The United Kingdom’s “Brexit” from the European Union gives the country new economic latitude, which can be harnessed to advance economic freedom and commerce. One such opportunity would be the creation of “free ports,” a type of free trade zone that falls geographically within the U.K. but operates outside its customs authority. A new study by London-based Atlas Network partner the Centre for Policy Studies, titled “The Free Ports Opportunity: How Brexit could boost trade, manufacturing and the North,” explains how free ports could create 86,000 new jobs for the British economy through an expansion of international trade.
“There are approximately 3,500 Free Zones located in 135 countries across the world,” writes study author Rishi Sunak, a member of Parliament for Richmond (Yorkshire) in the U.K. “While often associated with high-tariff, high-regulation emerging markets in Asia, the potential benefits of Foreign Trade Zones (FTZs) in developed western economies remain significant. Whereas in emerging markets Free Zones are typically focused on exports, in developed nations they can also service the domestic economy. The US is a case in point. Home to a considerable number of advanced and well-developed Zones, it provides ample evidence of their power in encouraging economic activity. Put simply, by championing FTZs, the UK would be joining a host of other countries actively supporting both domestic manufacturing and trade.”
Free ports would allow goods to be imported, manufactured, and re-exported within a designated zone “without incurring domestic customs duties or taxes,” Sunak explains, until those goods enter the domestic economy. Improved efficiency and capacity of ports is especially relevant for the U.K., which already contains dozens of large and successful privately financed ports that together account for “96% of all trade volume and 75% of trade value.”
Although the United States has more than 250 FTZs, EU constraints have left the U.K. with only a single FTZ, on the Isle of Man. Brexit frees the U.K. from EU customs and trade mandates, and provides a new opportunity to bypass the highly regulated and limited versions of FTZs that the EU’s regulations currently allow.
“What Brexit means for Britain will be determined as much by how we make use of our new freedoms as by the outcomes of the forthcoming negotiations,” Sunak concludes. “Free Ports are not a panacea, but, with decisive action, they have the potential to lay the foundations of a golden age of prosperity for a Britain connected by its trading and manufacturing businesses to every corner of the world.”