Setback for new zones
Freeport firms may lose access to key markets
Freeports are being promoted as a key to growth
UK companies which sign up to the government’s flagship freeport programme are likely to be shut out of export markets worth £35bn a year, it has been claimed.
Rollover free trade deals signed with 23 countries including Canada, Switzerland, Norway and Singapore feature clauses specifically excluding manufacturers benefiting from freeport tax breaks, said shadow trade secretary Emily Thornberry.
This would mean companies taking advantage of the new freeport zones at East Midlands Airport, Felixstowe & Harwich, Humber, Liverpool City Region, Plymouth & South Devon, Solent, Thames and Teesside will have to pay tariffs on exports to these countries, which together make up almost 10% of the UK’s global export market.
The latest twist in the freeport plan, announced by Chancellor Rishi Sunak in his March Budget, will also alarm the Scottish Government which was forced to put its own plans for so-called ‘green ports’ on hold because of the election. The new administration will be hoping to resume talks on the issue.
As part of the UK government’s plan for recovery Scotland is expected to get one of the tax-efficient freeports – renamed green ports by the Scottish government as it insists on the inclusion of conditions such as fair work and commitments to net zero.
A UK government spokesperson denied mistakes had been made in accounting for tax rules, insisting that companies will be able to choose between benefiting from either the “duty drawback” arrangements available to them in freeport zones or the preferential tariff rates negotiated in the free trade deals.
Boris Johnson has promoted freeports as a key benefit from Brexit, even though the UK was able to operate them as a member of the European Union and did so from the 1980s to 2012, when the Conservative-led government decided not to renew licences.
Manufacturers based in the zones will be allowed to import raw materials and components duty-free before converting them into finished products for export around the world.
The prime minister and chancellor Mr Sunak believe they will provide a boost to local economies, though some experts believe they will simply relocate economic activity from one area of the country to another and offer companies an opportunity to minimise tax.