Bid to be Lodged for Establishment of Freeport Development in the East of England

UK – Following last week's announcement of a joint bid by DP World and Forth Ports to establish a Freeport on the Thames just to the east of London, another major port operator, Hutchison Ports, has made their pitch to establish one of the Special Economic Zones, this time in the East of England.

Freeport East would focus on the Port of Felixstowe and Harwich International Port, both operated by Hutchison Ports. Felixstowe is already the UK’s busiest port, handling around 48% of the country’s container trade, about 3.8 million Twenty-foot container Equivalent Units (TEU) per annum. As a result the two ports already form a hub for British imports and exports, and are central in trade with Northern Europe and Asia.

Hutchinson states that by making Freeport East a reality, the government will create a manufacturing and innovation hub that directly links into global trade networks and will deliver strong economic advantages that benefits growth plans for the future of the whole UK. Clemence Cheng, Executive Director of Hutchison Ports and Managing Director of Hutchison Ports Europe, said:

“The combination of the ports of Felixstowe and Harwich offers the UK a unique opportunity in the post-Brexit world, sitting as they do at the main junction point between the UK's principal trade route to and from the Far East and key freight links to and from northern Europe.

“Together with the leading edge technical skills that come with the partnership with universities, including the University of Cambridge, this combination can serve as a powerful magnet to bring new investment into the UK and in particular to the area around this unique junction point.”

Whether the current situation at Felixstowe will weigh in favour or not when it comes to the decision remains to be seen. The port has been witness to some of the most severe criticism expressed in recent years following the abject failure to install a new traffic management system in June, and persistent problems ever since, with hauliers and freight forwarders alike incandescent as delays and costs mount.

The British government intends to create ten Freeports in the country to support the post-Brexit economy. They work on the principle that goods that are imported into a zone do not incur usual import procedures on entry and import duties are not payable until these goods are released into the domestic economy. By providing tax breaks in designated zones, Freeports have historically been used to drive growth in specific areas.

Opinions are mixed as to whether any great benefits will accrue from the establishment of the new free trade zones. The Mace construction group states that the policy, if applied to seven ports in the north of England, has the possibility of adding £9 billion a year to the local economy and creating as many as 150,000 high-value jobs.

The scheme has the support of four local reginal Councils, however, economists from the University of Sussex have calculated that favourable returns from the new Freeports would be quite limited.

Freeports also pose issues for potential money laundering and tax evasion schemes. This is graphically illustrated by the ongoing cases for alleged tax evasion against Yves Bouvier, who established Freeports in Geneva, Luxembourg and Singapore. The Luxembourg scandal even saw questions asked of Jean-Claude Juncker, then European Commission president, when it revealed ‘the potential for fraud on a vast scale’.

This in turn led to a crackdown on Freeports in the EU to make sure they are complying with European laws. As a result the proposed British Freeports are already been watched with a measure of suspicion by the Europeans, particularly at the time when the country is leaving the Eurozone countries.

A video of the pitch for the siting of the new Freeport East can be seen HERE.