Friday 9 September 2022

Tories demand UK becomes landlocked


The issue with the Northern Ireland Protocol is, and has been from the outset, that two areas with different regulatory and customs regimes need to have a border between them to control smuggling and tax and customs evasion. It’s a simple enough concept, although one which the Brexiteers are still struggling to understand, largely because many of them actually favour tax evasion and smuggling. Buccaneering, aka piracy, is what they’ve openly admitted that they want.

But the issue doesn’t just apply to the question of Northern Ireland – it also applies to so-called freeports. Logically, there has to be a customs border between any freeport and its immediate hinterland because two different customs regimes apply; without controls over what passes across that border, goods imported tariff-free into a freeport can simply end up in the rest of the UK, potentially undercutting legitimately imported goods. The proposal from a group of Tories that the whole coastline of the UK should become a freeport thus effectively amounts to a demand that the rest of the UK should become an entirely landlocked customs area. The fact that they are proposing, effectively, not to police the border doesn’t mean it isn’t there, just that crimes such as tax evasion, money laundering, and smuggling become easier to commit. If one of the problems with the border between the Republic and the North is its length and the number of crossing points, just imagine the consequences of a border which maps the entire UK coastline, but a few miles inland.

There is certainly evidence that establishing a freeport promotes the development of industry and jobs within its area, but there is no hard evidence to suggest that that economic activity is extra, rather than merely relocated. From the perspective of a capitalist, who wouldn’t prefer to operate in an area where they pay less tax and are subject to fewer regulatory restraints? Whether it actually benefits the economy as a whole, as opposed to only those who can easily relocate their businesses, is another question entirely. The evidence and experience is not good, which is why the government of the day – a Tory government – closed down the UK’s freeports in 2012. There is no obvious evidence that the current crop of Tories have learned anything from the problems of the past, and every reason to believe that it’s a get-rich-quick scheme for those prepared to play fast and loose with the rules.

There is another parallel with the Northern Ireland Protocol here, though. Those who believe that it is possible to set up separate customs regimes within a territory without policing the borders can’t understand why the EU doesn’t see things in the same light. The EU believes that borders between customs areas should be controlled; the UK government considers such controls unnecessary. That’s how they want to implement their promise that the UK outside the EU would pursue a policy of global piracy, although they preferred the rather vaguer term ‘buccaneering’. Same thing, though. One man’s criminal is another man’s ‘entrepreneur’; it’s hard to see how that gap between perspectives can ever be bridged.


Jonathan said...

I can see why the Tories contradict themselves. And you are right about there perhaps being no net gain from freeports. But they are tantalising and attractive. I for one would like to get this right. I will try:
1. Nation-state or City-state? Look at the Med and the Hanseatic League - there is a tension. But City-states (and a network of them) are fantastically profitable.Liverpool is a natural in England. I would love Wales to have a City/State/Port like Hamburg, Singapore or Alexandria at their best. Wouldn't bother me if a Freeport in Wales drew economic life down the M4 or A55 and out of England. 'Levelling up' see?
2. For a Nation-State (like Wales) to regulate a City-state/Freeport is very difficult. You need switched-on, light-touch governments. Like using a tourniquet - Balance the enforcement of rules while keeping the blood circulation going.
The political and business culture of Wales is totally incapable of making Freeports work, or any lively economy. We had a shot in the 70s and 80s with the WDA with some/mixed success. We will desperately need something good in Wales and I don't see it on any horizon. Wales does like the Drakeford 'insurance policy'. Stops us getting Indy. Luckily we don't have the Palestine issue in Wales. So its ok to listen to Netanyahu on how he linked the economy and Indy. He had the Wales problem ie E.German economy but broke out. Worth a hard look!

dafis said...

Much of what you say there Jonathan is right. The default mindset in Wales is reliance on the begging bowl vis a vis London and the belief that only inward investors are smart enough to "do business". Even then Wales prefers to regulate its business in case it gets above itself !
The WDA benefits from being a part of history. It may have been a source of joy in its early days but I recall clearly how it too began to get above itself with modest achievers thinking they were masters of the universe and attracting even more modest and under achievers to reinforce their myopic egos. Maybe we like to recall it now because what exists today with its support for faux enterprise is a total disaster which will never give us the go-forward needed to underpin a drive to indy.