Author Question: What benefits does an international firm operating in a foreign trade zone ... (Read 66 times)

awywial · **on:** Jun 29, 2018

What benefits does an international firm operating in a foreign trade zone receive?

Question 2

Setting prices higher in the ___________________ _ market than in the ___________________ _ market is justified by a lower buying power of host-country consumers relative to consumers in the company's home market.
Fill in the blank(s) with correct word

TINA · **Reply #1 on:** Jun 29, 2018

Answer to Question 1

Foreign goods that enter the foreign trade zone are exempt from the usual customs duties, tariffs and other import controls, as long as the goods do not enter the country. For firms that ultimately export to the country where the FTZ is located, the FTZ provides flexibility by lowering and/or deferring tariffs. A foreign trade zone is also a location that is used for breaking bulk. Because unassembled goods are cheaper to transport, FTZs may lower the price for goods sold in the importing country. A FTZ also helps when an importing country imposes local content regulations on products from abroad. Finally, products that are manipulated in a FTZ may be labeled as manufactured in the FTZ host country, which may provide a favorable country-of-origin effect.

Answer to Question 2

Home, international