BNA Inc., WTO Reporter
Antiguan Minister Says U.S. Rule Change
Needed to Comply With WTO Gambling Ruling
GENEVA--The United States must lift a ban on the cross-border provision
of Internet gambling services in order to bring its practices in line
with its World Trade Organization commitments, a senior official from
Antigua and Barbuda told the trade body May 19.
Antiguan Finance Minister Errol Cort told a meeting of the WTO's Dispute
Settlement Body that a mere "tweaking" of U.S. legislation would not be
enough to bring the United States in compliance with a WTO ruling
partially condemning the ban on remote gambling, as U.S. officials
contend.
"To comply with the ruling, the United States must give Antigua market
access for the provision of gambling and betting services," Cort
asserted. "This should not be a difficult or time-consuming task.
The Antiguan minister added that his country accepts that online
gambling should be subject to regulation and was prepared to cooperate
with the United States on rules that would give Antiguan operators
"fair, reasonable and responsible access to the enormous gambling market
in the United States."
U.S. Pledges Compliance With WTO
On April 7 the WTO's Appellate Body upheld an earlier panel ruling
backing Antigua's claim that the United States had, contrary to its
assertions otherwise, included specific commitments on market access for
cross-border gambling and betting services in its WTO services schedule
(67 WTO, 04/8/05 ).
The Appellate Body also maintained--but only in part--the panel's
rejection of U.S. claims that restrictions on cross-border gambling
services were justified under Article XIV of the WTO's General Agreement
on Trade in Services (GATS), which allows an exception from WTO services
commitments for trade-restrictive measures deemed "necessary to protect
public morals."
The Appellate Body agreed with the United States that three U.S. federal
statutes in question--Section 1084 of Title 18 of the United States Code
(the Wire Act), Section 1952 (the Travel Act) and Section 1955 (the
Illegal Gambling Business Act)--were all measures necessary to protect
public morals. Nevertheless, the Appellate Body concluded, on narrow
grounds, that the U.S. ban was applied in a discriminatory manner in
violation of WTO rules.
The United States informed the DSB meeting that it intends to comply
with the WTO ruling but did not spell out when or how it would do so.
Deputy U.S. Trade Representative Peter Allgeier insisted after the
Appellate Body verdict was issued that the ruling allows U.S.
restrictions on Internet gambling to remain in place. "This report
essentially says that if we clarify U.S. Internet gambling restrictions
in certain ways, we'll be fine," Allgeier argued.
The Appellate Body found that the United States failed to disprove that
an additional federal statute--the Interstate Horseracing Act--permits
interstate wagers to be accepted by an off-track betting system via
telephone or other modes of electronic communication (including the
Internet), as Antigua had claimed, thus discriminating between foreign
and domestic service suppliers in violation of the Article XIV
provisions.
Referring to this finding, the Office of the U.S. Trade Representative
said April 7 the United States "needs to clarify one narrow issue
concerning Internet gambling on horse racing" in order to comply with
the ruling.
Cort pointed out that the ruling addresses all forms of "remote"
gambling, not just Internet gambling, and that the United States would
have to ban all types of the former (including services such as
off-track betting) in order to justify its "public morals" exception.
"If our fellow members were not aware of it, the United States has
sanctioned domestic Internet and telephone account wagering services
that accept hundreds of millions of dollars in wagers each year," the
Antiguan minister declared. "There is extensive remote gambling on horse
races and other events and contests in the United States."
Cort said a May 16 U.S. Supreme Court ruling on interstate sales of wine
bolstered his country's claims in the gambling dispute. The Supreme
Court struck down state laws in Michigan and New York barring
out-of-state wineries from selling directly to consumers but allowing
such sales by in-state wineries.
"This case is remarkably analogous to our dispute and, we suspect, may
very well soon have an impact on the resolution of this dispute," Cort
declared. By Daniel Pruzin
