European Union Joins Antigua in WTO Case Against US

by Lou on June 20, 2007

When tiny Antigua, population 70,000, won its battle at the World Trade Organization (WTO) against the United States, and won again when the US appealed that decision, it was no big deal to the world’s largest economy. After all, if Antigua applied trade sanctions as a legal response against the US, it would be the equivalent of a flea attacking an elephant.

In the case brought by 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.”

Instead of appealing its latest loss at the World Trade Organization, the United States decided to withdraw from its obligations regarding gambling and betting services. Under WTO treaty obligations, this leaves the US open to damage claims from any WTO member adversely affected by their withdrawal. Those claims must be resolved through a negotiated settlement or arbitrated before the US may withdraw their commitment.
The big question that remained was what would happen next. The usual kind of sanctions imposed in trade disputes would not be meaningful because Antigua is too small to have an impact on the United States.
But now Antigua has a bigger weapon in hand. The world’s largest consumer market, the European Union, recently joined Antigua in seeking compensation. Compensation is sought because the effect of American protectionism on EU nations was to deny these nations a fair chance to compete for market share in the field of online gaming. The fact that the Unlawful Internet Gaming Enforcement Act (UIGEA) provided cut-outs for online horse racing and fantasy sports leagues added insult to injury. UIGEA is viewed worldwide as an act of protectionism, and contrary to US treaty obligations under the WTO.
What began as a trade dispute between the US and Antigua now shows all the signs of blowing up into a bigger brouhaha, one involving the US, Antigua, and the entire European Union, with lots of money and economic leverage at stake–not to mention your freedom to play online poker in the privacy of your own home.

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