OUSTR Seeks Comments on GATS Article XXI and Internet Gambling

July 16, 2007. The Office of the U.S. Trade Representative (OUSTR) published a notice in the Federal Register that requests comments on the negotiations for compensatory adjustments to U.S. Schedule of Services Commitments under WTO General Agreement on Trade in Services (GATS) in response to notice of the United States of intent to modify its schedule under Article XXI of the GATS. See, Federal Register, July 16, 2007, Vol. 72, No. 135, at Pages 38846-38847.

This pertains to U.S. regulation of internet gambling. The nation of Antigua and Barbuda, which is home to internet gambling operations, filed a complaint in 2003 against the U.S with World Trade Organization (WTO) asserting that U.S. laws banning some gambling services violate the treaty obligations of the U.S.

The WTO has found fault with U.S. laws. The report of the compliance panel was adopted by the WTO Dispute Settlement Body (DSB) on May 22, 2007.

See also, stories titled "WTO Panel Instructs Congress to Amend Wire Act to Legalize Internet Gambling" in TLJ Daily E-Mail Alert 1,016, November 11, 2004; "WTO Appellate Body Upholds U.S. Laws Affecting Internet Gambling" in TLJ Daily E-Mail Alert No. 1,111, April 8, 2005; and "Allgeier Addresses Trade Agreements and Internet Gambling" in TLJ Daily E-Mail Alert No. 1,118, April 19, 2006.

The U.S.'s latest action, announced on May 4, 2007, was to invoke Article XXI of the General Agreement on Trade in Services [35 pages in PDF], to exclude gambling from the scope of the U.S. commitments under the GATS. See, story titled "OUSTR Invokes GATS Article XXI in WTO Internet Gambling Dispute" in TLJ Daily E-Mail Alert No. 1,577, May 8, 2007.

The Federal Register notice states that "In light of these developments in the WTO dispute, the United States has decided to make use of the established WTO procedures to correct its schedule in order to reflect the original U.S. intent -- that is, to exclude gambling from the scope of the U.S. commitments under the GATS. The GATS, Article XXI, provides that when a Member modifies its services schedule, other Members who allege they will be affected by this action may make a claim for a compensatory adjustment to other areas of the GATS schedule. Under the Article XXI procedures, WTO Members had until June 22, 2007 to make such claims."

It continues that "Prior to the applicable deadline, the following eight WTO Members notified the United States that they consider that their benefits under the GATS may be affected by the proposed modification and thus that the United States should enter into negotiations with a view to reaching agreement on any necessary compensatory adjustment: Antigua and Barbuda, Australia, Canada, Costa Rica, the European Communities, India, Japan and Macao."

It concludes that "Consistent with these requests, the United States will begin consultations with these WTO Members. Under the Article XXI Procedures, the United States and those Members making claims have an initial period of three months to consult on any necessary compensatory adjustment. If these discussions are not successful in reaching a satisfactory conclusion for any claimant, that claimant may refer the issue to arbitration."

The notice states that comments "must be received on or before noon, 30 days after publication." Publication occurred on July 16, 2007. 30 days after publication is August 15, 2007.

On Wednesday, July 25, 2007, at 11:00 AM, the Cato Institute will host a panel discussion and lunch titled "America's High-Stakes Response to the WTO Internet Gambling Dispute". The speakers will be Mark Mendel (counsel for Antigua and Barbuda), John Jackson (Georgetown University Law Center), and Sallie James (Cato). See, Cato notice.

See also, story titled "Rep. Frank Introduces Bill to Facilitate Licensed Internet Gambling" in TLJ Daily E-Mail Alert No. 1,574, May 3, 2007.