Germany is taking a leading role in the EU’s global trade strategy, backing 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 India pact by the end of January, highlighting the EU’s aim to expand trade beyond the US and China.
India Seen as Key Economic Partner
Speaking during a trip to India, Merz emphasized the importance of free trade and warned against rising protectionist trends worldwide. He said European Commission President Ursula von der Leyen and European Council President Antonio Costa could travel to India later this month to finalize the deal.
Merz described India as “the fastest growing economy of the G20” and a “pivotal partner in the Indo-Pacific,” urging a timely conclusion after previous plans to seal a deal by the end of 2025 stalled.
Challenges in Negotiations
Negotiations between the EU and India have faced hurdles, particularly over sustainability standards and the EU’s Carbon Border Adjustment Mechanism. Indian officials have expressed concern about environmental rules affecting exports, while both sides are also navigating trade tensions with the US and China.
Despite the difficulties, Merz expressed confidence that the talks are nearing completion, calling a potential signing “an encouraging sign” for Europe’s broader trade agenda.
Mercosur Deal Sparks Political Tension in France
Meanwhile, the EU’s Mercosur free trade agreement has caused political turmoil in France. The country opposed the deal due to fears that imports from Latin America could harm French farmers. Opposition parties on both the far-left and far-right have called for a no-confidence vote against President Emmanuel Macron’s government.
Despite the backlash, von der Leyen is scheduled to travel to Paraguay on 17 January to sign the Mercosur agreement, demonstrating the EU’s commitment to advancing its trade diversification strategy even amid domestic controversy.
