Tuesday, April 20, 2021

Some Scepticism Over the UK Freeport Policy as Report Published

Internal Political Wrangle Does Not Inspire Confidence
Shipping News Feature

UK – With the release of the report on UK Freeports by the International Trade Committee the tone from some quarters is less than enthusiastic. The policy was always to prove controversial when promoted by a government which has a track record of previously proposed transport policies about as popular as a European Football Super League (think ferry companies with no ships, parking for post Brexit traffic, Smart motorways which aren't etc.).

For those who don’t know, Freeports are designated areas which enjoy various concessions on customs and other benefits. Despite being within a country’s geographical borders, Freeports are effectively outside a country’s customs borders. This means goods imported into a Freeport are generally exempt from customs duties until they leave the Freeport and enter the domestic market. No duty is payable if they are re-exported.

The new report examines the objectives of the Freeports policy, the package of measures available within the chosen sites, and the overall implementation of the policy, however the Committee is quick to cast some doubt as to how effective the government policy will be in achieving its aim of increasing trade and investment in the country.

The Committee does however welcome the fact that the government is focused beyond the use of Freeports purely for tariff benefits, a policy it doubts would work in the UK. It further recommends that the government commission a full, independent evaluation of the implementation of the Freeports policy within five years of the establishment of the first Freeports.

What is striking is that the policy has obviously been proving a bone of contention in political circles with the Department for International Trade and HM Treasury in dispute as to which was best-placed to submit evidence to the inquiry. This caused the Committee concern as to future cross-departmental collaboration and clear accountability which will be vital to implement the policy, concluding such cooperation is ‘absent’.

And so the confusion continues with a welcome for the security in place, but again that worrying note that such problems do not run out of control, many Freeports overseas being renown as hot spots for a broad spectrum of criminal activities. Angus Brendan MacNeil MP, the Chair of the International Trade Committee, summed up thus:

"We welcome the Government’s ambition to increase international trade and investment through its Freeports policy. However, it remains to be seen how successful Freeports will be in achieving this objective. Now that the Government has announced where Freeports will be located in England, we are calling on HM Treasury to publish an impact assessment for the policy so that we have estimates for economic growth and job creation.

”The Government should also commission an independent evaluation of the implementation of the Freeports policy, within five years of the establishment of the first Freeports. Of course, the operation of Freeports will continue to be of interest to my Committee, and an area we will watch closely."

The views of the country’s freight forwarding community was, as ever, summed up eloquently by Robert Keen, director general of the British International Freight Association (BIFA), which represents the majority of such agencies, saying:

"From a purely Customs viewpoint, the benefits of Freeports are marginal and provide very few new advantages compared to the existing Customs Special Procedures, which since 1 January 2021 have no longer needed a guarantee to operate. The report also acknowledges the security risks that accompany Freeports and any BIFA member that is considering setting up in one of the eight Freeports that has been announced to date, should bear in mind that long term storage is prohibited, and there is also a lack of clarity regarding customs regimes.

”Clearly if the Freeports scheme succeeds in increasing international trade and investment , it will be of benefit to BIFA members that handle a large percentage of the UK’s visible international trade, but that remains to be seen.”

Photo:The Port of Felixstowe forms part of one of the new designated English Freeports.