Wednesday, April 4, 2007

WTO Internet Gambling, Antigua Two, U.S. Zip

The World Trade Organization has once again ruled United States laws prohibiting Internet gambling is a violation of WTO rules by trying to prevent Americans from participating in online gambling.

The case was brought before the WTO by the tiny Caribbean nation of Antigua in 2004 when the Federal Government began pressuring U.S. financial institutions from transferring funds to online gambling sites.

The WTO ruled the U.S. action was a violation of the General Agreement on Trade. The U.S. appealed asking the ruling be overturned but the appeal was rejected. The panel said the U.S. is violating the WTO’s general trade agreement because it allows remote gambling, particularly betting on horse races, to take place within its borders.

Since that ruling the United States has not only refused to come into compliance with the WTO, it has thumbed its nose at the organization passing the "Unlawful Internet Gambling Enforcement Act" which placed further restrictions on Internet Gambling.

The nations of Antigua and Barbuda sent a letter earlier this year to U.S. trade representative Rob Portman, claiming that he had exerted no effort to modify America’s online casino gaming policy to comply with the WTO ruling. So far the Bush administration seems to be ignoring the decision.

Under the ruling the nations could impose trade restrictions against the U.S. but their small size makes that remedy impotent. Later this year Great Britain will allow online gambling companies to be based there. That will change the equation, as England will use the ruling to present their own complaint to the WTO. With the earlier precedent in place the U.S. is sure to loose again. This time to a nation that wields economic clout.

This will present the administration with a "Hobson’s Choice" obey international law and follow the ruling, or become an scofflaw and ignore the World Trade Organization.


Scott Erb said...

Not only does the US have to worry about not following international law, but the WTO is the centerpiece of the free trade regime that the US has worked so hard to build. If we ignore the WTO, that could threaten other states doing likewise in the future, leading to a weakening of the GATT free trade regime that has led to unprecedented prosperity in the West.

Jim Fish said...

This is a typical U.S. response, shoot yourself in the foot.