UK govt launches consultation on freeports

Imports and Exports | | MIC Customs Solutions |

Up to ten freeports could be created in Britain in a bid to prevent levies and tariffs.

The UK government has launched a consultation period with the intention of creating up to ten freeports that will enjoy special status with regard to duties and tariffs.

A freeport is traditionally an area outside a country's customs territory but within its physical borders, and the government said it is firmly committed to opening the first set in 2021.

These proposed zones would mean no duty would be payable on goods until they enter the full UK market - and none at all should they be re-exported from the port.

Additional benefits would include only having to pay duties on final goods, rather than on imported raw materials that are going to be processed, and not having to fill in full customs declarations on imported goods.

It is claimed these areas could create thousands of new jobs and prompt significant investment, as well as being centres for trialling new customs systems before they are rolled out elsewhere.

Britain's business secretary Andrea Leadsom said: "Freeports represent a fantastic opportunity for our businesses to increase their trade with companies from all over the world. They underscore our commitment to championing global free trade, unleashing our country's potential."

However, some concern has been expressed about the new freeports being used as a base for money laundering or organised crime, while lawyers in Europe have argued they could lead to the limited oversight of movement of goods and therefore increased smuggling.

Another possible issue is the World Trade Organisation rule dictating that if countries importing goods from free trade zones can demonstrate the manufacturers enjoyed unfair subsidies, then off-setting duties can be imposed.

Freeports would also have to comply with European Union rules on factors such as state aid, which may cause problems as the UK and Europe attempt to negotiate a free trade deal.

The Treasury has begun a ten-week consultation on the freeports proposal and the Port of Dover has already said it welcomes the announcement.

However, the British Ports Association says it thinks a freeport model should be wider in scope than the traditional customs free zone model.

There are currently around 70 freeports operating in the EU's customs territory, with more elsewhere around the world. In the US, they are referred to as foreign trade zones, while other nations call them export processing zones.