HONDURAS-TRADE: Integration is a One-Way Street

By Thelma Mejía Reprint | | Print |

Thelma Mejia

TEGUCIGALPA, Apr 24 1996 (IPS) - There is a lot of talk about economic integration in Honduras, but so far the evidence of increased regional trade has been of a one-way flow of goods — the nation buys from its partners than it sells to them.

As it signs integration agreements with its Central American neighbors, the nation accumulates a trade deficit with these countries — revealing a failure to conduct an aggressive trade policy, according to some economists.

Critics say while the government defends market economics and speaks of globalization as a challenge the nation must face but has failed to improve public finances or control inflation, thus impeding its ability to develop a broad integration policy.

“If Central American integration is understood only as signing accords and political pacts in good faith, where discourse takes precedence over practice, we Hondurans will always emerge as the ugly duckling of this process,” warned Martin Barahona of the Honduran Economists’ Association.

Barahona told IPS the country’s regional trade deficit should be blamed on the failure to develop an export promotion policy.

Nevertheless, Foreign Minister Delmer Urbizo insists that Central American integration is proceeding “with giant steps”. Honduras is playing a “leading” role in that process which is regarded as the best way to increase trade in the isthmus.

The chancellor acknowledges that globalization “compels us to modernize and become competitive.” In pursuit of competitiveness, Urbizo has traveled the world looking for partners, investors and new trade ties.

But statistics reveal something else: three years after signing the Central American integration accords, Central Bank data show that Honduras imported 243.3 million dollars worth of goods last year, mostly from Guatemala, El Salvador and Costa Rica. But the country exported only 60.1 million dollars to Central America.

While tariff and trade agreements have stimulated Honduran exports, they have also kept the country’s regional trade in deficit.

The deficit is particularly high with Guatemala and El Salvador and to a lesser extent, Costa Rica. Imports from these three nations totalled 235.7 million dollars in 1995 while Honduran exports to them were only 41.3 million dollars.

Honduras only enjoys a trade surplus with Nicaragua among Central American countries. Exports to Nicaragua last year exceeded 18.8 million dollars, while imports were 7.6 million dollars.

Barahona says the reason the government has not developed an aggressive trade policy is because of the acute economic problems facing Honduras in the sixth year of a neoliberal adjustment programme that “still hasn’t finished: it’s barely begun.”

“So we’re trying to resolve domestic problems in order to become competitive, but trying at the same time to join the global economic process, because if we don’t take it seriously it’s going to suffocate us,” he added.

Guatemalan economist Guillermo Santizo agrees with Barahona’s diagnosis. He adds that if Honduras fails to increase its economic growth within five years it could pushed into a corner on the global trade map, along with other African, Asian and Latin American countries.

The Honduran government, with private sector help, is hoping to increase total annual exports from somewhat more than one billion dollars today to 18 billion dollars within 20 years.

But Barahona says that achieving this long term goal requires understanding that “competency doesn’t mean bureaucracy but rather efficiency and aggressiveness.”