With continued uncertainty about the levels of import and export tariffs when the Brexit transition period ends on 31st December, the government is pressing ahead with its plans to create ten Freeports in the UK, which it says is ‘designed to attract major domestic and international investment’ and will ‘create jobs, drive investment and regenerate communities’.
The idea is that these designated areas, which can be airports or rail hubs as well as seaports, would be combined with special economic zones (similar to the existing Enterprise Zones), which would be effectively outside the UK’s customs borders, even though they would be situated on British territory.
Because goods brought into a Freeport do not face import tariffs, it means that they can be imported, subjected to a manufacturing process, and re-exported without being subject to checks, paperwork or indeed tariffs.
Despite the fact that the government is claiming that the creation of Freeports are ‘seizing on the opportunities presented by leaving the EU’, the concept is not precluded by EU membership. There are in fact around 80 such free zones already in the EU, and indeed there were seven in the UK as recently as 2012.
The bidding process for the new Freeports is due to open by the end of the year, with the first ones up and running in 2021. So could this be a boost for our part of the world?
In terms of seaports, Felixstowe in
Suffolk would be an obvious candidate, being one of the busiest international
goods ports in the UK. But places such
as Great Yarmouth, which is emerging as an important UK centre for the offshore
green energy sector, and which already benefits from Enterprise Zone status,
could conceivably also make a claim.
Of course, a lot depends on the outcome of the current fraught trade negotiations with the EU. Given that state aid and the level playing field are the central points of disagreement, giving tax incentives to companies using Freeports could be problematic, particularly if a deal is done and the UK does indeed agree to be bound by EU state aid rules.
Some critics argue that the whole concept of Freeports can be used to circumnavigate taxes and tariffs, while at the same time offering opportunities for lowering standards on things like health and safety and workers’ rights, or even allowing money laundering. And of course, if import tariffs are imposed, they will still need to be paid at the point where any goods left the Freeport area and entered the ‘UK’.
But given that the government is pressing ahead with its Freeports plan, it is important the East Anglia secures at least one of the ten which are planned. Some commentators predict that the plan won’t increase business overall, but simply transfer it into the Freeports – and if that is the case, it is imperative that our region gets a slice of the action.