The Concept of Free Zone

Nowadays, as international trade is getting globalized, the foreign trade policies of countries and the way the different economic instruments are being used is becoming more and more important.

In this framework, free zones have become an important foreign trade instrument especially for developing countries. In spite of all the differences that exist in practice, the free zone may be defined as areas that in geographic terms lie within the political boundaries of a country while enjoying customs free status.

Free zones have a very long past going back to the 16 th century. But after that colonies established on the trade roads near the big consumption centers of the world formed their countries' political boundaries and customs barriers, free zones had been declared as "Free Area" meaning area outside customs so that they do not lose their economic vitality and advantages.

In practice, free zones are generally applied as “export processing zones” in developing countries and “free trade zones” in developed countries. The main goal is to increase the commerce and the employment level in the least developed regions of countries.

Today, the successful free zones are far beyond this classical application. They tend to specialize and pioneer the production of technological products having a high added value: Technoparks.

When we take a look at the data of the year 1999 of WEPZA-The World Export Processing Zones Association- we observe that 882 free zones are still active in 104 countries. As we look to the repartition of these free zones, 241 of them are in the USA, 125 are in China, 64 are in Europe (24 of which are in the EU countries such as Germany, England, Spain, Italy, Portugal and Greece). In Asia and the Far East (except China) there are 85 free zones while there are 39 free zones in the Middle East.