Trade free zones

1. TRADE FREE ZONE
By
Ahmad Sarfraz
Roll no.
39
Submitted to
Sir Imran Ali

2. Free Trade Zone:
Free trade zones (FTZ) around the world offer several advantages. These advantages
can be divided into economic and logistics incentives; economic incentives include
preferential tax rates, special corporate and financial rules, and preferential labor and
immigration conditions; on the other hand there are advantages related to logistics,
which come as a result of being located in competitive locations, with reliable
infrastructure and operational advantages. This second group of incentives is going to
play a key role for the future of FTZ.
The increasing trend of globalization and international trade has gradually changed the
logistics operations; increasing the importance of node-to-node logistics. The nodes of
the global value chain, also called logistics clusters, are geographic locations where
shipments arrive from different places and with multiple destinations to be shipped to.
These shipments are transferred from one mode of transportation to another, for
consolidation, deconsolidation and transshipment. Logistics clusters comprise three
types of logistics firms: logistics services providers, such as 3PLS; logistics divisions of
industrial firms such as the distribution centers of manufacturing firms; and companies
with logistics-intensive operations such as automobile manufactures or bulk
commodities distributors, for whom logistics represents a large part of the cost.
• A restricted access site, in or adjacent to a Customs port of entry, but legally
defined as outside the Customs Territory of the United States.
• Operated by the public or private corporation, as authorized by the Foreign Trade
Zone Board, and under supervision of U.S. Customs and Border Protection.
• Foreign and Domestic Merchandise may be admitted into zones
• Merchandise within a zone may be used for storage, assembly for exhibits,
manufacture and processing.
• Merchandise may be stored into a zone for an unlimited amount of time.
Free Trade Zones and Logistics
public investment and the existence of clear rules in terms of land use and urban
planning and fourth, a friendly business environment with efficiency of administrative
processes such as custom clearance. Finally, the last common factor of successful
logistics clusters is human capital; qualified people encourage innovation and efficiency,
which in turn generate positive spillovers for the firm, the cluster and the local economy.
The popularity and success of logistics clusters in the world may be the result of the
specific advantages that they provide to companies and regional economies.4 Clustered
companies face transportation cost reductions since the higher cargo volumes entering
and leaving the cluster allow a higher utilization of larger conveyances. Agglomeration
also promotes a more frequent use of the transportation services and the creation of
direct connections with a broader range of destinations. Thus, the companies in the
cluster are able to offer better services to their clients and enjoy economies of
frequency.

3. Location:

4. Typesof FTZ’s
General Purpose Zone
Established for multiple activities. Established for multiple users. Most commonly
located at ports or Industrial parks. Used by small to medium sized businesses for
warehousing, distribution, processing or assembly 9
Examples: Electronics, Machine Parts Retail items
Subzones sponsored by General Purpose Zones
Typically involve a single company used for more extensive manufacturing/processing
that cannot be accomplished in a General purpose zone
Example: An Automobile Plant
Advantages of FTZ’s
 Foreign and domestic merchandise may be admitted
 Merchandise can be stored, assembled, manufactured and processed
 Helps create employment opportunities
 Not subject to duties and tariffs, unless and until the foreign merchandise enters
Customs territory for U.S. consumption
 Helps facilitate and expedite international trade

5. What is an Inbond Code?
An inbond code is a two digit number identifying the inbond movement of merchandise.
It does not include spaces, hyphens, slashes or other special characters
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