FREE TRADE ZONES

What is Free Trade Zone ?

The world's first Free Trade Zone was established in Shannon, Ireland. Free Trade Zones are also known as Special Economic Zones in some countries. Special Economic Zones (SEZs) have been established in many countries as testing grounds for the implementation of liberal market economy principles. SEZs are viewed as instruments to enhance the acceptability and the credibility of the transformation policies and to attract domestic and foreign investment.

FREE TRADE ZONE

Free trade zone (FTZ) are not a port and not a warehouse. They are a truly unique sort of facility that is taking on a much more important role in international logistics.

Benefits of Free Trade Zone

• Government provide the carriers and shippers flexibility. Without an FTZ, any mistake would mean that the cargo be sent out of the country, an expensive solution.
• It is a good way for unstable countries to get some free and fair enterprise. Foreign companies are often shy of entering an unstable country, but an FTZ is usually much safer.

Purpose of Free Trade Zone

• To encourage international trade by giving some flexibility in the import rules.
• FTZ allows someone to bring something into country, as long as it remains in FTZ.
• There are many things that can be done to the cargo while in FTZ.
• Some of those things are intended to assist the importer to get the cargo ready for legal import. in this way it helps the importer do his job.
• Its also way to create local jobs.

Reasons of using Free Trade Zone

Reason using FTZ	Explanation
Delay Tariffs	As long as the cargo sits in the FTZ, it does not pay the import duties. The FTZ is physically just a warehouse but is more expensive.
Avoid tariffs before on shipment	The cargo may not be destinated for that country at all. it may sit in FTZ and then be exported.
Processing	This is more like an EPZ
Correct mistakes	The customer authority may have told the importer that the cargo was not up to the local law, so it can sit in an FTZ to be fixed.
Sell	The cargo may be bought and sold while sitting in the FTZ.