German Chancellor Friedrich Merz is pressing for Europe to finalize a free trade agreement with India as part of a broader strategy to diversify trade beyond the US and China. His comments come just days after EU countries approved the controversial Mercosur agreement, a deal Germany strongly supports despite opposition from some member states.
Merz Eyes Timely EU-India Agreement
Speaking during a visit to India on Monday, Merz suggested that European Commission President Ursula von der Leyen and European Council President Antonio Costa could sign a trade pact with New Delhi by the end of the month. He stressed that Europe must act decisively amid what he described as “a renaissance of protectionism” threatening free trade and open markets.
Merz highlighted India as “the fastest-growing economy of the G20” and a key partner in the Indo-Pacific. Talks for an EU-India summit have been ongoing since late last year, although previous efforts to finalize a deal by the end of 2025 fell short. The German chancellor expressed confidence that negotiations are now in their final phase.
Sustainability and Trade Hurdles
High-level talks between India and the EU have faced challenges, particularly over environmental commitments. The European Commission has struggled to agree with India on a sustainability chapter that includes dispute resolution mechanisms tied to green standards. India has also raised concerns over the EU’s 2023 Carbon Border Adjustment Mechanism, which imposes carbon tariffs on imports.
Despite these issues, Merz insisted that a deal would signal Europe’s commitment to forging new trade partnerships amid global tensions with the US and China, both of which have adopted increasingly nationalist trade policies in recent years.
Political Fallout in France
While Germany advocates for trade expansion, the Mercosur agreement has stirred political unrest in France. French leaders have opposed the pact, citing risks to farmers from a potential influx of Latin American imports. The situation has intensified domestic political tensions, with far-right and far-left parties calling for a no-confidence vote against President Emmanuel Macron.
Meanwhile, von der Leyen is expected to travel to Paraguay on 17 January to formally sign the Mercosur agreement, underscoring Europe’s push for trade diversification even as internal disagreements continue.
