World Trade Organization

Antigua to Forge Ahead in WTO Dispute, US Decries ‘Government-Authorized Piracy’

Last time out, we brought up the recent news of how Antigua’s long-simmering World Trade Organization dispute over online gambling had seemingly run its course, after Antigua had been denied permission to revisit the issue within the December docket for ongoing disputes.

wto-logoBut it’s not quite quite over yet: Antiguan officials have now succeeded in getting the matter onto the January agenda, according to reports in the Antiguan Observer and elsewhere.  According to these reports, based on information received from Mark Mendel, the Houston attorney who’s represented Antigua’s WTO interests for several years in this matter, Antigua will finally pursue the remedy it was officially granted in 2007, and will be providing details of exactly which $21 million in US intellectual property rights it intends to violate.

This isn’t sitting well with the US Trade Representative office, which immediately presented a warning / complaint, available in full below.  The US stance remains unchanged, in that it did not intend to include gambling activities in the GATS agreement signed back in the late ’90s, which it calls an “unintentional concession on gambling”; that Antigua is blocking the resolution of the matter pursuant to a WTO procedure for updating previous agreements; and that Antigua would be engaging in “government-authorized piracy” should it press forward.

The US statement also lobbed a general shot over Antigua’s bow in stating that should Antigua move ahead, it would be a “major impediment to foreign investment in the Antiguan economy, particularly in high-tech industries.”

Interesting reading, and we’ll have to wait about a month to see what happens next.

* * * * *

UNITED STATES – MEASURES AFFECTING THE CROSS-BORDER SUPPLY OF GAMBLING AND BETTING SERVICES (DS285)

• Antigua’s statement today fundamentally misrepresents the current status of this matter, and its positioning within the WTO system as a whole. Moreover, Antigua’s sentiments only serve to postpone the final resolution of this matter, to the detriment of its Antigua’s own interests.

• This dispute involves an area of services regulation – gambling and betting services – that the United States never intended to be included in its schedule under the General Agreement on Trade in Services (GATS).

• Indeed most Members, like the United States, view gambling as a significant issue of public morals and public order, involving the protection of children and other vulnerable individuals. Accordingly, most Members tightly regulate any gambling allowed within their borders. And most Members did not include any market access commitment for gambling in their GATS schedules.

• This was the U.S. understanding of its own GATS schedule. However, as a result of ambiguities in drafting, and despite the intent of U.S. negotiators, the Appellate Body ultimately found that the U.S. schedule must be construed as including a market access commitment for cross-border gambling.

• Although the United States finds this outcome difficult to understand and highly unfortunate, the United States has accepted the results of the dispute settlement process.

• The United States has responded to this finding responsibly, and in a manner that involves substantial costs for the United States. As the United States previously notified the DSB and the Council on Trade in Services, the United States has invoked the established, multilateral procedures for modification of its GATS schedule of concessions.

• In May 2007, the United States initiated the modification procedure under Article XXI of the GATS so as to reflect the original U.S. intention to exclude gambling from the scope of U.S. commitments.

• Pursuant to the GATS procedures, the United States reached agreement with all interested Members, except one, on a package of substantial compensatory adjustments to the U.S. GATS schedule.

• Only one single Member, out of the entire WTO membership, will not accept compensatory service concessions. That Member is Antigua.

• Instead of respecting the WTO process under Article XXI, Antigua insists that the United States must maintain its unintentional concession on gambling, and that the United States must change its domestic policies concerning public morals and public order so as to allow internet gambling.

• Despite this unreasonable and unrealistic demand, the United States has gone to great efforts to meet Antigua’s concerns. Over a course of years, the United States has devoted substantial resources to settlement discussions. The United States has met repeatedly with Antigua at all levels of government, from the ministerial to the technical level.

• Based on specific requests made by Antigua, The United States has offered real and substantial benefits that would make important contributions to the future development of the Antiguan economy.

• At times, Antigua has been on the verge of accepting these benefits and putting this dispute behind us.

• At other times, however, as appears to be the case today, Antigua reverts to its unrealistic demands that the United States forego the modification of the U.S. GATS schedule.

• Moreover, Antigua today is stating that it intends to take the additional step of seeking authorization to suspend concessions with respect to intellectual property rights.

• The United States would view such a step as fundamentally at odds with the current status of this matter. It is Antigua’s actions in refusing to engage in the Article XXI process, and not the actions of the United States, that are preventing the final resolution of this matter.

• In these circumstances, Antigua has no justification for taking any retaliatory actions against the United States.

• Moreover, if Antigua actually proceeds with a plan for its government to authorize the theft of intellectual property, it would only serve to hurt Antigua’s own interests. Government-authorized piracy would undermine chances for a settlement that would provide real benefits to Antigua. It also would serve as a major impediment to foreign investment in the Antiguan economy, particularly in high-tech industries.

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