Free Ports: Free for All and Free for Whom?

The Freeport of amburg at night by vonCroy

One of the mainstays of the Brexit campaign was the desire for ‘sovereignty’ and ‘taking back control’. But there are freeports all over Europe already. What’s going on?

When Michael Gove tried to clarify on the BBC’s Today programme on 28 December 2020 what that means, he referred to the UK’s ability to set up ‘freeports’. That made me start. There are freeports all over Europe already. What’s more, the UK used to have freeports, but the last one was closed in 2012. 

So as it was already possible to create freeports, why the need for Brexit? It turns out that freeports are a bit dodgy. Back in 2019, following a report on tax evasion and money laundering, the European Parliament called for them to be scrapped. 

According to the Institute for Government, freeports provide operators ‘with a safe and widely disregarded storage space where trade can be conducted untaxed, and ownership can be concealed’. This lack of scrutiny on imports means that high-value items like art, for example, can be bought and easily stored without the kind of check and controls they could normally face. 

A 2016 article in the Art Newspaper also linked freeports to art crime. “Freeports now harbour art worth billions of dollars – some of it of questionable provenance”, said Daniel Brazier, a special agent at the US Department of Homeland Security. “It is easy to create shell companies that obscure the link to the real owner. The lack of transparency makes it difficult for us to do our job.” So something like a tax haven then? An area that the EU is also keen to clean up.

The UK is currently signed up to the EU’s Anti-Tax Avoidance Directive but, as the BBC’s Reality Check team wrote in November 2019 “It should be noted that leaving the EU will mean future governments could remove any of these laws for which they could get a majority.” 

Shanker Singham is a proponent of freeports and a prominent Brexit advocate. Singham owns Competere, a company that offers clients advice on the opportunities arising from Brexit. And he should know as, according to Open Democracy, in 2018 Singham had monthly meetings with the Department for International Trade minister, Greg Hands MP.

At that time Singham was head of the Legatum Institute’s trade commission. Legatum Institute is a right-wing think tank that was established back in 2007 by a Dubai-based, New Zealand born billionaire, Christopher Chandler, who made his fortune from ‘disaster capitalism’ – exploiting trading opportunities created by extreme political disruption.

Open Democracy went on to say that the Legatum Institute had emerged as ‘one of the most influential voices in Westminster in the wake of the Brexit vote’, with senior Leave figures, including Matthew Elliott [founder of the right-wing think tank TaxPayers’ Alliance, advocating for lower taxes, and a big supporter of Vote Leave), joining the think tank.

In November 2017 the Legatum Institute published a paper ‘The Brexit Inflection Point – the Pathway to Prosperity’. Here, it repeatedly emphasised that ‘The UK must therefore be able to regulate differently from the EU in areas like standards and regulatory issues.’

I was reminded of Caroline Ahern’s Mrs Merton asking Debbie McGee: “So what first attracted you to the millionaire Paul Daniels?”. What was it about Brexit that attracted so many billionaires?

Different regulatory benefits

In May 2020, Singham’s Competere published a consultation proposing that “Free ports must have different customs regimes along the lines of Free Trade Zones so that they are not in the customs territory of the host country, and should have tax benefits.

They will need to additionally have regulatory benefits (including but not limited to planning rules, making it easier to start and scale businesses etc).”

Different regulatory benefits is a worrying phrase. Might those include lower standards for workers? A quick look around the world where such FEZs already exist might provide a clue. 

Freeports, or a free-for-all?

According to Wiki, many of the countries that already have FEZs can also be found on Amnesty International’s list of the most repressive regimes around the world. Take Tanzania, for example. From Amnesty’s 2019 report:

“The authorities severely restricted the rights to freedom of expression and association, and targeted journalists, human rights defenders and political opposition members. Repressive legislation with broad provisions gave authorities sweeping powers to silence critics and stop media outlets, NGOs and political parties from operating.” 

Other countries with Free Economic Zones include Egypt, Eritrea, Libya, and Nigeria, a country whose most recent election may well have been influenced by a campaign by Cambridge Analytica (remember them?).

And that’s important, as those in government would be setting the ‘regulatory benefits’ of the FEZs. Coincidentally, an article by the Independent on 20 November 2020 reported that in 2018 ‘Priti Patel sought to publicly intervene three times on behalf of an offshore company which has been accused in a British court of obtaining a £100m contract from the Nigerian government through corruption.’

She was joined in supporting the company by none other than Shanker Singham, who is now a government trade adviser and a member of the House of Lords. Patel later became Home Secretary.

Then there’s China

China Briefing reported in September 10, 2019 that it was expanding its ‘Free Trade Zone’ Pilot (the name changes, but the principles remain the same) ‘which will raise the total number of China’s FTZs from 12 to 18 [which] aligns with the government’s ongoing reforms to open up the economy’.

Readers of Byline Times will be aware of the abuse of the Uyghur muslims in China – more than a million moved to political ‘re-education’ camps. What has also recently been exposed, by the BBC, is that many are now working, as forced labour, in cotton fields. Perhaps forced labour might also be regarded as a ‘regulatory benefit’.’.

So it becomes a bit clearer that ‘sovereignty’ and ‘taking back control’ are rather more about getting rid of those pesky EU rules that focus on eliminating tax evasion and protecting human rights, thus allowing the UK to do business with countries that have a more ‘nuanced’ relationship with both.  

Dr Jason Hickel is an Economic anthropologist and author of The Divide: A Brief Guide to Global Inequality and its Solutions. “Wages tend to be lower than in the homeland, labour standards are worse and environmental regulations do not exist,” Hickel comments. “This is ideal for patterns of accumulation by foreign capital, but not good for national development.”

So a bit like a ‘free for all’, but just not for everyone.