World Trade Organization

Antigua Seeks Compromise in WTO Online Gambling Dispute

The 11-year World Trade Organization battle waged by the Caribbean island nation of Antigua and Barbuda against the United States has surfaced again, with news reports indicating that the newly elected government has contacted the United States with a compromise offer to end the nations’ ongoing WTO online gambling trade disagreement.

wto-logoA report from the Antigua office of the Jamaican Observer states that the island’s new government, led by Prime Minister Gaston Browne, is seeking $100 million in cash and other considerations from the United States.  An earlier report from Intellectual Property Watch quotes an unreleased statement from an Antiguan government source that states the offer “represents a significant concession to the United States from earlier proposals” and “represents but the slightest fraction of the harm done to the Antiguan economy by the failure of the United States to observe its obligations… .”

A separate quote from the unreleased report, referenced here, states that Antigua’s “newly elected government has, after considerable deliberation and with a view towards a prompt and final resolution of this long-standing matter, formulated yet another comprehensive and realistic proposal.”

The shift in tactics by Browne’s new government also includes the jettisoning of Houston-based attorney Mark Mendel, who had represented Antigua’s WTO interests for a full decade, but had been unsuccessful in getting US trade officials to negotiate an end to the trade conflict.  A separate CalvinAyre report notes Mendel’s dismissal and cites Antiguan PM Browne as stating that Mendel was working on behalf of Antigua-based online operators more than the tiny nation itself.  Browne stated that as much as $15 million in legal fees could be owed to those online gaming firms in the event a successful compromise is reached.

Whether or not the US reciprocates in kind to Antigua’s new conciliatory stance remains to be seen.  Antigua was declared victorious years ago in the formal dispute which the country lodged with the WTO in 2003, protesting United States policies relating to online gambling that were first agreed to back in the late ’90s as part of the GATS (General Agreement on Trade in Services) first established in 1995 and expanded upon in later trade summits.

The United States subsequently claimed that it “made a mistake” in including online gambling in the GATS schedule of covered trade categories, and tried to back out of the WTO case at one point by claiming the agreement was invalid on moral grounds.  The WTO scoffed at that claim, noting the widespread gambling opportunities available throughout the US.

Antigua and the United States made wildly disparate claims about the value of the online-gambling services, though there is no doubt that a series of US actions, up to and including the passage of the 2006 UIGEA, severely impacted the island’s economy, as much as a third of which was dependent on the online-gambling sector during the industry’s first growth phase a decade ago.  Antigua sought an annual judgement of $3.6 billion in its claim — rather exorbitant when one considers that the island’s population in 2003 was about 80,000 — and the US countered with one-time pittance offer of $500,000.

Even though the merits of the case itself clearly rested on Antigua’s side, the claimed amount itself was extreme, and Antigua was awarded an annual $21.5 million judgment in 2007, following the initial WTO decision in 2005.

However, Antigua was left with no easy way to collect its claim.  The WTO merely dictated that Antigua could abrogate (ignore) the international rights of US-created intellectual property of various forms (music, movies, software, etc.), in essence being allowed to manufacture and sell that amount of copies of the US-made originals.  US officials decried the ruling as a WTO authorization of unofficial piracy, and though Antiguan officials have repeatedly threatened to make good on the ruling by manufacturing such goods, intense pressure from the US Trade Representative’s office has kept the country from collecting in that manner to date.

The saga returned to the news when Antiguan officials requested the chance to file an update during last month’s scheduled meeting of the WTO’s Dispute Settlement Body, the WTO agency that has been responsible for adjudicating the matter., the first update on the story since early last year, when Antigua’s previous government vowed to begin unspecified abrogation of copyrighted goods, per the judgment’s terms.  The full body of the recent statement made by Antigua at the WTO last week has yet to be made public, but the WTO has published a brief summary:

Antigua and Barbuda reiterated its concern that it had not yet received any settlement proposal or other communication from the United States. Antigua and Barbuda informed the DSB that its newly elected government has recently formally presented a comprehensive and realistic proposal to the US. Antigua and Barbuda urged the US to consider the proposal with good faith and to engage comprehensively with Antigua and Barbuda so as to end this dispute. The US said that it remained committed to resolving this dispute and looked forward to working with Antigua and Barbuda’s new government.

— WTO Dispute Settlement Body, August 29, 2014

It’s interesting to note that the offer made by Browne is actually less than the amount Antigua is now entitled to, a sure sign that the island nation would like to settle the dispute and move on.  The 2007 WTO judgment called for $21.5 million in abrograted property rights annually, meaning that a total of roughly $150 million has accrued to date.  The accrual factor may be one reason the US may make a serious counteroffer to end the dispute.

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