Free economic zone facts for kids
Free economic zones (FEZ), free economic territories (FETs) or free zones (FZ) are a class of special economic zone (SEZ) designated by the trade and commerce administrations of various countries. The term is used to designate areas in which companies are taxed very lightly or not at all to encourage economic activity. The taxation rules and duties are determined by each country. The World Trade Organization (WTO) Agreement on Subsidies and Countervailing Measures (SCM) has content on the conditions and benefits of free zones.
Some special economic zones are called free ports. Sometimes they have historically been endowed with favorable customs regulations, such as the free port of Trieste.
Definition
The definition should be understood in meaning The International Convention on the Simplification and Harmonization of Customs Procedures (Revised Kyoto Convention) uses the term “free zones” which the revised convention describes as “a part of the territory of a Contracting Party where any goods introduced are generally regarded, insofar as import duties and taxes are concerned, as being outside the customs territory”.
History
An early type of special economic zone was free ports, these historically were endowed with favorable customs regulations. In modern times, free port has come to mean a specific type of special economic zone, for example LADOL.
All "free ports" in the world were permitted by the respective states, save the Free Port of Trieste that with the signing of the 16th Resolution of the Security Council of the United Nations (10 January 1947) and the signing of the Treaty of Peace with Italy (10 February 1947, ratified 15 September 1947) was put territorially under the sovereignty of the United Nations itself. As cited on Annex VIII, Article 3, paragraph 2: "The establishment of special zones in the Free Port under the exclusive jurisdiction of any State is incompatible with the status of the Free Territory and of the Free Port". For example, it was not possible to apply the "Italian Law on Ports" in the extraterritorial free zones of the UN Free Port of Trieste with the effect that all actual territorial concessions were null and void.
In 1954 the Free Territory of Trieste was dissolved and given to its neighbours, Italy and Yugoslavia.
List of free economic zones by country
See also
In Spanish: Zona franca para niños
- Bonded logistics park - another type of SEZ
- Free-trade zone - another type of SEZ
- Free-trade area
- Bonded warehouse
- Four Asian Tigers
