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In Name Only

Are Free Trade Zones Assisting Capitalism or Criminals and Crony Capitalists?

Roger Bate
AEI, 2013
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Free trade zones (FTZs) have proliferated in the absence of a global trade agreement. FTZs attract overseas businesses by adopting a laissez-faire attitude toward tariffs, duties and regulations. Yet these same liberal market principles lure counterfeiters, money launderers, drug smugglers and other criminals. Economist Roger Bate provides chilling evidence of the dangers FTZs pose to legitimate companies and to global security. getAbstract recommends his gripping anecdotal report to policy makers, business executives and concerned consumers.

Summary

Due to governments’ inability to negotiate a global free trade agreement, free trade zones (FTZs) – regions “where national customs laws regarding import duties and taxes do not apply” – have filled the void. Some 3,500 FTZs operate in 130 states. These commercial zones collectively generated $500 billion in trade value in 2008. Typically, FTZs are manufacturing and warehousing sites located at ports or in run-down areas. FTZs boast many of the characteristics of enlightened capitalism, such as laissez-faire regulation and low or no taxes and tariffs. In some cases, especially in Asia, such zones have acted as ...

About the Author

Roger Bate is an adjunct scholar at the American Enterprise Institute.

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