free port

economic-dictionary

A free port in economics is a location that manages the entry and exit of goods and people under less strict regulatory control. This, compared to other maritime or air terminals in the same country where you are.

That is, in a free port (also called free port) the exchange and transport of goods and services are facilitated. Thus, a particular legal framework is created where, among other measures, lower taxes on imports in said territory are established.

These are usually spaces in which there is room for a large number of economic operations. These range from warehousing to the distribution of goods.

The proliferation of this type of zone began in the first half of the 20th century, between World War I and II. In turn, the phenomenon happened especially in ports of European countries.

Various factors have contributed to the multiplication of these special terminals. We refer, for example, to commercial development and the improvement of communications and transport. In addition, there is a desire of companies around the world to open up to export and import.

Outstanding characteristics of a free port

The main characteristics of a free port are the following:

  • The regulation establishes a series of tax advantages for certain products or commercial participants, even reaching the elimination of tariffs in some cases.
  • Its creation can be a form of encouragement by a particular government. In this way, it seeks to attract a greater volume of trade to a specific geographical area. Thus, development for the population and the creation of jobs in the port and its surroundings are pursued.
  • A multitude of companies and regulatory bodies converge. For this reason, it is necessary to enjoy a large area of ‚Äč‚Äčland and possibilities for the transfer and storage of goods.
  • They often have differentiated customs fees (as we mentioned above).
  • These are closed areas and controlled by the authorities through strict access controls.

Free port example

In general, international airports fall into the category of free port. This, because they usually have a space where tax-free transactions can be carried out. Similarly, large seaports tend to be in this classification.

In Spain, for example, the port of Barcelona is of special historical importance as a free or free port. This condition has been held even since the last century, and long before the globalization trend that the world has experienced since then.

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