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WTO online gaming ruling could be trouble, says think tank

Published:Tuesday | February 12, 2013 | 12:00 AM

The Center on Hemispheric Affairs (COHA) says the recent decision by the World Trade Organization (WTO) siding with Antigua and Barbuda against the United States in their online gambling dispute "presents a troubling scenario" for Washington.

"If the United States claim that the world's 15th smallest economy is engaged in some form of economic bullying, attempting to force its hand in altering gambling laws by increased pressure from Hollywood lobbies, seems farcical, then so be it," said COHA, a Washington-based think tank.

"American corporations largely have taken advantage of the swelling international tribunal system that encourages investor to state relations, and Washington has controversially promoted such terms in its recent free trade agreements.

"Now, Washington is experiencing the other side of international trade regulations, and if a reward of US$21 million to Antigua and Barbuda does not prompt a recalculation of US trade policy in this part of the Caribbean, perhaps US$8 billion in litigation arising from Chinese complaints will," COHA said.

In its final ruling, the WTO has allowed Antigua to suspend certain concessions and obligations it has under international law to the United States in respect of intellectual property rights.

For nearly a decade, the small Caribbean island has sought to resolve the dispute with Washington over its failure to abide by American treaty obligations on remote gaming.

Fair and reasonable solution

The Baldwin Spencer administration described the WTO ruling as a "fair and reasonable solution," adding that it offers legal retribution over Washington's refusal to let Americans gamble at online sites based in Antigua.

Trade analysts speculate that Antigua's action may involve offering downloads of American intellectual property, such as Hollywood films, network television shows or hit pop songs.

But the US has warned Antigua against its proposed plan, saying it could hurt trade relations between the two countries.

"If Antigua does proceed with the unprecedented plan for its government to authorise the theft of intellectual property, it would only serve to hurt Antigua's own interests," said Nkenge Harmon, a spokeswoman for the United States Trade Representative.

"Government-authorised piracy would undermine chances for a settlement," she said.

But with an economy mired in public debt, COHA said "there is no question that Antigua could use the additional revenue," noting that St John's is currently participating in a 36-month standby agreement with the International Monetary Fund "after a bruising 2008 financial crisis turned into the banking crisis of 2011".

Yet, COHA said, it is still unclear whether the WTO dispute is "a legitimate step toward St John's sponsoring an online piracy haven or if these contenders are using the edict as an American response to illegal gambling".

"It is far more likely that reality in this instance lies closer to the latter as Washington has ample reason to make amends with St John's gambling strategies," said COHA.