EU prevents UK from becoming part of pan-European trade network

(MENAFN) The European Union has rejected the United Kingdom’s attempt to join the Pan-Euro-Mediterranean (PEM) convention, a trade framework designed to simplify tariffs and rules of origin among 20 countries, Financial Times reported on Wednesday, citing officials.

The PEM convention, launched in 2012, streamlines trade by allowing products assembled with components from multiple member nations to benefit from lower tariffs. Since its exit from the EU in 2020, the UK has remained outside the single market and customs union but viewed joining the PEM as a practical way to ease post-Brexit trade friction. British business groups have supported the move, and the UK government included it in its recent trade strategy, citing benefits such as reduced paperwork and greater flexibility for exporters.

However, EU approval is essential, as Britain would need to revise its post-Brexit Trade and Cooperation Agreement with the bloc to adopt PEM rules. This effectively gives Brussels a veto over UK participation. According to trade expert Sam Lowe from consultancy Flint Global, without EU consent, the UK’s entry into the convention is not viable.

While EU officials initially showed openness to the idea, the European Commission has reportedly shifted its position, now opposing the move out of concern that UK products might gain unfair tariff advantages. The decision marks the first major trade-related tension since both sides agreed to reset their relationship during a summit in May, where they discussed enhanced cooperation on energy and efforts to finalize a veterinary agreement.

In a related development, the EU is also pressing the UK to fully implement the Windsor Framework—a post-Brexit deal finalized in February 2023—before moving forward with the veterinary agreement. The framework governs trade between Northern Ireland and the rest of the UK to prevent a hard border with the Republic of Ireland, an EU member. The final phase of the framework took effect on July 1, but UK retailers have criticized new labeling and customs requirements as overly burdensome.

Despite the EU's rejection, the UK government has reaffirmed its commitment to the Windsor Framework and continues engaging with PEM members in hopes of future cooperation.

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