GPWA Times Magazine - Issue 2 - October 2007

31 But a WTO panel ruled against the United States in 2004, and an appellate body upheld that decision one year later. In March, the organization upheld that ruling for a second time and declared Washington out of compliance with its rules. That has placed the United States in a quandary, said John Jackson, a professor at Georgetown University Law Center who specializes in international trade law. Complying with the WTO ruling, Jackson said, would require Congress and the Bush administration either to reverse course and permit Americans to legally place bets online from offshore casinos or, equally unlikely, impose an across-the- board ban on all forms of Internet gambling - including the online purchase of lottery tickets, participation in Web-based pro sports fantasy leagues and off-track wagering on horse racing. But not complying with the decision presents big problems of its own for Washington. That is because Mendel, who is claiming $3.4 billion in damages on behalf of Antigua, has asked the trade organization to grant a rare form of compensation if the U.S. government refuses to accept the ruling: permission for Antiguans to legally violate intellectual property laws by allowing them to distribute copies of U.S. music, movie and software products, among others. For the WTO itself, the decision is equally fraught with peril. It cannot back down because that would undermine its credibility with the rest of the world. But if it actually carries out the penalties, it risks a political backlash in the United States, the most powerful force for free-flowing global trade and the WTO’s biggest backer. “Think of this from the W.T.O’s point of view,” said Charles Nesson, a professor at Harvard Law School and a founder of Harvard’s Berkman Center for Internet & Society. “They’re this fledgling organization dominated by a huge monster in the United States. People there must be scared out of their wits at the prospects of enforcing a ruling that would instantly galvanize public opinion in the United States against the WTO.” In April 2005, the trade body gave the United States one year to comply with its ruling, but that deadline passed with little more than a statement from Washington that it had reviewed its laws and decided that it had been in compliance all along. The case is now before an arbitration body charged with assessing damages. “The stakes here are enormous,” Nesson added. If anything, the Bush administration raised those stakes in May when it announced that it was removing gambling services from existing trade agreements. John Veroneau, a deputy trade representative, said that the federal government was only “clarifying our view” that it never meant to include online gambling in any free trade agreements. “It is truly untenable to think that we would knowingly bargain away something that has been illegal for decade upon decade in this country,” Veroneau said. He added that Washington was not defying the WTO but simply pursuing its case through all legal channels. The WTO allowed that Washington probably did not intend to include online gambling when it agreed to the inclusion of “recreational services” and other similar language in agreements reached during the early 1990s. But the organization says it has no choice but to enforce the plain language of the pacts.