Antigua Roars Again
- posted by Jim Leitzel @ 11:51 PM

In the WTO internet gambling case that seems to go on and on and on, Antigua and Barbuda is threatening to start ignoring US copyrights and patents by the end of the month if the US does not make some movement towards settling Antigua's WTO-validated complaint. US movies, music, and computer software would likely be copied and sold, at least until Antigua earns the $21 million it has coming in damages. The WTO would have to approve Antigua's self-help maneuver, but might have little grounds for withholding approval. The movie folks are concerned.

Vice Squad has let pass unmentioned the last couple iterations in the US-Antigua dispute. Our most recent relevant (to this topic, that is) post was last August; ironically, the US largely won the case with Antigua at the WTO, but has been stonewalling for years to avoid a reckoning on the small portion in which Antigua prevailed. The WTO is unimpressed, and likely will remain so.

Labels: Antigua, gambling, internet, WTO

 
US-Antigua WTO Dispute in the Times
- posted by Jim Leitzel @ 1:39 PM

Dani Rodrik points us to an article in today's New York Times on the WTO case between Antigua and Barbuda and the United States. One point that the article does not make clear -- indeed, it sort of suggests the opposite -- is that for the most part, the US won the case. But it does note the stonewalling tactics of the US on that portion of the dispute, primarily concerning internet betting on horse races, in which Antigua prevailed.

Existing domestic vice controls, for all of their faults, represent a sort of evolved equilibrium that in part tries to deal with the social costs of vice. Allowing these controls to be trumped by trade treaties is dangerous, as Vice Squad continues to proclaim. Undoubtedly it would be possible to imagine a world in which a nation's chosen approaches towards vice could be made consistent with trade non-discrimination principles. But allowing those principles to overturn the existing equilibrium, before the first-best system of rules is worked out, puts a country at risk of a difficult transition that might involve much higher social costs of vice. And this dynamic in turn will put trade openness at risk. Dani seems to agree:

To me, this is another example of how existing WTO practices are leading to the narrowing of policy space to the detriment of legitimacy (and economic logic). When the system serves to enforce new restrictions on domestic policy autonomy that would be wildly unpopular at home, it is time to rethink the system.

Dani couches his reaction by invoking the "residual rights of control" approach to ownership. This is not an approach I have ever found to be particularly compelling, though I imagine that I am missing something obvious. Imagine that there is an asset over which there are two payoff-relevant dimensions of use, say, intensity and duration. We write a contract that says that I get to choose intensity and you get to choose everything else. Then by the "residual rights" approach, you are the owner. Now imagine the (equivalent, by stipulation) contract that gives you the right to choose duration, and I can choose everything else; handy dandy, I'm the owner?

Labels: Antigua, gambling, internet, Rodrik, WTO

 
It's Official: Antigua Defeats US
- posted by Jim Leitzel @ 11:46 PM

The wheels of World Trade Organization justice turn rather slowly. After some four years and myriad reversals and dramatic double reversals, the WTO has adopted its March ruling that US rules on internet betting on horse racing are illegal. Recall (see the Vice Squad post from May 4, 2007) that the US response to the pre-official ruling was to unilaterally 'renegotiate' its trade obligations, claiming that the renegotiated version represented its intentions all along. So it needn't even provide compensation to its trading partners who are harmed by the altered treaty terms, the US argues. Sure, WTO rules require compensation when a country alters its obligations, but the US, you see, never really agreed to those silly old obligations anyway, so now that we've cleared that up we can all just forget about this little WTO ruling, OK?

"Brazil and India on Tuesday both said the United States was obliged by law to compensate Antigua if it wants to now redefine its services obligations." Antigua's WTO-endorsed threat, should it not receive satisfaction, includes disregarding US trademarks and copyrights.

Labels: Antigua, gambling, internet, WTO

 
Rewriting History to Avoid a WTO Ruling
- posted by Jim Leitzel @ 6:49 PM

The US mostly won the internet gambling case that was brought against it by Antigua and Barbuda. (Here's a Vice Squad post on the matter from April 9, 2005 -- somehow the permalinks only bring you to the proper month, however, so there's some scrolling down to get to April 9.) But in the relatively small matter of betting on horse races, Antigua prevailed. The problem is that the US allows some internet betting on horse racing, but does not extend the required 'national treatment' -- a level-playing field between domestic and foreign suppliers -- to offshore internet gambling purveyors. The US has been dragging its heels (as per this February 7, 2007 post) in making the adjustments to its laws that are necessary to bring them into compliance with its WTO non-discrimination commitments.

The latest US dodge is to deny that it ever made such a commitment with respect to gambling. There was an error, you see, when the US failed to explicitly exclude gambling, as was its intention, when it signed on to liberalized trade in recreational services some 14 years ago. Apparently no one noticed the oversight until just now; conveniently enough, amending the agreement to the original intention will also nullify the force of the adverse WTO ruling. Glad we got that misunderstaning cleared up.

This sort of thing could catch on -- surely Russia did not really intend to sell Alaska to the US?

Labels: Antigua, gambling, internet, WTO

 
WTO Rules for Antigua Again
- posted by Jim Leitzel @ 9:52 PM

Imagine that you lose a civil case as a defendant, and the court orders you to abate a nuisance, say, by ceasing to engage in some activity. You don't stop, and the plaintiff returns to the court. You are asked to explain your failure to comply, and you say, basically, I thought I was always in compliance -- my activity did not constitute a nuisance. You wouldn't be surprised if the court mentions that your contention was already rejected in the original trial.

Well, that is essentially what has happened in the World Trade Organization dispute between Antigua in the US. The US was found to be engaged in discriminatory behavior by allowing some domestically-based internet betting on horse racing, while preventing Antigua-based firms from offering a similar service to US bettors. The US was supposed to alter its legislation to eliminate the discriminatory treatment, but it did no such thing -- rather, when hauled back into the WTO dispute process the US claimed that its rules had always been non-discriminatory. (The one piece of new US legislation that was connected to internet gambling was the October 2006 attempt to curtail web betting by targeting payment intermediaries. But horse racing was explicitly exempted, precisely to protect the existing domestic trade.) On Friday, the WTO announced that it did not find the US-non-argument to be compelling. The decision was widely expected, in part because of an unauthorized leak of an interim report in January.

The original dispute was a near-complete victory for the US. Antigua had targeted all forms of internet gambling, but only prevailed in the case of horse racing because of the legal internal trade in the US. This small bone that the WTO tossed to Antigua was more than the US was willing to tolerate, it seems.

Labels: Antigua, gambling, internet, WTO

 
Antigua-US Internet Gambling Dispute Rolls On
- posted by Jim Leitzel @ 10:22 AM

Back in 2005, the US largely won its internet gambling dispute with the two-major-island nation of Antigua and Barbuda. The part of the decision that favored Antigua concerned internet betting on horse racing. This is permitted in some US states, and furthermore, a federal US law explicitly makes such activity legal in states that license horse racing. But the US still wants to prevent Antigua-based internet wagering sites from being able to legally offer betting on horse races to US-based customers, and has been stalling the seemingly required adjustment in US laws. So Antigua has gone back to the WTO with a complaint that the US has not complied with the 2005 decision. Now it looks as if Antigua will win this round (again, in a sense); furthermore, the EU is an interested bystander in the proceedings.

Precisely what the EU interest is is uncertain, however. Surely EU-based internet gambling sites would appreciate fully legal access to US gamblers. On the other hand, internally, the EU faces exactly the same conundrum of protectionist internet gambling policies by individual nations. Some EU member states allow their residents to bet on sports, even over the internet, though only via an in-state monopoly provider. Countries also place controls on the advertising of foreign gambling services, while simultaneously aggressively promoting their own national lotteries. Both of these practices are likely to contravene EU rules, and are under challenge.

Labels: Antigua, EU, gambling, internet, WTO

 
US Makes a Comeback In WTO E-Gambling Case
- posted by Jim Leitzel @ 4:20 PM

There for a while it looked like the World Trade Organization was going to come down on the side of Antigua and Barbuda in its trade dispute with the US over internet gambling. But the final ruling largely went the US way, with the WTO accepting that the US can keep its federal restrictions on sports betting. Horse racing is another matter, however, since some states allow internet betting on racing. The WTO's non-discrimination orientation suggests that if a service is legal for domestic suppliers, foreign suppliers cannot be prohibited.

It isn't easy to tell exactly what is going on in the ruling, which takes the form of a 138-page document (in the English-language version) released on April 8. (The document can eventually be found from this page; scroll down to DS285, from March, 2003.) But it seems as if the major finding is that the US federal gambling statutes at issue (the Wire Act, the Travel Act, and the Illegal Gambling Business Act) are measures that fall under the exception of being necessary to protect public morals or to maintain public order. So in this case, the commitment to free trade is not allowed to trump domestic vice regulation.

Labels: Antigua, free trade, gambling, internet, WTO

 
The WTO and Marijuana
- posted by Jim Leitzel @ 10:04 AM

Back to Chicago and blogging, both one day later than planned. I can't possibly catch up with blogospheric activity, but I will try to note today a couple of items that registered particularly deeply. First, this St. Patrick's Day offering from Slate, suggesting that the WTO's commitment to free trade might one day provide a lever to marijuana legalization in the US. Among the reasons offered is the course of the internet gambling case between the US and Antigua and Barbuda. I think that the internet gambling case will not prove to be a relevant precedent (at least for a loooong time), because both the production and consumption of internet gambling is legal in much of the world, while marijuana is prohibited globally -- even in the Netherlands, despite the official toleration of coffee shops. And I find overstated the observation that "Local marijuana-growing enjoys quasi-legal status in the United States...", as would, I think, just about anyone who tried to openly and notoriously engage in such growing for recreational use, or if not part of a state-sponsored medical marijuana program.

Though I am opposed to drug prohibition, I am also quite leery of using free trade principles to drive vice policy. I believe that such a route ultimately will undermine the (always rather tepid) political commitment to free trade (witness the reaction of some Congressmen to the WTO decision) and also lead to undesirable vice policies. But I also expect that it is the social view of the vice at issue that chiefly determines the extent to which free trade is enlisted into the service of vice policy regulation. On free trade (and probably also on harm reduction) grounds, the European Union should embrace snus, which is a form of a legal product, tobacco. But instead it bans it, outside of Sweden. The EU also hectors the Netherlands on cannabis policy, requiring the Dutch to show that their relatively liberal approach does not undermine the more restrictive regimes of neighboring countries. Meanwhile, as Vice Squad frequently points out, EU policies, this time under the banner of free trade, have rendered unsustainable strict alcohol control regimes in Denmark, Finland, and Sweden.

Labels: Antigua, free trade, gambling, internet, marijuana, WTO

 
The US, Behind, to Continue Its Battle With...
- posted by Jim Leitzel @ 10:50 PM

...Antigua and Barbuda. The World Trade Organization found in November that the US ban on betting with offshore firms violates its trade commitments. (Enforcement of an offshore betting ban is something else entirely -- in most states, it seems, casual bettors are unlikely to face any enforcement action, though those who establish internet betting sites, even abroad, have more to worry about in terms of legal jeopardy from the US. But I am not a lawyer, so please do not rely on that information, which could be mistaken.) But the US will not take this ruling lying down; rather, the nearly 70,000 residents of Antigua and Barbuda will be subjected to...an appeal of the WTO decision.

As Vice Squad's ad nauseum discussion of EU alcohol policy indicates, I worry that allowing free trade agreements to trump a nation's vice regulations poses a threat both to desirable vice policies and to free trade.

Labels: Antigua, free trade, gambling, internet, WTO

 
The US Ban On Internet Gambling
- posted by Jim Leitzel @ 7:17 PM

Here's an article with some nice background on the ongoing controversy and WTO case between Antigua and Barbuda and the US, plus the US government's crackdown on the advertising of Internet gambling. It includes the statistic that 5.3 million Americans gamble at foreign-based web-casinos.

Labels: Antigua, free trade, gambling, internet, marketing, WTO

 
David, Goliath in Settlement Talks on Internet Gambling
- posted by Jim Leitzel @ 5:47 PM

In late March, a World Trade Organization Panel decided an Internet gambling dispute between the US and the twin-island nation of Antigua and Barbuda by backing the islanders; previous related Vice Squad post here. Antigua hosts cyber casinos, while the US tries to prevent at least some forms of Internet gambling. (The legal status of Internet gambling in the US varies state-to-state and is both complicated and unsettled.) That's a restraint upon trade, and the WTO panel thought that the US should have negotiated with Antigua before banning (to the extent that it has) Internet gambling. The US was talking appeal, but this week's news is that the two sides are going to try to come to terms before any further WTO rulings.

Having successfully (so far) taken on the US of A, Antigua and Barbuda is feeling its oats. The next target: looking for some relief from those onerous anti-money laundering controls promulgated by the G-7. Perhaps A&B should mention that the best money laundering intervention would be to abandon the disastrous worldwide drug prohibition.

Labels: Antigua, free trade, gambling, internet, WTO

 
Playing Catch-Up
- posted by Jim Leitzel @ 8:57 PM

During the past week of slow blogging here at Vice Squad, lots of exciting vice-related stories have appeared on blogs to which we link. We can't possibly make good the arrears, but I will mention just a few of the highlights:

(1) Mark Kleiman offers a fairly detailed post about personal alcohol licenses, which would be revoked (for some period of time) if a person is convicted of misbehavior under the influence of alcohol. Mark suggests that to be efficacious, sellers would have to do the enforcing, that is, check all potential buyers for a valid alcohol license. Related systems now in use in the US as conditions for probation or pre-trial release rely on such things as random tests to provide a modicum of enforceability.

Vice Squad has mentioned the possibility of personal licenses for drug use many times in the past, most recently, here. Such licensing, which could be used for heroin and cocaine as well as alcohol, also would create an environment conducive to some private drug policy responses: some employers might be unwilling to hire someone with who has a heroin license, while life, health, or auto insurance rates might vary based on the licenses a person holds. People might even use the license to control their consumption, perhaps by agreeing to be licensed for only limited purchases (that is, below some maximum that would be established by law) of their drug per month.

Mark also links to and comments upon this fine LA Weekly piece on the use of psilocybin (the main active ingredient in magic mushrooms) to reduce death anxiety.

(2) Tyler Cohen at Marginal Revolution brings word of the World Trade Organization decision that the US cannot legally ban Internet gambling by US residents from web-based casinos located abroad. The case pitted the nation of Antigua and Barbuda (population: under 70,000; Internet betting operations: 30) against the most powerful nation on earth, and the underdog has won the first round. Some members of Congress won't take this lying down, however, as this NY Times article (registration required) linked by Tyler makes clear. (Vice Squad occasionally comments upon the regulation of Internet gambling.)

(3) Belle at Belle de Jour offers an FAQ-style post that provides some information you probably didn't know about the call-girl business in Britain; for instance, only about one-quarter of her customers tip. (Keep in mind, as you read the linked post, that commercial sex is not illegal in Britain, though Belle's "manager" is on the wrong side of the law. ) Belle's award-winning blog has led to a book deal for her. Those of us who will never earn a dime can try to take the moral high ground: making money off of a blog? Isn't that a sort of, er, prostitution?

Labels: alcohol, Antigua, Britain, drugs, gambling, internet, Kleiman, licensing, mushrooms, prostitution, WTO