Port Strategy: Free ports won’t help Brexit Britain’s economy

New research shows that the creation of free ports with relaxed customs rules and duties would have little impact on economic growth in a post-Brexit UK.

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Free ports have been suggested as a way of boosting trade after the UK leaves the European Union (EU), but research by the University of Sussex-based UK Trade Policy Observatory into the potential of free ports in post-Brexit Britain found that relief on customs duties and tariff inversion are likely to be limited in the UK and any economic benefits brought to free zones could simply be diverting economic activity from elsewhere.

Briefing paper What is the extra mileage in the reintroduction of ‘free zones’ in the UK? concluded that “when tariffs are low the direct benefits of free zones are small. They do not allow suppliers to obtain duty-free access to final markets (except where inverted tariffs are avoided), and they merely defer any duty payments, a small gain to cash-flow.

“Although there are potential benefits and savings that businesses can accrue from simplified customs procedures, and relief on customs duties and tariff inversion, we believe that such benefits will be very limited in the UK context.”

Authors Ilona Serwicka and Peter Holmes stated that Brexit would not widen the scope of enterprise zones significantly as the UK would still be “subject to World Trade Organization subsidies agreement rules and to any commitments to EU state aid rules under ‘level playing field provisions’, (such as have been included in recent EU free-trade agreements) and would certainly be included in any post-Brexit trade deal”.

The EU would be concerned about any relaxation of labour or environmental standards and object to tax breaks, potentially invoking anti-dumping or countervailing duties, they stated.

The full article is on the Port Strategy website here

 

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