Britain is planning 'free ports' to drum up post-Brexit trade
, bulbous-bowed Höegh Autoliners car-carrier, with room for 6,500 vehicles, takes up the space of three normal-sized ships in the Port of Tyne. Inside are several thousand shiny new Nissan Leafs, Qashqais and Jukes bound for the continent. Newcastle’s deep-sea port is not the country’s busiest, but because it serves nearby Nissan Sunderland, the biggest carmaking site, it is among the first in line to become one of the government’s swashbuckling new “free ports”.
Such zones are physically inside a country but legally outside it for customs purposes. As well as zero tariffs, free ports pile on other goodies such as low taxes and loose regulation. The idea is that firms will flock to them. Brexiteers in particular dream of free ports pulling in companies and container ships from everywhere. Boris Johnson, the prime minister, has promised to anoint ten free ports—mostly big harbours and perhaps some airports.
If the Port of Tyne became a free port, enthuses Matt Beeton, its chief executive, more firms would move into space currently occupied by weeds and cormorants. Nissan is keen. More business activity would further boost the port’s contribution to the local area, including deprived South Shields. Another policy aim of free ports is to help left-behind places, by generating investment and pulling in economic activity.
Yet they are no panacea. On the tariff side, their utility may be tiny. The plan post-Brexit is for Britain to maintain low tariffs on most goods. American foreign-trade zones are supposed to encourage domestic production by letting firms bring in inputs tariff-free . But Brexit is unlikely to lead to higher tariffs on inputs than on finished goods, according to a paper by theTrade Policy Observatory, which examined World Trade Organisation .
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