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World > North America > Honduras > Relations with U.S. (Notes)

Honduras - Relations with U.S. (Notes)


U.S.-HONDURAN RELATIONS


Overview
The United States and Honduras have close and friendly relations. Honduras is supportive of U.S. policy in the United Nations and other fora, as well of the war on terrorism. Honduras was among the first countries to sign an International Criminal Court (ICC) Article 98 Agreement with the U.S., and the Honduran port of Puerto Cortes is part of the U.S. Container Security Initiative (CSI).


The United States favors stable, peaceful relations between Honduras and its Central American neighbors. During the 1980s, Honduras supported U.S. policy opposing a revolutionary Marxist government in Nicaragua and an active leftist insurgency in El Salvador. The Honduran Government also played a key role in negotiations that culminated in the 1990 Nicaraguan elections. Honduras continues to participate in the UN observer mission in the Western Sahara, contributed 370 troops for stabilization in Iraq, and remains interested in participating in other UN peacekeeping missions.


The United States is Honduras chief trading partner, with two-way trade in goods increasing to over $7 billion in 2006. U.S.-Honduran trade is dominated by the Honduran maquila industry, which imports yarn and textiles from the United States and exports finished articles of clothing. Other leading Honduran exports to the United States include coffee, bananas, seafood (particularly shrimp), minerals (including zinc, lead, gold, and silver), and other fruits and vegetables.


U.S. investors account for nearly two-thirds of the foreign direct investment (FDI) in Honduras. The stock of U.S. direct investment in Honduras in 2005 was $402 million, up from $339 million in 2004. The overall flow of FDI into Honduras in 2005 totaled $568 million, $196 million of which was spent in the maquila sector. The United States continued as the largest contributor of FDI. The most substantial U.S. investments in Honduras are in the maquila sector, fruit production (particularly bananas, melons, and pineapple), tourism, energy generation, shrimp aquaculture, animal feed production, telecommunications, fuel distribution, cigar manufacturing, insurance, brewing, leasing, food processing, and furniture manufacturing. Many U.S. franchises, particularly in the restaurant sector, operate in Honduras.


In 2004, the United States signed the U.S.-Central America Free Trade Agreement (CAFTA) with Honduras, El Salvador, Nicaragua, Guatemala, Costa Rica, and the Dominican Republic. The legislatures of all signatories except Costa Rica ratified CAFTA in 2005, and the agreement entered into force in the first half of 2006. CAFTA eliminates tariffs and other barriers to trade in goods, services, agricultural products, and investments. Additionally, CAFTA is expected to solidify democracy, encourage greater regional integration, and provide safeguards for environmental protection and labor rights.


In June 2005, Honduras became the first country in the hemisphere to sign a Millennium Challenge Account (MCA) compact with the US Government. Under the compact, the U.S. Millennium Challenge Corporation will invest $215 million over five years to help Honduras improve its road infrastructure, diversify its agriculture, and get its products to market.


The United States maintains a small presence at a Honduran military base; the two countries conduct joint peacekeeping, counternarcotics, humanitarian, disaster relief, and civic action exercises. U.S. troops conduct and provide logistics support for a variety of bilateral and multilateral exercises--medical, engineering, peacekeeping, counternarcotics, and disaster relief--for the benefit of the Honduran people and their Central American neighbors. U.S. forces--regular, reserve, and National Guard--benefit greatly from these exercises.


U.S. Policy Toward Honduras
U.S. policy toward Honduras is aimed at consolidating democracy, protecting human rights, and promoting the rule of law. U.S. Government programs are aimed at promoting a healthy and more open economy capable of sustainable growth, improving the climate for business and investment while protecting U.S. citizen and corporate rights, and promoting the well-being of the Honduran people. The United States also works with Honduras to meet transnational challenges--including the fight against terrorism, narcotics trafficking, money laundering, illegal migration, and trafficking in persons--and encourages and supports Honduran efforts to protect the environment. The goals of strengthening democracy and promoting viable economic growth are especially important given the geographical proximity of Honduras to the United States. Approximately 800,000 to 1 million Hondurans reside in the United States; consequently, immigration issues are an important item on our bilateral agenda.


U.S.-Honduran ties are further strengthened by numerous private sector contacts, with an average of between 80,000 and 110,000 U.S. citizens visiting Honduras annually and about 15,000 Americans residing there. More than 150 American companies operate in Honduras.


Economic and Development Assistance
In order to help strengthen Honduras democratic institutions and improve living conditions, the United States has provided substantial economic assistance. The United States has historically been the largest bilateral donor to Honduras. The USAID budget for Honduras is $37 million for fiscal year 2007. Over the years, U.S. foreign assistance has helped advance such objectives as fostering democratic institutions, increasing private sector employment and income, helping Honduras manage its arrears with international financial institutions, providing humanitarian aid, increasing agricultural production, and providing loans to microbusinesses.


1998s Hurricane Mitch left hundreds of thousands homeless, devastated the road network and other public infrastructure, and crippled certain key sectors of the economy. Estimates show that Hurricane Mitch caused $8.5 billion in damages to homes, hospitals, schools, roads, farms, and businesses throughout Central America, including more than $3 billion in Honduras alone. In response, the United States provided more than $461 million in immediate disaster relief and humanitarian aid spread over the years 1998-2001. This supplemental assistance was designed to help repair water and sanitation systems; replace housing, schools, and roads; provide agricultural inputs; provide local government crisis management training; grant debt relief; and encourage environmental management expertise. Additional resources were utilized to maintain anti-crime and drug assistance programs.


In 2001, the United States also provided food aid in response to a short drought and the depressed state of the agriculture sector. Subsequently, the United States provided $265,000 in disaster assistance after Tropical Storm Michelle inundated the north coast with floods. Most recently, the United States provided assistance for Honduras recovery from 2005s devastating storms, including Hurricane Beta and Tropical Storm Gamma.


The Peace Corps has been active in Honduras since 1962, and currently the program is one of the largest in the world. In 2005, there were 220 Peace Corps Volunteers working in the poorest parts of Honduras.


The U.S. Government strongly supports the professionalization of the civilian police force as an important element in strengthening the rule of law in Honduras. The American Embassy in Tegucigalpa provides specialized training to police officers.


Security Assistance
The role of the Honduran armed forces has changed significantly in recent years as many institutions formerly controlled by the military are now under civilian authority. The annual defense and police budgets have hovered at around $35 million during the past few years. Honduras receives modest U.S. security assistance funds and training.


In the absence of a large security assistance program, defense cooperation has taken the form of increased participation by the Honduran armed forces in military-to-military contact programs and bilateral and multilateral combined exercises oriented toward peacekeeping, disaster relief, humanitarian/civic assistance, and counternarcotics. The U.S. Joint Task Force Bravo (JTF-B), stationed at the Honduran Soto Cano Air Base, plays a vital role in supporting combined exercises in Honduras and in neighboring Central American countries. JTF-Bravo plays a critical role in helping the United States respond to natural disasters in Central America by serving as a platform for rescue missions, repairing critical infrastructure, and in meeting high priority health and sanitation needs. JTF-Bravo forces have helped deliver millions of dollars worth of privately donated goods to those in need.


U.S. Business Opportunities
Bilateral trade between the two nations totaled $7.4 billion in 2006, up from $7 billion in 2005. Exports of goods and services from the U.S. increased from $3.24 billion in 2005 to $3.69 billion in 2006, while Honduran exports to the U.S. fell slightly from $3.75 billion in 2005 to $3.72 billion in 2006 More than 150 American companies operate in Honduras; U.S. franchises are present in increasing numbers.


Opportunities for U.S. business sales include textile machinery, construction equipment, automotive parts and accessories, telecommunications equipment, pollution control/water resources equipment, agricultural machinery, hotel and restaurant equipment, computers and software, franchising, and household consumer goods. The best prospects for agricultural products are corn, milled rice, wheat, soybean meal, and consumer-ready products.


U.S. citizens contemplating investment in real estate in Honduras should proceed with extreme caution, especially in the Bay Islands or coastal areas, because of frequently conflicting legislation, problems with land titles, and a weak judicial system. Investors or their attorneys should check property titles not only with the property registry office having jurisdiction in the area in which the property is located (being especially observant of marginal annotations on the deed and that the property is located within the area covered by the original title), but also with the National Agrarian Institute (INA) and the National Forestry Administration (COHDEFOR). Investors in land should be aware that even clear title is not a guarantee that a future dispute over land would be resolved equitably.


Principal U.S. Embassy Officials
Ambassador--Charles A. Ford
Deputy Chief of Mission--Jim Williard
Political Counselor--Frank Penirian (Acting)
Economic Counselor--Martin Healy (Acting)
Consul General--Rachel Schofer (Acting)
Management Counselor--Jesse Coronado
USAID Director--Harry Birnholz
Public Affairs Officer--Chantal Dalton
Defense Attache--COL Derek Dickey
Military Group Commander--COL Jeffrey Moragne
Peace Corps Director--Trudy Jaycox


The U.S. Embassy in Honduras is located on Avenida La Paz, Tegucigalpa (tel.: 011-504-236-9320; faxes: general--011-504-236-9037, USAID--011-504-236-7776, Consulate--011-504-237-1792). Internet: http://honduras.usembassy.gov/english/index_e1.htm


Contact Information
American Chamber of Commerce
Hotel Honduras Maya
Apartado Postal 1838
Tegucigalpa, Honduras
Tel: (504) 232-7043/232-6035
Fax: (504) 232-9959
Branch office in San Pedro Sula
Tel: (504) 557-6402/559-6412
Fax: (504) 557-6402


U.S. Department of Commerce
International Trade Administration
Office of Latin America and the Caribbean
14th and Constitution Avenue, NW
Washington, DC 20230
Tel: 202-482-0057
800-USA-TRADE
Fax: 202-482-0464
Internet: http://trade.gov


U.S. Agency for International Development
1300 Pennsylvania Avenue, NW
Washington, DC 20523-0001
Tel: 202-712-4810
Fax: 202-216-3524
Internet: www.usaid.gov


Facts at a Glance: Geography - People - Government - Economy - Communications - Transportation - Military - Climate - Current Time - Ranking Positions - Honduran Lempira Exchange Rates
Notes and Commentary: People - Economy - Government and Political Conditions - Historical Highlights - Foreign Relations - Relations with U.S.



Facts at a Glance
Geography
People
Government
Economy
Communications
Transportation
Military
Climate
Current Time
Ranking Positions
Honduran Lempira Exchange Rates


Notes and Commentary
People
Economy
Government and Political Conditions
Historical Highlights
Foreign Relations
Relations with U.S.





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