News | Published August 03 2019

Ten free ports to open in post-Brexit UK

The government has unveiled plans for up to ten free port zones to be introduced in the UK once Brexit has been finalised.

The free ports will allow businesses to import and export goods exclusive of normal tax and customs restrictions.

Prime minister Boris Johnson feels that they could help create jobs and improve the economy in so-called “left-behind areas”, while international trade secretary Liz Truss believes they will generate “thousands of jobs”.

Truss said: "Freedoms transformed London's Docklands in the 1980s, and free ports will do the same for towns and cities across the UK.”

The Labour Party is concerned that free trade zones may attract undesirables such as tax evaders and money laundering criminals.

Shadow international trade secretary Barry Gardiner said that it is “a race to the bottom” which will see “money launderers and tax dodgers rubbing their hands with glee”.

Gardiner added: "Free ports and free enterprise zones risk companies shutting up shop in one part of the country in order to exploit tax breaks elsewhere, and, worst of all, lower employment rights.

"The British people did not vote for this new administration and they certainly did not vote to see their jobs and livelihoods threatened in favour of gifting further tax breaks to big companies and their bosses."

Johnson first suggested the idea of free trade zones during the Conservative leadership campaign.

The idea of them is to allow goods to be imported, manufactured and then re-exported tariff free. This opens up the possibility of raw materials being imported for conversion into whole products which the UK can then export.

Normally, free trade zones also equal reduced VAT and lower employment taxes for businesses operating there.

Seaports and airports across the UK will be able to apply for free trade zone status, which will then be implemented after the October 31 deadline for the UK’s withdrawal from the EU.

EU laws do permit free trade zones, but it is argued that the benefits of introducing them in the UK will be greater once Brexit is finalised and the UK is unrestricted by EU regulation.

Eamonn Butler, who sits on the government’s free ports advisory panel, believes that their introduction will set the UK "on the right course" after Brexit, providing “safe harbour for trade in turbulent times and show that hi-tech hubs of enterprise, low taxes, deregulation and trade without restriction can rebalance the economy”.

There are an estimated 3,500 free trade zones worldwide, spanning 135 countries.

80 of them are in EU member states, but the EU itself is known not to favour them, arguing that it makes competition between businesses operating within and outside of the zones unfair given the differentiation in rules.

The European Commission also said in a recent report that free ports “pose a risk as regards to counterfeiting”, allowing criminals to import and export fake or tampered goods in the absence of customs authorities.

EU member states which have them are tied by EU state aid regulations and cannot offer financial support to firms operating in the free zones.

Between 1984 and 2012, seven were on UK shores, including in Liverpool, Southampton, the Port of Tilbury, the Port of Sheerness and Prestwick Airport. They were abolished after the legislation which granted them free status expired seven years ago.

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Authored by

Scott Challinor
Business Editor
August 03 2019

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