Free economic zone facts for kids
Free economic zones (often called FEZ) are special areas in a country where businesses get special rules to help them grow. Imagine a special club for businesses! These rules usually mean companies pay very little or no taxes and customs duties (fees on goods coming into a country). The main goal is to encourage economic activity, create jobs, and attract trade and commerce.
Each country decides its own rules for these zones. The World Trade Organization (WTO), which helps countries trade fairly, also has guidelines about how these zones should work.
Some special economic zones are known as free ports. Historically, these were places like ports or airports that had special customs rules to make trade easier.
What are Free Zones?
A "free zone" is like a special part of a country's land where goods are treated as if they are outside the country's customs territory. This means that when goods enter a free zone, they usually don't have to pay import duties or taxes right away. These rules are explained in an international agreement called the Revised Kyoto Convention. It helps make customs procedures simpler and more organized around the world.
A Brief History of Free Zones
The idea of special trade areas has been around for a long time. Early versions were called free ports. These were places, often near the sea, where ships could unload goods without paying high taxes. This made it cheaper and easier to trade.
In modern times, the term "free port" still exists, but it refers to a specific type of special economic zone, like the LADOL in Nigeria.
One interesting historical example is the Free Port of Trieste. After World War II, in 1947, this port was put under the control of the United Nations. This meant no single country had full control over its special trade rules. It was meant to be a truly international free port. However, in 1954, the Free Territory of Trieste was divided between Italy and Yugoslavia.
List of Free Economic Zones
To see more examples of these special areas around the world, you can check out the main article:
See also
- Bonded logistics park - another type of special economic zone
- Free-trade zone - a similar concept for trade
- Free-trade area - an area where countries agree to have no tariffs or taxes on goods traded between them
- Bonded warehouse - a secure place where imported goods can be stored without paying duties until they are sold or moved
- Four Asian Tigers - a term for the economies of Hong Kong, Singapore, South Korea, and Taiwan, which grew very fast partly due to special economic policies
