Strategic Guidelines & Development Plan's New Colon & Panama's Free Economic Zone Decade 2010 - 2020

AN ASSESSMENT OF FREE ECONOMIC ZONES (FEZs) IN LATIN AMERICAN COUNTRIES: PERFORMANCE AND MAIN FEATURES

Strategic Guidelines & Development Plan's New Colon & Panama's Free Economic Zone

Decade 2010 - 2020

To develop Panama in a balanced and sustainable way...

Francisco Antonio Cern Garca

ACKNOWLEDGMENTS


I would like to thank and acknowledge the support received from the invaluable contribution of the data banks of public access to the IDB, IMF, UN, OECD, WB, WTO and other national and international agencies, whose list is so extensive that I refer the reader to the bibliography and links to the cited end of the document.

I hope that this working paper serves as a useful strategy for the future Panama's Free Economic Zone.

New Colon & Panama's Free Economic Zone

AN ASSESSMENT OF FREE ECONOMIC ZONES (FEZ's) IN LATIN AMERICAN COUNTRIES: PERFORMANCE AND MAIN FEATURES

Working Paper's Francisco Antonio Ceron Garcia

Abstract

Free Economics Zones (FEZ) have become increasingly important as developing countries seed to attract foreign investment, in order to promote trade and growth.

A large number of FEZ have been put into operation throughout the World, and more are in the planning process. Even though they offer almost similar incentives and facilities, their degree of success differ from one country to another. Macro as well as micro level constraints have impeded the success of most of the zones, which require a careful reassessment of their existing measures. Jebel Ali Free Zone proved to be the most successful in Arab countries in terms of investment attracted to the zone, level of exports and foreign exchange, as well as backward and forward linkages with the domestic economy. To be successful, Fez's in Latin American countries have to concentrate on competing on the basis of the services offered and their quality.

Index 3

Abstract 2

1. Razones para realizar el Proyecto de la Nueva Zona de Libre Comercio en Panam 4

2. The main reasons to develop the Colon & Panama's Free Zone Project 5

3. OCDE Investment Programme: What do we mean by free economics zones? 7

4. Criteria for Establishing Free Economics Zones: Elements of Success 12

4.1 Political Stability 12

4.2 Commitment to Free Economy (Openness) 12

4.3 Strategic Location 12

4.4 Availability of Labour and Low Labour Costs 13

4.5 Availability of Good Infrastructure Facilities 13

5. Free Economics Zones in Latin American Countries: Trend and Main Features 13

6. Main Features: Incentives, Facilities and Administration of Free Zones 14

6.1 Fiscal and Financial Incentives 14

6.2 Customs Exemptions: Import Duties 14

6.3 Facilities and Administration 14

6.4 Administration of Free Zones in Panama 15

7. Attracting Foreign Investment and Capital 15

8. Free Zones Obstacles and Problems: Reasons for Poor Performance 15

8. I Macro Level: Administrative Obstacles 15

8. II Macro Level: Marketing Obstacles 16

8. III Micro Level 16

9. Conclusion and Policy Implications 16

Bibliography 18

Useful Links 19

(Spanish Language)

1. Razones para realizar el Proyecto de la Nueva Zona de Libre Comercio en Panam

Primer Argumento: ""ptima Localizacin tanto Geogrfica como Estratgica"

Panam es el centro geogrfico y estratgico entre Norteamrica y Sudamrica, y entre Asia, frica y Europa. Si se transforma en un "Hub" de libre comercio, tendra gran xito.

Segundo Argumento: "Sinergias y Experiencias Logsticas del Puerto Libre de Coln"

Se aprovecharan las sinergias y experiencias logsticas previas del Puerto Libre de Coln.

Tercer Argumento: "Sinergias y Experiencias Logsticas del Canal de Panam"

Se aprovecharan las sinergias y experiencias logsticas previas del Canal de Panam.

Cuarto Argumento: "Sudamrica es la principal zona del Mundo que tiene las Commodities que tanto necesitan las economas emergentes de Asia"

De mi trabajo anterior, "Plan de Desarrollo y Lineamientos Estratgicos Provincia de Salta (Argentina) Dcada 2008 - 2018", se concluye que Sudamrica es la principal zona que tiene las materias primas, alimentos y combustibles, de todo el mundo, y que tanto necesitan las economas emergentes de Asia, en particular la India y China. Luego es una enorme razn de peso de cara al futuro, pues el trfico de dichas relaciones comerciales pasara por Panam, que es quien est mejor situado al respecto en toda Amrica.

Quinto Argumento: "El bilingismo Ingls y Espaol de Panam"

Habra la muy importante ventaja competitiva aadida del bilingismo Espaol - Ingls en Panam.

Sexto Argumento: "La Crisis Mundial es precisamente el momento de mayor oportunidad para llevar a cabo el Proyecto"

Por ltimo, la crisis es precisamente el mejor momento de mayor oportunidad para llevar a cabo la realizacin del proyecto, pues precisamente porque quiebran algunas de las ms importantes multinacionales como Opel en EEUU, otras toman el relevo de dicho nicho de mercado, y cuando la economa mundial se reactive este ao que viene, entonces se estar en los primeros puestos de salida. Dejar de realizar el proyecto ahora mismo, es perder una oportunidad competitiva ventajosa nica para ser los primeros y tener xito, precisamente por la competencia en la regin de otras zonas como Jamaica.

ltimo Argumento: "El Marketing y la Calidad de los Servicios es el Secreto del xito del Proyecto"

El Marketing y la Calidad de los Servicios es el Secreto del xito del Proyecto!

Por eso para capitalizar desde el comienzo del mismo ante el mundo entero, el marketing tanto del Puerto Libre de Coln como del Canal de Panam, propongo que dicho proyecto se denomine: "La Nueva Zona de Libre Comercio de Colon y el Canal de Panam", o en ingls "New Colon & Panama's Channel Free Economic Zone"

(English Language)

2. The main reasons to develop the Colon & Panama Free Zone Project

First Reason: "Panama could be the "New Free Economic Zone Hub" who connects all the world's continents"

Panama is the geographical centre between North America and South America for one side, and for the other side between the Pacific Ocean and the Atlantic Ocean, or in other words, between Asia, Africa and Europe. Then Panama could be the "New Free Economic Zone Hub" who connects all the world's continents, and this project would be successful at all!

Second Reason: "Synergies and Logistic Experiences from the Colon's Free Port"

If the New Colon Free Economic Zone could start up, the project would benefits with all the synergies and logistic experiences from the Colon's Free Port.

Third Reason: "Synergies and Logistic Experiences from the Panama's Channel"

If the New Colon Free Economic Zone could start up, the project would benefits with all the synergies and logistic experiences from the Panama's Channel, who connect by maritime way the Pacific Ocean with the Atlantic Ocean.

Fourth Reason: "Latin America has all the commodities who need the Asian countries"

From my previous original paper, "Plan de Desarrollo y Lineamientos Estratgicos Provincia de Salta (Argentina) Dcada 2008 - 2018", you could realize that Latin America is the only continent over the entire world who has all the commodities who need the Asian countries like India and China. Then Panama would be the best Hub to connect Asia and Latin American countries throughout the New Colon Free Economic Zone.

Fifth Reason: "Speaking of both languages: English and Spanish"

Panama has another great advantage compared for example with Jamaica, who is the speaking of both languages: English and Spanish.

Sixth Reason: The "Global Crisis" is the best opportunity to start up this "Global Project"

This main "Global Crisis" is the best opportunity to start up this "Global Project", because of the lack of something corporations like for example, Opel in EEUU. Then the market is in a dynamical quickly evolution, and new corporations covert the lack of the traditional and main global corporations; and again in this way is the best opportunity to start up the New Colon & Panama Free Economic Zone.

And the last Reason: I recommended to name the new Free Economic Zone as: "New Colon & Panama Free Economic Zone"

The marketing and the quality of the services of the project are the secret of the successful of it!

Then from the beginning I recommended to name the new Free Economic Zone as: "New Colon & Panama Free Economic Zone", to capitalise all the marketing of Panama's Channel and Colon's Free Port.

In the nexts paragraphs I will study and analyse with others characteristics, this two main characteristics, the marketing and the quality of the services, from the point of view of the successfully Free Zones, like Jebel Ali Free Economic Zone from Dubai, and others failures projects in the same geographical region.

4. Criteria for Establishing Free Economics Zones: Elements of Success

In order for a free zone to succeed, the factors that attract firms must be known. Should a government or free zone authority not have a thorough grasp of the need of firms, and then the development of a free zone can become a very expensive lesson in what firms do and do not need. The more information available to free zone authorities concerning factors involved in the decision of the zone's management to locate in certain area, the more capable the authorities will be in providing critical information to interested firms.

Studies carried out on free zones in developing countries conclude that criteria governing the decision to invest in a free zone area include the following:

4.1 Political Stability

This is considered the most important factor that attracts capital to the host country. Foreign investment companies are always hesitant to undertake ventures in politically unstable countries where their interests are consistently threatened.

4.2 Commitment to Free Economy (Openness)

In fact a suitable macroeconomic exchange rate and trade policy regime, together with a legal regulatory environment favourable to business, is a basic and critical element for the entry of a developing economy into the world market.

Where there are tariffs and other taxes or restrictions on imports of producer goods, export policies must provide exporters with a free trade status, which their competitors around the world enjoy. So the more committed the host government is to investment, free trade, etc., the more guarantees foreign firms have and the more attractive the free zone is to foreign investment.

4.3 Strategic Location

Free Zones have to be established close to major international markets. In order to succeed a free zone has to have a good geographical and strategic location, i.e. close to the traffic of international trade. For instance, Dubai's strategic location at the crossroads between the East and the West has made it the leading hub between Europe and the Far East. Dubai's traditional links with the nearby Gulf States, the Red Sea, East Africa and the Indian subcontinent have enhanced the success of the free zone in Jebel Ali.

Comprehensive theories for the location of manufacturing activities have been developed throughout history. In making allocation decisions, several determinants or factors such as transportation cost, labour cost, marketing advantages and proximity to auxiliary industries are considered. Some economists referred to the best location as that site from which a given number of buyers can be served at the lowest total cost. In that sense the location theory involves both cost and demand curves.

4.4 Availability of Labour and Low Labour Costs:

Because foreign firms and companies are interested in lowering their cost of production, the cost and availability of labour are one of the main factors that attract foreign investment to free zones, and in turn, enhance their success. However recently and due to many reasons, the cost and availability of are losing importance in the face of other factors of a more qualitative nature, such as transport conditions and cost, and business establishment conditions.

4.5 Availability of Good Infrastructure Facilities

Availability of infrastructure as well as other supply services is considered a must for a free zone to succeed. Availability of good transportation and communication systems, for instance, in addition to a good administrative system away from red tape and bureaucracy would definitely enhance the success of the zone. The availability of a modern seaport, for instance with its terminals and modern international airport, with its cargo village and its air-freight handling capability, and the Manifest and Documentation System (MDS) have tremendously enhanced the success of Jebel Ali Free Zone tremendously.

The Free Zone's infrastructure facilities which would compete with those of other zones and contribute to the zone's success include: low cost pre-fabricated warehouses, offices and refrigerated stores, open stores and retail transport facilities, abundant power supply and highly efficient support services by the engineering and data system. Also the fully free flow of capital and tax-free profits and/or returns are important facilities to be considered.

5. Free Economics Zones in Latin American Countries: Trend and Main Features

The geographical location of Panama's country allow it to act as a bridge between four continents, namely, Asia, Africa, Europe, and between North America and South America. Panama's country strategic location at the crossroads between East and West, and North and South, has contribute to their importance in international trade, where it is considered important gateways to large numbers of people and where it provide essential meeting points for production and consumption markets.

The idea of establishing free zones in the region is gathering momentum, especially with the general trend in the area towards liberalization and globalization trends and the newly emerging economics blocs.

Like most free zones in the world, free zones in Panama's country would be located either in or near seaports or near airports and international borders. Such locations would be attractive to low as well as high-value products. In fact without access to services that are essential to export and industrial operations, some free zones in Panama's country may find it hard to attract foreign investment.

6. Main Features: Incentives, Facilities and Administration of Free Zones

6.1 Fiscal and Financial Incentives

The variety and magnitude of fiscal and financial incentives given to investors in Free Zones vary from country to another. Jebel Ali Free Zone, for example, seems to offer the most attractive incentives, where there are no limitations on foreign ownership, no personal and income taxes, and exemption from corporate taxes is for almost 30 years.

Apart from fiscal incentives (tax exemption) most free zones offer financial incentives such as exemption from taxes on profits and from foreign currency controls. Most Free Zones permit the unlimited transfer of profits as from the first year of production and repatriation of the total initial investment after a relatively short period of about 3 years.

6.2 Customs Exemptions: Import Duties

Apart from its duty-free privileges, free zones are characterized by the speed and simplicity of import and export transactions. In Jebel Ali Zone (Dubai), for example, time-consuming procedures on importation and exportations are kept to a minimum.

6.3 Facilities and Administration

Free Zone in Panama's country would be provided with various types of infrastructure facilities and services. This would include roads, ports (Colon), airport (The International Airport of Panama), facilities for storage and standard factory buildings. The support services would include physical services such as the supply of electricity and water, telecommunication facilities, commercial services such as banking, insurance, shipping and forwarding agents, etc. and social services such a medical care, food facilities, etc.

The most extensive infrastructure facilities over the world are those provided in Jebel Ali Free Zone. This includes a modern port, generous space, a modern communication system and pre-built facilities for lease. Abundant and inexpensive energy is also available.

6.4 Administration of Free Zones in Panama

It should be administer by a separate authority which should be call The Free Zone Authority or Corporation. It should has representatives from various ministries; in fact the existence of a centralized administrative office with the authority to intercede between firms in the Free Zone and other government departments helps to provide investors with a simple and straightforward administrative procedure, i.e. one window service.

7. Attracting Foreign Investment and Capital

Investment activities in free zones were dominated by storage projects that not require large amounts of capital. The source of the invested capital determines, to some extent, the ability of the Zone to attract foreign investment.

What I believe determines the success of a Free Zone is its external competitiveness relative to other zones in the region rather than its internal profitability as captured by only cost-benefit analysis. The rate of return of investments in the Zone may be extremely high but foreign investors are not attracted. So, may be what is needed is an international competitiveness analysis that is carried out parallel to the cost-benefits analysis.

Having looked at some of the main issues that determine the success of Jebel Ali Free Zone, it appears that success depends on a number of economic, social and geographical factors in effect within the country and abroad. It is essential that we do not overlook the fact that in general, a Free Economic Zone is a mature phenomenon of the international economy. It is believed that an understanding of the features, objectives and mechanism of the Zones and their role in the global economy is essential to the success of every zone.

8. Free Zones Obstacles and Problems: Reasons for Poor Performance

Investors in Free Zones are continuously faced with problems and obstacles that impede the operations of their firms in the zones. Some of these problems are related to the macro level while others to sectoral and firm levels. Also some are considered administrative and marketing problems while other are legal and technical ones. Although assessment shows that the type and magnitude of obstacles differ from country to another, the major problems are considered to be similar.

8. I On the Macro Level: Administrative Obstacles include, among other things:

1. Excessive red tape and bureaucracy where investors have to deal with several departments to obtain licenses, or approvals. The process is tedious and lengthy.
2. Lack of actual autonomy of Free Zones even though they are accorded, by law, financial and administrative authority.
3. Unexpected changes in laws and regulations that continuously confuse investors.
4. Conflict and overlap of laws and procedures related to Free Zones as well as to customs.

8. II On the other hand, Marketing Obstacles include:

1. Free zones lack of effective promotional policies. They failed to understand that marketing is a task requiring most of the attention of top management.
2. There is a difficulty in marketing products of Free Zones because Free Zones in the region are similar and produce almost similar products.

At the same time adequate Infrastructure Facilities surrounding the Economic Free Zone are necessary pre-condition for attracting foreign investment. However this is not the case in most Free Zones in the region of Panama's country. Infrastructure obstacles include: Inadequate infrastructure utilities and services especially communication, as well as lack and inefficiency of ports used to carry Zones products and materials necessary for production.

8. III On the Sectoral and Micro Level:

Some problems are related to the nature of industrial activities such as the small-sized industries in the Free Zones and their inability to compete in the markets. Others are related to the dependence on imported raw materials which has tremendously increased the cost of production of industrial products. As a result the ability of industries to compete has decreased.

At the same time certain problems such as, the lack of a complex production process, have led to the limited transfer of technology to industries. As a result the transfer of technology through industries was relatively limited. It is believed that a simple production process generates very few backward linkages with other production activities in the economy and most of the material that requires technical knowledge is being imported from foreign sources. As a result there is no room to develop specific technologies in the zones. What actually exist is only assembly lines as well as putting together of ready made parts.

It is believed that Free Economics Zones are going to be more important in the present decade than they were in the last decade or so, because they can be the doorways to growth and development that can be opened and closed according to the country's interest and benefits.

9. Conclusion and Policy Implications

In recent years Free Economics Zones have become increasingly important as countries sought to attract foreign investment for the purpose of promoting growth through increasing exports, foreign exchange and employment opportunities as well as enhancing the transfer of technology.

The result the relatively limited effect of Free Zones on the host economies, except in the case of Jebel Ali Free Zone, was mainly due to macro as well as sectoral level obstacles that impeded the operation of firms in the zones. Looking back at the experience of partly successful Free Zones in Arab countries, one can identify a number of classical failures at the planning and design stage. They include the choice of inappropriate location for the zone, lack of sufficient basic infrastructure such as telecommunications and inefficient institutional linkages between the Zone Authority and other government departments. As a result careful consideration of the existing rules and measures is necessary for the Zones to succeed. The recommended measures include, among others things:

9.1 Legislative reforms that would take care of the numerous contradictions and duplications of laws and regulations in the Zones to reduce bureaucracy and give more independence to the authorities. Investment laws should remain in force for long periods in order to give investors peace and mind.

9.2 Sufficient infrastructure facilities and services are needed in most of the Free Zones in the region. The availability of such infrastructure facilities would give to the New Colon Free Zone in Panama's country a comparative advantage within the entire region.

9.3 Reforms that encourage the expansion of export industries in the Zones such as the removal of barriers to the movement of finished goods in the region. In fact is essential to have regulations that attract large and medium size industries rather than small industries as it is the case in Jebel Ali Free Zone.

9.4 Encouragement of employment of nationals in Free Zones which may require giving more attention to training of manpower by the Free Zone Authority on one hand by local and foreign firms on the other.

9.5 Promotion and marketing of the Zones that requires the attention of top management. So promotional and marketing programs that attract clients and keep them happy should be developed. Priority should be given to meeting clients needs as well as the country's objectives. In fact, it makes little sense to invest in land, infrastructure, utilities, etc. and fail to provide enough investment for marketing and promotion.

Finally we can say that Panama's country have not probably been active as any others regions in establishing and developing Free Economics Zones, like the Arab countries, and in particular Dubai with the Jebel Ali Free Zone. The idea was to get around a large amount of existing regulations and to provide infrastructure facilities and services to attract foreign investment and in turn to promote growth. To be successful Free Economic Zones in Panama have to concentrate on competing on the basis of the services offered and the quality of such services. In others words, their comparative advantage of liberalization should be in their services. Aggressive Free Zones can create good opportunities for themselves within the region while traditional and slow Free Zones which are not able to adapt quickly become uncompetitive and in turn a classical example of failure. It is the job of dynamic managers to seize the opportunity to attract business and investment to the zone, and I can do that for the New Colon Free Zone in Panama, because I am a successful CEO actively seeking new opportunities to capture new business opportunities to which I may offer my global approach along with extensive experience!

Bibliography

Tahir, Jamil (1998): "An Assessment of Free Economic Zones (FEZs) in Arab Countries - Performance and Main Features"

Working Paper 9926. It was presented in an international conference on "New Economics Developments and Their Impact on Arab Economies" held in Tunis during the period 3-5 June 1998

Guangwen, Meng (2003): "The Theory and Practice of Free Economic Zones: A Case Study of Tianjin, People's Republic of China"

Submitted to the Combined Faculties for the Natural Sciences and for Mathematics of the Ruprecht-Karls University of Heidelberg, Germany for the Degree of Doctor of Natural Sciences.

Oral Examination: 14/02/2003

Watson, Noel Newton (1998): "EVALUATING THE NET ECONOMICS BENEFITS OF FREE TRADE ZONES IN THEORY AND PRACTICE - APPLIED TO THE KINGSTON EXPORT FREE ZONE IN JAMAICA"

Thesis submitted in partial fulfilment of the requirements for the Degree of Doctor of Philosophy in the Department of Economics of Simon Fraser University.

November 1998.

Ministry of Finance and Economy (Republic of Korea): "Free Economic Zones in Korea (2003): The Future of Northeast Asia"

September 2003

http://english.mosf.go.kr

Salma Ali Saif Bin Hareb, Chief Executive Zone's Jebel Free Zone of Government of Dubai (2007): "Jafza Corporate Brochure"

November 2007

http://www.jafza.ae/en

Knowledge Innovation Zone Research Project (2006): "SPECIAL ECONOMIC ZONES (SEZ) VERSUS KNOWLEDGE INNOVATION ZONES (KIZ) - A COMPARISON"

http://www.inthekzone.com

OECD Private Sector Development Division (2008): "Free Economic Zones in the MENA Region: Update 2008"

Tarun Dhingra, Dr. Ambalika Sinha, Dr. Tripti Singh (2008): "Location strategy for competitiveness of Special Economic Zones in India - A Generic framework"

Useful Links

Jebel Ali Free Zone (Jafza): http://www.jafza.ae/en

SEZ stands for Special Economic Zone, a tax free area for manufacturing, R&D, Trading and Services units (Inspira Infrastructure): http://www.inspirainfra.com

Yellow Sea Free Economic Zone (Yesfez): http://www.yesfez.go.kr/eng/yesfez/songak_district.asp

Tanger Free Zone: http://www.tangerfreezone.com

Hamriyah Free Zone: http://www.hfza.ae

Ras Al Khaimah Free Trade Zone (RAK FTZ): http://www.rakftz.com/en

Jebel Ali Free Zone Online Directory (Potential Customer for the New Free Zone): http://www.jd.ae

International Trade - General International Trade and Trade Policy
- Free Economic Zones

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From Wikipedia, the free encyclopedia

Jump to: navigation, search

Many countries have, or have had at some time, designated areas where companies are taxed very lightly or not at all to encourage development or for some other reason. These are known as free economic zones.

Sometimes they are called free ports, by an analogy with free ports known for a long time in history - the ports free of customs or with favorable customs regulations, e.g., the free port of Trieste. Very often free ports are parts of free economic zones.

[edit] Free economic zones by country

[edit] Armenia

• Gyumri

[edit] Belarus

• Brest FEZ

[edit] Brazil

• Zona Franca de Manaus

[edit] Bulgaria

• Burgas
• Rousse
• Plovdiv
• Dragoman
• Vidin
• Svilengrad

[edit] Chile

• Iquique

[edit] China

• Hong Kong

[edit] Egypt

• Port Said Public Free Zone
• Alexandria Public Free Zone
• Nasr City Public Free Zone
• Suez Public Free Zone
• Ismailia Public Free Zone
• Damietta Public Free Zone
• Media Public Free Zone
• Shebin El- Kom Public Free Zone
• Qeft Public Free Zone
• Port Said East Port Public Free Zone

[edit] Georgia

• Poti, Samegrelo region

[edit] India

• Sricity Multi Product SEZ, Andhra Pradesh [1]
• SEEPZ, India
• Inspira Pharma & Biotech Park, Aurangabad, Maharashtra[2]

[edit] Iran

• Kish
• Aras Free Zone
• Anzali Free Zone
• Arvand Free Zone
• Chabahar Free Zone
• Gheshm Free Zone

[edit] Italy

• Catania
• Erice
• Gela
• Crotone
• Rossano
• Lamezia Terme
• Matera
• Taranto
• Lecce
• Andria
• Naples
• Torre Annunziata
• Mondragone
• Campobasso
• Cagliari
• Quartu Sant'Elena
• Iglesias
• Velletri
• Sora
• Pescara
• Massa Carrara
• Ventimiglia

[edit] Lithuania

• Klaipeda Free Economic Zone
• Kaunas Free Economic Zone

[edit] Malaysia

• Port Klang Free Zone

[edit] Russia

• Nakhodka
• Ingushetia
• Yantar, Kaliningrad

[edit] South Korea

• Yellow Sea
• Incheon
• Busan
• Gwangyang

[edit] Spain

• Ibiza

[edit] Ukraine

• Quarantine Pier of Odessa trade sea port, January 1, 2000, for 25 years

[edit] United Arab Emirates

• Ajman Free Zone[1]
• Jebel Ali Free Zone
• Dubai Internet City
• Dubai Media City
• Dubai Knowledge Village
• Dubai Healthcare City
• Dubai International Financial Center
• DuBiotech
• Dubai Outsource Zone
• International Media and Production Zone
• Dubai Studio City

[edit] Uzbekistan

• Navoiy

[edit] United Kingdom

• London Docklands
• Bristol Subverbs

[edit] References

1. http://www.sricity.in/
2. http://www.inspirainfra.com

Retrieved from "http://en.wikipedia.org/wiki/Free_economic_zone"

Categories: Special Economic Zones

From Wikipedia, the free encyclopedia

Jump to: navigation, search

A Special Economic Zone (SEZ) is a geographical region that has economic laws that are more liberal than a country's typical economic laws. The category 'SEZ' covers a broad range of more specific zone types, including Free Trade Zones (FTZ), Export Processing Zones (EPZ), Free Zones (FZ), Industrial Estates (IE), Free Ports, Urban Enterprise Zones and others. Usually the goal of a structure is to increase foreign direct investment by foreign investors, typically an international business or a multinational corporation (MNC).

One of the earliest and the most famous Special Economic Zones were found by the government of the People's Republic of China under Deng Xiaoping in the early 1980s. The most successful Special Economic Zone in China, Shenzhen, has developed from a small village into a city with a population over 10 million within 20 years.

Following the Chinese examples, Special Economic Zones have been established in several countries, including Brazil, India, Iran, Jordan, Kazakhstan, Pakistan, the Philippines, Poland, Russia, and Ukraine. Currently, Puno, Peru has been slated to become a "Zona Economica" by its president Alan Garcia.

A single SEZ can contain multiple 'specific' zones within its boundaries. In India the Government has sanctioned few large multi-product Special Exconomic Zones (SEZ), where one can set-up any kind of business (services, manufacturing, trading etc). Some of the most promoinent large multiple zone SEZs are Sricity SEZ, near Chennai and Mundra SEZ in Gujarat, India. The other two most prominent examples of this layered approach are Subic Bay Freeport Zone in the Philippines, the Aqaba Special Economic Zone Authority in Jordan and According to World Bank estimates, as of 2007 there are more than 3, 000 projects taking place in SEZs in 120 countries worldwide.

SEZs have been implemented using a variety of institutional structures across the world ranging from fully public (government operator, government developer, government regulator) to 'fully' private (private operator, private developer, public regulator). In many cases, public sector operators and developers act as quasi-government agencies in that they have a pseudo-corporate institutional structure and have budgetary autonomy. SEZs are often developed under a public-private partnership arrangement, in which the public sector provides some level of support (provision of off-site infrastructure, equity investment, soft loans, bond issues, etc) to enable a private sector developer to obtain a reasonable rate of return on the project (typically 10-20% depending on risk levels).

[edit] China

Main article: Special Economic Zones of the People's Republic of China

Currently, the most prominent SEZ's in the country are Shenzhen , Xiamen, Shantou, Zhuhai and Hainan Province.

[edit] India

Considering the need to enhance foreign investment and promote exports from the country and realising the need that a level playing field must be made available to the domestic enterprises and manufacturers to be competitive globally, the Government of India had in April 2000 announced the introduction of Special Economic Zones policy in the country, deemed to be foreign territory for the purposes of trade operations, duties and tariffs. As of 2007, more than 500 SEZs have been proposed, 220 of which have been created. This has raised the concern of the World Bank, which questions the sustainability of such a large number of SEZs. The Special Economic Zones in India closely follow the PRC model.

India passed special economic zone act in 2005. In India, the government has been proactive in the development of the SEZs. They have formulated policies, reviewed them occasionally and have ensured that ample facilities are provided to the developers of the SEZs as well as to the companies setting up units in the SEZs.

[edit] List of SEZs in India

The policy provides for setting up of SEZs in the public, private, joint sector or by State Governments. One of them is Sricity Multi product SEZ, part of Sricity which is a developing satellite city in the epicentre of AP & TN. It was also envisaged that some of the existing Export Processing Zones would be converted into Special Economic Zones.

• Sricity (SEZ), (Andhra Pradesh) (http://www.sricity.in)
• Hyderabad (Andhra Pradesh)
• Polepally (Andhra Pradesh)
• Visakhapatnam (Andhra Pradesh)
• Velankani SEZ, (Chennai) (http://www.velankanisez.com)
• Pharma and Biotech SEZ, Aurangabad, Maharashtra (http://www.inspirainfra.com)
• Ahmedabad, Baroda, Kandla and Surat (Gujarat)
• Cochin (Kerala)
• Pithampur (Madhya Pradesh)
• Nagpur also refer MIHAN, Pune and SEEPZ in Mumbai (Maharashtra)
• Chennai, Ilandaikulam Madurai, Nanguneri and Tirunelveli (Tamil Nadu)
• NOIDA, Greater NOIDA (Uttar Pradesh) UP
• Falta (West Bengal)
• Bangalore [Karnataka]
• Kensington [Powai, Mumbai]
• Mangalore (Karnataka)

Currently, India has 1022 units in operations in 9 functional SEZs, each an average size of 200 acres (0.81 km2). 8 Export Processing Zones (EPZs) have been converted into SEZs. These are fully functional. All these SEZs are in various parts of the country in the private/joint sectors or by the State Government. But this process of planning and development is under question, as the states in which the SEZs have been approved are facing intense protests, from the farming community, accusing the government of forcibly snatching fertile land from them, at heavily discounted prices as against the prevailing prices in the commercial real estate industry. Also some reputed companies like Bajaj and others have commented against this policy and have suggested using barren and wasteland for setting up of SEZs.

Attempts to set up a Special Economic Zone in Nandigram have led to protests by villagers in the area. A Parliamentary Committee to study and give recommendations on SEZs has said that no further SEZs be notified unless the existing law is amended to incorporate the changes related to the land acquisitions.

Genpact has announced its plans to expand its presence in Hyderabad by setting up a Special Economic Zone (SEZ) across 50 acres (200, 000 m2) in the city at Jawahar Nagar.

[edit] Indonesia

Main article: Batam Island#SEZ - Special Economic Zones

[edit] Iran

• Arg - e - Jadid Special Economic Zone: Vehicle Manufacturing Hub.
• PetZone: Petrochemical special economic Zone, Mahshahr.
• Kish: Kish island special economic zone.
• Sarakhs
• Sirjan
• Shahid Rajaee Port[1]
• Amirabad Special Economic Zone[2]
• Bushehr Port

[edit] Kazakhstan

• Astana

Multiple Economic zones created by the mandate of the President. Each zone has a different focus. South Kazakhstan "Ontustyk" special economic zone is dedicated to the development of the textile industry in Kazakhstan.

[edit] North Korea

The Rajin-Sonbong Economic Special Zone was established under a UN economic development programme in 1994. Located on the bank of the Tuman River, the zone borders on the Yanbian Korean Autonomous Prefecture (or, Yeonbyeon in Korean) of the People's Republic of China, as well as Russia. In 2000 the name of the area was shortened to Rason and became separate from the North Hamgyeong Province.

[edit] Pakistan

Taking the example of the Chinese success with their SEZs, China is helping Pakistan develop the Haier-Ruba economic zone on the outskirts of Lahore.

Other economic zones include the China-Pakistan economic zone open only to Chinese investors and also the future crown jewel of Pakistan, Gwadar.

There are also talks of creating a Japanese city for foreign investors from Japan only.

There has also been new SEZ proposed on the currently under construction Sialkot-Lahore motorway, Qatar has proposed an investment for $1 billion in a new SEZ along the motorway.

There is also a new zone under construction in Faislababd, which will be the biggest industrial estate of Pakistan when complete, it has sections for each country and the first phrase is already complete with a special Chinese zone in it.

[edit] List of SEZs in the Pakistan

• Karachi Export Processing Zone, Karachi, Sindh
• Risalpur Export Processing Zone, Risalpur
• Sialkot Export Processing Zone, Sialkot, Punjab
• Gujranwala Export Processing Zone, Gujranwala, Punjab
• Saindak Export Processing Zone, Saindak, Balochistan
• Reko Diq Export Processing Zone
• Khalifa Coastal Oil Refinery EPZ
• Gwadar Export Processing Zone, Gwadar, Balochistan
• Special Industrial Development Zone, Gwadar, Balochistan
• Faisalabad Export Processing Zone, Faisalabad, Punjab
• Special Inudstrial Economic Zone, Lahore, Punjab

[edit] Philippines

Philippine economic zones (ecozones) are collections of industries, brought together geographically for the purpose of promoting economic development. Although designed to operate separately from the political and economic milieu of surrounding communities, Philippine economic zones do in fact interact with their neighbors. There are 41 private-owned economic zones and 4 government owned economic zones in the Philippines. Of the 41 private economic zones, the biggest exporter is Gateway Business Park in General Trias, Cavite and the second biggest private ecozone is Laguna Technopark Inc. The four governmentally owned are Cavite Economic Zone, Bataan Economic Zone, Mactan Economic Zone and Baguio City Economic Zone. Thus it is a useful act for the growth of economic zone of the country.

[edit] List of SEZs in the Philippines

• Subic Bay Metropolitan Authority
• Clark Special Economic Zone
• Philippine Economic Zone Authority
• PHIVIDEC Industrial Authority
• Zamboanga City Special Economic Zone Authority
• Cagayan Economic Zone Authority

[edit] Poland

There are 14 Special Economic Zones in Poland[1]:

• Kamiennogrska SSE
• Katowice Special Economic Zone
• Kostrzysko-Subicka SSE
• Krakowski Park Technologiczny
• Legnicka SSE
• dzka SSE
• SSE EURO-PARK MIELEC
• Supska SSE
• SSE Starachowice
• Suwalska SSE
• Pomorska SSE (Pomeranian Special Economic Zone)
• Tarnobrzeska SSE
• Wabrzych Special Economic Zone "INVEST-PARK"
• Warmisko-Mazurska SSE

[edit] Russia

[edit] Technical/Innovational Zones

• Dubna
• Zelenograd
• Noidorf (Russian: ) - industrial and business park in special economic zone in Strelna near Saint Petersburg, Russia
• Novo-Orlovskoe (Russian: -) - SEZ territory in Saint Petersburg, Russia
• Tomsk

[edit] Industrial/developmental Zones

• "Alabuga" (special economic zone)
• Lipetsk

[edit] Tourist Zones

• Krasnodar Krai
• Stavropol Krai
• Kaliningrad Oblast (Yantar, Kaliningrad Special Economic Zone)
• Altai Krai
• Altai Republic
• Irkutsk Oblast
• Buryatia

[edit] Ukraine

Special Economic Zones existed in Ukraine until March 31, 2005. The first created was the Nouth-Crimean Experimental Economic Zone Syvash (since 1996). From 1998 to 2000 11 new zones were created.

[edit] References

1. http://www.mg.gov.pl/Specjalne+strefy+ekonomiczne/Wykaz+SSE/

• Chee Kian Leong, 2007, A Tale of Two Countries: Openness and Growth in China and India [6], Dynamics, Economic Growth, and International Trade (DEGIT) Conference Paper.

[edit] External links

• South Kazakhstan "Ontustyk" special economic zone
• Regularly updated news about SEZs in India
• Indian Special Economic Zones
• Russian Special Economic Zones
• Export Processing Zones Authority Pakistan
• Indian SEZ
• PEZA Philippines
• The New Maharajas of India
• India Special Economic zones map
• Federal Agency for Management of Special Economic Zones (Russia)

Retrieved from "http://en.wikipedia.org/wiki/Special_Economic_Zone"

Categories: International business | International trade | International economics | Special Economic Zones

From Wikipedia, the free encyclopedia

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A free port (porto franco) or free zone (US: Foreign-Trade Zone) is a port or area with relaxed jurisdiction with respect to the country of location. Free economic zones may also be called free ports.

Most commonly a free port is a special customs area with favorable customs regulations (or no customs duties and controls for transshipment). Earlier in history some free ports like Hong Kong enjoyed political autonomy. Many international airports have free ports, though they tend to be called customs areas, customs zones, or international zones.

[edit] Free ports and Free Zones by country

[edit] Africa

• Port Said
• Suez Canal Container Terminal

• Tangier Exportation Free Zone

• Port Louis Free Port

[edit] Asia

• Manama

• Hong Kong

• Banglore
• Mumbai
• Kolkata
• Kerala

• Batam Island

• Qeshm
• Chabahar
• Kish
• PSEEZ
• Arvand

• Eilat

• Nagasaki
• Niigata

• Port Beirut

• Macao (Ka-Ho)

• Penang Until 1969

• Gwadar

• The former United States Navy base of Subic Bay
• Zamboanga Economic Zone and Freeport
• Clark Air Base and Freeport

• Singapore

• Incheon
• Busan
• Gwangyang Bay

• Port of Keelung Free Trade Zone
• Port of Taipei Free Trade Zone
• Port of Taichung Free Trade Zone
• Port of Kaohsiung Free Trade Zone
• Taoyuan Air Cargo Park Free Trade Zone

Taiwan FTZs

• Mersin

• Fujairah Creative City
• Dubai Internet City
• Dubai Media City
• Dubai Studio City
• International Media and Production Zone
• Dubai Knowledge Village
• Dubai Healthcare City
• Dubai International Financial Center
• DuBiotech
• Dubai Outsource Zone
• Jebel Ali Free Zone
• RAK Media City
• RAK IT Park
• Ras Al Khaimah Free Trade Zone

[edit] Europe

(part of the European Union)

• Linz (port on river Danube)
• Vienna (port on river Danube)

• Brest FEZ
• Grodno FEZ

• Rijeka, 1723

(part of the European Union)

• Freeport of Copenhagen (Kbenhavns Frihavn)

(part of the European Union)

• Free zone of Lappeenranta (Lappeenrannan Vapaa-alue)
• Freeport of Hanko (Hangon Vapaasatama)

(part of the European Union)

• Free Zone of Verdon - Port de Bordeaux (Zone franche du Verdon - Port de Bordeaux)

(part of the European Union)

• Freeport of Hamburg (Freihafen Hamburg)
• Freeport of Bremen (Freihafen Bremen)
• Freeport of Bremerhaven (Freihafen Bremerhaven)
• Freeport of Emden (Freihafen Emden)
• Freeport of Kiel (Freihafen Kiel)
• Freeport of Cuxhaven (Freihafen Cuxhaven)
• Freeport of Deggendorf (Freihafen Deggendorf)
• Freeport of Duisburg (Freihafen Duisburg)

• Ajaria autonomous republic
  • Batumi, 1878-1886 (then Russia)

(part of the European Union)

• Free zone of Piraeus
• Free zone of Thessaloniki
• Free zone of Heraclion

(part of the European Union)

• Ringaskiddy Free Port
• Shannon Free Zone

• Ronaldsway Airport (Ballasala)

(part of the European Union)

• Livorno, 1675-1860
• Free Zone of Trieste (Porto franco di Trieste)
• Free Zone of Venice (Porto franco di Venezia)

(part of the European Union)

• Malta Freeport [1]

(part of the European Union)

• Free port of Riga
• Free port of Ventspils

(part of the European Union)

• Free Port of Klaipda

(part of the European Union)

• Free Zone of Madeira - Canial (Zona franca da Madeira - Canial)

(part of the European Union)

• Port of Constana, January 2007

• Nakhodka
• Vladivostok, 1861-1909

(part of the European Union)

• Free zone of Barcelona (Zona franca de Barcelona)
• Free zone of Cdiz (Zona franca de Cdiz)
• Free zone of Vigo (Zona franca de Vigo)
• Free zone of Las Palmas de Gran Canaria (Zona franca de Las Palmas de Gran Canaria)
• (Ceuta and Melilla are not Free Ports or Free zones because they are parts of Spain, but not part of the European union for customs and excises)

(part of the European Union)

• Marstrand, 17th century
• Saint-Barthlemy, 1785-1878

(part of the European Economic Area)

• La Praille free port, Geneva[1]
• Geneva airport free port, Geneva[2]

• Mersin

• free port and free economic zone Odessa
  • 1819-1858
  • Trade sea port of Odessa, January 1, 2000 for 25 years

(part of the European Union)

• Liverpool Free Zone
• Prestwick Airport Free Zone
• Southampton Free Zone
• Tilbury Free Zone
• Port of Sheerness Free Zone
• Humberside Free Zone
• London Docklands

[edit] The Americas

• Zona Franca La Plata

• Free port of Hamilton Harbour, Hamilton, Bermuda

• Zona Franca de Manaus

• Iquique

• Mega Port of Punta Caucedo

http://strategis.ic.gc.ca/epic/internet/inimr-ri.nsf/en/gr115831e.html http://www.port-technology.com/projects/caucedo/

• Managua Zona Franca (Free Port)

• Coln

• Carrasco International Airport (Free Port)
• Zona Franca de Montevideo
• Zona Franca Colonia
• Zona Franca Rivera

• US Commerce Department (International Trade Administration): List of U.S. Foreign-Trade Zones

• Free port of Isla Margarita (Puerto Libre de Margarita)
• Free zone of the Paraguan Peninsula (Zona Franca de la Pennsula de Paraguan)

[edit] See also

• Duty free
• Entrept

[edit] References

1. http://www.geneva-freeports.ch/
2. http://www.geneva-freeports.ch/

[edit] External links

• a list of free ports in the European union (.pdf-file; English)
• The German customs administration about freeports and free zones in Germany (German)
• US Customs: About Foreign-Trade Zones & Contact Info
• US Commerce Department (International Trade Administration): U.S. Foreign-Trade Zones Board

Retrieved from "http://en.wikipedia.org/wiki/List_of_free_ports"

Categories: Commercial item transport and distribution | International taxation

From Wikipedia, the free encyclopedia

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Special Economic Zones of the People's Republic of China are Special Economic Zones (SEZs) located in mainland China. The government of the People's Republic of China gives SEZs special economic policies and flexible governmental measures. This allows SEZs to utilize an economic management system that is especially conducive to doing business that does not exist in the rest of mainland China.

[edit] History

Since the late 1970s, and especially since the 3rd Plenary Session of the 11th CPC Central Committee in 1978, the PRC government has decided to reform the national economic setup. The basic state policy has focused on the formulation and implementation of overall reform and opening to the outside world.

During the 1980s, the PRC passed several stages, ranging from the establishment of special economic zones and open coastal cities and areas, and designating open inland and coastal economic and technology development zones.

Since 1980, the PRC has established special economic zones in Shenzhen, Zhuhai and Shantou in Guangdong Province and Xiamen in Fujian Province, and designated the entire province of Hainan a special economic zone.

In August 1980, the National People's Congress (NPC) passed "Regulations for The Special Economy Zone of Guangdong Province" and officially designated a portion of Shenzhen as the Shenzhen Special Economy Zone (SSEZ).

In 1984, the PRC further opened 14 coastal cities to overseas investment: Dalian, Qinhuangdao, Tianjin, Yantai, Qingdao, Lianyungang, Nantong, Shanghai, Ningbo, Wenzhou, Fuzhou, Guangzhou, Zhanjiang and Beihai.

Since 1988, mainland China's opening to the outside world has been extended to its border areas, areas along the Yangtze River and inland areas. First, the state decided to turn Hainan Island into mainland China's biggest special economic zone (approved by the 1st session of the 7th NPC in 1988) and to enlarge the other four special economic zones.

Shortly afterwards, the State Council expanded the open coastal areas, extending into an open coastal belt the open economic zones of the Yangtze River Delta, Pearl River Delta, Xiamen-Zhangzhou-Quanzhou Triangle in south Fujian, Shandong Peninsula, Liaodong Peninsula (Liaoning Province), Hebei and Guangxi.

In June 1990 the PRC government opened the Pudong New Area in Shanghai to overseas investment, and additional cities along the Yangtze River valley, with Shanghai's Pudong New Area as its "dragon head."

Since 1992, the State Council has opened a number of border cities, and in addition, opened all the capital cities of inland provinces and autonomous regions.

In addition, 15 free trade zones, 32 state-level economic and technological development zones, and 53 new and high-tech industrial development zones have been established in large and medium-sized cities. As these open areas adopt different preferential policies, they play the dual roles of "windows" in developing the foreign-oriented economy, generating foreign exchanges through exporting products and importing advanced technologies and of "radiators" in accelerating inland economic development.

Primarily geared to exporting processed goods, the five special economic zones are foreign-oriented areas which integrate science and industry with trade, and benefit from preferential policies and special managerial systems. In 1999, Shenzhen's new-and high-tech industry became one with best prospects, and the output value of new-and high-tech products reached 81.98 billion yuan, making up 40.5% of the city's total industrial output value.

Since its founding in 1992, the Shanghai Pudong New Zone has made great progress in both absorbing foreign capital and accelerating the economic development of the Yangtze River valley. The state has extended special preferential policies to the Pudong New Zone that are not yet enjoyed by the special economic zones. For instance, in addition to the preferential policies of reducing or eliminating Customs duties and income tax common to the economic and technological development zones, the state also permits the zone to allow foreign business people to open financial institutions and run tertiary industries. In addition, the state has given Shanghai permission to set up a stock exchange, expand its examination and approval authority over investments and allow foreign-funded banks to engage in RMB business.

In 1999, the GDP of the Pudong New Zone came to 80 billion yuan, and the total industrial output value, 145 billion yuan.

[edit] Economic policies of SEZs

1. Special tax incentives for foreign investments in the SEZs.
2. Greater independence on international trade activities.
3. Economic characteristics are represented as "4 principles":
   1. Construction primarily relies on attracting and utilizing foreign capital
   2. Primary economic forms are sino-foreign joint ventures and partnerships as well as wholly foreign-owned enterprises
   3. Products are primarily export-oriented
   4. Economic activities are primarily driven by market forces

SEZs are listed separately in the national planning (including financial planning) and have province-level authority on economic administration. SEZs local congress and government have legislation authority.

[edit] List of SEZs

As part of its economic reforms and policy of opening to the world, between 1980 and 1984 China established special economic zones (SEZs) in Shantou, Shenzhen, and Zhuhai in Guangdong Province and Xiamen in Fujian Province and designated the entire island province of Hainan a special economic zone.

In 1984 China opened 14 other coastal cities to overseas investment (listed north to south): Dalian, Qinhuangdao, Tianjin, Yantai, Qingdao, Lianyungang, Nantong, Shanghai, Ningbo, Wenzhou, Fuzhou, Guangzhou, Zhanjiang, and Beihai.

Then, beginning in 1985, the central government expanded the coastal area by establishing the following open economic zones (listed north to south): Liaodong Peninsula, Hebei Province (which surrounds Beijing and Tianjin), Shandong Peninsula, Yangtze River Delta, Xiamen-Zhangzhou-Quanzhou Triangle in southern Fujian Province, Pearl River Delta, and Guangxi.

In 1990 the Chinese government decided to open the Pudong New Zone in Shanghai to overseas investment, as well as more cities in the Yangzi River Valley.

Since 1992 the State Council has opened a number of border cities and all the capital cities of inland provinces and autonomous regions.

In addition, 15 free-trade zones, 32 state-level economic and technological development zones, and 53 new and high-tech industrial development zones have been established in large and medium-sized cities. As a result, a multilevel diversified pattern of opening and integrating coastal areas with river, border, and inland areas has been formed in China.

[edit] See also

• Metropolitan Regions of China
• Economy of the People's Republic of China
• Special administrative region

[edit] External links

• Chung-Tong Wu. China's special economic zones: five years later - Asian Journal of Public Administration
• Special Economic Zones: Lessons from China by Bhaskar Goswami
• Coordination of tax legislation of special zones in Mainland China
• Support service to enter development Zones to Mainland China

Retrieved from "http://en.wikipedia.org/wiki/Special_Economic_Zones_of_the_People%27s_Republic_of_China"

Categories: International trade | International economics | Economic development in China | Trade of China | Industry of China | Special Economic Zones

Hidden categories: Articles containing traditional Chinese language text | Articles containing simplified Chinese language text

From Wikipedia, the free encyclopedia

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This is article is on free international trade. For information on special economic zones within countries, see Free trade zone.

Free trade area is a designated group of countries that have agreed to eliminate tariffs, quotas and preferences on most (if not all) goods and services traded between them. It can be considered the second stage of economic integration. Countries choose this kind of economic integration form if their economical structures are complementary. If they are competitive, they will choose customs union.

[edit] Description

Unlike a customs union, members of a free trade area do not have the same policies with respect to non-members, meaning different quotas and customs. To avoid evasion (through re-exportation) the countries use the system of certification of origin most commonly called rules of origin, where there is a requirement for the minimum extent of local material inputs and local transformations adding value to the goods. Goods that don't cover these minimum requirements are not entitled for the special treatment envisioned in the free trade area provisions.

Cumulation is the relationship between different FTAs regarding the rules of origin - sometimes different FTAs supplement each other, in other cases there is no cross-cumulation between the FTAs. A free trade area is a result of a free trade agreement (a form of trade pact) between two or more countries. Free trade areas and agreements (FTAs) are cascadable to some degree - if some countries sign agreement to form free trade area and choose to negotiate together (either as a trade bloc or as a forum of individual members of their FTA) another free trade agreement with some external country (or countries) - then the new FTA will consist of the old FTA plus the new country (or countries).

Within an industrialized country there are usually few if any significant barriers to the easy exchange of goods and services between parts of that country. For example, there are usually no trade tariffs or import quotas; there are usually no delays as goods pass from one part of the country to another (other than those that distance imposes); there are usually no differences of taxation and regulation. Between countries, on the other hand, many of these barriers to the easy exchange of goods often do occur. It is commonplace for there to be import duties of one kind or another (as goods enter a country) and the levels of sales tax and regulation often vary by country.

The aim of a free trade area is to so reduce barriers to easy exchange that trade can grow as a result of specialisation, division of labour, and most importantly via (the theory and practice of) comparative advantage. The theory of comparative advantage argues that in an unrestricted marketplace (in equilibrium) each source of production will tend to specialize in that activity where it has comparative (rather than absolute) advantage. The theory argues that the net result will be an increase in income and ultimately wealth and well-being for everyone in the free trade area. However the theory refers only to aggregate wealth and says nothing about the distribution of wealth. In fact there may be significant losers, in particular among the recently protected industries with a comparative disadvantage. The proponent of free trade can, however, retort that the gains of the gainers exceed the losses of the losers.

[edit] List of free trade areas

See also: List of free trade agreements and List of bilateral free trade agreements

Current FTAs

This is list of free trade areas between three or more countries, mainly notified to the General Agreement on Tariffs and Trade/World Trade Organization and in Force. Every customs union, trade common market and economic and monetary union has also a free trade area. Smaller agreements, that are part of larger one are not listed.

[edit] External links

• bilaterals.org - "Everything that's not happening at the WTO"
• fightingftas.org
• FTAs submitted to the WTO
• Americas FTAs
• Singapore official FTA site
• EFTA official site
• Australia's FTAs
• About.com's Pros & Cons of U.S. Free Trade Agreements
• Bilateral and Regional Trade Agreements Notified to the WTO: developed by WorldTradeLaw.net and Bryan Mercurio
• ptas.mcgill.ca

Retrieved from "http://en.wikipedia.org/wiki/Free_trade_area"

Categories: Trade blocs | Lists of organizations | International trade | Free trade agreements