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Free Ports are gaining traction to bring jobs and prosperity across the country in a post-Brexit world, the Secretary of State for International Trade Liz Truss announced in August an intention to establish ten Free Ports after the UK leaves the EU.

Truss stated that the intention would be for these Free Ports to sit outside the UK’s main tax and tariff rules and have lower regulations to attract investment and business.

Despite suggestions by the government otherwise, it is already possible for the UK to set up tariff and tax free zones for imports whilst remaining a member of the EU.  There are around 80 such free zones in the EU currently.

Crucially, however, they cannot deviate from single market regulations including those on employment protections. For trade union members and their families, that’s a good thing.

The government has set up a Free ports Advisory Panel which will determine which ports can become Free Ports after Brexit. The Panel has no union representation. 

Union concerns about Free Ports include:

  • Workers in Free Ports are likely to have less protection than the rest of the UK.  This ultimately means lower pay and less job security in coastal communities already facing long term economic problems.
  • They encourage tax avoidance and are likely to become tax havens, leading to less money for our NHS and Education system.
  • They may become hotspots for organised crime encouraging money laundering and smuggling.
  • Several high quality studies led by academics have debunked the suggestion Free Ports create jobs or stimulate growth.

While some argue a Free Port will help support some of our regions existing industry, if we crash out of the EU without a deal or with a minimal trade deal and we see tariffs introduced, we will see widescale job losses across the region.

Low regulation, low tax Free Ports may end up being a solution which is worse than the initial problem.

Jude Kirton Darling, North East Labour MEP raises a series of interesting questions:

It is very questionable whether Free Ports actually create new jobs or just move them from one area to another. For example, the North East has many manufacturing companies that are dependent on imports and exports. If a Free Port was established on Teesside, would this create more jobs for the region?

Or just shift jobs from across the North East into one area? An area where they pay less tax and basic worker protections and health and safety standards may not apply.

Jude Kirton-Darling MEP (2018) - "When It Comes To Brexit; Free Ports Are Not The Answer"

This is a view that has been supported by the Centre for Cities in a recent report where they call into question how effective low regulation and tax zones are at job creation. What they found was a significant amount of job reallocation with businesses moving from local areas to the new zones, however the net impact on overall job creation was negligible. 

The Centre for Cities research showed that:

With enterprise zones created in the 1980s and 90s, the zones encourage displacement, with businesses moving from elsewhere either locally or nationally to take advantage of the benefits that the zones offer.

Research shows that of all the jobs in the zones in 2017 that were not there in 2012, at least one third moved from elsewhere.

So of the jobs created, a large chunk of them were not new jobs. Given the similarity of the offer, we should expect Free Ports to have a similar impact. They may well create some jobs, but these jobs are likely to be low skilled and relocate from elsewhere.

Centre for Cities, 2019 - "In the zone? Have enterprise zones delivered the jobs they promised?"

Instead of Free Ports that will drive down rights,  we need a UK-EU deal that allows us to stay as close as possible to the Single Market and Customs Union,  allows North East business to import and export both goods and services without barriers to our largest trading partner and secure the tens of thousands of jobs in the North East that depend on trading with the EU.

Such a deal would ultimately ensure workers in the UK don't fall behind the protections other workers in the EU have.