US Plans To Remove Web Gaming from WTO Commitments

US Plans To Remove Web Gaming from WTO Commitments

US plans to remove web gaming from WTO commitments
By Mark Drajem & Warren Giles

LONDON — The US has moved to “clarify” its commitments to the World Trade Organization, saying its ban on offshore Internet gambling isn’t part of its trade pledges.

The US action follows rulings by WTO judges against its ban. Antigua and Barbuda, a Caribbean nation of 80,000 people, successfully argued against congressional bans on US residents taking part in the estimated $12 billion global business.

“We did not intend and do not intend to have gambling as part of our services agreement” to the WTO, Deputy US Trade Representative John K. Veroneau told reporters in a conference call on Friday. “What we are doing is just clarifying our commitments.”

Antigua, the smallest government ever to lodge a WTO complaint, scored an initial victory against US online gambling restrictions when the WTO found in April 2005 that the US had pledged to open the industry to competition 10 years earlier.

The Republican-controlled Congress passed legislation last September that curbs financial payments from banks to offshore Internet casinos that are illegal under US law. The law was aimed at shutting down the payment system for Internet gambling and caused betting sites such as SportingBet Plc to cease US operations or sell them for nominal amounts.

Income for the 32 registered online casinos in Antigua and Barbuda has fallen to $130 million a year from $1 billion in 2000, when earlier US restrictions on online gaming were imposed, the Antiguan government says. The country developed online gambling to boost a tourism-dependent economy after several hurricanes in the 1990s.

Veroneau said Friday that the US never envisaged that the agreement to establish the WTO in 1994 included any rules about its gambling laws.

“This is not a question of the US rethinking its commitments,” Veroneau said. No “WTO member could have reasonably thought that the US was agreeing to commitments in direct conflict with its own laws,” Veroneau said.

Under WTO rules, a country can withdraw commitments to open its services market to foreign investors. It can’t opt out of tariff cuts. The US must now negotiate with any countries that object to the move and want to withdraw any of their commitments as compensation.

Advocates for Antigua’s gaming companies said Friday that the US is opening a Pandora’s Box, and may establish a new route for countries to get out of pledges to open their borders to US banks, insurance companies or other financial services firms.

“I am disappointed to see our country lead a degradation of the system,” said James Jochum, a partner at the law firm of Mayer, Brown, Rowe & Maw LLP in Washington and former Bush administration official. Jochum represents the Antigua Online Gaming Association. “The implications are so serious because of the precedent it sets.”

Other observers said the real implication of the gambling case was to make countries wary of any pledges they made to the WTO, because they may be expanded by judges in Geneva.

Countries first reaction may be, “Maybe I shouldn’t be so hasty to write things down,” said Robert Vastine, president of the Coalition of Service Industries, which represents banks and insurance companies. Still, “I would be surprised if” this move by the US “were seen as opening the floodgates to wholesale recommitments on services,” Vastine said.

While the Bush administration is moving to block WTO-imposed legal changes on this issue, lawmakers such as Representative Barney Frank, the Democratic chairman of the House Financial Services Committee, are moving legislation to allow online gambling in the US, loosening a ban enacted last year.
The legislation would allow Americans to bet online with licensed Internet operators. “This is a kind of libertarian, let-people-have-fun kind of thing,” Frank said last month.

On Friday, Nevada Representatives Shelley Berkley, a Democrat, and Jon Porter, a Republican, introduced legislation calling for a one-year federal study of online gambling technology and regulations that would be a “blueprint” for lifting of the US ban.

Source: Caribbean Net News, May 5, 2007

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