Liverpool docks

Ten Free Ports Expected Post-Brexit

The government has reportedly put plans in place to offer up to ten free ports in the UK after Brexit. This will allow firms to import goods and then re-export them and be exempt from typical tax and customs charges and rules.

The UK has previously had such zones in 2012 and Prime Minister Boris Johnson believes they could create jobs in 'left-behind areas.'

Free ports, also known as free trade zones, are designated areas where the normal tax and tariff rules of the country in which they are based do not apply. They allow goods to be imported, manufactured and re-exported without being subject to checks, paperwork or import taxes, known as tariffs. This means raw materials can be imported, then engineered into whole products for export. Typically, companies operating in the zone pay lower taxes, such as reduced VAT and lower rates of employment tax, but critics argue they simply defer the point when import tariffs are paid, which then still need to be paid at some stage.

There has been controversy to this announcement with Labour stating that no new investment would be involved and that this could also attract money launderers and tax dodgers.

Seaports and airports will be able to apply for free port status, to be set up after the UK is due to leave the EU on 31st October 2019. Such zones are allowed under EU law, although backers argue the benefits would be greater after Brexit if the UK is allowed to diverge from EU rules.

International Trade Secretary Liz Truss said;

"The move would create thousands of jobs... Freedoms transformed London's Docklands in the 1980s, and free ports will do the same for towns and cities across the UK."

Around 135 countries, mostly in the Far East, have free trade zones according to a 2013 US Congressional report. The previous ones in the UK included Liverpool, Southampton, Port of Tilbury, Port of Sheerness and Prestwick Airport.

Despite the benefit of additional jobs, a report earlier this month by the European Commission said free ports 'pose a risk as regards to counterfeiting.' It said they allowed counterfeiters to import goods, tamper with them and then re-export them without the intervention of customs officials. Responding to the government announcement, Shadow International Trade Secretary Barry Gardiner said the planned UK zones did not constitute new investment;

"It is a race to the bottom that will have money launderers and tax dodgers rubbing their hands in glee... 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."

10 September 2019

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