The Department for International Trade’s new scheme provides uncertain benefits and could even harm some parts of the countryby David Henig / August 7, 2019 / Leave a comment
The word “free” has a special place in the hearts of those wanting to leave the EU deal or none. A UK free of EU regulations has long been a core part of the rationale for Brexit. UK Free Trade Agreements have increasingly joined the narrative as a reason to reject the proposed Withdrawal Agreement. Completing a trinity of UK freedom outside the EU we now have the possibility of up to 10 free ports, as announced last week by the new Secretary of State at the Department for International Trade, Liz Truss.
The idea of freedom from EU regulations has long been dogged by the failure of most Brexiteers to name any specific regulations they want to repeal on departure. Free Trade Agreements don’t actually yield huge economic gains, and would better be described as preferential trade agreements, providing improvements on World Trade Organisation terms as long as you know what to ask for to benefit your economy. Free ports similarly turn out on further investigation to be a slightly less than overwhelming answer to the question of what the UK should do after Brexit, in particular how to make up economically for increased tariffs and other barriers to EU trade.
Essentially free ports are zones of the country, designated by the government, where goods may arrive, be reconfigured, and subsequently exported without any import tariffs being applied by the host nation. They are usually sited at ports or airports, and typically in addition to a tariff-free status a variety of regulations and taxes are relaxed, to increase the attractiveness of establishing processing facilities there. Another popular activity within such areas is storage, which has led to concerns that items such as fine art are often held in free ports as a tax avoidance measure.
The EU has concerns about free ports, but there are a number in existence across member states. The UK similarly had free ports until 2012, including at Prestwick Airport and the Port of Tilbury. They were not seen to add significant value to the economy. One of the main reasons for this is that free ports don’t affect the tariffs applied by other countries, so in the event of a no-deal Brexit, goods coming from a UK free port would still be subject to EU tariffs. They are also subject to UK tariffs if brought…