Free port
From ArticleWorld
A free port is generally an area in the vicinity of a port where commercial goods intended for trade or reshipment can be received and stored without payment of duties in that country where the free port is geographically situated. It may also be defined as a port open all commercial vessels irrespective of their political affiliations, legal establishment, or economical status. Generally, in a free port or an area that comes under the jurisdiction of a free port imported goods can be kept for storage or processed without paying customs duties or protective tariffs. It is observed that usually goods kept at free ports are intended for reexport. These ports or sections of a port are usually exempt from customs regulations. Under this system, the goods are allowed to be landed at a free port for storage and handling, and sometimes they may even be processed into manufactured goods. In the free port, duty is levied only if the goods are moved from the zone specified as the free port into nearby territories. It is believed that the concept of free ports came in to existence during the period of mercantilism. It was a period when excessive levies where charged on imported goods and it necessitated the setting up of free ports. At some point in the past, it is said that some free ports enjoyed political autonomy.
The main free ports that exist today in East Asia are Hong Kong and Singapore. United States, on the other hand followed the system of bonded warehouses. Under this system, many of the qualities and functions of the free ports were retained. They allowed goods to be stored and processed in specially licensed and designated warehouses if a bond exceeding the amount of the customs duties is posted initially itself. Under the Foreign Trade Zones Act of 1934 establishment of free ports in United States was authorized, but it put a ban on manufacturing that could be carried out on its premises. The first American free port was opened in New York City in 1937, and since then others have been added. Today it is a common for many countries to have free ports in international airports to facilitate international trade and commerce.