December 21, 2007

WTO Issues Decision On Internet Gambling Case

The World Trade Organization issued a decision [PDF] today regarding Antigua and Barbuda's request to impose $3.4 billion in retaliatory measures against the United States for allegedly violating its WTO commitments. The WTO said Antigua can use annual trade sanctions against the U.S. retroactive to April 2006 for the amount of $21 million until the U.S. reaches compliance with the WTO. The WTO also ruled that Antigua's sanctions may target U.S. intellectual property.

"Considering that Antigua and Barbuda were asking for over $3 billion in compensation, and they were only awarded a token $21 million, this decision is a partial victory for the U.S.," said Rep. Bob Goodlatte, R-Va. "However, I remain concerned about how these countries could extract these sanctions from unrelated U.S. companies, like those in the intellectual property and banking industries."

"I will continue to closely monitor this situation and work with other U.S. policymakers and businesses to mitigate the decision's impact on U.S. industries," continued Goodlatte, who sponsored legislation banning online gambling last year.

Greg Frazier, executive vice president of worldwide government policy for the Motion Picture Association of America, warned of possible repercussions from the ruling. "We have made clear from the outset of the case that if Antigua were to suspend its intellectual property rights obligations in retaliation, we believe such a move -- which would be virtually unprecedented in WTO disputes -- would put Antigua at odds with some of its other international obligations as well as raise questions about its eligibility for certain U.S. trade preference programs," he said.

"Also, as a practical matter we have serious questions about how such a decision could be effectively managed to avoid damage beyond the amount of compensation in the WTO decision," Frazier added.

Sallie James, a trade policy analyst with the Cato Institute, said that "by allowing the suspension of intellectual property obligations, the arbitrator showed it is serious about allowing small countries to take action where their trade interests have been harmed, in a way which does not harm their own economies."

The Caribbean island nation requested the right to impose sanctions following a WTO ruling that the U.S. online betting ban violates commitments to WTO nations. Today's decision cannot be appealed by either Antigua or the U.S. According to a report (subscription) in Technology Daily this week, "Many people in the United States who are pushing Congress to repeal the ban and instead regulate online gambling have cited the WTO case as a key reason why lawmakers need to revisit the issue."

Mark Mendel, counsel for Antigua, called today’s decision an "extraordinary document" and said Antigua would be carefully assessing the decision going forward.

"The best way to resolve this case," James said, "would be for the U.S. to bring themselves into compliance with the findings of the WTO and remove the restrictions on U.S. citizens to access offshore gambling and betting services."

"It is not clear how, if at all, the government of Antigua will respond," said Frazier. "The WTO must first approve the arbitrator's decision before Antigua can act, and that approval will not come until January.... We continue to encourage the U.S. government and the government of Antigua and Barbuda to reach agreement on the U.S. decision to amend its underlying WTO commitments with respect to access to the U.S. market for online gambling on horse racing."

U.S. Trade Representative spokesman Sean Spicer said in a statement that the U.S. has "already initiated the formal process under the WTO for clarifying its schedule of commitments and is engaged in compensation negotiations with Antigua and six other WTO Members that have claimed to be affected."

"We announced a compensation agreement with three of those members earlier this week, and are continuing discussions with the others," Spicer noted.

The European Commission, the regulatory arm of the European Union, notified the United States in June that it would seek compensation over the U.S. ban on Internet gambling.

Earlier this week, the U.S. government announced it had reached compensation agreements with Canada, the European Union and Japan over the U.S. ban. "The agreement involves commitments to maintain our liberalized markets for warehousing services, technical testing services, research and development services and postal services relating to outbound international letters," the USTR said. The countries have more than a month to request a WTO review of the agreements.

Also today, the Remote Gambling Association, a trade association representing European Internet gambling companies, reportedly said it is filing a complaint against the United States for allegedly violating WTO rules by targeting foreign gaming companies while not prosecuting U.S. online gaming operators.

"The EU has consistently criticized the discrimination faced by the EU industry in the U.S., and we will use all avenues available to remove U.S. discriminatory practices," an EU spokesman told National Journal.

"That being said, the European Commission practice is not to comment on complaints received under the Trade Barriers Regulation. Therefore, we can neither deny nor confirm the receipt of a complaint from the Remote Gambling Association," he continued.

-Winter Casey, National Journal

Posted at 4:53 PM
Posted to: Congress, Economy, House, Trade
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