The world's "free trade zones": hives of scum and villainy

Institutions like the IMF like to encourage poor countries to set up "free trade zones" (AKA "freeports," "special economic zones," etc): effectively unregulated import/export zones where environmental, labor, tax, customs, financial and other rules are either nonexistent or much looser than in the rest of the country. These are billed as a means to stimulate the local economy by bringing in international corporations.

That happens, sometimes, but the activities that take place in these FTZs are hardly beneficial for their host countries or the rest of the planet. They're hubs for "trade-based money-laundering" and trafficking in contraband and counterfeits.

Writing in Global Financial Integrity, Daniel Neale rounds up the world's most notorious and toxic FTZs: Paraguay's Ciudad del Este, which pumps billions in contraband into Brazil every year and is a hub for human trafficking, drug smuggling and illicit weapons deals; the 45 FTZ in the United Arab Emirates, which are used as financial secrecy cut-outs for arms-dealers, gold smugglers, cigarette counterfeiters, etc; and Panama's Coln Free Trade Zone, a favored hub for international crime families who need to launder their funds.

In many cases, FTZ are not currently bound by national laws or courts, and often rely on common law as a dispute settlement mechanism. Legislation should also address some key issues of concern regarding transparency and trade data collection. Part of the reason granular knowledge of FTZs is lacking is due to the limited amount of information on trade flows reported in FTZs. Making that information available would help quantify the problem and paint a clearer picture of the trading routes and commodities that pose a high risk.