There has been much debate about whether Brexit will have a positive or negative impact on the UK's international trade. For many, leaving the EU presents many questions to which the answers are unclear. But, in the continuous mist of uncertainty there could be a potential bright side to Brexit, where international trade zones are concerned, in the form of Free Trade Zones.

A Free Trade Zone is an area that is physically within a country but legally outside of it for tax purposes. Put simply, a Free Trade Zone allows goods to be imported, manufactured, processed and re-exported without the payment of import taxes, which only fall due when the goods are removed from the zone and entered into the domestic economy.

There are currently no operational Free Trade Zones in the UK; while there are a number of ports which have been authorised in the past, none have active authorisations. However, post Brexit the UK could have the freedom to set its own trade policy and to re-introduce Free Trade Zones in the UK.

What are the benefits of Free Trade Zones?

Free Trade Zones are widely used across the world, particularly in the US, South America, Canada, Middle East and Asia. The precise format varies, but it is very common for governments to use Free Trade Zones to encourage local manufacturing. They can also be used to simplify, or remove, import and local tax obligations for goods that are imported into the zones for manufacturing or processing.

Looking ahead

Clearly, the establishment of Free Trade Zones themselves will only help the UK economy if the port infrastructure is in place to support and assist UK manufacturers. A quick internet search shows that the UK is one of Europe's biggest importers and exporters and my clients tell me that the UK has excellent port facilities; which suggests that the infrastructure is in place and could therefore be a platform for the creation of UK Free Trade Zones.

The questions are, could the UK re-introduce Free Trade Zones across the UK as one part of a number of measures aimed at promoting the UK manufacturing and ports industries?

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