The United States has warned Antigua and Barbuda not to pursue compensation agreed by the World Trade Organization (WTO) following a 2004 ruling against US laws prohibiting the provision of online gambling services to the United States market.
Negotiators from Antigua and Barbuda and the United States held recent consultations with the Caribbean territory seeking to achieve meaningful compensation for the hurt caused to its remote gambling industry as a result of a number of laws criminalizing remote gambling services offered to American consumers.
In a landmark decision in 2004, the WTO agreed that these laws were in violation of the US’s international treaty obligations. However, to date, the government of Antigua and Barbuda has said that “it has been unable, despite sustained efforts, to either get the United States to comply with the WTO ruling or negotiate any reasonable compromise to settle the dispute.”
Due to diminutive size of the Antiguan economy, its ability to impose sanctions upon the United States has been limited, as enforcement actions historically permitted in such cases are limited to trade sanctions. Due to the inferior size of bilateral trade between Antigua and the US in comparison to lost gambling sector revenues, it is said that any such action would fail to compensate the nation in a meaningful way. In 2006, it was estimated that Antigua held a 25% market share in the American gambling market.
It would appear the latest consultations have yielded no breakthrough and Antigua and Barbuda has confirmed that it may opt to enforce the compensation provided for in the ruling, worth USD21m annually, that allows the territory to sell US-copyrighted merchandise without having to pay for rights usage.
In a statement delivered to the WTO’s dispute settlement body (DSB), the United States said: “Antigua’s sentiments only serve to postpone the final resolution of this matter, to the detriment of its Antigua’s own interests.”
“This dispute involves an area of services regulation – gambling and betting services – that the United States never intended to be included in its schedule under the General Agreement on Trade in Services (GATS).”
It argued: “Indeed most Members, like the United States, 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 commitment for gambling in their GATS schedules. This was the US understanding of its own GATS schedule. 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 United States has responded to this finding responsibly, and in a manner that involves substantial costs for the United States. 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, the United States 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 United States 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.”
“Instead of respecting the WTO process under Article XXI, Antigua insists that the United States must maintain its unintentional concession on gambling, and that the United States must change its domestic policies concerning public morals and public order so as to allow Internet gambling.”
On consultations with Antigua and Barbuda, the US stated: “Based on specific requests made by Antigua, The United States has offered real and substantial benefits that would make important contributions to the future development of the Antiguan economy. At times, 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. Moreover, Antigua today is stating that it intends to take the additional step of seeking authorization to suspend concessions with respect to intellectual property rights.”
“The United States would view such a step as fundamentally at odds with the current status of this matter. It is Antigua’s actions in refusing to engage in the Article XXI process, and not the actions of the United States, that are preventing the final resolution of this matter.”
“In these circumstances, Antigua has no justification for taking any retaliatory actions against the United States. Moreover, if Antigua actually proceeds with a plan for its government to authorize the theft of intellectual property, it would only serve to hurt Antigua’s own interests. Government-authorized piracy would undermine chances for a settlement that would provide real benefits to Antigua. It also would serve as a major impediment to foreign investment in the Antiguan economy, particularly in high-tech industries,” it warned.
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