Contributors

Freeports or Foreign Trade Zones (FTZs) as they are referred to in the US are more established and the UK could take insight from the successes and challenges.

The key is simplicity, businesses need to understand the benefits to their business. Our clients have found success with ‘Freeports’ (FTZ) when there is open and consistent communication between the companies within the FTZ, outside the FTZ and government organizations. This is aided in the United States by the delegation of the management of FTZs to a more localized “grantee” entity. Grantees include cities, local economic development foundations and port/utility authorities. This more localized management has allowed the application process and ongoing operation of the FTZ to reflect more localized needs (rather than having everything run by a centralized authority).

Data collection and management is an ongoing challenge for regulators and grantees, with implications related to both efficiency and security. As every shipment into and out of an FTZ must be authorized by the US federal government, with a significant amount of information provided with respect to each shipment, there is a substantial amount of data at issue, and there are ongoing efforts and initiatives to digitize and standardize the information that is collected. This should be a priority for UK Freeports as they develop systems and processes to ensure longevity and security. Encouraging and embracing this digitalization yields more efficient processes which are intended to also be more secure.

The UK survey highlights the concern that UK Freeports will have potential negative impacts. In the US, this is where we see the most advancement in overcoming challenges involving such activities and concerns. Trust and collaboration between the public and private sector is also critical here as well. Free trade zones in the United States exist under the oversight of the US Customs and Border Protection (CBP) division of the Department of Homeland Security. CBP has addressed several of the concerns and potential negatives of FTZs, such as fraud, manipulation and potential criminal activity, through regular audits and inspection of the FTZs that have been approved, together with a fairly substantial initial inspection process.

We often find that businesses are unaware of the benefits of FTZs beyond the basic level, and unaware of the requirements to obtain these benefits for their business. More active marketing and promotion of FTZs by local and state economic development agencies will ensure that all qualifying businesses are able to benefit, which will in turn drive future use and collaboration.