A Zone for Employment and Economic Development (
Spanish: Zonas de empleo y desarrollo económico, or ZEDE, colloquially called a model city) is a type of administrative division in
Honduras that provides a high level of autonomy, with its own civil code, while still subject to the criminal code of the Honduras government.[1]
ZEDEs originated in the government of
Porfirio Lobo Sosa; the first draft of the law was in 2011, but the necessary legislation was not passed until 2013. The ensuing
Juan Orlando Hernández administration continued them.
In 2022, Honduran president
Xiomara Castro began proceedings to repeal the 2013 legislation that enabled them.[6] However, ZEDEs were created within a framework of 50 year sunset clauses and internationally binding agreements, to make them functionally unrepealable.
Próspera takes the legal position that ZEDEs are "Built to Last",[7], and have threatened to sue the Honduran government for $11 billion if it reneges on its legally binding commitments,[8]. It has also written to the US State Department requesting that the US "encourage" Honduras to respect its legal commitments.[9]
History
The first attempt to create later became known as ZEDEs, the REDs (Regiones Especiales de Desarrollo or Special Development Regions) was struck down as unconstitutional in 2011 by the
Supreme Court of Honduras. In September 2013, after amending the law, and after a change of 4 supreme court justices and a constitutional amendment, the law to create ZEDEs was passed.
Objectives
ZEDE has the following objectives for economic development:[10]
International logistics centres that permit the processing of goods at a grand scale (such as the
Colón Free Trade Zone in
Panamá).
International business courts that resolve disputes between both national and foreign business entities (such as the
Isle of Man,
United Kingdom).
Districts for renewable energy that permit investment in renewable energy (such as the
solar parks in
Arizona, United States).
Special economic zones in which the laws that govern the economy will be different from the rest of the country. National laws might be suspended in favor of solutions based on a
free market. Compare
Shenzhen,
China.
Zones subject to a special judicial system that function under a judicial tradition different from the usual (such as the courts in the financial districts of
Dubai that are subject to
Common Law).
Special agro-industrial zones that permit incentives for exporting high-quality agricultural products (such as the cultivation of
asparagus in
Peru).
Special tourist zones that permit special conditions for creating centres for tourism in undeveloped parts of the country.
Projected impact
Economists at the
Universidad Francisco Marroquín conducted an economic impact analysis examining how ZEDEs might impact the Honduran economy.[11] They found that a ZEDE which resembles the growth rates of China's Special Economic Zones would reach $36,000 GDP per capita by 2050.
Próspera, Technology and Services ZEDE. Located next to the village of Crawfish Rock on the Island of
Roatan.[12] Prospera's Laws allow for expansion along coastal Honduras. On March 18, 2021 they confirmed the addition of an area near the Satuye area of
La Ceiba, labeled as "Port Satuye".[13]
Ciudad Morazán, Low Income Manufacturing (Maquila) Employee Community and Industrial Zone. Located near the city of
Choloma in the Department of Cortes.[14] Phase 1 of the development will entail in a gated low-income housing project. Phase 2 will create manufacturing areas within the gated community.
ZEDE Orquídea,[15] in Choluteca, For the agricultural industry with the parent company Agroalpha. Located at Las Tapias in the municipality of San Marcos de Colon. Agroalpha will construct a large greenhouse for cultivation of produce for foreign exports. ZEDE Orquídea has adopted the common law of the State of Delaware as its applicable private law.[16]
In April 2022, the Honduran Congress repealed the Constitutional Amendments and Laws that created the ZEDE regime.[17][18] However, the three existing ZEDE are grandfathered in for a period of 50 years, as per their Legal Stability Agreements, Article 45 of the ZEDE Organic Law, and the Bilateral Investment Treaty with the Government of Kuwait.[19]
Potential candidates and failed ZEDEs
Unnamed Peña Blanca ZEDE - Originally proposed as the first ZEDE with a focus in the agricultural sector.[20] Peña Blanca was selected for its location near the agricultural and manufacturing region of Valle de Sula. The project ultimately failed to receive local support.
Unnamed Valle ZEDE - Distributed among the three municipalities of Nacaome, Amapala and Alianza. The Valle ZEDE was intended to function as an agricultural and logistics ZEDE, with the department's capital,
Nacaome, serving as an agricultural research center,
Alianza, on the border with El Salvador, as a logistics free trade zone, and the island city of
Amapala as a megaport on the Pacific's
Gulf of Fonseca.[21]