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US defeated by Antigua in WTO Internet gambling case

written May 22, 2007

At a meeting of the World Trade Organisation held today, the United States conceded defeat in its long-running battle with the small Caribbean nation of Antigua and Barbuda and announced it would not be appealing the most recent adverse decision rendered by a WTO dispute panel. As expected, however, the United States announced that it had initiated action to withdraw its treaty obligations with respect to gambling and betting services in an attempt to preclude Antigua and other nations from capitalising on the WTO decisions in favour of Antigua.

In a statement delivered to the WTO membership today, Antigua’s Ambassador to the WTO, Dr John W. Ashe, stated that this tactic was not going to work and that Antigua would press on with its remedies at the WTO: “There is something clearly wrong with the concept that after a long, difficult struggle covering years of dispute resolution at the WTO an offending member could ultimately avoid the consequences of its loss by withdrawing the commitment that gave rise to the claim in the first place. As far as we are concerned, our dispute has been resolved and the United States remains obligated to comply,” said Dr Ashe.

At the meeting, the delegation of Brazil declared its unequivocal support of the Antiguan position, making clear that the actions of the United States in the case threaten the integrity of the entire dispute resolution system, particularly with respect to small and developing countries. India expressed similar concerns while the European Union noted its disappointment that the United States had failed to engage Antigua and other concerned countries over a reasoned approach to the provision of these services.

The US action to withdraw its commitment now leaves it open to claims for damages from all WTO members who may consider themselves adversely affected by the withdrawal. Under WTO procedures, any member can file a claim, all of which must either be resolved by agreement or arbitrated before the United States can actually withdraw the commitment. These claims could potentially run into many billions of dollars of trade concessions that US trading partners could impose against the United States in virtually any sector, a result that could see US producers of goods and services having nothing at all to do with gaming facing large trade barriers from American trading partners such as the European Union.

“While we will not know until the filing deadline in mid-June,” said Mark Mendel, Antigua’s legal advisor in the case. “We have heard rumblings that substantial trading partners such as the EU are seriously considering filing claims for compensatory adjustments. The potential adverse impact upon completely unrelated American business interests could be massive.”

In his presentation to the WTO today, Dr Ashe expressed his particular disappointment that the United States had not seen fit to negotiate with the Antiguan government over any compromise, despite Antigua’s belief that a compromise was possible. “In a system that is replete with references to good faith, fair dealing and cooperative resolution of disagreements, it is the failure of the United States to engage with Antigua that is most troubling,” said Dr Ashe. “We are unable to understand why there was no effort to find some middle ground. We ourselves were and remain ready to find a fair and reasonable solution. But we need the other side to show up to do so.”

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--EOG