A free trade zone is a geographical area that can import products and export goods without paying tariffs. This is used to attract foreign investment and bring modern technology into a country. The first free trade zones were established in Shanghai and Tianjin, and later in other cities. The most important benefit of FTZs is that they can offer tax and business incentives for foreign companies. This can help boost the economy and create more jobs.

Another benefit is that it can reduce the risk of conflict between countries. If two countries are tied together by a free trade zone, it can make them less likely to go to war with each other. This is especially true if the countries share borders and have similar economies. For example, the United States, Mexico, and Canada are all connected by a free trade zone that lowers their trading barriers. This prevents them from waging war against one another and allows their economies to grow more quickly.

A free trade zone can also benefit the environment by reducing waste and encouraging recycling. For this reason, the government has been promoting green development in FTZs by establishing a number of environmental protection measures in these areas. This includes developing a green supply chain management system and providing financial incentives for companies to improve their environmental efficiency. The Guiding Opinions on Supporting the Innovative Development of Pilot FTZs published by the Ministry of Commerce in 2015 also highlighted the importance of exploring institutional innovations related to the protection of the ecological environment in these areas.