Note 364 — Chapter VII · —Geographical Boundaries

Allied to this phase, yet differing from it, is the "Zona Libre" or Free Zone, 12 miles broad and 1,833 miles long, which forms the northern hem of Mexico from the Gulf to the Pacific. Here foreign goods pay only 18-1/2 per cent., formerly only 2-1/2 per cent., of the usual federal duties. Goods going on into the interior pay the rest of the tariff at the inner margin of the Zone. This arrangement was adopted in 1858 to establish some sort of commercial equilibrium between the Mexican towns of the Rio Grande Valley, which were burdened by excessive taxation on internal trade, and the Texas towns across the river, which at this time enjoyed a specially low tariff. Consequently prices of food and manufactured goods were twice or four times as high on the Mexican as on the American side. The result was persistent smuggling, extensive emigration from the southern to the northern bank, and the commercial decline of the frontier states of Mexico, till the Zona Libre adjusted the commercial discrepancy.364 Since 1816 a tariff free zone a league wide has formed the border of French Savoy along the Canton and Lake of Geneva, thus uniting this canton by a free passway with the Swiss territory at the upper end of the lake.365