US embassy cable - 05TEGUCIGALPA708

UNCLAS TEGUCIGALPA 000708 
 
SIPDIS 
 
STATE FOR EB/TPP, EB/CPA, EB/TRA and WHA/CEN 
 
E.O. 12958: N/A 
TAGS: ECIN, ETRD, ELTN, ECON, EAGR, HO 
SUBJECT: Central America: Progress on a Customs Union; A 
Step Towards Integration 
 
REF: 04 Tegucigalpa 778 
 
1.  Summary: The Central American customs union is on its way, 
slowly but surely.  On Wednesday March 9 of this year, Honduras 
and Guatemala consolidated the process of customs unification by 
signing a bilateral agreement at El Florido, a border crossing 
between the two countries in the Department of Copan in western 
Honduras.  This is the next step in a process that has recently 
included signing a similar agreement with Nicaragua in February 
2005, and the conclusion of a customs liberalization between 
Guatemala and El Salvador in December 2004.  End summary. 
 
Honduras Consolidates Custom Union with Guatemala 
--------------------------------------------- ---- 
 
2.  The presidents of Honduras and Guatemala, Ricardo Maduro and 
Oscar Berger respectively, signed a bilateral agreement that 
contemplates measures for the creation and application of 
mechanisms to facilitate the transit of people and merchandise 
between the two Central American countries.  The signing of this 
agreement follows similar resolutions taken by Honduras, 
Guatemala, El Salvador, and Nicaragua (known as the CA-4) to 
create a Central American passport for all the citizens of the 
region and also to create a unique visa that will be required of 
all foreigners that wish to visit these four countries. 
 
Central America Marches Towards Integration 
------------------------------------------- 
 
3.  At the March 9 ceremony, President Maduro highlighted both 
the importance of CAFTA-DR to all the Central American countries 
and how all the countries of the region are going to work 
together to reach a similar trade agreement with Europe. 
According to President Maduro, this is the first time in history 
that the Central American countries have negotiated as one.  "We 
set the example to the world [with CAFTA-DR] and with this 
success we are preparing ourselves to also do the same with 
Europe".  He expressed his satisfaction with the steps that have 
been taken towards the issuance of a unique passport and visa 
requirement for the Central American region. 
 
Guatemala and El Salvador Set The Example 
------------------------------------------ 
 
4.  At the end of 2004, Guatemala and El Salvador were the first 
Central American countries to advance towards a customs union by 
opening a single customs window for the movement of people and 
merchandise between the two countries.  On February 15 of this 
year, Honduras and Nicaragua signed a similar agreement to 
operate a unified customs window at the Guasaule border crossing 
point, in the Choluteca Department in southern Honduras.  This 
agreement, which had sixteen points to be followed by both 
nations, includes: the elimination of most requirements for 
agricultural products that come from Nicaragua to Honduras, the 
installation of one window to provide immigration services for 
both countries, an entry/exit card that will be the only 
requirement for the citizens of the CA-4 countries, and the 
gradual elimination of all tariffs on products from both 
countries.  Honduran and Nicaraguan customs, police, immigration, 
quarantine, and transportation officials signed the document. 
The Central American countries are hoping that Nicaragua and 
Costa Rica will establish a similar agreement in the near future. 
5.  Comment:  As reported reftel, in 2004 Honduras was perceived 
as lagging behind Guatemala and El Salvador in its enthusiasm for 
the customs union, in part because of certain statements made by 
GOH officials, including Director of Trade Policy Melvin Redondo. 
In conversations with EconOffs at the time, Redondo stressed that 
Honduras was indeed supportive of the customs union, but was 
merely concerned that certain technical issues regarding customs 
integration needed to be carefully worked through, not rushed 
into without planning.  It appears that these steps towards 
integration, while slower at first than had been hoped, are 
finally building a momentum towards a genuine customs union.  It 
remains to be seen if the technical implementation will keep pace 
with the political declarations.  End Comment. 
 
Palmer