The cancellation of President Obama's planned trip to Asia is one example. By skipping the annual Asia Pacific Economic Cooperation (APEC) summit, Obama has inadvertently sent a message to regional players that Washington is not really serious about strengthening its presence there — a message that Beijing has been quick to capitalize on.
With growing protectionist tendencies across the Asia-Pacific, and with China increasingly vying for economic influence across the region, American support for the Trans-Pacific Partnership (TPP) is crucial.
(Read more: US growth in danger as shutdown heads into second week)
By not attending the meeting, Obama forfeits an opportunity to make a strong personal push for the regional trade deal and to strengthen U.S. business ties with three important emerging economies—Indonesia, Malaysia and the Philippines.
But U.S. economic interests in Asia are not the only ones affected by the shutdown. Negotiations with the European Union over the Trans-Atlantic Trade and Investment Partnership (TTIP) are also taking a hard hit. This week, U.S. trade officials were supposed to meet their European counterparts in Brussels for the second round of negotiations. Now cancelled, this meeting will have to be pushed into the future.
Of course, the TTIP negotiations with Europe will soon resume. But, given what is at stake — a trade deal of epic proportions with potential to drive growth on both sides of the Atlantic as well as the rest of the world — the cancelled meeting still marks a blow to the White House. Europeans are currently looking at American politics with a combination of intrigue and disgust. The title of recent story in the French daily, Le Monde, on the US government shutdown, "Jefferson, Wake Up, They've Gone Crazy!," says it all.
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The impact of the shutdown may also be felt during the upcoming IMF and World Bank meetings in Washington. Here, the U.S. government's ability to muster the resources necessary to effectively advocate American interests in countless meetings and bilateral with foreign colleagues is now called into question. (Case in point: Some 90 percent of the Treasury Department's employees are currently on furlough).