Antigua gives US until year’s end to resolve WTO dispute

antigua-america-world-trade-organizationAntigua’s trade representative has given the United States until the end of the year to comply with its World Trade Organization responsibilities or face the consequences.

On November 23, Antigua made a formal presentation to the WTO’s Dispute Settlement Body regarding the now 12-year-old ruling that America’s trade policy vis à vis gambling and betting was in violation of its obligations under the General Agreement on Trade in Services. (Read the full presentation here.)

Specifically, the WTO found fault with America’s policy of permitting its domestic horseracing industry to offer interstate online betting while simultaneously blocking Antigua-licensed betting sites from offering similar services to US bettors.

The WTO ordered the US to pay $21m per year until it either scrapped its domestic online betting industry or allowed Antigua-licensed sites access to the US market. To date, the US has done neither of these options, nor has Antigua received one penny of this annual $21m, the total obligation of which has now accumulated to over $250m.

The WTO anticipated the US intransigence on this issue by authorizing Antigua to use alternative means of collecting this penalty, including via offering royalty-free downloads of US intellectual property, including movies, music, TV shows and books.

To date, Antigua has refrained from exercising this nuclear option, opting to continue negotiations with the US Trade Representative (USTR). Antigua’s new Prime Minister Gaston Browne went as far as to offer to cut the US’ outstanding monetary obligation by more than half but the US has so far refused to budge.

In this latest DSB presentation, Antigua said its trade representatives had “always conducted our relations with the US at a high level of regard and cooperation,” yet the USTR has failed to offer settlement terms “that would even remotely compensate for the harm that has been done to our economy and continues to impact it negatively.”

Antigua therefore announced that it was engaged in a “final effort” with the USTR to reach a settlement, but warned that Antigua would be “compelled” to launch its royalty-free download site “if an appropriate and beneficial settlement is not reached with the US by year-end.”

Antigua’s representative said that his country continued to hope “that a sense of right will prevail” during these last-ditch negotiations with the USTR but emphasized that these discussions “cannot go beyond the end this year.”

Antigua notes that $250m represents one-quarter of Antigua’s annual gross domestic product, while the same sum represents a mere 0.0003% of US GDP. The US has also enjoyed a $1b trade surplus with Antigua in the 12 years following the original WTO ruling.

Antigua stressed the inherent hypocrisy of the US ignoring its WTO obligations, given that the US is “the most active user” of the WTO’s Dispute Settlement System. Antigua says all WTO members should be concerned by America’s “continued non-compliance,” which threatens to “collapse confidence in the efficacy and credibility of the rules-based trading system.”

A year ago, Antigua’s PM addressed the United Nations General Assembly, warning delegates that America’s refusal to honor its WTO commitments meant the citizens of smaller nations “are entitled to conclude that the powerful continue to ignore and trample the rights of the weak and that might is right.”