On 3 May 2023, World Press Freedom Day, for the first time the Bylines Network is covering one topic on one day across its platforms. In response to this by those who’ve heard about it, a common phrase keeps arising: “I don’t know much about them.” Surprisingly few people are aware of freeports at all, considering that they represent a local and regional embedding of the way the UK government does business in the Brexit era, and were pledged in the 2019 Conservative general election manifesto. But the mainstream press rarely reports on them analytically. Many if not most news stories about freeports are effectively uncritical press releases, except when it comes to our network and publications like Byline Times and Private Eye.
The Bylines Network of online newspapers is built on progressive, internationalist, powerful citizen journalism, nurturing democracy by giving a voice to local people and holding our elected representatives to account. This is made possible by our independence from government control and corporate influence. We cover most of Great Britain; not as yet Northern Ireland, London, or parts of South East England. (The West of England is covered by West Country Voices, formerly West Country Bylines). Our aim is to publish well-written, fact-based articles and opinion pieces on subjects of interest and in the interests of people in our areas and beyond.
In keeping with our mission, we thought it important to spend a day focussing on freeports in more granular and collective detail, exploring their myths and realities, their stated aims and impacts. There is so much happening so fast in the country that we can’t keep up or follow up. Putting things in one place means being able to better see the big picture as well as zooming in, to see things side by side and deepen understanding while making new connections. We’ll republish existing Bylines Network articles on freeports as well as posting new articles written especially for the day, and also republish articles from Byline Times and The Conversation.
The name ‘freeport’ can confuse, because there are towns and cities called Freeport, and because they don’t always involve ports. For example, the freeport written about by East Anglia Bylines also involves a 156-acre ‘innovation park’. However, the zones in the UK designated as freeports do usually have a port within their boundaries, and/or centre around a long-standing port, as is the case in Liverpool, Scotland, and Wales, for example.
Alternative terms for freeports are more descriptive of their nature: free economic zones (FEZs), special economic zones (SEZs), free economic territories, export processing zones, or simply free zones. Freeports would usually be considered a subspecies of SEZ. Whatever the denomination, they are areas within a country geographically, but about which a political decision has been taken to treat them differently administratively and economically.
Generally speaking, businesses within such areas pay little to no tax or duties and may receive other benefits or incentives, including financial assistance from the state to set up there. The International Convention on the Simplification and Harmonization of Customs Procedures (Revised Kyoto Convention), describes “free zones” as “a part of the territory of a Contracting Party where any goods introduced are generally regarded, insofar as import duties and taxes are concerned, as being outside the customs territory”.
Such zones exist around the world, with Dubai, Hong Kong, and Singapore being leading ‘trade gateways’. International airports, with their duty-free arrangements, are types of SEZs. There are SEZs of some nature in Africa, Asia, Europe, and North and South America. The company with which Prime Minister Rishi Sunak’s wife is involved, Infosys, has four SEZs in India. Tory donor, fervent Brexiteer, and frequent Boris Johnson host and financial supporter Lord Bamford, the maven of nominally-British equipment manufacturer JCB, has a facility on a large SEZ in India. Johnson took time out in the middle of the ‘partygate’ embroglio in April 2022 to pop to India, and his first order of business there was to visit Bamford and inaugurate a new JCB factory.
There’s a common myth in the UK that we would not have been free to establish freeports if we remained within the European Union. This is demonstrably untrue for two reasons. The first is that there have long been and still are freeports in the EU, in Austria, Cyprus, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Portugal, Romania, Spain, and Sweden.
The other reason is that the UK formerly had freeports. The Customs and Excise Management Act 1979 offers a free zone designation, so the arrangement has long been part of domestic legislation. In 1984, while the UK was still in the EU, freeports were introduced in the UK in Belfast, Birmingham, Cardiff, Glasgow Prestwick Airport, Liverpool, and Southampton. These were history by 2012, having developed into nothing of great import, so to speak, and ‘Enterprise Zones’ were introduced the same year. Businesses within those get business rate discounts and enhanced capital allowances for the purchase of equipment and machinery. There are 48 across England, and Scotland and Wales have made similar arrangements. Both those zones and the freeports before them operated within EU laws.
Those laws restricted certain ways of running freeports in order to ensure competitive fairness between member states. While the UK is no longer bound by EU trade policies per se, the EU-UK Trade and Cooperation Agreement (TCA) represents a pledge by both to uphold competition laws. It remains to be seen whether the new freeports established by the UK government will conflict with that agreement; the EU does have its concerns.
In 2016, a white paper titled The Free Ports Opportunity was published by right wing think tank the Centre for Policy Studies. Its author was a little-known MP called Rishi Sunak. Boris Johnson backed the concept in 2019 prior to becoming Prime Minister, calling them “an excellent way to boost business and trade in regions that Westminster has neglected to pay attention to for far too long.” His party’s 2019 election manifesto pledged to create up to ten freeports, and the first eight were announced in Sunak’s first budget as Chancellor in March 2021: East Midlands Airport, Felixstowe and Harwich, Humber, Liverpool City Region, Plymouth and South Devon, Solent, Teesside, and Thames.
Scotland has Inverness and Cromarty Firth, and the Firth of Forth and, in Wales, Anglesey and the ‘Celtic freeport’ in Milford Haven and Port Talbot were announced in late March 2023. Both devolved nations call theirs ‘green’ freeports and place much stress on that word. Freeports are said to be on the cards for Northern Ireland but of course the position there is different. Andrea Leadsom MP, Secretary of State for Business, Energy, and Industrial Strategy 2019-2020, has said that the Northern Ireland Protocol should be done away with and the whole of Northern Ireland designated as a freeport.
The business benefits of UK freeports are clear: goods are classified as offshore for tax purposes, allowing imported materials to be processed and re-exported without tariffs or customs paperwork. There are tax breaks, business rates are waived for five years, and employers don’t pay national insurance contributions for staff earning less than £25,000 for up to three years.
Free for all
In 2020, the EU introduced stricter controls on freeports and free zones to be able to identify and report suspicious activities in response to a “high incidence of corruption, tax evasion, and criminal activity” relating to them. Even under a relatively strict regime like that of the EU, freeports are considerably deregulated compared to other areas of trade and commerce. The European Parliament connected an increase in demand for freeports to a corresponding increase in measures to tackle tax evasion globally. A 2018 report by the European Commission expressed serious concerns about the vulnerability of free zones to abuses:
“In addition to its confidentiality, the high level of monetary transactions, the unfamiliarity of enforcement agencies with values and the portable nature of art itself all contribute to the art market being a suitable vehicle for illegal activity. As other money-laundering techniques are coming under closer scrutiny, it has been suggested that smugglers, drug traffickers and arms dealers are increasingly turning to the art market.”
“In 2010 the Financial Action Task Force on Money Laundering, an intergovernmental body based at the headquarters of the Organisation for Economic Co-operation and Development (OECD) in Paris, published a report claiming that free-trade zones, which include free ports, were a ‘money-laundering and terrorist-financing threat’ partly due to inadequate safeguards, relaxed oversight and weak inspections.”
“Clamping down on problems such as tax evasion and money laundering has become a matter of the utmost urgency. In this context, the Panama Papers drew attention to the dubious role of free zones, and in particular of free ports, as repositories of artworks and other valuables. Some media reports pointed to the connection between the international art trade and offshore secrecy, for example suggesting that arts buyers and sellers use the same structures to remain anonymous in the global financial system as dictators, politicians and fraudsters.”
It has been suggested that UK freeports, too, risk providing inlets for money laundering, tax evasion, and other international wrongdoing. “Customs provide crucial scrutiny of goods, processes, and documentation. Without similarly robust measures in place, another aspect which has not been fully addressed in the government’s plans, freeports risk harbouring criminal activity and helping criminals evade authorities.” These are bigger questions than the 3 May series by Bylines Network can examine. We will hone in on such issues as whether, as with Brexit, freeports can ‘deliver’ what is promised about them, and who will benefit most.
But it is worth bearing in mind as you read – or bookmark for the weekend – our citizen journalists’s excellent work on the subject that, even as the UK goes all-in on freeports, elsewhere in the world they are also being looked at rather carefully.
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