BRUSSELS — As Donald Trump shifts the United States’ trade policy away from free trade, the European Union (EU) is responding by actively pursuing trade agreements with various global partners. This strategic pivot aims to enhance the EU’s already significant economic footprint, which comprises around 16 percent of global trade, while the U.S. accounts for 13 percent.
European Commission President Ursula von der Leyen recently conveyed the growing interest in collaborative trade relationships, stating,
“Countries are lining up to work with us.”
Since her reappointment in December, von der Leyen has engaged in multiple negotiations, including completing a long-anticipated agreement with the Latin American Mercosur bloc and initiating talks for a free trade agreement (FTA) with India.
Key Trade Agreements in Progress
Here’s a closer look at the ongoing trade discussions that Brussels is keen to finalize:
- Mercosur: This deal aims to create a market of over 700 million consumers across the Atlantic. However, the agreement faces significant opposition from European farmers, particularly in France, who express concerns over competition from cheaper South American imports. Despite the low import quotas set for specific goods like beef and poultry, resistance remains strong due to fears regarding deforestation, especially in Brazil. Yet, Trump’s aggressive trade policies have shifted some EU nations, like Austria, towards supporting the deal. A potential breakthrough may occur post-May 18 Polish elections, with a Council vote anticipated in the autumn.
- India: Von der Leyen has prioritized securing an FTA with India, which would connect nearly 2 billion people. However, past negotiations have faltered due to issues surrounding market access and high import duties on goods such as cars. As India approaches becoming the world’s third-largest economy, both sides appear committed to finalizing a deal this year. Nevertheless, India’s Commerce Minister, Piyush Goyal, remains cautious, especially regarding the EU’s proposed carbon border tax, which he argues could have detrimental effects on Europe’s manufacturing sector.
- Australia: Negotiations with Australia have been ongoing since 2018, with the EU poised to boost its GDP by approximately €4 billion through a successful agreement. However, disagreements over access to agricultural markets have stalled progress. Recent tensions arose over Australia’s demands for greater market access and disputes over geographical indications, which could hinder European products like Prosecco and Feta. The outcome of Australia’s upcoming elections may reignite discussions, with Trade Minister Don Farrell indicating a renewed willingness to negotiate.
- Indonesia: The EU aims to strengthen its trade relationship with Indonesia, the largest economy in Southeast Asia. Yet, negotiations have encountered various obstacles, including disputes over nickel exports and environmental regulations impacting Indonesia’s palm oil industry. Both parties have struggled to find common ground, and recent discussions have not yet yielded fruitful results.
- Southeast Asia (Philippines, Malaysia, Thailand): The EU is also working to restart trade agreements with other ASEAN nations. Malaysia and the Philippines have faced previous halts in negotiations due to various concerns, including sustainable practices and human rights issues. However, following recent political changes, particularly the departure of former leaders in the Philippines and Thailand, prospects for renewed talks look promising. Malaysia’s Prime Minister visited Brussels earlier this year, indicating a potential for significant progress before summer.
Future Outlook
The EU’s commitment to diversifying its trade relationships is evident as it seeks to counterbalance the impacts of U.S. tariffs initiated under Trump’s administration. By engaging with a variety of global partners, the EU not only seeks to enhance its economic dominance but also mitigate the risks associated with reliance on the U.S. market. Each of these trade negotiations will require careful navigation through complex political and economic landscapes, but the EU remains determined to establish itself as a leader in global trade.