Hamburg Senate decides to abolish Free Zone effective 1 January 2013

The Senate today adopted a resolution to apply to the federal government to have the Free Zone abolished. The decision has been reached after intensive discussions about the future of the Free Port over a period of several years. The resolution is based on a broad consensus that was achieved in cooperation with the Hamburg Chamber of Commerce and the port-related business associations.

Businesses operating in the current Free Zone that will be affected by the change will be required to conform with the customs regulations applicable to seaports as of 1 January 2013, as is already the case in other parts of the Port of Hamburg, in Rotterdam, Antwerp and other European ports. The Ministry for Economic and Labour Affairs will be urging the federal government to approve and promulgate the implementation provisions for the modernised EU Customs Code already passed back in 2008 in a timely manner to give the businesses concerned sufficient time to prepare for the system change.

It is also intended that the customs authority will use its discretionary powers for the benefit of businesses operating in the port to the greatest extent possible, particularly in relation to obtaining collateral security for import levies in connection with the warehousing of non-EU merchandise. Moreover, the Senate, the Chamber of Commerce and port-related businesses concur that the customs authority should present an overall concept for the logistics location of Hamburg, prior to the abolishment of the Free Zone, which adheres to the principle of “customs to the customer” to the greatest extent possible; what this means is that customs officials are to clear the goods directly at the terminals in future.

Senator for Economic Affairs Axel Gedaschko: “The joint efforts by the Senate and port-related businesses to arrive at a consensus with regard to the future of the Free Zone have been worthwhile. Through the abolishment of the Free Zone, Hamburg will once again be given absolute sovereignty in terms of planning and design for the port district. This will benefit the port in every way. To the businesses affected by this change, we – together with the customs authority, the Chamber of Commerce and the associations of port-related business – will be providing assistance in order to help them achieve as smooth a transition as possible.”

Following approval by Hamburg’s Bürgerschaft, or city parliament, the Senate will apply to the Federal Minister for Finance for the abolishment of the Free Zone, since this change will require a Federal Act to be passed. Generally speaking, the dismantling of the customs fence will only occur after the abolishment of the Free Zone on 1/1/2013; the barrier might be retained in certain places for security or cost reasons. The Senate will investigate the traffic implications resulting from the abolishment of the Free Zone and present suggestions regarding traffic route planning as well as urban traffic management and control.

Infobox: From the Free Port to the Free Zone

The agreement signed following Hamburg’s entry into the customs union with the German Reich in the year 1881 provided for a fenced “Free Port” excised from the customs territory of the German Reich, and this Free Port was officially opened in 1888. In compensation for relinquishing its customs sovereignty to the German Reich, Hamburg was paid 40 million Goldmarks [the currency in use at the time], and these funds were used to build the Speicherstadt warehouse district. The establishment of the European Economic Community (EEC) resulted in the formation of a customs union amongst the EEC member countries. Customs law became European law. The passing of the modernised EU Customs Code in 2008 completed the final customs law integration of the existing free ports, meanwhile referred to as Free Zones, which had begun in 1994 and has led to the complete relinquishing of national customs and tax privileges. The Hamburg Free Zone currently covers approx. 23% of the entire port district.

The Senate had been compelled to re-evaluate the status of the Hamburg Free Zone in the aftermath of substantial changes to the relevant EU customs legislation, future logistical challenges and urban planning trends. Responding to a changed international security situation, the World Customs Organisation and the European Union have formulated a new general framework for managing cross-border movement of goods. In future, application procedures subject to customs regulations will have the same status in all EU ports, regardless of their customs status. The Federal Customs Administration had previously raised grave objections against a plan to reduce the size of the Free Zone, a measure initially passed by the Hamburg Senate.

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