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          The world's most important free trade zones

          The world's most important free trade zones

          What are Free Trade Zones

          Free trade zones are a kind of Special Economic Zone (SEZ) that are designated economic areas free of trade-related fees such as duties and taxes.

          In these areas, goods that are manufactured, stored, and handled are subject to different customs preferences. They are often offered reliefs and incentives to encourage investments.

          Here’s the OECD’s definition of a free trade zone:

          “Countries within which tariffs and non-tariff trade barriers between the members are generally abolished but with no common trade policy toward non-members”

          Organisation for Economic Co-operation and Development (OECD)

          Benefits of free trade zones include:

          • Promotes trade and business opportunities
          • Keeps costs of logistics low
          • Reduces red tape and bureaucratic formalities
          • Increase foreign exchange earnings
          • Creates employment opportunities
          • Attracts investments

          History of Free Trade Zones

          To understand the history of free trade zones, we must look at the overarching category: Special Economic Zones (SEZs).

          There are many different variations of the term SEZ. But they are all established for the same purpose.

          In the United Nation’s own words:

          “…within a defined perimeter, they provide a regulatory regime for businesses and investors distinct from what normally applies in the broader national or subnational economy where they are established.”

          — United Nations Conference on Trade and Development

          The first of all SEZs were known simply as ‘free zones’ and were designated areas, usually next to seaports, airports, or between two or more nations. These began in the 1960s and began to increase exponentially in the 1980s.

          Today, there are over 5,400 SEZs in the world. Of them, 1,000 were established in the past five years. Experts expect the establishment of more than 500 new special economic zones over the next few years.

          Here’s an infographic to illustrate the world’s major free trade areas, including the China’s 12 SEZs.

          Free trade zones infographic

          North American Free Trade Agreement (NAFTA)

          • Countries involved: United States, Canada, Mexico
          • Established in: January 1, 1994
          • Total trade: $1 trillion/year
          • Total GDP: $24.9 trillion GDP
          • Population: 450 million

          European Union Single Market

          • Countries involved: 28 EU member states, Iceland, Liechtenstein, Norway, and Switzerland.
          • Established in: 1993
          • Total GDP: $14 trillion
          • Population: 500 million

          African Continental Free Trade Area (AfCFTA)

          • Countries involved: 52 of 55 member states
          • Established in: 2019
          • Total GDP: $2.5 trillion
          • Population: 1.2 billion people (Largest free trade agreement by population)

          Association of Southeast Asian Nations Free Trade Area (AFTA)

          • Countries involved: Brunei, Indonesia, Malaysia, Philippines, Singapore, Thailand, Vietnam, Laos, Myanmar and Cambodia.
          • Established in: 1992
          • Total GDP: $1.5 trillion
          • Population: 580 million
          • Total trade: $1.7 trillion/year

          China Special Economic Zones

          There are a total of 12 Special Economic Zones, or SEZs, in China, of which the first, the Shanghai free trade zone, was established in 2013. Since then, 11 more have been added, with Hainan being the most recent inclusion in 2018.

          2013

          • Shanghai: 121km2

          2015

          • Fujian: 118km2
          • Tianjin: 120km2
          • Guangdong: 116km2

          2017

          • Chongqing: 120km2
          • Henan: 120km2
          • Hubei: 120km2
          • Liaoning: 120km2
          • Shaanxi: 120km2
          • Sichuan: 120km2
          • Zhejiang: 120km2

          2018

          • Hainan: 35,400km2

          Importing From Asia In 2020

          Discover how to import or export from/to China, India or Vietnam and avoid delays on your cargo. Includes Incoterms and documents.

          importing asia eBook
          Klaus Lydsal

          "Customs duties play an important role in your international shipment. How they're determined and calculated varies from country to country"

          Klaus Lydsal, vice president of operations at iContainers