Labor accuses minister of ‘catastrophic error’ on freeports

Manufacturers based in Boris Johnson’s new freeports will be unable to take full advantage of the benefits if they export to a string of countries with which the UK has signed post-Brexit trade deals.

The Prime Minister and Chancellor Rishi Sunak have championed freeports – special economic zones offering tax breaks and reduced tariffs – as part of the Government’s ‘levelling up’ agenda to spread economic growth and jobs Across the country.

But Labor said a “catastrophic error” means manufacturers operating in freeports could face tariffs on their exports to key markets including Switzerland, Canada, Norway and Singapore, despite the UK’s free trade agreements with these countries.

Officials insisted there had been no mistake and the companies would not be excluded from markets in countries with which the UK has negotiated deals.

The opposition suggested that exports to 23 countries with which the UK has signed agreements to roll over agreements those countries had with the European Union would be affected.

Labor said trade ministers had failed to remove broad “duty exemption bans” contained in 23 of the deals.

The bans state that any company that has not paid duties on its imports cannot benefit from reduced customs duties on its exports.

Watch: What are free ports?

A government spokesperson said: “There is no mistake and it is not uncommon for free trade agreements to contain such provisions.

“Businesses will not be excluded from markets with which we have negotiated free trade agreements.

“They will benefit both from our free trade program, but also from free ports, which offer tax breaks, simpler planning restrictions and cheaper imports. »

When these provisions apply, companies will be able to opt either for a “duty drawback” – the reimbursement of import duties when the goods are re-exported – or to benefit from the preferential rates provided for by the free trade agreement, at provided that they respect the rules of origin of the agreement. tests.

Goods exports to the 23 affected countries were worth £35.56 billion in 2019, almost 10% of the UK’s total goods exports, Labor said.

Shadow International Trade Secretary Emily Thornberry has written to International Trade Secretary Liz Truss asking for clarification.

Ms Thornberry said: “Last November, when the Treasury called for applications for its new freeports programme, the fine print warned potential bidders of the blackout clauses contained in several continuity trade agreements that the department of Commerce had signed during the previous two years.

“But despite this warning, Liz Truss signed trade deals with 10 other countries containing the same clauses, including key markets like Canada, Singapore and Mexico.

“It would have taken an hour of discussion and the stroke of a pen to explain the UK’s freeport policy to these countries’ negotiators and remove the ban clauses from these agreements, and I don’t understand why Liz Truss didn’t succeed to do it.

“On the face of it, this looks like a catastrophic mistake by a minister stuck in her silo and, as a result, I fear that manufacturers in cities and regions across our country who have successfully bid for port status franc risk disappearing. on access to key markets.

During the March Budget, the Chancellor announced freeports at East Midlands Airport, Felixstowe and Harwich, Humber, Liverpool City Region, Plymouth, Solent, Thames and Teesside.

He promised “eight new freeports in eight English regions, unlocking billions of pounds of private sector investment, generating trade and jobs across the country”.

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