Free Trade Zones in the United States

OpinionFront Staff Nov 4, 2018
A great deal of confusion prevails when it comes to use of terms like free trade zones, export processing zones, and Foreign Trade Zones, and that turns out to be a major hindrance when you try to compile a list of free trade zones in the US.
Basically, you won't find any free trade zones in the USA. Instead, you will find a similar concept referred to as the Foreign Trade Zones. There is a little bit of difference between the two, but broadly speaking they serve the same purpose: creating job opportunities and increasing foreign investment while lending a helping hand to international trade.
While Foreign Trade Zones are restricted to the United States, the concept of free trade zone is common in the developed countries of Europe. In order to understand the intricacies of the entire matter, you need to understand the basics of each of these concepts.

Free Trade Zone

A free trade zone is an area of the country wherein trade barriers, such as tariffs and quotas, are exempted, and government policies, which distort the trade, are relaxed in order to attract new business and foreign investment in the country.
Simply put, it is an area wherein the concept of free trade―international trade free of government interference―is followed owing to the various benefits it has to offer. These include boost in international trade, healthy business competition, efficient production, larger markets, etc.
A concept closely related to free trade zone, free trade area refers to a type of trade bloc wherein the member countries do away with certain trade barriers and trade distorting policies for each other.

Foreign Trade Zones in the United States

A concept which is by and large native to the USA, the Foreign Trade Zone refers to the special geographic area in the vicinity of a US Port wherein commercial merchandise can be handled without being subjected to customs duties and other ad valorem taxes.
Other than storing, the traders can also assemble, package, clean, test, repair, or destroy their goods in these Zones, without having to pay any tax for the same. This relief lowers the cost of US-based operations of the international trade, while creating job opportunities and capital investment in the country.
That being said, the tariff relief is only available for those goods which are restricted to these trade zones. If the goods are meant to be imported and sold in the US market, they will be taxed as soon as they are out of these trade zones.
In these zones, goods are treated the same way as they would be treated outside the US territorial borders. This allows the traders to land and store their goods here without having to pay the import duties on them. These trade zones are under the direct supervision of US Customs Service.
The lengthy list of Foreign Trade Zones in the United States of America has 293 members, which include FTZ No. 83 Huntsville, FTZ No. 98 Birmingham, FTZ No. 75 Phoenix, FTZ No. 174 Pima County (Tucson), FTZ No. 50 Long Beach (Los Angeles/ Long Beach), FTZ No. 3 San Francisco, etc.
Other than these 293 Foreign Trade Zones, there also exist around 500 Special Purpose sub-zones in the United States. Even though each of these trade zones have some stipulations of their own, by and large all of them follow the same procedure.