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Freeports not a replacement for what we have now

 

Rachel Anderson's column from the Journal

Whenever there is a new(ish) Government in place, there is always a flurry of activity and new announcements all designed to hammer home to the public how marvellous this lot are compared to the last lot and how a new broom sweeps clean etc. Of course it’s a bit tricky if the new lot were part of the Government of the last lot who’ve all gone to eat ice cream at the cricket.

One of the new announcements was on Freeports. These aren’t a new idea, many countries around the world operate different freeport models. The idea is that goods can be manufactured in a specialist area without crossing an international boundary. Not having to cross an international boundary is handy if there are suddenly tariffs to pay on goods as it doesn’t add significant cost to the finished product.Some countries have areas that are little more than bonded warehouses, others something more sizeable with China currently topping the league with an entire megacity freeport.

Our Government is proposing to designate 10 areas as freeports in the UK with North Sea ports obvious candidates. Given Liz Truss made the announcement on a visit to Teesport last week it seems a fair bet the Tees will be one of them but the rivers Tyne and Wear also make a strong case. Done correctly, freeports can be drivers of job creation and investment and will provide a useful frictionless trade area.

There are however some drawbacks. Freeports will be attractive to investors but jobs must be new ones, not simply relocated from other areas of the UK. Politicians must guard against a scenario where areas which already struggle to secure investment are further disadvantaged because frictionless trade in a freeport is so attractive. In terms of job creation they are potentially great but Government needs to look at elements like transport links so people can easily access the jobs.

Then there is the freeport idea stacked against the free trade we have already with our biggest market the EU and the 65 free trade deals the UK has through EU treaties with countries around the world. Freeports are a great idea but not a replacement for what we have now.

So we shall see, with a majority of 1 this Government might be going to eat ice cream at the cricket sooner rather than later and the whole thing put on a back burner. If not, lets make sure Freeports benefit everyone.