US says not bound to WTO gambling action, will modify commitment

[The Judge]

The United States said Friday it was not required to comply with a WTO ruling to open its borders to the Internet gambling industry because of an "oversight" in a decade-old trade agreement.

US officials said they were submitting documents to "clarify" Washington's commitment to "recreational services," which was interpreted in a WTO dispute settlement as including a commitment to allow cross-border Internet gambling services.

The clarification "should dispose of this matter," said Deputy United States Trade Representative John Veroneau.

The US announcement was the latest development in a four-year-old dispute with the Caribbean nation Antigua and Barbuda, which sued the US at the World Trade Organization alleging failure to comply with global trading rules, and won.

But Veroneau said the dispute stems from a lack of clarity in the 1993-1994 negotiations under the Uruguay Round of international trade talks that led to the General Agreement on Tariffs and Services (GATS), which took effect in 1995.

Veroneau said that the US commitment to free trade in "recreational services" was not intended to included Internet gambling, which did not exist at the time.

The commitment to opening up recreational services "doesn't explicitly include gambling nor does it necessary exclude it," Veroneau said.
"It didn't occur to us that this could include gambling until Antigua brought this case in 2003."

"Clearly that was an oversight in the drafting," he said.

"The process we are starting today would allow us to clarify our schedule and make clear that we did not intend and do not intend to have gambling included in our services agreement."

US officials said Article 21 of the GATS agreement allows a member to file clarifications to their original schedule of commitments, a procedure that has been used only once.

Under the procedure, an affected country may file a claim for compensation that may be subject to arbitration at the WTO. A finding against the US might allow a country to retaliate by restricting some services, US officials said.

It was not immediately clear how the US action would affect the current case before the WTO, which had ordered the US to modify its laws to comply with the ruling.

US officials said they did not expect to be penalized for modifying its schedule of services even though some affected countries such as Antigua could ask for permission to retaliate.

One US official, who asked to remain anonymous, said "everyone knew the US has very strong criminal prohibitons on gambling. Nobody could have had any expectations the US would make this commitment in the Uruguay Round."

Under the latest procedure, any country that claims to be adversely affected by the US modification may file a claim of interest within 45 days. A three-month period is set for discussions, after which the case may be brought before an arbitrator.

Antigua argued in the complaint it launched in March 2003 that US prohibitions were harming its online gaming business, which is aimed at reducing the island's economic dependence on tourism.

Antigua, with a population of about 68,000, is a center for offshore Internet gaming operations, attracting large numbers of US residents to its virtual casino-style games and betting services.

US officials contended Internet gambling is illegal if it involves activity on US soil, and have vowed to prosecute those involved in the practice.
One study showed US residents spent more than four billion dollars in 2005 on Internet gambling, despite a de facto prohibition on such wagering in the United States.

A new law passed in 2006 prohibits US banks and credit card companies from processing Internet bets. This was expected to sharply curb Web gambling by US residents and prompted several online casinos to halt US operations.

[Dr. Jack]

It's a load of crap. Just amazing to me. Antigua already made statement and obviously this will not end here.

[guitarjosh]

So will other countries stop recognizing US copyrights & patents?

[Davydave]

hypocrites