ON SOME ISSUES OF ECONOMIC RELATIONS IN FREE ECONOMIC ZONES

BESARION NAKOPIA

In the modern stage the development of new economic relations – formation of free economic zones and joint enterprises is to be observed.

National interests of a country should be taken into consideration during the formation of joint enterprises and free economic zones. Thus, it is necessary to determine interests of a certain country’s transnational corporation during the penetration into the economy of our country. This moment should be taken into consideration during the formation of joint enterprises and free economic zones. The following factors are used to attract capital in foreign countries:
1. Access to comparatively cheap minimal resources;
2. Penetration into the market with limited purchasing ability of import;
3. Use of comparatively cheap highly-qualified labour force that would help to produce competitive production for world markets;
4. Use of country’s scientific achievements and technical research for the production of new highly-qualitative goods;
In attracting capitals of foreign countries, a country should be interested in the following:
1. Access to foreign technologies;
2. Completion of external sources of accumulation;
3. Use of foreign countries’ advanced methods of control system for the improvement of production efficiency;
4. Reduction of import and excess expenses;
5. Increase of import scales, in particular import of ready-made production rather than raw materials;
6. Promotion of economic stability in the country.
The mentioned interests do not always coincide with interests of partner countries. Therefore, it is necessary to pursue single economic policy and promote the development of international business on the basis of mutually beneficial principle. Economic relations between countries are established through trade. Presently, all cargoes crossing the national frontier are grouped into export, import and transit cargoes. There is also a category of the so-called “other cargoes” that includes different parcels. In case of crossing national frontiers, goods and different cargoes are subject to national tax. This is performed by means of specific taxes envisaged by customs duties. Customs duties promote the protection of national economy and regulation of trade relations. There are the following systems of customs duties:
1. Special;
2. Ad valorem;
3. Combined.
Special duty is established as fixed tax in accordance with the weight of different goods and units. Ad valorem duty is imposed in accordance with customs value. The amount of customs value depends on commodity price by the time of crossing national frontiers as well as on factual expenses not included in invoice. Besides, customs value includes tax on intellectual property that concerns customs goods to be paid by exporter/importer. The latter is included in import/export conditions in the form of direct or indirect taxes. In world practice, another form of taxes on import/export is used for customs taxes. It is established by the world legislature as well as customs laws and provisions of different countries. The mediatory operations of a country connected with the increase of profit at the expense of difference between the prices on national raw materials and prices on imported goods, affect revenues of public treasury in the form of incomes from international trade. Now that the new route is under way, entrepreneurial incomes might turn into sources of private or collective misappropriation being followed by appropriate events. It is clear that such operations are useful for economy in the conditions of appropriate legislature. It is necessary not to act in accordance with the prohibition principle, but it is necessary to create conditions – motivation for the provision of market equilibrium and comprehensive development of entrepreneurial activity. In accordance with accessibility principle, it is also necessary to create conditions not only for attraction of foreign production (goods and services), but also for the development of production. With this purpose an appropriate customs system should be used that implies exemption of imported goods from customs tariffs and establishment of benefits on exported goods. This measure is aimed at the stimulation of mutually beneficial exchange between countries. Such benefits should promote the growth of developing countries. They help to create favourable conditions for the development of sea regions during the formation of market infrastructure. As a rule, free economic zone is formed in developing countries. Unfortunately, Georgia belongs to developing countries. Therefore, the world experience in using the measures should be deemed as useful. The normal functioning of free economic zones requires such economic pillars as establishment of tax revenues by way of preferential tariffs. Very often benefits in such zones are established from the functional point of view. The latter implies reduction of tax rates with the purpose of encouraging assimilation of new technologies. Customs control can be relieved during import/export of goods in free economic zones. This control is exerted only by a country of import. Proceeding from the above-mentioned, final production that is based on imported resources and raw materials and is designed for export, is useful for the development of free enterprise and business. Purchase of goods in free economic zones is profitable for business as it only passes through the customs control of its country. It is very useful to perform banking and credit operations and mediation in international trade within the limits of free zone. In these zones, different organisation forms of infrastructure are formed successfully; external, telephone, telex and other modern communication systems are used. The very profitable business in the zone is construction of different offices. On the initial stage, free economic zones involve significant expenses because imposition of tax benefits is tantamount to state subsidy. Thus, the formation of such zones as a significant part of country’s external economic policy requires legal framework. In other cases, it is not ruled out that the process might become damaging for the national economy. Formation of free economic zones should be preceded by stabilisation of national currency. Otherwise, export of home production might cause flood of foreign countries’ hard currency, which means granting of interest-free credit for a country that imports currency. Another possible danger is intrusion of inflation currency, which, in fact, leads to the loss of imported production. During the formation of free economic zones, the high probability of shadow economy activation should be taken into consideration. Therefore, the country with free economic zone in its area should take measures for the legalisation of shadow economy. In our country free economic zones should be formed in the conditions of strengthened state control. A significant share of enterprises’ profit in the zone should be left at the disposal of state. First of all, this should concern entertainment site, hotel and tourist networks and other sites of country’s infrastructure where one can return invested capital and receive large benefits. The simplest form of free economic zone is free trade zone that constitutes a condition of international trade. As far as we know, goods are taken to places with higher prices in the conditions of free trade. Thus, import tariffs turn into a rate. For instance, tariffs increase by 1,7% in the USA. Quotas are used to influence tariffs. Price is fixed not only on the level of trade balance; it is “corrected” by tariffs and quotas. The main principle of using tariffs and quotas is almost the same, though there are some differences. Non-prohibited goods give the government a certain difference that makes other taxes possible whereas national quota in the final price provide difference from income realisation in favour of import. In short, tariff is better for business than quota. Co-ordination of economic relations in the given stage should be performed in the context of considering global problems. It is motivated by the need to form a system of developing “man-society” relations. “Man-society” system implies development of man in the conditions of hunger and poignant scientific-technical progress. Such important problem as “man-nature” is also brought to the forefront nowadays. It implies solution of problems connected with protection of nature, natural resources and energetics that are equally disturbing for all countries of the world. Even a powerful country would not manage to solve a global problem independently. This problem should be solved by means of joint efforts of humanity. In these conditions, the importance of world business development is great.