German Chancellor Friedrich Merz is doubling down on Europe’s free trade ambitions, signaling that an EU-India trade agreement could be signed by the end of January, even as the bloc faces internal divisions over other deals like Mercosur.
Merz Urges Timely EU-India Agreement
Speaking during a trip to India on Monday, Merz expressed optimism that European Commission President Ursula von der Leyen and European Council President Antonio Costa could finalize a free trade pact with New Delhi soon. He highlighted the deal as part of Europe’s strategy to reduce reliance on the US and China, both of which have embraced nationalist trade policies in recent years.
“Unfortunately, we are seeing a renaissance of protectionism. It is directed against the principles of free trade and open markets,” Merz said, calling India “the fastest growing economy of the G20” and a “pivotal partner in the Indo-Pacific.” He noted that EU leaders could travel to India “towards the end of this month” to sign the agreement, describing it as a “major step forward” for Europe’s trade agenda.
Challenges in Sustainability and Trade Rules
Negotiations have faced hurdles, particularly over the sustainability chapter and the EU’s Carbon Border Adjustment Mechanism, which India has criticized. High-level talks between India’s Commerce Minister Piyush Goyal and EU trade chief Maroš Šefčovič have continued, with both sides seeking a balance between environmental standards and trade growth.
Merz expressed confidence that discussions are in their final stages, saying a signed agreement would signal progress for the EU’s broader effort to secure new trade partnerships and strengthen its economic independence.
Mercosur Deal Sparks Political Tension in France
While Germany pushes ahead, the recent approval of the Mercosur agreement has stirred controversy in France, Europe’s second-largest economy. French officials fear that imports from Latin America could harm local farmers, leading to heightened political tensions. President Emmanuel Macron now faces calls for a no-confidence vote from both far-right and far-left parties, as divisions over EU trade policies threaten to destabilize the government.
Meanwhile, Ursula von der Leyen is scheduled to travel to Paraguay on 17 January to formally sign the Mercosur pact, underscoring the EU’s determination to advance its trade diversification strategy despite domestic and international challenges.
