United States-Measures Affecting the Cross-Border Supply of Gambling and Betting Services

1. United States-Measures Affecting the Cross-Border Supply of Gambling and Betting Services

2. Outline • Fact • Conclusion (Panel & AB) • Legal Issues - GATS Art. XVI - GATS Art. VI - GATS Art. XIV • Subsequent Development

3. Fact (1/2) • Complaining Party： Antigua Barbuda • The Antiguan gambling and betting services at issue involve cross-border supply • Several US legislations, along with some court decision, state Attorneys’ General Statements…,etc. prohibit remote gambling • Jan. 2003, Antigua requested the DSB to establish a Panel • Panel Report issued on Nov. 10th, 2004 AB Report issued on Apr. 7, 2005

4. Fact (2/2)

5. Conclusion • Panel 3 federal laws and 4 state laws  violating GATS Art. XVI:1,XVI:2(a) & XVI:2(c)  not justified by Art. GATS Art. XIV • Appellate Body 3 federal laws  violating GATS Art. XVI:1,XVI:2(a) & XVI:2(c)  not justified by GATS Art. XIV

6. Measures at Issue • Panel: “Total prohibition” is not a measure in itself Antigua has made a prima facie case on 3 federal laws & 4 state laws • AB: 3 federal laws only, Antigua did not make a prima facie case on the state laws

7. GATS Art. XVI (1/4) US’s commitment on MA：Is gambling included in “other recreational services”？ • Panel：Referring to dictionary, “sporting” does not include gambling；according to W/120 and 1993 Scheduling Guidelines, “other recreational services” include gambling • AB：W/120 & 1993 Scheduling Guidelines are not context when interpreting US’s schedule, but supplementing documents (VCLT Art.32) Uphold Panel’s conclusion • Conclusion：US should fully open its market

8. GATS Art. XVI (2/4) Para. 1 • Panel：US’s commitments on mode 1 in 10.D is “None”，therefore should not impose any prohibition measures at issue violate para.1 • US did not appeal on this

9. GATS Art. XVI (3/4) Para. 2 (a) • Panel & AB：Total prohibition = zero quota Zero quota is “numerical quota” • Conclusion: Para 2 (a) is violated

10. GATS Art. XVI (4/4) Para. 2 (c) • Panel: Limitations in (c) may be designated numerical units, quotas or the requirement of economic needs test US violates (c) because it does not allow MA to its scheduled sector • AB：There is scope for overlap btw elements in (c) To clarify, AB referred to 1993 Scheduling Guidelines (supplementing document) Measures at issue amount to a “zero quota” on service operations or output

11. GATS Art. VI • Antigua：US violates GATS Art. VI:1 & VI:3， because it is impossible for foreign suppliers to obtain authorization • Panel：Antigua’s claim is based on the premise that suppliers need to obtain authorization, but it fails to identify which measures and provisions impose such requirement or any of its suppliers have filed such application • Antigua did not appeal on this

12. GATS Art. XIV (1/5) • Two-tiered analysis Para (a): Public moral & order • Panel: Members should be given the scope to define and apply for themselves the concept of “public moral & order” US’s concerns (underage gambling & organized crimes) fall under public moral & order • AB: No need for separate determination on fn 5 Uphold Panel’s finding

13. GATS Art. XIV (2/5) Para (a): Necessity analysis • Panel: In the present case: (1) The measures serves important societal interests (2) Contribute to addressing the concerns (3) Pursuant to previous cases, Members shall exhaust other WTO-consistent measures. However, US declined to negotiate with Antigua • Conclusion: The measures are not necessary

14. GATS Art. XIV (3/5) Para (a): Necessity analysis • AB: Other WTO-consistent measures have to be “reasonably available” Responding Party has to make a prima facie case, but need not to identify all the alternative measures Negotiation is not an appropriate alternative, because the result of which is not certain

15. GATS Art. XIV (4/5) Para (c) • Panel: The measures assist in enforcing RICO statute Applying the necessity analysis: Without prior consultations, the measures are not necessary • AB: Reversed Panel’s finding as they did in para (a), but exercised judicial economy

16. GATS Art. XIV (5/5) The chapeau • Panel: Applying the consistency standard US violate the chapeau, because: (1)It does not enforce the prohibition equally (2)Interstate Horseracing Act permits remote gambling • AB: Given the limited evidence, AB should focus on the wording of measure, rather than isolated instances of enforcement However, uphold Panel’s finding on IHA

17. Subsequent Development-Award of Arbitration (1/2) What is the “reasonable period of time” (DSU 21.3c) to implement Panel & AB’s decision here? • Arbitrator: US’s assertions (legal form of implementation & technical complexity ) were not persuading as to why it needs 15 months Taking into account previous similar arbitrations • Conclusion: 11 months & 2 weeks would be appropriate

18. Subsequent Development-Award of Arbitration (2/2) • Relationship btw DSU 21.2 & 21.3 (c): The precise nature of 21.2 is not the issue here, because of the absence of specific elaboration on the affected interest of Antigua and their relationship. Criteria referred to in 21.2 have not been satisfied. • Award Circulated on 19 Aug, 2005

19. Thank you!