Antigua To Defy US Over WTO Gaming Ruling

by Mike Godfrey, Tax-News.com, Washington

11 April 2006

The US has apparently told Antigua that it will take no action to comply with the WTO's ruling on the US/Antiguan gaming dispute; the WTO's deadline expired last week.

The ruling by the WTO Appellate Body in April 2005 upheld one of Antigua and Barbuda's complaints over US prohibitions, which prevented US banks and major internet search engines from doing business with gambling firms on the island. US federal laws bar the placing of bets across state lines by electronic means, preventing Antiguan online gambling companies from accessing US customers. The US had asked for and was given a year in which to take remedial action; but in fact, the only legislative action taken in the US is the reintroduction of a bill which would worsen, not improve the situation of offshore gaming sites.

Mark Mendel, Antigua's counsel, based in El Paso, Texas, said last week that the office of the US trade representative had formally advised him in a telephone conversation that there would be no further negotiations.

“Yesterday our request to have meaningful negotiations was rejected,” said Mendel afterwards. “They have come to the mind-boggling conclusion that they are in compliance and have been in compliance all along, and they need not do anything.”

Whatever the law says, the reality is that US punters are estimated to be behind up to half of the $12 billion a year wagered in cyber casinos. Antigua-based operators are thought to account for 25% of this turnover.

After losing the WTO case last spring, the United States pleaded for a year’s delay to implement federal legislation to accommodate the ruling. But the year has passed without U.S. action to either close the loophole or make Internet gambling legal. One bill is moving forward in Congress, but it would only stiffen existing federal law while carving out exemptions for operators such as racetracks, Indian casinos and state-owned lotteries.

Mendel says that Antigua plans to impose compensatory trade sanctions against the US under WTO rules. Putting tariffs on US exports would only harm Antigua; but Mendel points out that lifting US patent and copyright protections in Antigua would permit a manufacturing wave of knockoff products such as music CDs and DVDs. He says that WTO once granted similar patent waivers as compensation in a case involving Ecuador.

L. Errol Cort, Antigua and Barbuda’s minister of finance and the economy, said that the attitude of the US was greatly disappointing. He said: “I can find no better words in response to the United States than to paraphrase those of United States Trade Representative Rob Portman, made in relation to China last week: ‘As a mature trading partner, the United States should be held accountable for its actions and be required to live up to its responsibilities.’ ”

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