Free Port of Peterhead plan shows dark chaos of Brexiteers’ capitalism

I had agreed to speak at some rally that Salmond – then MP for Banff and Buchan, with Peterhead in his constituency – had organised at the town’s huge dockside.

It was a bitingly cold, blustery, slate-skied early evening. The port workers gave the leading politician a few claps, but endured my blethery yearnings with forearms tightly folded. The fish smell? It was in with the atoms.

This is one of the tough places of Scotland, I remember thinking – where raw stuff is harvested, processed, crated and traded. There’s no messing with Peterhead.

So when a Scottish Office minister opined this week that the Blue Toon was an eminent candidate for the latest post-Brexit buccaneer adventure – the creation of low-tax and low-tariff “free ports” – it didn’t really surprise me.

After Salmond and then Eilidh Whiteford, Banff and Buchan elected a Tory MP in 2017, David Duguid, on a 20% swing (and that was anticipated by the 54% Leave vote in the area).

These fishermen chuck their freelance selves out into the often insane elements, engage battles with other national fishing fleets, sometimes (I am reliably told) do hard drugs to get them through their shifts. If any Scottish community was up for a bit of libertarian “free-porting”, it might as well be Peterheadians.

But take a day to examine these free port proposals, and you stare right into the heart of the chaos capitalism that burns in the hearts of the No-Deal Brexiteers.

A “free port” is a pretty old idea. It dates back to 2500 years ago when the boats (or triremes) of the Mediterranean – laden with wines and oils – docked into the Free Port of Delos. This was a small Greek island in the Aegean seas, which offered a respite from the taxes and tariffs imposed by other principalities.

In the Renaissance, Italian city-states like Trieste, Livorno or Genoa also opened up their docks – and fiscal regimes. They exemplify the definition given by the University of Helsinki of a free port – as “a territorial exclave endowed with its own economic policies, often of a liberal (or even libertine) cast ... a place where merchants could do business with minimal interference from state authorities”.

And in this very spirit, the free port has been resurrected. The Brexiteers’ dream has several rainbow arches.

Firstly, this is the kind of crazy brilliant thing you believe you can do when you are free of the dreaded customs union, single market and acquis communitaire of the EU. And revive your global brand as a “maritime superpower” to boot. Cutlasses aloft!

Secondly, you can point to examples of it apparently working (though not exactly in the same way everywhere). The policy cherry-picked by the Brexiteers is the idea that free ports will revive British manufacturing industry.

There is a quirk of global trading standards which often means you pay a big tariff for the raw materials and parts, crossing many borders, that go into making your final product. These tariffs are much bigger, weirdly, than the tariff you pay for the manufactured object itself.

So look here, suggest the Brexiteers (holding out their camel-coat racked with gold watches). What if you set up your manufactory within these new free port zones – where the materials and parts come in on a low tariff, get fully assembled in this location, and leave on a low tariff? Many millions saved!

Thirdly, the Brexiteers then point at a map of Britain, showing that most of our many “world-class” ports are in areas of relative deprivation. Not to mention far from the overheating, overweening metropolis of London.

Turn a few of these into free ports, they suggest, and tax-and-tariff-avoiding industries will swarm into these spaces, like wasps to jam. So it’s not only buccaneering, but redistributive too!

The Brexiteers then point to the US, and the United Arab Emirates, as examples where this effect precisely happens. But ever since these ideas have come back into vogue – kicked off by a 2016 paper from the Tory rising star Rishi

Sunak MP – the critics have been steadily lining up their objections.

The biggest critique – and it’s also made of the “Enterprise Zones” so beloved of both Tory and Labour Westminster governments – is that the employment created in these zones and ports have actually just been pulled away from other, less favoured areas of the country. They’re not new or additional jobs.

The remainder of the critique refers to the historic dodginess of the free port. Exceptional economic zones, where scrutiny, inspection and regulation are deliberately simplified or lifted, are invitations to money laundering, or just straight out tax avoidance and flight.

So the free port may be an economic supernova – yet it may barely radiate its benefits to the wider society. With alarming candour, the director of Teesside’s port – vigorously bidding for the new status – stated the obvious equation.

“What we need to do is demonstrate that the upside benefits are proportionally greater than the loss of revenues in term of taxes”, said Jerry Hopkinson from PD Ports to the BBC. “We are doing the calculations that will demonstrate that to HM Treasury.” Many experts say that simply won’t be demonstrable.

Their tattiest rainbow of all is the idea that this dodging, diving, ducking and weaving will even survive the supposedly cleansing brutality of a No Deal. There is a touching faith among Brexitons that “turning to WTO rules” means they can finally evade those interfering Eurocrats, constantly instructing member states on how they can and can’t aid their own economies.

Yet the WTO has its own, not-insignificant anxieties about nations giving themselves unfair advantage in a world market. And other WTO members can also make objections to Brexitannia’s freebooting moves.

And when they eventually, creakingly, come to strike their inevitable trade deal with the EU, do the Brexiteers think the mandarins won’t notice that UK free ports are going gangbusters, undercutting continental business? And that they won’t try to mitigate that in any deal?

I’m not being starry-eyed about the EU here. If the Brexiteers think they can rodeo-ride the rules of global commerce, then an indy Scotland would have to be just as strategic when it comes to Europe’s rules on “state aid”.

But some canniness could be genuinely progressive. For example, the more socially improving and environmentally ambitious your case for public industrial and business investment, the more likely you’ll get it approved at an EU level.

Proposing to set up hyper-capitalist Fight Clubs on the sandy seashore…maybe not so attractive.

Which is why Scotland should be on the inside of Europe, aiming to remain, reform and even transform, rather than outside, brandishing flaky and antique schemes.

Will the Blue Tooners of Peterhead, arms folded and eyes narrowed, adapt effectively to either of these outcomes? I’d bet on it.

But the fog of Brexit is rolling in fast over the waters. The rest of us in this not-yet-stated nation had better plot our course, quick, to outpace the oncoming darkness.