[ssf] A WTO ruling could result in Net gaming - or more

[Chris Malins]

More inteersting news about Antigua. I think I've forwarded articles on 
this fascinating case before. We are now in the position that Republican 
congresspeople are starting to worry about the way in which WTO 
agreements infringe on the state/federal power divide in the states, 
and, ironically, that trade agreemetns can place a restriction on the 
ability of states to legislate. Of course, this is a concern about 
legislation on 'moral' grounds, in the form of eg. the Utah gambling 
ban. But the same arguments apply to safety regulation etc. This could 
generate some very useful opposition to the wTO in an unlikely camp. On 
the negative side, the US has some potential, as normal, to try to swing 
the rules in its favour - I wouldn't rule out seeing 'morality 
protection' as a legitimate reason to block trade in future drafts, 
although this would be very hard to legally protect.

Chris



http://www.deseretnews.com/dn/print/1,1442,600121371,00.html
Deseret Morning News, Saturday, March 26, 2005

Is gambling Utah-bound?

A WTO ruling could result in Net gaming — or more

By Jerry Spangler
Deseret Morning News

WASHINGTON — Utah politicos have long been proud of the fact the state has
no legal gambling of any kind — one of only two states in the country that
can say so.

Photo
Deseret Morning News graphic
But those days could come to an end. A ruling in a legal dispute between the
United States and the tiny island nation of Antigua could ultimately result
in legalized Internet gambling in the Beehive State.

Racetracks and even casinos would likely not be far behind if the decision,
expected in the next two weeks by the World Trade Organization, goes against
the United States and if gaming companies decide to push the limits of
free-trade agreements.

The state could do little, if anything, to stop them.

"That is a possibility," said Robert Stumberg, a professor at Georgetown
University Law Center, "unless the United States renegotiates its present
trade commitments on recreation and gambling services."

Antigua, which has replaced its sugar and banana economy with Internet
gambling targeted primarily at Americans, complained to the WTO that the
Americans were violating a 1993 trade agreement when the United States tried
to stop Antigua from offering Internet gambling to American citizens. The
trade agreement, signed by the United States, involved cross-border supply
of gambling and betting services.

A WTO dispute panel ruled this past November that the United States was in
violation of its international trade obligations. In other words, Antigua
can't be stopped by the United States.

The WTO decision, in general terms, means that laws used by particular
states to limit or forbid gambling are considered by the dispute panel as a
violation of "market access" principles of the WTO's General Agreement on
Trade in Services (GATS).

The U.S. appealed, and a ruling is expected by April 7.

"In trade-speak, Utah's prohibition amounts to the use of a zero-quota on
the supply of Internet gambling services, and that's a violation of market
access," said Peter Riggs, director of the Forum on Democracy and Trade.

If the WTO rules that the United States is seen as having a made a
commitment on gambling, Riggs said, another part of the GATS agreement
indicates the United States also made commitments to a "commercial
presence."

"It's that commercial presence category which would allow foreign gambling
companies to argue that they have a right to establish casinos, " Riggs
said.

Rep. Sheryl Allen, R-Bountiful, has been watching what is commonly called
the "Antigua case" in her role as chairwoman of the Committee on Economic
Development and International Trade for the National Conference of State
Legislators. She believes it has "very serious" ramifications not only for
Utah's historic battle to keep gaming out but for the state to determine its
own destiny.

"This is a states' rights issue, not a moral one," Allen said. "I am a
states' rights advocate, and I am really concerned about ability of states
to regulate things. It has far-reaching implications."

Allen agrees with the legal assessment that if the WTO appeal goes against
the United States, it could ultimately result in full-blown gambling in
Utah, although that is a worst-case scenario and probably down the road.

A negative ruling could mean that foreign companies would be entitled under
international treaty to start gambling businesses in the United States. A
refusal by the United States or any state could result in trade sanctions
against the nation generally or against any state that ignored the WTO
ruling, legal experts say.

To avoid sanctions, the federal government could be forced to supersede
state law.

Rep. Chris Cannon, R-Utah, isn't too worried about that happening, calling
the threat of sanctions a "toothless tiger." Any sanctions would likely
involve higher tariffs on U.S. products, which is something that other
nations, particularly those in the Caribbean, are not willing to do.

While trade sanctions by Antigua would not hurt the Utah or national
economy, it is probable that many other nations, some of them economically
powerful, would join in on the sanctions. The two countries with the biggest
gambling investments are Great Britain and Australia — critical U.S. trade
partners.

So far, the WTO challenge relates only to Internet gambling, and no
international gaming company has filed a challenge against U.S. trade policy
to open a bricks-and-mortar casino in Utah or anywhere else it is not
allowed.

But Allen believes it is only a matter of time and that for every creative
move the state makes to block it, attorneys will try to figure out ways
around it.

The core issue, she said, is not gambling but trade agreements and the
failure of U.S. trade negotiators to recognize individual state rights and
values.

"In the future, trade negotiations might not only force us to accept
gambling but take away our regulatory authority over utilities and, on the
extreme, take away the authority of local governments over zoning," she
said.

That is why it is so critical, she said, that trade negotiators involve
state lawmakers and attorneys general in international trade decisions.

And that's exactly why the United States is in the Internet gaming pickle
with Antigua.

The WTO ruling, "in other words, says you'll just have to live with the
consequences of what some would argue was sloppy drafting by the United
States during the GATS negotiating process," Riggs said.

Riggs also sees the issue in terms of state rights, and the failure of trade
negotiators to recognize differences between the states on attitudes toward
gambling.

Antigua argued convincingly that the United States really couldn't claim a
moral aversion to gambling because 48 out of 50 states allow some forms of
legalized gambling, Riggs said. Furthermore, some states have made it legal
to bet on horse races and to buy lottery tickets over the Internet.

"Antigua's argument starkly reveals why this WTO case is a state's rights
issue," he said. "It argued public morals on a national level, brushing
aside any argument regarding the rights of states under the U.S. federal
system to regulate gambling in the interest of public morality."

People involved in researching the dispute find it ironic that Antigua, a
small country with only 70,000 residents, had an economy based entirely on
sugar and bananas.

But a WTO decision favoring the United States devastated Antigua's banana
industry; at the same time sugar prices plummeted, leaving the country
looking for economic diversification. And now Antigua is poised to wreak a
different kind of havoc on national gaming laws.

E-mail: spang at desnews.com






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