World Trade Organization Weakened by Internet Gambling Case
The office of the United States Trade Representative (USTR) has succeeded in increasing distrust in the US administration at a time when such distrust is already high in many parts of the world.
Several World Trade Organisation (WTO) Panels had found for Antigua & Barbuda, a small Caribbean island, that the US had made commitments on Internet gambling in its services schedule under the General Agreement on Trade in Services (GATS).
The US had repeatedly appealed this ruling first made in 2003 on the basis that it had made no such commitment, and repeatedly WTO Panels ruled against it.
Instead of complying with the rulings, on 4 May the US took the unprecedented step of notifying the WTO that it intends to remove the market access commitment covering Internet gambling based outside of the US from its services schedule.
Part of the US argument for taking this unprecedented step is that when it made the commitment, it had no intention of doing so.
In other words, having fought the case brought against it by Antigua & Barbuda on the grounds that it had not made a commitment to allow Internet gaming access to the US market, the USTR's office then turned around to admit that it did indeed do so, but now it is withdrawing it.
What is even more remarkable about this step is that, during the negotiations on trade in services that have been ongoing at the WTO, several countries have sought to withdraw commitments that they made on the basis that they did not intend to make them, largely because they did not understand the full implications of the commitments into which they were pushed.
The US has been one of the leading countries to reject this argument by the nations that advanced it, insisting that their commitments should hold.
Under the General Agreement on Trade in Services (GATS), if a country withdraws its commitments, other nations could seek compensation for any services trade opportunities that they could prove they lost through the change.
For this reason, developing countries in particular have not withdrawn commitments they may have made in error fearing the cost of compensation that would have been demanded from them.
However, while the government of Antigua & Barbuda has rightly indicated that it will file a claim for compensation from the US government through the WTO, the USTR's office has made an ambiguous statement about whether or not it will pay compensation to anyone.
Specifically, the USTR statement suggests that no country could have believed that it was the intention of the US government to allow Internet gaming access to its shores since its domestic laws were geared not to permit it.
In this connection, even though it has valiantly followed all the WTO rules and had fought and won its case several times, Antigua & Barbuda should not hold its breath that the US government will pay up compensation any time soon, if at all.
Indeed, right now it is not even clear as to what form compensation would take, since no country has ever gone to arbitration over the withdrawal of commitments under the GATS.
What is obvious is that the USTR's office intends to resist any claims for compensation.
Of course, Antigua & Barbuda is not the only country that could claim compensation.
The United Kingdom, where several Internet gaming companies were headquartered, should also have a sound case for demanding compensation particularly as a number of these companies were forced to close or had the value of their shares significantly reduced a few months ago when the US arrested top executives for violating US laws.
If the UK is to claim compensation, it would do so through the European Union Commission which jointly represents European Union countries at the WTO. In any event, Antigua & Barbuda should be encouraging the UK and other countries to press the case for compensation.
But, beyond all this, Antigua & Barbuda's experience should be trumpeted in all the committees of the WTO while the current Doha round of negotiations is ongoing at the WTO.
In particular the unfairness of the US withdrawal of its commitments under the GATS when it has refused to allow other countries to do so, should be highlighted and demands made for a change in the system.
The USTR's office said that its action does not weaken the dispute settlement process in the WTO because the US is choosing to bring itself into compliance with its WTO obligations instead of simply ignoring the WTO ruling and accepting possible retaliation from Antigua & Barbuda.
This, of course, is a legal argument, but it does not gainsay the moral ground that the US has lost by not complying with the rulings of the WTO Panels.
Further, despite all the legal arguments the USTR's office may make, its action has considerably weakened confidence in the dispute settlement process of the WTO.
Why would any country go through this expensive process only to have the rug pulled from under its feet when it wins? Indeed, it begs the more fundamental question: why join the WTO and be guided by its rules when big countries can withdraw commitments and not pay compensation to affected countries?
The principles involved in this matter go far beyond the dispute between Antigua & Barbuda and the US over Internet gaming; they strike at the root of fairness in the international trading system and the benefits of the WTO itself.
Sir Ronald Sanders is the author of this edtiroial and he is a former Caribbean diplomat who is now a corporate executive. He publishes widely on small states in the international community. You may write to Sir Ronald Sanders at: ronaldsanders29@hotmail.com regarding this article. |
