The historic customs union between Guatemala and Honduras starts on Monday at the border between Rios-Corinto and is passed free to the transit of almost 80 percent of the products and people between the two Central American countries…

President Jimmy Morales (Guatemala) and Juan Orlando Hernández (Honduras) will converge in that border area to inaugurate the first customs union between two of the three countries that make up the Northern Triangle of Central America.

In 2014, the presidents of the two states instructed their cabinet to specify actions to begin negotiations to specify legal, regulatory and administrative provisions in customs, tax, immigration, sanitary, phytosanitary, among others.

By February of the following year, the leaders signed a historic agreement that would give life to the process that began 64 years ago (1951) with the formation of the Organization of Central American States.

Estimates from the Economic Commission for Latin America and the Caribbean (ECLAC) indicate that customs integration would increase tax revenues by around $40 million per month.

In addition, economic growth is expected to increase by between 0.4 and 1 percent annually, as well as export operations are expected to grow between 0.6 to 1.6 percent.

The measure also contributes to fostering competitiveness in the country, promoting strategic sectors and attracting investment, reducing logistical costs by 25 percent and increasing the speed of freight transport.

Guatemala and Honduras represent 46 percent of the region’s gross domestic product, also possess 40 percent of the Central American territory and 42 percent of the population, which translates into a potential market for trading partners.

Customs Union

The customs union is the integration of computer systems between both countries to know the traceability and improve the control of tax operations with the strengthening of control systems.

Data from the Superintendence of Tax Administration indicate that the investment for the project is 2.105 million dollars, which come from the Central American Bank for Economic Integration, the World Bank, the Inter-American Development Bank, the Central American Integration System, the Central American Integration System, the Spanish Fund, and the Structural Fund.

The customs territory of both countries will be made up of border posts integrated in three sites, as well as 10 steps as peripheral customs in different parts of the country.

The integrated border posts are places located in the intra-frontier territory (border Guatemala Honduras) where there are control centers and trade facilitation centers, where the legal, regulatory and administrative provisions in customs, tax, immigration and sanitary matters are applied.

On the other hand, peripheral customs are an extension of the customs authority for the operations of entry and exit of merchandise to or from a state party, where the above mentioned provisions apply.

In order to register the merchandise movement, the states defined the use of the Central American Single Invoice and Statement (Fyduca), which is a legal instrument for exports and imports between the two states.

The process allows the electronic transmission and real time payment of taxes in the destination country, reduces time and operating costs for economic agents and contributes to insurance and better electronic controls.

The customs project is contemplated within the Plan of the Alliance for the Prosperity of the Northern Triangle of Central America, which seeks to improve the living conditions of the population of Guatemala, Honduras and El Salvador.

Read more…