EU online gambling firms demand $100 bil in WTO dispute
US thumbs nose with comical settlement offers
The long-running, occasionally tragicomic trade dispute between America and tiny Antigua at the WTO over the cross-border provision of gambling services has sputtered into the settlement phase, according to CasinoGamblingWeb.
Although Antigua has roundly defeated its lumbering, puritanical northern neighbor at every step of the way in its WTO case, the US still seems disinclined to address the WTO ruling seriously. The current administration seems content to drag its heels as long as it can, in the hopes, as always, of foisting difficult policy decisions off on whatever administration has the misfortune to follow.
The case originated back in 2003 after the prosecution of Jay Cohen, an expatriate American who ran a sportsbook out of Antigua called the World Sports Exchange, and ended up doing time in a federal prison - in Las Vegas, of all places - for violation of the Wire Act. The high profile prosecution led the Antiguan authorities to file a formal complaint with the WTO, because the US continued to allow US companies to offer various forms of remote domestic gambling while aggressively prosecuting Antiguan companies under legislation originally drafted to fight the mob. A fuller treatment of the case can be found here, but, suffice to say, the WTO sided with the Antiguans.
The ramifications of that defeat are still rippling around the world, and major American trading partners such as the EU and Japan have begun lining up behind the Antiguans in defense of WTO principles. Potential damages are really starting to pile up - the AP reported today that EU online gambling firms are pressing for $100 bil in damages.
Traditional trade sanctions would do little for a small country like Antigua, so the WTO rules allow smaller countries the option of suspending their own WTO commitments, and the Antiguans have been threatening to suspend their intellectual property obligations to the US. That in turn ultimately caught the attention of powerful Silicon Valley and Hollywood interests, and last week the mainstream American press suddenly discovered that something important was happening.
Antigua filed a claim with the WTO for $3.4 bil to compensate the little island nation for the economic fallout resulting from repeated American legal attacks on Antigua-based internet gambling providers. The US has countered with an offer of - ahem - $500,000. The EU, however, is the largest and most dynamic online gambling market in the world, and the US is trying to buy that claim out by offering to liberalize such dynamic, hot-growth economic sectors as warehousing and storage services.
As Mark Mendel, lead attorney for the Antiguans, told El Reg, "But anyway, the U.S. in its submission said our damages were only $500,000 a year. Our $3.4 billion claim is per annum from April, 2006. In the WTO system, you cannot get compensation for past harm, it is only starting with the end of the supposed compliance period. I feel pretty good about our numbers, and I think the U.S. typically shot themselves in the foot by being so cavalierly dismissive of our claims with that ridiculous number. But, we shall soon see — a decision will be out by the end of November."®
Burke Hansen, attorney at large, heads a San Francisco law office
I can't see Antigua getting invaded or labelled as part of the Axis of evil (but then what do I know?) on the back of this but can someone convince me that a covert coup in Antigua a la Operation Ajax would not end this problem for the US?
They've already lost the case, and the appeal - they're just trying to ignore it in the hope it'll all go away.
Given the way things are going, it's going to cost them an arm and a leg if they don't pull their thumbs out and make a reasonable offer of recompence.
EU & Beyond
It occurs to me the the optimal approach is for the whole world to adopt the same strategy in Antigua - suspension of IP obligations. The US is uniquely vulnerable to this, because so much of its exports these days are IP - music, video, software, technology - stuff which other nations can make for themselves at zero cost by simply copying what the US has already sold them.