After years of unsuccessful negotiations between nations, the World Trade Organization Dispute Settlement Body today gave Antigua and Barbuda the right to impose sanctions against the United States for blocking online gambling. The US was found in violation of WTO rules in 2007 and has failed to resolve the issue, so the Caribbean nation was given the right to retaliate in an area that is likely to force a US response: lifting US intellectual property rights. [Update: US DSB statement added]

At the DSB meeting today, it was announced that the DSB agreed to the request by Antigua and Barbuda for authorization to apply sanctions against the US consistent with the arbitrator decision on the dispute concerning the cross-border supply of gambling and betting services, according to sources.

Antigua and Barbuda said in its statement to the DSB that it has lost billions of dollars and thousands of jobs, that it has been “patient, open and creative,” and has never received a settlement proposal from the US. “They have simply failed to respond or do anything,” it said. The country said that the retaliation against US IP rights is sanctioned and not piracy, as the US is trying to make it out to be.

The amount of sanctions requested by Antigua and Barbuda cannot exceed US$21 million annually. The violation was of the General Agreement on Trade in Services (GATS), but as the small country has little to sanction in that area without doing harm to itself, it was permitted to cross-retaliate under the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). The related WTO documents are WT/DS285/25 and WT/DS285/ARB.

Antigua and Barbuda in its statement rejected as “disingenuous” and an “unhelpful red herring” the US argument that the commitment in relation to gambling in the US GATS (services) schedule was an error or was unintentional. And it said it will apply the suspension of concessions and other obligations “in a reasonable and responsible manner”.

And it rejected US arguments that it has banned all online gambling for health and safety reasons because of its pernicious nature, as it said the industry could be regulated. But it especially took issue with assertions that it will be engaging in piracy.

“To accuse our country of somehow being an International outlier by doing what the rules provide we can do, while at the same time confiscating the money of our operators held in global accounts and subjecting our operators to prison terms under laws held inconsistent with GATS pretty much beggars belief,” it said.

Dominica, on behalf of the Organization of Eastern Caribbean States (OECS) members, made a statement in support of Antigua and Barbuda.

Antigua and Barbuda issued a press release, available here.

[Update:] The United States, in its statement to the DSB, available here [pdf, see item 6], called withdrawal of Antigua and Barbuda’s obligations under the intellectual property agreement “theft” and “government-authorised piracy.” It said it has offered “real and substantial benefits” to Antigua and Barbuda.

The US expressed disappointment with Antigua and Barbuda’s “misplaced decision to abandon constructive settlement discussions.” It said it understood the two sides to be “making progress on a settlement that would bring real benefits to Antigua.” But a crux of the US position in the case is that it “never intended gambling and betting services to be included in its schedule under the GATS.” With GATS, countries volunteered commitments in different areas at the time of negotiation.

“As a result of ambiguities in drafting, and despite the intent of the U.S. negotiators, the Appellate Body ultimately found that the U.S. schedule must be construed as including a market access commitment for cross-border gambling.” It said it has accepted the results of the DSB and has responded responsibly. It has reached agreement will interested WTO members, except Antigua and Barbuda, on a compensation package of adjustments to the US GATS schedule. It warned Antigua and Barbuda that proceeding with sanctions will undermine chances for a settlement and impede foreign investment in the country. [end update]

Steve Metalitz, counsel to International Intellectual Property Alliance, a major US content industry group, said in a statement: “We are of the firm view that suspending intellectual property rights is not the right solution, and that state sanctioned theft is an affront to any society. Should Antigua determine to move forward in this manner, it would certainly interfere with the ability to reach a negotiated resolution, and would harm the interests of Antiguans.” But he did not give any indication why Antigua and Barbuda should believe more progress will be made now than in the past five years.

The country had a response to this in its statement. “[N]o longer can we, or of most importance, our citizens, be placated with empty promises and dissembling,” it said. “If the United States wants to avoid the consequences of our resort to our rights under the DSU [WTO Dispute Settlement Understanding], we would encourage them to act, and act quickly.”

Infojustice.org has prepared an analysis of the decision, here. It says Antigua will set up a website offering infringing American content.