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Emily D. Swoboda

Spectre of GATS Keeping U.S. in Interstate Gambling Game, Expert Says

15 January 2009

Meetings this week between Antigua and the United States trade representative could have far-reaching effects on the I-gaming industry, an international trade expert told IGamingNews Thursday.

It stands to reason that the United States would be eager to put an end to the lengthy negotiations, given that upon settling with Antigua, the United States would theoretically be able to withdraw gambling services from its commitments to the General Agreement on Trade in Services.

However, Nao Matsukata, a senior policy analyst at Alston & Bird, is not confident the parties will reach an agreement.

"If they don't reach a resolution, it won't be because of the United States," Mr. Matsukata said. The likely outcome will be that Antigua is still not satisfied with the United States' offer, he said.

Negotiations have been ongoing since January 2008, and unconfirmed reports that year said Antigua had requested more than $2 billion in compensation. But previously, the United States dismissed Antigua's request for $3.4 billion in damages during the initial dispute, saying it was "disconnected from economic reality."

If Antigua rejects the United States' compensation offer this week, and does not reach an agreement with the trade representative before Barack Obama's inauguration on Jan. 20, Antigua's negotiations for compensation would have to start over under the new administration, L. Errol Cort, Antigua's finance minister, told the Antigua Sun Wednesday.

At the same time, the United States would be unable to complete its withdrawal of gambling services from GATS, which would keep it obligated, under the W.T.O. treaty, to honor all trade agreements regarding interstate gambling for the time being, Mr. Matsukata said.

So, by the same token, not reaching a resolution could serve as a boon to a separate case between the European Union and the United States under consideration at the European Commission, according to Mr. Matsukata.

Clive Hawkswood, chief executive of the Remote Gambling Association -- which filed the complaint against the United States for violating the Trade Barriers Regulation -- said it may not affect his case, however.

"Presentationally and perhaps morally it would strengthen our case, but legally I don't believe it makes any difference," Mr. Hawkswood told IGamingNews Thursday. "One of the main bases for our complaint is that the U.S. should not be allowed to take retrospective action against E.U. operators for trade which took place while the U.S. GATS commitment was in place. So even if they had been able, or are now able, to withdraw their GATS commitment it wouldn't affect whether it was acceptable to take enforcement action against E.U. companies in the past."

Meanwhile, Kaye McDonald, Antigua's director of gaming, told IGamingNews Thursday that she has not yet received word about Wednesday's meeting.

Regardless, she added, she would not be able to comment on the meeting until she heard from Mr. Cort, Antigua's minister of finance, who has not yet returned to the island.

Spectre of GATS Keeping U.S. in Interstate Gambling Game, Expert Says is republished from
Emily D. Swoboda
Emily D. Swoboda