One of our readers has been in touch about ‘free ports’ and ‘green ports’, asking what they are and what’s the difference. Always happy to oblige, here’s a Common Weal take – and of course there is a bigger question that we think is missing. What kind of ports does Scotland really need?
First, some history. Free ports emerged as part of the mercantile culture of the late Renaissance period, particularly in Italy. They were the point of arrival of goods and the merchants who traded there developed what we’d now think of as a ‘libertarian’ view of things.
They were bringing in the goods people wanted and needed so making it easier to bring them in had to be a good thing. They pushed for an increasingly got exemptions from the customs and duty regimes of the countries (more accurately kingdoms) of which they were a part, effectively giving them autonomous economic policy powers.
This led to the thriving of some of the great European port cities like Genoa and Livorno, then free ports moved outwards to cities like Odessa, and across the European empires and colonies to the Caribbean (the main city in Grand Bahama Island is still called Freeport) and Asia (where Singapore and Hong Kong are good examples).
This sounds like a success story – if mercantile power and colonisation of other countries can be considered a success, and if you’re willing to overlook the iron link between free ports and slavery. But to really understand the legacy of free ports beyond architecture we need to look at their 21st century offspring.
One of those is the Export Processing Zone (EPZ) or the Special Economic Zone (SEZ). These are the spirit of free ports in 21st century form. These are designated areas (almost always in developing economies) where the government has effectively ceded sovereignty on a conditional basis.
They become the host of factory work done by or on behalf of the big corporations, but which don’t need to abide by the rules of the host nation on tax, worker welfare, environmental performance and health and safety. The stories of life in an EPZ are truly horrific, little more than modern day slavery with all the violence, exploitation and squalor to go with it.
In some ways it is a dream for the economic elite; you can have rules and laws to protect your own children but create little unregulated hells in which you force the poor to work for you, hidden away and safely quarantined. If you’ve shopped in the last 20 years you’ll certainly have possessed items which are the result of EPZs.
The other modern offspring of free ports is the offshore (or in the case of London the onshore) tax haven. Again, the elite get to live in well-policed, well-maintained societies but avoid tax themselves by using accounting tricks to make it look like their source of money is really a tiny Caribbean country with hardly any population but a willingness to not raise taxes on them.
This idea of a ‘safe space’ for the interests of the powerful which has a boundary so they themselves are insulated from the corruption or indeed the horror of what their interests look like in reality is enormously attractive.
This is the tradition from which the Tory Government has drawn – competitive advantage from boundary-delineated low tax status. Now towns and cities with ports can apply for tax exemptions to give them that ‘competitive advantage’.
Rather shamefully, the SNP initially seemed to be about to throw its lot in with free ports but, after a backlash, adapted the idea somewhat. That idea has become known as ‘green ports’ (though whether there is any chance of this happening isn’t clear as the UK Government has the power here and has indicated it doesn’t want to play ball).
Green ports are basically free ports with more conditions attached – the tax breaks apply but there must be a living wage for workers, a loose commitment to good business practices and decent environmental performance.
These are definitely improvements, but in the end this is still a proposal to invite businesses to move to low-tax zones on the Scottish mainland. In fact the extent to which this is true can be gathered when you know that Scottish ‘green ports’ must be created by getting the UK free port status first but then signing a separate bit of paperwork from the Scottish Government.
Will they be policed properly? What sanctions for businesses that don’t live up to the ‘Scottish Business Pledge’? Does ‘green’ in this context only mean ‘no worse than elsewhere in Scotland’? Should you even be trying to ‘sand the edges’ off a proposal which is pretty far-end even for right wing Brexit fanatics?
But fundamentally, does the Scottish Government believe that tax competition is good for Scotland? If a port area can benefit from opting out of the taxes everyone else has to pay, why not an inland town or some disused industrial estate? In fact, why not let rip, town by town, undermining each other on tax in a desperate attempt to grab any jobs you can?
Starting this debate from this angle fails us on the ports issue which is a serious one. Scotland must be the world’s most land-locked island. The way we have allowed our maritime history to decline along with our coastal communities is in its way quite remarkable.
Both the CalMac and Ferguson Marine debacles are just more example of lack of any driving vision for Scotland’s maritime, island and coastal future, to which we can add the private fishing and fish processing monopolies, the seabed dredging horrors, the lack of interest in the harm being done by enclosed intensive salmon farming and much more.
And even more, it neglects the really big issue – is the Scottish Government serious about becoming an independent nation and if so why has there been no serious work on what export capacity an independent Scotland would actually need?
As things stand, Scotland would be a country with very limited ability to trade with the world other than via another country. Almost everything made in Scotland would be driven to England if it was to be transported anywhere else in the world.
Changing that needs a major plan for creating at least one major export port in Scotland (and probably more than one). It seems unlikely that the UK free port initiative (even with ‘added niceness’) has any hope of achieving that given that existing English exporting ports are eligible too.
There is a very real risk that ‘green ports’ will end up not being that green, not being all that ‘port’ focussed but still manage to undermine other parts of the Scottish economy – yet will still leave us without anything like the exporting infrastructure an independent Scotland would need.
The line of least resistance may dictate that following behind Boris Johnstone but ten paces back and with an umbrella constitutes ‘realpolitik’. It is also the case that this is being done with good intentions. It is harder to be convincing that this is really in Scotland’s interests.