Trade in Counterfeit Goods and Free Trade Zones

Evidence from Recent Trends

image of Trade in Counterfeit Goods and Free Trade Zones

This study examines the potential for the misuse of Free Trade Zones (FTZs) for trade in counterfeit and pirated goods. It presents the evolution of the FTZs and the international legal framework in which they operate, the reasons for establishing such zones and the benefits they offer businesses, and, finally, the role these zones play in fuelling trade in counterfeit and pirated goods. It also analyses the links between the FTZs and trade in counterfeit products, and provides data on these links.



Benefits and costs of zones for host economies and business

Zones provide numerous benefits to business. The advantages can include savings in taxes and customs duties, more flexible labour rules than those applicable in the customs territories of host countries, laxer regulation and oversight of corporate activities, fewer restrictions on corporate activities and opportunities to improve distribution of goods to diverse markets. Meanwhile, the costs for choosing to locate in a zone, which might include a variety of special zone fees, are often quite low, perhaps even lower than would otherwise be the case if the business were established in the customs territory of the host country.


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