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Johnson's (not so secret) POST-BREXIT plan - VisualPolitik EN - YouTube
Channel: VisualPolitik EN
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Brexit is like nuclear power: everyone has
an opinion about it but almost nobody knows
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how it really works.
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To many, Brexit means the UK isolating themselves
from the rest of the world.
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But Brexit supporters think the exact opposite
- that Brexit means globalization and open
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markets... on steroids.
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Just check this out.
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Fears Boris Johnson is planning to turn UK
into ‘Singapore-on-Thames’ after Brexit
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In 2019, the phrase ´Singapore-on-Thames´
became a sort of mantra for many Brexiteers.
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As you know, Singapore is one of the main
hubs for international trade.
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They have free market deals with nearly everyone
and their laws have attracted thousands of
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companies.
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According to Boris Johnson, the European Union
is blocking the UK from becoming as free and
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open as Singapore is.
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And there is some truth to this.
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No, I haven’t gone nuts!
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Think about it for a moment.
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The EU is the biggest free market area in
the world.
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Thanks to this, there are 28 countries that
can trade with each other.
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And yes, it is true that the EU has very few
tariffs when it comes to foreign trade.
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But it’s also true that, for years, Brussels
has been cheating in the international free
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trade market.
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Guerre des frites: EU sues Colombia at WTO
over fries
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Yes, you head it right... we’re talking
about French fries.
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Europe has been selling French fries to Colombia
for years.
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So far, so good.
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The EU and Colombia have a free trade agreement,
so everybody is happy.
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So, what’s the problem?
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The problem comes when Brussels heavily subsidies
European farmers.
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Thanks to CAP grants, producers can sell under
market price to the Colombians.
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Add to this the EU food regulations, which
tend to be stricter than elsewhere and you
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can understand why Colombian farmers can hardly
compete with European ones.
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Many of you may think that French fries is
a stupid example.
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But we can find the same issue in a much bigger
industry.
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The battle between American BOEING and European
AIRBUS follows the same principle.
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And here we would be talking about something
much more serious than just some chips.
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US imposes record $7.5 billion tariffs on
European goods
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In other words, the United Kingdom wants to
stay away from all these trade wars.
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In order to do that, Johnson’s post-Brexit
plan would be to sign free trade deals with
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anyone.
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Deals that would allow the UK to trade with
the whole world without restrictions.
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All of this sounds beautiful but... there
is another problem here: TIME.
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Negotiating a trade deal between two countries
can take years.
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So, the UK will need more than a decade to
see the Singaporean dream come true... if
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it ever does.
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And what would happen in the meantime?
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The UK would have to trade with the world
according to World Trade Organization rules,
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which are not as convenient.
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So, if you’re watching this video from Brexitland,
you’d better get ready for lots and lots
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of tariffs while your government negotiates
something better.
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Or maybe not?
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What if there was an easy, quick and handy
solution for all of this?
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Oh yes! Boris Johnson has a not-so-secret
plan to have free trade without negotiations.
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I’m talking about this.
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Boris Johnson Widens Push for Singapore-Style
Free Ports in U.K.
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Exactly!
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The so-called ‘supercharged free ports’.
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These ports would work as islands of free
trade in the middle of the UK.
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Here is an example.
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Imagine that we have a Colombian ship full
of potatoes and we want to sell those to the
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UK.
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Let’s assume that the tariff for this would
be 30%.
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But now, imagine that instead of loading your
merch in, say Liverpool, you do it in a supercharged
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free port in the Port of Tyne, near Newcastle.
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Initially you pay no tariffs.
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Very close to the port there is a factory
that can process those potatoes, cut them
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into chips, freeze them and put them into
bags.
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And this factory is built on special ‘free
port’ land.
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So far, you haven’t paid any tariff whatsoever.
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Besides, the taxes here are very low and there
is freedom of movement.
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No border control, no customs checks... nothing!
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Then, once we have the frozen French fries,
we sell them to the UK market.
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This is when you have to cross the border
that limits the area of the supercharged free
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port.
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However, you are now already in the UK when
you have to pay the tariffs.
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But hey!
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Unlike raw potatoes, frozen fries just have
a 10% tariff.
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So now Colombians have paid less tariffs,
you have secured some jobs and you have bypassed
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lots of trade restrictions.
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Easy, right?
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Sounds like a great idea, doesn’t it?
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Then... why didn’t they do it before?
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Why does the UK need to be out of the EU to
do this?
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Today we are going to answer to all of these
questions but, before we do, let’s take
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a look back at the history.
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THATCHER’S LEGACY
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If you ever travel to London, there’s a
place you cannot miss: Canary Wharf.
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It’s one of the most modern neighbourhoods
in town, with lots of skyscrapers and even
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a funicular.
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Canary Wharf is one of the world’s financial
hubs.
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And this is surprising given that in the 70s,
this area was extremely poor.
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Back then, this region had a port: the Isle
of Dogs port.
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And they had a big problem.
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During the 70s, merchant ships started getting
bigger and bigger.
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So big that they couldn’t fit into the Isle
of Dogs port.
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So, year after year, they had less and less
traffic.
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In the 70s, this area was marginalized.
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But things changed in 1982.
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Back then, the British Prime Minister was
the woman you see on the screen: Margaret
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Thatcher.
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Thatcher was a big fan of businesses.
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So, in order to restore this neighbourhood,
she had an idea: she turned it into a so-called
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‘enterprise zone’.
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Basically, this area would have lower taxes
and much more flexible urban laws.
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Besides, the government would make sure it
was well connected with public transport and
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roads.
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All of this was enough to convince lots of
developers to come here and build office buildings
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and today, Canary Wharf is a skyscraper forest,
makes lots of money and employs thousands
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of highly skilled workers.
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In other words: the experience was good.
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So good that Thatcher repeated it over and
over again.
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During the 80s, the United Kingdom started
opening more and more enterprise zones with
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lower taxes.
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If this wasn’t enough, they also gave licences
to some ports to become free ports, with no
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tariffs whatsoever.
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This is how NISSAN opened their Newcastle
factory, near the Port of Tyne, that employs
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7000 people.
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So, what’s the problem?
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These two great examples I just gave you are
some of the few that really worked out.
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In most cases, these special economic zones
didn’t generate as much growth as Thatcher
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thought.
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According to many studies, 40% of the new
jobs they created were just relocated ones.
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This means, instead of brand new companies
and brand new jobs being created, businesses
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from other areas moved into the enterprise
zones.
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So, the net result was 0.
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But beyond this, the Government had to spend
lots of money on infrastructure to make the
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enterprise zones really attractive to businesses.
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Just to give you an example, Canary Wharf
has its own airport: London Central.
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So, basically, for each job that was created
with this policy, the Government spent 17,000
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pounds.
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In 2012, the United Kingdom stopped giving
licenses to these zones.
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No more tax breaks, no more tariff free ports.
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So now you might wonder... if the idea was
so bad... why do they want to do it again?
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Why are so excited about it?
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Let’s have a look at it!
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HARD BREXIT THERAPY
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While the UK lost its faith in these special
economic zones, the European Union did the
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opposite.
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You might not know but, today, Europe has
more than 80 special economic zones with lower
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taxes and lower or no tariffs.
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For example, if your Colombian friends want
to unload their French fries in the Port of
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Cadiz, in Southern Spain, they would pay no
tariff.
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They can store those tasty, tasty, fries in
the port for as long as they want.
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Of course, as soon as they want to sell in
Spanish territory, they cross a beautiful
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border with some customs checks and they pay
the tariff.
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But if they just store the fries because,
eventually, they want to send it to, say,
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Morocco... they pay no tariff whatsoever to
Spain.
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So now you might wonder... if this is already
happening in Europe... why does Boris Johnson
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need a Brexit to do it, huh?
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Well... here you have the reason.
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The Treaty on the Functioning of the European
Union, passed in 2007, is one of two primary
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Treaties of the European Union
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So, what does this treaty say?
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Among many other things, it says that these
special economic zones can be created for
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two purposes: one, helping a poor region to
develop or two, boosting a specific type of
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industry like green energy or something like
that.
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All of this explains why most of these 80
zones are placed in Eastern Europe.
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Croatia has 11 free zones while Austria and
the UK have none.
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And this makes sense because the wealthiest
Croatian region has 11,400 EUR of GDP per
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capita.
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Meanwhile, the Newcastle area, one of the
poorest regions in UK, has 35,000 EUR of GDP
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per capita.
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I think it’s clear who needs the most help,
right?
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So... yes and... no.
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Of course, from an EU perspective, the UK
does not need special economic zones.
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But if we look at it from a British perspective,
we can see how there are big differences between
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regions.
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Western Inner London has a GDP per capita
of 191,000 EUR.
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So, as you can see, compared with London,
the Northern regions are much poorer.
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And economics is sometimes a matter of comparison.
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In fact, these poorer regions are where Brexit
is so popular.
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And all of this explains why in this area
of the country, this free port idea sounds
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like heaven to many.
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Port of Tyne wants "virtual free port" stretching
to Nissan factory (in Newcastle)
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But the question remains the same.
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Special economic zones didn’t do marvels
in the 80s... why would they do it now?
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And this is when we get to the idea of the
supercharged free ports.
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Basically, in the 80s we had two types of
special economic zones: enterprise zones,
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with some tax breaks, and free ports, with
no tariffs.
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Imagine what would happen if we merge these
two into one thing.
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What do we have?
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We have a place with freedom of movement,
low taxes, flexible urban regulations and
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no tariffs.
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Boom!
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All of a sudden, we can make the story of
the Colombian French Fry maker possible.
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They come with their raw ingredient, they
unload it, they process it and then they sell
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it with lower tariffs.
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In the meantime, we have created companies,
factories and jobs for lots of people in the
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poorest areas of the countries.
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Sounds good?
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Well... in the North, this sounds really good.
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‘Free ports’ plan for North could give
UK £9bn boost
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According to a consultant named the MACE GROUP,
filling Northern England with these supercharged
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free ports would create over 150,000 jobs.
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As you can imagine, the port associations
in the country are enthusiastic about the
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idea.
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Conservatives are happy too.
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And Labour is pretty much divided.
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On the national level, they say this.
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Boris Johnson’s ‘free ports’ are for
the super-rich to dodge taxes and launder
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money
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Nevertheless, the Northern English Labour
MPs aren’t as clear.
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Just look at what Mike Hill, an MP from Manchester
says...
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Mike Hill: For jobs in Northern coastal towns,
create supercharged free ports
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So now the question is...
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Are we really talking about the last resort
for post-Brexit UK?
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Can these free ports really work?
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So far it looks as though they have more advantages
than disadvantages.
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But we are not talking about a game changer
at all.
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Can they create jobs?
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Of course they can!
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Definitely, in Newcastle, where the Nissan
factory is based, they could be a great incentive
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for other car manufacturers to set assembly
plans.
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They could import the cars piece by piece
and then put them all together in the UK.
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This could provide some jobs... but not really
highly skilled ones.
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At the end of the day, assembly is one of
the cheapest parts of the value chain of a
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product.
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But anyway, we are just making predictions...
and that’s not our job.
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So now the question goes to you.
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Do you think these supercharged free ports
are going to turn the UK into a Singapore-on-Thames?
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Would this make up for the losses of a Hard
Brexit?
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Please, leave your answer in the comment section
below.
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Before finishing this video, I would like
to thank ADRIANOPLE GROUP for helping us with
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the research.
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Adrianople Group is a political intelligence
company specialized in special economic zones.
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They have given us lots of insights and we
want to thank them.
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This is not a sponsor, just a simple thank
you.
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Also visit RECONSIDER MEDIA.COM, the podcast
that provided the vocals in this episode that
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were not mine.
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Don’t forget that we publish brand new videos
like this one every week so subscribe to VisualPolitik
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If you liked this video, give us a thumbs
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