Freeport strategy not enough to tackle UK’s regional inequalities, says expert

Britain has launched a consultation of new innovative freeports in a move to boost trade, jobs and investment following the country’s departure from the European Union (EU). But there are several challenges the country should address to make the strategy work to promote regional development, a trade expert has said.

The most obvious objective of freeports strategy is “an instrument to promote regional development”, Amar Breckenridge, senior associate at the Frontier Economics (Europe), told Xinhua in a recent interview.

“This ambition can be read against a recent report into regional differences in productivity within the UK, which are amongst the highest in Europe,” he said.

According to an official statement released on Monday, up to 10 new innovative freeports will be opened across Britain, with the location of the new zones expected to be released at the end of this year so they can start business in 2021.

Freeports will benefit the local area as the government aims to “level up the country and seize on the opportunities leaving the EU has presented,” said the statement.

However, as the former economist at the World Trade Organization observed, the freeport strategy is unlikely to promote regional development on its own.

The main issue for the country is getting various regions more connected to trade, he said. “But the ability to take advantage of trade depends on skills in workers and productivity in businesses,” the expert explained.

Therefore, the expert believed there need to be interventions dealing with factors that are holding back productivity of companies and workers in regions where productivity is lagging.

“In particular the government needs to create linkages between the freeports and the rest of the economy of the regions in which they are located,” he added.

Among other regional transport policies, Prime Minister Boris Johnson on Tuesday approved the HS2 high-speed train project despite spiralling costs. The route, to be completed by 2040, will link London to Birmingham, and then Manchester and Leeds.

Meanwhile, Breckenridge pointed out that the freeport concept could pose a challenge to striking a trade deal with the EU, in the context that various concerns about freeports have been raised in terms of whether they undermine the notion of a “level playing field”.

He regarded state-aid rules and other “level playing field” requirements as the key issues in the trade talk set to start soon between Britain and the EU.

However, “having freeports may be one way to mitigate the difficulties that would arise if the UK and EU fail to conclude a trade agreement”, he added.

The freeport idea was first raised by Johnson during his campaign to become Conservative leader, according to the English newspaper The Guardian. In Johnson’s vision for Britain’s post-Brexit trade relations, the country will be unshackled after 47 years tied to the EU.

However, Michel Barnier, the EU’s chief Brexit negotiator, has emphasized that for the EU to offer a “highly ambitious trade deal” with Britain, Britain needs to agree to “specific and effective guarantees to ensure a level playing field” to ensure competition “is and remains open and fair.”