When Maroš Šefčovič, the European Commission’s top trade official, floated the idea that the United Kingdom might join the Pan-Euro-Mediterranean Convention (PEM) at the World Economic Forum in DavosDavos in January 2025, it wasn’t just another policy whisper—it was a quiet olive branch thrown across the Channel. Nearly five years after Brexit, the European Union and the United Kingdom are circling each other again, not with hostility, but with a cautious, pragmatic eye toward fixing what’s broken: trade friction.
Why PEM Matters More Than It Sounds
The Pan-Euro-Mediterranean Convention (PEM) isn’t flashy. It doesn’t sound like a deal that could reshape supply chains. But here’s the thing: under the current EU-UK Trade and Cooperation Agreement (TCA), goods exported from the UK to the EU must be made mostly from British or EU-sourced materials to qualify for zero tariffs. That’s fine if you’re making cheese or cars using local parts. But what if you’re a British manufacturer using electronic components from Turkey, or textile fibers from Egypt? Suddenly, your product gets hit with tariffs—even though those materials were already tariff-free when they entered the EU via PEM members.That’s where PEM steps in. It’s a web of 40-plus countries, including the EU, Turkey, Egypt, Jordan, and others, that allows cumulative origin rules. In plain terms: if your product has parts from multiple PEM countries, you can still ship it tariff-free across the whole zone. For UK firms reliant on global supply chains, that’s a lifeline. The Bruegel think tank noted in a January 2025 brief that this could cut compliance costs by up to 30% for certain manufacturing sectors.
UK Officials Say ‘Not Now’—But Leave the Door Ajar
Don’t expect a handshake just yet. On January 27, 2025, Nick Thomas-Symonds, the UK’s Europe Minister, told Parliament: “We don’t currently have any plans to join PEM.” His colleague, Matthew Pennycook, Housing Minister and Brexit policy advisor, echoed that on the BBC: “As for this particular arrangement, no, we’re not seeking to participate in it at the present time.”But then came Jonathan Reynolds, the Business Secretary, with a different tone. “PEM is obviously not a customs union,” he said, carefully separating the issue from red lines. “But it does help in some sectors—particularly in engineering, pharmaceuticals, and food processing.” That’s the nuance. The UK government’s three non-negotiables—no single market, no customs union, no freedom of movement—remain untouched. PEM doesn’t touch any of those. It’s not about regulatory alignment. It’s about paperwork.
The May Summit: A Make-or-Break Moment
All eyes are now on the EU-UK summit scheduled for May 19, 2025London. Keir Starmer, Ursula von der Leyen, and António Costa will meet face-to-face for the first time since the 2024 UK election. This isn’t a photo op. European Parliament documents show they’re preparing three concrete deliverables: a joint statement, a security and defence partnership, and a renewed cooperation framework.And PEM? It’s not on the official agenda—but it’s in the room. The European Parliament’s November 2024 report on TCA implementation quietly flagged PEM as a “potential low-risk, high-reward mechanism” to reduce friction. Meanwhile, UK Labour’s 2024 manifesto pledged to “tear down unnecessary barriers to trade with the EU.” That’s not a slogan. It’s a directive.
The Carbon Clock Is Ticking
There’s another pressure point no one’s talking about loudly enough: carbon. Starting January 1, 2026, the EU’s Carbon Border Adjustment Mechanism (CBAM) will fully kick in, charging levies on imports from countries with weaker climate policies. The UK’s own Emissions Trading System (ETS) is already aligned with the EU’s—but not formally linked. If the two systems don’t connect, UK exporters could face double charges: CBAM levies on top of existing tariffs.Joining PEM wouldn’t fix that. But it would signal willingness to cooperate. And that’s the real goal here: rebuilding trust, one technical agreement at a time. The EU isn’t asking for sovereignty. It’s asking for alignment on rules that don’t threaten political independence. The UK, for its part, is being asked to trade a bit of flexibility for real economic relief.
What’s Next? The Quiet Revolution
This isn’t about rejoining the EU. It’s about making Brexit work better—for everyone. If PEM is accepted, we could see UK exporters in sectors like aerospace, medical devices, and agri-food gaining smoother access to markets from Morocco to Ukraine. Suppliers in Turkey and Tunisia, who’ve been locked out of UK-EU trade flows since 2021, could suddenly become viable partners again.And if PEM fails? The UK will keep facing the same headaches: customs checks, origin paperwork, and rising costs for businesses that rely on global inputs. The Bruegel report estimates that without reform, UK exports to the EU could shrink by 1.7% annually through 2030.
So while the UK says “no” for now, the quiet truth is this: the pressure to act is growing. The summit in May won’t solve everything. But it might be the moment the UK realizes that some borders can be smarter—not just harder.
Frequently Asked Questions
What is the Pan-Euro-Mediterranean Convention (PEM), and how does it work?
The PEM Convention is a 40-country trade agreement that allows cumulative rules of origin. This means goods made with components from multiple PEM member states—including the EU, Turkey, Egypt, and Jordan—can move tariff-free across the entire zone. It’s not a customs union; it’s a paperwork hack that simplifies supply chains for industries using global inputs. The UK currently can’t benefit from this because it’s not a member.
Why is the UK refusing to join PEM right now?
UK ministers, including Nick Thomas-Symonds and Matthew Pennycook, say they have no current plans to join, fearing any move could be misread as a step toward rejoining the EU’s single market or customs union. The government’s three red lines—no customs union, no single market, no freedom of movement—remain absolute. PEM doesn’t violate those, but politically, even small steps are treated as risks.
How would PEM help UK businesses?
UK manufacturers using components from non-EU PEM countries like Turkey or Tunisia currently face tariffs when exporting to the EU. PEM would let them count those inputs as “originating,” avoiding duties. Sectors like automotive, pharmaceuticals, and food processing could save an estimated 20–30% in compliance costs, according to Bruegel. It’s not a magic fix, but it removes one of the most persistent post-Brexit headaches.
What’s the connection between PEM and the EU’s Carbon Border Adjustment Mechanism (CBAM)?
While PEM doesn’t directly affect CBAM, joining it could signal the UK’s willingness to align with EU environmental standards. CBAM, launching fully in January 2026, will charge levies on imports from countries with weaker carbon pricing. If the UK doesn’t link its Emissions Trading System (ETS) to the EU’s, exporters may face double charges. PEM membership could be a first step toward broader regulatory cooperation.
What happens if the UK doesn’t join PEM before the May 2025 summit?
The summit won’t collapse without PEM, but it will highlight the UK’s reluctance to fix practical trade issues. Without PEM, UK exporters will keep facing rising compliance costs and supply chain inefficiencies. The EU may respond by tightening origin checks or slowing progress on other cooperation areas. The longer the UK waits, the more it risks being left behind as supply chains evolve.
Is PEM a step toward the UK rejoining the EU?
No. PEM is a technical trade agreement, not a political union. It doesn’t require regulatory alignment, free movement, or EU law adoption. Countries like Ukraine and Morocco participate without any EU membership aspirations. The UK’s refusal to join isn’t about sovereignty—it’s about optics. But experts argue that rejecting PEM is a strategic error, not a political stance.
