US Cancels EU Free Trade Talks Due To Government Shutdown

Last Updated: 7, October 2013

Please note that we are not authorised to provide any investment advice. The content on this page is for information purposes only.

As the U.S. government shutdown enters into its second week, officials from the United States Trade Representative (USTR) office have postponed plans to hold a second round of negotiations with the European Union this week on a free trade pact, claiming that financial and staffing constraints made it impossible to send a full negotiating team to Brussels.

Last Friday, US trade representative Michael Froman called the European Union Trade Commissioner Karel De Gucht to apologise for the delay in discussion for the Transatlantic Trade and Investment Partnership (TTIP), adding that the deal remained “a major economic priority for the US, with the potential to enhance the world’s largest economic relationship and support jobs on both sides of the Atlantic when an agreement can be completed”.

“USTR will work with the [European] Commission to craft an alternative work plan that can begin once the US government shutdown ends,” a USTR spokeswoman further said over the weekend.

Reacting to the U.S. announcement, De Gucht said that the delay had been “unfortunate.”

[quote]”But let me underline that it in no way distracts us from our overall aim of achieving an ambitious trade and investment deal,” he said.[/quote]

EU and U.S. officials say that the TIPP can potentially boost economic output by some $100 billion a year on each side of the Atlantic, creating a market of 800 million people. Agreeing a deal by the end of 2014 is the goal of both sides, as the European Commission’s term will end in November next year while the U.S. is expected to hold mid-term elections.

U.S. President Barack Obama announced the first round of talks with the EU Trade Commission on the first day of the G8 Summit last June and have met with trade representatives and leaders from the 17 countries represented in the EU; but disagreement still abound over financial regulations.

The EU is looking to impose tighter regulatory control over both sides of the Atlantic, while Washington is demanding that global trading involving U.S. firms be subject only to U.S. rules, regardless of where it happens.

Meanwhile, the White House also announced that President Obama would miss two summits in Asia, including the Asia-Pacific Economic Co-operation (Apec) meeting in Indonesia.

Secretary of State John Kerry will attend the Apec gathering and the East Asia summit in Brunei in Mr Obama’s place, the White House said.

Nevertheless, Obama’s absence could be a serious blow in talks on a Trans-Pacific Partnership (TPP), undercut the Obama administration’s ambition to promote his “pivot” to Asia, a long-term strategic plan to cement American interests in the region and to push back against rising Chinese influence.

Mike Green, a former Asia director at the national security council, told the Financial Times hat the cancellation could have “consequential and lasting strategic implications” for the US in the region. “Our Chinese friends are spreading doubt around the region about our staying power,” he said.

“If he [Obama] is not there, it is hard for anybody else to agree to various kinds of commitments,” added Deborah Elms, a leading TPP expert based at Singapore’s Nanyang Technological University.

[quote]“Even if Obama has empowered John Kerry to make various kinds of concessions on behalf of the United States, I’m not sure how many other leaders are going to feel confident that it is the same as hearing it out of Obama’s mouth.”[/quote]

About EW News Desk Team PRO INVESTOR

Latest news about the state of the world economy.

View all posts by EW News Desk Team