The UK government has decided to create freeports in eight locations in the UK.
This is part of plans for post-Brexit trade and yet another scheme to try and level up regions of the UK.
Freeports are usually located around shipping or airports. They create areas which operate outside the usual customs territory, meaning that they are exempt from customs charges, tariffs and taxes. These taxes are only paid if the goods leave the freeport and are moved elsewhere in the UK. Otherwise, they are sent overseas without the charges being paid.
An example of the use of freeports in action is use of them in the process of assembling a car. A car manufacturer might produce the individual components in different countries because that might be where the expertise is, or where the raw materials are from. They would then assemble the car in one place.
Without freeports they would have to export all those parts to countries, facing import tariffs on the components then export the vehicles from there. But with a freeport, a manufacturer could transport all the components to a factory within the freeport area tariff-free. This gives manufacturers a tax incentive to situate production within freeport areas.
The idea is that freeports will stimulate investment from businesses and regenerate deprived areas.
The eight locations in England which will become freeports in the UK include East Midlands airport, Liverpool city region and Plymouth. Freeports are not new to the UK, there were five in the UK, until 2012. The EU never stopped the UK having freeports, though it did limit the scope of them in some ways. There are still around 80 freeports within the EU.
Freeports are hoped to increase manufacturing and create investment and jobs in areas which otherwise might struggle to attract such business.
The government hopes they will be a success and ensure that manufacturing businesses do not leave the UK. Whilst the UK was in the European Union, freeports would have been subject to some of the single market regulations, such as employment protections and other workers rights.
Opponents to freeports say that they would not bring the benefits suggested to these areas. But would potentially lead to deindustrialisation as businesses relocate to freeports to take advantage of lower taxes and tariffs on offer. They may just move jobs from one place to another and pile greater pressure on some areas which are already facing shortages, such as housing and services.
The TUC thinks that freeports will be used to drive down workers rights, which now we are outside of the EU would not be protected in freeports. Trade union leaders have also expressed concerns about freeports, with the Rail Maritime and Transport union (RMT) saying they would turn areas into “bargain basements for multinational companies to enjoy increased profits at the expense of workers’ safety, employment rights and public services”. Surely we can find other ways to attract manufacturing jobs, which does not involve deregulation and erosion of workers rights.