Germany, Italy deepen cooperation on industry, trade and defence

Germany and Italy said on January 23 that they would work together within the European Union to advance the deregulation of industry, signalling closer coordination between the bloc’s two largest manufacturing powers as their priorities increasingly diverge from those of other members, including France.

Italian Prime Minister Giorgia Meloni and German Chancellor Friedrich Merz presented a joint initiative aimed at simplifying regulations, strengthening industrial policy and expanding cooperation in key areas such as energy, defence and migration, as per foreign media reports.

In a joint statement, the two governments said Europe must bolster its capacity to act in response to Russia’s war in Ukraine and broader global challenges, while at the same time reinforcing growth and resilience across the EU’s industrial base. Berlin and Rome argue that their industrial competitiveness is being steadily undermined by China and constrained by EU rules, particularly the Green Deal, which they say has disrupted the automotive sector.

“Today, I believe Italy and Germany are closer than ever,” Meloni said at a joint news conference with Merz. She added that the EU’s ecological transition had “brought our industries to their knees” and strengthened China’s position.

Recent tensions in transatlantic relations have also exposed differences with France, after President Emmanuel Macron this week called for a tougher stance toward Washington. Germany and Italy, which are the EU’s two largest exporters to the United States, have adopted a more cautious public approach.

Although Meloni’s party has roots on the far right, Merz has described her as a pragmatic partner who shares his emphasis on safeguarding Europe’s industrial base, including how to manage US pressure over Greenland without triggering escalation. “During this eventful week, the two of us have spoken almost every day about how to deal with the difficult issue involving Denmark and Greenland,” Merz said.

In their 19-page action plan, Germany and Italy called for simpler rules across the 27-member EU and urged “legislative and regulatory self-restraint” to reduce bureaucratic burdens. They supported deeper integration of the single market, particularly in services, and outlined industrial priorities such as the automotive sector and energy-intensive industries.

The push for closer coordination reflects growing concern in European capitals that the EU risks falling further behind the United States and China in technology, industrial capacity and economic security unless member states align their policies more closely.

On critical raw materials, Berlin and Rome pledged to cooperate on securing supply chains in order to counter China’s expanding influence over pricing. They also urged the EU to ensure fair competition, citing the impact of low-cost Chinese online retailers.

Meloni and Merz said they backed the rapid entry into force of an EU trade agreement with South and Central American countries, another area where their stance differs from Paris, which has sought stronger protections for farmers. They also expressed support for completing trade agreements in the Indo-Pacific region.

In addition, the two countries signed a defence cooperation agreement to expand joint efforts across land, air, maritime and electronic-warfare systems.