U.S. Trade decision to clarify WTO commitments could have wide-ranging impact

The U.S. decision to clarify its World Trade Organization commitments to not include Internet gambling could have far-reaching effects, according to legal analysts.

"It opens up a slippery slope," said Joseph Kelly, professor of Business Law at Buffalo State. "This is one of the first times this has been done, and it's going to require a long period of comment and other countries are going to be able to express their opinions on this."

The U.S. is invoking Article XXI of the General Agreement on Trade in Services (GATS) to clarify its commitment of "recreational services" to exclude Internet gambling. The move is a response to a loss of a dispute in the WTO with Antigua, which argued that the U.S. was taking a protectionist stance in regards to Internet gambling in allowing its citizens to make interactive interstate wagers on horse races and lotteries while barring offshore companies from taking bets from U.S. customers.

"We never believed that we had this obligation," said an official from the Office of the United States Trade Representative (USTR). "We certainly never intended to make this obligation, and the dispute settlement panel agreed with us, that we'd never intended to make this obligation."

The U.S. filed its modification last Friday and it was circulated by the WTO Secretary on Tuesday. There is now a 45-day process in which nations may notify the WTO if they believe they have an economic claim as a result of the modification.

"It's absolutely one of the most incredible conclusions that I've heard," said former Senator Alfonse D'Amato, Chairman of the Poker Players Alliance. "The next thing you know we'll decide to take steel and say that it was included there by mistake."

D'Amato, who admits he had doubts about the WTO when the U.S. joined the trade alliance in 1993 while he was in the Senate, has changed his opinion on the organization in recent years. And he's worried about the international perception that since the U.S. isn't happy with the recent ruling on the side of Antigua, that it is simply changing the rules to fit its circumstance.

"It shows an arrogance and contemptuousness, which is not good for the diplomacy of the United States -- whether it's trade or any other matters," D'Amato said. "And that's how we'll be characterized, as being contemptuous to the rules."

D'Amato went on to say that other nations may use the same tactic if they weren't happy with how the WTO ruled in cases involving the U.S. Some critics have implied that China could do something similar in a copyright dispute that the WTO is considering.

"This is a unique circumstance regarding the scope of a commitment," said a USTR official, referring to the Antigua case. "Disputes generally aren't about whether someone has scheduled a services commitment in a particular area. I don't think there's ever been such a dispute. It's a very unique circumstance, so it's just wildly wrong, frankly."

Once the 45-day comment period ends, the U.S. will have three months (that may be extended) to negotiate compensatory adjustments with nations that feel they will suffer damages from this clarification.

"There's very little we can say until day 45, because we don't know who is going to make a claim," said the USTR official.

D'Amato believes that the U.S., however, will eventually have to bow to the pressure of the international community which is increasingly regulating Internet gambling.

"I'm not suggesting that it tops the international trade issues or the international issues that we face," D'Amato said. "But I will suggest that it's going to grow, and it's a poor example of the United States picking and choosing to enforce laws that it likes while blatantly disregarding laws with an arrogance and contemptuousness. We look like ugly Americans when it comes to choosing to disregard valid laws that we agreed to."