U.S. Seeks Release from Duty to Allow Net Gambling
The U.S. govt. has filed with the WTO to get out of its duty to give foreign Internet gambling operators access to American bettors, officials told reporters Fri. A WTO appeals body recently ruled against the U.S. on the point in a dispute with Antigua (WID April 2 p4). The panel agreed that the U.S. hadn’t meant to open itself to online gambling through the 1993 Uruguay round of the General Agreement on Tariffs & Trade (GATT) -- but ruled that’s what the agreement requires, said John Veroneau, deputy U.S. trade representative (USTR).
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The U.S. wants to modify or withdraw a service commitment under Article 21 of the GATT agreement. The process will take “roughly 6 months” after a 45-day comment period, unless the U.S. gets extensions, a USTR official said. Other countries can file claims of interest within 45 days.
If claims are submitted, the U.S. and countries filing would hold talks for 3 months on “compensatory adjustment” to balance out the loss of gambling business in the U.S. If they can’t resolve the dispute, it would go into arbitration for 3 months. If the U.S. loses there, a complaining country could impose “some form of restriction” on its service commitments to the U.S., proportionate to its loss of gambling business, the official said.
The procedure has been used only once, by the EU in 1995 when the body was adding members; failure to resolve Internet gambling differences would lead to the first arbitration requested under Article 21, the official said.
No one thought the U.S. was giving thumbs-up to Internet gambling through GATT, the USTR told the WTO. The definition of “recreational services” in the 1993-1994 U.S. “schedule” under the treaty was loose enough that it didn’t “explicitly” include or exclude Internet gambling, Veroneau told reporters. “It never occurred to us” that anyone would assign the U.S. legal responsibility until Antigua filed its case, he said: “Clearly it was an oversight” in the Uruguay round of drafting. The U.S. will “clarify” its intent in the WTO filing, Veroneau said.
The timing of the U.S. move has nothing to do with Rep. Frank’s (D-Mass.) bill to allow Internet gambling with opt- out provisions for states and sports leagues (WID April 27 p1), the other USTR official said. The U.S. respected the multiyear litigation process with Antigua “and we're at the end of the litigation,” Veroneau said, explaining USTR’s timing.
The U.S. doesn’t assume that it would need to compensate Antigua for putting American customers off-limits to that country’s gambling operators if it escapes its WTO obligation, Veroneau said. Compensation typically is provided when a country admits it has an obligation from which it seeks to withdraw. “There’s no negotiating history suggesting that a commitment from the U.S.” to allow foreign- operated Internet gambling “was ever sought in this area,” Veroneau said.
The issue isn’t whether Antigua was making money on U.S. customers, but whether it had a “reasonable expectation” that the U.S. was signaling a relaxation of federal law concerning remote gambling, a USTR official said: “We've gone to great pains at every step in the process” to explain the long-held U.S. position. “It doesn’t matter” that online wagering for horse racing has a carve-out in federal law, another official said.
WTO rulings won’t be undermined by the U.S. effort, the first official said. “We are actually taking a procedural step to bring ourselves into compliance” with the WTO, the official said: “This is the most transparent way for us to respond” to the appellate body ruling, and won’t set “a precedent for misuse of Article 21.” The official said the Internet gambling dispute arose from a “unique set of circumstances” affected by U.S. policy and law-enforcement concerns. The U.S. gave Antigua a “heads up” on its WTO move, the official said, and there’s nothing in Article 21 stopping WTO members who weren’t in the Uruguay round from filing claims against the U.S.