Maros Sefcovic, the European Union’s chief negotiator on post-Brexit relations, has said that Brussels “could consider” allowing the UK to join PEM, a pan-European customs scheme that would lower trade barriers between Britain and the bloc as well as other nations.
The convention, which is organised by the European Commission, simplifies the trade of goods between the EU, some non-EU European countries and some countries in Africa and the Middle East.
However, it also says that joining PEM is not something they are planning for right now. Minister Matthew Pennycook told the BBC the government wasn’t looking at joining “at (the) present time”.
“We now have the most pro-British president (Trump) for along time and someone who is prepared to make a deal with the UK.”
But both government sources and trade experts have been quick to point out that it is not a customs union nor an EU scheme.
The Pan-Euro-Mediterranean Convention establishes common rules of origin for trade between the EU and other countries.
Despite the objections from Brexiteers, the government is correct when it says that PEM is neither an EU scheme nor a customs union. It is however run by the European Commission, the executive branch of the EU.
It does, however, simplify the rules of origin for goods fully or partially made in countries who are signed up to the convention.
In practice, that means that anything either manufactured or completed in the UK – as many goods are in a global supply chain – could be exported more easily to lots of countries in the neighbourhood, including the 27 EU member states.
the EU the European Free Trade Association states (Switzerland, Norway, Iceland and Liechtenstein) the Faroe Islands the participants in the Barcelona Process (Algeria, Egypt, Israel, Jordan, Lebanon, Morocco, Palestine, Syria, Tunisia and Türkiye) the participants in the EU’s Stabilisation and Association Process (Albania, Bosnia and Herzegovina, the Republic of North Macedonia, Montenegro, Serbia and Kosovo the Republic of Moldova Georgia UkraineThe 25 Contracting Parties to the PEM Convention are:
EU officials and lobbyists in Brussels have been frustrated at the British government’s perceived reluctance to say exactly what they want from the so-called Brexit reset despite the warm words from Keir Starmer’s government.
There had been high hopes that Keir Starmer’s government would go out of its way to restore trust been London and Brussels.
While many sources from EU institutions and member states have taken a hard line on there being “no new deal until the UK obeys the current one,” as one EU Council source said, PEM could be an easier sell, even for Eurosceptics in London and UK-sceptics in Brussels.
“It would help both exporters and importers of goods, and is supported by non-EU countries like Switzerland and Morocco. It is not an economic game changer, but it is something the UK should do.”
However, sources in Brussels are sceptical that even if this was their plan, any UK government would be willing to go further than something like PEM.
Trump, who seems to have brought his hostility to the EU back to the White House for his second term, has been threatening harsh tariffs on the EU, which the UK had hoped it could avoid.
Any suggestion of the UK moving towards a customs union with the EU would naturally complicate a full-fat trade deal with the US.
Will it happen?
It does seem that the EU is broadly happy with allowing the UK to join PEM. However, they are still sceptical that British politics is in a healthy enough place to take this relatively small step in the Brexit reset.
What the UK joining the European trade scheme would mean for Starmer's Brexit reset
Read MoreAn EU diplomat: “Given the state of the big economies either side of the channel it makes sense, right? No quotas, no tarrifs, no paperwork.
But they added: “The UK’s economic logic has been sacrificed on the anvil of sovereignist ideology before”
The UK government was approach for comment but declined to give a statement on-the-record.
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