bolsas) are duly covered by inventories and buildings with a market value of Lps. 400 million. Nevertheless, account receivables have been a little shaky after Hurricane Mitch with a revolving total of Lps. 200 million.

Trademarks are rapidly increasing in Honduras. In the period from Jan. 1, 1994 through Dec. 3, 1998, the number of trademarks registered with the Ministry of Economics rose from 62,481 to more than 120,000. Five years ago the number of trademarks covering the marketing of products was 60,591 whereas for services there were only 1.890. The first trademark registered in Honduras was under the name Apollinaris, property of a German firm, and was destined to protect the marketing of a mineral water. Of the 120,000 names currently registered, most represent food products, pharmaceuticals, perfumes and clothing. In 1998, the government received more than Lps. 5 million as revenue generated by trademarks and 4,024 new trademarks were registered. During the period January-July 1999, more than Lps. 2 million were paid out by owners of trademarks. According to Camilo Bendeck, head of the trademark registry, 70 percent of trademark's owners are foreigners.

Current government revenues grew Lps. 833.6 million during the first six months of 1999, from Lps. 6,647.7 million lempiras collected in the first half of 1998 to Lps. 7,480.6 million lempiras registered in the first half of this year. According to the Central Bank, tax collection grew at an annual growth rate of 22 percent, jumping from Lps. 5,568.8 million in the first half of 1998 to Lps. 6.638,9 million this year. The increase is due to the rise in sales tax revenue, which rose from Lps. 1,401.5 million to Lps. 2,303.1 million as a result of the 5 percent sales tax hike. This rise compensated for the loss in income tax revenue, as both the corporate and personal tax base were reduced last year. The drop in income tax revenue was from Lps. 1,898.3 million to Lps. 1,654.4 million.

The Rotary Club of Tegucigalpa is sponsoring a one-year scholarship, offered by the Georgia Rotary Student Program, Inc., for study on the university level in the state of Georgia during the 2000-2001 academic year.

The grant covers all scholastic costs including tuition, books, college provided room, food, and gives $125 three times during the year to cover incidental expenses. However, it does not cover travel or medical insurance.

Students in all fields of study are eligible except medicine and dentistry.

Applicants must be between 18 and 24 on Sept. 1, 1999, single, and an undergraduate or graduate student. Applicants who have previously studied in the United States for more than four months are not eligible.

Moreover, students must have a 90 percent GPA and need high scores on the SAT, TOEFL, GRE or GMAT exams.

The deadline for application is October 1. For more information, contact Silvia Reyes at tel. 221-4060.

By DON PEARLY

Special to Honduras This Week

Once again I made the pilgrimage to Tegucigalpa in search of the elusive United States travel visa for a Honduran-born citizen. What has changed since writing the first article on this subject? One great improvement was the absolute lack of tramitadores. Could it be that enough people read the article? Could it be some heat came down upon them or could it just be they were busy picking other bones? Nope, too good to be true, they surfaced again but in smaller numbers on our next visit.

This time we were armed with a definite appointment time that we stood in a long, long line a couple of weeks prior to get. 10:30 a.m. Now this sounds good. Sure enough, right on schedule, we were ushered inside and made comfortable. A couple of hours after lunch break our name was called. I believe it was about 2:30 p.m. After a successful interview, we were told to pick up our visa after 4 p.m. the next day. Now this was another adventure. The line ran about four deep in places and took us all the way up the entire face of the embassy and around the corner.

I am more than ever looking forward to the upcoming reform. I still say the embassy people are doing their absolute best in providing as rapid and accurate service as is humanly possible, but they are overwhelmed with applicants and therefore paperwork. Please remember, always be patient and always be courteous.

Next a little good news about the Doctors Gomez doing all the good work in La Ceiba. Due to readers such as yourselves, they have been receiving donations of much needed medical and hygienic materials. Some of you found out the doctors' phone number is 443-1938 and others discovered an e-mail connection at drgomez@laceiba.com. Now the rest of you have a way to contact them and please do, since they still need plenty of help with their wonderful work.

While your all listening, I might put out what we refer to as a "zig-alert" in America, a traffic advisory bulletin in some parts of the country. It is about the drive from San Pedro Sula to Tegucigalpa. If you have another option, I would suggest you take it. Just a few of the hazards might include miles of speed bumps (sleeping policemen), some of which are the exact same color as the highway and play havoc with your suspension system; cars and great big heavy trucks that totally ignore the no passing when the solid line is on your side signs; torrential rains up in the mountains and very few signs warning of upcoming dangers and disasters (except, of course, the big ones that say do not damage the signs themselves). All in Spanish, by the way. Other than that, the scenery is beautiful should you dare take your eyes off the road in front of you.

The article on adoption procedures in Honduras caused my e-mail to ring off the hook and we are working on a follow-up story with many more details. We had no idea so many readers were interested in adopting children.

So what is next? What subjects would you like us to explore? Either e-mail to Honduras This Week directly or to me at <dpearly@compuserve.com>, and we will see what we can do.