Two top Hawaii economists yesterday took a dim view of the State’s proposal to create a foreign trade zone at Pier 39 and Sand Island.

The two, James H. Shoemaker of the Bank of Hawaii and Thomas K. Hitch of the First National Bank, were in the audience yesterday at a meeting of the Hawaii Economic Association.

Dr. Shelley M. Mark, director of the Department of Planning and Economic Development, spoke about Hawaii’s role in the foreign trade of the Pacific and on the advantages to the State of a foreign trade zone.

The zone would be a restricted area into which foreign and domestic materials and products may be brought for manufacturing, packaging, merchandising, processing and other purposes.

In the case of foreign material, U.S. duties are not applied until it leaves the zone and technically enters the U.S.

Mark explained that foreign manufacturers could ship components into the trade zone where they could be assembled and taken out of the zone with advantage in custom rates.

He said the zone should be operated by the government, but that users must be private businesses.

Mark called it a challenge, an investment in the State’s future economy, and admitted it has its risks.

“But isn’t it the essence of private enterprise to risk something for gain,” he asked.

He said the concept wasn’t a cure-all but that it offered new horizons, hope and potential for the State’s economy.

During a question and answer period, Shoemaker said that there has been a large increase in trade with Asia but that it is mostly exports from Asia and that’s of no advantage to Hawaii.

He said he didn’t see how Hawaii could profitably export to the Far East in the face of low wages in the Orient.

He also … sees no advantage in transshipping from here when the shipment could go directly to Los Angeles, for instance.

He does see the advantage of a trade zone display area because among the increasing number of visitors here are numerous businessmen who would be interested in Asia’s products and who could use the trade zone as a contact point rather than going to the Orient.