US government shutdown halts EU free trade talks

US President Barack Obama: "Nobody is winning"

Negotiations on a sweeping free trade pact between the US and the EU have been postponed because of a partial government shutdown in America.

US officials had been due in Brussels next week to discuss the deal aimed at boosting bilateral ties.

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

The US government closed non-essential operations on Tuesday after Congress failed to agree a new budget.

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

'Unfortunate'

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.

House Speaker Boehner: "This isn't some damn game"

But he 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.

"But let me underline that it in no way distracts us from our overall aim of achieving an ambitious trade and investment deal," he added.

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

It said the decision was made due to the "difficulty in moving forward with foreign travel in the face of a shutdown".

Analysis

This is the most recent example of the ongoing problem Mr Boehner has controlling the Republican caucus, especially a rebellious faction hailing from solidly conservative, mostly rural areas across the country.

They've been called the "suicide caucus" in reference to their disregard for their party's survival. In national security debates, immigration reform, disaster relief, defence authorisations, and even agriculture funding, Mr Boehner has found his position undermined by these rebellious legislators.

But these representatives reflect the will of the voters who sent them to Washington, a decidedly different demographic than America at large.

This has forced Mr Boehner to operate more like the tolerant head of a coalition government than an iron-fisted speaker of a past era, who could make or break a politician's career at will.

Republican 'suicide caucus'

Mr Obama called Indonesian President Susilo Bambang Yudhoyono on Friday and expressed his regret over the cancellation, Indonesian presidential spokesman for foreign affairs Teuku Faizasyah told the BBC.

The visit had not been rescheduled, the spokesman added.

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.

President Obama had been due to begin a four-nation Asian trip on Saturday, heading to Bali and Brunei before travelling on to Malaysia and the Philippines.

The US government partially shut down operations on Tuesday after Republicans who control the House of Representatives refused to approve a budget, saying they would only do so if Mr Obama's healthcare reform law was delayed or stripped of funding.

Mr Obama and the Democrats have refused, noting the law was passed in 2010, subsequently approved by the Supreme Court, and was a central issue in the 2012 election which Mr Obama won comfortably.

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

Republican House Speaker John Boehner insisted Mr Obama and Democratic Senate leaders open negotiations on the shutdown.

"All we're asking for is to sit down and have a discussion," he said. "This isn't some damn game."

Mr Obama later said he was happy to hold talks with the Republicans, "but we can't do it with a gun held to the head of the American people".

"This shutdown could be over today," he said. "We know there are the votes for it in the House of Representatives. If Speaker Boehner will simply allow the vote to take place, we can end this shutdown."

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

'Worse than 2008'

IMF head Christine Lagarde says it is "mission critical" that the situation is resolved

Christine Lagarde, managing director of the International Monetary Fund (IMF), said warned earlier that a failure to raise the US debt ceiling would be a far worse threat to the global economy than the current shutdown.

She said it was "mission critical" that the US agreed a new debt limit.

Ms Lagarde's comments were echoed by the US Treasury.

It said a debt default could lead to a financial crisis as bad as 2008 or worse.

Meanwhile, the impact of the shutdown was being felt across the country.

The National Transportation Safety Board did not send investigators to a deadly church bus crash in Tennessee that killed eight people and injured 14 others.

The labour department also postponed the release of the highly anticipated September jobs report.

With Tropical Storm Karen bearing down on the Gulf states, the website of the National Oceanic and Atmospheric Administration (NOAA), carried a message saying: "Due to the federal government shutdown, NOAA.gov and most associated web sites are unavailable."

It referred visitors to the National Weather Service.

However, the Federal Emergency Management Agency (Fema) recalled workers to help prepare for the storm.

On Friday, House Majority Leader Eric Cantor said the House would vote on a measure to re-open Fema as well as the National Weather Service to deal with the impending storm.

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