Germany is taking a leading role in advancing the EU’s trade agenda, supporting both the recently approved Mercosur deal with South America and a potential free trade agreement with India. Chancellor Friedrich Merz said on Monday that European leaders could sign the pact with New Delhi by the end of January, emphasizing the EU’s goal of diversifying trade ties beyond the US and China.
Merz Highlights India as Key Economic Partner
During his visit to India, Merz criticized rising protectionist policies worldwide, calling them a threat to “the principles of free trade and open markets.” He indicated that European Commission President Ursula von der Leyen and European Council President Antonio Costa could travel to India later this month to finalize the agreement.
Merz described India as “the fastest growing economy of the G20” and a “pivotal partner in the Indo-Pacific,” stressing the importance of securing a timely deal after earlier plans to conclude negotiations by the end of 2025 fell through.
Negotiations Face Hurdles but Remain Promising
High-level talks between EU and Indian officials have faced challenges, particularly around sustainability standards and the EU’s Carbon Border Adjustment Mechanism. Indian negotiators have expressed concern over environmental rules that could affect exports, while both the EU and India contend with trade tensions from the US and China.
Despite these obstacles, Merz expressed confidence that the talks are nearing completion, calling a potential signing “an encouraging sign” for the EU’s broader trade strategy.
Mercosur Deal Fuels Political Tensions in France
Meanwhile, the Mercosur free trade agreement, recently backed by a majority of EU states, has stirred political unrest in France. Concerns that Latin American imports could harm French farmers have prompted calls for a no-confidence vote against President Emmanuel Macron’s government from both far-left and far-right parties.
Despite opposition, von der Leyen is expected to travel to Paraguay on 17 January to sign the Mercosur deal, signaling the EU’s determination to move forward with its trade diversification agenda even amid domestic controversy.
