E.U. Takes Next Steps in Investigation of Continuing WTO-Violations of U.S. Enforcement Policy WASHINGTON, Sept. 15
WASHINGTON, Sept. 15 /PRNewswire/ -- Congress and members of the executive
branch will be visited by a team of European Union investigators this week,
headed by senior E.U. trade official M. Jean-Francois Brakeland, head of the
European Commission's dispute settlement office. The E.U. delegation is
looking into allegations that the U.S. Department of Justice (DOJ) breaches
international treaties by continuing to enforce WTO-violating laws against
E.U. businesses and individuals who once, but no longer, participated in the
U.S. online gaming industry. The E.U. delegation will be seeking answers from
the U.S. before taking decisions on how best to protect E.U. interests,
including to the possibility of implementing blocking-legislation to prevent
U.S. enforcement in Europe; opening WTO proceedings on U.S. enforcement of its
laws versus conflicting international commitments; and consideration of the
sanctions which would be sought against U.S. industry if no amicable and fair
solution can be found.
The provision of Internet gambling remains protected by commitments that
the U.S. has made under the treaties policed by the World Trade Organization
(WTO). The U.S. has already been found to be in violation of those commitments
and is in the process of seeking to withdraw them. Even if it is successful in
doing so, the effort would only effect future trade rather than past activity.
The E.U. does not accept that it is legitimate for the U.S. to further renege
on its trade commitments by continuing to take retrospective and
discriminatory enforcement action, especially against E.U. entities which have
long since ceased their acceptance of any U.S. business. If the investigators
conclude that DOJ prosecutorial policies and action violate international
trade rules, the E.U. is likely to launch a fresh WTO dispute against the U.S.
with further consequences for the reputation and standing of the U.S. in the
international community.
"This is a hugely significant piece of the fact-finding mission whose
existence reflects a major point of tension between the U.S. and Europe over
the integrity of international trade commitments," said Dr. Joseph Weiler, an
international trade expert and professor at NYU School of Law who advises the
industry. "It is a shame that the E.U. has to go this far to seek a solution
to such an unnecessary and avoidable dispute that, if not solved, will have
wide-reaching consequences for the U.S. and the systems it benefits from and
needs to maintain."
Dispatched by the European Commission in Brussels, the team of
investigators will arrive in Washington on September 15 meeting with the
offices of the United States Trade Representative (USTR), and Department of
Justice (DOJ) as well as members of Congress who have relevant committee
responsibility or who have demonstrated an interest in seeing the executive
branch account for its policies and decision-making.
"We have no doubt that U.S. prosecutorial policy as regards E.U. online
gaming operators is a clear breach of its WTO commitments and we applaud the
E.U. trade office for taking seriously the concerns of the online gaming
industry in Europe," said Clive Hawkswood, the Chief Executive of the Remote
Gambling Association (RGA.) "The E.U. industry has had to accept the huge
losses caused by the U.S. repudiation of its WTO commitments. What can't be
accepted is that companies and individuals, who respected Congress in 2006 and
ceased taking U.S. business, should still be under the threat of criminal
enforcement action today for conducting trade that they were entitled to do
under the terms of the WTO agreements -- that simply cannot be right."
Nao Matsukata, a respected trade advisor in Washington and former senior
trade policy official under the earlier Bush administration, says, "The U.S.
may find itself in a difficult political situation with Brussels. The
'disconnect' between trade and law enforcement policy compounds the matter,
and risks leaking into other areas of the transatlantic relationship. The
current course of U.S. action may also expose U.S. business to retaliatory
measures in other countries if more WTO members adopt these types of policies
and even now we are seeing the consequences, for example, in current cases
with China. Greater congressional oversight of trade policy is probably
inevitable to ensure that executive branch agencies maintain the proper regard
for the nation's treaty commitments and priority interests."
Lode Van Den Hende of Herbert Smith law firm, for the Remote Gambling
Association on this matter, said, "It is one thing to change the rules going
forward, but you can't change them for the past or the whole system collapses.
The E.U. is currently considering all options available to it for use if
needed, including implementing blocking-legislation which would prevent any
E.U. entity cooperating with U.S. authorities in seeking enforcement in Europe
whether it be extradition, asset-seizure or otherwise. It is a shame that this
unnecessary and avoidable dispute has to go this far. We are still hopeful
that sense will prevail."
Background
The E.U. investigation began in March 2008, prompted by a complaint under
Europe's Trade Barriers Regulation ("TBR"), which allows the E.U. to take
legal action to enforce its commercial interests on behalf of its 27 member
states. The complaint was made in December 2007 by the Remote Gaming
Association, a London-based trade group that represents approximately 30
online gaming operators in Europe. The complaint however relates to
enforcement activity that effects companies, banks and other E.U. businesses
and the individuals (executives, major shareholders etc.) that are associated
with them.
The WTO cases in this area began in a case brought by Antigua and which
produced 3 separate rulings (including Appellate panel in 2005 and culminating
in an implementation panel in 2007) confirming that the U.S. was in violation
of its commitments under the General Agreement on Trade and Services (GATS) by
restricting non-U.S. businesses while leaving U.S. businesses to operate
uninterrupted in this highly lucrative market.
During the course of the Antigua case, the U.S. Congress passed the
Unlawful Internet Gambling Enforcement Act in October 2006 (UIGEA) at which
point the leading E.U. operators and their banking and other business partners
ceased accepting U.S. customers, at the cost of billions of dollars loss of
business.
In May 2007 and in response to the WTO decisions in the Antigua case, the
U.S. made the unprecedented announcement that, instead of creating compliant
policy on Internet Gambling, that it would withdraw its commitments from the
GATS beginning a compensation negotiation with several WTO members affected,
including the E.U. While agreement was eventually reached with the E.U. for
removing the gaming commitment going forward, the E.U. does not agree (and
nothing in the E.U./U.S. agreement or the WTO rules permit) that the U.S. is
entitled to change the commitments retrospectively to justify enforcement
against past activity. In addition, there has been a question-mark over the
integrity of the E.U./U.S. agreement due to the lack of congressional
ratification of any new commitments introduced by USTR in place of the
gambling commitments.
This is the second attempt by the E.U. to make the visit - the first being
postponed by USTR in June citing the need for more time to prepare - and is
now being headed up by Jean-Francois Brakeland, the head of the relevant unit
in the E.U. Commissions Directorate General on Trade. Overall responsibility
for E.U. External Trade is held by Commissioner Mandelson who is the USTR
(Susan Schwab)'s counterpart in Europe.
Other parties with interests at stake who are watching with interest
include major banks and other participants who are caught up in the
enforcement policy of certain offices of the Department of Justice with
respect to activity that ceased after UIGEA was enacted.
About the Remote Gambling Association
The RGA represents most of the world's largest, licensed, and stock
market-listed remote gambling companies and provides the industry with a
single voice on all the issues of importance to regulators, legislators, and
key decision makers around the world. For more information, please visit
www.rga.eu.com.
SOURCE Remote Gambling Association
