Germany is stepping up as a key driver of Europe’s trade strategy, advocating for both the newly approved Mercosur agreement and a prospective EU-India free trade deal, even as political tensions rise at home and abroad.
Merz Champions EU-India Free Trade
Speaking from India on Monday, German Chancellor Friedrich Merz signaled optimism that European Commission President Ursula von der Leyen and European Council President Antonio Costa could sign a trade agreement with New Delhi by the end of the month.
Merz framed the deal as part of a broader strategy to reduce Europe’s reliance on the US and China, countries that have increasingly embraced protectionist trade policies. “Unfortunately we are seeing a renaissance of protectionism. It is directed against the principles of free trade and open markets,” he said. Calling India “the fastest growing economy of the G20” and a “pivotal partner in the Indo-Pacific,” Merz stressed that the signing would mark “another major step forward” for EU trade diversification.
Challenges in Trade Negotiations
Negotiations with India have been complex, particularly around sustainability measures and the EU’s Carbon Border Adjustment Mechanism, which India has raised concerns about. Last week, Indian Commerce Minister Piyush Goyal visited Brussels for high-level talks with EU trade chief Maroš Šefčovič.
Both the EU and India are navigating growing trade tensions with the US, which has raised tariffs, and China, which is increasingly leveraging dependencies on raw materials and technology. Despite these obstacles, Merz expressed confidence that the EU-India deal is in its final stages and could soon be signed.
Mercosur Deal Sparks Political Backlash in France
While Germany presses forward, the Mercosur agreement has stirred domestic unrest in France, Europe’s second-largest economy. French authorities opposed the pact over fears that Latin American imports could threaten local farmers. The controversy has escalated tensions between President Emmanuel Macron and opposition parties, with calls for a no-confidence vote coming from both far-right and far-left groups.
Meanwhile, von der Leyen is scheduled to travel to Paraguay on 17 January to sign the Mercosur deal, signaling that the EU is determined to move forward with its trade diversification agenda despite internal disagreements.
