When it comes to Brexit; Free Ports are not the answer

13 February 2018

There has recently been a lot of debate on my native Teesside about “free ports” and their potential ability to give the region, and specifically the old SSI steel site, a much needed economic boost.A free port is a designated area (normally around a deep water port) that sits outside the tax, customs rules and regulations which would normally apply within the country it is based. In theory, free ports allow businesses to import/export components, materials and goods without the cost, paperwork and delays which would normally be imposed by said country.

This might sound like a good idea on paper, but free ports have also attracted a lot of criticism; by their very nature they help business avoid tax and give specific businesses in certain areas an advantage over others. Unions have also expressed concern to me about a reduction in workers’ rights, standards, and conditions as free ports are often given exceptions on regulation. This may be good for business looking to increase profit margins, but will not serve the people of Teesside well.

Additionally, it is very questionable whether Free Ports actually create new jobs or just move them from one area to another. For example, the North East has many manufacturing companies that are dependent on imports and exports. If a free port was established on Teesside, would this create more jobs for the region? Or just shift jobs from across the North East into one area? An area where they pay less tax and basic worker protections and health and safety standards may not apply.

The debate over free ports is one that will rumble on, with the idea gaining both support and criticism on both sides of the political divide. I personally remain unconvinced but understand the desire for a new and radical solution to create jobs in the region and regenerate the former SSI site.I am more concerned by the narrative set out by Tees Valley Mayor Ben Houchen that a Teesside free port is somehow an alternative to staying in the Single Market and Customs Union post Brexit. Along with (wrongly) claiming free ports are only possible outside the EU.

Both of these claims can be added to the long and growing list of Ben Houchen comments which can be categorised under “misinformed” at best, “farcical” at worst.

The claim that free ports are not possible under EU law is simply untrue. There are free ports in Bordeaux, France and Bremerhaven, Germany, both inside the EU. Other EU countries have “free zones” which follow the same basic principle. A simple Google search would have shown Mr Houchen such.

Much more importantly, the UK already has a mechanism for reducing delays at borders and allowing the free flow of goods and services between the UK and our biggest trading partner. The Single Market and Customs Union does exactly this by eliminating tariffs and customs checks, aligning regulations and reducing paperwork. All done without having to sweeten the deal with tax breaks and lower standards.

Mr Houchen’s preferred Brexit option is to leave both the Single Market and Customs Union. A policy that will cost our region 16% of GDP growth over the next 15 years according to recent leaked government assessments. According to local economic development experts this figure equates to 200,000 job losses in our region (1/6th of the current total), and could see regional unemployment rise to 20% (Link). This data paints a simply devastating economic picture, a level of ideological Tory job destruction not seen in our region since the Thatcher years.

The only possible reason for a free port would be to help maintain some of the industry we already have if the government continues to pursue this reckless hard Brexit policy. A hard Brexit would see tariffs and other so-called “non-tariff barriers” introduced between the UK and our largest trading partners in the EU. Yes, free ports would help limit this damage for a very small number of businesses based there. But what about the rest of the region and national economy?I have a better idea: post Brexit we stay in the Single Market and Customs Union, which allows North East business to import and export both goods and services to our largest trading partner without any tariffs or other “non-tariff barriers” to trade. This is good for business, good for jobs and good for the wider regional economy.

Ben Houchen is using free ports as a gimmick in place of an evidence based, long term, and thought-out Brexit policy. If he is genuinely concerned about jobs and economic growth on Teesside he would join me in supporting the UK’s continued membership of the Single Market and Customs Union post Brexit

Do you think the North East needs its own voice in the EU exit negotiations?

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