reply to post by hawkiye
A Foreign trade zone is nothing new and is used by all countries on the planet who engage in intertnational trade, including the US and China.
Contrary to the fearmongering in the OP post, a FTZ is sovereign US soil. What they are designed to do is to act as a stop over on the off chance an
order goes wrong.
A company in the US imports say wood from China. Under our trade agreements, China is allowed to only ship so much to the US (Import Quota set by the
US on Chinese goods coming here). If a company screwes up and orders, and it exceeds the quota, the old way was to ship the excess back to the
originating country, which as we can guess made the items more expensive to account for the return trip to china, and thenm back to the US when the
quota resets / drops below the set number.
A FTZ is set up and is generally a large warehouse that acts like a stop over point. Take the same scenario above and apply a FTZ to the shipment.
This allows the Chinese company to keep the iems in the US in a warehouse and not count againt the import Quota. This cuts down on cost from haveing
to ship back to China, then back to the US.
They can also be used as a stop over point where, again same scenario as above, except in this case if another buyer in another country needs the
items, say Mexico, the stock can be pulled from the FTZ.
Its a part of International trade between countries, and has nothing to do with a nations loss of sovereignty. To date the only thing in the United
States that is Sovereign Chinese territory are their embassies, and that courtesy is extended to all countries embassies in any country they are
lcated in (The US embassy in China is sovereign US territory.
What is a Foreign Trade Zone?
A foreign trade zone is a warehouse on US soil that acts like limbo for imported goods. If you have something that can’t come into the country,
is just stopping off before being shipped to another country, or needs to operate outside of standard Customs procedures, a Foreign Trade Zone (FTZ)
might be the way to go.
Example: I worked with a customer one time importing textiles (T-shirts) from China for sale in the US. As many textile importers will tell you, there
is an import quota on Chinese textiles that caps the total amount they’re allowed to import into the US each year. Unfortunately, this importer’s
agent failed to advise his customer that his category’s quota for the year had been filled. The end result was 50,000 embroidered T-shirts held at
the port of Long Beach California that could not be cleared through Customs.
As you can probably guess, the solution I recommended was a Foreign Trade Zone. By warehousing the goods in an FTZ on US soil, the importer was able
to avoid shipping his goods back to China (and all the costs that would incur) and was first in line when quota was re-opened the following year.
Not a totally pleasant experience for the importer, but a lot better than the alternative.
Where the confusion comes in when talking about US Law and the comment about an FTZ being Sovereign Chinese territory is the role US Customs play. A
FTZ is part of trade agreements as described above, and are also designated as duty free (you find these on the borders with Canada and Mexico 9 Duty
Free Shop). Since it is duty free, an FTZ will fall outside the authority of US Customs in terms of applying duties / taxes.
Foreign Trade Zone - More info
The last part of this article talks about FTZ's becoming Chinese colonies, where only Chinese workers are hired and not American. They are NOT
sovereign Chinese territory and fall under the jurisdiction of the State they are located in, as well as the Commerce and Treasury Department.
Is it something we should ignore? Absolutely not. Is this something new? Absolutely not as this practice has been around for a long time now.
Why is it just now being publicised? Maybe because of the growing powerhouse that is China. Maybe its because of their Military upgrades, maybe its
because of the amount of debt we owe them (about a trillion dollars now).
People should call their representatives and demand an offical explanation from the Government, and see what we can do to get some laws in place to
head off any poitential abuse of these zones.