Trade Wars, Online Wagering, and Unforseen Consequences…

by Lou on April 4, 2006

Has America shot itself in the foot by ignoring the World Trade Organization’s ruling about its dispute with the tiny Caribbean nation of Antigua over online wagering?

The US was given an April 3 deadline to comply with the WTO, but opted to ignore it. Now that decision may come back to haunt the US in another trade dispute — this one concerns huge trading partner China, not tiny Antigua, and is not as easily ignored. Here’s the story. The Bush administration has accused China of violating global trade rules by imposing high taxes on auto parts from the United States and other countries, and plans to file a complaint against the Chinese with the WTO.

U.S. Trade Representative Rob Portman said “. . . China should be held accountable for its actions and be required to live up to its responsibilities.” But by ignoring the WTO decision about Antigua’s online gambling industry, has the US has provided China with ammunition they can use against us? From my perspective, it’s difficult to envision how we can ask for a favorable ruling in our dispute with China, while ignoring WTO rulings we don’t agree with, such as the decision rendered in our dispute with Antigua?

In the spirit of “what goes around, comes around,” one impact of the United States’ decision to ignore the WTO’s ruling in the Antigua case is that it will encourage countries such as China to give the United States a dose of its own medicine.

Now that April 3rd has come and gone and the US has failed to respond to the WTO deadline, we’ll see if this action results in unforeseen consequences during future trade disputes.

[For background material on the US/Antigua dispute about Internet gambling, just scroll down and you’ll find all of my previous posts on this topic].

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