WTO Finality: $21.1 Million per Year, No Appeals

A World Trade Organization arbitration panel has awarded Antigua and Barbuda a $21.1 million remedy in its dispute with the United States over U.S. laws against Internet gambling.

"While of course in our opinion the number is almost absurdly low, even in this context, the decision remains a very potent weapon."

- Mark Mendel
WTO Counsel

The award comes in the form of trade sanctions in the areas of services and intellectual property rights. The panel authorized Antigua to suspend its obligations to the United States in respect of copyrights, trademarks and other forms of intellectual property rights.

The United States is subject to $21.1 million in trade sanctions per year until it complies with the WTO Dispute Settlement Body's ruling, and the penalty is retroactive to April 2006, when the DSB issued its ruling.

Mark Mendel, lead counsel for the Antiguan government since the case began in 2003, today expressed mixed emotions over the ruling in a call-in press conference.

"While of course in our opinion the number is almost absurdly low, even in this context, the decision remains a very potent weapon; $21 million annually can add up over the years," Mendel said.

Antigua had asked for US$3.4 billion in retaliatory sanctions, but the U.S. Trade Representative countered, saying $500,000 was a more reasonable number. The panel arrived at the $21 million figure by assessing what Antigua could have made on horseracing in the U.S. market in 2006, Mendel said. Regardless, neither the United States nor Antigua can appeal the sanctions level awarded today.

The arbitration process was one for the record books as well. The panel assessed Antigua's damages based on a hypothetical form of compliance--that the United States could someday comply by allowing Antiguan operators to offer horse race betting in the United States--and one panel member dissented from the decision.

"There has never been a dissenting opinion in an [arbitration] context, and I think in the whole history of the WTO there have been maybe six or less dissents," Mendel said. "The decision of the panel to speculate on possible methods of compliance in the face of real and sincere disagreement between the parties over what would constitute compliance is simply incredible."

Mendel said he will discuss the decision with the Antiguan government in coming days and that they will decide after the holidays how to proceed.

Antigua now has the option of suspending certain trade obligations, but Mendel said this is not the remedy Antigua wants.

"Antigua dedicates a significant amount of limited resources to supervision and oversight and believes it should be able to offers these services (remote betting)," Mendel said. "It's been proven effectively over the years that these services are not any worse for people than any other kind of gambling services. Everything that we've done and each step of the way, after each victory we have followed it up with an offer to engage in negotiations (with the United States) to try to settle this thing and each step of the way that has not happened. So we've taken it to the next step. And we've taken it to the next step. And I think this reflects that. Would it be stronger if we had a warehouse full of DVDs? Sure, but that's just not the strategy the government has right now."

"Because the United States is already taking steps to bring itself into compliance by clarifying its WTO commitments with respect to Internet gambling, the Arbitrator's award issued today is not paramount."

- Sean Spicer
Spokesman for US Trade Representative

Unfortunately, Mendel said, Antigua is right back where it started.

The White House said it was pleased with today's decision and noted it was negotiating with Antigua and other countries on compensation following a decision to formally remove gambling from the services it has opened up.

Meanwhile, on Monday, the European Union accepted a settlement offer from the United States opening up services, warehousing, postal and research and development sectors.

Click here to view the WTO panel's report.