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CARICOM Backs Antigua In US Gaming Dispute

by Phillip Morton, Investors

22 February 2013

The Caribbean Community (CARICOM) has backed Antigua and Barbuda in its efforts to obtain a meaningful settlement in the ongoing World Trade Organization (WTO) dispute between the territory and the United States in respect of that nation's Internet gaming laws that prohibit the provision of online gaming services to the US market.

Negotiators from the United States had held consultations with Antigua and Barbuda to discuss meaningful compensation for the hurt that Antigua and Barbuda claims was caused by the introduction of a number of laws criminalizing remote gambling services offered to American consumers. In 2006, Antigua and Barbuda-based providers held a 25% online gaming market share in the US.

In a landmark decision in 2004, the WTO agreed that these laws were in violation of the US's international treaty obligations. However, to date, the Government of Antigua and Barbuda has said that "it has been unable, despite sustained efforts, to either get the United States to comply with the WTO ruling or negotiate any reasonable compromise to settle the dispute."

Due to diminutive size of the Antiguan economy, its ability to impose sanctions upon the United States has been limited, as enforcement actions historically permitted in such cases are limited to trade sanctions. Due to the inferior size of bilateral trade between Antigua and the US in comparison to lost gambling sector revenues, it is said that any such action would fail to compensate the nation in a meaningful way.

Frustrated with the lack of progress achieved during consultations, Antigua and Barbuda decided to apply to the World Trade Organization, to allow it to retaliate, by suspending its obligations to the US in respect of the Trade-Related Aspects of Intellectual Property Rights (TRIPS) agreement. Antigua and Barbuda received a favorable ruling at the end of January, permitting it to obtain compensation worth USD21m annually by selling US-copyrighted merchandise without paying for rights usage. In response, the United States warned that Antigua's plans were tantamount to "government-authorized piracy" and warned that if implemented the mechanism would seriously undermine Antigua's efforts to attract foreign investment, particularly from high-tech industries.

Antigua and Barbuda has yet to use the collection mechanism it is now entitled to under WTO law, and hopes that the two territories may yet be able amicably resolve the spat.

At the end of its 24th inter-sessional meeting, which concluded on February 19, 2013, CARICOM announced its full backing for Antigua and Barbuda and called for the US to cooperate with the territory in its efforts to secure compensation, stating:

"The Caribbean Community affirms its full support for Antigua and Barbuda in its fight to obtain United States of America compliance with the ruling of the World Trade Organization (WTO) Dispute Settlement Body on the subject of cross-border provision of gambling and betting services."

"The Conference of Heads of Government calls on the US to settle the dispute with Antigua and Barbuda by honoring its obligations to respect international rules and by complying with the decision of the WTO in this matter. Those rules apply to all countries whether small, large, rich or poor. All countries must abide by their obligations within the Community of Nations in the WTO. The Community has stood with the US and the Community of Nations to defend the imperative of full compliance with internationally accepted norms and rules. However, in this case, the US must review its actions in the context of the principles referred to above."

"Moreover, as small developing Nation States, we have consistently worked for international cooperation and reaffirmed that all sovereign member states should be regarded as equals, and respected accordingly. In the current WTO dispute between Antigua and Barbuda and the US, we expect the US will fulfill its international obligations and engage Antigua and Barbuda in urgent, meaningful and constructive negotiations to arrive at a mutually acceptable settlement."

TAGS: compliance | tax | TRIPS | Intellectual Property | law | international financial centres (IFC) | copyright | enforcement | offshore | internet | gambling | offshore e-gaming | Antigua and Barbuda | United States | trade | services

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