When it comes to seeking advice about Britain’s economy after Brexit, it’s probably fair to say that Greece wouldn’t be most people’s first call. And yet the Greek island of Delos holds a valuable lesson for the future of British industry. Over 2,000 years ago, Delos’s rulers declared it a Free Port. This new status exempted the island’s trade from customs duties, attracting merchants from around the world. Ancient empires have since crumbled, but the concept of Free Ports has lived on. They are a popular tool for governments across the world, helping to boost trade and manufacturing in industrial areas as markets become more globalised.
Indeed, while Mr Trump may insist that free trade has brought nothing but gloom to American manufacturing, the US’s pioneering of Free Ports tells a different story. Ports like Boston and Seattle are designated as being outside American customs territory for legal purposes. That means businesses like Nissan in Tennessee can import components through them, manufacture on US soil and then re-export cars without anything passing through US customs and incurring tariffs. Meanwhile, goods manufactured for the home market benefit from less customs red-tape and flexibility on import tariffs. Far from eroding domestic employment, keeping costs down in this way has allowed the US to retain and attract manufacturing jobs in a way that would otherwise have been impossible; crucial at a time when firms are being lured overseas by the promise of cheap labour. If the US looks ready to discard its free trade tradition, there has never been a better time for Britain to take it up. In 1952 Britain was still the workshop of the world, accounting for a staggering 25 per cent of global manufacturing exports. Today that figure is just 2 per cent, and the UK manufacturing sector ranks a miserable 30th of 35 OECD countries.
Consider this manufacturing decline in the context of a maritime heritage that once saw a third of the world’s ships flying the Union Jack and it might seem like Free Ports are a no-brainer for the UK, offering the opportunity to recapture our buccaneering free trade spirit. And yet, of the world’s 3,500 Free Ports, not a single one is in mainland Britain.
The culprit for this is the European Union. Its Customs Code is a murky 60,000 word document setting out the Customs Union’s rules, regulations, and procedures. To cut a painfully long story short, if the UK wanted its manufacturers to benefit from Free Ports, it would first have to prove that this wouldn’t damage the interests of other EU countries. Given the EU’s baffling array of special interest groups- from German washing machine manufacturers to Hungarian vineyards – this is a mountainous hurdle, making the development of British Free Ports impossible without a barrage of legal challenges.