Calls have been made for further government involvement in the Solent’s new freeport to curb potential illegal activity.
The Solent area – which includes Portsmouth – is one of eight locations in the UK where a freeport is set to be implemented later this year.
Free trade zones
Also known as free trade zones, they are designated areas where a country’s usual tax and tariff rules do not apply.
It is thought this could attract around £2bn of investment to the south of Hampshire and stimulate global trade post-Brexit.
University report: Stronger regulation needed
However, a new study from the University of Portsmouth has shown stronger regulation is needed to prevent them being abused for money-laundering and tax-evasion purposes.
Lead author of the published report Paul Gilmour, from the university’s institute of criminal justice studies, said,
“The companies based within these zones enjoy several concessions, such as cheaper import duties, suspended custom obligations, and reduced bureaucratic checks intended to streamline cross-border trade.”
How the freeport could be abused
The study found art dealers commonly exploit the beneficial goods-in-transit position of freeports, to house assets on a more permanent basis. It also warned freeports can be abused for money-laundering and tax-evasion purposes due to lack of transparency.
Mr Gilmour added,
“There is also evidence that these zones enable trade-based money laundering by the falsifying of trade invoices to deceive authorities.
“The many international transactions occurring through freeports, coupled with a lack of regulatory supervision, poses notable challenges for government officials.”
Post-Brexit trade deals
It comes as the national Labour party claimed firms based in freeports would miss out on key markets in countries that the UK has signed post-Brexit trade deals with.
Labour said exports to 23 countries were affected as the UK had signed agreements to roll over deals the nations had with the European Union.
Exports to the countries concerned – which include Canada, Singapore and Mexico – were worth £35.5bn in 2019, the party said.
But a government spokesman said,
“There is no error and it is not uncommon for free trade agreements to have these provisions.
“Businesses will not be shut out of markets we have negotiated free trade deals with.”
Ambition to attract £2bn investment and create 52,000 jobs
The bid for the Solent freeport had been led by the Solent Local Enterprise Partnership (LEP). When asked about Labour’s concerns, the LEP did not comment.
A spokesman for the Solent freeport said:
“Our ambition is for the Solent Freeport to attract £2bn investment and create 52,000 jobs.
“Focused on the Solent’s most disadvantaged communities, high quality employment space will be created, with investment specifically targeted at state-of-the-art growth sectors and ground-breaking approaches to decarbonisation.
“Partnerships with our three world-class universities and research assets, alongside a dedicated Solent freeport green growth institute, will provide a centre of excellence in green skills and jobs to ensure local communities – and in particular our young people – can benefit from opportunities created.”
This article is from the BBC’s LDRS (Local Democracy Reporter Service) scheme, which News OnTheWight is part of. Read here to find about more about how that scheme works on the Island. Some alterations and additions may have been made by News OnTheWight. Ed
Image: Annie Spratt under CC BY 2.0
