Germany is leading the charge in advancing the EU’s global trade agenda, backing both the newly approved Mercosur agreement with South America and a potential free trade deal with India. Speaking on Monday during a trip to India, Chancellor Friedrich Merz said European leaders could finalize the pact with New Delhi by the end of January, signaling Germany’s push to diversify trade ties beyond the US and China.
India Seen as Key Partner Amid Rising Protectionism
Merz criticized the recent rise in protectionist policies around the world, calling them a threat to “the principles of free trade and open markets.” He suggested that European Commission President Ursula von der Leyen and European Council President Antonio Costa could travel to India later this month to sign the agreement.
Highlighting India’s economic significance, Merz described it as “the fastest growing economy of the G20” and a “pivotal partner in the Indo-Pacific.” While the EU had originally aimed to conclude negotiations by the end of 2025, those plans stalled, making a January summit a potential turning point for EU-India trade relations.
Challenges Remain in Trade Negotiations
High-level discussions between EU and Indian officials have faced hurdles, particularly over environmental standards and the EU’s Carbon Border Adjustment Mechanism, which India views as a major concern. Both India and the EU are also navigating trade tensions with the US, which has imposed tariffs on multiple partners, and China, which is increasingly using dependencies on raw materials and technology as leverage.
Despite these challenges, Merz expressed confidence that talks are in their final stages. He said a signed agreement would send “an encouraging signal” for the EU’s broader efforts to secure free trade agreements worldwide.
Mercosur Deal Sparks Political Friction in France
At the same time, the Mercosur free trade pact, approved by most EU countries last week, has triggered political unrest in France. French farmers fear that an influx of Latin American imports could threaten their livelihoods, prompting both far-left and far-right parties to call for a no-confidence vote against President Emmanuel Macron’s government.
Despite opposition in Paris, von der Leyen is expected to travel to Paraguay on 17 January to formalize the Mercosur deal, underscoring the EU’s commitment to advancing its trade diversification strategy even amid domestic controversy.
