Businesses taking advantage of newly-established freeports in the UK will be unable to benefit from tariff-free trade with certain countries, it has been revealed.
The Financial Times reports that exporters based within the eight zones will be required to pay duties on exports to 23 countries, including Canada, Norway, Switzerland and Singapore.
This is due to a clause in trade agreements with these nations that specifically exempts companies based in freeport zones from benefiting from zero-tariff agreements - even though exporters elsewhere in the UK will not need to pay any duties.
A statement from the Department for International Trade denied this is due to an error or oversight, noting it is not uncommon for FTAs to have such details.
It added: "Where these provisions apply, businesses can choose to either benefit from the duty drawback or the preferential rates under the free trade agreement - provided they meet the rules of origin test under that agreement - depending on what suits them best."
However, the UK government has been criticised by opposition politicians for failing to negotiate the removal of these clauses, with shadow trade secretary Emily Thornberry saying it should have been a simple matter to have such provisions struck from the deals.
She said: "I've written to [trade secretary] Liz Truss asking her to clarify the situation, and if it needs fixing, I've urged her to go back to the negotiating table immediately with these 23 countries and get these clauses removed before Britain’s freeports come into operation later this year."
The eight freeport zones due to begin operating from late 2021 are Teesside, London Gateway, Liverpool City Region, Humber, Felixstowe, Southampton, Plymouth and East Midlands Airport.
They are intended to allow businesses to import goods from overseas without paying the usual tariffs, provided they are then exported onwards without leaving the designated freeport area.
According to research from the Labour party, exports to the 23 countries included in these agreements totalled £35.56 billion in 2019, accounting for almost ten per cent of the UK’s total goods exports.
