Antigua And Barbuda Readies Sanctions Against US

The government of Antigua and Barbuda says that it is entitled to compensation of US$3.4 billion from the United States to rectify the damage to its economy caused by the long-running e-gaming dispute between the two countries.

If given the go-ahead by the World Trade Organisation, Antiguan finance minister Errol Cort said in a statement that the compensation would take the form of withdrawing intellectual property protection for US trademarks, patents and industrial designs.

"We feel we have no other choice in the matter, we have fought long and hard for fair access to the US market and have won at every stage of the WTO process," said Cort. "Until such time as the United States is willing to work with us on achieving a reasonable solution to this trade dispute, we will continue to use every legitimate remedy available to protect the interests of our citizens."

The WTO’s Dispute Settlement Body is set to review Antigua & Barbuda's request at its 24 July sitting and decide whether such sanctions are reasonable. If approved the sanctions can be put into place immediately thereafter. However the US also has the right to refer the issue to further arbitration and is expected to exercise this option, thus stringing out the protracted dispute for at least another three to four months, with the dispute panel's decision not expected to come until the end of the year.

The dispute between the two countries began when the US decided to block banks and credit card companies from processing payments made by US residents to online gaming companies based offshore, citing both moral and security justifications. A huge proportion of the global e-gaming market was thus wiped out at a stroke for the 32-registered online casinos in Antigua & Barbuda, a move which also threatens the jurisdiction's attempts to diversify its economy. According to the Antiguan government, income has fallen to $130 million a year from $1 billion among the jurisdiction's online casinos in 2000, when earlier US restrictions on online gaming were imposed.

The United States decision to withdraw from one of its WTO commitments after it finally lost its battle with Antigua and Barbuda provoked a storm of outrage and concern. Last month, it emerged that the United States had decided to sidestep the ruling by the WTO dispute resolution panel in favour of Antigua by simply rescinding one of its services agreements. "We did not intend and do not intend to have gambling as part of our services agreement," stated Deputy US Trade Representative John K. Veroneau, in an announcement that shocked many observers. "What we are doing is just clarifying our commitments."

The WTO treaty allows a country to withdraw commitments to open its services market to foreign investors. However, the US could potentially have to renegotiate with any of the other 149 member countries if they raise objections to its decision. Member countries affected by the US ban on offshore online gaming firms may also have a case to claim compensation from the US government.

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Amanda Banks, Tax-News.com

Originally published June 25, 2007 10:47 am ET