Businesses overwhelmingly approve of the UK joining the Pan-Euro Mediterranean (PEM) convention that creates preferential trading conditions between Europe and nations in the Middle East and North Africa, a government consultation on the matter has found.
The majority (79%) of respondents to the UK government’s call for evidence on joining the PEM Convention on Rules of Origin were in favour of the UK’s accession, stating it would “have an overall positive or very positive impact on them or their members”.
The Chartered Institute of Export & International Trade was one such respondent, submitting to the consultation to advocate for accession on behalf of its members.
The organisation’s UK public affairs lead Grace Thompson, who oversaw the Chartered Institute’s response said that:
"In our report last year on Reimagining UK-EU Trade and Cooperation, we recommended the UK rejoin the Pan-Euro-Mediterranean (PEM) Convention to enable broader cumulation. That the majority of consultation respondents were in favour of accession and believed it would positively impact them or their members further supports calls from across the trading community.
"What we are yet to understand are any clear next steps from this call for evidence. We will continue to liaise with DBT on this area, while keeping in mind a broader picture, which focuses on frameworks and relationships which might move the dial more significantly for UK exporters."
What is PEM?
PEM is a customs area (not union) comprised of the EU, other European nations, and some Middle Eastern and North African countries.
Through a process known as ‘diagonal cumulation’, EU trading partners that are also PEM members can include inputs from non-EU PEM countries in their manufactured goods, while still qualifying for EU preferential rates when exporting those products to the bloc.
If the UK were to join, its businesses could manufacture goods with parts supplied by non-EU PEM members like Morocco, Jordan or Moldova, while still qualifying for EU preferential rates.
In addition to the 27 member nations, PEM includes:
· European Free Trade Association (EFTA) members: Switzerland, Norway, Iceland, and Liechtenstein, plus the Faroe Islands.
· Non-EU, west Balkan nations in the EU’s Stabilisation and Association Process: Albania, Bosnia and Herzegovina, Kosovo, North Macedonia, Montenegro and Serbia.
· Moldova, Georgia and Ukraine
· Mediterranean countries: Algeria, Egypt, Israel, Jordan, Lebanon, Morocco, Palestine, Syria, Tunisia, and Turkey
Cumulation benefits
The possibilities of diagonal cumulation under PEM were viewed very favourably by respondents.
Most respondents (85%) stated that being able to include non-EU PEM inputs in their goods without attracting tariffs would be “moderately” or “very” helpful to their business (or members).
The majority said this would “offer greater supply chain flexibility” and could also provide “increased ability to access preferential tariffs”. However, a minority of respondents from the agricultural sector warned diagonal cumulation could undermine the competitiveness of the UK’s goods.
Increased costs
One area that raised concerns was the potential for movement certificates to increase business administration costs.
In order to claim preferential rates within PEM, exporters must provide proof of origin. Movement certificates are one of two valid methods to prove origin under PEM.
Just under half of respondents said they thought that being required to provide movement certificates under the UK-EU Trade and Cooperation Agreement would raise administration costs.
Who responded?
The government received 74 responses in total. Of those, 32 came from businesses and 27 were from trade associations, like the Chartered Institute.
Most respondents were UK-based, however, eight had EU headquarters and 12 were located in non-EU PEM countries.
Progress so far
The UK has angled for inclusion in PEM in recent years. The government set out the benefits in its Trade Strategy, published last year, which launched the business consultation.
However, this aspiration was challenged in July 2025, when the European Commission announced it wouldn’t support UK accession, claiming this could allow UK products to unfairly qualify for low-tariff access to the EU.
Since then, ‘reset’ talks between the UK and EU on enhancing their relationship, including closer alignment of trade rules, have progressed. A summit announcing alignment in key areas, including sanitary and phytosanitary rules and energy trade schemes, is expected to take place this summer.
PEM has not been discussed during negotiations ahead of this summit.
Next steps
The government encouraged businesses, trade bodies and other stakeholders to share any further insights on PEM or their experiences navigating rules of origin via the following email address: PEMCallforEvidence@businessandtrade.gov.uk.
The insights gained from the consultation will be used to inform future decisions about the UK’s accession to PEM, it added.
For information about the Chartered Institute’s policy positions on key trade areas, as well as any consultations we’re responding to, visit our advocacy page.
