Breaking New Ground

3 June 2008

The United States government may soon make a precedent-setting revision of its commitments to the General Agreement on Trade in Services, a 13-year-old international trade agreement and backdrop to a long-standing cross-border trade dispute.

GATS -- as the agreement is often referred to -- was born out of the Uruguay Round, a series of trade talks which began in 1986 and culminated in the creation of the World Trade Organization in 1994.

Prior to the Uruguay Round, certain services, like architecture and advertising, were not covered under international trade agreements. GATS, therefore, opened up trade for a number service sectors among W.T.O. members.

In 1994, the United States became a signatory to GATS, and the agreement took effect in January 1995.

Thirteen years later, John K. Veroneau, a deputy trade representative, announced that the United States would use a W.T.O. procedure to rectify a mistake it had inadvertently made in 1994: allowing remote gambling services to fall under its commitments to GATS.

According to Mr. Veroneau, the mistake -- which, in May 2007, he called an "oversight" -- only came to light in 2003, when the United States entered what would become a near five-year trade dispute with Antigua and Barbuda.

In March 2003, the Caribbean nation filed a complaint at the W.T.O. after the United States attempted to employ several legislative measures to prohibit certain types of Internet gambling services within its borders while allowing others -- horse race wagering among them.

After numerous victories for Antigua at the W.T.O., the United States continuously failed to comply with the rulings.

Rather than bringing federal policy into compliance with W.T.O. rules, the United States saw to it that gambling would not be included under its commitments to GATS, as it had originally intended.

However, the dispute ended in December 2007 when a W.T.O. dispute settlement panel ruled in favor of Antigua. For its part, Antigua won the right to violate United States intellectual property law -- to the tune of $21.1 million, annually.

While the United States is well within its right to realign its commitments under GATS, doing so does not come without a price.

Under Article 21, which allows a member to modify its commitments, the United States was required to negotiate a compensation agreement with any W.T.O. member that claimed to be affected by the action.

Although compensation negotiations have concluded with most of the claimants -- including Canada, Japan and the European Union -- Antigua, the last party to file for compensation, has been in discussions with the office of the United States trade representative since late January.

During the negotiation process, Antigua has agreed to refrain from exercising its right to violate American copyrights.

United States trade officials told Interactive Gaming News on May 30, 2008 that after meeting recently with Antigua's finance minister, L. Errol Cort, both sides were left with much to consider.

"We've had constructive, positive discussions with Minister Cort," the trade officials said.

The current deadline for this round of talks is June 6, 2008, but the United States government said the negotiations are ongoing, adding the possibility of extending the deadline exists.

"It's a mutually agreed upon date, and by mutual agreement, we could change it," the trade officials said. "It's been changed before."

The trade officials said the United States has kept an open dialogue with Antigua throughout the dispute and into the current negotiations.

Both Antigua and the United States agree that it would be best to resolve the issue quickly through a settlement, the trade officials added.

Seeking further research in this area? Click here to review "Inside IGN - The Antigua/US WTO Dispute."

Emily Swoboda is the senior staff writer at IGamingNews. She lives in St. Louis, Mo.