WTO implication for future, Any over-under on the price to buy out ?

[MiltonFriedman]

The US has cut and run from the WTO. This leaves a residual liability for damages to Antigua-Barbuda and provides a politically acceptable way to buy an Antiguan ban on offshre gaming directed to the US.

Keeping in mind that Antigua has a small 60K population, is largely dependent upon purchasing US imports such as frozen chicken, is in hock to a US financial institution, and has truly wonderful beaches currently underserved by US airlines, .... how much "development aid" and/or 'damages" settlement would it take to get Antigua to boot out gaming operators ? $20, $30, 60 million ? $75 million ?

Keep in mind that, having bolted the WTO as to gaming, the US has shut the door on future claims AND opened the door for protectionist legislation regarding MGM/Harrahs/Venetian/Yahoo/Google online gaming.

$50 million to close out the past chapter and clear the field for future domestic development ? Seems reasonable, especially compared to the cost of invading Grenada to effect change in that small Carribean island nation.

[Jay Cohen]

It's not clear that the US can just walk away so easy. Just because they put it in a press release, it doesn't make it true. Remember, for years they have been insisting that they won the case or that it was no big deal. It must be a big deal since they pulled such a drastic move here.

Changing commitments in response to an adverse decision has never been done before and it's not clear that the WTO will allow it. The Antigua Gaming case is far from over.

As to your question, what's the present value of an income stream that the US claims is in the billions when they are filing indictments?

[daedalus]

Interesting analysis but if they pursue a one time buyout it doesn't solve the problem of the EU and other countries filing against them for the UIGEA which is even more protectism (bans outgoing moneys to foreign countries but accept $$ back into the U.S.). They need a policy win here to avoid future claims and they know it.

[whangarei]

[ QUOTE ]
As to your question, what's the present value of an income stream that the US claims is in the billions when they are filing indictments?

[/ QUOTE ]

Rough guesstimate is it's a helluva lot more than the $75 million at the top end of Milton's numbers.

[Legislurker]

My underztanding is compensation has to come in the form of trade allowances/preferences/access. I'm not sure if it can be cross-area or not. Im not sure anyone has a clear idea what would come out of a penalty phase in this dispute. For Over/Under imagine the yearly profits of PartyPoker. Then, you have the fact sports punting is a bigger slice of the remote gaming take.
Toss in online casinos/lotteries/Bingo and the cost of negotiation, and conservatively you're staring at $5b from zero gravity.
Honestly, I think its more of a stall move as the last appeal was only a 90-day appeal. Then again, it could be people in the Bush administration with no idea of what they are [censored] doing.
Monday I hope to hear from Pascal Lamy or Teresa Jowell in the press raising hell over this. I don't think this can stay backpage news or in the business sectiosn much longer. Imagine the reaction of the man on the street when he learns he is paying a 9 or 10 figure bill(possibly annually) for the domestic gaming business to be protected.
We can't leave the WTO........impossible. The implosion in the world economy of the collapse of MFN practices could trigger something akin to the Depression. Just in time production, lean warehousing, the entire Wal-Mart model of the world economy would collapse over unknowns and trade disruptions. Renegotiating regionally and bilaterally is impossible in time to hold the world economy together. Its like we lost All-In on the river to an Antiguan two-outer, and Bush decided to write 6th street into the rules.

[BluffTHIS!]

[ QUOTE ]
People in the Bush administration

[/ QUOTE ]

Not an appropriate term to use.

Edited

[oober]

[ QUOTE ]
My underztanding is compensation has to come in the form of trade allowances/preferences/access. I'm not sure if it can be cross-area or not. Im not sure anyone has a clear idea what would come out of a penalty phase in this dispute. For Over/Under imagine the yearly profits of PartyPoker. Then, you have the fact sports punting is a bigger slice of the remote gaming take.
Toss in online casinos/lotteries/Bingo and the cost of negotiation, and conservatively you're staring at $5b from zero gravity.
Honestly, I think its more of a stall move as the last appeal was only a 90-day appeal. Then again, it could be ChristaNazis in the Bush administration with no idea of what they are [censored] doing.
Monday I hope to hear from Pascal Lamy or Teresa Jowell in the press raising hell over this. I don't think this can stay backpage news or in the business sectiosn much longer. Imagine the reaction of the man on the street when he learns he is paying a 9 or 10 figure bill(possibly annually) for the domestic gaming business to be protected.
We can't leave the WTO........impossible. The implosion in the world economy of the collapse of MFN practices could trigger something akin to the Depression. Just in time production, lean warehousing, the entire Wal-Mart model of the world economy would collapse over unknowns and trade disruptions. Renegotiating regionally and bilaterally is impossible in time to hold the world economy together. Its like we lost All-In on the river to an Antiguan two-outer, and Bush decided to write 6th street into the rules.

[/ QUOTE ]

Well written!!!!!

[Jay Cohen]

I don't think the WTO will accept this as compliance in a live case. If the WTO allows this as a form of compiance, the GATS and GATT are not worth the paper they are written on. Below is the section they are referring to.

http://www.wto.org/English/docs_e/legal_e/26-gats_01_e.htm#articleXXI

Article XXI: Modification of Schedules back to top

1. (a) A Member (referred to in this Article as the “modifying Member”) may modify or withdraw any commitment in its Schedule, at any time after three years have elapsed from the date on which that commitment entered into force, in accordance with the provisions of this Article.

(b) A modifying Member shall notify its intent to modify or withdraw a commitment pursuant to this Article to the Council for Trade in Services no later than three months before the intended date of implementation of the modification or withdrawal.

2. (a) At the request of any Member the benefits of which under this Agreement may be affected (referred to in this Article as an “affected Member”) by a proposed modification or withdrawal notified under subparagraph 1(b), the modifying Member shall enter into negotiations with a view to reaching agreement on any necessary compensatory adjustment. In such negotiations and agreement, the Members concerned shall endeavour to maintain a general level of mutually advantageous commitments not less favourable to trade than that provided for in Schedules of specific commitments prior to such negotiations.

(b) Compensatory adjustments shall be made on a most-favoured-nation basis.

3. (a) If agreement is not reached between the modifying Member and any affected Member before the end of the period provided for negotiations, such affected Member may refer the matter to arbitration. Any affected Member that wishes to enforce a right that it may have to compensation must participate in the arbitration.

(b) If no affected Member has requested arbitration, the modifying Member shall be free to implement the proposed modification or withdrawal.

4. (a) The modifying Member may not modify or withdraw its commitment until it has made compensatory adjustments in conformity with the findings of the arbitration.

(b) If the modifying Member implements its proposed modification or withdrawal and does not comply with the findings of the arbitration, any affected Member that participated in the arbitration may modify or withdraw substantially equivalent benefits in conformity with those findings. Notwithstanding Article II, such a modification or withdrawal may be implemented solely with respect to the modifying Member.

5. The Council for Trade in Services shall establish procedures for rectification or modification of Schedules. Any Member which has modified or withdrawn scheduled commitments under this Article shall modify its Schedule according to such procedures.

I will say it again. We are in unchartered waters.

[crzylgs]

Oh, so this is just another stall tactic that will lead to 3 months of failed "negotiations" and ANOTHER arbitration? That's the reading I get.

[Skallagrim]

"Then again, it could be people in the Bush administration with no idea of what they are [censored] doing."

Almost always the case.

[JPFisher55]

What about the DOJ case against Mr. David Carruthers. If anyone recalls the judge in that case has allowed Mr. Carruthers to file a motion to dismiss based on the WTO decision. Does this action by the USTR affect that motion?
Maybe the federal courts will enforce the WTO decision against the DOJ and the executive department?
This whole matter will likely be up in the air until a new administration takes office in Jan 2009. I think that delay is the real purpose of the action by the USTR.

[Skallagrim]

As a matter of criminal law, JP, I can tell you that what counts is what the law was at the time he committed the alleged acts.

I think otherwise you are guessing correctly about the USTR.

[*TT*]

[ QUOTE ]
I don't think the WTO will accept this as compliance in a live case. If the WTO allows this as a form of compiance, the GATS and GATT are not worth the paper they are written on.

[/ QUOTE ]

No way your just figuring that out now. Unfortunately thats how the current US administration views GATS and the WTO - we all hate it, but we are stuck with it until a new administration comes in - and even then it may not change.

Jay - as I read the quote you provided (didnt read the link) the situation is worse for you than I imagined. Its seems that the US can withdraw from the section of the treaty (which actually is in the best interest of the US, but not in the best interest of us of course) provided they are willing to face trade penalties - which they were already going to be subject to anyway. It sounds like as a nation Antigua won and will receive compensation, but your out in the cold personally - that sucks.

[Jay Cohen]

Well that section says they can withdraw, but the Appellate Body found them in violation and ordered them to comply with the GATS. So there's a conflict that will probably have to be resolved by some WTO panel, and ultimately the WTO Appellate Body. They will have to rule whether a country can withdraw from commitments as a form of compliance.

It's never been done before and I don't think a WTO Panel will be very enamored with the strategy, especially after the US put Antigua through four years of the process.

As to compensation, the US thinks they can offer offsetting commitments in a services sector. Which brings Antigua back to, "I'll take intellectual property for a few billion." This is something corporations with interests in the area want to avoid, not just for the action, but for the precedent. One day it could be a bigger country invoking it as a sanction.

The US has taken a minor trade matter and made it a major international trade issue. And it's not because Antigua wasn't willing to compromise, they were. But the US would never budge one inch.

Unchartered waters.

[Richas]

[ QUOTE ]
[ QUOTE ]
As to your question, what's the present value of an income stream that the US claims is in the billions when they are filing indictments?

[/ QUOTE ]

Rough guesstimate is it's a helluva lot more than the $75 million at the top end of Milton's numbers.

[/ QUOTE ]

If I were doing the calc I wold take the loss on gaming shares post UIGEA and then add a multiplier as UIGEA is only part of the loss. UIGEA shows the cost is in Billions not millions.