Foreign-Trade Zones of the United States

Abstract

IN THE world pattern of international trade routes the United States has long occupied a chiefly terminal position. Until recently we apparently have not had the desire to alter that status quo. Endowed with power and resource materials, possessing an unparalleled capacity to produce and to consume, unchallenged by effective competition from other parts of the hemisphere, this country has shown little interest in importing or re-exporting merchandise on a grand scale. The pivot of global trade, the primary entrepot to which materials gravitate, has remained on the shores of Northwestern Europe. It now appears, however, that the United States may be seeking to compete more actively in re-export trade: within the past i5 years six foreign-trade zones have been established on or near the coast. In concept, a foreign-trade zone' is a device designed to stimulate the import and re-export trade of a country that maintains protective tariffs. Inasmuch as the bulk of international trade is oceanic, foreign-trade zones are almost invariably in seaports, though a few may be found in favorably located railroad or airline centers. The zone is an areally segregated and patrolled district where certain foreign goods may be stored temporarily without payment of customs fees and without customns inspection. Regulations of some zones permit manipulation (grading, sorting, mixing with domestic products, etc.) and exhibition of the warehoused merchandise; limited manufacturing privileges may also be granted. If the goods are eventually brought into the country, the usual domestic duties must be paid and customs inspection administered; if they are reshipped to a foreign land, they are exempt from both. Although the device of the foreign-trade zone has been utilized for nearly eight centuries, few nations possess the economic and geographic requisites for its establishment. Paramount is a national policy of substantial tariffs, without which a zone obviously would have no reason to exist. Of slightly less significance is location. A customs-free district should occupy an advantageous position on a major international trade route, and/or in proximity to a group of economically active sovereign states. Within the