Freeports would boost The North after Brexit - Simon & Frank Field MP write for The Times

In Parliament today I am joining forces with Frank Field, the veteran former Labour MP, to set out why a Freeport at Teesport would be such a great boost for our area. We have co-written a piece for The Times to explain why this is such an important topic. Those of you without a Times subscription can read the article below:

Whichever side of the Brexit debate one stands, there are three aims that achieve uncommon consensus: first, that we should maintain and improve the competitiveness of British industry; second, that jobs and prosperity need to be spread more equitably across the country; and, third, that our existing trade with the EU should remain as frictionless as possible.

The introduction of freeports in the UK would take out these three birds with one stone.

At its simplest, a freeport is an area that is physically within a country but legally outside it for customs purposes. Goods that enter a freeport do not incur import duty. Instead, import duty is only paid if and when goods pass from the freeport into the domestic economy.

This offers notable advantages, most particularly that goods can be imported, processed, and then re-exported without incurring any duty. This incentivises international businesses to use the freeport as part of their supply chain, stimulating domestic manufacturing and creating jobs in the process.

Freeports are not an untested idea. There are now approximately 3,500 freeports operating in over 135 countries. The UK is therefore unusual in having zero operational freeports. If the UK is to compete seriously in the global trading system once we leave the EU, this is something that has to change.

We are seeking to open up the political debate on freeports because, in our view, they could unlock golden opportunities for job creation and economic growth in regions like Teesside and Merseyside. Mace Group looked at what a programme of “supercharged freeports” in the north of England might mean for the economy and found that it would boost UK trade by nearly £12billion a year, create 150,000 extra jobs across the north, and provide a boost to northern GDP of £9 billion a year.

A previous attempt in the 1980s to establish freeports failed, partly due to the regulatory constraints placed on them by the EU, but also because the Thatcher government showed an uncharacteristic lack of ambition.

It is therefore crucial that any post-Brexit freeports are given the oxygen they need to breathe and come to life. The type of freeport we are able to introduce after Brexit, however, is inextricably linked to the type of relationship we forge with the EU. Crucial for freeports will be the state aid rules that apply to the UK after we leave.

At present, the UK is bound by two international legal frameworks relating to state aid: that of the EU and the WTO. The EU’s state aid regulations are far more stringent than those of the WTO; the most fundamental difference being that, under WTO law, only ‘financial contributions’ count as subsidies, whereas the European Commission describes state aid as ‘an advantage in any form whatsoever’.

The EU’s state aid restrictions make it much more difficult to build the type of successful freeports our communities want and need. This makes doubly clear the need to be seeking out the fresh opportunities presented by Brexit. Freeports constitute a tremendous opportunity, and we would be the poorer for not having seized it.