Merkel defends trade pact opposed by Trump

German Chancellor Angela Merkel on Wednesday expressed concern about the dim prospects for a sweeping trade pact between the U.S. and Asia, which President-elect Donald Trump opposes, and argued that Europe should keep pushing for trade liberalisation.

The German leader said she was unhappy about the push to pull out of the Trans-Pacific Partnership deal, hinting that China might be the biggest beneficiary of the move.

The president-elect has been clear in his opposition to multilateral trade deals and has pledged to pull out of the 12-nation partnership. Days after Mr. Trump’s election, Republican and Democratic lawmakers told the White House that they won’t bring the deal to a vote before his term begins.

“I don’t know who will benefit from this,” Ms. Merkel told the German parliament. “I only know one thing, there will continue to be trade pacts, and these will not have the standards that this accord… would have had.”

Beijing said Tuesday it now hopes to conclude its own Asia-wide trade pact in a bid to broaden its influence in the region.

German officials are concerned that a pan-Asian trade deal orchestrated by China would have none of the environmental and social safeguards included in TPP and its stalled cousin, the Trans-Atlantic Trade and Investment Partnership, a planned deal between the European Union and U.S. that would create the world’s largest free trade zone, which Mr. Trump has also criticized.

Some think Europe should seek to leave the vacuum left by TTP’s imminent collapse and pursue new bilateral trade deals with Asian economies.

Economists have said that Germany, whose economy is heavily reliant on exports, could be hit hard by growing protectionism and the collapse of TTIP. The U.S.-Europe trade pact is the brainchild of Ms. Merkel, who launched the idea in her first term as chancellor.

“Openness will bring us more security than isolation,” Ms. Merkel said, adding that trade deals help to shape globalization. “We should put our trust in similarities, in multilateralism, when forming it.”

Ms. Merkel also urged Europe to build a European Defence Union that would deepen military cooperation within the EU and strengthen the bloc’s defence against mounting external threats. Such a move, she said, would help reinforce the North Atlantic Treaty Organization rather than compete against it.

The chancellor reaffirmed Berlin’s commitment to raise military spending despite domestic opposition but warned that Germany would need time to bring its defence budget to 2% of gross domestic product, the benchmark set by NATO for its members. Germany currently spends 1.2% of GDP on its military, compared with 3.4% in the U.S., but has been ramping up spending lately.

“We aren’t yet where we should be,” she said. “We still have a pretty long way to go.”

The U.S. administration has long pressured EU members to spend more on defence. Mr. Trump is set to raise the pressure even more after suggesting during his campaign that U.S. military support for NATO members could be contingent on what they spend.