A Brexit embrace of British style free ports
The UK post Brexit must establish Free Ports so we can optimise the economic benefits of leaving the EU. Free Ports would not only bring economic benefits independently, but would offer a key bridge between leaving the EU and securing tariff-free trade with the EU as well as other nations around the world
Boris Johnson is the latest advocate of ‘Free Ports’, saying he would establish three, at Belfast, Teesside and Aberdeen, if he succeeds Theresa May as Prime Minister.
Free Ports are designated geographic areas which essentially exist outside a nation’s borders for tax purposes. This option has operated in countries such as Singapore with great success. In post-Brexit Britain, Free Ports could form an essential part of our dynamic economic future.
Businesses operating within Free Ports benefit from deferring the payment of taxes until their products are moved outside of the free-zone. Companies can avoid paying taxes altogether if they import goods to store or manufacture on site, before exporting them outside the free-zone again after.
This option would offer a great wealth of opportunities to the United Kingdom post-Brexit, but we must tailor this option to the UK’s needs, so we can optimise their benefits.
Critical industries such as agriculture must not be exposed, by encouraging the unlimited import of far cheaper and poorer quality produce. This option could also pose the danger of encouraging firms to relocate away from tax-paying areas into tax-free Free Ports, which must only be open to new firms entering the UK.
Tax loopholes would also be an area of concern, as Free Ports are a tax-free zone. The UK has some of the most comprehensive tax laws in the world so they must be upheld, if not tightened, to ensure businesses do not use these zones to exploit the British economy and taxpayer.
Free Ports have two major benefits. Firstly, they would attract Foreign Direct Investment (FDI) into the UK and provide high skilled jobs for the surrounding local communities. The income earned would be part of a larger economic ecosystem which would benefit the entire economy. More people in work means more would be paid in Income Tax, and people would have greater disposable income which can be spent in the economy.
Secondly, it would enhance the exchange of ideas. Foreign businesses coming into the UK can introduce new production methods which can be perfected by British engineering and our workforce. Free Ports can encourage British business to learn and develop alongside foreign business from all over the world, in a way which is mutually beneficial.
The issues around ports have been one of the main issues of Brexit, with frictionless trade a key objective of the British Government. Under a WTO Brexit, Free Ports would by-pass the time delay of Free Trade Agreements - especially with the European Union - as this policy would be supported by a vast array of international precedent and our own experience using this option at sites across the UK such as Liverpool. It would be negligence to dismiss the idea out of hand.
The latest projection has estimated Free Ports would create 150,000 new jobs and add £9 billion to the UK economy over the next 20 years. In 2016, Conservative MP Rishi Sunak wrote a report arguing Free Ports could create tens of thousands of jobs and critically boost trade and manufacturing in the North.
Jobs would mainly be created in areas outside London, where economic need is higher. Ports are already a vital strategic asset for the UK economy, currently accounting for 96% of all trade volume and 75% of trade value. Free Ports, enabled by Brexit, could reduce regional disparity by giving the forgotten areas of the UK the opportunity and investment they deserve.
The UK has had Free Ports before. Until 2012, there were Free Ports in Liverpool, Southampton, the Port of Tilbury, the Port of Sheerness and at Prestwick Airport. The only reason this stopped was because the legislation which established them expired and was not renewed, demonstrating the lack of will and dynamism of Britain under the stranglehold of the EU.
After Brexit, with our
own sovereign control over our own economic policy, we can refocus on business and reignite this profitable area of the UK’s economy.
The benefits of Free Ports would be enhanced when we leave the EU. The UK will no longer be part of the Single Market, and we will no longer be tied to rules and regulations which limit the UK giving state aid and subsidies. These can be used to support British business and encourage FDI. The UK would also be free of EU tariffs (taxes on imports) which would be payable outside Free Ports.
In conclusion, the United Kingdom post Brexit must establish Free Ports so we can optimise the economic benefits of leaving the EU. Free Ports would not only bring economic benefits independently, but would offer a key bridge between leaving the EU and securing tariff-free trade with the EU as well as other nations around the world.
When we Get Britain Out of the EU, Free Ports must be part of our economic strategy.
Joel Casement is a Research Executive at cross-party, grassroots Eurosceptic group Get Britain Out
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