Key questions: what will green freeports mean for Scotland?

FREEPORTS (or green freeports in Scotland) are not a new concept. They were last introduced in the UK by the Thatcher government, but since the UK was then a member of the European Union, they achieved little as they were subject to EU rules and regulations which were rigidly enforced.

A freeport is technically an area outwith the country, where normal rules do not apply. A company can import goods, manufacture items, and export goods without liability for tax and duties. States can and do provide incentives for companies to invest in these areas free from all taxation and duties.

READ MORE: SNP members call for review into green freeports amid 'extreme' concerns

The EU has recently placed further restrictions and rules on freeports, and in fact are closing them where they can.

For Scotland’s ambition to rejoin the EU, this move will have a severe detrimental effect on membership application as it provides tax avoidance and fails at present to address concerns and worries.

Without answering concerns and questions we appear to be led blindly by Westminster to become a race to the bottom for industry and workers.

Without answers there are great concerns for many. The fact that some of these freeports will be commencing soon without answers is deeply concerning, and the ­promises of jobs and investment are over-exaggerated and bear no reality to freeports world-wide. I know of no example where jobs are created without displacement of staff from other areas.

A freeport area is in essence a ­separate jurisdiction zone, where companies do not pay tax or VAT (and are given extra incentives not to pay) on buildings and ­infrastructure development and building. The UK Government has also stated that companies in the area will be exempt from paying National Insurance (NI) for five years (which can be extended).

This exemption is particularly ­concerning with regards to workers’ state pension benefits and health and security benefits. If no ­contributions are paid by the companies, what ­happens to the individual rights of workers there?

And concerns around NI are one issue among many.

READ MORE: Still unclear what 'worrying' freeports mean for workers, says Roz Foyer

When the concept of freeports was extended to include Scotland by the UK Government, the SNP Trade Union Group raised concerns with Scottish Government ministers, which resulted in a motion being taken to SNP annual conference that established the official SNP position on freeports/greenports.

This was three years ago and talks and representations involving the STUC and individual unions have followed.

The comprehensive SNP ­motion agreed a firm set of points, and ­underlined the importance of trade union recognition and bargaining rights. The agreed motion raised ­other questions:

Will the companies operating in freeports actually be based in the UK/Scotland? Will they have UK directors and secretaries and be registered at Companies House? Must they have actual shareholders or can they just be “on-paper” companies?

The answer to date is that companies will follow the current model, ie be registered in the UK. This is of concern as a company based in a ­foreign entity can be registered in many ways, including simply as a brass plate in a regime in the developing world or offshore tax haven.

Will they fall under UK law ­provisions, or be able to exploit loopholes in a freeport?

Besides exploiting the lack of liability, without proper controls in place the actual registration of the company can be open to abuse and used for criminal purposes such as money laundering.

While the government states that companies will be registered in the UK, the Financial Commission and other government authorities often have no idea of the legitimacy of directors that are listed. They are often fictitious, listing individuals’ names and addresses without their knowledge.

Will the living wage be guaranteed to workers?

Although the Scottish Government is discussing this question with the UK Government, no guarantees have been given to date.

Will companies be required to recognise trade unions?

The answer to date is no. Rather, there will be a requirement for something called “meaningful worker ­engagement” or, in Scotland, “fair work arrangements”. There has been limited consultation with the STUC and unions regarding this ­issue.

Without trade union recognition ­enshrined as a right, workers are starting from a very weak position.

Without recognition ­guarantees, how can workers’ terms and ­conditions, and health and safety, be ensured or negotiated?

Will UK health and safety and environmental rules and laws be ­recognised and applied in freeports?

As these are reserved issues, the UK Government will determine and can change these regulations. As such, Scotland will have no say in determining these matters.

This should be of grave concern for workers and ­wider society, particularly in regard to environmental matters.

The freeport ­development at Teesport in Yorkshire is accused of environmental and habitat destruction of the North Sea area with the dumping of waste ­during its construction phase. The question is: what controls will be used in freeports? How do we enforce them? How do we protect workers, wildlife, and the environment?

Do local authorities have any ­authority in freeports?

There is limited (if any) consultation with local authorities about freeports, which will be exempt from rates and council tax. It is uncertain whether local authority planners will be involved in planning.

At this stage there are many unanswered ­questions.

Without Cosla or a local authority being involved how can local ­employment safeguards be put in place? What will the consequences be for local areas of the relocation or ­displacement of workers, in terms of education, employment, health, housing, and emergency services? What will be the local effect of the movement of workforces in and out of the area by companies that are given tax incentives to relocate them?

Will government agencies be employed to control ports, protect revenues, prevent smuggling, uphold trademarks and intellectual ­property rights, and ­administer ­immigration (since ­freeports could present ­opportunities for circumventing ­immigration controls)?

The answer to these questions ­appears to be yes; however, no plans are evident to increase staffing or training that would be required.

It is self-evident that criminal activity and evasion within freeports will develop and grow. Yet there are no surplus trained staff in any department or agencies that are available. There is a major deficit of experienced staff in all areas of border control and customs control following Brexit.

To avoid exploitation and ­unintended consequences, ­controls and laws must be put in place, ­before we ­experiment and count the cost to workers, society and the ­environment.

How will security be maintained in freeports?

A freeport can be established anywhere, not just at ports. As such, there are now proposals to extend freeport areas across multiple sites, from warehouses to airports, and in cities.

Without secure sites, these ­proposals are recipes for fraud, tax evasion, crime, environmental ­damage, ­pollution and exploitation of local trade, workers and society.

Will freeport areas be subject to government inspections, including unannounced visits?

Clarification and reassurance are required before the freeports are developed and start operating. To try and address it after the fact will never succeed. It is vital that unions and politicians urgently address these matters before they become complicit in ­exploiting and harming workers, families, local trade, government revenues, and the environment.

Freeports are policies designed to benefit the rich by exploiting workers, diminishing employment law, and degrading terms and conditions. They can only benefit the few, at the expense of the workers.