Germany is leading the charge for a new EU-India free trade agreement, with Chancellor Friedrich Merz signaling that the deal could be signed by the end of January. His comments come just days after EU countries approved the controversial Mercosur trade pact, which Germany has strongly supported as part of a broader strategy to reduce reliance on the United States and China.
Merz Calls for Action as Protectionism Grows
Speaking from India on Monday, Merz stressed the urgency of finalizing a trade agreement with New Delhi, describing India as “the fastest-growing economy of the G20” and a “pivotal partner in the Indo-Pacific.” He warned that the world is seeing “a renaissance of protectionism,” which threatens free trade and open markets, and said EU leaders could travel to India “towards the end of this month” to finalize the deal.
Negotiations between the EU and India have been ongoing for some time. An EU-India summit was initially proposed for the end of January, though earlier hopes to conclude the agreement by the end of 2025 were delayed. Merz expressed confidence that talks have now reached the final stage, with the signing of the agreement representing a “major step forward” in Europe’s push for stronger global trade ties.
Sustainability and Tensions Create Roadblocks
High-level discussions between India and the EU have faced hurdles, particularly regarding sustainability rules and the EU’s Carbon Border Adjustment Mechanism, which India views as a potential trade barrier. India’s Minister of Commerce and Industry, Piyush Goyal, traveled to Brussels last week for talks with EU trade chief Maroš Šefčovič, who has described Indian negotiators as “tough.”
Both the EU and India are also navigating growing trade tensions with the US, which has raised tariffs on multiple partners, and China, which is increasingly using its control over raw materials and technology as leverage. Despite these challenges, Merz remains optimistic that the deal can be concluded soon.
Mercosur Approval Stirs Political Unrest in France
While Germany pushes forward, the EU’s trade diversification strategy has sparked political turbulence in France. French leaders opposed the Mercosur pact, fearing an influx of Latin American imports could threaten local farmers. The controversy has intensified political pressure on President Emmanuel Macron, with far-right and far-left parties calling for a no-confidence vote against his government.
Meanwhile, European Commission President Ursula von der Leyen is expected to travel to Paraguay on 17 January to formally sign the Mercosur deal, further highlighting the delicate balance between EU-wide trade ambitions and domestic political concerns.
The push for the EU-India agreement signals Germany’s commitment to strengthening global trade ties, but it also underscores the complex challenges of balancing economic strategy with political realities at home.
