David (Antigua) Beats Goliath (US) At WTO

Antigua has beaten the US at the WTO on the issue of online gambling, and has proposed a novel – if unworkable – intellectual property solution.

The Caribbean nation of Antigua and Barbuda does something very, very well. It’s the world center of online gambling. And that fact has brought it into direct conflict with the US in a disputeat the World Trade Organization – a dispute that Antigua’s won.   But what happens next is the problem.   At the heart of the matter is a pieceof US legislation that banned Americans from gambling over the Internet. In 2003 Antigua took the US to the WTO, claiming that the law violated Antigua’s rights as a member of the WTO. A yearlater a WTO panel ruled in favour of Antigua, and the appellate body upheld that decision in 2005. That ruling was upheld for a second time in March and declared Washington out of compliance with itsrules.   And that’s where the problem arrives. To comply with WTO rules, the Bush administration either has to let Americans place online bets with offshore casinos, or simply ban everyform of online gambling, which currently and legally ranges from fantasy football leagues to placing horse racing bets. Neither seems likely.   But if they fail to comply, Mark E. Mendel, thelawyer representing Antigua in the dispute, has a novel solution. Apart from $3.4 billion in damages, he wants permission for Antiguans to violate intellectual property laws by allowing them todistribute copies of, among other things, American music, movie and software products.   That leaves the WTO between a rock and a hard place. They can’t back down from their decision, butneither can they reasonably allow the Antiguan solution, which would raise massive hackles among US politicians.   Washington insists it has been in compliance all along. The case is currentlyin arbitration to assess damages.   “This is the world’s biggest consumer and exporter of gambling services trying to prohibit a small country from developing its economy by offeringthese same services,” said Mendel. “And we find that deeply hypocritical.”