The EU is seeking new trade partnerships. Here's why

The ambitious free trade agreement between the European Union and India underscores the EU's efforts to ink new global partnerships at a time when the Trump administration has rattled a continent deeply tied to Washington on trade, defense and diplomacy. The agreement announced Tuesday reflects a new priority for the 27-nation EU, the world's largest trading bloc, after US President Donald Trump threatened to impose tariffs because of opposition to American control of Greenland, only to back off days later. It follows trade deals struck or pending over the past year with India, Japan, Indonesia, Mexico and the five Mercosur nations of South America. "The international order we relied upon for decades is no longer a given," said Nikos Christodoulides, president of Cyprus, in a speech last week at the European Parliament. He was outlining Cyprus' priorities as the island nation begins its six-month term at the helm of the EU. "This moment calls for action, decisive, credible and united action. It calls for a union that is more autonomous and open to the world," said Christodoulides, echoing widespread sentiment across the bloc. After attending a military parade in New Delhi, European Commission President Ursula von der Leyen signed the free trade agreement to deepen economic and strategic ties with India. She called it the "mother of all deals."

The pact could affect as many as 2 billion people and slash tariffs on nearly 97% of EU exports to India like cars and wine, and 99% of India's shipments of goods like textiles and medicines to the EU.

"Europe and India need each other today like never before," said Garima Mohan, a senior fellow at the German Marshall Fund. She said that both Brussels and New Delhi had long sought closer ties as a counterweight to China's economic rise. But the Trump administration's newly aggressive stance on economic and security issues clinched the deal.

"This movement towards diversification, looking for new partners as well as building self-reliance was precipitated by the tensions with China and really driven home by the fracture of the trans-Atlantic partnership," Mohan said. The deal "only came to pass at this particular geopolitical juncture, and that says something of the world we live in."

The EU struck its first trade deal in July with Indonesia. Two weeks ago, von der Leyen signed a deal with the Mercosur nations of South America that was decades in the making to create a free trade market of more than 700 million people - and she's said she has the authority to implement it despite objections raised by European Parliament.

The EU has also upgraded ties with Japan, South Korea and Australia, Pacific nations wary of Beijing's strategic ambitions and Washington's turbulent politics. Canada is "knocking on our door" to do the same, said Manfred Weber, head of the European People's Party, Europe's largest political bloc.

"There is a hope that things will change given the importance of the U.S. for us ... but there is a realization now that we are a bit more alone in this world," said Ivano di Carlo, a senior policy analyst at the European Policy Centre.

Russia's invasion of Ukraine drove the EU to create financial tools to boost the bloc's defense industry and infrastructure like trains, roads and ports - but the Trump administration's criticism of the continent's low levels of defense spending kicked those initiatives into overdrive.

Denmark's prime minister has said Russia could pose a credible security threat to the EU by the end of the decade and that defense industries in Europe and Ukraine must be able to thwart that threat.

France has led calls for Europe to build "strategic autonomy," and support for its stance has grown since the Trump administration warned last year that its security priorities lie elsewhere and that the Europeans would have to fend for themselves.

Shortly after Trump began his second term in the White House, EU leaders agreed to increase their own defense budgets. As a priority, 150 billion euros ($162 billion) in loans are designated for air and missile defense, artillery systems, ammunition, drones and air transport, as well as cyber systems, artificial intelligence and electronic warfare.

Industry leaders and experts across Europe have said truly self-sufficient military power would require overcoming a decades-long reliance on the US as well as the fragmentation along national lines of Europe's own defense industry. Stocks in Europe's major arms makers like Leonardo (Italy), Rheinmetall (Germany), Thales (France) and Saab (Sweden) have all been on the rise. While trying to cut its energy ties with Russia, the EU began buying more US energy, according to the Institute for Energy Economic and Financial Analysis. But that too is risky for the bloc, said Dan Jørgensen, European commissioner for energy and housing, during a North Sea Summit in Hamburg, Germany on Monday.

The EU imports 14.5% of its oil and 60% of its liquefied natural gas from the US, according to the EU statistics agency Eurostat. Jørgensen said the EU should seek further energy independence by investing in energy production and alternate suppliers. "We do not want to replace one dependency for another — we need to diversify," Jørgensen said. Brussels is eyeing sources in the eastern Mediterranean and the Gulf, where negotiations are underway for a free trade deal with the United Arab Emirates. "Decoupling is easier said than done," but forging new global relationships gives the EU an edge in dealing with Beijing, Moscow and Washington, Mohan said.

Associated Press