Internet Gaming: The US-Antigua and Barbuda contention

Sir Ronald Sanders

Saturday, November 05, 2016

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For over 12 years, the governments of Antigua and Barbuda and the United States have been involved in a contention over an award by the World Trade Organization (WTO) in favour of Antigua and Barbuda over Internet gaming.

In March 2004, an arbitration panel set up by the WTO found that the United States had violated its commitments under the General Agreement on Trade in Services (GATS) to allow cross-border access to its market for Internet gaming. The adjudication by a WTO panel that Antigua and Barbuda has been deprived of trade revenues was upheld three times by the Appeal Tribunals.


What now exists is a contention over a satisfactory compensatory proposal from the US that would cause Antigua and Barbuda not to implement the WTO award it has been granted. The award authorises Antigua and Barbuda to sell US copyrighted material without having to pay royalties/fees, up to a value of US$21 million a year, until the US offers a proposal acceptable to Antigua and Barbuda, either to settle the matter or to allow access to its market for Internet gaming.


At any time that the Government of Antigua and Barbuda determines that the discussions it has been holding with the US Trade Representative’s Office (USTR) are fruitless, it can notify the WTO of its intention to implement the judgement and to market US intellectual property without copyright up to US$21 million a year.


Antigua and Barbuda has both a moral and a legal right to compensation from the US. It is the US that has violated its international treaty obligations; not Antigua and Barbuda. Indeed, in 2003, the Antigua and Barbudan Government, under then Prime Minister Lester Bird, entered good faith consultations with the US to rectify the loss of trade revenues and the damage to the economy. Only after the US declined to provide compensation did Antigua and Barbuda reluctantly ask the WTO to arbitrate the matter. Successor governments, led by former Prime Minister Baldwin Spencer and present Prime Minister Gaston Browne, have demonstrated great forbearance over the years since 2004.


The moral right


With respect to the moral right, a tiny country with a population of less than 100,000 people and a gross domestic product (GDP) of US$1 billion has found itself at a trade disadvantage, damaging to its economy, because, for over 12 years, the US with a population of 350 million people and a GDP of US$17,947 billion has not found it possible either to reach an acceptable settlement or to allow market access.


In addition to not compensating Antigua and Barbuda for its significant loss of revenues, jobs and economic growth, the US has collected the sum of US$1,209,312,776.91 in fines, forfeitures and seizures from persons and operators in Antigua and Barbuda up to 2015.


The US has also benefited from a surplus of trade in goods from Antigua and Barbuda over the period 2004 to 2014 in the sum of US$1.892 billion.


Adding the trade surplus in goods to the sum the US gained from penalties, seizures and fines imposed on Internet gaming individuals and businesses that operated in Antigua, the US gain over the period of this controversy is US$3 billion.


Over 11 years (2003-2014) of the Internet gaming impasse, US aid to Antigua and Barbuda amounted to US$8.5 million or an annual average of US$776,669.00. More than 90 per cent of this money went to military training from the US Department of Defence, primarily for counter drug trafficking. When this sum is deducted from the US trade surplus with Antigua and Barbuda, the US still benefits by US$1.88 billion.




The legal right


Antigua and Barbuda is asserting a legal right awarded to it by the WTO, the competent legal authority empowered by 164 nations of the world and recognised by treaty, to provide a legal and institutional framework for the implementation and monitoring of trade agreements (such as the GATS), as well as for settling disputes arising from their interpretation and application.


In pursuing its right, Antigua and Barbuda, as the injured party, is doing nothing more than following the law and respecting the authority of the WTO. If Antigua and Barbuda is forced to implement the award of the WTO it would be exercising a legal right just as the US has done in relation to many other countries when arbitration decisions have been made in its favour.




What prospects for a settlement?


Antigua and Barbuda remains determined to reach a settlement that rectifies its loss of trade revenues. Every diplomatic effort is being made to show the United States that US$21 million a year is the paltry sum of 0.000001 per cent of its GDP; indeed, the loss to the Antigua and Barbuda economy of U$$217 million from 2007 to now is a mere 0.0012 per cent of one year of the US GDP – in other words, it is nothing to the US, but it is significant to Antigua and Barbuda.


Discussions with the US Government are ongoing. The US wants to withdraw its international commitments under the GATS and to restrict its market for Internet gaming to its domestic operators only. But it cannot do so until Antigua and Barbuda agrees. There is no likelihood of such an agreement until a settlement is reached.


The US has been trying to guard its intellectual property from predators, and it would be troubled by Antigua and Barbuda exercising its legal right to sell US copyrighted material without paying fees. Antigua and Barbuda understands and sympathises with the US position. Therefore, if the Government decides to implement the WTO award and to market US intellectual property without the payment of copyright fees, it would only be because it is forced to do so by the absence of an acceptable settlement. There is a growing possibility of this happening as the level of frustration rises.


The US utilises the WTO dispute settlement machinery more than any other country; it values the organisation and expects its decisions to be upheld. Therefore, given that the grave and serious loss to the Antigua and Barbuda economy since 2007 is 0.0012% of one year of the GDP of the US, it is entirely within the capacity and interest of the US to settle the issue in a mutually satisfactory way.


Equity, fairness and the law would suggest that the US should bring this protracted matter to an end, particularly as it has a vested interest in preserving the standing of WTO decisions. And, as President Barack Obama has pointed out at the United Nations on several occasions, right should not be ignored by might.





Sir Ronald Sanders was Antigua and Barbuda’s ambassador to the World Trade Organization when the case against the United States was first won in 2004. He has been appointed by Prime Minister Gaston Browne and the Cabinet, since August 2016, to lead negotiations with the US on the matter. He is
an international affairs consultant as well as senior fellow at Massey College, University of Toronto, and the Institute of Commonwealth Studies, London. He previously served as ambassador to the European Union and high commissioner to the UK. The views expressed are his own. For responses and to view previous commentaries:
www.sirronaldsanders.com
.


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