Free Trade Zones

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One of the main spring budget announcements was the location of eight new freeports in England. Chancellor Rishi Sunak has confirmed that they will be located at East Midlands Airport, Felixstowe and Harwich, in the Humber region, in the Liverpool region, Plymouth, Solent, Thames and Teesside. Free ports will benefit from incentives related to customs, taxation, planning, regeneration, infrastructure and innovation.

Successful bidders in England will be able to access a share of £ 175million of seed capital funding, depending on the submission of a business case.

According to Maritime UK Managing Director Ben Murray, Britain could have set up freeports long before it left the EU.

He accused the government of using membership in the bloc as an excuse.

Mr Murray told “The UK has always been the best behaved member of the EU, in terms of not pushing the limits.

“Countries like France, Germany and Denmark are pushing EU state aid guidelines to the limit.

“We did not do it.”

He added: “The government actually used it as an excuse to be shy. That excuse is no longer there, however.

“And yes, now that we’re outside of the bloc there are areas where we can go further.

“But there are also areas where we could have been pushing long before Brexit, so we need to make sure the government does it now.

“Even if it’s just a change of mind, so be it.”

Pieter Cleppe, researcher at the Property Rights Alliance think tank and author of a 2020 article on the subject, explained how Brexit freeports can be much more lucrative than EU ones.

He told “Brexit freeports will be a better application of the idea of ​​freeports than EU freeports, as the UK is now free from EU competition policy. , which prevented EU freeports from acting properly like low taxes and customs. / weak regulatory havens, given that this is – oddly enough – seen by the European Commission as a distortion of fair competition.

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“It is true that in theory the EU could challenge the UK tax breaks, but the EU-UK trade deal makes this task very complex for the EU, which means the UK is largely free to grant tax breaks to free ports as it sees fit. ”

Mr Cleppe added: “A significant unintended effect of the EU crippling the EU’s free ports with all kinds of restrictions is that they appear to have become vulnerable to all kinds of smuggling and illicit trade purposes. . “

The European Parliament, among other EU institutions, has already expressed concern over the situation, said Cleppe.

He noted: ‘The Organization for Economic Co-operation and Development (OECD) has estimated that the creation of a new free trade area‘ is associated with a 5.9% increase in the value of counterfeit exports of the host economy ‘, but it seems to depend a lot on how freeports are structured.

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“The British think tank RUSI pointed out that in Morocco, for example, free zones may in fact present lower criminal risks than other border crossing points and logistics centers, as they are subject to a level of higher regulation and control. “

Speaking to the BBC in March after a visit to a French free port, former Portuguese MEP Anamaria Gomes said: “We left our visit to Freeport with a lot of trepidation.

“It’s a way that could be easily used to store goods out of anyone’s control, to put them in the dark when it is more convenient, avoiding taxes.”

German MEP Markus Ferber, coordinator of the European People’s Party group in the European Parliament’s ECON committee, added: “If free ports are used for their original purpose, which is to temporarily store goods in transit, it not much to complain about.

“In fact, there are quite a few free ports in the EU.

“However, these free ports are often not used for this specific purpose, but rather to support illicit activities, such as tax evasion and money laundering, which is why strict regulations and effective enforcement are required. in place.”