As we were recently discussing Free Ports: Let me tell you the story of the Hamburg Free Port. Der Hamburger Freihafen.

First published in August 2019.

• At the beginning of August, the new government announced it was planning to create free ports across the UK after Brexit.
• On 1 August, Chief Secretary to the Treasury Rishi Sunak immediately claimed on the BBC Radio 4 Today Programme that “the EU is the only place where these [free ports] really don’t exist.”
• The next day Conservative party chairman James Cleverly claimed on the same Today Programme that [Britain could] use that opportunity of Brexit to do the kind of things that we’ve been precluded from doing for decades, including free ports...”

Hamburg became a state of the newly founded German Empire in 1871. But it did not become part of the Empire’s customs territory.

In 1881, finally, the citizenship of Hamburg signed a treaty with the Empire to join the customs territory. However, a bit of the territory was declared a free port and would not join the customs territory.

As part of that deal Hamburg received 40 million gold marks. It took the money and built the “Speicherstadt”. Pretty, right?

Freie und Hansestadt Hamburg. / Flickr - Heribert Pohl

Anyway. The treaty came into force in 1888. The Hamburg Free Port was born. And it was rather successful at the time for a couple of industries that took hold there.

EU law did not kill the free port either. The free port became a free zone. But the economics of free ports changed... The average tariff – at the time the free port had been set up a staggering 30% – was now a mere 3%. US post-9/11 security requirements meant that security requirements reduced the “free” in free ports.

Then, most of the goods were traded within the EU context, so not subject to even the 3% tariff. And then there was another legal change: EU law does not only allow free zones but also free storage procedures.

Here’s the EU’s Union Customs Code (UCC):

EU’s Union Customs Code. /

In short, the Free Port was now more of a hassle: 120 customs officers were busy checking an actual border within the German territory. And they found some fun things...

A mini-torpedo with Marijuana (really, guys?), a container with 122,000 fake Gucci bags from China, and (this is fun) 5,000 fake pallets that cannot transport as much as the standard euro-pallets.

In short: the economic need for a free port was gone, it was now a location for increased bureaucracy, producing cost and procedures that were less flexible than the ones under the UCC. The citizenship of Hamburg thus decided to abolish the free port.

But Hamburg alone could no longer do so, it took a federal law to do it in 2011.

Here it is:

Law to repeal the free port of Hamburg. / Bundesanzeiger Verlag

On 1 January 2013, the free port was abolished, the inner-German border fell. Of course, at first there was a bit of administrative hassle, etc, but one year later the consensus was: it was the right decision...

The most telling statement was from the head of the committee for trade of the chamber of commerce who said: “... the traffic in the port flows better, there are less customs formalities for goods from the EU, and companies in the port can now act without regard to customs opening hours.”🔷

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[This piece was first published as a Twitter thread and turned into the above article on 14 August 2019, with the author’s consent, with the purpose of reaching a larger audience. It has been minorly edited and corrected. | The author of the tweets writes in a personal capacity.]

(Cover: Der Hamburger Freihafen.)