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U.s. Attacked Over W.t.o. Decision
America tries to avoid compensation clause as support
for Antigua mounts.
The World Trade Organisation dispute over online gambling with
Antigua moved centre stage again in Geneva, Switzerland Tuesday
as the Antigua and Barbuda delegate criticised the USA and asked
other countries to join it in seeking compensation from Washington
for its failure to comply with global trade rules.
Ambassador John Ashe of Antigua told the WTO dispute panel that
his country may target U.S. trademarks, copyrights and telecommunications
companies after the WTO ruled in March that the U.S.'s continued
restrictions on online gambling were illegal (see previous InfoPowa
reports).
The finding, and the US non-compliance and subsequent decision
to take the unprecedented step of amending its original 1994 WTO
trade agreement obligations, means that the USA could face compensatory
claims arising from the amendment, a clause its Trade Representative
is trying to evade.
Ambassador Ashe has other ideas: "Not only do we think that
members should press claims for compensatory adjustments as a matter
of economic self-interest, but we also believe it is important that
the process is made as difficult as possible for the United States,"
he told fellow WTO delegates.
In a statement to members, Antigua's representative said: "There
is something clearly wrong with the concept that after a long, difficult
struggle covering years of dispute resolution at the WTO an offending
member could ultimately avoid the consequences of its loss by withdrawing
the commitment that gave rise to the claim in the first place. As
far as we are concerned, our dispute has been resolved and the United
States remains obligated to comply," said Dr Ashe.
The ambassador seized the moral high ground in his communication,
saying: "In a system that is replete with references to good
faith, fair dealing and cooperative resolution of disagreements,
it is the failure of the United States to engage with Antigua that
is most troubling.
"We are unable to understand why there was no effort to find
some middle ground. We ourselves were and remain ready to find a
fair and reasonable solution. But we need the other side to show
up to do so."
At the meeting, the Brazilian delegation declared its unequivocal
support of the Antiguan position, making clear that the actions
of the United States in the case threaten the integrity of the entire
dispute resolution system, particularly with respect to small and
developing countries. India expressed similar concerns while the
European Union noted its disappointment that the United States had
failed to engage Antigua and other concerned countries over a reasoned
approach to the provision of these services.
The US action to withdraw its commitment now leaves it open to
claims for damages from all WTO members who may consider themselves
adversely affected by the withdrawal. Under WTO procedures, any
of the 150 members can file a claim, all of which must either be
resolved by agreement or arbitrated before the United States can
actually withdraw the commitment.
"While we will not know until the filing deadline in mid-June,"
said Mark Mendel, Antigua's legal advisor in the case. "We
have heard rumblings that substantial trading partners such as the
EU are seriously considering filing claims for compensatory adjustments.
The potential adverse impact upon completely unrelated American
business interests could be massive."
Major UK public companies, in particular were hard hit by US anti-online
gambling measures last year, losing billions of dollars.
The online gambling dispute is threatening to become one of the
most complicated the WTO has ever handled and could soon spark a
series of compensation negotiations between the U.S. and other trading
powers such as the European Union, Associated Press bulletins confirmed,
reporting that claims filed against the US for withdrawal of commitment
could run to many billions of dollars
At the Geneva meeting, the United States conceded defeat in its
long-running battle with the small Caribbean nation of Antigua and
Barbuda and announced it would not be appealing the most recent
adverse decision rendered by a WTO dispute panel. The U.S. declined
to challenge Tuesday's adoption of the Internet gambling ruling,
because it says that its legal manoeuver [to amend its original
obligations] effectively ends the case.
The United States announced that it had initiated action to withdraw
its treaty obligations with respect to gambling and betting services
in an attempt to preclude Antigua and other nations from capitalising
on the WTO decisions in favour of Antigua.
Associated Press reported that Juan Millan, a U.S. trade lawyer,
told the Geneva-based trade body that the procedure - which no government
had previously used to avoid a WTO ruling - was invoked "in
order to bring the United States into compliance and to resolve
this dispute permanently. This modification will ensure...the original
U.S. intent of excluding gambling from the scope of U.S. commitments."
The U.S. contends that it is also exempt from negotiating compensation
to governments - as required in the GATS clause allowing countries
to rewrite their services commitments - because Internet gambling
was never explicitly mentioned in the negotiations of the early
1990s.
The March ruling upheld the U.S. right to exclude offshore betting
as a means of protecting public order and public morals. But importantly
it said it was illegal to target online gambling, without equally
applying the rules to U.S. operators offering remote betting on
horse and dog racing.
Brazil and India on Tuesday both said the U.S. was obliged by law
to compensate Antigua if it wants to now redefine its services obligations.
The E.U. questioned how the new clarification of the U.S. ban on
online betting would eliminate the discrimination that allows for
U.S. companies providing offshore betting on horses and other services
to remain in business.
Chief legal counsel for Antigua, Mark Mendel said: "The American
defense was predicated on their theory that Internet gambling was
worse than gambling in bricks and mortar shops. If they believed
that, they would eliminate all remote gambling in America. They
have not done that. It's just blatant trade protectionism."
Mendel told The Associated Press that Antigua would seek retaliatory
sanctions against the U.S., since U.S. negotiations to rewrite its
services obligations " could take years," requiring the
consent of the WTO's other members.
"In the meantime, there's nothing to prevent us from seeking
our remedies and we absolutely will," he said.
In an interview with the news service, Mendel said the Antiguan
nation of 80 000 people was looking at different ways to recoup
its losses - a challenge for such a small country facing the world's
biggest economic power. Antigua's legal efforts were largely bankrolled
by U.K.- owned Internet gambling operators with servers licensed
in the country.
"Maybe we'll target telecoms. Intellectual property rights
- that's a way we can possibly fight back," Mendel speculated.
The E.U. has stressed at every stage in the four-year dispute that
it would act in support of its interests - a reference to the U.K.-based
companies that lost billions because of the U.S. restrictions. Officials
in Brussels said, however, they had yet to notify Washington whether
they would submit a compensation claim.
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