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Emily D. Swoboda
 

US Says Antigua's Compensation Claims are 'Disconnected from Economic Reality'

25 September 2007

While the United States met its Sept. 22 deadline with the World Trade Organization (WTO) to pay damages owed to Antigua and Barbuda (Antigua) over a four-year dispute, it said the Caribbean nation's claim was based on calculations that were "wildly disconnected from any official economic statistics, and thus disconnected from economic reality."

Antigua in 2003 filed a claim with the WTO against the United States over its unfair online gambling laws. Through several appeals at the WTO's Dispute Settlement Body, Antigua has emerged victorious, and the United States has failed to bring its laws into compliance with international trade policies.

Antigua has asked for $3.4 billion based on annual lost revenue because local online casinos cannot do business with U.S. customers. But the United States on Saturday said $500,000 was a more accurate figure.

"Antigua's request [for] suspension of concessions in the amount of $3.4 billion U.S. dollars is nearly four times greater than Antigua's entire gross domestic product, and at least 1,000 times higher than any figure that could be based on actual economic data," the United States said in its 25-page response filed on Sept. 19.

The WTO has extended the deadline to Oct. 22 so all parties can continue to negotiate, but the final decision rests ultimately with the WTO.

Antigua's next move, according to attorney Mark Mendel, is to seek authorization from the WTO to impose trade sanctions against the United States. Such sanctions could include the suspension of Antigua's copyrights, trademarks and industrial design and patent obligations to the United States, though an official claim has not been filed.

The United States maintains that it never intended to include Internet gambling in its commitment to the General Agreement on Trade in Services (GATS). It argues that it could not have known when it signed the treaty in the early 1990s that that online gambling would be a commodity. Thus, in May, it withdrew gambling services from GATS, opening itself up to compensation claims from any number of WTO members, which is exactly what happened.

The United States has since been in compensation negotiations with the European Union and other WTO members. On Saturday, the United States made an undisclosed offer to Brussels, which the Financial Times says includes "opening opportunities in the storage, warehouse services and technical testing sectors." It adds that these concessions are not thought to equate the estimated $4 billion that EU companies are losing. The WTO has been given until Oct. 22 to review the offer.

Meanwhile, Australia, which filed a claim in June, has reached a settlement with the U.S. government under Mode 3 of the WTO treaty, which will enable Australian investors to establish a commercial presence in U.S. casinos, said Jamie Strawbridge, a reporter for Inside U.S. Trade.

India has asked for an extension, but Strawbridge was unsure exactly how long of an extension they have requested.

Click here to view a copy of the United States' response to Antigua's claims.

US Says Antigua's Compensation Claims are 'Disconnected from Economic Reality' is republished from iGamingNews.com.
Emily D. Swoboda
Emily D. Swoboda