Describes bilateral and multilateral trade agreements that this country is party to, including with the United States. Includes websites and other resources where U.S. companies can get more information on how to take advantage of these agreements.
Last Published: 8/13/2019

CAFTA-DR supplanted the earlier Caribbean Basin Initiative and later Caribbean Basin Economic Recovery Act trade benefits. CAFTA-DR liberalized bilateral trade between the United States and the region and also furthered integration efforts among the countries of Central America, removing barriers to trade and investment in the region by U.S. companies. CAFTA-DR requires countries to undertake needed reforms to alleviate systemic problems in such areas as customs administration; protection of intellectual property rights; services, investment, and financial services market access and protection; government procurement; sanitary and phyto-sanitary (SPS) barriers; and other non-tariff barriers.

The final act of the Multilateral Commercial Negotiations of the Uruguay Round, which established the World Trade Organization (WTO), was signed by Honduras on April 15,1995. Honduras is a member of the Central American Economic Integration System (SIECA) along with Guatemala, El Salvador, Nicaragua, Costa Rica, and Panama. As part of Central America, FTAs have also been signed with the Dominican Republic, Chile, South Korea, and Mexico. Honduras has bilateral FTAs with Canada, Colombia, Panama, Peru, and Taiwan.

The Association Agreement between the European Union (EU) and Central America was signed on June 29, 2012. The Association Agreement relies on three pillars, political dialogue, cooperation, and trade. The trade pillar of the Association Agreement entered into force on August 1, 2013, with Honduras, Nicaragua and Panama, on October 1, 2013, with Costa Rica and El Salvador, and on December 1, 2013, with Guatemala.  Honduras and Guatemala halted negotiations with the European Free Trade Association (EFTA), comprising of Switzerland, Iceland, Liechtenstein, and Norway in June 2013.

The Central American countries agreed to establish an Economic Integration System and a Central America Customs Union (CACU) in December 1960. The commitment was reaffirmed in 1993. Between the years 2000 and 2002, the Central American countries incorporated into the legal framework agreement. The subscription of the agreement for the creation of CACU was held in 2006. The goal is to allow unrestricted movement of products and a Central American uniform tariff with duty-free privileges among the region’s countries. The products have to originate in the Central America region.

The CACU has granted free trade access throughout the region for 99.9 percent of the Central American products (with the exception of sugar and un-roasted coffee for the region). The harmonized common tariff up to now is 97 percent of Central American products.

Central America established a common external tariff schedule in 1998. Six countries signed a revised protocol for economic integration and macroeconomic coordination in October 1993. The integration protocol allows Central American countries to advance at varying rates toward more open trade.

On February 2015, Honduras and Guatemala signed a bilateral agreement creating a Customs Union in an effort to eliminate trade barriers, cut costs and speed up the transportation of goods throughout the region. Through this single customs territory, one-stop border posts have been created to guarantee an expeditious movement of goods and cross border control for those goods that are not subject to free movement. El Salvador has also negotiated its entry into the Customs Union in 2018.  In June 2019, Nicaragua has now signaled its interest in joining the customs union.  

Prepared by our U.S. Embassies abroad. With its network of 108 offices across the United States and in more than 75 countries, the U.S. Commercial Service of the U.S. Department of Commerce utilizes its global presence and international marketing expertise to help U.S. companies sell their products and services worldwide. Locate the U.S. Commercial Service trade specialist in the U.S. nearest you by visiting http://export.gov/usoffices.