Sistema Financiero Nacional

“Free Trade Zone”

Countries around the world look forward a better trade without barriers than can create inconveniences in their economies. That is why the Free Trade Zones were created, in orderto improve the international trade among the countries worldwide and strength the commercial relationships. “A Free Trade Zone (FTZ) is an area of a country where trade barriers are eliminated andbureaucratic requirements are decreased to compete with foreign countries and attract their investments.” Here the goods can be landed, handled and re exported without any barrier, however when theyare handled to customers they will have to pay the respective customs duties. FTZs are also described as manufacturing hubs where raw materials can be imported and the finished goods can be exported.In first place, the purpose of the FTZ is to simplify the cross border trade by eliminating or lowering the trade barriers of the countries that will export or import to foreign countries. This meansthat both of them, the exporter and importer, will benefit because these zones are also used to reduce labor costs and their respective taxes. FTZ promote an increase of investments from the foreignindustries and it is useful to reduce the unemployment of the countries, create more manufacturing options, etc. This last one means that, corporations can place their operations to produce goods,according to their raw material, skilled labor and well equipped technical staff.
Next, for a better trade among countries, the free trade zones are placed in areas, such as, places near internationalairports, seaports, etc. “Most of the FTZs are located in developing countries such as, Philippines, Brazil, China, Malaysia, Mexico, Honduras, Madagascar, Pakistan, Costa Rica, etc, but recently, theFTZ in Latin America have become of great importance.” There are some old Free Trade Zones in the world, which are found in Latin America. In 1920, Free trade regulations were approved in Uruguay...