U.S. ratification of CAFTA spurs potential

UNCLAS SECTION 01 OF 02 TEGUCIGALPA 001752

SIPDIS

SENSITIVE

STATE FOR WHA/CEN AND EB/TPP/ABT
STATE PLEASE PASS USTR
DOL FOR ILAB
TREASURY FOR DDOUGLAS
COMMERCE FOR MSIEGELMAN
GUATEMALA FOR FCS MITCH LARSEN and FAS STEVE HUETE

E.O. 12958: N/A
TAGS: ETRD EIND ELAB PGOV HO
SUBJECT: U.S. ratification of CAFTA spurs potential
investors and traders into action

Reftel: Managua 02304

This cable is Sensitive But Unclassified; please protect
accordingly. It contains business confidential information,
and is not intended for internet distribution.


1. (U) Per reftel request, post reports increased investment
and trade momentum, stemming from CAFTA ratification in
Honduras and the U.S. Since the U.S. Congress ratified
CAFTA implementing legislation on July 27, several key
Honduran business organizations report an increase in
companies interested in exporting to and from Honduras,
accelerated momentum on foreign investment projects
previously placed on hold pending approval of CAFTA, and a
general up-tick in requests for information on doing
business in Honduras. Please note that all company names
should be considered business confidential.


2. (U) The Honduran NGO Foundation for Investment and
Export Development (FIDE) reports that 10 companies have
either initiated or moved forward on plans to establish
manufacturing facilities in Honduras since July 27. The
majority of these companies represent an expansion in the
maquila sector out of traditional textile and apparel
manufacturing. Potential new manufacturing facilities would
include: Automotive electrical wire harnesses (2
companies),electrical parts and switches, printing
materials and cardboard, wood furniture and iron
chandeliers, bathroom fixtures and accessories, textiles (3
companies),and liquefied natural gas (LNG) investment
(Note: Of the 10 companies working with FIDE, the Foreign
Commercial Service office in Tegucigalpa referred four to
the organization for further assistance).


3. (SBU) U.S. company Delphi, a manufacturer of wire
harnesses, has once again taken up consideration of a
several million dollar maquila investment in Honduras.
Delphi visited Honduras just after CAFTA passage in the U.S.
Congress, after putting all investment on hold during the
CAFTA ratification processes in both countries. Such
investment is particularly important as Honduras strives to
diversify into other areas of production besides textiles.


4. (SBU) The Honduran-American Chamber of Commerce (AmCham)
received three calls from interested parties the day after
CAFTA passage, including a call from the Port of
Brownsville, which plans to lead a delegation to Honduras
later this year. The delegation would include Texan
businessmen interested in doing business in Honduras, and
also would serve as a marketing trip by Port of Brownsville
executives.


5. (SBU) According to Roberto Interiano, General Manager of
the Honduran Manufacturer's Association (AHM),the AHM is
working with a number of investors looking to take advantage
of CAFTA implementation in Honduras. American investors are
developing a new export processing zone (or "ZIP", for its
initials in Spanish) in Naco, just south of Puerto Cortes.
According to AHM, following CAFTA ratification, American
disposable medical gowns manufacturer Avent initiated talks
to expand their operation in Villa Nueva. Various Brazilian
thread manufacturers are exploring Honduras as a production
site. In addition, AHM reports a number of American
companies have contacted them in recent weeks for general
information, without registering with the Association.


6. (SBU) Post is currently coordinating with the Department
of Commerce on a Secretary of Commerce-led regional trade
mission October 16-22, featuring a delegation of 15-20
prominent U.S. businesses. These companies will visit the 3
CAFTA countries that have ratified (Honduras, El Salvador,
and Guatemala) to meet trading partners and establish
relations. The Department of Commerce will continue
recruiting for the delegation until mid-September, but
reports they already have strong interest from a number of
companies, including world-class firms such as G.E.


7. (SBU) The Foreign Agricultural Service (FAS) office in
Tegucigalpa notes an increase in inquiries both from
companies interested in exporting to and importing from
Honduras. According to FAS, the inquiries can be broken down
as follows:

Interested in exporting from the U.S. to Honduras: Honduran
businessman Jose Nolasco (looking for U.S. Manufacturers/
Suppliers of pasta products); Honduran businessman Javier
Flores (looking for U.S. Suppliers of onion, garlic and
carrots); Honduran firm Inversur (looking for U.S. Suppliers
of pork); and U.S. firm WISHH (looking for Honduran
importers of texturized soy).

U.S. company inquiries about Honduran import regulations:
Cargill (concerning expedited processing for unloading of
corn); Mayer, Brown, Rowe & Maw LLP (concerning tariff
levels for Distillers Dried Grains with Solubles, DDGS); and
Prima Tech USA (requesting an assessment of bovine and pork
potential/needs in Honduras for animal health products).

Several firms have also contacted FAS for information on
exporting from Honduras to the U.S., including Honduran firm
Aguazul S.A.(Drinking water) and U.S. firm Citricos Coqui
(oranges). Firms seeking information related to U.S. import
regulations: Honduran firm Panificadora Real (color
additives in food products) and Fosforera Centroamericana
(concerning wood packing material requirements).


Williard