Understanding the Foreign Trade Zone concept is fairly simple. A company that moves goods to or from another country gets special benefits by locating in a particular area - known as a Foreign Trade Zone (FTZ) - within a country. The way the FTZs are implemented in various countries is a bit more complicated.
Foreign trade zones (FTZs) offer manufacturers supply chain benefits. Companies involved in light manufacturing and distribution, in particular, benefit from being close to market, cheap labor and duty free entry.
Sophisticated users have found they can use FTZs to transfer goods from one zone to another to maximize the benefits of the program. Merchandise in an FTZ can be stored, tested, relabeled, repackaged, manipulated, assembled, manufactured, or processed. Some firms use FTZs for transshipment, adding value to the product before shipping it to the end user.
Montreal FTZ lets companies add value
Montreal's Foreign Zone at Mirabel offers a good example of the transshipment advantages of an FTZ. The zone gives manufacturers access to distribution centers serving the North American market. Mirabel offers attractive tax incentives, plus the logistics industry benefits from the Montreal-Mirabel International Airport facilities, the proximity of the Port of Montreal, and an efficient and extensive highway and railway network.
The Montreal Foreign Trade Zone at Mirabel was created by the transfer of international flights from Mirabel Airport to Dorval Airport. Companies in the zone have invested $360 million and hired close to 2,600 people. Mirabel is fast becoming a center for aircraft maintenance and repair, international logistics and light manufacturing, especially in the aerospace sector.
Middle East Zones
The Aegean Free Zone is the only free zone in Turkey with ISO 9002 certification. The Aegean Zone is a 540-acre project in Izmir, Turkey, which offers a unique industrial park environment.
"It is our goal to contribute to the economy, enabling increased prosperity in the community and the transformation of our region into one of the most advanced industrial centers in the world," said Kaya Tuncer, chairman of the zone.
Located five minutes from Izmir International Airport and 15 minutes from the Port of Izmir, companies established at the zone minimize production costs by taking advantage of conditions and benefits offered there. Over 400 firms from 12 countries have located in the zone.
Oz Optics Ltd. of Canada began operations at the zone in 2001 with a 2,200 square foot modular unit. The company now operates in a 5,000 square foot facility facility. Some of Oz's clients include advanced technology firms from the United States, Canada and Europe that are working in fields such as telecommunications, cable television, medicine, defense and computers.
In Dubai, the Jebel Ali Free Zone has positioned itself as a strategic location for trade and commerce for the sub-Indian continent region, a market with 1.5 billion people. Located at the largest man-made port in the world - Jebel Ali Port - goods coming to the zone for processing, assembling, re-export and transshipment move quickly.
ARAMEX International, a provider of total transportation solutions in the Middle East and Indian Subcontinent, is strengthening its Middle East presence through the lease of a 28,566 square foot facility in the Jebel Ali Free Zone. The new $1 million logistics and distribution center will reinforce the future of ARAMEX logistics operations, e-services and e-commerce initiatives, serving the company's clients across the region.
Karen Thuermer is a freelance writer from Devon, Pa.
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