Making the case for a '˜Foyle Free Trade Zone'

In this article, commentator STEVE BRADLEY floats the idea of a post-Brexit '˜Foyle Free Trade Zone' which, he argues, could be an economic '˜game-changer' for the North West

Friday, 2nd December 2016, 10:06 am
Updated Tuesday, 6th December 2016, 11:39 am
Foyle Port on the banks of the River Foyle.

It would be difficult to dispute that Derry’s days as a regional transport hub are long gone.

In its maritime past, the city has been a hub for shipbuilding, an international naval base, a thriving export centre and a key departure point for emigrants. Nowadays, all that remains is a small but important port at Lisahally (pictured).

Meanwhile, the town which bore witness to Amelia Earhart making aviation history 84 years ago, contains a regional airport that survives only through council subsidies. And, with its sole tenant (Ryanair), all but pulling out of the facility, its future is in question.

Derry's port at Lisahally.

As for rail, we’ve gone from being a regional rail hub with four stations and lines offering links in every direction to, nowadays, having just a single halt on the slow and infrequent Belfast route.

With our infrastructure in such a poor state, it’s little wonder Derry consistently tops the UK’s unemployment tables.

However, the possibility of a major reboot for our city’s infrastructure could arise from a very unexpected quarter. Whilst there is genuine concern at the impact Brexit may have, particularly on border areas, being removed from the EU could result in some unexpected benefits.

Once Brexit is complete, the UK will resume full control over its own tariffs and taxes. And that has prompted some in Westminster to float the idea of creating ‘Free Ports’ and ‘Free Trade Zones’ - particularly in economically disadvantaged areas like ours.

Derry's port at Lisahally.

Free Ports and Free Trade Zones are like Duty Free shops for industry - ie designated areas which, for customs purposes, are treated as if they were outside the country in which they are actually based. Under Free Ports, foreign goods can come in, go back out again or be stored without incurring the usual taxes, tariffs and red tape.

Tariffs are only paid on goods which go through the port and out into the local economy, though often at reduced rates. Free Trade Zones (FTZs) operate in a similar way and are like an extension of a Free Port. Foreign goods can enter them without incurring any taxes, providing those goods are intended for re-export. For example, an FTZ could contain a car assembly plant – importing hundreds of components from around the world and putting them together to create finished vehicles. By importing the foreign parts through the Free Port and assembling them within the Free Trade Zone, customs duties and red tape would be avoided on those parts and the finished cars would be cheaper to make and re-export.

FTZs are, therefore, all about attracting investment, boosting manufacturing and employment and promoting international trade.

There are over 3,500 Free Ports and FTZs in 135 countries around the world, providing employment for over 66 million people. The United States has over 250 FTZs with 420,000 jobs and they have helped retain domestic manufacturing that would otherwise have moved elsewhere.

Although common elsewhere, there are currently no Free Ports or Free Trade Zones in the UK and EU regulation makes it nigh-on impossible to set any up. So, earlier this month, the influential Centre for Policy Studies in London published a report called ‘The Free Ports Opportunity’.

It recommended that the UK should seize the opportunity Brexit presents to establish Free Ports in disadvantaged port cities around the UK. They estimate that 86,000 new jobs could be created in this way, both at the ports themselves and via the manufacturing clusters that would develop nearby.

So, what might a Foyle Free Trade Zone look like ? Not only should it make Lisahally a Free Port, but by also granting the same status to City of Derry Airport the concept could be amplified dramatically. The three-mile stretch of largely industrial and agricultural land between the port and the airport could then serve as the Free Trade Zone - creating a huge new economic engine room between two international transport hubs, Lough Foyle and the A2 (the city’s only dual carriageway).

This would not only usher in a golden era in manufacturing and logistics for our city, but would also help resuscitate our ailing transport infrastructure. City of Derry Airport’s viability would be greatly improved with Free Port status, as would its value – enabling the council to not only remove subsidies, but to potentially also find a willing buyer for it. And, with the Derry to Belfast train line running through this new Free Trade Zone, a brighter future could also be guaranteed for our railway. New stations at either end of the Free Trade Zone – serving the Airport/Eglinton and the Port/Strathfoyle - would connect the FTZ and transport hubs directly into Ireland’s rail network. It would also create a new commuter rail network for the city, and open up the possibility of rail freight returning to Northern Ireland for the first time since 2003.

There is no guarantee that the UK Government will introduce Free Ports/Free TradeZones, but the idea is certainly being discussed in Westminster circles. It is, therefore ,vital that Derry seizes the initiative now and not only helps make the case for Free Trade Zones, in general, but also for any such facility in NI to be located in Derry instead of Belfast - as usual. Not only do we have demonstrably greater economic need here, but, from a practical and financial viewpoint, we also have more land beside our port in which to build it than Belfast does (and with significantly lower land values). And, importantly, it would also ensure that the best days for transport are no longer all in the past for this once great regional and international hub.

For once, Stormont should get behind a campaign to create a Foyle Free Trade Zone for Derry and the north-west.