German Chancellor Friedrich Merz is leading the charge to expand Europe’s trade horizons, backing both the contentious Mercosur agreement and a potential free trade deal with India. His comments come as the EU navigates rising protectionism worldwide and internal political tensions, particularly in France.
Merz Highlights India as Key Trade Partner
Speaking during a trip to India on Monday, Merz said European Commission President Ursula von der Leyen and European Council President Antonio Costa could sign a free trade agreement with New Delhi by the end of January. He emphasized that diversifying trade beyond the US and China is essential, especially as both nations pursue increasingly nationalist economic policies.
“Unfortunately we are seeing a renaissance of protectionism. It is directed against the principles of free trade and open markets,” Merz said, adding that concluding the EU-India deal would be “another major step forward.” He described India as “the fastest growing economy of the G20” and a “pivotal partner in the Indo-Pacific,” underlining the strategic importance of the agreement for Europe.
Trade Negotiations Hit Key Hurdles
High-level talks between India’s Commerce Minister Piyush Goyal and EU trade chief Maroš Šefčovič continue to focus on sticking points like sustainability measures and the EU’s Carbon Border Adjustment Mechanism, which India views as a barrier to its exports. Both sides also face pressure from escalating trade tensions with the US and China.
Despite these challenges, Merz expressed confidence that the deal is nearing completion, calling a potential signing “an encouraging sign” for Europe’s broader free trade agenda.
French Backlash Over Mercosur Deal
While Germany pushes ahead, the Mercosur agreement has sparked political turmoil in France, the EU’s second-largest economy. Paris opposed the deal over fears that a surge of Latin American imports could threaten local farmers. The controversy has intensified internal politics, with far-right and far-left parties threatening a no-confidence vote against President Emmanuel Macron.
Meanwhile, von der Leyen is scheduled to travel to Paraguay on 17 January to sign the Mercosur pact, highlighting the EU’s determination to pursue trade diversification despite domestic and regional disagreements.
