by ERIC STADIUS
In a January 28 ruling, the World Trade Organization (WTO) signaled to Washington that it must exist in the brave new world it helped create. In a simmering trade dispute between Antigua and Barbuda and the United States over online gambling, the trade body came down in favor of the Caribbean island nation. In the mid-1990s, a number of foreign investors aided the buildup of sophisticated gambling infrastructure to help supplement a worrisome decline in tourist revenues.In the following ten years, online gambling circles pumped 3.4 billion USD into the Antiguan economy annually and had become the second largest employer on the island. [1] However, gambling is illegal on the federal level in the United States where U.S. law bans its citizens from gambling online, a policy that St. John’s blames for the decline of the nation’s economy. St. John’s has interpreted this law as a violation of their trade agreement with Washington, where in 2005 Antigua filed a complaint with the WTO, that the WTO ruled valid in 2007. [2]
Reflecting on the recent WTO ruling, Antigua’s economy demonstrably is too small to easily benefit from significant tariff increases regarding the access of U.S. products—the customary WTO-sanctioned response for these types of violations— so St. John’s sought a different form of compensation under the WTO’s cross-retaliation regimen.[3] Antigua’s plan, supported by this latest WTO judgment, lies in the concept of state-sponsored piracy—setting up a website where users could pay for media content and St. John’s would not be required to pay U.S. copyright royalties. This website concept has the potential to offer users the ability to download, for example, Zero Dark Thirty, Argo, and Lincoln for less than a dollar and songs for mere pennies. Understandably, Washington has expressed outrage at the WTO findings, with Nkenge Harmon, a spokeswoman for the Trade Representative’s office (USTR) lamenting that St. John’s had “repeatedly stymied negotiations with certain unrealistic demands.”[4] Harmon went on to comment that the government-authorized copyright infringement arrangement would “serve as a major impediment to foreign investment in the Antiguan economy, particularly in high-tech industries.”
If the United States’ claim that the world’s 15th smallest economy is engaged in some form of economic bullying—attempting to force its hand in altering gambling laws by increased pressure from Hollywood lobbies—seems farcical, then so be it. Nevertheless, this decision presents a troubling scenario for Washington. American corporations largely have taken advantage of the swelling international tribunal system that encourages investor to state relations and Washington has controversially promoted such terms in its recent free trade agreements.[5] Now, Washington is experiencing the other side of international trade regulations, and if a reward of 21 million USD to Antigua and Barbuda does not prompt a recalculation of US trade policy in this part of the Caribbean, perhaps 8 billion USD in litigation arising from Chinese complaints will.
Council on Hemispheric Affairs for more