WTO To Rule On Antigua And Barbuda's Compensation Claim Against US

by Amanda Banks, Tax-News.com, London

27 July 2007

A World Trade Organisation Dispute Resolution Panel is set to begin examining Antigua and Barbuda's case for compensation from the United States, in respect of the latter's illegal restrictions on the online gaming industry.

According to reports, the WTO announced on Tuesday that it would begin arbitrating on the protracted dispute in response to a request sent by the United States government on the previous day, which outlined its objection to Antigua's $3.4 billion compensation demand, labelling it as "patently excessive".

In the statement to the WTO panel, the US government argued that the amount sought by Antigua & Barbuda in compensation is several times higher than the jurisdiction's gross domestic product.

Antigua and Barbuda, a tiny twin-island federation in the Caribbean, is seeking restitution from the US because of new laws there which prohibit banks and credit card companies from processing transactions between American gamblers and online gaming sites based offshore, which the WTO has ruled are in breach of global trade rules. Although small geographically, Antigua & Barbuda has grown to become one of the largest offshore gaming domiciles, and its government argues that the US ban has effectively shut down a large component of its economy.

It is said that America accounts for some 80% of the global e-gaming market, and according to the Antiguan government, income has fallen to $130 million a year from $1 billion among the jurisdiction's online casinos in 2000, when earlier US restrictions on online gaming were imposed.

If given the go-ahead by the World Trade Organisation, Antiguan finance minister Errol Cort has said that the compensation would take the form of withdrawing intellectual property protection for US trademarks, patents and industrial designs.

In April 2007, a World Trade Organization Dispute Resolution Panel concluded that the US has failed to comply with a 2005 ruling that it should change its legislation banning payments to offshore gaming web-sites. The original ruling had been confirmed by an Appeals Tribunal in 2006, but Antigua & Barbuda was forced to go back to the WTO when the US failed to do anything to comply with the ruling.

The latest arbitration process on the level of compensation is expected to take around two months.

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