FREE-TRADE ZONE

also called Foreign-trade Zone, formerly Free Port, an area within which goods may be landed, handled, manufactured or reconfigured, and re-exported 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 frontiersareas with many geographic advantages for trade. Examples include Hong Kong, Singapore, Coln (Panama), Copenhagen, Stockholm, Gdansk (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, expanding from 133 zones in 1970 to 614 in 1990. In the United States free-trade zones were first authorized in 1934, but only about a dozen were established before 1970; by the mid-1990s, however, there were more than 200 such zones, with about 250 subzones.