EU blocks UK from joining pan-European trade network – FT

The EU has refused to grant the UK fall in a sleek web that offers get down tariffs to 20 countries that trade with the bloc, the Financial Times reported on Wednesday, citing officials.

According to the article, the UK had sought to join the Pan-Euro-Mediterranean (PEM) convention, established in 2012 to align rules of origin across trade deals between the EU and countries in Europe, North Africa and the Middle East. The framework allows manufacturers to qualify for lower tariffs when using components sourced from multiple member countries.

Since leaving the EU in 2020, Britain has ruled out rejoining the single market or customs union, but business groups have backed PEM membership as a practical step to help exporters cope with new trade barriers. The UK government included the plan in the trade strategy it published last week, saying it could reduce “complex paperwork” and provide businesses with more flexibility.

Trade experts say the move depends on EU approval, as the UK would need to amend its post-Brexit trade agreement with Brussels to adopt PEM rules – even though the convention itself is not exclusive to the EU.

“For it to be meaningful for the UK, the EU would need to agree to incorporate the PEM rules of origin into the EU-UK Trade and Cooperation Agreement. This gives the EU de facto blocking powers,” Sam Lowe, trade lead at the consultancy Flint Global, told the FT.

EU officials told the outlet that Brussels had previously indicated it was open to the idea, but now sees the move as not in the bloc’s interest. The European Commission reportedly fears that UK goods could unfairly qualify for low-tariff access.

The rejection marks the first sign of tension since both sides declared a “reset” in relations at a May summit, where they pledged closer energy ties and progress on a veterinary deal to ease agrifood checks.

Separately, the EU is demanding full UK compliance with the Windsor Framework, agreed upon in February 2023, before signing off on a veterinary deal that would ease checks on goods crossing the Irish Sea.

Northern Ireland, part of the UK, shares a land border with the Republic of Ireland, an EU member state, and continues to follow some EU rules to avoid a hard border. The final phase of the framework took effect on July 1. Retailers have called the new labelling and customs rules “bureaucratic madness,” as hundreds of products now face extra checks when moving from Great Britain to Northern Ireland.

The UK has said it remains committed to the framework and continues to engage with PEM members, including the EU.

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