US Trade Representative tests his verbal jujitsu out on the WTO

We didn’t really mean it, Frist crony says

House of Cards The US Trade Representative (USTR) spoke out yesterday against the compliance panel report that slammed the US for failing to bring its online gambling policies in line with previous WTO rulings.

The new American argument is really something of a Trojan horse for the international body - the USTR now claims that the US will comply fully with the report, but with the caveat that the US never really agreed for gambling services to be covered by the General Agreement on Trade in Services (GATS) back in 1994 when the agreement was finalized.

This new tack rather cleverly allows the US to maintain a fig leaf of compliance with the WTO rulings while revising its own commitments, although under GATS, affected member states would also be allowed to adjust their own commitments as compensation for the US action.

"U.S. laws banning interstate gambling have been in place for decades. Most WTO Members have similar laws. Unfortunately, in the early 1990s, when the United States was drafting its international commitments to open its market to recreational services, we did not make it clear that these commitments did not extend to gambling. Moreover, back in 1993 no WTO ember could have reasonably thought that the United States was agreeing to commitments in direct conflict with its own laws," said Deputy United States Trade Representative John K. Veroneau.

"Neither the United States nor other WTO Members noticed this oversight in the drafting of U.S. commitments until Antigua and Barbuda initiated a WTO case ten years later. In its consideration of this matter, the WTO panel acknowledged that the United States did not intend to adopt commitments that were inconsistent with its own laws. However, under WTO rules, dispute settlement findings must be based on the text of commitments and other international documents, rather than the intent of the party. The United States strongly supports the rules-based trading system and accepts the dispute settlement findings. In light of those findings, we will use WTO procedures for clarifying our commitments."

Oh, really?

Other countries, of course, could well take issue with some of those comments. Interstate gambling on horse racing is clearly legal under the Interstate Horseracing Act, which is why the WTO panel ruled rather narrowly against the US on that issue. And that in turn begs the question - why can’t the US just bring itself into compliance on this rather narrow issue of gambling on horse racing over the phone or the internet? Obviously, it’s fairly common in the US and the sky has yet to fall, so what’s the big deal?

Veroneau’s personal history might have something to do with it. He previously held the title of “Legislative Director” for the now - departed Republican Majority Leader Bill Frist, a social conservative and rabid opponent of online gambling who tacked the Unlawful Internet Gambling Enforcement Act (UIGEA) to a port security bill under cover of night.

The gist of Veroneau’s argument is that somehow America naively signed on to GATS without knowing what it was doing, although many other signatories specifically excluded gambling services from their commitments - an argument that rings rather hollow. And if most of the other signatories to the treaty were aware of what they were doing, why should other countries assume the US did not?

Whether or not this will be the panacea the USTR seeks is still questionable, however. If other countries "clarify" their agreements under the GATS, they could well use it as a hammer against US intellectual property interests just as Antigua will be able to once the compliance panel process comes to a close.

The US could well discover that compliance with the WTO on internet horse race gambling would have been the simplest and cheapest solution of all. ®

Burke Hansen, attorney at large, heads a San Francisco law office