6th Jul 2022

US budget trouble hits EU trade talks

  • EU/US trade talks are on hold as part of the US government shutdown (Photo:

Talks between the EU and US on a landmark trade deal have been cancelled this week as a result of the continuing government shutdown in Washington DC.

US trade officials were expected to arrive in Brussels on Monday (7 October) for the second round of negotiations on a proposed Transatlantic Trade and Investment Plan (TTIP) with talks planned to last all week.

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As yet there are no indications of when the talks will be rescheduled.

The US government was forced into a partial shut-down last week, after Democrats and Republicans in Congress failed to reach a deal on the country's budget.

Republicans are refusing to adopt new spending plans unless President Obama's healthcare reforms are blocked or are stripped of funding, three years after the bill was adopted in Congress.

Only essential government functions will take place until the two parties reach an agreement with thousands of state employees going without pay.

However, a deal needs to be reached by 17 October, the date when the US is due to default on its debt repayments.

Obama also scrapped plans to attend the Asia-Pacific Economic Co-operation summit in Bali, the other key priority of US trade policy, although US Trade Representative Michael Froman was present.

Speaking with Bloomberg television on Sunday (6 October), Froman said that there could be little progress in trade negotiations until the end of the shut-down.

“We’ve had to pull back on our negotiations, we’ve had to stop some of our enforcement efforts, we’re not able to monitor a lot of our existing agreements,” he said.

The cancellation of the talks will also come as a blow to EU officials, particularly the commission's trade chief, Karel de Gucht, who has set an ambitious deadline - next year - for concluding the talks.

The EU executive believes that a trade deal harmonising technical and regulatory standards, as well as scrapping remaining tariff barriers, could be worth up to 1 percent of GDP.

In a statement released Friday (4 October), de Gucht described the move as “unfortunate” but did not undermine the “clear commitment of the EU and the US to the TTIP process.”

“It in no way distracts us from our overall aim of achieving an ambitious trade and investment deal between Europe and the US,” he added.

For her part, Marietje Schaake, a Dutch MEP on the Parliament's US delegation, called on the two sides to continue talks “via digital means” until the US side could re-open formal negotiations.

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