Free trade zones are sometimes a hotly contested subject of debate for many. Some critics believe that there are too many drawbacks to free trade.
Proponents of free trade zones believe that there aren’t enough or that existing ones are excessively hampered by bureaucracy. The idea is that free trade zones connect the world expeditiously through international business and commerce.
Other people may just be perplexed by the term “free trade zones.” So, it may help to use a real-life example.
If you watch the news, you have heard of the term “Brexit.” It is a term that means “Britain’s Exit,” as a member of the European Union.
The politics connected to Brexit are complex and relative to those who are affected by it. What is undeniable about Brexit’s passage is how dramatically different commercial trade between the United Kingdom and the European Union will be from now on.
Before Brexit, every E.U. country could transport trade to and from other member E.U. states without paying tariffs, a kind of commerce transport tax.
After the United Kingdom leaves the E.U., it may have to pay trade-related taxes with every E.U. country during commerce. There are 28 E.U. member countries.
So, conducting trade commerce over E.U. borders post-Brexit can get very expensive very quickly for the United Kingdom unless it deals with the E.U.
This is a simplified version of the issue, but it explains the importance of free trade zones.
The consumer goods you use every day and take for granted were probably manufactured on the other side of the world. Then, these goods were shipped to a port relatively local to where you live.
And you probably paid low or reasonable consumer prices for those goods because of free trade zone agreements.
The most important free trade zones globally, local, regional, and international, keep the business world running smoothly.
Do you need consulting guidance about free trade zones? Contact Alba Wheels Up today.
Before we discuss the most important free trade zones, let’s first better define free trade zones.
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What is a Free Trade Zone?
A free trade zone is an area, such as a seaport, airport, or land port that is legislatively designated as a particular area for international commercial trade. In a free trade zone, taxes, tariffs, duties, and fees are waived between countries conducting business within the zone.
Free trade zones also encourage countries to consider investment opportunities in other regional territories.
Other names throughout the world know free trade zones.
For example, free trade zones are also known as industrial free zones, special economic zones, export free zones, and qualifying industrial zones in other parts of the world.
The global supply chain system that supplies every country with consumer goods has been made more efficient by implementing free trade zones.
Free Trade Zone Statistics
The first free trade zone was probably established on the Greek isle of Delos in 166 BCE.
And the concept of free trade zones has only grown since that early time.
The first modern-era free trade zone was created in the United States in 1934 during the Great Depression. It was called the U.S. FTZ Program.
Over 140 countries mutually transact via 5,300 free trade zones located throughout the world.
Over 100 million people globally are employed because of the existence of free trade zones. About 450,000 American jobs exist because of free trade zones.
Here is a listing of the most important free trade zones. It is important to remember that “important” is a relative term for free trade.
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N.A.F.T.A.
The North American Free Trade Association is a free trade zone deal between Canada, Mexico, and the United States. It was signed into existence by President Bill Clinton in 1993 but went into effect in 1994.
About $1 trillion in trade revenue is generated every year through the NAFTA agreement. The NAFTA agreement has a GDP financial equivalency of almost $25 trillion.
The European Union Single Market
The European Union Single Market is a free trade zone agreement between all 28 E. U. member states. This free trade zone was first established in 1993.
The European Union Single Market has a GDP financial equivalency of almost $14 trillion. This European free trade zone agreement affects nearly 500 million people.
The African Continental Free Trade Area
About 24 of the 54 African countries have signed onto the African Continental Free Trade Area. The ACFTA is a recent free trade zone agreement that came into being in 2019.
The African Continental Free Trade Area’s GDP has a financial equivalency of almost $2.5 trillion. And it directly affects all 1.2 billion people living in Africa.
The Association of Southeast Asian Nations Free Trade Area
The Association of Southeast Asian Nations Free Trade Area is an Asia-centric free trade zone agreement between 10 Asian countries. It was first established back in 1992.
The ASANFTA has a GDP financial equivalency of almost $1.5 trillion and generates over $1.7 trillion in revenue annually.
This free trade agreement affects almost 600 million people in Asia.
China Special Economic Zones
China currently has about 12 special economic zones. Over 30 million jobs have been created due to the implementation of these zones.
The Most Important Free Trade Zone?
So, what is the most important free trade zone? Only time and perspective can determine such a thing.
In December 2020, ten ASEAN countries, Australia, New Zealand, Japan, China, and South Korea, entered into the world’s largest free trade zone agreement.
This recently ratified free trade zone deal will directly affect 2.2 billion people or roughly 1/3rd of the world’s population.
Additionally, this trade will help jumpstart Asian economies hard hit by the coronavirus pandemic.
This new free trade zone’s future success will determine the most important one relative to others.
Exploring the Free Trade Zone Market
The number of free trade zone agreements and affiliations increases every year. If you want to expand your business to include free trade zone agreements, you need to know what you are doing.
If your business is ready to enter the free trade zone, contact Alba Wheels Up today.
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