Unfair, totally unfair - US battles ruling of WTO
27 May 2006
Monday May 22 2006
Last week we were made aware of the latest move of the United States in their continued battle against the implementation of the ruling of the World Trade Organisation in relation to cross border trading in services, particularly Internet gaming, in favour of Antigua & Barbuda.
The US Department of Justice, after examining all the offshore betting companies that have been targeting US citizens and enticing them to participate in online gambling, zoomed in on perhaps the largest operator in the only country who successfully challenged the unfair trade practice, as it relates to the protectionist policies on the gambling industry.
In an era of globalisation and trade liberalisation when the watchwords are regional integration, single markets, economic blocs; and where small island states have been forced to eliminate protective barriers for vital components of their local economies in pursuit of global economic unity, one has to wonder who really benefits from integration and the coming together of economic interests into a single market.
In the interest of the growth of international trade, small island states in the Caribbean have seen their preferential trade arrangements eliminated, causing dramatic upsurge in unemployment and other economic ills.
Still in the interest of the “international good” regions like the OCES acquiesce to big stick policies like the Shiprider Agreement which gives the US the right to traverse into our boundaries without any degree of reciprocity.
In defence of our economic survival, which is hinged to a large measure on international travel, we expend significant scarce resources to provide tighter security measures, in conformity with more stringent requirements from the US in particular.
As small, open, vulnerable economies in a competitive global arena, the challenge exists to find industries which harness the country’s resources to the benefit of its citizens.
The economic realities of islands like Antigua & Barbuda, is the need for a diversified economic base, given its very limited natural opportunities. To complement the lifeblood of the economy – tourism – the offshore services were identified as a sector which enabled a merger between foreign investment and the countries most abundant resource, its people.
The offshore sector in Antigua & Barbuda has come in for high praises from the international community for its regulatory framework and the independent initiatives undertaken to ensure that the jurisdiction maintains the highest desirable standards.
While there are no official estimates with regards to the contribution of the offshore sector to the economy, the figures indicate that offshore gaming, alone, contributes in excess of EC$250 million annually to the local economy, with additional indirect spin-offs in excess of EC$200 million.
Within the context of the above, the actions of the US Department of Justice as outlined in the summary of the charges laid against the principals of WWTS, must be viewed from three perspectives.
Firstly, there has been no settlement between the US and Antigua & Barbuda with respect to implementation of the WTO ruling. As such, moves by the US to pursue this matter appears as a flagrant disregard for the leading international trade arbitration panel.
This is a curious move on behalf of the US who has taken many trade issues before the said body and has pushed for the enforcement of the ruling, when the decisions have been to their economic benefit.
Secondly, is the signal that is being sent by this indictment to other entities in the offshore gaming industry of Antigua & Barbuda.
As far as we are aware, the US Department of Justice is in pursuit of one entity for violating federal law by “illegally enticing gamblers to send funds from the United States to Antigua with the intent that these funds would be used for wagers on Internet casino games and sporting events.”
But, there are a plethora of such companies in many countries across the globe engaged in similar activities prior to the start up of operations in Antigua & Barbuda. Who is the real target of the US? Is it the principals of WWTS or is it the offshore gaming industry of Antigua & Barbuda?
What is really at stake in this unresolved dispute? Little Antigua & Barbuda successfully challenged the great US on a matter that really is about who benefits from the consumer expenditure. Gambling is big business in the US, and online gambling is widespread.
There are many regions in the US where the dominant economic activity is gambling. We can recall the catastrophic losses in the French Quarter during the 2005 hurricane season, including the loss of a major gambling belt in the US, the loss of jobs and associated economic activity was sizeable.
Utilise any major search engine and check for US online casinos and the results would be startling. Logic would suggest that the issue is not the fact that there are social consequences of gambling.
Gambling in the US means that the government is able to collect sizeable revenues from taxes on winnings and from taxes on the profits of the corporations providing the activity.
There are also the issues of job creation, and the spin-off positive impact on other sectors that support the gaming industry. Also taken into account, is the spending of those directly engaged in the industry.
Any resolution of this dispute in Antigua & Barbuda’s favour means that the US would face direct competition from the rest of the world for the profits, taxes and other economic benefits from the anticipated expansion of the industry.
Therefore, typical of US self preservationist fashion, it is seeking to protect its own interest regardless of the impact on friendly countries like Antigua & Barbuda.
In pursuance of economic preservation, the US continues to protect and subsidise industries such as agriculture. In its own self-interest it continues to wield its big stick, big brother policy.
Whenever the US appears to succumb to international pressure, the major beneficiaries have always been multi-national corporations originating from the US.
Case in point, the hue and cry over ‘exporting America’ has arisen because American companies are seeking to maximise profits by taking advantage of cheaper factors of production available in third world countries and China.
Any action which threatens the capacity of a country to protect the constitutional rights of its citizens should be taken very seriously.
The international arbitration panel which is a part of the system of governance at the WTO ruled that the US needed to adjust its regulations governing cross border gaming in a similar vein as rulings governing other trade disputes.
When other disputes ruling have been to the benefit of industrialised countries, smaller and more economically challenged countries have had to fall in line.
This one case could signal the death of a very vibrant sector for Antigua & Barbuda. If the US has other reasons to pursue the principals of WWTS it is only just and fair that they do so.
But this apparent move to curtail the free movement of services demands a broad base action, if only to remove any notion that free trade and the pursuance of single economic bloc and free markets are really not free nor fair.