WTO to investigate US gambling laws

[Nate tha\\\' Great]

[ QUOTE ]
We can only hope that negative light shed on this matter will encourage the Senate to let this bill die.

[/ QUOTE ]

That's right. We're just hoping for small pieces of negative momentum here, since that may be all that is needed to prevent Leach/Goodlatte from being taken up by the Senate this year. It's not a watershed development or anything like that, but it's good news nevertheless (and we haven't had much of that lately).

[Mr.K]

I'd caution against relying on this WTO business for any momentum. The U.S. has been out of complaince with WTO rulings on on a number of tax issues (most recently with regard to the Foreign Sales Credit/Extra-Territorial Income Credit), and has done little to nothing to address the situation, even when the WTO did step in and grant affected countries the right to impose retaliatory duties, and even when the countries granted such rights decided to start exercising them.

I feel you guys in your search for answers and momentum in this debate, but I don't think you'll actually find either in the WTO issue.

[Jay Cohen]

[ QUOTE ]
I need a introductory course on how the WTO operates.

I suppose, from the article, that the US approach to gambling has been the subject of an ongoing dispute, but that there will be new scrutiny because some negotiatons just broke down? But the WTO has already found that the US is violating some agreements, correct? At what point does the WTO seriously consider imposing some kind of sanctions? How long is the whole process?

Anyone know?

[/ QUOTE ]

You can start to read up here:

http://www.antiguawto.com/

[Wynton]

Thanks for that link, it is helpful.

[damaniac]

There was a short piece on NPR this morning. To summarize:

Nations have the right to legislate morality. However, they apparently cannot do it in a way that is protectionist (ie, banning outside gambling but allowing it if it is run by American companies). It looks like this would give some teeth to the underinclusive argument, where judicial review in this country would not because of the nature of the issue (commerce clause legislation is treated deferentially).

The analyst claimed there was a "decent chance" that the countries win their suit. But, he added, if they lost, this might give other countries the rationale to ban U.S. online services (at least gambling ones, such as the horses perhaps), so we still might see some retaliation. Whether this is significant enough retaliation to prompt Congress to overturn/avoid banning internet gambling remains to be seen, but it is something. I feel that may give some strength to a move to legalize and regulate it.

(Side bar on regulation/taxation: everyone does realize this will drive up the poker sites' costs, and that these costs will be passed on to us, right? Just so you know when rake goes up and bonuses go down.)

[mattnxtc]

Anybody have a link to where the wto says either ban it all or none of it?

[Wynton]

I copied the press release below from the link provided by JC. The press release (I think) is from the Minister of Finance of Antigua.

"4th April 2006

Almost exactly a year ago, the Dispute Settlement Body (DSB) of the World Trade Organization (WTO) found the United States in violation of its commitments under the General Agreement on Trade in Services with respect to its prohibition on the provision of cross-border gambling and betting services from Antigua and Barbuda to consumers in the United States.

After a lengthy and contentious process, the WTO gave the United States until yesterday, Tuesday, 3 April 2006, to bring its laws into compliance with the rulings of the DSB in our case.

The deadline has come and passed and the United States has made no effort towards compliance. The only laws introduced into the United States Congress in recent months would, in fact, further entrench the discriminatory nature of the United States’ approach to cross-border gambling and betting services.

The United States Trade Representative has rebuffed every offer Antigua and Barbuda has made to engage the United States in an attempt to work out a reasonable resolution of this dispute. It is not just that discussions have proven difficult; it is simply that the United States has refused to discuss any compromise or settlement at all.

It is ironic that at this point in time when the United States is upbraiding other WTO nations for failing to meet their obligations under WTO agreements and failing to act as “responsible stakeholders” in international trade matters, the very same United States government would treat its own WTO obligations to Antigua and Barbuda with such scant regard.

As a member of the World Trade Organization, Antigua and Barbuda agreed to abide by the rules and decisions of this esteemed body and, we expect that all other members would do likewise, irrespective of size and/or wealth.

While the United States flaunts the decision of the WTO in our case and attempts to shore up its own domestic monopoly on gambling and betting services, Antigua and Barbuda wants to point out that we have a highly regulated gaming industry in our country. We have and maintain strict laws that protect the integrity of the services provided from our shores; we prevent underage gaming and lock out this country’s services from money laundering and other criminal activity.

We have offered to engage in co-regulation with the United States and to limit our gaming sector until the United States could observe and evaluate the effectiveness of our regulations. We have, in fact, agreed to work with the United States in any regard to ensure the safety of the services our providers offer to US consumers.

Regrettably, all of our offers have been not just rejected, but ignored.

It, no doubt, will be extremely challenging for our very small island state to effectively retaliate against this internationally unlawful conduct of the United States, but we remain resolute in our quest to fully enforce our international trading rights, thereby protecting and further enhancing the economic opportunities for our citizens and residents and also providing that needed level of economic diversification within the global competitive environment.

In this regard, the Government of Antigua and Barbuda is committed to exploring all available options within the framework of the WTO in order to have the United States comply with the WTO’s ruling on the provision of cross border gambling and betting services.

We believe this to be a watershed moment for the WTO—where we find out if the WTO works for all, or only for the most powerful. We also believe it is time for the United States administration to translate its words into concrete action by tangibly demonstrating that it truly believes in “free and fair trade”.

We remain ready to discuss the most appropriate form of compensation and remedies with the United States, and I have instructed our WTO delegation to remain ready to engage their US counterparts to this end."

[broiler]

The US repealed the Extraterritorial Income Exclusion, effective starting in 2007 because of the WTO ruling and threatened tariffs. Congress then passed the Domestic Production Activities Deduction as an attempt to make up the difference for corporations. There has been no reported WTO problem with the new deduction as it is available to all businesses with qualified production activities.

[JPFisher55]

I actually think that these governments would have a better chance of enforcing the WTO rulings against federal laws and the DOJ in federal courts and the US Supreme Court. It can rule a federal law unenforceable because it violates a lawful treaty. And the DOJ has to obey federal courts and the Supreme Court. It seems that they do not believe that they have to listen to the WTO.
The problem is setting up a test case because who wants to be a test subject in a criminal matter. Unfortunately, I doubt that BetonSports is really such a test case.

[h11]

If you violate a provision of a trade law, the damaged nation typically is granted the right to recover its damages by imposing a tariff on goods made in the perp nation sold into the victim nation. But that remedy is toothless in the case of a very small nation, such as Antigua, which imports very little from the US. It can impose a hundred percent tariff on all US goods imported into Antigua - and get a few million dollars. While the losses to its gambling houses is many times that. So Antigua won in World Trade court, and the US just laughed. The US figures it's worth the cost to its exporters to stop the flow of gambling money into Antigua. So going to a US court will not work. It's not something where you are not permitted to break the law. It's a deal where you can break the law, and keep doing it, so long as you are willing to pay the price. And the price here is small to the US.

Now if the UK decided to stand up for its gambling houses - that would be different.