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May-22-2007,
The Stakes Have Been Raised in the Antigua WTO Dispute...By Hartley Henderson

Two weeks ago the United States chose to rewrite its commitment regarding gambling under GATS which satisfied no other countries. Neither the country of Antigua nor other WTO members were happy with this decision, but it seemed pretty obvious that unless more powerful countries, such as those in the EU or Asia, came to Antigua's defense, there was little that could be done given the size of the United States. As one free trade expert said to me "the United States is absolutely wrong in this case, but if they want to be bullies there's nothing smaller countries can really do about it. The United States has always believed that might makes right and unfortunately they are probably correct." The United States admitted it may have to pay some restitution for its decision, but it was clear it had absolutely no intention of complying with the WTO ruling.

However, the situation may have changed if an article in Egaming Review is correct and David Carruthers (the former CEO of BetOnSports) is planning on having former advisors lobby the British government, the European Union and members of the European Parliament to use the WTO ruling in an effort to get him off of the charges brought against him. According to the article (located at: http://www.egrmagazine.com/---you must be registered to read the full story), Missouri district court judge Mary Ann Medler (who is overseeing the Bet On Sports case) concluded in April that Bet on Sports executives, as well as several other individuals who were charged by the U.S. government, could file supplemental briefings to prior motions in an effort to dismiss the indictments, provided those briefings are based on the WTO's ruling that the United States was not operating in accordance with the GATT agreement. If they use previously filed arguments they will not be admitted. Consequently, David Carruthers, who has some powerful influence in Britain, plans to have various members of the British government, including Peter Mandelson, the European commissioner for external trade, lobby the U.S. government to release Carruthers because of the WTO ruling. The argument will be that the United States had no business arresting anyone operating in Antigua or in any other WTO based country because the U.S. agreed to allow WTO members to sell gambling services to its country. Of course if Britain and/or the EU agree to take on Carruther's appeal, then it automatically forces them to argue that the U.S. is out of bounds by trying to rewrite its commitments and is obligated to abide by previously signed agreements. That in turn could put the United States in a very awkward position. Aside from the enormous amount of trade the US and EU do each day, (and of course the amount of trade they would like to do in the future), the EU is the one entity that could really hurt the U.S. economically should it decide to invoke some sort of economic sanctions as a result of the blatant breach of commitment.

The question of course is: why would Britain or any member of the EU take on the United States for the sake of a few Internet gambling companies? It is a fair question, but one must remember that the current Republican government is despised by many countries right now worldwide. While few countries have issues with the American people, the U.S. government itself is deplored and any initiative that appears to be giving George Bush and his cabinet the finger could gain political points within the European countries. Tony Blair was one of few government leaders that agreed to support the United States in Iraq, and he has taken a beating at home as a result of this. The fact that many insurgents in Iraq have threatened to kidnap Prince Harry if he decided to go to war in the country hasn't helped either. However, Tony Blair announced his resignation last week and will be out of office on June 27th. Blair's support of Bush was seen as a major reason for his party's rapid decline of support within Britain, and consequently his party demanded his resignation. Thus it's safe to say that the replacement British Prime Minister (likely Gordon Brown who does not have the same feelings towards the Republican government) will not climb into bed with George Bush the way Tony Blair did. In fact, opposition to George Bush could go a long way in helping a candidate win the next British election. And as is the case with any election in any country, a party will usually do what it has to in order to keep or gain power. Plus, everyone knows about the feelings of France and Germany towards George Bush.

But it's not only in Europe that Bush is disliked. The latest U.S. polls show that he is currently at 28% public support, which is unprecedented for a sitting President. His lame duck status, given the midterm gains by the Democrats, also makes George Bush very vulnerable; and no one in either the Democratic or Republican Party right now really wants to be associated with him given that 2008 is an election year. Aside from Newt Gingrich, there is really no presidential candidate in either party that has the same evangelical moral agenda as he does, and it is widely reported that many of the candidates actually have no issue with gambling. So if the European Union decides to make a big issue of the United States' decision not to live up to signed agreements, one has to ask whether it's even worth fighting for. As is already known, Antigua and its legal representatives have already petitioned the EU for support, so this may be a great opportunity to get involved in a petition to the EU to force the United States to live up to its commitments. If there is enough of a groundswell, no doubt initiatives from people like Barney Frank and Shelley Berkley will gain momentum, and any presidential candidate will have to decide whether it wouldn't just be better to legalize and regulate online gambling and let the rest of the world try and compete with U.S. companies for American business if they want to. The U.S. faces many more serious trade disputes in the near future, particularly in China. And I doubt many in either U.S. party (save for Kyl, Frist and Bush) really believe this is a hill worth dying over.

It's still a longshot, but David Carruthers could be a major stepping stone to forcing the United States to live up to its own commitments.

05-22-2007
Hartley Henderson
MajorWager.com
henderson@majorwager.com



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