UNITED STATES – MEASURES AFFECTING THE CROSS-BORDER SUPPLY OF GAMBLING AND BETTING SERVICES
Document: Recourse by Antigua and Barbuda to Article 22.2 of the DSU
Date: 22 June 2007
Document codes: WT/DS285/22
Complainant: Antigua and Barbuda
Respondent: U.S.
Third parties: Canada, Taiwan, EU, Japan, Mexico, China
Dispute stage: Implementation & Compliance
Agreements cited: Art. VI, VIII, XVI, XVII, XI  Services (GATS)

UNITED STATES – MEASURES AFFECTING THE CROSS-BORDER SUPPLY
OF GAMBLING AND BETTING SERVICES

Recourse by Antigua and Barbuda to Article 22.2 of the DSU

 The following communication, dated 21 June 2007, from the delegation of Antigua and
Barbuda to the Chairman of the Dispute Settlement Bo dy, is circulated pursuant to Article 22.2 of the
DSU.

Antigua and Barbuda requests that the followi ng item be included in the agenda of the
meeting of the Dispute Settlement Body (the "DSB ") of the World Trade Organisation (the "WTO")
to be held on 24 July 2007:

"" (WT/DS285) – Recourse to Article 22.2 of the Understanding on
Rules and Procedures Governing the Settlement of Disputes by Antigua and Barbuda

Pursuant to Article 22.2 of the WTO's Understanding on Rules and Procedures Governing
the Settlement of Disputes (the "DSU"), Antigua and Barbuda requests authorization from the DSB to
suspend the application to the United States of co ncessions and related oblig ations of Antigua and
Barbuda under the General Agreement on Trade in Services (the "GATS") and the Agreement on
Trade-Related Aspects of Intellectual Property Rights (the "TRIPS").

Antigua and Barbuda's aim through this suspensi on is the effective withdrawal of concessions
and other obligations so as to match the level of nu llification or impairment of benefits accruing to
Antigua and Barbuda, amounting to an annual va lue of US$3.443 billion, as a result of the
United State's failure, as of 3 April 2006, to bri ng its measures affecting the cross-border supply of
gambling and betting services into compliance with the GATS or to otherwise comply with the rulings
and recommendations of the DSB in United States– Measures Affecting the Cross-Border Supply of
Gambling and Betting Services ("DS285").

Antigua and Barbuda has held discussions w ith the United States with a view towards
agreement on compensation, but to date these disc ussions have not resulted in any agreement.
Antigua and Barbuda remains hopeful that further di scussions may result in resolution of this issue,
and if so it will inform the DSB as soon as practicable.

Background

On 21 July 2003, the DSB established a panel at the request of Antigua and Barbuda. Both
the panel and the Appellate Body in DS285 foun d certain measures of th e United States to be
inconsistent with the obligations of the United States under the GATS. On 7 April 2005, the DSB

adopted the report of the panel, as modified by the report of the Appellate Body. The resulting DSB
recommendations and rulings include, inter alia, the recommendation that the United States bring the
measures found to be inconsistent with the GATS in to conformity with its obligations under that
agreement (WT/DS285/AB/R, para. 374). A WTO appoint ed arbitrator subsequently determined that
the "reasonable period of time" for the United St ates to implement the DSB recommendations and
rulings would expire on 3 April 2006.

The compliance period expired on 3 April 2006 without action being taken by the United
States to bring its measures into compliance with the recommendations and rulings of the DSB in
DS285. On 10 April 2006 the United States subm itted a status report to the DSB regarding
implementation of the DSB recommendations and rulings in which the United States informed the
DSB that, in its opinion, it was in compliance wi th the DSB recommendations and rulings. At a
meeting of the DSB on 21 April 2006, the United Stat es informed the Members that the United States
was in compliance with the DSB Rulings. At the same meeting, Antigua expressed its disagreement
with the United States' assertion of compliance.

On 23 May 2006, Antigua and the United States concluded "Agreed Procedures under
Articles 21 and 22 of the Dispute Settlement U nderstanding Applicable to the WTO Dispute
United States – Measures Affecting the Cross-Bo rder Supply of Gambling and Betting Services
(WT/DS285)" (the "Agreed Procedures"). In confor mity with the Agreed Procedures, on 8 June 2006
Antigua made recourse to Article 21.5 of the DSU by requesting consultations with the United States.
Subsequent consultations were held in Washington, D.C., but did not result in a settlement of the
dispute. As there was clearly a dispute between the parties "as to the existence or consistency with a
covered agreement of measures taken to comply w ith the recommendations and rulings" of the DSB
in the original proceeding, on 6 July 2006 Antigua submitted a request for the establishment of a
panel pursuant to Article 21.5 of the DSU, and at its meeting of 19 July 2006 the DSB agreed to form
the panel.

On 30 March 2007, the panel issued its report, in which it concluded that the United States
remained out of compliance with the recommendations and rulings of the DSB in this matter.

Pursuant to Article 22.2 of the DSU and paragr aph 7 of the Agreed Procedures, Antigua and
Barbuda hereby requests authorization from the DSB, at the next meeting of the DSB to be held
following the provision of this notice, to suspend the application to the United States of concessions
and related obligations under the TRIPS and the GATS in an annual amount of US $3.443 billion.

 Antigua and Barbuda Recourse to Articles 22.3(b) and (c) of the DSU

In considering what concessions and obligations to suspend, Antigua and Barbuda applied the
principles and procedures set forth in Article 22.3 of the DSU, and makes this request pursuant to
Articles 22.3(b) and (c). Antigua and Barbuda is a developing country with a population of
approximately 80,000. With a combined landm ass of only 442 square kilometres, Antigua and
Barbuda is by far the smallest WTO member to have made a request for the suspension of concessions
under Article 22 of the DSU and realises the difficulty of providing effective counter measures against
the world's dominant economy. The natural resource s of Antigua and Barbuda are negligible and as a
result not only are the country's exports limite d (approximately US $4.4 million annually to the
United States) but Antigua and Barbuda is required to import a substantial amount of the goods and
services needed and used by the people of the country. On an annual basis, approximately 48.9 per
cent of these imported goods and services come from single source providers located in the United
States. The imposition of additional import duti es on products imported from the United States or
restrictions imposed on the provision of services from the United States by Antigua and Barbuda will
have a disproportionate adverse impact on An tigua and Barbuda by making these products and
services materially more expensive to the citizens of the country. Given th e vast difference between

the economies of the United States and Antigua and Barbuda, additional duties or restrictions on
imports of goods and services from the United States would have a much greater negative impact on
Antigua and Barbuda than it would on the United Stat es. In fact, ceasing all trade whatsoever with
the United States (approximately US$180 million annuall y, or less than 0.02 per cent of all exports
from the United States) would have virtually no impact on the economy of the United States, which
could easily shift such a relatively small volume of trade elsewhere.

Antigua and Barbuda further considers that the circumstances are serious enough to justify the
suspension of concessions or obligations under othe r covered agreements in addition to the GATS.
As a result of Antigua and Barbuda's lack of natu ral resources, the bulk of the economy is dependent
upon tourism and the provision of banking and other financial services. Antigua and Barbuda,
initially with the cooperation of the United Stat es government, looked to the provision of gambling
and betting services as a way to diversify its economy and create the growth needed to assist the
country in moving from a developing to a more advanced status. Prior to the actions taken by the
United States to prevent the provision of gamb ling and betting services from Antigua and Barbuda to
consumers in the United States, it is estimated th at the gambling and betting services sector accounted
for more than ten per cent of the gross domestic product of Antigua and Ba rbuda and was the fastest
growing segment of the economy. Recent efforts by the United States government to further prohibit
and impede the provision of these services to consumers in the United States have greatly harmed the
Antiguan service providers, while domestic providers in the United States continue to prosper in the
absence of prohibition and criminal prosecution. Under the circumstances, the United States'
prohibition of these services and its non-compliance with the recommendations and rulings of the
DSB in DS285 forces Antigua and Barbuda to proceed in the manner requested despite the difference
in level of development with the United States, the large disparity in their trade relations and despite
the harsh economic reality affecti ng Antigua and Barbuda which affe cts its ability to exercise its
rights under Article 22.

In addition to the reasons described above , the suspension of concessions and other
obligations corresponding to a value of US $3.443 b illion and wholly applied to the importation of
services from the United States is neither practicable nor effective for various reasons. First, Antigua
and Barbuda made no commitments under the sector at issue in DS285, GATS Sector 10.D.,
"Sporting and Other Recreational Services," in its Schedule of Specific Commitments under the
GATS (GATS/SC/2) (the "Antigua Schedule"). Sec ond, with respect to most of the other services
covered by the Antigua Schedule, as noted above suspension of concessions in the form of higher
duties, tariffs, fees or other restrictions woul d have a disproportionate impact on the economy of
Antigua and Barbuda and little or no impact on the United States. Third, even if Antigua and Barbuda
were to rely exclusively on a suspension of concessions under the GATS, Antigua and Barbuda would
clearly not be able to recover the full amount of nullification and impairment caused by the
inconsistent measures.

Additionally, in Antigua and Barbuda's view , the United State's continued non-compliance
renders the circumstances serious enough, within the meaning of Article 22.3(c) of the DSU, to justify
the imposition of appropriate countermeasures under other covered agreements, given that Antigua
and Barbuda's gaming industry will continue to suff er serious losses, the government of Antigua and
Barbuda will be deprived of critical revenue, the people of Antigua and Barbuda will be enjoined
from participating in much needed employment and the overall economy of the nation will continue to
suffer adverse effects for such time as the United States does not withdraw the measures at issue in
DS285 or remove their adverse effects.

Summary of Countermeasures

Because the withdrawal of concessions solely under the GATS is at present not practicable or
effective, and the circumstances are sufficiently serious to justify Antigua and Barbuda exercising its

rights under Article 22, Antigua and Barbuda request s authorization to suspend concessions and other
obligations under the TRIPS.

For the reasons given above, Antigua and Bar buda intends to take countermeasures in the
form of suspension of concessions and obligations under the following sections of Part II of the
TRIPS:

Section 1: Copyright and related rights
Section 2: Trademarks
Section 4: Industrial designs
Section 5: Patents
Section 7: Protection of undisclosed information

Suspension of Concessions Under the GATS

Antigua and Barbuda may also suspend horizontal and/or sectoral concessions and obligations
for the following sector contained in the Antigua Schedule:

2. Communication Services

Until such time as the United States brings its measures into compliance with the rulings and
recommendations of the DSB in DS285, every year Antigua and Barbuda will notify the DSB of the
amount and the form of the suspension of concessions if proposed to be different in any respect from
the preceding fiscal year, as applicable.

Compliance with Article 22.4

As required by Article 22.4 of the DSU, the le vel of suspension of the above concessions or
other obligations proposed above by Antigua and Barbuda is lower or equivalent on an annual basis to
the nullification or impairment of benefits accrui ng to Antigua and Barbuda resulting from the United
States' failure to comply with the DSB's recommendations and rulings in DS285.