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Antigua To Retaliate Against US In Gambling Dispute

by Glen Shapiro, LawAndTax-News.com, New York

31 January 2013


In a long-running dispute, which began in 2003 following measures introduced by the United States affecting the cross-border supply of gambling and betting services, Antigua and Barbuda has this week been granted authorization by the World Trade Organization (WTO) to retaliate by suspending its obligations to the US in respect of the Trade-Related Aspects of Intellectual Property Rights (TRIPS) agreement.

Following the introduction of US federal laws relating to gambling and betting services, including the Wire Act, the Travel Act and the Illegal Gambling Business Act, a WTO Appellate Body in 2005 upheld a previous panel's finding that the US schedule within the General Agreement on Trade in Services (GATS) included specific commitments on gambling and betting services.

It was therefore also upheld that the US acted inconsistently with its commitments under GATS by prohibiting the cross-border supply of gambling and betting services, and that Antigua's economy had suffered as a result.

Harold Lovell, Antigua's Finance Minister, has said that: "The economy of Antigua and Barbuda has been devastated by the US government's long campaign to prevent American consumers from gambling on-line with offshore gaming operators."

It is said that the direct actions of the US reduced the remote gaming industry in Antigua, which had been estimated to be worth over USD3.4bn and was the country's second largest employer, from one providing 4,000 jobs to a sector with less than 500 jobs currently. Fees paid by the gaming industry to the government had helped to fund such public services as education and healthcare.

Under the WTO Dispute Settlement Understanding, it is provided that a country such as Antigua that has been harmed by a violation of a WTO agreement may – if it cannot do so in the same sector or under the same agreement where the violation occurred – suspend concessions or other obligations (i.e. retaliate) against the other country by withholding benefits under a different WTO Agreement (such as TRIPS).

A WTO Arbitrator in 2007 then determined that the annual level of benefit impairment accruing to Antigua under GATS is USD21m and that Antigua may suspend obligations under the TRIPS Agreement at a level not exceeding that amount annually. Therefore, Antigua could, for example, establish a website offering US copyrighted content, such as music and films.

However, getting the authorization from the WTO to suspend intellectual property rights does not require Antigua to take immediate action, and, despite Antigua's accusation that the US has failed to provide any meaningful proposals so far, it still appears hopeful that the US will engage in more productive discussions, despite the time already taken up by the dispute.

On the other hand, the US, in its statement to the WTO, was "disappointed with Antigua and Barbuda's misplaced decision" to take action, and was of the opinion that it would "make resolution of this longstanding matter more difficult."

"The US fundamentally disagrees with Antigua's characterization of the status of this dispute and with US efforts to reach a solution," it said.

The US called Antigua's plan for its government to authorize the "theft" of intellectual property, "government-authorized piracy," which would undermine chances for a settlement that would provide real benefits to Antigua. It also would serve as a major impediment to foreign investment in the Antiguan economy, particularly in high-tech industries, the US warned.

A comprehensive report in our Intelligence Report series examining the new possibilities that offshore e-commerce open up for business, and analysing the offshore jurisdictions that have led the way in offering professional e-commerce regimes for international business, with a particular focus on e-gaming, is available in the Lowtax Library at http://www.lowtaxlibrary.com/asp/subs_reports.asp and a description of the report can be seen at http://www.lowtaxlibrary.com/asp/description_report6.asp
TAGS: Finance | TRIPS | Intellectual Property | law | intellectual property | copyright | World Trade Organisation (WTO) | enforcement | offshore | gambling | legislation | offshore e-gaming | trade disputes | Antigua and Barbuda | United States | trade | services

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