DON'T RETALIATE JUST YET, U.S. URGES ANTIGUANS

28 December 2007

US manoeuvring could make Antiguan retaliation moot


The award of $21 million of cross-retaliatory trade moves by the World Trade Organisation to Antigua in its discrimination action against the United States continued to reverberate through the online gambling industry today (Saturday) In a surprise move, US Trade Representative spokesman Sean Spicer 'advised' Antigua to delay any action pending US changes to its international trade obligations under the WTO treaty.

Spicer said Washington has initiated a formal process at the WTO to revise its commitments [by the removal of gambling services from it's decade-long agreement] and is in talks with Antigua and six other WTO members that have claimed to be affected.

"We would expect that Antigua would not suspend its WTO commitments to the United States while that process is underway.," Spicer said. "Once the process of clarifying the US schedule of commitments is complete, any issues in our bilateral dispute with Antigua will be moot, and there will no longer be any basis for suspending WTO commitments."

Reporting on the US statement, Associated Press said that the action marked the latest twist in a dispute with Antigua and Barbuda, the tiny Caribbean nation that complained in 2003 that the US ban on Internet gambling violated WTO rules. Antigua has prevailed in its bid at the WTO to have the US ban declared improper. But US officials said earlier this year that Washington was not bound to change its laws to open its borders to the Internet gambling industry because of an "oversight" in a decade-old trade agreement.

US officials announced in May they were submitting documents 'to clarify' Washington's commitments. They cited a lack of clarity in the 1993-1994 negotiations under the Uruguay Round of international trade talks that led to the General Agreement on Tariffs and Services (GATS), which took effect in 1995.

On Monday, US officials said Washington would widen access to some of its services to compensate the European Union, Japan and Canada to settle the WTO dispute on Internet gambling with those members. The complaints of other nations have yet to be addressed.

In making the $21 million a year award, significantly lower than the $3.4 billion Antiguan claim, a WTO arbitration panel ruled that this dollar amount only took into account the money Antigua and Barbuda is losing through online horse-racing wagers, which are legal in some states and exempted from US legislation generally.

Mark Mendel, the lead counsel for Antigua, said that all the WTO dispute panels leading up to the settlement had acknowledged the widespread use of online gambling in the U.S. But the [different] panel that ruled on the compensation amount refused to account for all sectors of online wagering that takes place in the U.S., taking into account only the online wagers that are taxed and regulated.

“They basically reversed themselves,” Mendel said. “Why they did that, I don't know and probably never will.”

Mendel and his team claim that U.S. legislators and enforcement agencies have actively worked to stop its citizens from doing business with companies located in Antigua and Barbuda. But at the same time, the Americans continue to allow certain forms of remote gambling domestically, and this means the U.S. is essentially being allowed to create a monopoly.

Mendel went on to predict that in several years, individual US states will begin to operate online poker rooms. If this happens, Mendel threatened that Antigua will once again take up the issue with the World Trade Organisation.

The American strategy now unfolding appears to be that once the revision of its WTO commitments (read removal of gambling agreements) has been carried through, gambling will be excluded from the American commitments to the WTO, and the U.S. will no longer be out of compliance with the WTO ruling.

This could compromise any future tactics by Antigua because the U.S. will no longer have to submit to WTO rules concerning the online gambling industry. And that means that if individual American states decided to regulate and tax online gambling operations, they would be protected against offshore competition with no fears regarding WTO intervention.

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