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Antigua In The Cold After EU/US Gaming Deal

by Jeremy Hetherington-Gore, Tax-News.com, London

21 December 2007


The on-line gaming sector, which had been hoping for a positive resolution to its WTO spat with the USA over legislation which bans Internet gaming transactions, was disappointed this week when the EU reached a deal with the USA in compensation negotiations at the WTO in Geneva.

The European Commission accepted a US offer of openings in other sectors as compensation. "A bilateral agreement was signed in Geneva, which provides EU service suppliers with new trade opportunities in the US postal and courier, research and development, storage and warehouse sectors," said the Commission. "The US also made concessions in the testing and analysis services sector.

Canada and Japan have apparently also accepted similar US offers, and the office of the USTR said it hoped that India, Costa Rica and Macau would fall in line as well. This leaves Antigua and Barbuda, which brought the original complaint to the WTO, rather isolated, since it has little trade with the USA and cannot benefit from trade-related offers of compensation. It has asked the WTO for permission to retaliate against the United States by suspending intellectual property laws, permitting it to sell $3.4bn worth of American content a year on world markets.

Neogtiations between the USA and Antigua are continuing this week, but if no deal is reached, Antigua has 45 days to ask for binding arbitration from the WTO. However, it will not be encouraged by what happened last year after the WTO ruled against the US, only to have the US renege on its WTO obligations - and it's this that opened the country up to compensation claims from other WTO members.

The deal between the EU and the US was probably cut in November when EU Trade Commissioner Peter Mandelson visited Washington for meetings on "Transatlantic Economic Cooperation."

Mandelson met US Trade Representative Susan Schwab and Representative Barney Frank (D-MA), who has been leading so far abortive efforts in the Congress to modify the Unlawful Internet Gambling Enforcement Act, passed in 2006, which prohibits the use of payment instruments by financial institutions to handle the processing of any form of internet gambling that is illegal under US federal or state law. It was this law which led to the collapse of many global gaming operations.

Barney Frank introduced legislation into the House of Representatives in April that would create an exemption to the ban on online gambling for properly licensed operators, allowing Americans to lawfully bet online. The Internet Gambling Regulation and Enforcement Act of 2007 would establish a federal regulatory and enforcement framework to license companies to accept bets and wagers online from individuals in the US, to the extent permitted by individual states, Indian tribes and sport leagues. All such licenses would include protections against underage gambling, compulsive gambling, money laundering and fraud.

“The existing legislation is an inappropriate interference on the personal freedom of Americans and this interference should be undone,” said. Rep. Frank, who is Chairman of the House Financial Services Committee.

"I think Representative Frank takes a fair-minded, common sense approach to this and we look forward to that being effective legislation," said Mandelson. But the bill has floundered so far.


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