According to the United Nations Conference on Trade and Development (UNCTAD) World Investment Report 2019, around 5400 Special Economic Zones variously denominated are registered worldwide. Most of them are located in developing and transition countries, especially in Asia and the Far East.

As regards the SEZs existing in the economies of the developed countries, their main connotation consists in the presence of suspensions of a customs nature, that is to say, for example, in case of goods imported in the described areas , duties and VAT by destination and other customs duties till then suspended do not apply until they are released for free circulation. The largest number of this type of zone is into the United States land where they are denominated Foreign-Trade Zones (FTZ).
The further tax concessions that characterize them give to the FTZs a value that they would otherwise not have in terms of the global economy.
This circumstance can be observed in very few European Union countries, including Poland, Bulgaria, Lithuania and Latvia.
The FTZs are customs free zones, under the customs supervision of the United States, considered (as what happens in similar situations in the European Union), through a fictio iuris set outside the U.S. customs territory for the purposes of the duty.
These areas have been established to encouraging national companies’s use compared to foreign ones for the production and distribution phases of the products. The benefits planned in the FTZ consist of relief from tariffs and other customs administrative charges which, otherwise, would penalize the competitiveness of US companies compared to foreign ones. It is possible that each Free Trade Zone for its part will establish Subzones: currently around 500 of them are registered.
As required by current legislation for SEZs in Italy, the FTZs are located in the incoming customs ports or in neighboring territories, and constitute the American model of what are commonly called Free Trade Zones.
The normative source is the Foreign – Trade Zones Act of 18 June 1934, as amended by the Designation of Enterprise Zones, L. 102–550, 1992 and by the Regulations of the Foreign-Trade Zones Board, 15 CFR Part 400, 2012.
Currently, of the 262 authorized Foreign-Trade Zones, 195 are operative, as evidenced by official data of the 80th Annual Report of the Foreign-Trade Zones Board – 2018, presented at the United States Congress in November 2019.
The presence of the FTZs guaranteed a job for over 440,000 people, employed in approximately 3,300 companies that resort to the FTZs for their business activities, for a value of commercial transactions of 793 billion dollars, with an increasing trend compared to the previous year. In particular, the activity of the FTZ is rising in terms of both domestic and foreign trade, with a positive differential of $ 124 billion since 2017.
Of these, approximately 63% concerned production activities, with a turnover of approximately 504 billion dollars, while the remaining 37% concerned warehouse and distribution operations.
It is worth noting that the FTZ are not designed exclusively for foreign goods. In fact, domestic goods have an important positive impact on the activity of the FTZs.
The most represented production sectors concern the automotive, oil, electronics, pharmaceutical and machinery and equipment ones.
he main federal agencies overseeing the development of the Foreign-Trade Zones program are the Foreign-Trade Zones Board of the United States Department of Commerce and the Customs and the United States Border Police (CBP).

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Cultural and creative enterprise

A few decades ago, investing in a cultural and creative enterprise was certainly the most visionary decision that could be taken. It was at the center of an ardent debate that contrasted the political world with the scientific world. The sector of the cultural industry was considered in a negative way: an industry that has neither real inputs nor as many tangible outputs, it is certainly an industry that does not produce. In reality, the fruit of human intellect, of its imagination and of its particular inspiration is really a production in the economic sense. It will be precisely the English political world, through the words of Tony Blair, then British Prime Minister, to recognize the economic value of the creative industry, attributing to it the ability to create wealth and work through the use of intellectual property. In addition to this recognition, another direct consequence of the first was born: the extraordinary creative and innovative scope inherent in the cultural sector enterprises to stimulate a virtuous spiral of growth in the economic and social fields. In Italy, at the end of 2007, the President of the Republic Giorgio Napolitano, in his speech at the end of the year, stated that “a strength of our ountry is the culture of creativity, which must make the potential of our businesses and of our work”. It is undeniable that creativity favors the growth of the economy and puts companies in a position of competitive advantage. Hence the exaltation of the economic and social significance of a new way of doing economy which, after more than a decade from these affirmations, manifests itself in all its truth: human value, people, their formation and the development of their knowledge, constitute the real added value of a company.

Our conclusion is based on the observation of the internal and managerial dynamics of a cultural / creative company. In fact, in this industrial context personal skills and technical knowledge are not enough. The conditio sine qua non which is the basis for the success and the innovative capacity of a cultural enterprise is inexorably the environment within which it operates, so as to encourage its creative vision and, at the same time, an economy that seriously wants to invest in it. It is a complex process that bases its very survival on a necessary and sufficient condition, identifiable with the coexistence and perfect collaboration of indispensable and irreplaceable assets as unique, such as ideas, abilities, preparation, expertise and talent , with technological innovation and culture. It is precisely culture that is the productive factor capable of triggering the entire process of cultural and creative production through which we can develop new products.

Furthermore, the analysis of a cultural enterprise must be examined for each type of activity that can potentially be delivered. If we observe it from an artistic production point of view, the creative potential is expressed in all its grandeur through the conception and realization of a quid never realized before, a unique and authentic product, the result of imagination, style and inspiration. The economic repercussions are its immediate consequence and close as in a perfect circle in which it is no longer possible to understand its beginning and its end, precisely because that innovation establishes an uninterrupted and dynamic cycle that finds its economic justification in the more than perfect allocation of unique intangible assets, including artistic inspiration, technological innovations and new economic scenarios, with the combination of human, social, institutional and cultural factors. It follows that creativity is not “only” the inspiration that underlies innovation, but is one of the main and indispensable factors that contribute to its development. In fact creative ideas are indispensable both in the initial phase and throughout its production process. The economic consistency of the project will be born from them, starting from its creation, up to the distribution of the new output (product, service and / or process) that maximizes the utility of the final consumer bringing the greatest benefit through his purchase. This virtuous process will produce long-term effects.

The European Union attaches great importance to the cultural sector and through Article 167 of the Treaty on the Functioning of the European Union (TFEU) sanctions its discipline, defining its principles and the current framework through substantive contents and decision-making procedures.

It is not a coincidence, in fact, that in the same preamble to the Treaty on European Union (TEU) is expressed the precise desire to be inspired by “the cultural, religious and humanist inheritance of Europe” through a concrete commitment to respect “its rich cultural and linguistic diversity, and shall ensure that Europe’s cultural heritage is safeguarded and enhanced. (Article 3 of the TEU). These inspiring principles allow the introduction of an important innovation in the decision-making procedures within the Council. In particular, decisions relating to cultural spheres (mainly with regard to the format and scope of funding programs) do not required to vote unanimously, as in the past, but are considered adopted through the expression of qualified majority voting. The ratio is to be found in the attempt to promote a complete development of the cultures of the Member States, while respecting individual national and regional differences, in order to enhance their common cultural heritage.

The protection of culture is also accepted in the Charter of Fundamental Rights of the European Union. In particular, article 13 states “the arts and scientific research are free” and article 22 states that “the Union respects cultural, religious and linguistic diversity”.

Therefore it is not risky to conclude that, for the European Union, the cultural sector is one of the privileged instruments capable of implementing the highest objectives of prosperity, solidarity, security and internationalization. The latter in particular cannot be carried out outside a process of recognition and contemporary protection of cultural diversity and intercultural dialogue. Culture, from the point of view of the Community legislator, is to be understood as a true accelerator of creativity and international relations.

The “Creative Europe” framework program dedicates € 1.46 billion to the cultural and creative sector for the period 2014 to 2020. It is structured in the Culture Sub-program and in the MEDIA Sub-Program and in a “cross-sectoral” section that acts through a guarantee fund designed for two different purposes: to facilitate access to credit for micro, small and medium-sized enterprises in the sector; to allow a more precise and equitable assessment of risks in financial intermediation.  This helps building  an inclusive and far-sighted entrepreneurial and financial ecosystem, which enhances all the enormous potential of the sector and, at the same time, reassures public and / or private investors of the reliability and economic capacity of the cultural and creative sector.

It should be noted that the amount of budget available to the cultural sector will be defined in this month of December. If on the one hand, rumors speak of an increase in the sum made available to the cultural and creative sector, bringing it to a doubling of that expected in the previous period. However, there are also many concerns about deep cuts in the sector, as feared by Sabine Verheyen, president of the EU CULT Commission.

The arguments put forward so far would remain sterile words if they were not supported, as they are, by numbers and statistics. In particular, according to the most recent Eurostat periodical publication, the cultural and creative sector as a driver of economic growth:

– contributes more than 2% to the European Gross Domestic Product;

– it is an important employment source with more than 8.7 million jobs to its credit, for a value equal to 3.8% of total employment. The confirmation of what has been stated comes from highly innovative companies, which possess an important economic potential and the possibility, through alternative and highly innovative financing channels (crowfunding, smart finance, business angels), to penetrate the market in a disruptive way generating other occupation, as well as stimulating foreign trade.

– is a dynamic and stimulating sector able to attract unique talents and “transilient” minds. A meltin ‘pop of diversity and uniqueness that stimulates, fascinates, attracts, innovates, creates, realizes, reproduces, embellishes, enchants, monetizes, teaches, elevates. A varied constellation of professionalism that ranges from the “creative, artistic and entertainment” arts, to “libraries, archives, museums and other cultural activities”, as well as from the sector of production and programming of audiovisual, radio, cinema, record activities, to sector of specialized design activities.

Welcome to a new era, that one in which doing business is a question of culture.

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The Irish border​ and Brexit. A possible hypothesis of a special economic zone with economic-political function

The question of finding the best way out to achieve a Brexit that is as satisfying as possible with respect to national and international interests (even divergent ones) in play, as is known, includes a further problem: the management of the “Irish Border” affair.
Evidently it is not a small problem, because without an ad hoc solution, it would be a matter of applying the rigid and complicated rules of the customs regime in force according to the CDU in the commercial relations between the European Union and third countries, on a border of about 500 kilometers that for over 46 years, from the point of view of commodity flows, has been in fact a “weak border” subject to the rules of the single market.
According to the most recent data, about 33% of exports of goods and services produced by Northern Ireland companies go towards Eire.
In 2018, Northern Ireland’s interchange with Eire consisted of about 3 billion pounds in exports and 2 billion pounds in imports, equivalent to a trade balance of 1 billion pounds and a bilateral trade of almost 5 and a half billion pounds.
Eire is both the 1st country of export for Northern Ireland (equal to about 36% of its total exports) and the 1st import market (equal to about 28% of its total imports) .
In detail, most cross-border transactions were carried out by micro and small businesses, which represent the focus the economy of Northern Ireland, with about 74% of exports involving companies with less than 50 employees.
The UK’s trade flow to foreign countries is direct for about 6% towards Ireland, which is the 4th country with which it has greater connections, after the USA, Germany and China.
The same interchange report if analyzed by the Irish side, reveals that on the total foreign trade relations the flow with the United Kingdom accounts for 18%, and constitutes the 2nd country with which it has more connections after the USA.
According to The Guardian, every year 450,000 trailers arrive in Northern Ireland, transporting cars, foodstuffs and textiles: the total import value of the United Kingdom is about 13 billion pounds, of which about 11 billion pounds corresponds to the value of the goods purchased.
The continuity of this trade interchange must be safeguarded.
The United Kingdom before the Brexit process, in the Belt and Road Initiative (BRI), represented the potentially key partner for China to mediate within the European Union on particularly “hot” issues from a commercial point of view.
So now “Downing Street” should find a solution to safeguard its competitive ability in the markets, which could be strongly influenced, both because of the Brexit process and because of the lack of involvement (for the moment) in the BRI.
In this regard, Ireland is ready after Brexit to replace Britain as China’s new trusted interlocutor in the promotion of the Belt and Road Initiative, according to what the Foreign Minister (which is also Irish Deputy Prime Minister) said in recent months. On the other hand, the good link between the Dublin government and the Beijing government historically includes many examples of good trade relations, starting from the role of model played by the Shannon Free Zone created in 1959, and that of its functionaries, tutors for the creation of the first special economic zones in southern China in 1980, to feed the economic and commercial reform, the cd “Open door policy”, launched by Deng Xiao Ping.
So for London it is of vital importance to take this perspective into account because the effects on the United Kingdom could have very negative impact precisely starting from the economic consequences created on the commercial exchanges that take place through the border between Eire and Northern Ireland.
The occurrence of possible negative economic consequences, however, also exposes to the risk of the possible re-emergence of possible political frictions in this delicate area, historically never definitively placated.
This is why the contents of some points proposed by the British Government for the Brexit Agreement go in the direction of creating a sort of special economic zone along the Irish border.
This idea could have an important political value, and this would be in line with the functional evolution in the world of the SEZs. In fact, the increase of its relevance as a political tool to attract investments, will determine an ever greater attention both of the single SEZs and of the countries to look beyond administrative boundaries and therefore to develop integrated transnational approaches to the development of the SEZs.
Therefore in the present case it would be very desirable to create a “cross country” SEZ (for example above all in the area including the cities of Derry and Donegal), as happened in other parts of the world with positive results.
The endorsement by the European Union of this solution could be a good opportunity for the Brussels institutions to abandon their anachronistic position of substantial dogmatic and preconceived ostracism on the SEZs (which worldwide have become increasingly congenial to the historical context of a globalized economic development and dependent from the connection with the Global Value Chains, which today represent almost 50% of exchanges around the world) and to implement a more effective “realpolitik”, with effects of importance not only economic but also, as in this case, of evident specific weight to solve political-diplomatic issues.
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Valentina Di Milla
Chief Executive Officer
RALIAN Consultancy & Research SRL