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Antigua Asks U.S. for “One Last Effort” to Avoid Retaliation in WTO Gambling Case

Tuesday, April 30, 2013
Sandler, Travis & Rosenberg Trade Report

The United States may be down to its last chance to comply with a World Trade Organization ruling against its ban on Internet gambling before being hit with unprecedented trade sanctions. The Caribbean island nation of Antigua and Barbuda has been fighting Washington on this issue for a decade and is now threatening to suspend $21 million worth of U.S. intellectual property rights, possibly by setting up a subscription Web site allowing users to download U.S. movies, music and software without having to pay royalties to the copyright holders.

Years ago the WTO ruled that the Internet gambling ban violates U.S. commitments under the General Agreement on Trade in Services. The U.S. responded by removing online gambling from the scope of those commitments and saying it never meant to include them. The WTO subsequently found that the U.S. had not complied with the initial ruling and granted Antigua permission to levy $21 million in retaliation, far below the $3.4 billion it had sought. Authorities did not want to resort to traditional measures such as higher tariffs on imported goods out of concern that they would be more harmful to Antiguan consumers than U.S. suppliers. Instead, they sought and obtained authorization to suspend concessions under the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights concerning copyrights, trademarks, industrial designs, patents and protection of undisclosed information.

A war of words between the two countries has escalated since Antigua brought its plan to the WTO in January. U.S. officials have called the plan “government-authorized piracy” and warned that it would “hurt Antigua’s own interests,” for example by serving as “a major impediment to foreign investment in the Antiguan economy, particularly in high-tech industries.” Finance minister Harold Lovell responded by acknowledging that the proposed cross-retaliation is “an extraordinary remedy” but asserting that Antigua had no other options because the U.S. “has completely refused to engaged with us seriously” and instead has continued its “relentless use of criminal proceedings and forfeitures to wreck our remote gaming industry.” Emphasizing that the WTO has authorized the sanctions, the country’s delegate to the WTO called Washington’s comments suggesting otherwise “intemperate and dismissive” and said they represent “a fundamental challenge to the WTO by its most powerful member.”

On April 25, Antigua signaled that it is prepared to proceed with its retaliation given the lack of any “substantial progress” in the last few months. The country’s WTO delegate said that the “destruction of the second-largest economic sector, together with the effects of the economic recession now gripping the world economy, are an existential threat” to the country’s economy and that Antigua has concluded that only utilization of the WTO’s authorization for cross-retaliation “will move this matter forward.” However, the delegate warned that once this step is taken it could have “far-reaching effects that may not necessarily be able to be contained.” He therefore called on the U.S. to “make one last effort at bringing its complex bureaucratic structure to a decision that will avoid unpredictable consequences.”

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