Definition: Free zone

Category: Customs terminology

The term "free zone" means a part of the territory of a State where any goods introduced are generally regarded, insofar as import duty and taxes are concerned, as being outside the customs territory and are not subject to the usual customs control (Kyoto Convention, annex F.1, definition (a)). A distinction may be made between commercial and industrial free zones. In commercial free zones, the permitted operations are generally limited to those necessary for the preservation of the goods and the usual forms of handling to improve their packaging or marketable quality or to prepare them for shipment. In industrial free zones, processing operations are authorized (Kyoto Convention, annex F.1, introduction, para. 3). By specifying that the goods are not subject to the usual customs control, the definition draws attention to the fact that the customs control exercised over goods placed in free zones is more flexible than that applicable to goods stored in customs warehouses, for example, or admitted under the temporary admission for inward processing procedure. Whereas in exercising the usual customs control the customs authorities have at their disposal a whole series of specific measures designed to ensure compliance with the laws and regulations which they are responsible for enforcing, in the case of free zones they normally have recourse to general surveillance measures only. Thus, premises situated in free zones are not usually subject to permanent customs surveillance. The control measures applied to goods during their stay in the free zone are generally reduced to an absolute minimum and are principally concerned with the relevant documentation (Kyoto Convention, annex F.1, commentary (2)). In some countries a free zone is also known under various other names, such as "free port", "free warehouse" (Kyoto Convention, annex F.1, introduction, para. 2). http://ec.europa.eu/eurostat/ramon/statmanuals/files/SeriesF_87_EN.pdf