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US Lawmakers Urge Administration To Pull Back From Brink On Internet Gambling Dispute

by Leroy Baker, Tax-News.com, New York

21 November 2007


A group of influential US lawmakers are urging the Bush administration to review its policy on internet gambling, arguing that new legislation easing restrictions on the activity in the US is preferable to paying off the country's trading partners, and potentially unraveling a complex and fragile set of WTO agreements and commitments.

The Congressmen, who include House Financial Services Committee Chairman Barney Frank, House Judiciary Committee Chairman John Conyers and six others, have made their views known in a letter to US Trade Representative Susan Schwab, which has criticised the administration's apparent obstinance, in refusing to overturn legislation which effectively shut off certain types of internet gambling and blocked access for foreign gaming firms to the lucrative US market, despite WTO rulings that the US breached trading rules by doing so.

"Your agency has chosen not to consult with Congress, but instead to take what we view as a drastic step which could have significant consequences for the whole WTO (World Trade Organization) system," the letter stated.

"We are writing to express our interest in considering possible legislative solutions that might restore US compliance with the GATS [General Agreement on Tariffs] without renouncing any of our commitments under that agreement," the legislators added.

The US is facing compensation demands from several major trading partners, including the European Union, India, Japan, Costa Rica, Macao, Canada and Australia after withdrawing from its WTO commitments in respect of internet gaming to sidestep a negative WTO ruling, the result of a complaint from Antigua & Barbuda, a major domicile for global e-gaming companies.

Under WTO procedures, and following two failed sets of negotiations, the US now has until 14 December to respond to the compensation demands. If the talks fail again, the EU and its allies can demand binding arbitration.

However, Frank, Conyers and the other lawmakers believe that the time has now come for the US government to accept that it was wrong to sanction the Unlawful Internet Gambling Enforcement Act, passed in 2006, and back legislation re-opening the internet gaming industry in the US. Carrying on down the current road, they argue, will be "expensive to the US economy" and damage America's credibility as a trading partner.

Trade law experts have also warned that by withdrawing from its commitments, the US government is setting a dangerous precedent.

A comprehensive report in our Intelligence Report series examining offshore e-commerce and online 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

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