Germany is leading the charge on the EU’s trade agenda, backing both the newly approved Mercosur pact with South America and a potential free trade agreement with India. Chancellor Friedrich Merz said on Monday that European Commission President Ursula von der Leyen and European Council President Antonio Costa could sign the deal with New Delhi by the end of the month, part of the EU’s plan to diversify trade ties beyond the US and China.
Merz Emphasizes India’s Strategic Role
Speaking during his visit to India, Merz warned that protectionism is on the rise worldwide, threatening “the principles of free trade and open markets.” He highlighted India as “the fastest growing economy of the G20” and a “pivotal partner in the Indo-Pacific.”
Merz said EU leaders could travel to India later this month to finalize the agreement, a goal delayed from the original plan to conclude negotiations by the end of 2025. He framed a timely signing as a key step in strengthening EU-India economic relations.
Negotiations Face Challenges, But Progress Continues
High-level talks between EU and Indian officials have faced hurdles, particularly over environmental standards and the EU’s Carbon Border Adjustment Mechanism. Indian negotiators have pushed back on measures they see as restrictive, while both India and the EU grapple with trade tensions with the US and China.
Despite the challenges, Merz said negotiations are in the final stages, and signing the deal would be “an encouraging sign” for the EU’s broader trade strategy.
Mercosur Deal Sparks Political Tensions in France
The EU’s trade moves are also stirring controversy at home. The recently approved Mercosur agreement has sparked political unrest in France, where concerns that imports from Latin America could hurt French farmers have led far-left and far-right parties to push for a no-confidence vote against President Emmanuel Macron’s government.
Nevertheless, von der Leyen is expected to travel to Paraguay on 17 January to sign the Mercosur deal, signaling that the EU is moving forward with its trade diversification agenda, even amid domestic opposition.
