The tiny Caribbean nation of Antigua and Barbuda has just won a World Trade Organization (WTO) ruling against the US regarding online gambling. The WTO has ruled that the US "has failed to comply with the recommendations and rulings" of past WTO decisions, opening the way for possible trade penalties against the US.
The case began back in the summer of 2003, when Antigua and Barbuda requested that the WTO form a panel to investigate US laws against cross-border gambling websites, many of which are based offshore in the Caribbean islands. The claim was that the US had not lived up to its obligations under the "General Agreement on Trade in Services" (GATS), and that it was blocking services between WTO member countries.
In November 2004, the WTO panel concluded that US federal laws (including the Wire Act and the Illegal Gambling Business Act) and several state laws incorrectly breached the GATS agreement, and they required the US to change its ways. In early 2005, the US and Antigua and Barbuda both appealed portions of the ruling. The appeal proved more favorable to the US (it agreed that gambling laws could fall under the "public morals" exception to GATS), but the US was still required to change its rules because it remained in violation of Article XIV of the GATS.
An arbitration panel headed by Dr. Claus-Dieter Ehlermann concluded that a reasonable time period for implementation was 11 months and two weeks, which meant that the US should have made changes by April 3, 2006. In the summer of 2006, Antigua and Barbuda claimed that nothing had yet been done, and they requested a new WTO panel to enforce compliance. That panel has just issued its report, which takes the US to task for not complying with the earlier ruling. "Rather than take that opportunity," the report says, "the United States enacted legislation that confirmed that the ambiguity at the heart of this dispute remains and, therefore, that the United States has not complied."
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