WTO awards Antigua sanctions in U.S. gambling case

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GENEVA, Dec 21 (Reuters) - Antigua and Barbuda are entitled to levy $21 million a year in sanctions against the United States for being shut out of the U.S. online gambling market, a World Trade Organisation (WTO) arbitrator ruled on Friday.

The tiny Caribbean nation can exercise the sanctions in intellectual property, such as films and music, for instance by lifting copyright protection, as well as in services, which includes sectors such as banking and telecommunications as well as gambling, he said.

Antigua had asked the WTO for permission to impose $3.44 billion in "cross-retaliation", allowing it to seek damages outside the original services sector. Washington had argued Antigua was entitled to only $500,000 in compensation. (Reporting by Jonathan Lynn)

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Shenanigans!

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US urges Antigua to delay WTO sanctions on Internet gambling

WASHINGTON (AFP) — The United States Friday urged Antigua to hold off on imposing sanctions authorized by the WTO in a dispute over online gambling, saying Washington was revising its WTO commitments.

US Trade Representative (USTR) spokesman Sean Spicer advised Antigua to delay any action after an arbitrator for the Geneva-based World Trade Organization allowed the Caribbean nation to impose sanctions worth 21 million dollars a year.

Spicer said Washington has initiated a formal process at the WTO to revise its commitments and is in talks with Antigua and six other WTO members that have claimed to be affected.

"We would expect that Antigua would not suspend its WTO commitments to the United States while that process is underway.," Spicer said.
"Once the process of clarifying the US schedule of commitments is complete, any issues in our bilateral dispute with Antigua will be moot, and there will no longer be any basis for suspending WTO commitments."

The action marked the latest twist in a dispute with Antigua and Barbuda, a tiny Caribbean nation that complained in 2003 that the US ban on Internet gambling violated WTO rules.

Antigua has prevailed in its bid at the WTO to have the US ban declared improper. But US officials said earlier this year that Washington was not bound to change its laws to open its borders to the Internet gambling industry because of an "oversight" in a decade-old trade agreement.

Antigua had asked for sanctions worth 3.44 billion dollars, while Washington argued this was "patently excessive" and more than three times the size of the Antiguan economy.

Antigua, with a population of about 70,000, is a centre for offshore Internet gaming operations and attracts large numbers of US residents to its online casino-style games and betting services.

US officials announced in May they were submitting documents to clarify Washington's commitments. They cited 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.

On Monday, US officials said Washington would widen access to some of its services to compensate the European Union, Japan and Canada to settle the WTO dispute on Internet gambling with those members.

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Antigua Responds to adverse ruling by WTO
Antigua and Barbuda today expressed its mixed reaction to the ruling of the arbitrators issued today in its long running dispute with the United States over Internet gambling. The panel agreed with Antigua that it had no effective trade sanctions against the United States in the area of services and authorised Antigua to suspend its obligations to the United States in respect of copyrights, trademarks and other forms of intellectual property rights. However, it went on to set Antigua’s level of annual trade loss at US $21.0 million, much less than the US $3.4 billion Antigua had requested, although considerably more than the US $500,000 the United States had proposed.

In an unprecedented approach that is sure to arouse controversy, the arbitrators assessed Antigua’s level of damages based upon a hypothetical form of compliance proposed by the United States rather than through the withdrawal of the overall prohibition on the provision of remote gaming services. This decision resulted in a rare, perhaps unprecedented disagreement among the arbitrators, with one of the three panellists dissenting from the approach adopted by the other two members.

Mark Mendel, the lawyer who has been spearheading this case for the Antiguan government since it began back in 2003 observed “I am pleased that the panel approved our ability to cross-retaliate by suspension of intellectual property rights of United States business interests. That has only been done once before and is, I believe, a very potent weapon.” Mr Mendel expressed less satisfaction with the amount of damages assessed. “I find it astonishing that two of the three panellists would in essence grant the United States the benefit of a hypothetical method of compliance most favourable to the American side in assessing Antigua’s level of trade impairment. What appears to have been done here is assuming a form of compliance that has not happened and probably will not happen without giving Antigua the ability to contest the method under the WTO’s normal procedures,” he added. Unlike other WTO rulings, awards of arbitrators are not subject to review by the Appellate Body of the WTO.

While questioning the low number, Mr Mendel remains positive about the dispute going forward. “US $21 million a year in intellectual property rights suspension going forward indefinitely is not such a bad asset to have. I hope that the United States government will now see the wisdom in reaching some accommodation with Antigua over this dispute and look forward to seeing efforts in this regard.”