Bursting the Bubble

Government Shutdown Halts TTIP

7 October 2013 | by

After the end of a relatively productive negotiating period in the Transatlantic Trade and Investment Partnership (TTIP) last July, those at the heart of the negotiations have been excitedly preparing for the recommencement of talks set to occur in Brussels this month. A factor many of us had not anticipated was that the disagreement between U.S. lawmakers over the debt ceiling would cause the government of the United States to shut down. As an American in the field of European affairs, traveling in DC during the shutdown was eerie to say the least. The city remains on a fearful cusp of the unknown. With factions around the capital demanding that they ‘get something’ before agreeing to a compromise, I am reminded of a school yard staring contest – where only the looming chance of a cookie may divert attention.

While the shutdown is felt, in some way, in the daily lives of every American, many forget that the shutdown also affects U.S. engagements around the world. The TTIP is one of the latest victims of the U.S. government shutdown. The highly anticipated and largest bilateral trade agreement in the world is now on hold because lawmakers, much like Sesame Streets’ Cookie Monster, have been denied a cookie and are, simply put, a tad cranky.

On Friday October 4th, EU Trade Commissioner Karel De Gucht received what was, without a doubt, an embarrassing (for the United States) call from the U.S. trade representative Michael Froman. Negotiations which were set to take place from the 7th to the 11th of October would no longer occur as a result of the U.S. government shutdown. The reason for the halt is that the US is unable to send a full negotiation team to Brussels’.

While Secretary Kerry will continue being the U.S. presence at the Apec Summit in Indonesia, President Obama will now be missing from those proceedings due to the complications arising from the playground staring contest, which seems far from over. On the 1st October, the U.S. government shut down in anticipation of reaching the national debt ceiling of 16.7 trillion dollars by mid-October. While the shutdown immediately furloughed (forced unpaid leave) a broad category of non- essential personnel and paused government actions, as the shutdown continues the number of furloughed employees and programs closed shall increase. In other words, the world should anticipate that if the staring match continues, the rest of the world will feel an impact as the presence of the US on the global stage lessens and defaults begin occurring.

According to U.S. law, lawmakers must approve any breach of a pre-determined debt levels. The removal of the Patient Protection and Affordable Care Act, commonly known as ‘Obamacare’, which was passed in 2010, is the cookie desired by Republicans to persuade them to pass the necessary legislation for the debt ceiling. Upheld by the Supreme Court when challenged in 2012, Obamacare is currently being legally implemented throughout the United States. The Democrats have stated that removing Obamacare is non-negotiable, thus Republicans have not seen a crumb of the cookie they desire, enforcing the continuation of this stalemate. By mid-October, if lawmakers are unable to reach a solution, the United States treasury has predicted ‘catastrophic effects’ on the economy. And these effects will not be isolated to the U.S.. Christine Lagarde, Director of the International Monetary Fund (IMF) has put forth that a U.S. default would ‘wreak havoc on the global economy’ creating a situation potentially worse than in 2008; something which is not in the financial well-being of the EU. Yet despite the global repercussions and need to prevent further problems in the global economy, a U.S. congressman has been quoted as saying, ‘We have to get something out of this. And I don’t even know what that is.’[i]  Not extremely comforting considering the fragile state of many world economies.

Commissioner De Gucht diplomatically described the halt in negotiations as ‘regrettable’. The US and the EU stand to gain jobs from the increased transatlantic trade, in addition to the 15 million already employed in the field, along with increasing trades in goods, services, and investments; gains that – given both economic situations – would be mutually beneficial.

As I am currently travelling in the United States, the effects of the shutdown have been emphasized in a manner of reacting to one’s favourite zoo being closed to the public. With the Panda Camera being a hotly debated victim of the shutdown, as well as national parks and camping grounds, this metaphor seems as apt as any. However, the U.S. shutdown has a wider impact than just picnic enthusiasts, not only are American lives being affected, but the world at large is anxiously waiting to see if halting the TTIP was simply the tip of the iceberg. The negotiations for the TTIP shall be rescheduled as soon as U.S. lawmakers end this schoolyard staring match and realise that when you are working with a debt ceiling, you cannot always come away with a cookie jar. Having waited three months between the first negotiation session and the second, one would predict that having to reschedule this second session will lengthen the overall time necessary for TTIP completion – further delaying potential economic benefits of this agreement which is needed by both parties.

Helpful Links:

TTIP Information from EU In The US

Official Press Release From EU Concerning US Cancelling Negotiations

Resources from the U.S. Treasury about government Debt Limit

Resource on Obamacare

International Monetary Fund U.S.A. Resources

 


[i] U.S. Rep. Marlin Stutzman (R – IN)

4 Comments

  1. Frank

    Great job Tash!

    I love this American tradition of shutting the government down – and especially if you realise that this happened for no other reason than one’s ego being hurt (as it was the case in the 1990s when the Speaker Gingrich shut the gov down when he was disrespected by the President Clinton who dared not invite him to sit in front of the plane on their way to attend a funeral of Israeli PM Yitzhak Rabin. It’s great to see that the future of so many people depend on one ego).

  2. Oh my! I didn’t realize that this was the reason for the shutdown. That is just sad. So many good things being put on hold. I feel like flying to DC and bringing baskets of cookies into the House/Senate to bring these people to their senses. I am sure the TTIP negotiations will still end up happening at some point, but for this to be the reason why they can not hold the session in Brussels this week is as the author said ’embarrasing’.

  3. The Republicans are against Obama care saying it is inefficient. Yet the Republican party approved to continue the pay of furloughed employees who are currently Not working – meaning they are paying for no work production. So they are costing the U.S. government/economy millions per day for no result except to try to kill what is, a) already law & b) an economically efficient law – – – The whole thing is ridiculous.

  4. The cookie metaphor has everyone at American University in fits…as we eat cookies in the grad lounge

What do you think?