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US-Antigua trade dispute exposes global inequity

By Claude Robinson

AT their recent inter-sessional summit in the Haitian capital, Port-au-Prince, Caribbean leaders called on the United States to comply with the ruling by the World Trade Organisation (WTO) to end the longrunning dispute with Antigua on Internet gaming. They affirmed their “full support” for their Caricom colleague in its fight against our giant neighbour to the north.

However, if past behaviour is any guide to future action, sceptics would be justified in believing that the Barack Obama Administration will not behave any differently from its predecessors. Dare we hope that President Obama will prove the sceptics wrong?

A positive outcome is important for the region and beyond, because compliance by Washington with the WTO ruling would help restore the faith of developing countries that the international rules of trade apply equally to all nations without regard to economic size or political influence.

The dispute started more than a decade ago when the US issued a ban on its citizens participating in Internet gaming in “virtual” casino operations established in the small eastern Caribbean state of Antigua.

Latest signs indicate that the positions are hardening.

The Antiguan government took the issue to the WTO, the body established under US leadership to facilitate free trade and arbitrate disputes, arguing that the US ban violated “specific commitments” by Washington to recognise “recreational services” as a component of the liberalised trade regime under the General Agreement on Trade in Services (GATS ).

The WTO Dispute Settlement Panel ruled in favour of Antigua in 2003. The US did not comply. To keep up the negotiating pressure on the US, Antigua filed for US$3.44 billion in annual compensation from the compliance panel established by the WTO (a vast amount, given the size of Antigua’s economy).

The US announced in May 2007 that it would be noncompliant, by virtue of unilaterally withdrawing its commitment to recognise betting services as recreational services within the meaning of the GATS . Washington reportedly offered only US$500,000 in compensation for lost annual revenue.

While the US stonewalled, Antigua got a binding verdict from the final arbitrator panel in December 2007. The US still refused to comply. Then late last year Antigua gained another ‘victory’, this time an “open-ended right” to suspend copyright protections on US intellectual property up to US$21 million a year.

In response to the latest ruling last December, the US has warned the Antiguan government that there would be consequences if they attempted to act under the WTO concessions. “If Antigua does proceed with the unprecedented plan for its government to authorise the theft of intellectual property, it would only serve to hurt Antigua’s own interests,” said Nkenge Harmon, a spokeswoman for the US trade representative.

It was this latest threat that drew the wrath of Caricom leaders.

“The Conference of Heads of Government calls on the US to settle the dispute with Antigua and Barbuda by honouring its obligations to respect international rules and by complying with the decision of the WTO in this matter. Those rules apply to all countries whether small, large, rich or poor. All countries must abide by their obligations within the Community of Nations in the WTO,” the Caricom leaders said.

It was clear from the statements coming out of Port-au-Prince that regional leaders were particularly upset at Washington because the region has been a consistent and reliable US ally.

Further, as small states, their rights and interests in the international community will always be at risk unless there is full compliance with internationally accepted norms and rules.

In the late 1990s when the current trade rules were being established, it was the United States which insisted that trade in services should include intellectual property rights. This was not surprising since the US is the world’s largest exporter of such services, especially in the form of film, television and music content.

Caribbean countries have historically relied on a small range of export commodities like sugar and bananas exported under preferential arrangements to the UK. After independence there was some diversification of the economies to include tourism and manufacturing, largely based on import substitution.

Under economic globalisation promoted by the United States, following the triumph of market-driven economic policies promoted by US President Ronald Reagan and his conservative ally, British Prime Minister Margaret Thatcher in the 1980s, and the collapse of the Soviet Union, developing countries were prodded to place their faith in free markets as the only route to economic growth and prosperity.

Courtesy Jamaica Observer

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