The Business Secretary has indicated that the UK could join a tariff-free trading arrangement with Europe after meeting with the EU Trade Commissioner in Davos.
Jonathan Reynolds met with Maroš Šefčovič on Thursday following the trade commissioner’s proposal that Britain could become part of the Pan-Euro-Mediterranean Convention (PEM). This convention facilitates tariff-free trade of goods not only across Europe but also with certain North African and Levantine countries.
In an interview with the BBC, Mr. Reynolds praised Mr. Šefčovič’s remarks as “incredibly positive” and “helpful.” He suggested that joining the PEM might be feasible since it “is not a customs union.”
This development occurs as Chancellor Rachel Reeves faces increasing pressure to boost the UK economy amidst rising government borrowing costs this year, which have cast doubt on her ability to adhere to her self-imposed fiscal regulations.
Mr. Reynolds accompanied the Chancellor to the World Economic Forum in Davos this week, an important gathering of global business and political leaders.
He stated, “We can improve the terms of trade with the EU in a way that doesn’t involve revisiting customs unions or single markets or the arguments of Brexit, and we can achieve this while pursuing closer trade links globally.”
The Business Secretary also did not dismiss the possibility of reaching an agreement on food and farm products that would involve aligning UK regulations with EU standards, a practice known as “dynamic alignment.” He emphasized that this approach would not breach the Government’s “red lines” regarding rejoining the customs union or single market.
Labour’s 2024 manifesto has pledged to seek a deal on such products with the EU, and certain business groups support joining the PEM as it would help preserve intricate supply chains.
However, ministers stated on Thursday that the Government does not “currently” plan to join the PEM and would not “provide a running commentary” on the matter.
