ANTIGUA EXPLAINS IMPACT OF W.T.O. RULING AGAINST THE UNITED STATES

1 June 2007

Key findings emphasised in government press release

Antiguan government press releases this week clarified the rulings against the United States in its World Trade Organisation dispute with Antigua over online gambling exclusions (see previous InfoPowa reports)

In Geneva last week the Dispute Settlement Body (DSB) of the World Trade Organisation (WTO) unanimously adopted the report that, among other things, found the United States had failed to comply with the original rulings and recommendations which were previously made by the DSB.

In a reaction to the acceptance of US wrongdoing by the WTO, Antigua's Minister of Finance and the Economy, Dr. Errol Cort did not mince his words, saying: "It is unfortunate that previous reports in our dispute had left considerable uncertainty and ambiguity in the minds of some and were exploited for those purposes by others.

"This time around, though, I am extremely pleased that the compliance panel did not leave any room whatsoever for anyone, least of all the United States, to misconstrue or obfuscate the conclusions of this report."

The Minister highlighted a number of key findings of the compliance panel which he thought may have contributed to the US' decision not to further appeal the case. These include:

(a) the acknowledgement by the panel that the U.S. has a flourishing domestic, remote gambling industry which is licenced and regulated by a number of States but which offer identical services to those from Antigua operators;

(b) the fact that the U.S. government only seeks to prosecute foreign operators; and

(c) recent U.S. legislation that criminalises financial transactions for “unlawful internet gambling” only applies for foreign remote gambling and exempts a number of its domestic remote gambling operations.

Having announced that it will accept the findings of the panel, the U.S. jolted the entire WTO membership with its subsequent announcement that it is to withdraw its commitment for gambling and betting services under what is known as "Article 21" of the GATS agreement. The unprecedented use of Article 21 carries with it an obligation to consider compensatory claims from other WTO member nations that may be impacted by such a revision of commitments.

"This astounding and unprecedented action by the U.S. opens up a whole new chapter in the WTO jurisprudence, which runs contrary to the object and purpose of the GATS, the DSU and other WTO agreements," said Minister Cort.

He went on further to stress that, in light of this latest development by the U.S., his government will be examining the various options available to it with a view to identifying the most appropriate course of action.

In his address to the DSB, Antigua and Barbuda's Ambassador to the WTO, Dr. John W. Ashe, noted that this latest move by the U.S. flies “in the face of the concept of liberalization that is embodied in the GATS and the current Doha Round, and is contrary to these objectives."

"Moreover, it is difficult to see how the U.S. can, on the one hand, encourage and perhaps insist that other WTO members expand their commitments in services while simultaneously erecting a new barrier to trade in services from other members. This is particularly so when one considers that the American component of the remote [online] gambling industry is estimated to be in excess of U.S. $10 billion annually," he said.

Antigua and Barbuda's legal adviser, Mark Mendel, noted that, "....the simple fact [is] that the U.S. has a large, sanctioned domestic industry. If it was seeking to withdraw its commitment due to a strong anti-gambling culture, this would be understandable. However, this is certainly not the case here: it is seeking to withdraw this commitment simply to erect a trade barrier to foreign competition in order to protect and enhance its own, flourishing domestic gambling and betting industry."

The DSB also heard statements from the representatives of the European Union, Brazil, China and India, who all called on the U.S. to exercise the greatest caution before proceeding with its stated plan to seek a change in its Article 21 commitment.

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