INTRODUCTION TO FREE TRADE ZONES

A Free Trade Zone (FTZ) is a geographic area where goods may be landed, handled, manufactured or reconfigured and re-exported without the intervention of Customs Authorities. Only when the goods are moved into consumer status within the country in which the zone is located, do they become subject to the prevailing custom duties.

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Free Trade Zones are organised around major seaports and major international airports. Free Trade Zones can be defined as labour intensive manufacturing centres that involve the import of raw materials or components and the export of factory products.

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Free Trade Zones are sometimes referred to as Special Economic Zones (SEZ) and are an area in which the business and trade laws are different from the rest of the country. SEZs are used by many economies to promote trade, economic growth and industrialisation.

 

SEZs have been implemented both in emerging market economies including Brazil, China, India, Russia, Mauritius, Nicaragua, Honduras, Timor-Leste and South Africa and in advanced economies such as Canada, France, Singapore, the United Kingdom, the United Arab Emirates and the United States. Fiji has experimented with SEZs and Australia has long-considered some form of a SEZ in the northern part of Australia to stimulate economic growth and redistribute Australia’s southern-based population.

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BRIEF DEVELOPMENT HISTORY - GLOBAL FREE TRADE ZONES WORLDWIDE 

   

• Free Trade Zones were originally established in the USA in 1934
   

• In 1997, 93 countries had Free Trade Zones and similar zones employing 22.5 million people
   

• By 2004, 163 countries had Free Trade Zones employing 43 million people
   

• As at 1 June 2019, more than two-thirds of all countries have developed Free Trade Zones and over 3,500 SEZs are now in operation globally.
  Collectively these SEZs account for over USD 850 billion in international exports and provide direct employment for more than 66 million people worldwide.

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 VANUATU FREE TRADE ZONE PROGRESS  

       

• The Department of Trade and Industry of the Vanuatu Government approved in principle an Industrial and Free Trade Zone development on Santo 30 years ago (the Document is available for reference)
   

• To date unfortunately this development has never happened
   

• Initiative of the Santo Free Trade Zone by the Department of Trade of the Vanuatu Government was in 1985, and has been on the agenda for the country’s development for many years thereafter.
   

• The Development of the Eco-Industrial Park Policy was instituted and completed between January and June 2016
   

• The Eco – Industrial Park Policy was approved in September 2016 COM decision 144 of 2016
   

• The Eco – Industrial Park Working Committee was appointed by the Deputy Prime Minister and Minister of Trade, Honourable Joe Natuman on 21st December, 2016
   

• The Eco – Industrial Park Working Committee held their first meeting on Friday 3rd March 2017 at 2pm. 
  The committee members were represented from the following Departments: 
  Department of Trade and Industry, Vanuatu Investment Promotion Authority, Internal Affairs, Customs & Excise, Lands Department, DOA/Physical Planning Unit, Senior Planning Officer of the Sanma Province, Public Works and the Santo Free Trade Zone Developer (12 committee members in total)
  All Representatives of the Eco - Industrial Working Committee voted unanimously for the approval of, and to proceed with, the Santo Free Trade Zone as a first project under the COM decision.
   

• Funded by Chinese Government through Concessional Loan, the Project of Rehabilitation and Extension of Luganville Main Wharf started on July 28, 2015 and is contracted by the Shanghai Construction Group.
  This project was at a cost of approximately USD $93.4 million.
   

• The upgrading and construction of the main wharf in Luganville, Santo has now enabled this project to proceed for the benefit of Santo and in particular - great opportunities for employment. It is expected that between 1,000 and 2,000 workers or more will be employed in the Santo Free Trade Zone in the next 2 to 4 years.