Freeports: What are they and where will they be?

Freeports: What are they and where will they be?


A free port is a special customs area or small customs territory with generally less customs regulations or no customs regulations and/or controls for shipment. Freeports are located usually around shipping airports or ports. Goods that arrive into freeports from abroad are exempt from tax charges which are called tariffs, that are normally paid to the governments. These taxes are only paid if the goods leave the freeport and are shipped elsewhere in the United Kingdom. Otherwise, they are sent abroad without the charges being paid. The United Kingdom had seven freeports between 1984 and 2012 and the locations included Liverpool, Southampton and the Port of Tilbury.

The location of England's 8 new freeports were announced in the March 2021 Budget which were East Midlands Airport, Felixstowe & Harwich, Humber Region, Liverpool city Region, Plymouth, Solent, Thames, Teesside.

It is hoped freeports that can be up to 45km (27 miles) across, will help revitalize the deprived areas. In England, the organizations inside the sites will be offered temporary tax breaks. These include depletions in tax that the companies pay on their existing property and also when they buy new buildings. On 11th May In the Queen's Speech, the government confirmed that from April 2022, freeport employers will be able to pay less national insurance for all new workers. Wales, Scotland and Northern Ireland are expected to announce their own policies for freeport.

Eighteen areas in England had bid to become a freeport. According to the government, one of the most important deliberation was on how a freeport could bring economic opportunities to poor regions and "level up" the country. Ministers say other factors such as the impact of covid-19 on local areas and making sure freeports are spread fairly across England, were also taken into account.

People who support state that freeports can help increase manufacturing and also encourage jobs and investment in areas that would struggle to attract them. But opponents say they don't boost employment overall and moving economic activity different places comes at a cost to the taxpayer. According to labour, the firms inside freeports will not be able to take full advantage of post-Brexit trade deals and tariffs will have to be paid. The Labour-led Welsh government says although it has not ruled out introducing them, it has reservations about freeports

The SNP Scottish government which has previously been critical of freeports now plans to introduce its own scheme for Scotland, which will be dubbed as "green ports". Exact details have not been set out, but bidders will be asked to pay the real living wages and to promote sustainable growth.

Will freeports benefit from Brexit?

There are currently about 80 freeports marked around the European Union (EU). Now, that the United Kingdom (UK) has left the EU, some Brexit supporters believe that the UK can adopt a more generous freeport policy. For example, they say the government could give businesses more financial help.

A partner at law firm DWF, Jonathan Branton says the UK does have more flexibility as now it does not have to follow the EU rules. He has also pointed out, tax breaks offered to freeport firms would no longer require prior agreement from the European Commission. However, he adds that the Brexit trade deal, agreed by the UK and the EU, still requires subsidies to be proved right, otherwise they could be challenged in the UK courts.

In the extreme circumstances, the EU could respond to UK subsidies by introducing tariffs on some UK products deemed to be damaging the EU investment or trade. And the UK will still be point to the World Trade Organization (WTO) rules, which say you cannot introduce subsidies linked just to export performance.

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