EU steps up U.S. online gambling investigation

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The Safe and Secure Internet Gambling Initiative reported last week that the European Commission has launched a formal investigation into U.S. actions related to its online gambling ban.

The EC submitted a list of questions to leading U.S. officials related to the United States' discriminatory trade practices against European online gambling companies.

The World Trade Organization has ruled that the U.S. online gambling ban doesn't comply with trade regulation set up by the WTO. Antigua and Barbuda brought the case against the United States and has been working to get appropriate compensation for the United States' failure to comply with the WTO's ruling.

Rather than change its laws to comply with the ruling, the United States chose to pay compensation to Antigua and Barbuda and to withdraw online gambling from its commitments to the WTO.

That opened up the nation to compensation claims from other nations involved in online gambling as well. The European Union had previously come to an agreement with the United States over trade concessions as compensation, but now it is looking into the matter further.

"The cumulative effect of U.S. WTO-related actions over the past year have forced the European Union to take this dramatic step. The line of inquiry opened by the questionnaire could reveal that the U.S. is engaging in unfair, discriminatory, and selective prosecution of European online gaming operators," said Naotaka Matsukata, formerly director of policy planning for USTR Robert Zoellick and now a senior advisor to Alston & Bird, LLP.

"If the E.U. takes the nuclear option and brings the U.S. to the WTO, serious damage would be inflicted on the bilateral relationship at a delicate time in transatlantic relations," added Matsukata, in an SSIGI press release.

"Rather than taking this risk, the U.S. Trade Representative should work with Congress, as the United States Constitution instructs, to resolve the dispute by adopting Congressman Frank's Internet Gambling Regulation and Enforcement Act to bring the U.S. into WTO compliance."

Rep. Barney Frank (D-Mass.) introduced H.R. 2046 last year to reverse the online gambling ban in the United States after the nation had further restricted online gambling with the UIGEA.

His plan would allow the Internet gambling industry to be licensed and regulated in the United States, which would resolve the nation's problem with the WTO violation.

EU Trade Commissioner Peter Mandelson has expressed support for Frank's bill, saying Frank takes a "fair-minded, commonsense approach."

While the EU is continuing to express interest in settling the trade violation, Mandelson has argued that "discrimination against E.U. companies cannot be part of the policy mix."

Jeffrey Sandman, SSIGI spokesperson, said the European Commission's further investigation into the matter highlights the U.S. Trade Representative's reckless manner in seeking a protectionist trade policy. That policy also sets a precedent that threatens to expand beyond online gambling into other areas of trade.

""Congress should not sit on the sidelines as the USTR unilaterally grants trade concessions and hypocritically discriminates against foreign online gambling operators," Sandman said.

"Congress needs to become part of the decision making process and create a non-discriminatory market for Internet gambling in the U.S. as a way to restore integrity to the international trading system."

Some members of Congress have already taken steps to get more involved in the matter. Frank was joined by Rep. Ron Paul (R-Texas) in a letter to the USTR Ambassador Schwab requesting details of the trade concessions the office has made in regard to the European Union settlement. Rep. Peter DeFazio (D-Ore.) also encouraged members of Congress to join him in calling for the USTR to disclose details of the online gambling settlement agreements.

Congress could decide that the concessions the United States made to settle the matter aren't agreeable to them and send the countries back to the bargaining table again. With the EC already investigating the matter further, the United States could be facing another WTO complaint to settle the matter.

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