EU Trade Talks on Hold over US Govt Shutdown

Bulgaria in EU | October 5, 2013, Saturday // 12:45|  views

US President Barack Obama stresses Washington would continue working with the EU on drawing up the trade deal, but would have to wait until the shutdown was over. Photo EPA/BGNES

The government shutdown in the US has brought to a halt negotiations on an extensive free trade deal between the US and the EU.

The BBC reports Saturday that US officials had been due in Brussels next week to discuss the pact aimed at boosting bilateral ties, but US government closed non-essential operations on Tuesday after Congress failed to agree a new budget.

Since Tuesday, hundreds of thousands of government employees have not been working or paid.

On Friday, US trade representative Michael Froman informed the EU that financial and staffing constraints made it impossible to send a full negotiating team to Brussels.

US President Barack Obama stressed that Washington would continue working with the EU on drawing up the deal, but would have to wait until the shutdown was over.

Reacting to the US announcement, European Trade Commissioner Karel De Gucht said the delay was unfortunate.

Obama earlier cancelled his trip to Asia because of the shutdown.

It became imminent after Republicans who control the House of Representatives refused to approve a budget, saying they would only do so if Obama's healthcare reform law was delayed or stripped of funding.

Obama and the Democrats refused, noting the law was passed in 2010 and subsequently approved by the Supreme Court.

On Friday, Democrats and Republicans appeared no closer to finding a way out of the impasse.

Republican House Speaker John Boehner insisted the Democrats open negotiations on the shutdown.

Obama countered he was happy to hold talks with the Republicans, "but not it with a gun held to the head of the American people".

The US also faces running out of money and defaulting on its debt if there is no agreement to raise the debt ceiling later this month.

Christine Lagarde, managing director of the International Monetary Fund (IMF), warned that a failure to raise the government borrowing limits would be a far worse threat to the global economy than the current shutdown.

The US Treasury confirmed a debt default could lead to a financial crisis as bad as 2008 or worse.

Meanwhile, the New York Times reports that Boehner has privately told Republican lawmakers anxious about fallout from the government shutdown that he would not allow a potentially more crippling federal default.

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Tags: debt ceiling, IMF, US Treasury, John Boehner, Republican House Speaker, Republicans, Democrats, Asia, trade deal, shutdown, EU, Barack Obama, US President, christine lagarde, European Trade Commissioner Karel De Gucht


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