US embassy cable - 05TEGUCIGALPA934

UNCLAS SECTION 01 OF 02 TEGUCIGALPA 000934 
 
SIPDIS 
 
STATE PASS USTR FOR AMalito and JYoung 
STATE FOR WHA/CEN, WHA/EPSC, EB/CBA, EB/TPP/MTA 
GUATEMALA FOR COMATT 
 
E.O.  12958: N/A 
TAGS: ETRD, ECON, HO 
SUBJECT:  Honduran CAFTA Outreach to Environmental and Small 
Business Stakeholders. 
 
 
1.  Summary: On April 15th and 18th, the Ministry of Trade and 
Industry hosted events entitled, "Getting Ready to Take Advantage 
of CAFTA (Central American Free Trade Agreement)," and "CAFTA 
Environmental Chapter Implementation and Environmental 
Cooperation Agreement."  The first seminar educated 22 micro, 
small, and medium enterprises (MIPYMES, for its initials in 
Spanish) on the provisions of CAFTA.  The second seminar raised 
awareness of the Environmental Cooperation Agreement among 80 
private and public sector officials.  This seminar was a part of 
an ongoing effort by the GOH to ensure cooperation and 
collaboration in the implementation of CAFTA environmental 
commitments.  Both events represent the important work that the 
GOH is doing to ensure vulnerable groups in Honduran society can 
benefit from CAFTA.  End summary. 
 
2.  On April 15th, the Ministry of Trade and Industry sponsored a 
seminar to explain the commercial benefits that CAFTA could bring 
for small enterprises.  Participants expressed their need for 
technical assistance and funds to improve their production and 
compliance capacities.  Ministry representatives responded by 
highlighting an announcement made earlier this year that the GOH- 
owned mortgage and real estate lender, Fonaprovi, will be 
transformed into a state bank, to be called Bancaprovi.  Ten 
percent of Bancaprovi funds will be used to finance MIPYMES. 
International organizations, such as the Inter-American 
Development Bank (IDB), Central American Bank for Economic 
Integration(CABEI), and various German NGOs have offered funds to 
the Honduran government to train small businesses in export 
regulations and compliance.  The Ministry of Trade and Industry 
is also exploring ways to simplify complicated procedures that 
currently limit MIPYMES' ability to export and import products to 
and from the U.S.  Participants said that if MIPYMES do not 
receive government assistance, they would have difficulties 
harnessing the potential benefits of CAFTA. 
 
3.  A second, environmentally-focused seminar was held on April 
18, and included 80 participants from state, municipal, private 
and non-governmental organizations (NGOs).  Minister of Trade and 
Industry Norman Garcia opened the meeting by emphasizing that, 
although environmental industries are not well known in Honduras 
and have yet to develop relationships with commercial interests, 
their interactions will increase under CAFTA.  He explained that 
commercial business should be in compliance with environmental 
laws.  Humane Society representative, Marta Prado, explained 
that, in her opinion, environmental protection and monitoring 
should be the responsibility of non-governmental organizations. 
Participants expressed concern that currently neither the 
government nor private sector has the capacity to monitor and 
enforce environmental laws in Honduras.  If environmental groups 
were responsible for ensuring compliance with current laws, then 
civil society and NGOs would have authority to report violations 
of environmental laws. 
 
4.  The representative of the Honduran Private Sector Council 
(COHEP), Armando Urtecho, said that the private sector has every 
intention of following environmental standards.  That said, while 
there are many laws and agencies that deal with this matter, very 
few government officials truly understand it.  Delayed and at 
times unfair resolutions frustrate those that are trying to 
comply with present standards.  Urtecho questioned whether all 
Honduran producers or only those exporting to the U.S. need to 
comply with environmental regulations.  GOH representatives 
concluded that all producers ought to comply with environmental 
laws.  Participants suggested that the government, municipal, 
public, and private organizations should set up new procedures 
and work in coordination to accomplish environmental goals. 
Presenters emphasized that CAFTA Chapter 17 (on environment) 
creates new procedures for solving environmental disputes. 
 
5.  In his closing remarks, Minister Garcia indicated that, in 
recognition of the aforementioned complications in resolving 
environmental disputes, the Ministry of Trade and Industry and 
the Ministry of Natural Resources and Environment are working 
together and have opened liaison offices tasked with coordination 
between Ministries.  Vice-Minister of Natural Resources and 
Environment Gerardo Salgado affirmed that enforcement of 
standards currently on the books would foster  environmentally 
sustainable development in compliance with CAFTA commitments. 
His ministry is hoping to develop public environmental awareness 
campaigns and expedite claims processing procedures.  He 
recognized the need for transparent and expeditious dispute 
resolutions and the need to consult public and private 
stakeholders before passing new environmental laws. Were the 
government to be successful in instituting the above procedures 
and policies, it would represent a significant stride towards 
prioritizing environmental sustainability.  Private sector 
representatives who were present, however, doubted GOH capacity 
to accomplish these commitments. 
 
6.  Assistant USTR Mark Linscott presented the USG view, saying 
the policy of the U.S. government is not to impose new 
regulations on any country.  He emphasized the need for the 
government to allow civil society to become custodians of the 
environment and to advise on transparent, fair, and expeditious 
ways to solve environmental disputes.  He concluded by 
emphasizing the importance of empowering agencies and 
organizations responsible for enforcing environmental law with 
enough credibility and authority to successfully accomplish their 
objectives. 
 
7.  Comment: Even though CAFTA has already been ratified here, 
the GOH recognizes the continuing need to educate the public 
about the agreement.  Outreach events like the two recent ones 
are intended to increase public acceptance of the accord and to 
ensure that vulnerable Honduran groups are prepared to benefit 
fully from CAFTA.  During the first seminar, small entrepreneurs 
complained that small and medium companies do not receive 
government assistance and guidance in navigating international 
trade procedures.  We expect that continued GOH outreach efforts 
should help to allay those concerns. () End Comment. 
 
PALMER