#The Spatial Softwares of Extrastatecraft
Today urban space has become a mobile, monetized technology, and some of the most radical changes to the globalizing world are being written, not in the language of law and diplomacy, but rather in the spatial information of infrastructure, architecture and urbanism. Massive global systems — meta-infrastructures administered by public and private cohorts, and driven by profound irrationalities — are generating de facto, undeclared forms of polity faster than any even quasi-official forms of governance can legislate them — a wilder mongrel than any storied Leviathan for which there is studied political response.
One of these meta-infrastructures is the phenomenon of the free zone — a highly contagious and globalized urban form and a vivid vessel of what I have termed extrastatecraft. A portmanteau meaning both outside of and in addition to statecraft, extrastatecraft acknowledges that multiple forces — state, non-state, military, market, non-market — have now attained the considerable power and administrative authority necessary to undertake the building of infrastructure.
The zone — a.k.a., the Free Trade Zone, Foreign Trade Zone, Special Economic Zone, Export Processing Zone, or any of the dozens of variants — is a dynamic crossroads of trade, finance, management and communication. If, in the contemporary scene, diverse spatial types demonstrate the ways in which architecture has become repeatable and infrastructural, then it is the zone that demonstrates the ways in which urbanism has become infrastructural. Though its roots are ancient, dating back to the free ports of classical antiquity, only in recent decades has the zone emerged as a powerful global form, evolving rapidly from an out-of-way district for warehousing custom-free goods to a postwar strategy for jump-starting the economies of developing countries to a paradigm for glittering world cities like Hong Kong, Singapore and Dubai.
The zone is ancient and new.
The zone is heir to the history and mystique of the ancient free ports, pirate enclaves and entrepôts of maritime trade. The Roman port of Delos, in the Aegean Sea, which flourished in the first century B.C., is frequently cited as the primordial free port. 1 The Mediterranean fostered free ports for trade among Italian, Phoenician, Armenian and Muslim settlements for centuries. 2 From the 13th to the 17th century, in the Baltic and North Seas, the Hansa traders, or the Hanseatic League, established a network of “free cities” (including Hamburg, Bremen, Lübeck, Brügge, Köln, London, Danzig, Novgorod). 3 Hamburg and Genoa would remain models of the free port for centuries, able to evade the jurisdictional power of monarchies and nation states alike.
By the 17th century, a growing network of European free cities or free ports — including Naples, Venice, Trieste, Porto, Dunkerque and Copenhagen as well as Hansa cities like Hamburg, Bremen and Danzig — were trading with London, Rostock and Konigsberg. 4 In the late 18th and early 19th century, as trade extended to the Americas in a truly global network, the colonial powers of Spain, Portugal, Holland and Great Britain established free ports in South America and the Caribbean; these were followed by British and French free ports in Asia, Africa and the Middle East — Hong Kong (1841), Singapore (1819), Djibouti (1859) and Aden (1853). Eventually the activity of the Caribbean ports declined; but the Asian ports, notably Hong Kong, endured, and both Hong Kong and Hamburg remained global models into the 20th century. 5 In 1934 the United States passed the Foreign-Trade Zones Act. Based in part on the Hamburg model — and intended to alleviate protectionist restrictions on foreign trade — the zones allowed for the sorting and manipulation of goods; the “manipulation” might involve refining or curing processes as well lengthy holding periods that enabled the free-trade zones to engage in manufacturing, all of which made the zones distinct — with yet more freedom — from the bonded warehouses already permitted in the U.S. since 1846. 6 The first four authorized Foreign Trade Zones were in New York, New Orleans, San Francisco and Seattle. In 1950, the FTZ law was amended to unambiguously allow for manufacturing. Even so, up until the 1970s, only three more zones — Toledo, Ohio; Honolulu, Hawaii; Mayaguez, Puerto Rico — were created. 7
The specially tailored spatial instrument of the Foreign Trade Zone, which allowed manufacturing, would prove to be the forerunner of the Export Processing Zone, or EPZ — that extra-potent geo-political formula that in the postwar era spawned a global proliferation of extrastate entities. Hong Kong, as an EPZ, rebounded after the struggles of World War II and the Korean Conflict due to the high volume of exported goods. Shannon, Ireland, campaigned vigorously to attract manufacturing and service industries with 1947 and 1959 laws establishing a Customs-Free Airport and the Shannon Duty-Free Airport Development Authority. 8 In 1947, Puerto Rico, already tax-exempt in its dealings with the U.S., ventured to build manufacturing and warehousing facilities tailored to U.S. businesses. 9 In 1964, Mexico inaugurated the Border Industrial Program just as the U.S.-Mexican Bracero Program, or guest worker program, was expiring; the BIP authorized foreign companies to operate maquiladoras within a 20-mile strip along the international border and eventually throughout the country. Taking advantage of cheap, mostly female, labor, the maquiladoras were essentially inexpensive twins of the factories in the home country. Hong Kong and Shannon were in turn models for the Kaohsiung Export Processing Zone, or KEPZ, established in Taiwan in 1965. And Kaohsiung, along with Shannon and Hong Kong, was the template for extrastate zones in Ivory Coast, Liberia, Mauritania, Jordan, Colombia, Panama, Costa Rica, South Korean, South Vietnam, the Philippines and Indonesia. South Korea established six free trade zones, three each in Seoul and Incheon, in 1965. 10 India established the Kandla Free Trade Zone, in Gujarat State, in 1965. 11 Just prior to the 1970s, the first zones appear in communist countries, prefiguring their later use as a market experiment in China. In 1963, Yugoslavia legislated trade zones along the Danube River in Belgrade, Koper and Rijeka, and in 1967 allowed for manufacturing in the zones. 12 And in Manaus, Brazil, a free zone was established in 1967; like most of the zones established in the 1960s, its growth would accelerate throughout the 1970s. 13 It was in the 1970s, in fact, that the free zone became a more thoroughly abstracted and formulaic spatial and economic instrument; despite its historic origins in the European free ports, the zone was now becoming decoupled from the older manifestations and habits of urbanity and from the maritime districts that had once shaped trade. Wherever a plane could land or a truck could maneuver — inland areas, borderlands and backwaters that in earlier eras would never have sponsored the cosmopolitanism associated with global trade — there could now exist new diasporadic centers of global trade. And although private, corporatized interests would be the chief beneficiaries, the zones would also accommodate significant populations of factory workers.
The zone is a legal and economic instrument.
Perhaps the most important factor contributing to the exponential growth of zones in the 1970s was endorsement by the United Nations. 14 The United Nations Industrial Development Organization, or UNIDO, established in 1966, began to research the zone as an economic prescription to incentivize growth in developing countries. When formalized as such, the zone became a global contagion — a widely copied template for what might otherwise have been conceptualized as civic urban space. In the 1970s, UNIDO established a Free Zone Unit that worked with the Shannon Duty-Free Airport Development Co., the Kaohsiung FTZ and the World Bank to instruct developing countries. The unit held seminars around the world, and, in a 1971 report, UNIDO claimed that “… more and more countries, especially the developing countries, are interested in creating an industrial free zone. The existence of such plans have [sic] been announced by more than 30 developing countries, many of them also expressing their desire to obtain [the] technical assistance services of UNIDO.” 15 UNIDO characterized the zone as a temporary phenomenon that would jumpstart economies; when no longer useful in one country, it would be taken up by another on the threshold of the global market. In this way the UN hoped to empower an international “federation of free trade zones,” and it established an organization, the World Economic Processing Zones Association, which first convened representatives of governments before later becoming privatized. 16
As a legal instrument, the free trade zone presides over a laundry list of exemptions which are sometimes mixed with domestic civil laws, sometimes manipulated by business to create opportunistic mixtures of international law, and sometimes adopted fully by the host nation. Zone law varies, but in the most extreme cases, the zone is exempt from civil law and government control; it is not considered part of the territory of the home state and therefore cannot collect tariffs or duties on imported goods. In such instances, the host state usually creates a legal entity that is the zone authority, a parastate proxy with the power to negotiate with businesses and foreign governments. As an early free zone analyst wrote:
The exemptions granted to FTZ operators by these entities are exhaustive enough to strip the most stringent code of civil substance; in fact in most countries the FTZ investors cannot be sued in ordinary domestic courts by individuals. There are special courts to settle disputes with FTZ investors. The FTZ authorities not only override the authority of domestic ministries, courts, revenue offices, central banks, planning authorities, etc., but replace them within the FTZ.
A host country might have strict laws regulating labor, environment, sanitation, health and safety, or human rights. It may be a signatory to global compacts regarding human rights or International Labor Organization compacts regarding the treatment of workers. Yet the zone might have the power to grant exemptions from such laws and compacts, and zone status makes any law difficult to enforce. While UNIDO may have envisioned the zone as a temporary strategy in a changing market environment, the zone authority may issue guarantees that the zone will not be reabsorbed by the host nation. 17
UNIDO promoted the EPZ in the 1971 report referenced above; but less than a decade later, in a 1980 report, the agency was expressing caution about using the zone format as anything more than a short-term catalyst. UNIDO evaluated various factors, from gender roles to the benefits of introducing new technologies into developing countries, and it noted the positive effects of the zone, including enhanced international collaboration. Yet the report argued that the zone often redirected resources that might otherwise be used to improve local infrastructures, business platforms and other potential relationships with foreign interests within the regular state territory. According to the report, “The disadvantages of the EPZ would appear to lie in the continuation of its enclavistic nature. … Perpetuation of the enclave will retain the problems, the social and economic costs, without the obvious off-set of further benefits.” In effect, UNIDO acknowledged that the zone was a losing proposition if it remained distinct from the local economy. But it also realized that the format would likely persist. 18
Essentially concurring with UNIDO, both the Organization for Economic Cooperation and Development and the World Bank have argued that the EPZ is, at best, the second most advantageous way to encourage trade and national prosperity; the best way is simply through investment in the domestic economy. And — especially given the host country’s investment in infrastructure and loss in tax revenues — the zone approach has not always yielded what economists term “spillover effects” or spurred the introduction of new technologies. According to an OECD report: “EPZs are a suboptimal policy from an economic point of view. Improvement of the domestic business environment on [a] national basis through trade and investment liberalization, establishment of good infrastructure, rule of law and administrative simplification remains the optimal policy option to promote investment, employment and growth.” 19 Zones have also been criticized for creating a complex layer of administration sometimes at odds with domestic labor and environmental regulation; and since zone business interests are not responsible for the larger social costs, the zone has been called a potential “health and environment ‘time-bomb.’”
No matter its ultimate effectiveness, the zone has proved durable; most recently China’s adoption of the formula has produced an especially potent and self-perpetuating version. 20 If the Export Processing Zone was Zone 1.0, then China’s Special Economic Zone is Zone 2.0. Established in the early 1980s, the first SEZs — Shenzhen, Xiamen, Shantou, Zhuhai, and the entire province of Hainan — were planned as experiments with market economies. By 1984, China had created 16 more, and since then they have established literally thousands of SEZs. Most of these diverge from the typical EPZ, to the point where China now constitutes its own zone category; and an immense one — by 2006 the International Labor Organization had estimated that of the 66 million workers employed in EPZs worldwide, 40 million were in China. 21
The zone is breeding.
As interest in the classic EPZ waned in the ’80s and ’90s, the zone began to breed promiscuously with other enclave formats, or “parks,” merging with offshore financial areas, tourist compounds, knowledge villages, high technology campuses, museums and universities. Rather than functioning as catalyst and dissolving into the general business and industrial climate of its host, the zone has become a persistent yet mutable instrument, transforming as it grew and absorbing more and more of the general economy within its boundaries. As a result many countries — reconsidering the role of their domestic labor force in the typical EPZ —sought to “upgrade” their zones, to move from manufacturing to information technology or financial services. In the past generation, the zone has become a kind of petri dish for the cultivation of a host of spatial products — e.g., calling centers, software production facilities, factory compounds, office parks — that easily migrate around the world and that thrive in legal lacunae and political quarantine, enjoying the insulation and lubrication of zone exemptions. Indeed, the zone as corporate enclave is a primary aggregate unit of the contemporary global city, offering a “clean slate,” a “one-stop” entry into the economy of a foreign country. 22
Many of the early upgraded zones were Science Industrial Parks, based on the research park or campus. Palo Alto’s Stanford Research Park, established in 1951, was the model for scores of SIPs in the U.S., including Research Triangle Park, in North Carolina (which was established in 1959 and became a foreign trade zone in 1983), Cummings Research Park, in Alabama (1962), and the Austin Technology Incubator, in Texas (1989). 23 In 1965 Japan developed Kyushu Silicon Island and Tsukuba Science City three years later, along with 14 other SIPs before the 1990s. Taiwan and South Korea were early adopters in the move to upgrade technologies and to place more emphasis on export rather than on import and processing industries that depended upon cheap labor. In 1980 Taiwan established the Hsinchu Science and Industrial Park, which was followed by Southern Taiwan Science Park and Central Taiwan Science Park. Soon Singapore, France, the United Kingdom and Germany also established SIPs. 24
In their 1994 Technopoles of the World: The Making of 21st Century Complexes, Manuel Castells and Peter Hall marked a major shift in urban form as former industrial installations were being adapted to the new knowledge economy. 25 The 1990s saw the development in China of many high-tech parks specializing in IT, electronics and pharmaceuticals. In 1991, India established a government agency, Software Technology Parks of India, to broker broadband from the nation’s relatively new satellite fleet for use by IT companies; Bangalore and Hyderabad, among others, quickly developed cyber-city programs. 26 In 2007, the country added Special Economic Zone incentives to the mix. In 1996, based on a McKinsey study, Malaysia launched the Multimedia Super Corridor — a massive development of cyber-cities and cyber-centers located in a 750-square-kilometer zone between the Petronas Towers in Kuala Lumpur and the International Airport; here the incentivized urbanism included high quality infrastructure, tax exemptions for the first 10 years, and the duty-free import of multimedia equipment. 27
In 1995 the sociologist and political scientist Xiangming Chen charted three eras in the evolution of the zone. The first era, from the mid-16th century to the 1930s, is dominated by the free port and early free trade zones; the second, from the late 1950s through the 1970s, is characterized by the export processing zones, such as maquiladoras, which focused largely on manufacturing; the third stage, starting in the 1980s, saw the rise of the Special Economic Zones, the Economic and Technological Development Zones, and the Science Industrial Parks. 28 Yet rather than as a progressive evolution, zone development might be described as a proliferation of mutations, which might include programs as diverse as national capitals and tourist resorts. Indeed, operating as it does in a frictionless realm of legal and economic exemptions, the zone, as it merges with other urban formats, perhaps most naturally adopts the scripts — the aura of fantasy — of the vacation resort and theme park. Taken together business travelers, itinerant workers and tourists create temporary populations which, like temporary agreements and shifting identities, are good for business.
The increasing complexity of the zone has in fact confused economists who’ve attempted to classify the form as it has spread in waves around the world. Beyond the Export Processing Zone, which has remained the most popular designation for this repeatable formula, a 1998 World Bank report tracked 19 different terms for zone, including free trade zone, foreign trade zone, industrial free zone, free zone, maquiladora, export free zone, duty free export processing zone, special economic zone, tax free zone, tax free trade zone, investment promotion zone, free economic zone, free export zone, free export processing zone, privileged export zone and industrial export processing zone. 29 By the first decade of the 21st century, there were at least 66 terms for the zone in circulation. 30
In essence zone now describes a scatter of incentivized urban forms, and the fence that once surrounded it has both broadened and multiplied. Globe-trotting analysts chase after it, even as the zone is mutating on the ground and oscillating between visibility and invisibility, identity and anonymity. Many analysts attempt to quantify benefits in terms of employment, technology transfer, investments, etc. — again, the spillover effect. But although the zone has proven to be, in the terms of the OECD report, a “sub-optimal” economic catalyst, its cheap labor and legal exemptions have become global business standards.
The scores of zone variants constitute the volatile mixers for a potent cocktail of urban aspiration. Legal parameters may replace the physical fence, or the fence may be metaphorically thickened as the sweatshops and dormitories of labor exploitation morph into gated compounds or precincts in the zone city. Industry boosters extol — and exploit — the free-market advantage. Yet even as the zone has traded conventional state bureaucracy for potentially more complex layers of parastate governance, it has itself become an instrument of market manipulation and a perverse tool of economic liberalism.