Break with Taiwan affects shrimp exports in Honduras

The Honduran shrimp industry is undergoing a significant crisis following the breakdown of diplomatic relations with Taiwan in March 2023 and the failure to reach trade agreements with China. The decision by the government of Xiomara Castro to end ties with Taiwan, a historic partner since 1941, has had a profound impact on the national aquaculture sector. This situation has led to considerable economic losses and the closure of key markets for shrimp exports.

Consequences for trade and economy after ending ties with Taiwan

The shrimp sector in Honduras has experienced substantial financial setbacks following the cessation of diplomatic relations with Taiwan, which had been its primary export destination. Prior to this severance, up to 80% of the shrimp exported from Honduras was sent to Taiwan. The end of the Free Trade Agreement with Taiwan led to a 20% tariff, adversely impacting the foreign revenue from this industry. Based on figures provided by the National Association of Aquaculture Producers of Honduras (Andah), the year 2024 saw losses nearing $47.7 million and a decrease of 6.2 million kilos in shrimp exports due to the closure of the Taiwanese market.

Honduras’ effort to form a trade deal with China hasn’t succeeded in compensating these deficits. Despite the announcement of an initial deal to ship out 250 containers of shrimp, merely two deliveries occurred. Furthermore, the rates proposed by Chinese traders, approximately $4 per kilogram, fall short of covering production expenses, which lie between $6.30 and $6.50 per kilogram. This scenario has resulted in an economic disparity that impacts the industry’s profitability and hampers its recovery potential.

Impacts on society and varied approaches

The crisis in the shrimp industry has had a considerable social impact, with the closure of several processing plants and the loss of thousands of jobs in regions such as Choluteca and Valle. Against this backdrop, the Honduran government has begun efforts to diversify export markets, exploring the possibility of reestablishing trade relations with Taiwan and opening new routes to countries such as South Korea. Taiwanese Foreign Minister Lin Chia-lung has expressed his country’s willingness to resume diplomatic relations with Honduras after the November presidential elections, acknowledging the collapse of the shrimp industry following the break in 2023.

The present scenario demonstrates the outcomes of diplomatic and trade choices that have impacted the economic steadiness of the aquaculture industry. Relying on one market and the absence of successful agreements with new allies have made the industry susceptible, underlining the necessity for stronger and more varied tactics to guarantee its sustainability and support the nation’s economic growth.