runway model
11-17-2006, 08:02 AM
http://www.slate.com/id/2153352/?nav=tap3
This article is excellent on why the new legislation gives the US a new problem:
....The WTO gave the United States a year to comply with its ruling by either changing its laws to fully ban online gambling or by allowing foreign access to the online-gambling market. That year ended last April, but rather than do anything to comply, the United States simply issued a statement to the effect that it had spent the year reviewing the matter and decided that it has been in compliance all along. Antigua is, unsurprisingly, challenging this response. A final decision from the WTO is expected early next year.
It was in this context—a context to which Congress seems to have been largely oblivious—that Congress enacted its recent legislation. The legislation causes new problems, because it seems to clarify beyond any doubt that the United States does not, in fact, prohibit all forms of Internet gambling. Indeed, the law contains an explicit list of circumstances in which Internet gambling is permitted, including betting on horse racing and in-state gambling. So, whatever slender chance the United States may have had of establishing some broad moral objection to online gaming appears to have disappeared. In fact, things look so bleak for the United States that the government recently published a "Request for Comments" in the Federal Register that is essentially a nationwide call for help from anyone who thinks they can come up with an argument it can use here. The government, it seems, is all out of ideas.
The obvious question is what Antigua can do with a victory at the WTO. Retaliatory tariffs plainly aren't particularly appealing for small country like Antigua, because they would certainly hurt more than they would help. But the plucky little island paradise does have some creative options at its disposal. If the United States remains recalcitrant, under the WTO rules, Antigua would potentially have the right to suspend its own compliance with the treaty that obligates it to respect the United States' intellectual-property laws. That, one can well imagine, might get Washington's attention.
Want a cheap copy of Microsoft's latest software or a nice medical device that, annoyingly, is protected by a U.S. patent? Come to Antigua. In such a scenario, Antigua couldn't simply be ostracized as a rogue state. It would have every right under WTO rules to pursue such a course. In fact, Antigua could go down this road only in response to the United States' continuing refusal to honor its international obligations. While there undoubtedly would be complicated issues and restrictions on the scope of any suspension the WTO approves, the United States shouldn't assume that the world body is too timid to hand Antigua this sort of stick with which to retaliate, since it has authorized intellectual-property-based reprisal before. Antigua's frank calculation here, of course, is that while the administration might be comfortable stiffing the Antiguan trade representative, it would probably take notice if, say, an irate Microsoft or Disney started insisting that it get this problem solved.
This whole episode may turn out to be a case study of what can go wrong when Congress succumbs to an idea that probably should never have made it out of the 19th century—prohibition—in far more complex contemporary circumstances. To the extent it has been thinking about the dispute with Antigua at all, the United States may have been assuming that it could white-knuckle any public-relations fallout and not actually have to change its behavior. In the past, in an economy based largely on physical goods, this might have been a reasonable strategy, but it doesn't look good when intellectual property is such a crucial asset. As the United States knows better than anyone, useful intellectual-property protection requires a shared set of global enforcement agreements. Precisely because it has the most to gain from this system, the United States is also uniquely vulnerable to gaps in it. And that's why allowing countries like Antigua to suspend intellectual-property treaties in trade disputes gives them such a potent weapon, a fact that the United States, much to its annoyance, may soon learn.
This article is excellent on why the new legislation gives the US a new problem:
....The WTO gave the United States a year to comply with its ruling by either changing its laws to fully ban online gambling or by allowing foreign access to the online-gambling market. That year ended last April, but rather than do anything to comply, the United States simply issued a statement to the effect that it had spent the year reviewing the matter and decided that it has been in compliance all along. Antigua is, unsurprisingly, challenging this response. A final decision from the WTO is expected early next year.
It was in this context—a context to which Congress seems to have been largely oblivious—that Congress enacted its recent legislation. The legislation causes new problems, because it seems to clarify beyond any doubt that the United States does not, in fact, prohibit all forms of Internet gambling. Indeed, the law contains an explicit list of circumstances in which Internet gambling is permitted, including betting on horse racing and in-state gambling. So, whatever slender chance the United States may have had of establishing some broad moral objection to online gaming appears to have disappeared. In fact, things look so bleak for the United States that the government recently published a "Request for Comments" in the Federal Register that is essentially a nationwide call for help from anyone who thinks they can come up with an argument it can use here. The government, it seems, is all out of ideas.
The obvious question is what Antigua can do with a victory at the WTO. Retaliatory tariffs plainly aren't particularly appealing for small country like Antigua, because they would certainly hurt more than they would help. But the plucky little island paradise does have some creative options at its disposal. If the United States remains recalcitrant, under the WTO rules, Antigua would potentially have the right to suspend its own compliance with the treaty that obligates it to respect the United States' intellectual-property laws. That, one can well imagine, might get Washington's attention.
Want a cheap copy of Microsoft's latest software or a nice medical device that, annoyingly, is protected by a U.S. patent? Come to Antigua. In such a scenario, Antigua couldn't simply be ostracized as a rogue state. It would have every right under WTO rules to pursue such a course. In fact, Antigua could go down this road only in response to the United States' continuing refusal to honor its international obligations. While there undoubtedly would be complicated issues and restrictions on the scope of any suspension the WTO approves, the United States shouldn't assume that the world body is too timid to hand Antigua this sort of stick with which to retaliate, since it has authorized intellectual-property-based reprisal before. Antigua's frank calculation here, of course, is that while the administration might be comfortable stiffing the Antiguan trade representative, it would probably take notice if, say, an irate Microsoft or Disney started insisting that it get this problem solved.
This whole episode may turn out to be a case study of what can go wrong when Congress succumbs to an idea that probably should never have made it out of the 19th century—prohibition—in far more complex contemporary circumstances. To the extent it has been thinking about the dispute with Antigua at all, the United States may have been assuming that it could white-knuckle any public-relations fallout and not actually have to change its behavior. In the past, in an economy based largely on physical goods, this might have been a reasonable strategy, but it doesn't look good when intellectual property is such a crucial asset. As the United States knows better than anyone, useful intellectual-property protection requires a shared set of global enforcement agreements. Precisely because it has the most to gain from this system, the United States is also uniquely vulnerable to gaps in it. And that's why allowing countries like Antigua to suspend intellectual-property treaties in trade disputes gives them such a potent weapon, a fact that the United States, much to its annoyance, may soon learn.