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Shutdown shutters US trade deal discussions

A lot has been made of the immediate effects of the U.S. government shutdown, including furloughed workers and the loss of key federal services.

While these aspects could cut current economic activity, another shutdown effect is blocking officials from negotiating a deal to stimulate long-term economic growth.

On Friday, U.S. Trade Representative Michael Froman was forced to cancel a second round of negotiations with European Union and United Kingdom leaders regarding the Transatlantic Trade and Investment Partnership, which has been called the world's largest free-trade deal.

Officials have said the pact between the countries could stimulate $100 billion in economic activity on either side of the Atlantic each year and help stave off growing Chinese competition.

An analysis conducted by the Bertelsmann Foundation, Atlantic Council and British Embassy estimated the new trading pact would create 740,000 U.S. jobs, boost exports by 33 percent and benefit the average American household by $865 each year through reduced tariffs and open trade.

"It has been called an 'economic NATO' and presents a chance for the EU and U.S. to continue maintaining the values like open markets and protection of intellectual property in the global economic environment," said Kara Sutton, legislative director for the Bertelsmann Foundation.

The talks are by no means a slam-dunk, though. Negotiators must hammer out a complex series of regulatory standards and costs for the entire trading zone.

The negotiations set to begin Oct. 7 in Belgium were supposed to center on the most contentious finance issues. However, Froman had to call them off due to "financial and staffing constraints" caused by the shutdown.

Reuters reported the delay was significant, since negotiations are now entering their most difficult phase.

"This delay is not fatal, but if the U.S. shutdown drags on and you are taking things off the table like culture and financial services, it is not a good way to start," Stuart Eizenstat, a former U.S. ambassador to the European Union, told Reuters.

West Virginia's exports have grown at a stellar pace in recent years, with European trade accounting for more than a third of those exports. The new pact could continue growth, according to the trade analysis prepared by Bertelsmann.

Analysts forecast the trading block would grow West Virginia exports by an additional 6.6 percent, resulting in the creation of 4,200 new jobs.

The chemicals sector would see an additional $320 million in exports, with transportation equipment and metals products also growing by more about $117 million a year, the study said.

However, the shutdown casts doubt as to whether negotiators will be able to finish negotiations on schedule.

Sutton said European Union negotiators would like to see an agreement before their current governing mandate expires at the end of 2014. U.S. negotiators would like to have the deal completed and confirmed by Congress by the end of 2016, before President Barack Obama leaves office.

"Time is of the essence," Sutton said. "Such an ambitious agreement requires a great deal of political will to keep the momentum going."

Let's hope our political ills don't stifle that will to press on.



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