TWN Info Service on WTO and Trade Issues (Jan13/02)
22 January 2013
Third World Network

Antigua explains decision to seek sanctions in US gambling case
Published in SUNS #7504 dated 19 December 2012

Geneva, 18 Dec (Kanaga Raja) -- Following its recent request for authorisation from the WTO Dispute Settlement Body (DSB) to retaliate against the United States in the dispute involving the cross-border supply of gambling and betting services, Antigua and Barbuda explained its position on this issue at a meeting of the DSB on Monday.

Antigua and Barbuda had last week requested authorisation from the DSB to suspend the application of concessions or other obligations under the TRIPS Agreement with respect to the United States in an amount not exceeding $21 million annually (see SUNS #7502 dated 17 December 2012).

In its statement under the agenda item of "Other Business", Antigua and Barbuda pointed out that on 7 December 2012, prior to the completion and dissemination of the notice for this (DSB) meeting, its government submitted to the Secretariat, a request to be included on the agenda for today (17 December), together with a request for the authorisation of the DSB of the suspension of concessions and other obligations of Antigua and Barbuda to the United States in accordance with Article 22.7 of the Dispute Settlement Understanding (DSU) in "our longstanding dispute" over the cross-border provision of gambling and betting services.

Unfortunately, Antigua and Barbuda said it will not be requesting this authorisation today because the Secretariat, apparently following consultation with the United States, held its request untimely, "despite being here in this building prior to the completion and dissemination of the notice."

Antigua and Barbuda further said that it is a small developing country, under particular economic stress in these difficult times. "We haven't the resources to maintain a mission here in Geneva, and the prosecution of this case and the pursuit of our rights under the WTO agreements have been expensive, enormously time-consuming and difficult. It is very unfortunate that we were, under all circumstances, unable to present our suspensions request to this body today. We will be back to do so in January," it added.

(The next regular meeting of the DSB is scheduled to take place on 28 January 2013.)

In its statement, Antigua and Barbuda said that notwithstanding this, it is here today to explain its position to its colleagues in the WTO and to set the record straight. It said that it did not come to the decision to exercise its suspension rights lightly.

Noting that the first dispute settlement panel ruled in its favour in 2004, it said that the "reasonable period of time" in its case expired on 3 April 2006, and the report of the arbitrators under Article 22.6 of the DSU was released almost exactly five years ago, in December 2007.

"In the meantime, what was once a multi-billion-dollar industry in our country, employing almost five percent of our population has now shrunk to virtually nothing. A number of our citizens have been criminally prosecuted, and a number are still under the spectre of arrest, prosecution and incarceration by American authorities, for ostensibly violating the very laws ruled to be in violation of US obligations under the GATS in our case."

At the same time, Antigua and Barbuda added, domestic remote gaming is growing apace in the United States. More and more states and other governmental entities in America are authorising various types of remote gaming and two of the most senior elected officials in the American Congress have proposed legislation under consideration at this very moment that would provide a country-wide regulatory programme for remote gaming on poker in America.

"The only thing that all of these recent developments have in common, besides gambling, is that each and every one exclude the provisions of these much-in-demand services on a cross-border basis from other countries, including Antigua and Barbuda."

Over the years since the last WTO proceeding in this matter, Antigua and Barbuda said that its government has not been sitting idly by. "Nor have we been imposing unrealistic and unbending demands upon the United States."

In point of fact, Antigua and Barbuda has been working hard to achieve a negotiated solution to this case. "Our efforts at compromise have been exhaustive. We have tabled proposal after proposal to the US government, and attended session after session, in pretty much every case involving our delegation travelling to Washington DC in hopes of finding some common ground."

But to date, Antigua and Barbuda noted, the United States has not presented one compromise offer of their own, "and in particular the USTR (US Trade Representative) has made, to our belief, no sincere effort to develop and prosecute a comprehensive solution that would end our dispute."

"As recently as last month, on yet another trip to the United States, we were told to work the Congress ourselves, engage a lobbying firm and hope for the best ... the USTR, we have been told time and again, has no authority in these matters."

"In fairness, we don't know exactly how the United States resolves the other disputes it has been involved in. But we tend to believe that the USTR has a big role in making things happen in those disputes ... after all, that is within its clear statutory remit if you take the time to explore the applicable domestic law. In our dispute anyway, the USTR apparently has no role in seeing an end to the dispute," said Antigua and Barbuda.

"We have spent the past five years searching, at great expense and considerable effort for our little country, for the person or persons, the agency or agencies, whomever has the authority and will to work with us to come to a reasonable, just and fair resolution of our dispute. Sadly, we have never found that person, that agency, that whomever."

Antigua and Barbuda said: "Told once again last month by the USTR that such is our problem, we find ourselves with no alternative but to apply the suspension of concessions and other obligations in hopes that perhaps affected domestic interests in the United States might have success where we have found none. Maybe an innocent American intellectual property rights holder may be able to convince its government that continued protectionism for the benefit of domestic gaming interests is not sustainable."

"Maybe such an innocent third party will be able to find that person who is willing to take ownership of this issue in the United States government and work with our government in good faith and in full consideration of the circumstances to bring this matter to a fair and fitting conclusion," it added.

Finally, Antigua and Barbuda took note of the fact that the United States has taken the exceptional step of trying to come into compliance with the rulings and recommendations of the DSB in the matter by simply removing the offending commitment altogether. And that in this regard, the United States has come to agreement with other affected member states on adjustments sufficient to satisfy those members.

However, Antigua and Barbuda stressed, "none of these things are within the reasonable scope of our assets and our economy to provide any benefit whatsoever."

"While this remains to be tested, we for one do not think that the DSU was intended to work in the way suggested by the United States. We do not think that a member can avoid its obligations to another member under the WTO agreements by simply removing or modifying the part of the agreement that a measure offends, making bilateral arrangements with other members and leaving the supposedly prevailing member with no remedy at all."

Antigua and Barbuda added: "If such is the case, then the DSU will ring particularly hollow for smaller member nations, who will rarely have the diversity and domestic assets to avail themselves of offered adjustments."

Also under the same agenda item, the US said that Antigua's statement "fundamentally misrepresents the current status of this matter, and its positioning within the WTO system as a whole." Moreover, it added, Antigua's sentiments only serve to postpone the final resolution of this matter, to the detriment of its own interests.

This dispute involves an area of services regulation - gambling and betting services - that the US said it never intended to be included in its schedule under the General Agreement on Trade in Services (GATS).

Indeed, most Members, like the US, 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 commitments for gambling in their GATS schedules.

This was the US understanding of its own GATS schedule, it maintained, adding however, as a result of ambiguities in drafting, and despite the intent of US negotiators, the Appellate Body ultimately found that the US 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 US said that it has responded to this finding responsibly, and in a manner that involves substantial costs for the US. "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, it initiated the modification procedure under Article XXI of the GATS so as to reflect the original US intention to exclude gambling from the scope of US commitments. Pursuant to the GATS procedures, the US said it reached agreement with all interested Members, except one, on a package of substantial compensatory adjustments to the US GATS schedule.

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

The US was of the view that instead of respecting the WTO process under Article XXI, Antigua insists that the US must maintain its unintentional concession on gambling, and that the US 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," it maintained.

Based on specific requests made by Antigua, the US said it has offered real and substantial benefits that would make important contributions to the further development of the Antiguan economy.

At times, the US added, "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 US GATS schedule."

According to trade officials, the DSB took note of the statements.