Green freeports 'could block an independent Scotland from joining the EU’

In an exclusive interview, the Scottish Greens MSP told The National that the EU are moving away from the freeport model and their implementation in Scotland could see the country “diverge from EU standard practice and minimum standards”.

“It's then absolutely conceivable that these freeports would cause delays or an outright challenge to Scotland's accession process,” he added.

The interview is the next instalment in our week-long series on Scotland’s green freeports after an overwhelming amount of reader interest and concern.

READ MORE: What are green freeports? Everything you need to know about the schemes

Inverness and Cromarty Firth green freeport and Forth green freeport were announced as Scotland’s two winning bids in January last year through the scheme agreed by the Scottish and UK governments.

Green freeport status offers special tax incentives and lower tariffs around ports, with the aim of stimulating economic growth – with the UK Government arguing it will attract up to an estimated £10 billion in investment and create around 75,000 new, high-skilled jobs.

But critics including Greer note that past experiments with freeports – including in the UK – have proven less successful.

There is also evidence that freeports can become hubs for criminal activity – including trade in counterfeit goods, drug trafficking, smuggling of untaxed goods or trade-based money laundering.

In 2020, the EU clamped down on 82 free ports or free zones in 2020 after identifying that their special tariff and duty status had also aided the financing of terrorism and organised crime.

“Obviously, we want Scotland to not just be independent but a full EU member state as soon as possible,” Greer (above) said.

“And the more that we diverge from its standard practice and minimum standards, the harder that will be and the longer that will take.”

He added: “And that's something that anybody who is committed to either Scotland or the UK as a whole rejoining the EU needs to not just be aware of but actually address. The supporters of freeports include many supporters of – whether it's Scotland or the UK – rejoining the European Union.

“And they've not really addressed this point.”

Greer also noted that this is far from the UK’s first foray into freeports.

“Freeports are an experiment in a really radical kind of neoliberalism. They follow this idea that the fewer rules that apply to businesses, the smaller the tax burden on businesses, the more that they will somehow give back to society,” he said.

“And we’ve got decades of examples where that doesn't work including in the UK where our previous experiment with freeports was ended by, of all people, George Osborne – one of the most neoliberal chancellors we've ever had.”

The first freeports in the UK opened in the 1980s by Margaret Thatcher in an effort to combat de-industrialisation and a declining economy. It was only in 2012 that the Tory-led government decided not to renew their licences.

“Osborne acknowledged that the UK's previous attempt at freeports actually hadn't worked,” the Greens MSP said.

“And yet we are unfortunately in the position now post-Brexit where this is something that is being imposed without really any credible evidence base that is going to benefit anybody in Scotland.”

Asked whether attracting this direct investment could help propel and expand Scotland’s renewables industry, Greer argued that Scotland “already does exceptionally well on foreign direct investment.”

“And we've done that by being a part of the UK that has the most progressive tax system and therefore has money to invest in public services,” he said “We have a highly educated population, we have world leading universities.”

“What freeports did, more often than not, was displace jobs rather than create new jobs. You had companies who already were operating within the UK, who simply moved their operations to the areas that the freeports were in. So there was no net benefit. No new jobs were being created, but there was a net loss of tax revenue. So that's a net loss for public services.”

This very risk was outlined in a House of Commons report from 2020, which quoted a UK Government freeports consultation document saying: "There is evidence in some cases that zone-based policy can have a displacement effect, leading to reduced job opportunities in areas which are not freeports."

A final government evaluation of the Enterprise Zones of the 1980s, very similar to freeports, said that the scheme had created about 58,000 jobs additional to those which would otherwise have been created in the local areas but it is unclear how much of these could have been due to displacement from elsewhere. 

The report also found that the cost per job created in terms of tax relief was approximately £17,000 in 1994/1995, or £40,000 in today’s prices.

READ MORE: Highlands green freeport tax sites 'live and active soon'

Greer said that the Scottish Greens have “always been clear that you can’t deregulate your way to a stronger, greener, more prosperous economy”.

“You cannot throw tax cuts at multinational corporations and expect the Scottish economy to benefit from that. We know much more widely in economics that what you need to do is invest in public infrastructure, invest in public services, invest in your people. That's how you end up with a stronger economy,” he said.

“The Greens have voted against these freeports at every opportunity and we will continue to do so. And we will push for them to be reversed.”