WTO HORSETRADING GETS UNDERWAY ON INTERNET GAMBLING

28 September 2007

Thanks....but no thanks the response to first US offers


The horsetrading over the compensation that the United States should pay for withdrawing from it's World Trade Organisation obligations (see previous InfoPowa reports) has begun....and the first offers from the Americans are being rejected, according to a report in the UK's Financial Times this morning (Monday)

The FT report claims that gambling groups are currently pressing the European Union to reject as inadequate an American compensation offer for losses suffered when the US passed legislation restricting the US online betting market last year.

Over the weekend, the EU was awarded a further month - to October 22 - to study the US offer. The US Trade Representative made its first compensatory offer just before the WTO deadline last Saturday, giving claimants insufficient time to study its proposals. These are believed to include opening opportunities in the storage, warehouse services and technical testing sectors to make up for the economic damage caused to other WTO members by the unilateral withdrawal of the United States from its trade obligations on online gambling in the Uruguay Round over a decade ago. The withdrawal followed a long drawn out WTO dispute with Antigua and Barbuda which the Americans lost.

The WTO ruled that Washington reneged on a commitment to open the market and should compensate the EU, the Caribbean nation of Antigua and Barbuda where many internet gambling companies are based, and other countries claiming damages.

A European Commission official confirmed the extension of talks. "We are examining the value of the offer," he said. "It will be discussed at EU talks next week."

Without sourcing its information, the FT report suggests that the first offer from the USA is not thought to equate to the estimated $4 billion a year that EU companies are losing, and the same concessions are also being offered as part of US moves under the Doha round of world trade talks.

Though most online betting groups are based in the UK, Malta and Gibraltar, they employ 15 000 in front- and back-office work as far away as Sweden and Estonia.

Antigua, which has also asked for more time, could be even harder to please.

It says it has lost $3.4 billion a year in potential gambling exports to the US, while it exports only $3 million in other goods and services - suggesting the US will find it hard to grant enough access to other markets to compensate.

Cash compensation would be one option. Mark Mendel, lead attorney for Antigua, told the FT: "We are open to all suggestions and will consider anything."

The US disputes the Antiguan claim of $3.4 billion figure, saying in a WTO submission that $500 000 would be more realistic.

Antigua has said it could ignore US patents and other intellectual property rights if it is not compensated properly - a threat that has drawn protests from alarmed US service sector industries.

The US administration is caught between different domestic business interests, yet the unlikely figure of Barney Frank, the liberal Democratic congressman, and his legislative proposal to regulate, license....and tax online gambling in the USA, could come to its rescue, opines the FT. However, conservative, religious and sports league groups strongly oppose Frank's Internet Gambling Regulation and Enforcement Act, and he has said that it is unlikely to progress further this year.

Online Casino News courtesy of InfoPowa