Listening to the Chancellor of the Exchequer, billionaire Rishi Sunak, you could be lured into thinking that the establishment of so-called Freeports in the UK is the cure-all for British economic ills, the “Big Idea”. Sunak has been banging on about Freeports for years, as he did in his recent Budget speech.
What’s all the fuss about? Actually — not very much.
A Freeport is an area, often around a port or an airport, where the normal rules of import-export do not apply. Imported goods that do not go outside the boundaries of the Freeport are not subject to the usual tariffs, customs duties and paperwork associated with importation. If goods are transported outside the Freeport area, standard importation procedures apply. The idea is that manufacturing will be attracted to the Freeport, to manufacture goods for export without having to go through import procedures for their supplies.
It is a popular idea. In 2017 there were 82 Free Trade Zones (ports or inland) within the EU. According to Sunak jobs will be created and industry will flourish.
But Freeports have been tried before in the UK. Six freeports were established in 1983, under Thatcher; but in 2012 their licences were not renewed. If a factory was set up in a Freeport, it was re-located from somewhere else. The growth in employment was minimal, and often precarious and poorly paid jobs, mostly in warehouses. The lost revenue in duty and tariffs etc. had to be replaced and that could only come from the taxpayer.
Concerns were also raised about how Freeports attract criminals keen to utilise warehouse space to store goods intended for money laundering. As it becomes more difficult for criminals to use banks for money laundering, they are turning to art works, precious stones, antiques or vintage wines (all of which tend to hold their value), storing them in unregulated Freeport warehouses until market conditions are favourable, then selling them on.
An unexpected police raid on a warehouse in the Geneva Freeport revealed rare Ancient Egyptian artefacts and even two mummies waiting to be released onto the black market.
Freeports are part of the neo-liberal mantra, promising huge dividends when stifling bureaucracy is done away with and goods are, supposedly, allowed to move freely (though, contrary to the propaganda, Freeports do not allow goods to move freely). Singapore is often held up as the model to follow, ignoring the special and unique features of that city state.
Despite all these concerns, some even from sections of the capitalist class, Sunak seems determined to go ahead, but there will be no “Singapore-on-Teesside”, or anywhere else for that matter. If any Labour councils are attracted to the idea: they should think again.