Antigua Pursuing Trade Sanctions Against US

by Amanda Banks, Tax-News.com, London

12 July 2010

Antigua and Barbuda’s Prime Minister, Winston Baldwin Spencer has said that the territory may have to apply sanctions against the United States to settle a longstanding internet gaming trade dispute. He made the comments whilst in Jamaica, attending the annual Caribbean Community (CARICOM) heads of government meeting.

The Prime Minister said the matter was raised at the Prime Ministerial Sub-Committee on external negotiations when ministers discussed the World Trade Organization’s (WTO) dispute settlement mechanism. Spencer identified the internet gaming case as a clear example of the difficulties small countries encounter in getting justice from WTO rulings. He noted that since the WTO ruled in Antigua and Barbuda’s favour back in 2007, the United States has failed to comply. The Prime Minister added that the government has sought to secure a negotiated settlement with the US.

Spencer said that while Antigua and Barbuda has the right to impose sanctions against the US in keeping with the WTO rules, the country remains committed to exhausting all possibilities for a negotiated settlement. He explained however that the country may have no other alternative but to signal to the WTO that it wishes to impose sanctions as he said the country is fast running out of options.

The Prime Minister said CARICOM ministers would participate in discussions on the matter to try to reach a settlement with the United States.

Spencer urged the need for urgent reform of the World Trade Organization dispute settlement mechanism, especially relating to enforcement of its rulings.

Antigua and Barbuda's complaint stems from the enactment of legislation in the United States in 2006 which effectively shut out e-gaming companies based offshore from participating in the US gambling market. Antigua and Barbuda, which as a major domicile for e-gaming companies had a large stake in the US market, saw a major pillar of its economy knocked from under its feet as a result of the US legislation. More than 530 e-gaming websites were based in Antigua and Barbuda in 2007.

After the WTO ruled that the US had violated trade rules in barring Antiguan online gaming operators from the US market, the US withdrew from its WTO obligations with regard to free trade in the gambling area. The WTO allowed Antigua and Barbuda to impose USD21m worth of retaliatory measures against the US, although this is considered to be a drop in the ocean compared to the billions in revenue the island may lose as a result of the US legislation. Antigua had initially asked for USD3.4bn in damages.

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