Monday 14 November 2016 1:00 am

British ports would be liberated by quitting the customs union, according to a new report

Mark Sands is City A.M's political reporter.

Mark Sands is City A.M's political reporter.

The potential of British ports could be unleashed in the aftermath of Brexit, if the UK quits the EU customs union, according to a new report.

The Centre for Policy Studies is calling on Prime Minister Theresa May to create a raft of new “free ports” to improving manufacturing trade and regional growth.

These are considered outside the country for customs purposes, meaning goods can enter and re-exit the port without incurring import procedures and tariffs, but, the UK's only such operation is currently based on the Isle of Man.

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Speaking to City A.M. Tory MP Rishi Sunak said free ports are effectively precluded by a combination of customs union membership and tight EU state aid rules, adding that new locations could be dictated by competition.

“The government could declare its intention to designate a certain number of areas for this and cities would be allowed to bid for the privilege by outlining their plans,” Sunak said.

“It would create competition and local buy-in, and ultimately more jobs in sectors like manufacturing.”

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In the CPS report, Sunak argued free ports could be operational within a year of a policy announcement, adding that they represent a more politically-viable option that one mooted alternative, unilaterally offering tariff-free trade to EU member-states.

Ports accounts for 96 per cent of all the UK's trade volume and 75 per cent of trade activity, and Britain's port sector is already the second largest in Europe.

Sunak entered parliament last year, succeeding former foreign secretary William Hague in the Yorkshire seat of Richmond, having previously run investment firm Catamaran Ventures.

Associated British Ports chief executive James Cooper said: “Ports are key to the nation’s trade and many offer ideal locations for new manufacturing. They should be front and centre of an industrial strategy to boost exports and re-balance the economy.”

“This report is an example of the creative and ambitious thinking that should underpin such a strategy, maximising the potential of our ports to promote export-led growth and helping forge a prosperous future post-Brexit.”

However, while international trade secretary Liam Fox has previously hinted that the UK will quit the EU customs union, a formal position has yet to be decided.

A Department for International Trade spokesperson said: “The UK’s ports provide British businesses with a gateway to the global market, with 95 per cent of Britain’s trade in goods currently moved by sea.

“As we seek to boost exports, we will continue to work with Britain’s ports to help secure our place as a global trading nation.”