January 24, 2025

Yes, the UK should join PEM. Here's why.

Opinion January 24, 2025

Yes, the UK should join PEM. Here's why.

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Opinion

CEO, Sir Nick Harvey, outlines what the Pan-Euro-Mediterranean (PEM) Convention is and why the UK would benefit from joining.

At Davos, EU Trade Commissioner Maroš Šefčovič suggested that Brussels is open to the UK joining the Pan-Euro-Mediterranean (PEM) Convention to strengthen trade relations.

However, the UK government remains hesitant. Both Housing Minister Matthew Pennycook and Minister for EU Relations Nick Thomas-Symonds indicated that there are no immediate plans to pursue membership. On the other hand, Business Secretary Jonathan Reynolds acknowledged the potential benefits and was quick to emphasise that PEM is not equivalent to a customs union—a red line for Labour—which leaves some room for cautious optimism.

The PEM Convention presents a practical opportunity for the UK to begin recalibrating its economic relationship with Europe in a way that benefits British businesses, strengthens supply chains, and enhances trade competitiveness. It will certainly not be a silver bullet to resolve all our current trade frictions, but joining PEM would be a pragmatic, tangible step forward—one that could deliver real value to industries deeply intertwined with European markets.

Although it is only a small step, it is an important one. Without laying the groundwork, any meaningful reset in relations with the EU will remain out of reach. It makes no sense to have ‘reset’ rhetoric on repeat while retreating from every opening for real change. Joining PEM would send a clear signal that the UK is serious about rebuilding trust and cooperation with Europe—without breaching the government’s self-imposed red lines, which, in my view, are unnecessary. Real progress requires a series of incremental measures before more ambitious goals can be pursued. That is why, as CEO of the European Movement UK, I am proud to lead a truly cross-party campaign advocating for a step-by-step approach to bring the UK and EU closer together—until Britain returns to the heart of Europe.

The PEM Convention, which includes the EU and 24 other countries—such as Norway, Algeria, and Ukraine—allows for diagonal cumulation of origin. In simple terms, this means that materials sourced from any PEM country can count as originating in the final product’s country of manufacture. For UK businesses, participation would mean they could use components from any PEM country and still qualify for tariff-free trade under preferential agreements. This would provide valuable support for industries such as automotive, chemicals, and food production, where complex, cross-border supply chains are the norm.

Since leaving the EU, UK businesses have faced new barriers, complex rules of origin, and rising costs. The impact has been felt across the manufacturing and export sectors, with supply chains being forced to move away from the UK. It is, therefore, difficult to understand the government’s reluctance to engage with practical solutions such as PEM.

Few businesses might lose by joining PEM—but far more would gain. Countries such as Switzerland and Morocco are eager for the UK to come on board, recognising the mutual benefits of reducing trade friction and enhancing regional integration.

PEM could provide significant value if it can operate alongside the rules of origin requirements set out in the UK-EU Trade and Cooperation Agreement (TCA). This dual framework would allow UK and EU exporters to choose the most favourable conditions to qualify for tariff-free access. Although it may seem unconventional, such arrangements are often feature of trade agreements. For example, UK exporters to Australia have the option to follow either the UK-Australia free trade agreement or the regulations set by the CPTPP.

Business leaders are calling for clarity and certainty—two things PEM could provide. A growing number of industry groups, including the British Chambers of Commerce, have voiced their support, arguing that PEM membership could simplify supply chains, reduce bureaucracy, and enhance trade efficiency.

Joining PEM should be seen as part of a broader strategy to rebuild trust and cooperation with the EU. Alongside initiatives such as rejoining Erasmus+, securing a youth mobility agreement, establishing a new defence pact, and negotiating a better deal for the creative industries, PEM could serve as an important stepping stone toward a much closer UK-EU partnership.


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