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British government hopes of joining a pan-European trade area to reduce post-Brexit supply chain challenges for UK goods exporters are being blocked by Brussels, according to officials on both sides.

The UK announced it was considering whether to join the Pan-Euro-Mediterranean (PEM) convention as part of its new trade strategy published last week, arguing it could help boost the UK’s flagging goods exports.

However, the European Commission has made clear to the UK that it would not currently support such a move, according to four people familiar with discussions, in a move the officials acknowledged had “frustrated” London. 

The blockage is the first sign of friction between the UK and EU since the two sides announced a “reset” of their relationship at a summit on May 18, promising to improve energy trading arrangements and sign a so-called veterinary agreement to remove checks on agrifood exports. 

The PEM convention is an agreement between the EU and 20 other countries in Africa and the Middle East that allows inputs for manufacturing supply chains to be sourced across multiple countries in order to qualify for low-tariff access to markets under free trade agreements.

Joining PEM is a move supported by UK trade groups, including the British Chambers of Commerce. According to the UK’s trade strategy published last week it could reduce “complex paperwork” and “increase flexibility for UK exporters where they source their inputs”.

EU officials familiar with the discussion said the Commission had decided that the UK joining PEM was not currently in the EU’s interests, because it would increase the risk of products unfairly qualifying for low-tariff access to the bloc.

Sir Keir Starmer has ruled out rejoining the EU single market or re-entering into a customs union with the EU, but industry has pushed the government to consider joining the PEM convention as an interim step to help goods exporters.

Trade experts said the UK would need EU co-operation to join the convention because it would require rewriting the terms of the existing post-Brexit EU-UK trade deal — even though the PEM is not exclusively an EU arrangement.

“For it to be meaningful for the UK, the EU would need to agree to incorporate the PEM rules of origin into the EU-UK Trade and Cooperation Agreement. This gives the EU de facto blocking powers,” said Sam Lowe, trade lead at consultancy Flint Global.

Brussels indicated previously that it was open to the UK joining PEM, but has since gone cold on the idea, arguing that it wants to stick closely to the agreements proposed in the “common understanding” set out between the two sides at the May 18 summit.

In 2023, PEM was mooted as a solution to a stand-off over post-Brexit tariffs on electric vehicles, while as recently as January this year EU trade commissioner Maroš Šefčovič said was something the EU “could consider”.

David Henig, a former UK trade negotiator now at the ECIPE think-tank, said the EU Commission’s reluctance demonstrated the ongoing political challenge of repairing relations with the bloc.

“The EU isn’t united on the importance of the UK reset and issues like PEM can easily be caught up in this even though technically straightforward,” he said. “The UK government is going to have to work hard in London and Brussels to build momentum.”

Separately, in another point of tension, the EU is still demanding full implementation of the Windsor framework deal on Northern Ireland ahead of any veterinary agreement that would remove the need for most checks on goods crossing the Irish Sea. 

The final phase of the Windsor framework deal came into force on July 1. M&S boss Stuart Machin last week described the implementation as “bureaucratic madness”, saying it requires 1,000 products to have “not for EU” labels, and 400 more will have to undergo full customs checks.

Machin added the promised EU-UK veterinary agreement “can’t come soon enough,” but EU officials said the Commission was being “very firm” on the point that the deal must be fully implemented ahead of any EU-UK veterinary agreement.

Industry insiders said that European relations minister Nick Thomas-Symonds had called supermarkets to a meeting in Whitehall last Thursday to urge them to comply with the deal or risk jeopardising talks over the veterinary agreement. 

The EU has repeatedly raised concerns that many big UK supermarkets are not fully complying with the rules. 

The Commission did not immediately respond to a request for comment.

The UK government said it was committed to full implementation of the Windsor framework and would review the merits of joining PEM through engagement with the trading group’s members, including the EU.

“We aren’t going to provide a running commentary on our ongoing discussions with the EU,” the Cabinet Office added.

In potentially the biggest threat to Starbucks since other companies figured out that they, too, could market pumpkin-spice flavored treats, Luckin Coffee, China’s biggest coffee chain, opened its first US stores yesterday with two outposts in New York City.

Warner Music Group CEO Robert Kyncl has announced what he calls the “remaining steps in our plan to help future-proof the company”.

This seemingly final stage in Warner’s recent restructuring under Kyncl is expected to further reduce the company’s annual costs by around USD $300 million on an annualized run-rate basis by the end of fiscal year 2027.

Just over half of that annual $300 million cost-cutting target ($170 million) will be achieved via headcount reductions at WMG, said the company.

A further $30 million of savings will be achieved by reducing costs (like admin and real estate expenses) directly related to the headcount reductions. The rest of the cost-cutting will target SG&A expenses.

In an SEC filing, Warner said it expects this plan to be “fully implemented by the end of calendar year 2026”.

The news comes on the same day (July 1) that Warner announced another significant element in the evolution of its company, launching a $1.2 billion joint venture fund with Bain Capital to buy music copyrights.

The first phase in Warner’s restructuring plan under Kyncl began last year, in a move “designed to free up more funds to invest in music”.

In February 2024, WMG announced it would cut around 10% of its global workforce, with approximately 600 roles to be eliminated.

Later in the year, it revised this plan, with 750 roles expected to go – the majority of which were based in Warner’s ‘Owned and Operated Media’ division.

That 2024 ‘phase one’ restructuring was expected to result in approximately $260 million in annual pre-tax cost savings.

The new “remaining steps” restructuring move, announced today, will supplement the plan announced by Kyncl last year.

When combined, the two sets of restructuring should therefore result in comfortably more than half a billion dollars in annual cost savings at the company.

In a note to staff sent today and obtained by MBW, Kyncl wrote: “Two years ago, we began to transform our company; not just to tinker around the edges of an old model, but to build a fast, innovative, and collaborative organization that reflects how music moves in the new world.

“Today, our strategy is gaining momentum. Our artists have held half of the Top Ten on the Spotify Global chart for the past ten weeks and nailed the No. 1 spot for all but four weeks of 2025.

“These aren’t just the biggest hits in the world today; they’re our evergreen catalog of the future. At the same time, we’re starting to see better progress in our global recorded music market share, while hitting new highs in music publishing. These wins are powered by our ability to become simultaneously more effective and more efficient… allowing us to invest in great talent, boost our star-making expertise, and deepen our world-building capabilities.”

“Our artists have held half of the Top Ten on the Spotify Global chart for the past ten weeks and nailed the No. 1 spot for all but four weeks of 2025. These aren’t just the biggest hits in the world today; they’re our evergreen catalog of the future.”

Robert Kyncl

Added Kyncl: “Building on this success requires us to keep evolving. Today we’re announcing the remaining steps in our plan to help future-proof the company and unlock the next era of growth. Specifically, we’ll be reducing our annual costs by ~$300 million as we reinvest in the business: ~$170 million through headcount rightsizing for agility and impact, and ~$130 million in administrative and real estate expenses. Many changes will be implemented in the next three months, with the remainder in fiscal 2026.”

He continued: “I know that this news is tough and unsettling, and you will have many questions… These decisions are not being made lightly, it will be difficult to say goodbye to talented people, and we’re committed to acting with empathy and integrity.”

Kyncl went on to discuss the “core drivers” of Warner’s growth plan in the year ahead.

On A&R, Kyncl wrote: “Working with the [Executive Leadership Team], we’ve sharpened our investment criteria… a more holistic and targeted approach to partnering with the world’s greatest musical talent, across (i) the most culturally potent and highest potential repertoire centers, (ii) globally managed off-roster catalog, and (iii) music publishing.”

On M&A, he added: “We have an ambitious M&A pipeline, especially for timeless catalogs. Our acquisitions of Tempo and start-up RSDL are good signposts of how we intend on growing both our copyrights and our capabilities. And, as you’ve seen today, we’ve announced an exciting venture with Bain Capital that adds up to $1.2 billion to our catalog purchasing power across both recorded music and music publishing.”

Kyncl suggested that a strengthened suite of services across Marketing, Distribution, Catalog, and Merchandising & Direct-to-Fan will back Warner’s “faster, more agile teams of local experts”.

He also referenced the recent rollout of the WMG Pulse app, while promising to “land the benefits of our financial transformation initiative as well as a vastly improved supply chain and data infrastructure”.

He concluded: “In an ever-changing industry, we must continue to supercharge our capabilities in long-term artist, songwriter, and catalog development. That’s why this company was created in the first place, it’s what we’ve always been best at, and it’s how we’ll differentiate ourselves in the future.

“As we implement these changes, we promise to communicate with you regularly. Thank you for your patience and support for one another. We’ve got some remarkable music coming, and I know that whatever challenges we’re navigating, your commitment to our artists and songwriters is unwavering.”Music Business Worldwide