free-trade zone

foreign-trade zone. See free port (def. 1). Abbr.: FTZ

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Area within which goods may be landed, handled, and re-exported freely.

The purpose is to remove obstacles to trade and to permit quick turnaround of ships and planes. Only when the goods are moved to consumers within the country in which the zone is located do they become subject to tariffs and customs regulation. Free-trade zones are found around major seaports, international airports, and national frontiers; there are more than 200 such zones in the U.S. alone.

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▪ international trade

also called  foreign-trade zone,  formerly  free port  

      an area within which goods may be landed, handled, manufactured or reconfigured, and reexported without the intervention of the customs authorities. Only when the goods are moved to consumers within the country in which the zone is located do they become subject to the prevailing customs duties. Free-trade zones are organized around major seaports, international airports, and national frontiers—areas with many geographic advantages for trade. Examples include Hong Kong, Singapore, Colón (Panama), Copenhagen, Stockholm, Gdańsk (Poland), Los Angeles, and New York City. Alternative devices such as the bonded warehouse and associated systems are used in some large seaports (e.g., London and Amsterdam).

      The primary purpose of a free-trade zone is to remove from a seaport, airport, or border those hindrances to trade caused by high tariffs and complex customs regulations. Among the advantages of the system are the quicker turnaround of ships and planes through the reduction in formalities of customs examinations and also the ability to fabricate, refinish, and store goods freely.

      The number of worldwide free-trade zones proliferated in the late 20th century. In the United States free-trade zones were first authorized in 1934.

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