Walter Finch
THE European Union has opened the door to the UK joining a pan-European trade agreement that could ease commercial restrictions between the two.
EU trade commissioner Maroš Šef?ovi? told the BBC the bloc could ‘consider’ UK membership in the tariff Pan-Euro-Mediterranean (PEM) convention.
The convention allows goods to flow tariff-free across borders, including members like the EU, Switzerland, Norway, and several North African nations.
This could offer a helping hand to British businesses that have found trading with the EU more costly and complicated since Brexit was enacted in 2021.
It would also offer a fig leaf to Gibraltar, currently negotiating to join the EU’s Schengen zone, which would likely see it forced to impose EU tariffs on its number one trade partner – the UK.
EU alignment, should Gibraltar join the Schengen zone, would presumably see them forced to apply tariffs on British clothing of up to 12%, on furniture 5.6%, and an eye watering 35% and 45% on dairy and meat respectively.
Britain and its Overseas Territory trade over £7 billion between each other annually, although mainly in the form of services.
The UK joining the PEM could be a way for the Rock to avoid having to choose between it and the EU in terms of trade.
British Labour ministers are reportedly consulting businesses about potential PEM participation, though the government has not committed to joining.
Jonathan Reynolds, UK business secretary, acknowledged PEM’s potential benefits, noting it ‘is not a customs union’ and could help certain economic sectors.
Trade expert David Henig highlighted that PEM would make a significant difference for manufacturing sectors with complex supply chains, potentially offering new opportunities for businesses.
The move comes as the British government has indicated it seeks a ‘reset’ with Brussels after years of Brexit-driven tension under the previous Conservative government.
The Pan-Euro-Mediterranean convention, launched in 2012, aims to facilitate trade by expanding the definition of ‘domestic’ goods.
For instance, a machine made with parts from multiple countries could be considered locally produced, potentially benefiting manufacturers across the region.
While trade experts suggest PEM would not be a ‘gamechanger’ for UK exports in general, it could have a salvative effect on trade relations between Gibraltar and the UK.
