Trade across tribal,geographic or national boundaries has contributed to economic welfare throughout time.Eons before David Ricardo discussed the benefits of comparative advantage (Ricardo, 1969) ,the benefits of international trade were a feet of life.The question,'How much should we trade?'may have been a key consideration in development of trade regulators,such as customs duty and tariff.
Free trade,or trade across national borders without customs barrier,is also an economic concept with historic precedent.A circa 400 B.C.E.duty free trade agreement between Leucon I ofBorporus and Athens(Burstein,1993)evidences early trade cooperation between nations.Specific centers of free trade,outside customs territory,are used today by over 100 nations as tools to increase national wealth.A characteristic common to 21st Century centers of trade is access to multiple transportation modes.A marine or riparian port facility,airfield,rail depot and highway may be co-located,providing intermodal and/or cross-docking opportunities for importers and exporters.
Some 230 areas of free trade in the United States and Puerto Rico,identified as Foreign Trade Zones(FTZs)by the Foreign Trade Zone Act of 1934,are community focused and do not share common transportation accessibility.An FTZ may be located at a major marine port,accessing air and rail freight options;or in the Midwest,accessing only an interstate highway.This study will analyze possible relationships between transportation mode accessibility and FTZ productivity.
CHAPTER I
THE FOREIGN TRADE ZONE
Free Trade Zones(FTZs)are developed and promoted globally in support of the concept of free ports.FTZs are also known as Duty Free Zones or Areas,and are recorded as a part of international trade activities since around 400 B.C.E.(Burstein,1993).Most non-U.S.FTZs are nationally subsidized efforts to enhance economic welfare,related as Gross Domestic Product(GDP).Large multipurpose areas in key locations attract foreign capital and high technology with the promise of inexpensive land use and labor.Job creation and infrastructure development resulting from foreign investment lead to improved quality of life and industrial competitiveness.
The Foreign Trade Zone in the United States
A Foreign Trade Zone in the United States is an area,within national boundaries,where goods can remain outside U.S.Customs Territory.The FTZ is a secure area,where goods and/or components of foreign origin remain in duty-free status while being stored,assembled,sorted,assorted or otherwise manipulated.The ability to defer,reduce or eliminate U.S.customs duty is an advantage to importers and exporters(Hanbeck,1999).Additionally,U.S.Customs Regulations,Part 400,allows reduction of Customs duties when foreign merchandise is admitted to a zone in a special status called t4non-privileged foreign status',or NPF.Therefore,foreign components destined for domestic consumption may be assembled or otherwise manipulated to a finished good in an FTZ,and may be subject to reduced duty.Finished foreign goods may be brought into an FTZ and stored inforeign status”for future distribution.Customs duties are not paid until such goods enter U.S.Customs Territory for domestic consumption.If such6foreign status”goods are re-exported,no duty is due.
Purpose of the Study
A detailed review ofU.S.FTZ and location literature reveals no research focus on individual FTZ productivity,or transportation factors that may affect FTZ productivity.The purpose of this study is to develop quantitative evidence that there is a relationship between US Foreign Trade Zone productivity and accessibility to multiple transportation modes.A positive correlation between FTZ productivity and transportation modalities provides an increased competitive advantage to FTZs enjoying access to multiple modes and/or intermodal opportunities.In essence,a determinant of FTZ productivity can be assessed by characteristics of its location and transportation infrastructure.CHAPTERⅡ
REVIEW OF RELATED LITERATURE
The concept of Free Trade Zones(FTZs)[aka Foreign Trade Zones in the United States]is inextricably related to the promotion of international trade.Location and transportation access are critical to the success of trade and commerce.The purpose of this review of related literature is five-fold:
1.Introduce the Free Port concept as an integral element in the development of International Trade.
2.Review the development of Location Theory,and demonstrate its ties and applicability to contemporary Cluster Theory.
3.Establish the impact of transportation availability on location.
4.Review non-US FTZ research documenting concern for employment issues and national wealth.
5.Focus on US FTZs in their role as community development tools.
The Free Port as a Tool of International Trade
Free Trade Zones(FTZs)are developed and promoted globally in support of the concept of Free Ports.Da Ponte(1997)observed that the role of free ports in prompting world trade is legendary.Greek history documents a circa 400 B.C.E.treaty between Athens and Leucon I of Bosporus provided duty freedom(Burstein,1993),and Hamburg,Germany has been a free trade area since 1835(Hall,1992).Modem examples of the free port range from developing economy export processing zones to various types of free zones/flexible entry procedures(Da Ponte,1997).In the United States,the Foreign Trade Zones Act of 1934,as amended(19 U.S.C.81a et seq.),authorizes designation of secured foreign trade zones,which are the U.S.equivalent to free trade zones elsewhere.The focus of this research is foreign trade zones,however,as defined in Chapter I?FTZ is an acronym that may refer to either foreign or free trade zones,in this or other works.
The foreign trade zones,and special customs procedures allowed by the FTZ Act,promote inte
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