EU URGED TO PURSUE HEAVY US COMPENSATION IN WTO FIGHT

28 September 2007

European companies compensation dwarfs that of Antigua, which fought the US to a standstill on Internet gambling


The difficulties in which the United States finds itself over the unilateral withdrawal of its online gambling obligations in terms of World Trade Organisation treaties continues to grab headlines around the world, focusing attention on the dispute in which the small island government of Antigua and Barbuda fought the US to a standstill after more than 3 years of dispute proceedings.

By taking the unprecedented step of retroactively withdrawing its gambling obligations to support a discriminatory policy toward online gambling, the United States is required to consider compensation claims from other WTO members impacted by its actions - and over 7 countries including the EU bloc of 27 nations have given notice of intention to claim.

The Reuters news service this week took up the tale, reporting that European online gaming companies which have been shut out of U.S. markets have urged the European Union to demand as much as $100 billion in compensation, although the best solution is still believed to be a Washington move that would reverse discriminatory legislation attacking the online gambling industry. Major US firms in industries vulnerable to copyright exceptions have also expressed alarm at the potential dangers to US business of the WTO row.

In an initial move, the United States offered concessions in other areas of trade to offset the online gambling restrictions, but these have been universally met with disapproval and are unlikely to be accepted (see previous InfoPowa reports).

"The U.S. (compensation) offer to date is insufficient and we continue to negotiate in order to improve it," said Peter Power, a spokesman for EU Trade Commissioner Peter Mandelson.

Lawyers for European online gaming firms - which are among the biggest in the world - say the EU should press for as much as $100 billion in compensation, given the plunge in the market value of listed firms when Washington shut off the world's biggest market last year and the value of business lost since then.

Antigua wants compensation of $3.4 billion - a figure the United States says is far too high - and the EU should demand at least 20 or 30 times that amount given the size of its online gaming industry, said one legal expert.

And an EU industry representative said the United States should allow European countries back into the market.

"They have got themselves into a terrible mess and yet there is an easy way out for them," Clive Hawkswood, head of the Remote Gambling Association, told a news conference in Brussels this week. He said regulation would ease what the United States says are its concerns about money-laundering and consumer protection.

The latest deadline for the United States to agree on compensation is October 22, and it is known that other countries are lining up with claims.

Lawyers interviewed by Reuters said the dispute could drag on for years while U.S. casino operators and Internet companies such as Yahoo! and Google are free to do business in Europe.

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