Free ports: Economic boost or Boris bluster?

Johnson hopes trade areas will lift local economies post Brexit.

by Johnny Aldred
Last Updated: 07 Oct 2019
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Innovation

In June,  while still campaigning for his election as Conservative Party leader, Boris Johnson shone light on a proposal to keep Britain competitive in a post-Brexit world. The creation of up to 10 freeports, he declared to Belfast hustings, would be "a massive boost to this economy". 

Free ports, or Free Trade Zones (FTZs), are designated areas that are allowed to bring in goods with little or no tax while they are stored or processed, before being moved on again. Any port or airport around the UK will be able to bid for the status.

This could include items such as valuable artwork, cars and jewellery, or raw materials that are processed in the port into products before being transported elsewhere.

Free ports are not a new concept – the Cinque Ports in the south of England in medieval times had similar special privileges, and in the 19th century there were bonded warehouses that gave tax breaks to tobacco and alcohol. In fact, right up until 2012, free ports created in the 1980s were in operation in Birmingham, Belfast, Cardiff, Liverpool, Prestwick and Southampton.

While they are physically based inside a country’s jurisdiction, for customs purposes they are seen to be outside (meaning there needs to be high security between the areas in and outside the port). Goods brought in don’t face import tariffs but are taxed accordingly if they are then sent for sale to the rest of the country. Businesses operating inside free ports may also receive other incentives, such as tax breaks and reduced regulation.

Johnson and international trade secretary Liz Truss believe the plan could create thousands of jobs in the UK and could benefit areas most at risk of suffering from a no-deal Brexit. Areas believed to have already expressed an interest include Tyneside and Milford Haven.

According to research conducted last year by consultancy and construction firm Mace, the creation of seven free ports in the north would net around £9bn and create around 150,000 jobs. However, those figures are questioned by the UK Trade Policy Observatory, run by the University of Sussex, and think tank Chatham House, which point out that much of those gains would merely represent the movement of money and jobs from elsewhere in the country.

As well as increasing the possibility of money laundering critics of the scheme – most vehemently perhaps Truss’s opposite number in the shadow cabinet, Barry Gardiner – also claim that the reduced burden for regulation in free ports would simply mean fewer rights for those who work there, and that any gains made would be made at the expense of decent pay and working conditions.

Image credit: Luxy Images / Alex Telfer

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