Germany’s new chancellor is wasting no time shaping Europe’s trade future. Friedrich Merz has thrown his weight behind expanding the EU’s network of free trade agreements, signalling that a long-awaited deal with India could be signed before the end of the month — even as Europe’s recent Mercosur agreement continues to stir controversy.
Merz Bets on India as Europe’s Next Key Trade Partner
Speaking during a visit to India, Merz said European Commission President Ursula von der Leyen and European Council President Antonio Costa may travel to New Delhi in the coming weeks to finalise a free trade agreement.
He framed the push as a direct response to growing global protectionism. With the US and China increasingly turning inward on trade, Merz argued Europe must secure new partnerships to keep markets open.
Calling India the fastest-growing economy in the G20, Merz described the country as a crucial partner in the Indo-Pacific and said negotiations appear to have entered their final stage. Plans for an EU-India summit were floated in Brussels earlier this year after a previous 2025 deadline quietly slipped.
Trade Talks Face Green Disputes and Global Pressures
Behind the optimism, difficult issues remain. EU and Indian negotiators are still divided over environmental commitments, particularly enforcement mechanisms tied to sustainability standards. India has also raised objections to the EU’s Carbon Border Adjustment Mechanism, which taxes carbon-intensive imports.
Both sides are under pressure to reach agreement as trade tensions rise globally. The US has introduced higher tariffs on several partners, while China has increasingly leveraged control over raw materials and technology supply chains. For Brussels, expanding trade links with India is seen as a strategic counterbalance.
Recent high-level talks between Indian commerce minister Piyush Goyal and EU trade chief Maroš Šefčovič have kept momentum alive, despite negotiators describing discussions as tough.
Mercosur Deal Sparks Political Storm in France
Merz’s trade push comes just days after EU member states backed the Mercosur agreement with South American nations — a deal Germany strongly supports as part of Europe’s diversification strategy. But not everyone in the bloc is on board.
France has opposed the Mercosur pact, warning that an influx of Latin American agricultural imports could threaten French farmers. The disagreement has intensified political tensions in Paris, with both far-right and far-left parties pushing for a vote of no confidence in President Emmanuel Macron’s government.
Meanwhile, von der Leyen is expected to travel to Paraguay later this month to formally sign the Mercosur deal, underscoring the EU’s determination to move ahead — even as internal divisions grow.
As Merz pushes for faster progress with India, Europe finds itself racing to secure new economic alliances in an increasingly fractured global trade landscape.
