US-ANTIGUA GAMBLING DISPUTE RAISES SYSTEMIC ISSUES

The US recently announced its intention to appeal a WTO ruling in favour of Antigua and Barbuda in a case that the island state had brought against certain US measures restricting the cross-border supply of gambling and betting services from foreign operators (see BRIDGES Weekly 17 November 2004). The panel found that gambling restrictions at both the federal and state levels violated US market access commitments under the WTO's General Agreement on Trade in Services (GATS). The US however emphasised that it had clearly intended to exclude internet gambling from US services commitments made during the Uruguay Round negotiations under the category of 'other recreational activities'.

If the US proceeds with its plan to appeal the decision, this dispute could drag on for years. Even in the case that the US refrains from appealing this decision, it remains to be seen how a small island with a population of 76,485 such as Antigua and Barbuda can compel compliance from a major trading partner such as the US. US trade officials have, in fact, hinted that even if the US loses its appeal, it does not intend to change its rules to comply with the ruling. In this respect, this case brings to the fore some systemic problems associated with the use of the WTO dispute settlement system by smaller developing countries.

Within the context of the ongoing negotiations to improve and clarify the existing WTO rules on dispute settlement -- the WTO Dispute Settlement Understanding Review (DSU Review) -- developing countries have expressed concern about the difficulty of small developing countries to bring challenges against powerful developed ones for reasons related to the implementation stage of disputes as illustrated by this case. They have highlighted the point that under the current rules, it is almost impossible for small countries to compel major trade and aid partners to comply with rulings against them. Secondly, the opportunity afforded to the offender to hold off the implementation of decisions for years as a result of appeals and subsequent arbitrations further aggravates the injury being caused to the particular economic industry or sector. Moreover, the remedies available to successful parties are inadequate to cushion the injury caused or to merit an initiation of the dispute in the first place. To address these concerns, some developing countries have called for enhanced remedies such as monetary compensation, retroactive application of remedies, and the need for other developing countries suffering from the measures of the offending Member to join the original developing country complainant in retaliation -- the so called 'cross retaliation' remedy. Most of these proposals, however, have not been well-received by WTO Members in the ongoing talks.

The DSU special (negotiating) session is scheduled to meet from 25-26 November.

The panel report, WT/DS285/R, is available here.

A World Bank country profile of Antigua and Barbuda is available here.

"Don't bet that U.S. will lose," THE OREGONIAN, 15 November 2004: "WTO Publishes Final Decision on Internet Gambling; U.S. to Appeal," WTO REPORTER, 12 November 2004.