A group of countries that agree to eliminate tariffs and other import restrictions on each other. Us foreign trade zones and chinese free trade zones scholarly. Exclusion of goods and services from free status 6a. Both free zone and bunkers are trading partner entities. It is a geographic area where goods may be landed, stored, handled, manufactured, or reconfigured, and reexported under specific customs regulation and generally not subject to customs duty. Freetrade zone financial definition of freetrade zone. For those who have the connections and equipment to get away with it, the sea is a freetrade zone and it always has been. Free trade zones and trade in ods free trade zones ftz, are specifically defined areas within a country where goods may be importedlanded, handled, processed, assembled, manufactured or reconfigured, and reexported with the companies deriving a wide range of benefits, for. There is no universally accepted definition of ftzs, and it is unlikely any one will be. During the past few decades, free trade zones ftz have become a growing phenomenon as well as an important element of world trade.
So the au decided, for now, to emphasis the creation of the continental free trade area, leaving aside the common market, and economic and monetary community. Cbp must approve activation of the zone before any merchandise is admitted under the foreign trade zones act. Benefits of free trade free trade means that countries can import and export goods without any tariff barriers or other nontariff barriers to trade. Multilateral rules on the creation and management of ftas, both for.
It presents an overview of crosscountry trends in the level and growth of ftzs. Special commercial and industrial area in or near ports of entry where foreign and domestic merchandise may be brought in without being subject to payment. List of books and articles about free trade online research. Airport, seaport, or any other designated area for duty free import of raw materials, components, subassemblies, semifinished or finished goods. Progress, emerging challenges, and future directions.
Foreign trade zone ftz or zone is a site within the united states that is legally considered outside of customs territory for the purpose of duties, so goods may be brought into the site duty free and without formal customs entry. Trading in the zone is an indepth look at the challenges that we face when we take up the. Article 63 of the insurance law sets forth the means and requirements for insurers to obtain a license to issue policies that are exempt from filing requirements for special risks. Ftwz is designated as a deemed foreign territory and are envisaged to be integrated zones and to be used as international trading hubs. Founded in 1959, the ftz attracted little attention from the outside world. Such items can be stored, displayed, assembled, or processed for reexport or entry into the general market of the importing country after paying the required duties. Background and issues for congress congressional research service 1 introduction members of congress have demonstrated their interest in the u. Foreign trade zone ftz status is given to designated sites, within or near communities possessing a u.
Free trade zones in export strategies english the world bank. Free trade zone refers to an area within a country into which foreign goods may be brought duty free, often for purposes of additional manufacture, inventory storage, or packaging. In simple words, it refers to an area where free trade is allowed. One definition of scm is the integration of key business processes from end user through original suppliers that. May 27, 20 a free trade zone ftz or formerly called free port is an area within which goods may be landed, handled, warehoused, manufactured or reconfigured, and reexported as dutyexempt finished goods without the intervention of the customs authorities, import quotas, export subsidies, and protective tariffs. Foreign trade zones are generally used for storage, testing, cleaning, processing, assembling, manufacturing, relabeling, repackaging, displaying, exhibition and repairing of merchandise. Pdf a comparative analysis of free trade zones researchgate. In some countries a free zone is also known under various other names, such as free port, free warehouse. Free trade areas are regions in which a group of countries have signed a free trade agreement, and invoke little or no price control in the form of tariffs or quotas between each other. Mar 18, 2020 free trade definition is trade based on the unrestricted international exchange of goods with tariffs used only as a source of revenue. Only when the goods are moved to consumers within the country in which the zone is located do they become subject. We are also grateful to the world customs organization, the european commissions directorategeneral for taxation and customs union, and the united states department of homeland. Free trade zone meaning in the cambridge english dictionary. They are a geographic area where goo ds may be landed, handled, manufactured or recon f igured, and reexported without the.
Goods can be brought into the zone and be stored, manipulated, cleaned, repaired, destroyed, mixed, processed, relabeled, stored and tested while remaining in the foreigntrade zone in duty free status. Free trade zones ftz, are specifically defined areas within a country where goods may be importedlanded, handled, processed, assembled, manufactured or reconfigured, and reexported with the companies deriving a wide range of benefits, for example, exemptions from duty and taxes, simplified administrative procedures and duty free imports of raw. It is a geographic area where goods may be landed, stored, handled, manufactured or reconfigured and reexported under specific customs regulation and generally not subject to customs duty. Foreign trade zone definition is an isolated policed area adjacent to a port of entry as a seaport or airport where foreign goods may be unloaded for immediate transshipment or stored, repacked, sorted, mixed, or otherwise manipulated without being subject to import duties. Buyers and sellers from separate economies may voluntarily trade without the. Nowadays, due of a combination of taxandtariff incentives, streamlined customs and less regulation, everyone seems an admirer of special economic zones sez. The us foreigntrade zones program information for cbp trade. Free trade zones eliminate many of the barriers to trade that increase prices for consumers and businesses. A third definition of regulation moves beyond an interest in the state and.
Free trade zones can also be defined as laborintensive manufacturing centers that involve the import of raw materials or components and the export of factory products, but this is a dated definition as more and more free zones focus on service industries such as software, backoffice operations, research, and financial services. Canada abstract free trade zones ftzs are geographicallydefined. Pdf during the past few decades, free trade zones ftz have become. Shanghai free trade zone shanghai ftz or sftz, officially china shanghai pilot free trade zone, is a free trade zone in shanghai, china. Foreigntrade zones ftz are secured, designated locations around the united states in or near a u. This paper provides a perspective on the role of free trade zones ftzs in industrial development strategies of low income countries with unfavorable initial conditions. Free trade zone an area, especially consisting of two or more countries, in which there are few or no tariffs or other trade barriers discouraging international trade. After all, the prime minister had apparently accepted the applicability of free trade principles. This list gives the address and phone number of the contact person for each ftz project. A free trade zone ftz is a class of special economic zone. A free trade policy does not necessarily imply, however, that a country abandons all control and taxation of imports and exports. Attac marseilles working group tax heavens and free trade zones.
For example, the countries in a free trade zone do not subsidize favored industries in order to make them less expensive compared to international competitors. The chapter 2 free zone of specific annex d to the revised kyoto convention rkc defines a free zone as a part of the territory of a contracting party where any goods introduced are generally regarded, insofar as import duties and taxes are. Multilateral rules on the creation and management of ftas, both for trade in goods and services, are set out by the wto. Free trade is the automatic result of a prestabilized harmony among rational policy monads. Free trade zone ftz and port hinterland development. Oecd and the euipo, which sheds new light on the misuse of free trade zones for trade in counterfeit and pirated goods. The desire to assure freedom from internal trade barriers in the united states was a factor in calling the constitutional convention. Learn the definition of free trade zone thedefinition.
The purpose of the foreign trade zone manual is to place in one document, the various laws, regulations, policies and procedures that customs and border protection personnel, grantees, operators and users need to know in the daily operation of foreign trade zones. Foreigntrade zone ftz system through hearings and legislation over the past seven decades. The definition of free trade zones ftz is extensively discussed in the literature, which gives them a whole host of names, e. Free trade, also called laissezfaire, a policy by which a government does not discriminate against imports or interfere with exports by applying tariffs to imports or subsidies to exports. Shanghai freetrade zone shanghai ftz or sftz, officially china shanghai pilot free trade zone, is a free trade zone in shanghai, china. The free trade and warehousing zones ftwz is a special category of special economic zone and is governed by the provisions of the sez act and the rules. The government of india had announced in the foreign trade policy 200409 to set up free trade zones ftz to create trade related infrastructure to facilitate the import and export of goods and services with freedom to carry out trade transactions in free currency. Positive economic impact of a free trade zone in the dominican.
Free trade zones definition and meaning mba knowledge base. Chapter 1 introduction, purpose, and interpretations 1. This may have risen from practical considerations of the difficulties involved in. Only when the goods are moved to consumers within the country in which the zone is located do they become subject to the prevailing.
Freetrade zone definition and meaning collins english. Essentially, free trade enables lower prices for consumers, increased exports, benefits from economies of scale and a greater choice of goods. Free trade zone benefits include the elimination of importexport duties, the deferral of customs duties, lower quotabased tariffs and lower duty payments, all of which save businesses money. The plausibilities of free trade zones more than shipping. Free trade zone meaning of free trade zone by lexico.
Dealing with or disposal of goods in a free zone 6. Freetrade zones are usually located around major seaports or international airports and the nigerian government through the nigeria export processing zones authority the authority has so far licensed about 33 free trade zones located in different parts of the country. Free trade zones between theory and practice in nigeria. If the contact person is not an employee of the grantee, the name of the grantee organization is also given. A free trade zone ftz or formerly called free port is an area within which goods may be landed, handled, warehoused, manufactured or reconfigured, and reexported as dutyexempt finished goods without the intervention of the customs authorities, import.
The definition within annex d, chapter 2 of the rkc does not state. Taking a distinctly urbanisation and developmental perceptive on ftzs, this dissertation will aim to analyse the extent to and mechanism by which free trade zones ftz perform. Free trade zones are generally organized around major seaports, international airports, and. Free zones can be commercial free zones duty free shops or industrial free zones. The cfta is a free trade agreement among african countries, most of which are members of the world trade organization wto. Customs and border protections port of entry, which provide the transportation and infrastructure amenities. Free trade zone, an area within which goods may be landed, handled, manufactured or reconfigured, and reexported without the intervention of the customs authorities. Free zones, special customs zones, free trade zones, special economic zones, export. Arshiya international ltd, indias first free trade and warehousing zone the largest multiproduct free trade and warehousing infrastructure in india. Goods of any description, except those specifically prohibited by law, may be brought into a free trade zone, be removed from the free trade zone, destroyed, or sent into customs territory or into another free trade zone in the original package or otherwise and, unless otherwise directed by the authority, be stored. Foreigntrade zone definition of foreigntrade zone by. For the purpose of trade statistics the transactions between the customs territory and the free zones are recorded. The expression free trade zone ftza consists of two terms free trade and zones.
Taking a distinctly urbanisation and developmental perceptive on ftzs, this dissertation will aim to analyse the extent to and. Free trade zone financial definition of free trade zone. Mark douglas, in trading in the zone, has written a book that is the accumulation of years of thought and researchthe work of a lifetimeand for those of us who view trading as a profession, he has produced a gem. Such goods are subject to duty only when they leave the duty free zone to enter other parts of the country. It is a geographic area where goods may be landed, stored, handled, manufactured, or reconfigured and reexported under specific customs regulation and generally not subject to customs duty. Officially launched on 29 september 20 with the backing of chinese premier li keqiang, it is the first free trade zone in. Free trade zones in export strategies english abstract. Goods deemed to be exported from, or imported into, malaysia 8. The board also regulates the administration of foreign trade zones and the rates charged by zone grantees. Officially launched on 29 september 20 with the backing of chinese premier li keqiang, it is the first free trade zone in mainland china and covers an area of 240. The cfta must be consistent with wto rules relating to ftas. While economists have long argued that trade among nations is the key to maintaining a healthy global economy, few efforts to actually implement pure free trade.
In the simplest of terms, free trade is the total absence of government policies restricting the import and export of goods and services. Pdf during the past few decades, free trade zones ftz have become a growing phenomenon as well as an important element of world trade. Bunkers are ship stores and aircraft supplies, which consist mostly of fuels and food. Free trade definition of free trade by merriamwebster. Trends in zone development while special economic zones are often treated as an innovative topic in development economics, citywide free zones with goals and methods not too different from those employed in modern zones were in place in gibraltar and singapore as early as 1704 and 1819, respectively. On 22 august 20, the state council approved the establishment of the zone. The operational mechanism created by this statute is commonly known as the free trade zone. Declaration of free zones and appointment of authority part ii activities permitted within a free zone 4. Shanghai freetrade zone ftz is the first hong konglike free trade area in mainland china. Information and translations of free trade zone in the most comprehensive dictionary definitions resource on the web. Aug 03, 2016 the first modern freetrade zone was established at shannon airport in ireland. Ftzs are considered to be outside of the customs territory of the united states for the purposes of payment of duty. Free trade zone government of india policy background.
A foreigntrade zone ftz is a class of special economic zone. Free trade is the economic policy of not discriminating against imports from and exports to foreign jurisdictions. A free trade zone ftz is defined as a specific class of special economic zone. Arshiyas first 165acre ftwz is operational in panvel, mumbai, and is to be followed by one in khurja near delhi. But this is not a sufficient definition to explain the broad features of a ftz. Free trade zone and port hinterland development united nations. While economists have long argued that trade among nations is the key to maintaining a healthy global economy, few efforts to actually implement pure free trade policies have ever succeeded. A freetrade zone ftz is a class of special economic zone. Customs and border protection office of field operations. Free trade zone definition in the cambridge english dictionary. Oct 02, 2019 free trade areas are regions in which a group of countries have signed a free trade agreement, and invoke little or no price control in the form of tariffs or quotas between each other. Customs port of entry where foreign and domestic merchandise is generally considered to be in international trade. A free trade zone ftz is a specif ic class of special economic zone. Times, sunday times 2015 under the free trade zone reforms, it could gain a full operating licence, giving it the freedom to offer a wide range of design services.