U.S. Official Blows Off Compensation Estimates

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Published: Friday, September 28, 2007 mgowanbo.cc

Unidentified official says reports of EU claims are based on "faulty and exaggerated assumptions"

A United States Trade Representative official, who intriguingly chose to remain anonymous, has dismissed media reports that World Trade Organisation compensation claims against the USA could reach $100 billion.

Speaking to the Reuters news agency the official brushed off extensive global media speculation and comments from WTO members that it may have to provide $100 billion in compensation to the European Union and other trading partners because of its restrictions on Internet gambling.

Speaking on condition she not be identified, the official said she could not reveal how much compensation - in the form of increased foreign company access to the U.S. market - trading partners were demanding in the talks.

"We can say that some of the numbers being put forward are based on faulty and exaggerated assumptions," she said.

Lawyers for European online gaming firms - among the biggest in the world - have urged the EU alone to press for as much as $100 billion in compensation, given the plunge in market value of publicly-traded firms after Congress tightened Internet gambling restrictions last year, and subsequent loss of business.

"This is by far the most significant WTO case ever and its implications for both the U.S. and the EU are enormous," Naotaka Matsukata, a senior policy advisor with the international law firm Alston & Bird, said in a statement. "Given the size of the U.S. gaming market, both the potential benefit for European industry and the corresponding damage to U.S. companies is unprecedented."

The case dates back to at least 2003, when the tiny Caribbean nation Antigua and Barbuda challenged U.S. Internet gambling restrictions at the World Trade Organisation. A WTO panel ruled two years later that a U.S. law allowing domestic companies to provide online horse race gambling, lottery and fantasy sports services discriminated against foreign providers.

Having lost the case despite appeals, the United States Trade Representative announced in May it would exercise a rarely used provision under WTO rules to 'clarify' that its commitments did not extend to gambling. In other words, removing its obligations under the original treaty.

Making that change opened the door for trading partners to demand compensation in the form of increased access to some other U.S. services sector.

U.S. officials initially said they did not believe compensation was warranted, but have since been in talks with seven WTO members - India, the 27 nation European Union, Japan, Costa Rica, Macao, Canada and Australia - on appropriate compensation.

Antigua is pressing for the right to slap $3.4 billion in "cross retaliation" on the United States by suspending copyright protections on American movies, music and software, causing alarm in Silicon Valley and Hollywood.