The European Union’s new trade chief, Maroš Šefčovič, has opened the door for the UK to potentially join the Pan-Euro-Mediterranean Convention (PEM), a trade agreement that allows goods to flow tariff-free across borders. However, Šefčovič emphasized that any such decision would depend on the UK’s willingness to align its trade rules with those of the EU and its partners, placing the onus firmly on the UK government.
While the UK’s Labour government has ruled out rejoining the single market and customs union after Brexit, the idea of joining a continent-wide agreement could offer new opportunities for economic growth and closer cooperation with the EU, strengthening UK-EU trade relations in the process.
What Is the PEM and How Could It Enhance UK-EU Trade Relations?
Šefčovič, who played a key role in post-Brexit negotiations for the EU, stated that allowing the UK to join the PEM was “something we could consider.” The PEM, which was originally established in 2012, includes not only EU member states but also several non-EU countries such as Switzerland, Norway, Georgia, Ukraine, and North African nations. Under this agreement, goods can flow across borders without tariffs, facilitating smoother trade among the 25 member countries, and potentially benefiting UK-EU trade relations.
Some businesses in the UK, particularly those in industries with complex supply chains, have shown support for the idea of joining the PEM. They argue that it could simplify regulations, reduce red tape, and improve trade, which would be a significant advantage for the UK economy and UK-EU trade relations.
How Could the UK’s Food and Farming Industry Benefit from Joining the PEM?
The UK’s food and farming industry stands to benefit significantly from joining the PEM, Šefčovič noted. He highlighted the importance of having common rules among members and the need for “dynamic alignment” of regulations. “We would have to have the same rules and we have to upgrade them at the same time,” Šefčovič explained during a discussion at the World Economic Forum in Davos, Switzerland. This dynamic alignment could play a vital role in enhancing UK-EU trade relations in the future.
Šefčovič, who took up his role as EU commissioner for trade and economic security late last year, acknowledged that the proposal had not been “precisely formulated” yet. However, he underscored that the decision now rests with the UK, effectively putting pressure on UK Labour leader Keir Starmer to take a stance on closer trade relations with the EU.
Why is the UK Government Not Seeking to Join the PEM at This Time?
Despite the potential benefits, the UK government has made it clear that it is not currently seeking to participate in the PEM arrangement. Housing Minister Matthew Pennycook stated that the UK government was “not seeking to participate in that particular arrangement.”
He added, “In general, the government has been very clear … that we do want a closer relationship with our European partners both in trading terms but also importantly in terms of security and defence cooperation.” However, Pennycook reiterated that joining the PEM was not part of the UK government’s current plans.
Is There Growing Support within the Labour Party for the PEM Deal?
Within the Labour Party, there is growing support for a potential UK role in the PEM. Stella Creasy, a Labour MP and chair of the Labour Movement for Europe, welcomed the idea. “Red tape from Brexit hits British business in many ways – joining PEM would help cut the paperwork connected to rules of origin requirements, which is why we have long argued it should be a priority for the UK as one way to undo the damage to trade leaving the EU has done,” Creasy said.
Her remarks reflect the growing recognition within parts of the UK political establishment that closer ties with the EU, including trade deals like the PEM, could help alleviate some of the economic disruptions caused by Brexit and enhance UK-EU trade relations.
Could the Liberal Democrats’ Proposal for a Customs Union with the EU Benefit the UK?
Meanwhile, Ed Davey, leader of the Liberal Democrats, has argued that the UK should go further in its engagement with the EU. Speaking earlier this month, Davey suggested that joining a customs union with the EU would be “the single biggest thing we can do to turbocharge our economy in the medium and long term.” He also pointed out that fostering closer links with the EU, both in trade and in defence, could help “Trump-proof” the UK against the shifting geopolitical landscape, particularly with the uncertainty of US President Joe Biden’s second term in office.
What Does the Future Hold for UK-EU Relations?
Šefčovič, who is optimistic about improving UK-EU relations, commented that ties between the two are “definitely” in a better place now than in the past. He noted that his counterpart in the UK government, Nick Thomas-Symonds, the minister in charge of EU relations, was “on speed dial,” signifying a readiness for dialogue and potential cooperation.
However, the question remains as to whether the UK will take the opportunity to deepen its trade ties with the EU through the PEM or other similar arrangements. While the Labour government is beginning consultations with businesses, including the potential benefits of joining the PEM, the decision on future UK-EU trade relations still hinges on government choices and political priorities.
As the EU trade chief has made clear, “the ball is in the UK’s court.”
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