Gambling on US morality

antigua-wto-uncle-samI spoke this week at a fringe meeting of the World Trade Organisation’s (WTO) annual forum in Geneva. The Democracy Institute, a public policy think-tank based in Washington DC and London, launched a report titled “Do as I say, not as I do” into a 14-year old dispute between the United States and the tiny Caribbean nation of Antigua & Barbuda. I was invited to attend as a panel member to explain why free trade and the integrity of the WTO is so important, and why the current US position regarding compliance with WTO rulings puts at risk the entire international order of trade arbitration. You can see the discussion here.

The issue revolves around America’s suggestion that Antigua’s sizeable online gambling industry threatens the morals of US citizens.  I have never been to Las Vegas, but I believe they have a bit of a thing for casinos there, so I was intrigued at their stance.

In 2003 online gambling overtook tourism as the main revenue driver for Antigua. For a nation of barely 70,000 people that is a big deal. Added to which, half the world’s online gamblers, in an industry worth US$10 billion, are American. The Cato Institute, a libertarian think-tank, believes US authorities have tried to snuff out the industry in Antigua more from a desire to protect the domestic market than from a concern about morality.

The US had relied on the 1961 Wire Wager Act, designed to stop gambling money won by bets placed over the telephone, crossing state or international lines. But the world has moved on since then and the internet, as if jockeyed by Frankie Dettori, has ridden a coach and horses through that piece of legislation. It is no longer relevant, but is a convenient ace up the sleeve for US authorities.

So in 2003 Antigua took the case to the arbitration panel of the WTO. No sooner had Antigua won the case when the US, employing the bureaucratic equivalent of a croupier’s chummy shuffle, appealed and threw up a myriad reasons why it need not change policy. The WTO looked at it again in 2007 and found in Antigua’s favour for a second time. Once more, the US continued to do nothing. Antigua, recently devastated by Hurricane Irma, is still out of pocket by, at the government’s estimate, US$3.44 billion (against a GDP of US$1 billion).

The broader concern is what the case says about America’s attitude towards the WTO. Antigua’s beef started under President George W Bush and extended through Barack Obama’s tenure, so this is not party political. In some respects Donald Trump’s administration has actually sought to resolve aspects of the case in ways his predecessors never did. But by so obviously flouting WTO judgements – whilst seeking redress through the same systems for alleged bad behaviour by China, for example – the actions by the United States serve only to undermine the credibility of the organisation as a whole.

Added to which is the US policy towards the WTO’s court of appeal. It is supposed to have seven judges but currently has only five, and by the end of the year could be down to four. A further three are due to retire by 2019. The US refuses to engage with the process of electing new judges, hoping to cajole the WTO into adopting a more US-friendly attitude. With any judgement needing three panel members it is a distinct possibility the WTO’s remit of international arbitration will be simply impossible to carry out in the very near future. That is unlikely to be allowed to happen, but America’s action is widely seen as attempting to hold the WTO to ransom; hardly an endearing quality in the world’s economic superpower.

The WTO consists of 164 nations, but without the moral and political backbone of the United States, what reason is there for other members to abide by any rules they don’t like? This case has global ramifications. Little old hurricane-smashed Antigua is still fighting to highlight US hypocrisy and seek redress. Even when the chips are down.

 

 

 

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