Bridges Weekly Trade News Digest • Volume 8 • Number 39 • 17th November 2004
WTO Panel Rules In Favour Of Antigua, Barbuda In Gambling Dispute
On 10 November the WTO panel hearing Antigua and Barbuda’s complaint against "certain US measures restricting the cross-border supply of gambling and betting services from foreign operators" released its final report to the public. The report followed a disruption in the process, during which the US and Antigua had tried to resolve the dispute through consultations (see BRIDGES Weekly, 13 October 2004). Ruling in favour of Antigua and Barbuda, 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). Trade experts described this WTO ruling — the first to address internet trade — as a landmark decision that could serve as a precedent with regard to WTO Members’ GATS commitments.
US to appeal panel report
While Antigua’s ambassador to the UN in New York, John Ashe, welcomed the ruling, the Office of the United States Trade Representative (USTR) spokesperson, Richard Mills, announced that the US would appeal the ‘deeply flawed’ panel report. Mills reiterated the US defence in this dispute that "the Clinton Administration clearly intended to exclude gambling from US services commitments when the Uruguay Round negotiations were completed". On this key point, the panel upheld Antigua’s claim that US market access commitments under its GATS schedule covering "other recreational services" included gambling services. The US had argued that it never intended to allow the cross-border supply of such services and that "gambling services" are not specifically mentioned in the schedule in question. The panel further held that restrictions on several means of supplying gambling services outlined under various federal laws and the legislation of certain states resulted in the US failing to offer services and service suppliers from Antigua treatment no less favourable than that set out under its GATS schedule of commitments.
US public morals defence unsuccessful
The US claimed that the remote supply of gambling and betting services raised significant concerns relating to the maintenance of public order and the protection of public morals, a defence available under the GATS and also reflected under the General Agreement on Trade and Tariffs (GATT). There has been no previous panel ruling on this issue. According to the US, the remote supply of gambling and betting services was particularly vulnerable to various forms of criminal activity, especially organised crime. While the panel agreed that the challenged US legislation constituted measures to protect public morals or public order, the panel nevertheless found that the US had not explored and exhausted reasonably available WTO-consistent alternatives. More importantly, the US had declined Antigua’s invitation to engage in bilateral and multilateral consultations and negotiations to determine the possibility of addressing its concerns in a WTO-consistent manner.
Members have a right to regulate gambling and betting activities
In its concluding remarks, the panel emphasised that it was "well aware of the sensitivities associated with the subject-matter of this dispute, namely gambling and betting services". The panel therefore cautioned that its conclusions were directly linked to the particular circumstances of this dispute. According to the panel, "the United States may well have inadvertently undertaken specific commitments on gambling and betting services. However, it is not for the Panel to second-guess the intentions of the United States at the time the commitment was scheduled. Rather, our role is to interpret and apply the GATS in light of the facts and evidence before us".
The panel also emphasised the point that it had "not decided that WTO Members do not have a right to regulate, including a right to prohibit, gambling and betting activities". In the particular circumstances of this case, it noted, the measures at issue were inconsistent with the US scheduled commitments and the relevant provisions of the GATS.
The panel report, WT/DS285/R, is available Online.
The Statement of USTR spokesperson, Richard Mills, is available at: Online.
ICTSD reporting; "WTO Publishes Final Decision On Internet Gambling; U.S. to Appeal," WTO REPORTER, 12 November 2004.