Rishi Sunak discusses freeports announcement
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Mr Sunak outlined plans for eight new free ports, at East Midlands Airport, Felixstowe and Harwich, Humber region, Liverpool City Region, Plymouth, Solent Thames and Teeside. Furthermore, the following month, during his Spring budget, Mr Sunak confirmed employers within Freeports would benefit from NIC reliefs.
Pieter Cleppe, a research fellow with the Property Rights Alliance think tank and the author of a 2020 paper on the subject, told Express.co.uk: “Brexit freeports will be a better application of the idea of freeports than EU freeports, as the UK is now freed from EU competition policy, which has prevented EU freeports from properly acting as low tax/low customs/low regulation havens, given that this is – oddly – seen by the European Commission as distorting fair competition.
“It is true that in theory, the EU could challenge UK tax breaks, but the EU-UK trade deal makes this very complex for the EU to do, meaning the UK is largely free to provide tax breaks to freeports as it pleases.”
Mr Cleppe added: “One important unintended effect of the EU crippling EU freeports with all kinds of restrictions, is that they seem to have become vulnerable to all kinds of smuggling purposes and illicit trade.”
The European Parliament, among other EU institutions, has already voiced its concern about the situation, Mr Cleppe said.
He explained: “The Organisation for Economic Co-operation and Development (OECD) has estimated that the establishment of a new free trade zone ‘is associated with a 5.9 percent rise in the value of counterfeit exports from the host economy’, but it seems to very much depend on how freeports are structured.
“UK think tank RUSI has pointed out that for example in Morocco, free zones may actually pose lower criminal risks than other border crossings and logistics hubs as they are subject to a higher level of regulation and control.”
Mr Cleppe added: “The UK’s post-Brexit approach to offer tax advantages to freeports that are much lower than the EU allows for EU freeports, combined with restrictions on freeports acting as art warehouses, should guarantee that the problems surrounding EU freeports are avoided while the economic benefits that EU freeports are struggling to provide are being realised.
“The need for freeports is also a consequence of the heavy taxes, regulations and customs that burden ordinary trade.
“In an ideal scenario, we shouldn’t actually need ‘freeports’ but overall cuts to taxes, customs and regulations for the whole territory.”
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Speaking to the BBC in March after a visit to a French freeport, former Portuguese MEP Anamaria Gomes said: “We came away from our visit to Le Freeport with a lot of apprehension.
“This is a way that could be easily used to store goods away from anybody’s control, for putting them in the dark when it’s more convenient, avoiding tax.”
Also speaking to the BBC in March, German MEP Markus Ferber, the European People’s Party’s Group coordinator in the European parliament’s ECON Committee, said: “If free ports are used for their original purpose, ie to temporarily store goods in transit, there is little wrong with them.
“In fact, there are quite a few free ports in the EU. However, often those free ports are not used for that narrow purpose, but rather to support illicit activities, ie tax evasion and money laundering, which is why there needs to be tight regulation and effective enforcement in place.
“Otherwise, there is a severe risk of abuse.
“So, some scepticism with regard to free ports is often warranted.”
Speaking in February, Mr Sunak predicted that freeports would “unleash the potential in Britain’s ports as well as boosting and regenerating communities across the UK.
He said: “They will attract new businesses, spreading jobs, investment and opportunity to towns and cities up and down the country.
“This is all part of our mission as an open, outward-looking country, championing global free trade with vibrant freeports that work for all of the UK.”
Secretary of State for International Trade, Liz Truss, added: “We are taking back control of our trade policy, and opening every corner of the UK to opportunities across the world.
“Freeports will unleash the potential of our historic ports, creating jobs and regenerating communities across the UK.
“These hubs will also deepen partnerships around the world as we restore our economic and political independence.”
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