On May 19, the National Association of Foreign-Trade Zones (NAFTZ) joined with free-trade zones and associations from around the world to promote trade, development, and the rule of law by launching the World Free Zones Organization (WFZO) at a public event in Dubai, United Arab Emirates.

Headquartered in the thriving trade hub of Dubai, the WFZO is a new non-profit entity operating as an association for all free zones around the world. Along with NAFTZ, other founding members include free zone administrators and associations from Latin America, Europe, Africa, the Middle East, India, and China.

The mission of the new global organization, according to its founding principles, will be to provide global leadership in terms of knowledge of free zones, to enhance public and general knowledge and the perception of free zones, to increase awareness among policy makers of the economic advantages of free zones and encouraging the use of free zones for economic and social development, and to provide services to the members and the community.

Of special interest to the U.S. foreign-trade zones users and administrators, the new WFZO will help to promote the rule of law and benchmarking standards among zone programs around the world. A more transparent and legally compliant free-zones network will safeguard the reputation of established zones programs, such as the FTZ program in the United States, while encouraging best practices.

With 80 years of experience since the original passage of the Foreign-Trade Zones Act in 1934, the U.S. zones community represented by NAFTZ has much accumulated knowledge to share with its new WFZO partners as well as much to learn from innovative practices abroad.

With comprehensive talks in the World Trade Organization stuck in neutral and the U.S. Congress struggling to pass Trade Promotion Authority, the spread of free zones has been one of the bright spots in promoting a more open global economy. In the past 30 years, according to the World Bank, more than 100 countries have adopted some variation of free economic zones. More than 60 million people around the world are employed in free zones, more than half of them in China’s special economic zones that have pioneered that nation’s economic reforms.

Here in the United States, the FTZ program has proven to be an effective tool in promoting trade, investment, and the retaining of quality jobs on U.S. soil. According to the most recent numbers from the Foreign-Trade Zones Board in the U.S. Commerce Department, exports from FTZs in the United States reached a record $70 billion in 2012. Annual FTZ exports have more than doubled since 2009, meeting President Obama’s National Export Initiative goal two years early—while overall U.S. exports have fallen far behind the pace needed to double by the end of 2014.

The recent boom in FTZ exports is not a temporary phenomenon. During the past decade, from 2002 to 2012, FTZ exports quadrupled, growing almost twice as fast as overall U.S. exports. Merchandise admitted to foreign-trade zones also reached a record high in 2012, with 58 percent of the total sourced from the domestic economy. The number of companies using foreign-trade zones in 2012 reached 3,200 and the number of workers employed reached 370,000.

NAFTZ’s Chairwoman Janette Frantz, grantee of FTZ No. 43 in Battle Creek, Mich., hailed the creation of the WFZO as a way for FTZ companies to deepen their connections to global markets. “The more we know about trade programs in other nations, the better we can understand and meet the needs of U.S. firms engaged in international commerce. Having contributed to finalizing the guiding principles and to drafting by-laws for the World FZO, we look forward to a productive future of collaboration with the World FZO as it provides global, knowledge-based leadership and promotes best practices and networking opportunities. These are values of the NAFTZ, and the WFZO now enhances those values to a global level for NAFTZ members,” Frantz said in a statement released by NAFTZ on the unveiling of the new organization.

The WFZO announced at its May 19 event that Dubai will host the first of what are expected to be annual conventions in April 2015, including a conference, exhibition, and general assembly of its members. The WFZO will also work with international multilateral organizations such as UN agencies, the World Customs Organization, and the World Trade Organization to increase awareness of the economic advantages of free zones in fostering world trade, economic and social development, and foreign and domestic direct investment. Membership in the WFZO is open to all United Nations member nations.

About The Author Daniel Griswold [Full Bio]

Daniel Griswold is senior research fellow and co-director of the Program on the American Economy and Globalization at the Mercatus Center.




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