Key facts
- The European Commission blocked the UK's bid to join the Pan-Euro-Mediterranean convention.
- The convention allows for diagonal accumulation of rules of origin.
- Diagonal accumulation means components from different countries can be used in a product without incurring tariffs.
- This would have reduced post-Brexit supply chain challenges for UK goods exporters.
- The decision marks the first friction since the UK and EU announced a relationship reset.
- The UK sought to join the convention to streamline supply chains and reduce administrative burdens.
The European Commission has blocked the United Kingdom's attempt to join the Pan-Euro-Mediterranean convention, a significant trade agreement that could have alleviated post-Brexit supply chain challenges for UK goods exporters. This decision has caused frustration in London and represents the first notable friction since the announcement of a relationship reset between the UK and the European Union. The Pan-Euro-Mediterranean convention is a regional cumulation of rules of origin. It allows for diagonal accumulation, meaning that components originating from any of the contracting parties can be used in the production of a good without losing their preferential origin status, provided the final product meets the relevant rules of origin. This would have facilitated trade by enabling UK businesses to source components from EU member states and other convention members, and then export finished goods to these countries without facing tariffs. The UK's accession to the convention was seen as a way to streamline supply chains and reduce administrative burdens for businesses operating under the new post-Brexit trading relationship. The European Commission's decision to block this move suggests ongoing complexities and potential disagreements in the UK-EU relationship, despite recent efforts to reset ties.