. /.  RESTRICTED  WORLD TRADE  
ORGANIZATION  S/C/W/283 
12 July 2007 
 
 (07-2989) 
Council for Trade in Services Original:   English 
  
 
COMMUNICATION FROM BRAZIL 
 
Statement on the Invocation by the United States of Article XXI of the GATS
 
 
  The following communication, dated 12 July 2007, from the delegation of Brazil, is being 
circulated to the Members of th e Council for Trade in Services. 
 
_______________ 
 
 
1. On 4 May 2007 the United States notified the Counc il for Trade in Services of its intention 'to 
modify, in part, its commitment on "Other Recr eational Services" in its Schedule of Specific 
Commitments' in order to "specifically excl ude gambling and betting services from the subsector 
coverage".1 Pursuant to Article XXI of the General Ag reement on Trade in Services ("GATS"), any 
Member whose benefits thereunder may be affected  by a proposed modification or withdrawal in 
other Members' schedules may request to enter into  negotiations with a view to reaching agreement 
on any necessary compensatory adjust ment with the notifying Member.  
2. Without prejudice to Brazil's views on its benefits being affected in the present instance, 
Brazil has not claimed to be an "affected Member" in the sense of Article XXI of the GATS and, consequently, has not requested the United States to enter into the negotiations established in Article 
XXI.2(a) thereof. 
3. Brazil was also not a third party to the dis pute brought by Antigua and Barbuda on certain 
U.S. measures affecting the cross-border supply of  gambling and betting services, in which context 
the United States was found to be in breach of its obligations under the GATS.2  As the United States 
itself acknowledged before the Dispute Settlement Body ("DSB"), this dispute is closely related to the 
mentioned notification.3 
4. Nevertheless, Brazil would like to highlight some  systemic concerns arising out of the present 
situation. 
5. According to the United States, recourse to Artic le XXI is the vehicle chosen by the U.S. 
authorities to simultaneously respect the definitiv e finding by the WTO dispute settlement system on 
the scope of the U.S. schedule, bring its GATS oblig ations into conformity with "a longstanding and 
well-recognized public policy" and correct a "unique  situation in which a Member never intended 
even to make a concession".4  
                                                      
1 See document S/SECRET/10. 
2 United States – Measures Affecting the Cross-Border Supply of Gambling and Betting Services , 
WT/DS285 (“US – Gambling”). 
3 See WT/DSB/M/232, at paras. 53-58, 71-72. 
4 Idem.  S/C/W/283 
Page 2  
 
  6. As Brazil stated before the DSB on 22 May 2007, it is clear that the solution preferred by the 
Understanding on Rules and Proce dures Governing the Settlement of Disputes ("DSU"), which can 
only be reinforced after so many years of litigation as in the gambling dispute, is that a Member found 
to be applying an inconsistent measure remove the source of such illegality, as indicated in Article 3.7 
of the DSU.  The U.S. initiative under Article XXI  of the GATS will eventually produce "some" 
solution, but not the solution preferred by the DSU.  Moreover, Brazil is still to be convinced that 
developing country Members that might decide to m odify or withdraw concessions in their schedules 
as a "solution" to disputes would have the ability to  persuade the developed country Members to agree 
with such an outcome.5 
7. While Brazil does not question the right confe rred by Article XXI of the GATS and does not 
wish to prejudge the final result of the process launched by the United States under that provision, 
Brazil is concerned about the idea that no compen sation should be granted by the United States to 
affected Members because allegedly there had never b een an intention on the part of the former to 
make any commitment with respect to cross-border gambling.  After the clear conclusion of the 
original panel and the Appellate Body6 on the scope of the U.S. schedule, Brazil would expect that 
this sort of assertion should not even be made. 
8. Regardless of what the United States may purport to be its intention underlying its GATS 
schedule, the fact is that the dispute settlement mechanism – using the resources provided for in the 
DSU – found that the U.S. schedule contains a co mmitment with respect to cross-border gambling. 
Therefore, any modification or withdrawal concerning such a commitment has to be duly compensated in accordance with the rules established by the GATS and the Procedures for the 
Implementation of Article XXI.7  Otherwise, the legal and econom ic value of Members' schedules 
would be severely undermined. 
9. In light of the above, Brazil urges the United States to accommodate satisfactorily all the 
affected Members, and in particul ar Antigua and Barbuda, by maintain ing "a general level of mutually 
advantageous commitments not less favorable to trade than that provided for in [the U.S.] Schedule of 
specific commitments prior to [Article XXI] negotiations".8  
 
__________ 
  
                                                     
 
5 See WT/DSB/M/232, at paras.60-64. 
6 See, e.g., US – Gambling , Appellate Body Report (WT/DS285/AB/R), at para. 208. 
7 See document S/L/80 . 
8 See Article XXI.2(a) of the GATS.