Previously, I detailed the case of the tiny island nation of Antigua and Barbuda winning its case against the US over online gambling restrictions. If you will recall, Antigua was severely hurt when the US effectively banned offshore online gaming operations from plying their trade Stateside. The significance of this matter is perhaps far greater than the stillborn Doha round. Can the US simply flout the WTO's rule-based regime by ignoring its decisions? It would be terribly unfair if this matter is not resolved in favor of Antigua. Hearteningly, several other countries have now joined Antigua to face down America's bullying tactics. Things will come to a head when the WTO's judicial system, the Dispute Settlement Body (DSB), meets on July 24:
Important questions will be raised in Geneva on July 24, about whether rules based on international systems can be used by the relatively powerless (Antigua), if the most powerful (United States), chooses to ignore or circumvent the World Trade Organization’s legally binding decisions.An op-ed in the Jamaica Gleaner also reiterates this theme. The US may try to delay proceedings yet again:
The issue is whether the United States will comply with a WTO ruling in favor of Antigua, along with other countries, and compensate its government for loss of earnings because of Washington’s decision that effectively led to the end of online gambling in the U.S.
"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," said Dr. John Ashe, Antigua's Ambassador at the WTO.
Brazil has joined Antigua & Barbuda, along with the European Union (27 member states, including the United Kingdom), China, India, Japan, Costa Rica, Mexico, and China Taipei, to claim compensation on legal matters of principle involved.
In 2004, the WTO ruled that the U.S. had violated global trade rules with the ban on internet gambling, and that this was an unfair trade barrier that hurt Antigua’s gaming industry. Citing that the U.S. prohibition on internet gambling was inconsistent with its obligations under the 1995 General Agreements on Tariffs and Services (GATS).
The WTO also noted that the U.S. ban on online gambling represented an "arbitrary and unjustifiable discrimination between countries," and was a "disguised restriction on trade." The United States has lost its appeal and has decided to withdraw its commitment on this service from the GATS.
As discussions continue in Germany to see whether an outline agreement is achievable on a new global-trade round, a more fundamental exchange is just beginning in Geneva.
It is one that raises important questions about whether rules based on international systems can beused by the relatively powerless if the most powerful choose to ignore or circumvent the World Trade Organisation's (WTO) legally binding decisions.
At issue is whether the United States (U.S.) will comply with a WTO ruling in favour of Antigua and compensate its government for loss of earnings as a result of Washington's decision that effectively led to the ending of online gaming from or through the United States.
In an extraordinary twist that turns the issue from one in which Antigua was essentially alone in pursuing justice, it has emerged in the last few days that the small island has been joined by Europe, Brazil, Japan and others in its claim for compensation and the matters of legal principal involved.
Antigua will attempt to obtain $3.4 billion worth of IP sanctions against the United States in return for the harm it has done over copyrights, trademarks, industrial designs, patents, and protection of undisclosed information as noted by the International Economic Law blog. See Antigua's official document as well. This story encapsulates matters:
Needless to say, I am rooting for the little guy. What is the point in having a rule-based system in the WTO if the US merely brushes off its decisions?
Meantime Antigua and Barbuda has announced its sanctions against the USA specifically by withdrawing intellectual property protection for US trademarks, patents and industrial designs worth up to US$3.4 billion in order to recover the amount it has lost in revenue.
"We feel we have no other choice in the matter, we have fought long and hard for fair access to the US market and have won at every stage of the WTO process," said Finance Minister Errol Cort. "Until such time as the United States is willing to work with us on achieving a reasonable solution to this trade dispute, we will continue to use every legitimate remedy available to protect the interests of our citizens."
According to reports, the US is now willing to consider a solution with Antigua and Barbuda but not with other countries filing claim on Friday.
Antigua and Barbuda has filed claim saying that its revenue from Internet gambling had dropped from US$1 billion annually to US$130 million as a result of the US action.