Past June 26th, 2017 was inaugurated the First Customs Union between Guatemala and Honduras, being considerate the first common customs area in America, where 80% of the bilateral trade will have free transit. This will generate to the commerce an increase in its earnings thanks to the creation of a common external tariff with third parties, the removal of the internal border posts and the implementation of peripheral customs. It is worth noting that this is the first phase of the Customs Union process, in the second phase will be given the “easy migratory step” and the third phase will have “free movement of people” between both countries.
Since 1960 the implementation on said customs union was discussed through the General Treaty of Central American Economic Integration. In 2007, the Central American Republics are subscribed to the Framework Agreement for the Establishment of the Central American Customs Union, but it wasn’t until 2014 that the Governments in Guatemala and Honduras presented the project.
Since 2016 the commercial exchange between Honduras and Guatemala amounted approximately to USD 1,246 million with around 6,500 products. From this, the 80% will freely circulate with the entry into force of the costumes union, that means that the procedures will be considerably facilitated, generating an immediate benefit for the users in times and costs to introduce products to the countries. Also, the paper application forms will be removed, for which the merchants must declare their purchases through a format of Factura y Declaración Única Centroamericana (FYDUCA), which it is requested online.
It should be noted that making the domestic trade of both countries more competitive and productive was one of the main attractions of the project. Since the entry into force of the Customs Union, the establishment of new companies in different sectors has increased, both in Honduras and Guatemala, due to the celerity the commerce has been handled with, given that in the past for the slowness and complexity of the customs formalities, the goods took between 18 to 20 hours to arrive to the different countries, unlike today that the times have been significantly reduced to 4 to 5 hours.
It is expected that with the Central American Customs Union the free transit impact the 95% of the tariff headings, which is the 80% of the commercial volume between both nations. The rest of the products will have restrictions due to legal and phytosanitary issues. With the Customs Union, the authorities hope to reduce the transportation costs associated to the border crossing between 21% and 25% and to reduce in a 90% the time for the goods that will enter freely.
It is important to note that Guatemala and Honduras represent the 46% of the GDP of the Central American region. Besides the territory and the population that both nations possess, it represents an interesting market with an invaluable potential for commerce, which undoubtedly has awaken the interest of big companies around the world to invest in Central America.
Socio
García & Bodán
Honduras