The EU Is the New Go-To Middle Power
In a world of disorder, the bloc’s boring stability is suddenly attractive.
Canadian Prime Minister Mark Carney is a geopolitical celebrity these days. In a January speech at the World Economic Forum in Davos, Switzerland, that went viral in foreign-policy circles, he pleaded for the leaders of other middle powers to join Canada in fighting against great-power coercion.
But while Carney’s speech made the headlines, the European Union was already implementing the diversification strategy that Carney called for, most notably in trade. In the past seven months, the bloc has inked free-trade agreements: with Australia, India, Indonesia, and Mercosur, a club of South American economies. The value of these four agreements goes well beyond economics. Brussels is positioning itself as the go-to alternative for the many middle powers around the world that want to avoid a binary choice between the United States and China. In this, Europe is having genuine success.
This success was not obvious from the start. The European Commission has an old habit of announcing groundbreaking trade deals that do not survive ratification by EU member states. Just a decade ago, the Transatlantic Trade and Investment Partnership (TTIP) was supposed to lock the United States and Europe into a golden era of trade and investment. The deal collapsed in the mid-2010s after European left-wing parties and activist groups generated mass protests against the deal.
The latest EU free-trade agreements have yet to be implemented. This time, however, there is reason to be optimistic about the new deals and their life expectancy. U.S. President Donald Trump is an obvious driver of the EU’s free-trade endeavors as Europeans seek alternatives to Washington’s tariff salvos, a National Security Strategy that is openly hostile to Europe, and bizarre threats to annex Greenland. Perhaps more importantly, the deals are also coming amid deep changes in the EU’s two most important capitals, Berlin and Paris.
The flip by the German left is a first factor. Mainstream German left-wing parties were once anti-TTIP and anti-globalization; the Social Democrats and Greens backed the mass anti-free trade protests that gathered some 250,000 people across Germany in 2016 under the banner of blocking an impending flood of supposedly dangerous chlorine-treated chicken, hormone-doped beef, and genetically modified organisms. Ten years later, such protests would be anathema to German left-wing voters. Concerns about the combined impact of China’s economic rise and U.S. protectionism on the country’s export-heavy industries now dominate the headlines. In turn, the left is now actively promoting the EU’s latest free-trade agreements in a bid to save industrial jobs.
France’s gradual loss of influence in Europe is the second factor. French opposition to free trade is nothing new. Amid mass farmers’ protests, Paris tried to build a coalition to block the adoption of the Mercosur deal in the European Council. France lost the vote 21 to five, finding itself isolated among an eclectic coalition that also comprised Austria, Hungary, Ireland, and Poland. For decades, Paris could count on building a blocking minority on EU decisions. The adoption of the Mercosur deal against French wishes shows how the rise of other prominent European powers—as evidenced by an emerging Berlin-Warsaw axis—now often relegates Paris to second-league status.
Skeptics like to note that Europe’s new trade deals have only limited economic value. Most projections suggest that the deals with Mercosur and India will boost the EU’s GDP by a mere 0.1 percentage point once they are fully implemented, and even that could take years. Instead, the value of the deals lies elsewhere. Brussels is quietly building a long-lasting architecture that will benefit the bloc and its partners in three areas: standards, security, and stability.
Take standards first. Trade policy wonks like to say that the EU exports its standards whenever it inks trade deals, a process known as the Brussels effect. When, say, Indonesia adopts obscure EU sanitary, consumer safety, or technical standards as a prerequisite for easing trade, the country effectively asks all its other, non-EU suppliers to meet these new standards if they want to retain access to the Indonesian market—which in turn fosters the global adoption of EU rules. Both sides benefit: Indonesian exporters aligning with European Union standards unlock access not just to the EU market, but also to any third country that also follows EU standards.
The standards side of the equation extends beyond goods trade. Negotiations around an upcoming EU-South Korea digital deal illustrate Brussels’ efforts to shape the global tech rule book around data privacy and governance principles, fostering a middle-power bloc whose practices stand in stark contrast with Washington’s deregulation drive and Beijing’s surveillance model.
Security is the second benefit of the new trade agreements. Supply-chain resilience and other aspects of economic security are the buzzwords of the day, not just in Brussels. The Mercosur deal includes provisions for EU firms to access South American critical minerals that will be crucial for the Europe’s green and digital transitions. Brazil holds 11 percent to 25 percent of the world’s reserves of graphite, nickel, manganese, and rare earths as well as two-thirds of the global reserves of niobium, a crucial metal for EU aerospace firms.
Again, the benefits cut both ways: The new trade deals give Australian, Indonesian, and Mercosur commodity producers stable access to the vast EU market. This is no small feat for Australia, which endured four years of Chinese import restrictions on its barley, beef, coal, cotton, lobster, timber, and wine after Canberra called for an independent inquiry into the emergence of COVID-19 in China in 2020.
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Stability forms the third and final pillar of Europe’s trade architecture. The EU’s free-trade agreements come with binding frameworks—regulatory chapters, dispute settlement mechanisms, and joint committees—that anchor the bloc to its partners in the long run. The Indonesia agreement includes legal mechanisms for disputes with foreign investors. A joint committee will oversee the implementation of the Mercosur deal. The Australia agreement has enough regulatory material to stave off insomnia for years. In a world where policy can shift as fast as a post pops up on Truth Social, such institutionalized stability has become a rare and valuable good for global policymakers.
Two data points suggest that the EU’s growing network of free-trade agreements could dilute U.S. centrality on the global trade landscape. First, the EU now has free-trade deals with 76 economies, and its network is growing fast. By contrast, U.S. agreements cover just 20 countries (not including Trump’s one-pager deals that he can change on a whim). The fast expansion of the EU’s trading network will come at the expense of U.S. firms; the U.S. Department of Agriculture estimates that the EU-Mercosur deal could put around $4 billion of annual U.S. agricultural exports to Europe at risk. It is not hard to imagine that the same logic will apply to Europe’s deals with Australia; Indonesia; and, crucially, India, the world’s sixth-largest economy by nominal GDP.
Second, between May and December 2025, many middle powers—including the EU, Canada, Japan, South Korea, Switzerland, and Britain—recorded a substantial drop in their goods exports to the United States compared to the same period during the previous year. At the same time, the value of their shipments to other middle powers rose. The trend predates the implementation of Europe’s latest free-trade agreements, suggesting that it could accelerate once these deals take effect—in May for Mercosur and next year for the other three.
Perhaps the EU’s appeal lies with the fact that the bloc’s trade deals come with no political strings attached. This is partly an admission of weakness: Brussels is unlikely to ask its trade partners to align on its geopolitical views precisely because it is short on geopolitical clout. For example, the EU concluded its free-trade deal with India while New Delhi kept buying Russian crude and declined to join Western sanctions on Moscow.
This laissez-faire is in stark contrast with U.S. and Chinese practices. Last year, Trump slapped a 50 percent tariff on U.S. imports from India (officially to protest against New Delhi’s imports of Russian oil); imposed a $100,000 fee on H-1B visas (of which 71 percent are held by Indian nationals); and, for good measure, called India’s economy “dead.”
At around the same time, Beijing pressured the Chinese company Foxconn to recall hundreds of Chinese engineers from its Indian iPhone factories. It is hard to imagine that this move came out of nowhere: One day earlier, the foreign ministers of the Quad countries—a security club made up of Australia, India, Japan, and the United States—had just met in Washington and voiced serious concerns about China’s behavior in the South China Sea. The examples are not restricted to India: Australia, Indonesia, and the Mercosur economies face similar pressures from Washington and Beijing that link trade relations to political behavior.
The irony is hard to miss. The EU’s biggest perceived weakness—its glacial pace, obsession with rules, and technocratic nature—could become the bloc’s competitive advantage in a fractured global order. Granted, this is not as sexy as Carney’s grand proclamations in Davos. What’s more, a lot could still go wrong for the EU’s trade ambitions. The Mercosur ratification process could drag on in national parliaments, and India’s myriad nontariff barriers could still gut the deal.
Yet through a mix of necessity and shifting domestic politics, the world’s most boring bureaucratic machine may inadvertently be leading a middle-power coalition looking for a third way between Washington and Beijing. Boring, it seems, suddenly has allure.
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Agathe Demarais is a columnist at Foreign Policy, a senior policy fellow on geoeconomics and technology at the European Council on Foreign Relations, a visiting professor at the College of Europe, a former global forecasting director at the Economist Intelligence Unit, and the author of Backfire: How Sanctions Reshape the World Against U.S. Interests. Bluesky: @agathedemarais.com
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