US embassy cable - 02TEGUCIGALPA2991

UNCLAS SECTION 01 OF 02 TEGUCIGALPA 002991 
 
SIPDIS 
 
DEPARTMENT FOR EB/TTP/MTA/MST/KIM BARR AND WHA/CEN 
STATE PASS TO USTR: ANDREA GASH DURKIN, DAN FANTOZZI 
DOC FOR 4320/DOC/ITA/MAC/WH/ONIA/MCARILLO 
GUATEMALA FOR COMMATT:DTHOMPSON 
GUATEMALA FOR AGATT:FCOOLIDGE 
 
E.O. 12958: N/A 
TAGS: ETRD, ECON, EAGR, ELAB, PREL, KTEX, HO, FCS 
SUBJECT: FTAA: HONDURAS' EXPORT PRIORITY INFORMATION 
 
REF: SECSTATE 209216 
 
1.  As solicited in reftel, Post identifies the following 
export priorities for the Honduran government and private 
sector.  The cable includes both non-agricultural products 
(mentioned in reftel) and agricultural goods. 
 
2.  According to its recently published economic plan, the 
Maduro administration will concentrate on developing export 
sectors with high potential to create jobs and related 
economic activity.  This includes strengthening Honduras' 
existing export capacity in the apparel-assembly and agro- 
industrial sectors and diversifying exports from other light 
industry and agro-industrial enterprises and exploiting 
Honduras' natural resources (primarily forestry and mining). 
 
3.  Honduras is the largest exporter of textile and apparel 
products to the U.S. among Caribbean Basin Trade Partnership 
Act beneficiary countries and the second largest exporter in 
the region after Mexico.  Industry representatives argue 
that duty free treatment for Honduran exports to the U.S. 
market is essential for the sector to be competitive with 
Asia when import quotas are eliminated in 2005.  Honduras' 
apparel assembly industry primarily manufactures knit 
apparel and t-shirts.  The Honduran government and 
manufacturing sector are interested in diversifying the 
industry to produce higher-value finished products like 
fashion wear and women's attire. 
 
4.  The GOH and industrial park operators are also seeking 
to diversify out of apparel and textile production and into 
other types of light industry, including footwear, 
automotive parts, electronics assembly, data processing 
services and wood furniture and other wood furnishings.  To 
date, there has been limited success in attracting non- 
textile light assembly operations.  Honduras is home to a 
few businesses producing wire harnesses and high-end doors 
and furnishings made from Honduran mahogany for export. 
Recently, a U.S. company manufacturing wire harnesses for 
U.S. automakers announced plans to hire 1,500 new employees. 
The company has also expanded into building high cost mail 
sorters for major U.S. buyers and has plans to expand into 
other high-value assembly operations. 
 
5.  Honduras is a major exporter of coffee, bananas and palm 
oil, which have traditionally been the leading sources of 
foreign exchange.  Falling commodity prices and natural 
disasters have significantly impacted Honduras' export 
revenues.  In recent years, and thanks in part to the 
Caribbean Basin Initiative, the Honduran government and 
private sector have expanded the agro-industrial export 
sector to include nontraditional agricultural products. 
There is significant investment in Honduras' melon industry 
(watermelon and cantaloupe) and seafood industry, especially 
for farm-raised and wild shrimp and other seafood products, 
especially spiny-tailed lobster. 
 
6.  USAID has enjoyed success with its agricultural 
diversification program run by FINTRAC, a U.S. company 
working with small farmers to diversify into profitable 
nontraditional agriculture exports (especially oriental 
vegetables and jalapenos).  A USDA-funded hot water 
treatment plant for mangos began operating in April 2002, 
permitting Honduran mango producers for the first time to 
meet U.S. med-fly phytosanitary requirements.  FINTRAC is 
working with Honduran farmers to develop a fledgling papaya 
for export industry.  There is interest in expanding use of 
the mango hot water treatment plant to include papayas 
during the mango-growing season. 
 
7.  USDA has also worked with Honduran cheese producers to 
meet U.S. sanitary restrictions and qualify to export ethnic 
cheese products to the U.S.  Honduran dairy producers are 
interested in increasing exports of ethnic cream to the U.S. 
and beginning exports of soft cheeses (mozzarella). 
 
8.  Other Honduran agricultural export interests include 
poultry products (especially white meat), beef, tobacco 
products (cigars), sugar, herbs and spices (parsely, 
oregano, black pepper, among others), blueberries and 
ornamental plants and flowers.  Honduran exports of poultry 
products, beef, blueberries and spices are restricted 
because they do not meet U.S. phytozoosanitary regulations. 
The Honduran government has also been publicizing the fact 
that Honduras' North Coast has been declared free of the med- 
fly in order to take advantage of the U.S. market for 
fruits. 
 
Pierce