By Nick Lung    Photo：CANVA

Free trade ports and bonded warehouses are concepts related to international trade and logistics, but their functions, scope and roles are significantly different, and they often make the public mistakenly think they are the same thing. However, in fact, they have many differences in nature. Different, in short, the free trade port will tend to be export-oriented, while the bonded warehouse will be mainly import-oriented. You can choose the applicable operation mode according to your own needs.

1. Concept

free trade port

It refers to a special economic zone set up by a country or region in a port, airport or specific area, which allows goods to be freely entered, stored, processed or transshipped without import and export tariffs and related restrictions. Free trade ports usually provide relaxed tax policies and convenient customs clearance procedures with the aim of promoting trade, investment and logistics.

Bonded warehouse

It is a warehouse specially used to store imported goods. While the goods are stored in the warehouse, they are temporarily exempt from paying import duties and other related taxes. Goods can undergo simple operations (such as repackaging, labeling, etc.) in the warehouse, but they usually cannot undergo deep processing.

2. Scope and operating model

free trade port

It is a regional economic system that covers the entire port or region and may include warehousing, processing, trade, finance and other functions. Companies can establish factories, R&D centers or offices in this area and enjoy greater policy freedom.

Bonded warehouse

It is a simple warehousing facility with a small scope and its functions are concentrated on the storage and simple processing of goods. It does not have comprehensive policy preferences for processing or investment.

3. Policy preferences

free trade port

Usually enjoy comprehensive policy benefits, including tax exemptions, financial innovation policies, free foreign exchange convertibility, simplified customs procedures, and even exemptions from some labor laws or investment regulations.

Bonded warehouse

The main benefit is tax deferral, which means the goods are exempt from paying taxes while they are in the warehouse and are only payable when the goods are officially imported or sold to the local market.

4. Functions and applications

free trade port

Support the establishment of global trade and logistics hubs.

Encourage investment in manufacturing and service industries.

Promote international trade facilitation.

Bonded warehouse

Provide temporary cargo storage services to importers or exporters.

Reduce financial pressure caused by inventory management.

Suitable for storage of transshipment goods or goods awaiting further processing.

5. Impact on foreign trade

free trade port

It is a core policy tool for countries or regions to improve their foreign trade competitiveness and involves multi-level reforms of the economic structure.

Bonded warehouse

It is part of the logistics and supply chain, and its role is more limited. It is mainly aimed at cost management in the import and export process.

6. Differences in regulatory authorities

free trade port

Generally, the regulatory authorities of free trade ports are the aviation police bureaus of each country, not customs, so the regulations are relatively simple in terms of operation.

Bonded warehouse

The supervision of bonded warehouses is managed by the customs of each country, and the customs acts as an agent for the tax bureau to handle customs duties. Since taxes and fees are involved, the operational details are relatively strict.

The free trade port is a larger and higher-level trade and economic development area that provides comprehensive policy support and is export-oriented; while the bonded warehouse is a tool focused on the management of imported goods and has a relatively single function.

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