PART 1 
GENERAL ANALYSIS 
1. ORIGIN OF FREE PORTS OR FOREIGN TRADE ZONES 
WHAT IS A FREE PORT OR FOREIGN TRADE ZONE? 
The term “free port” which is quite generally used abroad suggests 
complete freedom from all port restrictions and regulations, and hence 
s not accurately descriptive of the institution which operates under 
that name. In this country the term ‘foreign trade zone” seems to 
be preferred, but this term also is not truly descriptive of the free 
port and its uses. From the standpoint of the ship and of the 
physical handling of cargo, the term “free port” is more expressive 
and comprehensive. As a free port is essentially a maritime institu- 
tion, usually equipped with docks, wharves, transit sheds, ware- 
houses, and often with bunkering and ship repair facilities, the latter 
term is perhaps preferable to ‘foreign trade zone,” which is a term 
unfamiliar to shipping men throughout the world. It is in fact a 
new name for an institution which the maritime world has already 
named ‘free port,” probably because it is a port or a part of a port 
and is free to shipping in certain respects. 
Regardless of name, the freedom from official formalities and from 
certain port dues or charges which characterizes free ports or foreign 
trade zones, is limited to matters directly related to the entry and 
clearance of ships and cargo. It does not usually extend to formali- 
ties other than those prescribed by the customs regulations. Vessels 
entering free ports or zones, remain subject to the laws respecting 
the public health and quarantine and must be subject to regulations 
respecting the landing of passengers within the limits of the zone. 
Vessels entering harbors having free zones are not immune from 
the laws respecting pilotage. Other charges against vessels, often 
effective in the free port, are towage, moorage, dockage, demurrage, 
harbor dues, and port wardens’ fees. Vessels must still be subject to 
rules respecting the use and protection of navigable channels and to 
the regulations respecting inflammable and other dangerous cargoes. 
Absolute freedom in the discharge of cargo is probably not accorded 
at any free port. The customs laws not only prescribe procedure in 
respect to articles which may be admitted into the country but they 
also prescribe prohibitions against the admission of certain kinds of 
goods. Some countries have laws prohibiting the landing of goods, 
the manufacture or sale of which is subject to taxation or to govern- 
ment control. Charges may apply against goods in free zones for 
wharfage, handling, storage, and other services.