WTO Authorises Antigua to Move Forward on Retaliation in US Gambling Dispute

On Monday 28 January, the WTO Dispute Settlement Body (DSB) authorised Antigua and Barbuda to retaliate against US intellectual property (IP), as part of their longstanding dispute regarding internet gambling services (DS285). However, it remains unclear what kind of measures will be put in place by the Caribbean nation, with experts suggesting US music and film industries as possible targets of the future retaliatory sanctions.

The case, which dates back to 2003, pitted one of the world’s smallest economies against the largest, and was seen by some as a test of the WTO dispute system’s ability to empower small countries to take effective trade sanctions against their more powerful trading partners.

WTO dispute panels and the Appellate Body have, in a series of decisions, agreed with Antigua’s complaint that the US’ internet blocking of overseas operators is in violation of Washington’s commitments to liberalise its “recreational services” sector under the WTO General Agreement on Trade in Services (GATS).Since the US failed to comply, Antigua was authorised to retaliate by US$21 million, which was deemed to be the amount that the Caribbean country lost through the US’ trade barrier.

Multilateral trading rules provide for countries to ordinarily retaliate under the specific WTO agreement that has been violated - that is, sanctions against goods when merchandise trade is at issue, services for services, and so forth. However, if this is unlikely to be effective, they allow governments to “cross-retaliate” against other sectors, such as IP. This option has never been tested by any WTO member, raising questions regarding how to put it into practice, especially when a country targets intangible products with its retaliation.

Antigua and Barbuda did not clarify at Monday’s DSB meeting which specific retaliatory measures it intends to adopt. For one, Mark Mendel - one of Antigua’s representatives in the dispute - stated that a website allowing downloads at a minor price is an “intellectual possibility.” In that case, no royalties would be paid to the US industry, and downloads could be stopped when the threshold of US$21 million in income for Antigua is reached.

However, the island state left a door open to a possible settlement, specifying that they “stand ready and eager to find a fair solution to the dispute” and encouraged the US to act promptly to avoid the consequences of retaliation.

The US, in return, warned that if Antigua proceeds “with a plan for its government to authorise the theft of intellectual property, it would only serve to hurt Antigua’s own interests.”