News

A free trade zone is an area like an airport, seaport, or land-based port that is proactively designed to be a global commercial trade point. The most important feature of a free trade zone is that it can waive taxes, customs duties, and fees between two countries doing business within free zones. 

Free trade zones are the primary factors that motivate countries to think about potential investment opportunities in other nations. Free trade zones are scattered across the world, sometimes known by other names such as industrial free zones, export free zones, special economic zones, or qualifying industrial zones. The international supply chain system responsible for supplying consumer goods to every nation can be streamlined in a disciplined way using free trade zones. 

The History of Free Trade Zones & Manufacturing  

In the years between 1939 to 1945, manufacturing was prohibited in the FTZ, and the FTZs were not much used.  However, by the year 1950, with the passing of an amendment FTZs were allowed to manufacture. It was decided that customs duty would be based on the products’ full value, and not individual parts, and only to be paid upon their entry into the domestic commerce circle. This was called an island model and thus the activities performed within each trade zone were separated and not made part of the domestic economy. 

From the years between 1948 to 1994, the GATT or General Agreement on Tariffs and Trade was passed as law to promote global trade. This was mainly achieved by eliminating unnecessary trade tariffs. The twin plant program started by the Mexican government in the year 1965 helped hundreds of factories or plants in Mexico to import American components duty-free. The parts were used to assemble and make a finished product, then these products were again re-exported back to the United States as completed or finished goods. Such efforts offered cheaper-produced products or goods for American customers. 

History of Foreign Trade Zone & Customs

• The National Association of Foreign Trade Zones or NAFTZ was started in 1972.
• NAFTZ aimed to be the service providers for communities and businesses that take part in the American Free Trade
• Zone program.
• By 1980 the United States customs department passed a law in favor of the NAFTZ’s stand.
• The law stated that customs duty on products made in foreign trade zones should not be evaluated on the United States
• territory, value-added including all domestic materials, parts, workforce, labor, overhead costs, or profit.
• The North American Free Trade Agreement was formed in 1994.
• A rule was passed, which stated that between America, Canada, and Mexico all trade barriers would be eliminated among other things.
• And finally, in 1995, the WTO or the World Trade Organization was formed to do justice and eliminate all kinds of obstacles in the way of international trade.

The Impact of Trade & FTZ Program

Trade in association with the FTZ program had a deep impact on the prosperity of many countries like the United States. The foreign trade zone program soon became indispensable for U.S. businesses and its rising economic growth. Over the last thirty years, FTZ projects have grown from a mere 8 trade zones to over 230 foreign trade zone projects in the U.S. The annual profit amounts to $165 billion via warehousing and manufacturing via FTZ shipments alone. 

Onnsynex Ventures Pvt. Ltd. can assist businesses in taking advantage of the tariff-reduction benefits of foreign or free trade zones. Team OSV can prove to you the deep impact of FTZs on your savings and how they can expand your monthly profits.

Free Trade Zones Around The Globe 

European Union Single Market 

The European Union Single Market falls under the free trade zone agreement between the twenty-eight European member states. It is a free trade zone that was first established in the early 90s. With a GDP of almost 14 trillion dollars, the European free trade zone has positively affected the lives of almost 500 million people worldwide. 

The African Continental Free Trade Area 

Out of the 54 African nations, 24 of them have already signed up for the African Continental Free Trade Area or the ACFTA. It is a newly formed free trade zone agreement that came into existence in the year 2019. The ACFTA GDP financial value is almost $2.5 trillion. And it primarily affects a staggering 1.2 billion African people directly changing their lives for the better. 

The Formation of Southeast Asian Nations Free Trade Area

The Asia-centric Association of Southeast Asian Nations Free Trade Area is a free trade zone agreement between ten Asian nations. It was first established in 1992. The ASANFTA is said to have a GDP financial value of almost $1.5 trillion and generates over $1.7 trillion yearly revenue. This free trade agreement is known to affect more than 600 million Asians.

China Special Economic Zones

China presently has about twelve FTZs or special economic zones. More than 30 million jobs have been created in China, thanks to the implementation of these trade zones.

Which is the most valued free trade zone in the world?

The DMCC or Dubai Multi Commodities Center has been voted as the most reputed and leading SEZ or Global Free Zone in 2023. DMCC’s record was most impressive for initiating foreign investment into its free trade zones on a global scale. 

OSV FTWZ – The Most Trusted Indian Free Trade Zone 

In India, Onnsynex Ventures can resolve and help you in overcoming your regular logistics challenges. We fulfill our commitment to our valued clients and customers by offering multimodal and automated logistics that are operational on a global scale. We also offer key supply chain solutions to export/import businesses. Our services are fast, cost-effective, flexible, and compliant. Our free trade warehousing zones use modernized facilities with complete order management and are handled by a professional team to provide high service satisfaction.