The free trade zone allows foreign ships to enter and exit freely, foreign goods are imported duty-free, and the quota control on imported goods is abolished. It is also a further extension of the free port and a special functional zone for a country to open to the outside world.
In addition to most of the characteristics of a free port, a free trade zone can also attract foreign capital to set up factories, develop export processing enterprises, allow and encourage foreign capital to set up large-scale commercial enterprises and financial institutions, and promote the all-round and all-round economic development in the region. The limitation of free trade zone is that it will lead to the distortion of commodity flow and tax avoidance. If there are no other measures as a supplement, the third country is likely to transport the goods to the member countries with lower tariffs or trade barriers in the integration organization, and then transfer the goods to the member countries with higher trade barriers. In order to avoid this distortion of commodity flow, the free trade zone organization has formulated the "principle of origin", which stipulates that only the "products of origin" of free trade zone members can enjoy the free trade treatment given by member States.
Free trade zones are developed from free ports, usually located in port areas or areas adjacent to ports, especially in economically developed countries. For example, the United States has 92 foreign trade zones. As early as the early 1950s, the United States clearly stated that it could develop manufacturing industry with export processing as its main goal in the free trade zone. At the end of 1960s, some developing countries also used this form to build it into a special industrial zone and gradually developed it into an export processing zone. Since 1980s, many countries' free trade zones have actively developed into high-tech, knowledge-and capital-intensive, forming a "technology-based free trade zone". In today's world, the development of free trade zones is very rapid, and its number has reached dozens around the world, covering all continents, and it is one of the main forms of regional economic integration. Among them, North American Free Trade Area and ASEAN Free Trade Area are the most typical, and North American Free Trade Area is also the largest free trade area in the world. Other free trade areas include China-Europe Free Trade Area, EU- Latin America Free Trade Area and so on. Generally speaking, all countries in the world attach great importance to serving their own economic development through the establishment and development of free trade zones. At present, except China, Japan and South Korea, almost all the major trading countries in Asia have joined the free trade zone, and some are members of several free trade zones.