EU Open to UK Joining Trade Deal to Boost Post-Brexit Relations

Nearly five years since Brexit, relations between the EU and the UK appear to be heading towards a potential reset. EU trade chief Maroš Šefčovič has suggested that the UK could join the Pan-Euro-Mediterranean (PEM) convention, a significant trade agreement enabling tariff-free trade across a variety of nations, including the EU, Switzerland, and several non-European countries.
While this move is far from a gamechanger, joining PEM could mark an important step towards mitigating trade disruptions caused by Brexit. But what does this mean for both sides, and how likely is the UK to pursue this option?
What is the Pan-Euro-Mediterranean Convention?
The PEM was launched in 2012 to make trade smoother and more cohesive across its 25 member countries. Its participants include the EU, Turkey, Switzerland, Ukraine, Morocco, and Norway, among others. The UK, notably, is one of the few European countries not a member.
The core principle of the PEM is the use of common rules of origin. These rules allow countries to collectively benefit from reduced or zero tariffs if a product meets certain criteria for domestic origin. For example, if a Swiss manufacturer uses EU-sourced parts to produce machinery, the final product would still count as “domestic” when exported to Turkey.
Why is the EU open to this idea?
Šefčovič has called PEM membership “something we could consider” as part of broader discussions to reset the EU-UK relationship. He made these remarks in an interview with the BBC, where he emphasised that participation in PEM would require dynamic alignment with EU rules.
The suggestion comes amidst thawing relations between Brussels and London, as both sides look to repair strained ties post-Brexit. The proposal reflects the EU’s willingness to offer a pragmatic path forward that stops short of rejoining the single market or customs union.
What’s in it for UK businesses?
Joining PEM would undoubtedly provide some relief for UK businesses that have struggled with trade bureaucracy since Brexit. For manufacturers, particularly those with complex supply chains across Europe, PEM could simplify sourcing and exporting by expanding the definition of “domestic origin.”
For example, sectors like automotive, chemicals, and food manufacturing could benefit from reduced administrative barriers when sourcing parts and ingredients from multiple PEM regions. David Henig, a former UK trade official, explained, “It allows you basically not to worry about sourcing bits and pieces from around Europe, combining them, and sending them around the region.”
However, the Centre for Inclusive Trade Policy concluded in 2024 that the impact of PEM membership would be limited for the UK. Research found that ingredients sourced from PEM countries make up only about 1.1%–2.8% of UK-made products. This means the overall benefits may not be as significant as they seem.
Where does the UK government stand?
Publicly, the UK government has yet to endorse PEM membership. Housing minister Matthew Pennycook recently dismissed the idea, stating, “As for this particular arrangement, no, we’re not seeking to participate in it at the present time.”
Business secretary Jonathan Reynolds, however, seemed more open to exploring the proposal, acknowledging the benefits for specific sectors. “It’s a wider set of arrangements that do help in some sectors,” he noted, while reiterating that PEM is “obviously not a customs union.”
Labour MP Stella Creasy has also voiced her support for the idea, citing reduced post-Brexit trade bureaucracy as a major advantage. The Labour government may see PEM as a low-risk opportunity to improve trade conditions without compromising its stance on the single market or customs union.
Challenges to UK Membership
While the EU has shown flexibility, PEM membership would still present two key challenges for the UK:
- Dynamic Alignment
Šefčovič emphasised that joining PEM would require dynamic alignment with EU rules. This means that the UK would need to regularly adapt its trade regulations to remain in step with EU standards. For a government eager to avoid accusations of reversing Brexit, this could be politically sensitive.
- Limited Impact
PEM membership fosters ease of trade for industries dependent on regional supply chains. However, its overall impact on UK exports may not fully offset the economic challenges posed by Brexit.
These complexities mean that any decision to join will have to carefully weigh the economic benefits against the political risks.
Resetting the EU-UK Relationship
The proposal to join PEM occurs during a broader effort between Brussels and London to rebuild diplomatic and economic relations. The two sides are planning their first post-Brexit summit in early 2025, signalling a commitment to working together despite lingering tensions.
However, deeper collaborations are limited by the UK’s refusal to rejoin the single market or a customs union. Similarly, the EU is frustrated with the UK’s firm rejection of schemes like EU youth mobility.
PEM offers a more palatable starting point—a practical agreement that does not undermine Brexit but allows for incremental improvements in economic ties.
A Small Step Forward
For now, it seems unlikely that the UK will pursue PEM membership immediately. However, the EU’s openness to such discussions reflects a willingness to meet the UK halfway.
Whether this marks the beginning of expanded trade cooperation between the two remains uncertain, but all signs point to improving relations on both sides. Membership of PEM may not be a gamechanger, but it could represent a symbolic and pragmatic step forward in the post-Brexit era.
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