Trouble ahead for U.S.-EU WTO deal?

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The proposed WTO deal between the U.S. and EU regarding Internet gambling compensation may face problems in the near future.

In an article on the citizen journalism site , Lori Wallach, director of Public Citizen's Global Trade Watch Division, stated it's technically impossible for the U.S. to make concessions to the EU without receiving the OK from Congress.

Word of the EU-U.S. compensation deal hit all the major news outlets yesterday and the online gambling world has been buzzing since. According to a press release the bilateral agreement was signed in Geneva and will provide EU service opportunities in a number of U.S. sectors including

  • Research and development
  • Postal and courier
  • Storage and warehouse
  • Testing and analysis services

The agreement followed several months of negotiations after the U.S. announced its intentions to withdraw from its WTO commitments around online gambling and betting services. The EU will continue to press for non-discriminatory treatment in U.S. Internet gambling legislation.

Wallach went on to say that under the U.S. constitution, no administration can unilaterally change U.S. commitments under a trade agreement and the current administration's offer to bind service sectors to WTO jurisdiction is meaningless unless Congress approves such a proposal.

If the U.S. government were to follow through and subject service sectors to WTO jurisdiction, existing monopolies on alcohol distribution in 18 states, as well as the federal monopoly on postal service, could be threatened. (In fact, the Bush administration has been exploring privatizing the U.S. postal service since late 2002.)

Additionally, U.S. insurance and mutual funds markets, currently domestically regulated, may be forced to open up to international competition, which would pose serious regulatory dilemmas. Testing and analysis services is another domain that would be vulnerable.

This controversy has occurred before details of the scope of the compensation package have even been released. The prospect of exposing the U.S. postal service and safety testing to international competition could create a storm in Congress.

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