The probability is high that the United States will stop companies in the hi-tech industries that have US connections from investing in Antigua & Barbuda or use some other tool of economic aggression against Antigua. This is my fear but fear should not cause a country to buckle, it is only through courage and sacrifice that battles are won.
I have no proof of what will be the US’s action but I believe economic aggression is possible after analysing the tone of the Washington’s recent comment about Antigua within the analogous framework of the US’ dealing with Cuba when that Caribbean nation refused to behave according to the US dictates, that is accept western-style democracy.
Washington enacted the economically aggressive Helms-Burton Act which had the potential to derail the then President Fidel Castro’s efforts to attract foreign investors to help revive his country’s faltering economy. Whether you like Cuba’s ideology or not, the lesson to all is that Cuba did not buckle under the Helms-Burton weight but remained resolute in its conviction that its style of governing was the right one.
The Helms-Burton Act was signed in 1999 under Democratic President Bill Clinton. Now in 2013 with another Democratic President Barack Obama at the helm, Antigua & Barbuda, a smaller Caribbean country is ignoring the US wishes and is ready to impose sanctions against US intellectual property (IP) to recoup $21 million annually in losses that resulting from the US’ closure of its online-gambling market. Antigua & Barbuda was granted approval last week by the World trade Organisation (WTO) to suspend US intellectual property claims, allowing Antigua to sell movies, music, games and software while ignoring US copyright and trademark claims. But this has riled up US trade officials and sections of its entertainment industry are suggesting that the US use economic mechanisms as leverage to get Antigua to reverse its plan.
But Antigua isn’t doing anything wrong. It is doing what the United States does all over the world and sometimes for stated national reasons which only a microscope can reveal.
Antigua is only defending its national interest and like any other country would do, it is using the weapons most capable of achieving success. High Commissioner to London Carl Roberts said “(Antigua has) followed the rules and procedures of the WTO to the letter. Our little country is doing precisely what it has earned the right to do under international agreements.”
From the outset, the small Caribbean island was doing just that. First it used an opportunity under the WTO-administered General Agreement in Trade of Services (GATS) to host internet gambling casinos that targeted US consumers. In 2003, after the US closed them down, Antigua took the case to the WTO, which obligated Washington to reopen that market. The US refused, arguing that it had unintentionally committed to opening that market to cross-border trade but that internet gambling ran counter to its domestic policies on public morals and public order.
The WTO judged that St. John’s suffered US$21 million annually in losses from the closure and could use trade barriers to collect the sum. Finding an appropriate method for a small open economy to use against an economic giant, such as the United States, that does not comply with a WTO ruling is problematic.
In fact, large industrialised WTO members are unlikely to be negatively affected by the suspension of the trade concessions in goods and services implemented against them by smaller less developed countries. It is more likely the said retaliatory measures will backfire and significantly harm the economy of the developing country. Therefore, such suspensions were not seen as effective in getting developed countries to comply with rulings made against them that favoured developing countries.
This thinking is applicable in the case of Antigua versus the US. The US is the main source of imports into that small economy (33 per cent in 2011) as well as the leading destination for its exports (39.8 per cent in 2011). On the other hand, Antigua is not ranked among the top ten of US import sources or export destinations, its contribution to the US’ exports and imports is minuscule. Therefore if St. John’s places trade barriers to imports of goods and services from the US, the availability of essentials could become uncertain or non-existent to the detriment of Antigua and prices are likely to rise significantly.
“For many developing countries, suspension of concessions in (Trade-Related aspects of Intellectual Property Rights) TRIPS or (General Agreement on Trade in Services) GATS may represent a valuable alternative option when it is not practical or effective for them to rely on standard retaliation. This is often the case due to the unbalanced nature of trading relations and the asymmetry in economic power.”
As in the case with Ecuador versus the EU, the WTO therefore allowed TRIPS cross-retaliation in the Antigua/US case. Those are the rules and Antigua followed them.
Yet Washington’s spokeswoman Nkenge Harmon issues a warning.
“If Antigua does proceed with the unprecedented plan for its government to authorize the theft of intellectual property; it would only serve to hurt Antigua’s own interests,” she said.
“Government-authorised piracy would undermine chances for a settlement. It also would serve as a major impediment to foreign investment in the Antiguan economy, particularly in high-tech industries.”
A frightening statement when one considers US hegemony -its political, economic and military resources compared with puny Antigua & Barbuda. Already, as is expected, the big voices in Intellectual Property (IP) industries are using their might to advise their government how to coerce Antigua in watering down its defence. .
Michael Schlesinger, a lawyer for the International Intellectual Property Alliance said “if Antigua moves forward, we will work to ensure that its eligibility to participate in any U.S. trade assistance or benefit is withdrawn.”
In similar vein, executive director for international intellectual property at the U.S. Chamber of Commerce, Gina Vetere, said that Antigua’s action will sour the business environment and reduce government revenues in the long term.
“Any action that endorses IP theft would not only undermine any chance at resolving the dispute, but also come at great expense to Antigua and Barbuda.”
IP theft? Piracy? These are questionable descriptions. Why then is imposition of tariff on goods as a trade sanction not theft of trading rights?”
Cross retaliation using IP is special and is perhaps the only way out for tiny country in battle with large countries. The strategy rests on reasons upheld by experts who’ve advised that the sector within an offending country that is best suited for the imposition of sanctions, is one that is either vulnerable or has enough political clout to pressure decision makers to be compliant with the law. St. John’s plan seems to parallel this notion and therefore may be intended at getting filmmakers and recording artists to pressure the US Congress to re-open the US market to Antigua’s on-line gambling operators.
Comments from Antigua’s officials seem in agreement with this view. For example, the country’s Minister of Finance, Harold Lovell, said that they were still prepared to talk with the US regarding an agreement that would respect the WTO decision. Though not explicitly stated, Lovell was referring to the initial WTO rule that the US re-open its on-line gambling market, which Antigua estimated was worth over US$3.4 billion annually to its economy and was the country’s second largest employer.
Rather than allowing the restart of the remote gaming industry, the United States seems ready to drag this David & Goliath battle significantly longer than the ten years and will fight against Antigua’s imposition of sanctions. It has the financial, media and political resources to wage a bruising battle longer than having a remote gaming industry will be practical for Antigua.
General Counsel for the office of United States Trade Representative (USTR) Timothy Reif who said “… the US government, obliviously cannot allow any WTO decision to be distorted into a license for piracy,” is still talking about getting negotiations back on the right track but there seems to be a big divide between the two countries that augurs against a speedy settlement.
Reif described his government’s offer to Antigua as “a fairly wide ranging package of other kinds of steps that would allow Antigua to create as many as or more than jobs that they expected to lose as a result of the internet gaming decision.”
But the Antiguans don’t believe that the US made any important strides towards settlement. Its high commissioner to London Mr. Carl Roberts explained that “if you make offers and the offers are not accepted that means you have not touched the core of the problem.”
But the US will fight tough because more is at stake that is dangling from Antigua’s end. Antigua’s lead attorney Mark Mendel, warned that Antigua’s cross-retaliation plan could have broader repercussions.
“If we do something inventive that could pose a lot of problems for intellectual property holders. If we create that precedent, the consequences could be enormous.
“With Antigua, it’s $21 million. Maybe with China it’s going to be U.S. $21 billion. One of the messages we want to get across is that the WTO was sold to smaller countries as a level playing field and a way for them to expand the reach of commerce, subject to a set of rules that apply to everybody.”
The US will not be swayed by the desire for a level playing. It is accustomed to flexing hegemonic muscles and getting its way especially with small states. It will fight hard and is likely to use its power to Antigua in line even if it means following the advice of people in its entertainment industry who are suggesting the cutting off any trade assistance, aid or grant programme now extended to Antigua. This is a case for all CARICOM to watch and give Antigua its support. The Caribbean community/rum battle is heating up and lessons here will be instructive.
If the US is allowed to win this one because of its power and our ‘small-island’ fear of losing grants and assistance, the US will run us over on rum. If the US is allowed to use its power to crush Antigua & Barbuda on this one, we are lost in the WTO.
“The main obstacle developing countries will face to cross-retaliation in TRIPS is political. Industries reliant on IPRs are willing to invest heavily in government lobbying and media propaganda campaigns. Although IP is a creature of industrial policy, as are tariffs and services regulation, the IP-dependent industries have historically been able to persuade governments and media outlets that any interference with IPRs is equivalent to “theft”, implying criminal intent. Raising tariffs may equally interfere with the business interests of private operators by restricting market access, but private operators have not been able to equate increased tariffs with a “theft of trading rights”.
Words of wisdom from Frederick M. Abbott, Florida State University College of Law (April 2009)
The Long Arm of U.S. Law: The Helms-Burton Act (Anthony M. Solis – Loyola of Los Angeles International and Comparative Law Review)
Cuba and the Helms-Burton Act (House of Commons Library -Research Paper 98/114 14 December 1998)
EU claims US Gambling Laws are illegal
Cross-Retaliation in TRIPS and GATS: Options for Developing Countries by Frederick M. Abbott, Florida State University College of Law (International Centre for Trade and Sustainable Development)
Antigua may ditch financial services sector (Antigua Observer) http://www.antiguaobserver.com/?p=87302
DISPUTE SETTLEMENT: DISPUTE DS285 United States — Measures Affecting the Cross-Border Supply of Gambling and Betting Services (World Trade Organisation)
US judge orders piracy test case (BBC)