Germany is leading the charge for new trade partnerships as European leaders look to strengthen ties with India, even as free trade agreements spark political debates across the continent.
Merz Eyes Quick EU-India Agreement
During a visit to India on Monday, German Chancellor Friedrich Merz said European Commission President Ursula von der Leyen and European Council President Antonio Costa could sign a free trade deal with New Delhi by the end of this month. Merz’s push comes just days after a majority of EU countries approved the controversial Mercosur trade pact with Latin America, a deal Germany strongly supports as part of its strategy to reduce reliance on the US and China, which have recently adopted more nationalist trade policies.
Merz warned of a “renaissance of protectionism” and stressed that Europe must defend free trade principles. Calling India “the fastest-growing economy in the G20” and a “pivotal partner in the Indo-Pacific,” he expressed confidence that negotiations have reached their final stage. A summit to finalize the deal was first proposed in Brussels last year, though a target to seal it by 2025 was missed.
Challenges Over Sustainability and Tariffs
Despite progress, key issues remain unresolved. Negotiations over sustainability measures and dispute settlement tied to green standards have proven difficult, and India has raised concerns over the EU’s Carbon Border Adjustment Mechanism, introduced in 2023. Both sides are also navigating rising trade tensions with the US, which has increased tariffs, and China, which is leveraging global dependencies on raw materials and technology.
Merz, however, remains optimistic, calling the potential signing an “encouraging sign” for Europe’s broader agenda of forging new free trade agreements.
French Opposition Adds Political Pressure
While Germany champions trade diversification, the EU’s approach has fueled political unrest in France. Paris opposed the Mercosur deal, citing fears that an influx of Latin American agricultural products could harm French farmers. Tensions have escalated between President Emmanuel Macron and opposition parties, with both far-right and far-left factions threatening a no-confidence vote.
Meanwhile, von der Leyen is scheduled to travel to Paraguay on 17 January to formally sign the Mercosur agreement, signaling that Europe’s trade ambitions continue despite domestic political turmoil.
