Antigua vs the USA; what’s next?

by Lou on April 7, 2007

Last week the World Trade Organization (WTO) ruled that the unilateral prohibition imposed by the US on offshore Internet gambling is illegal.

In a case brought by the tiny Caribbean nation of Antigua and Barbuda against the United States, the WTO’s appeals panel judgment said that the United States “had an opportunity to remove the ambiguity between legal betting on horse racing across state borders and strictures and prohibitions on other types of gambling but instead, rather than take that opportunity, the US enacted legislation that confirmed that the ambiguity at the heart of this dispute remains.”The big question is what will happen next. The usual kind of sanctions imposed in these situations will not be meaningful because Antigua, with a population of less than 80,000 is too small to have an impact on the United States.

But the WTO has a provision for just such contingencies, designed to prevent big bullies from simply ignoring their trade disputes adjudicated before the WTO.

Antigua can ask that sanctions be imposed on the US. The most likely and most damaging would be authorization by the WTO to withdraw overseas protection for US trademarks and copyrights. Called “cross-retaliation,” the United States would feel its impact because it would be tantamount to approval by the WTO of Antigua inviting all the world’s software pirates to set up shop on their warm, sun-drenched shores.

This is something Microsoft and dozens of other multinational software firms would not like at all, and would quickly make their views known to the United States.

Moreover, other nations with a legal and regulated online gaming presence, such as the UK, might stand behind Antigua and lend them support in their efforts.

No one wants to see an escalation to cross retaliation, and it’s impossible to tell if this dispute will play out in this manner, but Antigua, while small, is not without a few big sticks to wave at the United States.

I’m not going to venture a guess, but I’m hoping that a change of administrations here in the US in 2008 will result in movement toward accommodating the rulings of the WTO, before this issue escalates completely out of control.

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