Antigua vs the U.S.

I read about this WTO ruling the other day (In Trade Ruling, Antigua Wins a Right to Piracy) and today a reader sent me a link to another article (Antigua wins modest sanctions in U.S. gambling cases). Briefly, the background is this. Gambling, including Internet gambling, is legal in Antigua. The U.S. prosecuted the owners of Antiguan sites in U.S. courts under the Wire Act sending one, Jay Cohen to prison, for 21 months after he voluntarily returned to the United States. Cohen thought that the U.S. laws didn’t apply to online gambling hosted in Antigua and said to himself “”No judge is going to let this stand.” (See Paul Blustein, “Against All Odds,” The Washington Post, 4-Aug-06 p. D1). Instigated by Cohen upon his release from prison Antigua filed a trade complaint against the U.S. with the World Trade Organization. The U.S. argued that its prosecution of online gambling sites was necessary to protect public morals. Antigua countered that certain types of online gambling–on horse racing and some state lotteries–is legal in the U.S. and that its selective prosecution of Antiguan gambling sites violated the International trade principle of “national treatment,” i.e., the U.S. can’t limit trade in Antigua that is legal in the U.S. If the U.S. wants to prosecute Internet gambling in Antigua then it must ban all Internet gambling in the U.S. The WTO agreed with Antigua’s argument in 2004 and again, although less broadly, on appeal in 2006. The 2006 ruling was marked by simultaneous press releases from the U.S. and Antigua, each claiming “we won!” The question was what the WTO would do to enforce its ruling.

The WTO’s solution, described in these articles, is to allow Antigua to violate U.S. copyright and trademark laws up to a value of $21 million–which of course makes no sense at all. Antigua’s recourse for the U.S. government’s violation of International trade treaties is to pirate $21 million from the pockets of private companies. It’s as if, in an eminent domain case, a court agreed that the city didn’t pay you enough for taking your property and allowed you to loot your neighbor’s property in compensation. The ruling will be impossible to enforce. How should one value acts of piracy? Using the RIAA’s math ($150,000 per incident of copyright infringement) Antigua would even the score by downloading 140 Celine Dion songs that would cost $138.60 on iTunes. As my correspondent said “I just don’t understand why copyright holders would be the ones who are more or less punished because of a Government decision. It seems the WTO thinks two wrongs make a right.”

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