BREXIT freeports could be introduced to the UK in a bid to boost jobs and economy once the UK negotiates its deal with the European Union. But what does post-Brexit freeport mean?
The Treasury launched a consultation on freeports on Monday as the Government investigates ways to “benefit from the opportunities of leaving the EU”. Its aim is to create 10 freeports across the country.
What does post-Brexit ‘freeports’ mean?
Free ports or free zones are economic zones (SEZ) where business and trade laws are different from those in the rest of the country.
Goods can be landed, stored, handled, manufactured or reconfigured and re-exported without being subject to customs duty.
They are not tariffed until they enter the domestic market and no duty is payable if they are re-exported.
Any raw materials processed in the zone attract duties only on the final product while businesses can also benefit from streamlined customs procedures.
Chief Secretary to the Treasury, Rishi Sunak, said: “Freeports will unleash the potential in our proud historic ports, boosting and regenerating communities across the UK as we level up.
“They will attract new businesses, spreading jobs, investment and opportunity to towns and cities up and down the country.
“This is all part of our mission as an open, outward-looking country, championing global free trade with vibrant freeports that work for all of the UK.”
After the Government’s 10-week consultation, successful applicants will bid for freeport status and will open for business in 2021.
The idea for freeports was first mentioned by Boris Johnson during his election campaign.
The freeports don’t have to be situated in ports. The Government said they can be adjacent to ports or even inland.
It said this “can reduce relocation or investment costs for existing manufacturing sites near ports”.
As a result, the Government is opening freeport applications to air, rail and sea ports across the UK.
Shadow Chancellor John McDonnell has condemned the idea of freeports.
He said: “This is the revival of a failed Thatcherite plan from the 1980s, designed to cut away at regulation and our tax base.
“There is very little solid evidence that so-called freeports create jobs or boost economic growth, showing this up as another ideological move from a far-right government.
“This plan only represents a ‘levelling-up’ for the super-rich, who will use free ports to hoard assets and avoid taxes while the rest of us feel the effects of underfunded public services.
The Government is also considering introducing tax incentives to appeal to freeport applicants.
It said it could offer tax breaks to help “increase investment in infrastructure, construction and machinery in freeports to raise productivity”.
The Treasury also wants to “incentivise research to stimulate innovation in freeports” and “cut costs associated with processing goods through a port” via tax incentives, as well as reducing the costs of hiring workers in freeport sites.
It was also adamant that the UK’s high standards with respect to security, safety, workers’ rights, and the environment “will not be compromised”.