New Push to Roll Back Online Gambling Ban?

WASHINGTON — The Bush administration should explore legislation to roll back a U.S. ban on Internet gambling instead of paying compensation to the European Union and other trading partners, the chairmen of two House of Representatives committees said today.

House Financial Services Committee Chairman Barney Frank, House Judiciary Committee Chairman John Conyers and six other lawmakers criticized the Bush administration’s handling of the issue in a letter to U.S. Trade Representative Susan Schwab.

“Your agency has chosen not to consult with Congress, but instead to take what we view as a drastic step which could have significant consequences for the whole WTO (World Trade Organization) system,” the lawmakers said.

Rather than comply with a negative WTO ruling in a case filed by the Caribbean nation Antigua and Barbuda, the United States announced earlier this year it was “clarifying” it never intended to allow foreign firms to offer Internet gambling services as part of the 1994 Uruguay Round trade pact.

That opened the door for other trading partners to demand compensation for the United States’ decision to retroactively exclude Internet gambling from its commitments under the General Agreement on Trade in Services, or GATS.

The United States has been in negotiation with the EU, India, Japan, Costa Rica, Macao, Canada and Australia on a compensation package and the trading partners recently set a new mid-December deadline for reaching a deal.

The compensation would require the United States to open other service markets, such as insurance, to more foreign firms.

Meanwhile, Antigua is pressing the WTO for permission to slap $3.4 billion in “cross retaliation” on the United States by suspending copyright protections on American movies, music and software.

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Congress passed legislation last year banning most Internet gambling by making it illegal for banks and credit card companies to make payments to online gambling sites.

Frank has offered legislation to roll back the ban, while Conyers warned during a Judiciary Committee hearing last week that the ban could hurt U.S. foreign relations.

“Continuing with the same old failed policies for the sake of feel-good politics doesn’t make sense,” Conyers said.

In the letter to Schwab, the lawmakers said they feared compensation would be “expensive to the U.S. economy. However, we are perhaps more concerned about what this withdrawal says about U.S. credibility as a trading partner.”

It also could backfire by encouraging other countries to withdraw commitments that turn out to be “inconvenient or politically difficult,” they said.

In past cases, the Bush administration has often worked with Congress to comply with adverse WTO rulings.

“We are writing to express our interest in considering possible legislative solutions that might restore U.S. compliance with the GATS agreement without renouncing any of our commitments under that agreement,” the lawmakers said.

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