International Trade Law News
March 25, 2004
WTO rules that US Ban of Web-based Gambling Violates Global Trade Pacts
The WTO has made a preliminary ruling that a U.S. ban on Internet gambling violates the General Agreement on Trade in Services (GATS). The action was filed in the WTP last year by Antigua and Barbuda, who contended that the U.S. ban on Internet gambling, both at the state and federal level, violated the United States’ obligations under GATS since it prohibits all supply of gambling and betting services outside the United States.
The United States has stated that it will appeal the ruling. Under Article 17 of the WTO’s Dispute Settlement Procedures, the losing side of a preliminary ruling may appeal to the seven-member appellate body.
U.S. Files Case Against China with the WTO
Last week, the U.S. filed a case with the World Trade Organization alleging that China has imposed a discriminatory tax rebate for integrated circuits produced in China.
U.S. exports of integrated circuits to China, which are subject to a 17% value-added tax (VAT), valued $2.02 billion in 2003. The U.S. contends that China taxes domestically produced integrated circuits at a rate which is significantly lower than the rate foreign producers pay since China offers a refund on integrated circuits that are domestically produced. Specifically, the U.S. notes that the VAT paid by Chinese producers may be as low as 3% in some cases once the allegedly discriminatory refund is assessed. The U.S. contends that this refund is inconsistent with the national treatment obligations that China assumed when it joined the WTO in December 2001.
This action is the first to be filed against China since it joined the WTO. In making the decision to bring the action, the U.S. Trade Representative (USTR) noted that China has made “substantial progress” in areas such as agricultural biotechnology but contended that the U.S. had repeatedly engaged China on the integrated circuit VAT without resolving the dispute over the allegedly discriminatory tax.
Under WTO dispute settlement procedures, filing the case commences a 60-day “consultation” period. If no resolution is reached within sixty days, the U.S. can request the establishment of a panel to determine whether China is acting in accordance with its WTO obligations.
