Should Antigua retaliate against the US in gambling dispute?

Sunday, December 23, 2012

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The Government of Antigua and Barbuda is planning to resort to retaliation against the United States in an effort to force the US to comply with a World Trade Organisation (WTO) ruling that the US ban on cross-border Internet gambling services was not in compliance with its rules.

Antigua will be eligible to take such measures of retaliation as permitted by the WTO come 2013, and the eastern Caribbean island is contemplating suspending the intellectual property rights of the United States.

When a member state of the WTO is found errant by the Dispute Settlement Body (DSB), the offending party must come into compliance or offer some acceptable compensation. If not, the injured party can request to exercise its right to retaliation. In response to the request for retaliation the DSB, acting through an arbitration panel, can decide on the form and amount of that retaliation. The right of Antigua to take retaliatory action was already approved by a WTO arbitration panel in 2007.

Antigua intends to submit a formal request in January 2013 for the DSB to grant authorisation to move ahead in suspending up to US$21 million annually in intellectual property concessions to the US under the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS).

If Antigua takes retaliatory action it could be intended to either force compliance or to bring the long-running talks between the US and Antigua to arrive at a package to compensate Antigua for the losses of revenue from Internet gambling. If the parties can reach a mutually acceptable compensation package, then it would bring closure to further litigation.

Antigua has certainly been patient. On July 21, 2003, the DSB established a panel at the request of the Caribbean island. Both the panel and the Appellate Body found federal laws of the United States -- including the Wire Act, the Travel Act and the Illegal Gambling Business Act -- were in breach of US commitments under the General Agreement on Trade in Services (GATS), because they prohibited the cross-border supply of gambling and betting services.

The "reasonable period of time" for the United States to implement the DSB recommendations and rulings expired on April 3, 2006.

There is no doubt that the Government of Antigua has the right to retaliate against the United States and that it has been patient. Mr Robert 'Bob' Marley exhorts us to stand up for our rights and we admire Antigua's courage. But as the old adage says, one does not want to be dead right. The question is whether imposing retaliation on the US is going to be advantageous, given the enormous disparity in power between the US and Antigua and the extent to which Antiguan dependence on American tourists makes it vulnerable to United States displeasure.

This decade-old dispute could be settled quickly and easily by the US because the compensation to St John's is not likely to be significant enough to trouble Washington.

This would be a win-win for all' because the struggling Antiguan economy would benefit, and the United States would reap the moral and political benefits of setting the example of adhering to a rule-based international trading system, reiterating its friendship to the Caribbean and demonstrating its credo of helping the less fortunate.




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