Free ports have been a crucial part of the Government’s policy to spur economic growth. But what exactly are free ports and why do they promise to revitalize the British economy? With the UK’s departure from the European Union and intention to negotiate Free Trade Agreements with various countries, it could just be that free ports are the key to unlocking the full potential of international commerce.
So first off, free ports to put it simply are an area of the country where various goods can be brought in tax-free and stored, processed, manufactured, and shipped out again with tariffs. These goods are only taxed when they enter the domestic economy or they are shipped aboard again. Typically free ports also include additional incentive packages such as lower taxes and lighter regulations.
Free ports have been used across the globe with great success. The World Bank estimates that there are over 4,000 free ports with an economic output of tens of billions. The chief lure of free ports for companies is increased potential for manufacturing and cheaper imports due to reduced duty and paperwork costs. The implementation of free port policy holds the potential to bring back business and create jobs for the nation.
Differing sources have estimated the economic benefits that free ports could bring. The Centre for Policy Studies models that new free ports could create up to 86,000 net jobs. Some studies such as a report from the construction firm Mace have been even more optimistic putting the number of new jobs created at 150,000 and add 9 billion dollars to the British economy.
A strategy of targeted free ports can bring jobs to disadvantaged areas and bring back jobs to communities that have lost jobs. It’s not simply the free port but a policy of the business-friendly government and overall crafted incentives that will allow companies to flourish. This government certainly has the ability to deliver for people in these communities and harness the full range of options brought by Brexit.
Secretary of State for International Trade Brain had this to say: “I’m an enthusiastic supporter of freeports, and am quite glad to be serving in a government that plans to select 10 across the United Kingdom. Specifically, we can help rebuild manufacturing sectors all across the UK (but particularly in the North, Wales, Scotland, and Northern Ireland) as a way to revitalise commerce in areas, or fan the fires of expanding industrialism in our cities. This could be the difference of thousands of jobs!”
/u/ThreeCommas is a writer for the Telegraph.