{"id":3277,"date":"2019-02-27T08:34:19","date_gmt":"2019-02-27T08:34:19","guid":{"rendered":"http:\/\/blogs.sussex.ac.uk\/uktpo\/?p=3277"},"modified":"2019-03-04T15:32:07","modified_gmt":"2019-03-04T15:32:07","slug":"any-free-port-in-a-storm-analysing-the-potential-of-free-zones-in-post-brexit-britain","status":"publish","type":"post","link":"https:\/\/blogs.sussex.ac.uk\/uktpo\/2019\/02\/27\/any-free-port-in-a-storm-analysing-the-potential-of-free-zones-in-post-brexit-britain\/","title":{"rendered":"Any free port in a storm: Analysing the potential of free zones in post-Brexit Britain"},"content":{"rendered":"Share this article: <\/em> \"Facebook\"<\/a>\"twitter\"<\/a>\"reddit\"<\/a>\"pinterest\"<\/a>\"linkedin\"<\/a>\"mail\"<\/a>

\"\"27 February 2019\"\"<\/em><\/p>\n

Ilona Serwicka is<\/em>\u00a0Research Fellow in the economics of Brexit and\u00a0Peter Holmes is a Reader in Economics at the University of Sussex. Both are Fellows of the UK Trade Policy Observatory.<\/i><\/em><\/p>\n

There are proposals to relax customs rules and duties in specially-designated areas known as free ports or more generally free zones. But these would make little impact on rebuilding the UK economy after Brexit, reveal Dr Serwicka and Dr Holmes in our latest Briefing Paper ‘What is the extra mileage in the reintroduction of \u2018free zones\u2019 in the UK?’<\/a><\/p>\n

The creation of free zones, which would give companies the ability to defer payment of taxes on imported inputs and\u00a0in some circumstances even\u00a0avoid them altogether, have been mooted as a way to create thousands of new jobs, rebuild the nation\u2019s manufacturing industry and regenerate deprived areas of the country once the UK leaves the EU Single Market and Customs Union.<\/p>\n

But our\u00a0analysis states that potential benefits and savings for businesses operating in free zones with simplified customs procedures, relief on customs duties and tariff inversion are likely to be limited in the UK.<\/p>\n

While free zones could in some circumstances help increase export opportunities after Brexit, the academics warn that any economic benefits brought to free zones could simply be diverting economic activity from elsewhere. In the US their main impact has been to promote imports.<\/p>\n

Dr Serwicka, Research Fellow in the Economics of Brexit at the University of Sussex, said:<\/p>\n

\u201cWhile some form of free zones could help with shaping export-oriented and place-based regional development programmes, UK policymakers will need to devise measures that counteract the possible risk that economic activity will simply be diverted from elsewhere. They will also need to offer a wider set of incentives for trade\u00a0and jobs\u00a0while keeping within the WTO and any \u2018level playing field\u2019 obligations that arise from new agreements.\u201d<\/p><\/blockquote>\n

Our analysis questions previous research claiming free zones in the UK could generate up to 150,000 new jobs, add \u00a39bn a year to the UK economy and narrow the North-South divide. We believe a smaller proportion would be genuine additional jobs and economic activity rather than just redistributed from elsewhere in the UK.<\/p>\n

We find that while free zones in the US prevent \u201ctariff inversion\u201d costs, where tariffs on intermediate goods exceed tariffs on finished goods, such opportunities are slight in any likely UK trade policy scenario. The briefing paper also warns that free zones have costs as well as benefits.<\/p>\n

The researchers observe that to have any noticeable effect, UK trade policymakers would need to offer a wider set of incentives in addition to just free zones. Yet, such incentives could be limited in scope by World Trade Organisation rules and \u201clevel playing field\u201d obligations (state aid rules) included in a future trade agreement with the EU that the UK would be bound by.<\/p>\n

Analysis of free zones operating within the US by Drs Serwicka and Holmes suggested limited evidence on their ability to create genuinely new jobs rather than just encourage companies to shift jobs from other parts of the country.<\/p>\n

Dr Holmes, Reader in Economics at the University of Sussex, said:<\/p>\n

\u201cThe UK Government will have to be innovative and inventive if it\u2019s to build fruitful new trading relationships as a sovereign nation outside the EU.<\/p>\n

\u201cFree zones alone can\u2019t do very much to promote overall regeneration.<\/p>\n

\u201cThey will need to be incorporated into a far more comprehensive plan alongside other regional incentives to revitalise areas hollowed out by de-industrialisation and in need of services jobs as well as manufacturing.\u201d<\/p><\/blockquote>\n

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Share this article: 27 February 2019 Ilona Serwicka is\u00a0Research Fellow in the economics of Brexit and\u00a0Peter Holmes is a Reader in Economics at the University of Sussex. Both are Fellows of the UK Trade Policy Observatory. There are proposals to relax customs rules and duties in specially-designated areas known as free ports or more generally free zones. But these would make little impact on rebuilding the UK economy after Brexit, reveal Dr Serwicka and Dr Holmes in our latest Briefing Paper ‘What is the extra mileage in the reintroduction of \u2018free zones\u2019 in the UK?’<\/p>\n","protected":false},"author":213,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[129970,130195],"tags":[147895,147957,147958,94174],"_links":{"self":[{"href":"https:\/\/blogs.sussex.ac.uk\/uktpo\/wp-json\/wp\/v2\/posts\/3277"}],"collection":[{"href":"https:\/\/blogs.sussex.ac.uk\/uktpo\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blogs.sussex.ac.uk\/uktpo\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blogs.sussex.ac.uk\/uktpo\/wp-json\/wp\/v2\/users\/213"}],"replies":[{"embeddable":true,"href":"https:\/\/blogs.sussex.ac.uk\/uktpo\/wp-json\/wp\/v2\/comments?post=3277"}],"version-history":[{"count":3,"href":"https:\/\/blogs.sussex.ac.uk\/uktpo\/wp-json\/wp\/v2\/posts\/3277\/revisions"}],"predecessor-version":[{"id":3304,"href":"https:\/\/blogs.sussex.ac.uk\/uktpo\/wp-json\/wp\/v2\/posts\/3277\/revisions\/3304"}],"wp:attachment":[{"href":"https:\/\/blogs.sussex.ac.uk\/uktpo\/wp-json\/wp\/v2\/media?parent=3277"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blogs.sussex.ac.uk\/uktpo\/wp-json\/wp\/v2\/categories?post=3277"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blogs.sussex.ac.uk\/uktpo\/wp-json\/wp\/v2\/tags?post=3277"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}