Antigua WTO Press Release-US action contrary to purpose of GATS

[Jay Cohen]

http://www.caribbeanpressreleases.com/ar...se-of-GATS.html

WTO adopts panel report, US seeks to withdraw its WTO commitments on gambling and betting services

US action contrary to purpose of GATS

Geneva, Switzerland -- May 24, 2007 --The Dispute Settlement Body (DSB) of the World Trade Organization (WTO) unanimously adopted on Tuesday the report of its compliance that, among other things, found the United States had failed to comply with the original rulings and recommendations which were previously adopted by the DSB, in the ongoing dispute over the cross-boarder provision of gambling and betting services by Antiguan providers to consumers in the United States.
"It is somewhat unfortunate that previous reports in our dispute had left considerable uncertainty and ambiguity in the minds of some and were exploited for those purposes by others. This time around, though, I am extremely pleased that the compliance panel did not leave any room whatsoever for anyone, lest of all the United States, to misconstrue or obfuscate the conclusions of this report," said the Honourable Dr. Errol Cort, Minister of Finance and the Economy, who has responsibility for this matter.

The Minister highlighted a number of key findings of the compliance panel which he thought may have contributed to the US' decision not to further appeal the case. These include: (a) the acknowledgement by the panel that the US has a flourishing domestic, remote gambling industry which is licenced and regulated by a number of States but which offer identical services to those from Antigua operators; (b) the fact that the US government only seeks to prosecute foreign operators; and (c) recent US legislation that criminalizes financial transactions for “unlawful internet gambling” only applies for foreign remote gambling and exempts a number of its domestic remote gambling operations.

Having announced that its will accept the findings of the panel, the US jolted the entire WTO membership with its subsequent announcement on 4 May that it will withdraw its commitment for gambling and betting services under what is known as "Article 21" of the GATS agreement.

"This astounding and unprecedented action by the US opens up a whole new chapter in the WTO jurisprudence, which runs contrary to the object and purpose of the GATS, the DSU and other WTO agreements," said the Minister.

He went on further to stressed that, in light of this latest development by the US, his government will be examining the various options available to it with a view to identifying the most appropriate course of action.

In his address to the DSB, Antigua and Barbuda's Ambassador to the WTO, Dr. John W. Ashe, noted that this latest move by the US flies “in the face of the concept of liberalization that is embodied in the GATS and the current Doha Round, and is contrary to these objectives."

"Moreover, it is difficult to see how the US can, on the one hand, encourage and perhaps insist that other WTO members expand their commitments in services while simultaneously erecting a new barrier to trade in services from other members. This is particularly so when one considers that the American component of the remote gambling industry is estimated to be in excess of US $10 billion annually," he said.

In his response to this latest move by the US, Antigua and Barbuda's legal adviser, Mark Mendel, noted that, in his view, the dispute has been resolved and the US remains obligated to comply.

"The dispute is settled and Antigua is entitled to and will be expecting market access. If the US wants to try and shut out potential future liability to other WTO members, it is welcome to try," he said.

"What must get lost in the shuffle, though, is the simple fact that the US has a large, sanctioned domestic industry. If it was seeking to withdraw its commitment due to a strong anti-gambling culture, this would be understandable. However, this is certainly not the case here: it is seeking to withdraw this commitment simply to erect a trade barrier to foreign competition in order to protect and enhance its own, flourishing domestic gambling and betting industry," he added.

The DSB also heard statements from the representatives of the European Communities, Brazil and India, who all called on the US to exercise the greatest of caution before proceeding with its stated plan to seek a change in its Article 21 commitment.

[Jay Cohen]

http://www.theregister.co.uk/2007/05...o_us_gambling/

Antigua calls for pirates to return to Caribbean

House of Cards Antigua and Barbuda - a nation of 70,000 in an area roughly half the size of San Francisco - has formally requested that the WTO allow it to suspend its intellectual property obligations to the United States, AP reports.
Although many in the US have mocked tiny Antigua'a case against the US with a shrug of the shoulders, the Antiguans have always carried in their pockets a nuclear option of sorts. Most Americans view trade disputes through the prism of tit-for-tat protectionist schemes. A perceived price subsidy leads to retaliatory tariffs, etc; but the obligations imposed by WTO obligations run deeper than that.

Repeated violation of WTO commitments in the face of contrary WTO rulings allows a victimized member country ultimately to suspend its own WTO obligations to the offending nation - a form of restitution much more punitive than tariffs alone. America runs a steady and hefty trade deficit in virtually every category of international trade other than intellectual property.
Were the WTO - with possible European, Japanese, and Chinese support - to allow the Antiguans to suspend all intellectual property obligations to the United States, the American IP industry could face a tiny adversary with an unlimited right to reproduce for its own benefit American IP goods of any kind..............(Click on link to read the balance)

[TheEngineer]

I wrote to my congressman and senators and explained that I would expect the U.S. to not renege on our commitments to the WTO.

[MiltonFriedman]

I wish they were not so, but the facts are:

1. Antigua imports heavily FROM the US and depends somewhat on US tourism.
2. Antigua is deep in hock to the Stanford banking interests
3. For the right, and not too high a price, Antigua can essentially be bought, i.e paid enough "aid" and other benefits to make it worthwhile to kick out online gaming.

The Spencer government would be foolish not to act in the national interest take a generously valued trade package in exchange for Bill Scott et al. Keep the non-US online sites, kick out the US sites and we will give you $20 million, $50 million, $100 million ..... whatever.

Hell, weren't poppy-growers paid not to grow poppies ?

Yeah, the issue is coming to a head, I am not sanguine about the outcome for online gaming however.

(Jay, you've been to Antigua. If you think I am wrong, please point out how.)

FWIW, I think the Antigua lawyers did a great job. The form of the benefits to Antigua asre up in the air. It would be ironic if the effort cost the gaming interests their sanctuary.

Milton

[daedalus]

I don't think a one time buy out is what Antigua is looking for. Online gambling is a long-term high-profit industry for them that they would be permanently forfeiting with an agreement like that. Now they have the option of starting a new industry of selling Eminem CDs and Shrek 3 DVDs for $1. Printing DVDs is cheaper than running a server-farm for poker sites.

Of course this would last 5 minutes until the U.S. Industry giants threaten to get every Congressman ousted in the next election unless they reverse this WTO decision.

[TheEngineer]

Nice post Milton. I've mentioned similar things here as well.

The WTO ruling is good for us, but we have to back it up with political change. In other words, the U.S. has to WANT to comply. Otherwise, the U.S. will not. Hopefully we'll write and call Congress and ask them to honor our commitments.

[Moneyline]

Thanks for posting this, Jay.

I don't have any analysis to add, but I really hope the US media picks up on this. This is a potentially huge story even for people who don't know a thing about online gambling.

[Jay Cohen]

[ QUOTE ]
I wish they were not so, but the facts are:

1. Antigua imports heavily FROM the US and depends somewhat on US tourism.
2. Antigua is deep in hock to the Stanford banking interests
3. For the right, and not too high a price, Antigua can essentially be bought, i.e paid enough "aid" and other benefits to make it worthwhile to kick out online gaming.

The Spencer government would be foolish not to act in the national interest take a generously valued trade package in exchange for Bill Scott et al. Keep the non-US online sites, kick out the US sites and we will give you $20 million, $50 million, $100 million ..... whatever.

Hell, weren't poppy-growers paid not to grow poppies ?

Yeah, the issue is coming to a head, I am not sanguine about the outcome for online gaming however.

(Jay, you've been to Antigua. If you think I am wrong, please point out how.)

FWIW, I think the Antigua lawyers did a great job. The form of the benefits to Antigua asre up in the air. It would be ironic if the effort cost the gaming interests their sanctuary.

Milton

[/ QUOTE ]

You assume that Antigua doesn't know the value of what they have won. Barney Frank stands up and says this can bring in $3 billion a year in tax revenue. When they indict BOS the US claims $4.5 billion in revenue. Antigua knows the value of the industry. What's the value to the US to get Antigua out of the way for a lifetime?

Antgua is in the strongest position it has ever been in this case. Why would they fold for a song now? Also, many Americans seem to assume that every small country in the world can be bought by the US and not for much. It's not always true. Antigua wants their industry. They didn't come this far for spare change.

Tourism and imports have nothing to do with this. Seeking remedies won in the WTO arena is not supposed to bring retaliation. All Antigua wants to do is claim what they won in a legitmate, neutral forum. They are even willing to give up elements of the win to get it settled. Unfortunately, for the last four years the US has lied, negotiated in bad faith, and done nothing but spin the decision in the media. Maybe when the RIAA and Motion Picture Association ask their lobbyists what the hell is going in in DC and why their product is suddenly unprotected Congress will wake up and pressure the Administration to settle the case?

Antigua has a national debt like many countries. I am not sure how much, if any, Stanford is holding.

Engineer, thanks for contacting your Congressman.

[Jerry D]

[ QUOTE ]


The DSB also heard statements from the representatives of the European Communities, Brazil and India, who all called on the US to exercise the greatest of caution before proceeding with its stated plan to seek a change in its Article 21 commitment.

[/ QUOTE ]

This last paragraph is very important and telling. The European Union, India, and Brazil are basicly saying if the US continues try to not follow WTO trade laws they will strongly back Antigua. The big arrogant US bully may think they can push tiny Antigua around, but it will be harder for them to pick on someone more of their own size like the European Union, Brazil, or India.

[Skallagrim]

Both Jay and Milton are right, and we will just have to see how this plays out...but I am optomistic primarily because the Bush administration only has 18 more months and even a future republican administration cant be as stupid as this one.

I suspect Antigua would love to negotiate an end to this dispute, and it can be bought off. But it wont be bought off cheap, they have won too much and have garnered allies.

Will it be worth it to the anti-gambling fanatics to give Antigua say a BILLION DOLLARS a year for the right to keep our internet gaming laws as written? How about when other countries start seeking "compensation" too?

As I have said before, although I cant predict the outcome, this WTO decision will force something to happen. As poker players we need to keep up what pressure we can to make sure the outcome is not a one time payment and a law against all internet gaming in the US (which will kill the horse-racing industry, and piss off the sports leagues when fantasy sports are also outlawed). That, at present, is the best the anti-gaming lobby can hope for, they will never achieve the political clout for endless payments or the end of the WTO as the price to stop gambling.

Skallagrim