Regional economic function analysis of U.S. foreign-trade zones

Foreign-Trade Zones (FTZs) are defined as designated areas in the United States where foreign merchandise is considered to be international commerce and not subject to U.S. customs duties unless or until it enters into the U.S. market. The original purpose of the FTZ program was to generate new business and employment in the United States by encouraging foreign trade, especially export and transshipment trade. Since the early 1980s, the program has grown in popularity in terms of the number of FTZs established and the value of goods traded through them. Meanwhile, the program has shifted its primary function from export promotion to import promotion. Today, offshoring manufacturers, such as oil refineries and auto-assembly plants, are the major beneficiaries of the program. They can reduce the payment of customs duties by converting high-duty imported materials into low-duty finished products under FTZ procedures. This import-oriented activity is enabled by the liberality of the FTZ Act and administrative support from the FTZ Board. FTZ #27, located around Boston Harbor, is not an exception. Since the late 1990s, this zone has amplified its function in import promotion by accommodating several distributors, including BOSFUEL and Reebok. Under FTZ procedures, these firms can benefit considerably from duty exemption and deferral. I estimated that the cost savings reach 940,000 dollars at BOSFUEL and 1.1 million dollars at Reebok. However, FTZ #27 has failed to generate employment both at the local and regional levels. The number of workers in the zone has declined by 61% since 1999 because employment loss at existing manufacturers has outpaced the increase at BOSFUEL and Reebok.

Department dc:contributor.department

Massachusetts Institute of Technology. Dept. of Urban Studies and Planning.

Grantor dc:publisher

Massachusetts Institute of Technology

Year dc:date.issued

2005

Author dc:creator

• Otsubo, Hirotoshi

Advisor dc:contributor.advisor

• Karen R. Polenske.

• Urban Studies and Planning.

Statement dc:rights

• M.I.T. theses are protected by copyright. They may be viewed from this source for any purpose, but reproduction or distribution in any format is prohibited without written permission. See provided URL for inquiries about permission.

Licence dc:rights.uri

• http://dspace.mit.edu/handle/1721.1/7582

Language dc:language.iso

eng

Handle dc:identifier.uri

http://hdl.handle.net/1721.1/33045

OAI identifier oai:identifier

oai:dspace.mit.edu:1721.1/33045