US SNUBS WTO RULING ON INTERNET GAMBLING

On 4 May, Washington announced that it was modifying its commitments related to "recreational services" and would not comply with a 2005 WTO ruling obligating the US to open its borders for gambling and betting from foreign operators.

The recent move is the latest development in an ongoing dispute between the US and Antigua and Barbuda. Four years ago the small Caribbean nation sued the US at the WTO for failure to comply with trading rules regarding cross-border internet gambling. In 2005, the WTO Appellate Body ruled in Antigua and Barbuda's favour, stating that the US market access commitments outlined in its Schedule attached to the General Agreement on Trade in Services (GATS) covering "other recreational services," included cross-border gambling and betting services (see BRIDGES Weekly, 13 April 2005, 17 November 2004, and 24 November 2004).

The US claims that the dispute dates back to misunderstandings from the 1993-1994 Uruguay Round negotiations. Deputy United States Trade Representative John Verneau on 4 May stated that the US never intended to include cross-border gambling, "it didn't occur to us that this could include gambling until Antigua brought this case in 2003." The US further issued a statement that it was 'clarifying' its commitment to cross-border internet gambling and betting. Washington believes this clarification will "dispose of the matter."

According to Article XXI of the GATS, Members are permitted to file modifications to their original schedule of commitments. This procedure has only been applied once before in the case of the EU's expansion from 15 to 25 member countries. Under this process, an affected country can claim compensation, subject to WTO arbitration.

According to GATS procedures, Antigua and Barbuda have 45 days from the US's notification of its intent to modify its commitment to file a claim seeking compensation. Should the parties fail to reach agreement on compensation, Antigua and Barbuda can refer the dispute to arbitration.

ICTSD reporting; "US Says Not Bound to WTO Gambling Action, Will Modify Commitment," AGENCE FRANCE-PRESSE, 4 May 2007.

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CHINA IP CASE: ADDITIONAL COUNTRIES JOIN US CHALLENGE

Japan, Canada, the EU, and Mexico have asked to take part in WTO consultations on the US's complaint against Chinese policies on copyrighted goods, such as books and DVDs. The four nations pointed to large and growing trade with China as their motivation for joining the case.

In mid-April of this year, Washington launched two separate complaints against Beijing. The first claimed that China was doing too little to enforce copyright and trademark protection on a wide range of goods, such as books, CDs, and DVDs, setting an unacceptably high bar for punishing copyright infringements with criminal prosecution. The second complaint argued that the Chinese government's requirement for books, journals, movies, and music to be imported by state-approved or state-run companies, contravened WTO rules and served as a trade barrier by preventing US companies from determining how their products enter the country (see BRIDGES Weekly, 18 April 2007).

All four countries have asked to join the first complaint. To date, only the EU has asked to participate in the consultations on the second.

If unable to resolve its differences with China in the 60 days after the start of consultations, the US will be allowed to seek the establishment of formal panels to rule on both disputes. In this case, Japan, Canada, the EU, and Mexico could become co-complainants, if they chose to do so and were accepted as such by the US. Alternatively, they could also opt to serve as 'third-parties' to the disputes, which would allow them to present their case to the panel under WTO rules. They would also receive the formal arguments submitted by the principal disputants.

In response to the complaints, Beijing has criticised the US for launching the case and has warned that it could harm bilateral relations even beyond trade. It remains unknown how this move might affect the other nations involved in the consultation.

ICTSD reporting; "EU, Mexico Seek to Join China WTO Talks," ASSOCIATED PRESS, 1 May 2007.