Rep wants net gambling settlement details

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According to the Safe and Secure Internet Gambling Initiative, Congressman Peter De Fazio is requesting that the U.S. Trade Representative disclose the details of concessions made to foreign trade partners regarding its online gambling settlement with the European Union.

DeFazio (D-Ore.) circulated a letter to all members of Congress last week encouraging them to join his efforts to get a copy of the concession agreement. His request could be an indication that that attempt by the Bush administration to resolve the WTO Internet gambling dispute is in jeopardy.

"There is a concern that the USTR may have been ambitious in its use of a 'national security' classification to avoid any publicity of which new business sectors are to be subject to the GATS (General Agreement on Trade in Services) treaty," DeFazio said in his letter.

The U.S. Trade Representative had recently rejected a Freedom of Information Act request for the same document, claiming it was classified for national security reasons.

The only details that were released about the agreement were that it will allow EU service opportunities in research and development, postal and courier, storage and warehouse and testing and analysis services sectors in the United States.

The agreement followed several months of negotiations after the United States announced its intentions to withdraw from World Trade Organization commitments around online gambling and betting services. However, if members of Congress take a closer look at the deal, it could be compromised.

According to Nao Matsukata, formerly director of policy planning for USTR Robert Zoellick and now Alston & Bird LLP senior advisor, the bigger issue may be whether the U.S. Trade Representative abused its authority by granting new market access to the EU without first getting consent from Congress' trade committees.

"Ultimately this could invalidate the deal with the EU and cause various WTO members to revisit the issue of fair compensation from the United States," Matsukata said.

Should the deal fall apart, negotiations would have to begin again or the EU would be free to take the dispute back to the WTO for it to settle the matter.

That could unleash more problems for the United States since the EU already announced this week it was opening an investigation into the U.S. online gambling laws to determine whether U.S. restrictions break international trade rules.

The investigation is the result of a Trade Barriers Regulation complaint filed by the Remote Gambling Association, which represents some of the largest remote gambling companies in Europe.

The RGA claims the United States is in violation of international trade laws because it is threatening and pursuing criminal prosecutions, forfeitures and other enforcement actions against foreign Internet gaming operators. At the same time, U.S. online gaming operators such as state-run lotteries and horse betting are allowed.

The EU plans to spend five to seven months investigating the matter, after which it can pursue discussions with the United States to find an appropriate solution to end the discrimination or it can take the case to the WTO.

"We hope that Mr. DeFazio's colleagues will join him in demanding more transparency, communication, and consultation from the Administration on Internet gambling," said Jeffrey Sandman, spokesperson for the Safe and Secure Internet Gambling Initiative. "A non-discriminatory market for Internet gambling in the United States will restore integrity to the international trading system."

Representative Barney Frank (D-Mass.) has already introduced legislation that could move the United States toward that goal. Last year he proposed H.R. 2046, the Internet Gambling Regulation and Enforcement Act, which will legalize and regulate online gambling in the United States.

In conjunction with Frank's bill, Rep. Jim McDermott (D-Wash.) has introduced legislation that would set up a system to tax the online gambling industry as well.

"Rather than paying out millions in trade concessions, which would have an adverse impact on the American economy, the U.S. should embrace the legislative solution presented by the Frank bill, which brings the U.S. into compliance by regulating Internet gambling and creating a level playing field among domestic and foreign Internet gambling operators," Sandman said.

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