Antigua wins modest sanctions in U.S. gambling case

GENEVA (Reuters) - Antigua and Barbuda won compensation from the United States on Friday in a long-running trade dispute about gambling, but the amount was far lower than the tiny Caribbean nation had been seeking.

A World Trade Organization (WTO) arbitration panel granted Antigua’s request to levy trade sanctions on U.S. intellectual property, for instance by lifting copyright on films and music to sell it themselves, prompting concern from Washington.

The WTO panel said Antigua was entitled to compensation of $21 million a year from the United States for being shut out of the U.S. online gambling market.

The ruling is only partial consolation for the former British colony, which built up an Internet gambling industry to replace declining tourism revenues, only to find itself shut out of the world’s biggest gambling market.

The award falls far short of what Antigua had demanded -- $3.44 billion in “cross-retaliation”, allowing it to seek damages outside the original services sector. Washington had argued Antigua was entitled to only $500,000 in compensation.


The White House welcomed the low amount of the award, and noted it was negotiating with Antigua and other countries on compensation following a decision formally to remove gambling from the services it has opened up.

“The United States is pleased that the figure arrived at by the arbitrator is over 100 times lower than Antigua’s claim,” said Sean Spicer, a spokesman for U.S. Trade Representative Susan Schwab.

But he urged Antigua not to use its sanctions award to lift copyright on intellectual property rights (IPR), pending a final settlement of the dispute.

That “would establish a harmful precedent for a WTO Member to affirmatively authorize what would otherwise be considered acts of piracy, counterfeiting or other forms of IPR infringement,” he said.

Mark Mendel, the lawyer who led the case for Antigua, welcomed the right to cross-retaliate by suspending the intellectual property rights of U.S. business interests.

“That has only been done once before and is, I believe, a very potent weapon,” he said in a statement.

He criticized the way the panel had arrived at the figure for damages, but noted the award was open-ended.

“$21 million a year in intellectual property rights suspension going forward indefinitely is not such a bad asset to have,” he said.

The dispute dates back to 2003, when Antigua complained that a U.S. law allowing only domestic companies to provide online horse-race gambling services discriminated against foreign companies. The WTO found in favor of Antigua.

But Washington, instead of bringing its laws in line with WTO rules, announced in May this year it would withdraw gambling from the services it opened up under a 1994 world trade deal.

Under WTO rules it then had to offer comparable access in other sectors to interested countries.

Earlier this week, the European Union announced it had reached agreement with Washington over access to the U.S. postal and courier, research and development and storage and warehouse sectors in compensation.

That was a blow for European firms such as PartyGaming, Sportingbet and bwin Interactive Entertainment, which had hoped the EU would fight on.

But it was a boost for companies such as Dutch mail carrier TNT, which will be able to compete with U.S. rivals such as FedEx on their home turf.

The United States has reached similar deals with Japan and Canada, but is still negotiating with four other countries -- India, Costa Rica, Macao and Antigua itself.

Since all WTO members have to approve the U.S. proposal to withdraw gambling, Antigua remains in a powerful position.

additional reporting by Doug Palmer in Washington