UK Freeports Consultation 2020
The UK government is currently running an open consultation until April 2020 on the establishment of a number of Freeports in the UK after Brexit has happen. The government has seen the effect of Freeports in Jebel Ali and Shanghai and hopes that this can be repeated here, boosting trade,jobs and significantly private investment. One of the areas which has put its self forward is the humber region ports, consisting of Immingham, Grimsby and Hull which are operated by ABP. They are going to face stiff competition as every single port and inland terminal in the UK will be desperate to be awarded this status for the trade port. Southampton, London Gateway, Felixstowe and Liverpool are likely to be awarded the status by the amount of existing trade they already handle and having significant sway in the industry and government. If this does happen it then leaves a possible six other locations within the UK.
For the uninitiated a Freeport is a secure customs area either located at or nearby ports or based inland near a strategic resource which the Freeport can take advantage of. The Freeport is a place were business can be carried out within that countries borders but does not have to follow the normal customs rules. Usually goods which are imported into a Freeport are not subject to pay any import duties, taxes or import excise until they leave the Freeport area and officially enter the local domestic market. If the goods are re-exported nothing is payable. Often the customs declaration when import and exporting the goods is a more simplified version of the doing a full customs entry giving a cost saving in time and labour. This is not the main benefit however, with the ability to rework and manufacture goods within the zone. This means raw goods, or unassembled goods can be brought into the Freeport zone from various sources around the world without being tax. These goods can then be made into another product or assembled and then imported into the domestic market or re-exported to another market. In both cases the finished product can be declared as being from this country and may mean they attract an overall reduced level of duty than what their raw counterparts would have had, making the product final sale price much lower.
The UK government wants Freeports to appeal to the widest range of businesses so more than one industry sector can benefit. Taken directly from the consultation document put out by the government the objectives are:
- Establish Freeports as national hubs for global trade and investment across the UK
- Promote regeneration and Job Creation
- Create hotbeds for innovation
As the government wants to encourage the Freeports to get the businesses which operate in the area to regenerate the area and view innovation as a positive rather than a negative they are going to have to solve the problem of who manages the Freeports. Which is one of the questions being asked in the consulting document. The issue is most of the larger companies who could manage these operations, are not only many years behind the current technology curve, they have very little interest in the requirements of SME businesses. These larger operators have limited understanding and/or willingness to adopt new cutting edge methods which modern SME businesses often are adopting meaning they are forced to use archaic methods which may need employing very expensive and highly skilled employees or consultants. This alone would severely limit or stop any innovation.
All business who work in the supply chain should have a look at the consultation document. Responses can be made directly through the UK consultation portal. They also accept postal responses directly to the International Trade Department. The address is given in the consultation document. The portal web address is https://www.gov.uk/government/consultations/freeports-consultation