Imagine for a minute that you are in charge of a business that buys cotton from growers all over the world and then ships the cotton to factories to be made into cloth. You’ve got a challenge: you buy cotton from growers in ten different countries and then ship that cotton to factories in twenty additional countries. How can you keep track of all that cotton? And where can you store all your cotton in between when you receive it and when you ship it out?

What you need is a Free Trade Zone. A free trade zone is an area — usually at a seaport or an airport — that has been specially created for people like you who ship or trade products. The country that hosts the free trade zone does not collect taxes, duties, or tariffs on your goods so long as they are in the free trade zone. Thus, a free trade zone can be a good place to store goods temporarily in between shipments. It can also be a good place to manufacture products such as toys or clothing, especially if those products are made from raw materials that come from many different places.

The Jebel Ali Free Zone (JAFZ) is a good example of a free trade zone. JAFZ is located in the United Arab Emirates at the Port of Dubai. It is a convenient location for shippers because it is right at the entrance to the Persian Gulf which gives it easy access to the entire Arabian peninsula. It is also quite convenient to Asia, India, and Europe. Can you find Dubai on a map?

The JAFZ was opened in 1985 by the government of Dubai. It is built around the largest man-made port in the world and covers over 100 square kilometers. It includes offices and warehouses, storage facilities for all different kinds of goods, a container port with 67 berths and 25 huge container cranes, and a team of staff who can help foreign businesses ship goods. Over 125 major shipping lines visit Jebel Ali so it is easy for businesses to ship their goods. And the nearby Dubai International Airport offers 300 flights each day to and from over 130 destinations for products that need to be shipped by air. Since the JAFZ was opened, over 1,300 businesses from 80 countries have opened offices there.

How would Jebel Ali work for your imaginary cotton business? Well, you might want to use the JAFZ container terminal as a place to receive and ship out your cotton. You could rent a warehouse to store the cotton, and could even rent office space at JAFZ for yourself and your staff. Employees at the JAFZ could help you with all the paperwork involved in shipping something like cotton around the world. And, because JAFZ is a free trade zone, you would not have to pay taxes, import duties, or tariffs on your cotton as long as it remains there. You can probably see why businesses all over the world rely on free trade zones to help them when they are shipping products to other places.

Now, forget about the imaginary cotton company and return to your own home town. Do you have a free trade zone in your town? You may have one at your local airport. And, if your town is located on the water, it is very likely that there is a free trade zone at your seaport. Do a little research and write a one-page paper about what you learn. When was the free trade zone in your town created? How big is it? Who uses it? What kind of products come through it every day?