Labour faced fresh criticism over Brexit after the Business Secretary said the UK could join a Europe-wide customs scheme.
Jonathan Reynolds insisted becoming part of the Pan-Euro-Mediterranean Convention (PEM) would not cross Sir Keir Starmer’s “red lines”.
His comments came after the bloc’s trade chief Maros Sefcovic suggested Britain could join the arrangement, which allows for tariff-free trade of goods across Europe, as well as some North African and Levantine nations.
Speaking to the BBC from Davos, Mr Reynolds described Mr Sefcovic’s comments as “incredibly positive” and “helpful”.
He suggested that joining the PEM could be acceptable as it “is not a customs union”.
He added: “We can improve the terms of trade with the EU in a way which doesn’t revisit customs unions or single markets or the arguments of Brexit, and we can do that whilst pursuing closer trade links around the world.”
The Business Secretary also declined to rule out a deal on food and farm products that would involve mirroring EU rules, known as “dynamic alignment”.
But Reform UK MP Richard Tice urged the Labour Government to focus its attention on the US.
He said: “Labour has consistently undermined our relationship with our most important ally, the United States, instead prioritising a narrow focus on securing a customs deal with the EU.
“With a newly elected pro-British president in the US, Labour should shift its focus toward building a strong, mutually beneficial relationship with America—one that promotes prosperity and shared interests for both nations.
“Labour continues to disappoint—rarely representing the needs and desires of the British people. It is time for real change and Reform UK is leading the charge.”
Meanwhile, the Conservatives accused Labour of “bending the knee” to the bloc.
The Business Secretary’s comments come amid the Government’s ongoing attempt to “reset” relations with the EU.