 WTO
Clears $21 Million
in Sanctions vs. US
GENEVA (AP) — The
United States faces
a token $21 million
in annual trade
sanctions as a
result of its online
betting ban, the
World Trade
Organization said
Friday in awarding
Antigua and Barbuda
the right to target
U.S. services,
copyrights and
trademarks.
The decision is a
setback for the
Caribbean island
nation, which sought
the right to impose
$3.4 billion in
retaliatory measures
against U.S.
commercial services
and intellectual
property.
Washington
acknowledged its
Internet gambling
restrictions were
ruled illegal by the
WTO, but argued that
Antigua should only
be compensated for
about $500,000 for
lost annual revenue.
The case has drawn
the attention of a
number of U.S.
industries, partly
because of the ways
Antigua has proposed
retaliating against
the much larger U.S.
economy.
Washington's attempt
to escape its legal
loss by proposing a
revision of the
WTO's key treaty on
trade in services
has also fueled
interest.
The office of the
U.S. Trade
Representative noted
that Antigua was
seeking sanctions
worth more than
three times the size
of its entire
economy.
"Antigua's claim was
patently excessive,"
it said in a
statement. "The
United States is
pleased that the
figure arrived at by
the arbitrator is
over 100 times lower
than Antigua's
claim."
However, the U.S.
said it was
concerned that
Antigua could now
violate some
American
intellectual
property rights —
which could range
from CDs and DVDs to
computer software,
industrial designs
and designer
clothing.
The ruling could
"establish a harmful
precedent for a WTO
member to
affirmatively
authorize what would
otherwise be
considered acts of
piracy,
counterfeiting or
other forms of ...
infringement," the
U.S. said.
The U.S. and Antigua
cannot appeal
Friday's decision.
Realistically, it
would have been very
difficult for a
country the size of
Antigua's to
implement hundreds
of millions of
dollars worth of
trade sanctions on
the U.S. without
harming its own
economy and the
welfare of its
citizens. Ecuador
was awarded similar
retaliation rights
in a bananas dispute
with the European
Union in 2000, but
failed to come up
with an effective
way to introduce
countermeasures.
The WTO arbitration
panel said it had to
adopt its own
approach to come up
with a fair
retaliation figure
in view of the wide
difference in how
the U.S. and Antigua
estimated the
economic effect of
the gambling ban.
"In doing so, we
feel we are on shaky
grounds," the panel
said in an 88-page
decision.
Washington stopped
U.S. banks and
credit card
companies last year
from processing
payments to online
gambling businesses
outside the country.
The decision closed
off the most
lucrative region in
a growing market
worth about $15.5
billion last year.
About half of the
world's online
gamblers are based
in the U.S.
The arrest in 2006
of two British
Internet gambling
executives while
traveling through
the United States
also highlighted the
U.S. government's
escalation of its
battle against the
industry.
The WTO, however,
upheld in March
previous rulings
striking down the
U.S ban.
The trade body found
that the U.S. had
the right to prevent
offshore betting as
a means of
protecting public
order and public
morals. But it said
Washington was
violating trade law
by targeting online
gambling without
equal application of
the rules to
American operators
offering remote
betting on horse and
dog racing.
Antigua, the
smallest country to
successfully
litigate a case in
the WTO's
12-year-history, had
hoped the ruling
would lead the U.S.
to revoke the
restrictions.
The former British
colony of about
80,000 people had
been promoting
electronic commerce
as a way to end the
country's reliance
on tourism, which
was hurt by a series
of hurricanes in the
late 1990s. There
are 32 licensed
online casinos in
Antigua, employing
1,000 people and
generating a yearly
revenue of around
$130 million. Seven
years ago, its
casinos had an
annual income closer
to $1 billion.
But Washington
responded to its
legal defeat by
announcing it would
take the
unprecedented step
of revising the
conditions under
which it signed the
WTO's 1994 General
Agreement on Trade
in Services, or
GATS. That allowed a
number of countries
to seek compensation
under a separate
process.
The U.S. has since
agreed on deals with
the 27-nation
European Union,
Canada and Japan to
change the treaty —
but has failed to do
so with Antigua,
Costa Rica, India
and Macau.
Until it gains the
approval of all 151
members of the WTO,
the U.S. online
betting ban is
illegal under
international trade
rules. As a result,
Antigua will have
the right to
penalize U.S.
services and
intellectual
property until the
U.S. government
either permits
Americans to gamble
over foreign-based
sites or eliminates
exceptions for
off-track betting on
horses, including
over the Internet.
British gambling
companies — which
bankrolled Antigua's
efforts and heavily
lobbied Brussels for
tough action — were
disappointed earlier
this week when the
EU announced that it
had received some
minor U.S. trade
concessions in
exchange for
accepting the
U.S.-proposed
revision to the
GATS.
The deal fell far
short of the $100
billion in new
commercial
opportunities the
Internet gaming
sites claimed the
United States owed.
Bradley S. Klapper,
Associated Press
Originally published
December 21, 2007
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