|
WTO and USA - The WTO Resolution about Gambling Ban
World Trade
Organization |
|
|
WT/DS285/AB/R
7 April 2005 |
|
(05-1426) |
|
|
|
|
Original: English |
United States – Measures affecting the cross-border supply of gambling and betting services
AB-2005-1
Report of the Appellate Body
I. Introduction....................................................................................................................... 1
II. Arguments of the Participants and the Third Participants...................................................... 6
A. Claims of Error by the United States – Appellant................................................. 6
1. Antigua's Prima Facie Case.................................................................... 6
2. United States' Schedule of Specific Commitments........................................ 8
3. Article XVI:2(a) and XVI:2(c) of the GATS – "limitations ... in the form of" 10
4. Article XIV of the GATS: General Exceptions.......................................... 12
5. "Practice" as a "Measure"......................................................................... 15
B. Arguments of Antigua – Appellee....................................................................... 15
1. Antigua's Prima Facie Case................................................................... 15
2. United States' Schedule of Specific Commitments...................................... 16
3. Article XVI:2(a) and XVI:2(c) of the GATS – "limitations ... in the form of" 17
4. Article XIV of the GATS: General Exceptions.......................................... 18
5. "Practice" as a "Measure"......................................................................... 19
C. Claims of Error by Antigua – Appellant............................................................. 19
1. The "Total Prohibition" as a "Measure"...................................................... 19
2. Article XVI:1 of the GATS – Conditional Appeal....................................... 20
3. Article XVI:2(a) and XVI:2(c) of the GATS – Measures Aimed at Consumers 21
4. Article XIV of the GATS: General Exceptions.......................................... 22
D. Arguments by the United States – Appellee......................................................... 25
1. The "Total Prohibition" as a "Measure"...................................................... 25
2. Article XVI:1 of the GATS – Conditional Appeal....................................... 26
3. Article XVI:2(a) and XVI:2(c) of the GATS – Measures Aimed at Consumers 27
4. Article XIV of the GATS......................................................................... 27
E. Arguments of the Third Participants................................................................... 30
1. European Communities............................................................................. 30
2. Japan...................................................................................................... 32
3. Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu............ 33
III. Issues Raised in This Appeal............................................................................................ 34
IV. Measures at Issue............................................................................................................ 37
A. "Total Prohibition" as a Measure...................................................................... 37
B. "Practice" as a Measure.................................................................................... 41
C. Antigua's Prima Facie Case................................................................................ 42
V. Interpretation of the Specific Commitments Made by the United States in its GATS Schedule 51
A. Interpretation of Subsector 10.D According to the General Rule of Interpretation: Article 31 of the Vienna Convention....................................................................................... 52
B. Interpretation of Subsector 10.D in Accordance with Supplementary Means of Interpretation: Article 32 of the Vienna Convention................................................................... 67
C. Summary............................................................................................................. 73
VI. Article XVI of the GATS: Market Access........................................................................ 73
A. Preliminary Matters............................................................................................ 75
B. The Meaning of Sub-paragraphs (a) and (c) of Article XVI............................... 76
1. Sub-paragraph (a) of Article XVI:2........................................................... 77
2. Sub-paragraph (c) of Article XVI:2........................................................... 81
3. Article XVI:2(a) and (c) – Prohibitions Directed at Consumers................... 84
C. Does the Second Paragraph of Article XVI Exhaust the Market Access Restrictions that are Prohibited by the First Paragraph?................................................................... 85
D. Application of Article XVI to the Measures at Issue............................................ 86
VII. Article XIV of the GATS: General Exceptions.................................................................. 89
A. Did the Panel Err in Considering the United States' Defence Under Article XIV? 89
B. Did the Panel Err in its Treatment of the Burden of Proof Under Article XIV?.. 92
C. The Panel's Substantive Analysis Under Article XIV........................................... 97
1. Justification of the Measures Under Paragraph (a) of Article XIV.............. 98
2. Justification of the Measures Under Paragraph (c) of Article XIV............. 111
3. The Chapeau of Article XIV................................................................... 111
4. Overall Conclusion on Article XIV.......................................................... 122
VIII. Findings and Conclusions................................................................................................ 123
ANNEX I Notification of an Appeal by the United States under paragraph 4 of
Article 16 of the Understanding on Rules and Procedures Governing
the Settlement of Disputes (DSU)
ANNEX II Notification of Other Appeal by Antigua and Barbuda under Article 16.4
and Article 17 of DSU, and under Rule 23(1) of the Working Procedures
for Appellate Review
ANNEX II(a) Notification of Other Appeal by Antigua and Barbuda under Article 16.4
and Article 17 of DSU, and under Rule 23(1) of the Working Procedures
for Appellate Review: Corrigendum
ANNEX III The United States of America – Schedule of Specific Commitments, GATS/SC/90
TABLE OF CASES CITED IN THIS REPORT
Short Title |
Full Case Title and Citation |
Argentina – Textiles and Apparel |
Appellate Body Report, Argentina – Measures Affecting Imports of Footwear, Textiles, Apparel and Other Items, WT/DS56/AB/R and Corr.1, adopted 22 April 1998, DSR 1998:III, 1003 |
Australia – Salmon |
Appellate Body Report, Australia – Measures Affecting Importation of Salmon, WT/DS18/AB/R, adopted 6 November 1998, DSR 1998:VIII, 3327 |
Canada – Aircraft |
Appellate Body Report, Canada – Measures Affecting the Export of Civilian Aircraft, WT/DS70/AB/R, adopted 20 August 1999, DSR 1999:III, 1377 |
Canada – Autos |
Appellate Body Report, Canada – Certain Measures Affecting the Automotive Industry, WT/DS139/AB/R, WT/DS142/AB/R, adopted 19 June 2000, DSR 2000:VI, 2985 |
Canada – Dairy
(Article 21.5 – New Zealand and US II) |
Appellate Body Report, Canada – Measures Affecting the Importation of Milk and the Exportation of Dairy Products – Second Recourse to Article 21.5 of the DSU by New Zealand and the United States, WT/DS103/AB/RW2, WT/DS113/AB/RW2, adopted 17 January 2003 |
Canada – Wheat Exports and Grain Imports |
Appellate Body Report, Canada – Measures Relating to Exports of Wheat and Treatment of Imported Grain, WT/DS276/AB/R, adopted 27 September 2004 |
Chile – Price Band System |
Appellate Body Report, Chile – Price Band System and Safeguard Measures Relating to Certain Agricultural Products, WT/DS207/AB/R, adopted 23 October 2002 |
EC – Asbestos |
Appellate Body Report, European Communities – Measures Affecting Asbestos and Asbestos-Containing Products, WT/DS135/AB/R, adopted 5 April 2001, DSR 2001:VII, 3243 |
EC – Bananas III |
Appellate Body Report, European Communities – Regime for the Importation, Sale and Distribution of Bananas, WT/DS27/AB/R, adopted 25 September 1997, DSR 1997:II, 591 |
EC – Bed Linen
(Article 21.5 – India) |
Appellate Body Report, European Communities – Anti-Dumping Duties on Imports of Cotton-Type Bed Linen from India – Recourse to Article 21.5 of the DSU by India, WT/DS141/AB/RW, adopted 24 April 2003 |
EC – Computer Equipment |
Appellate Body Report, European Communities – Customs Classification of Certain Computer Equipment, WT/DS62/AB/R, WT/DS67/AB/R, WT/DS68/AB/R, adopted 22 June 1998, DSR 1998:V, 1851 |
EC – Hormones |
Appellate Body Report, EC Measures Concerning Meat and Meat Products (Hormones), WT/DS26/AB/R, WT/DS48/AB/R, adopted 13 February 1998, DSR 1998:I, 135 |
EC – Tariff Preferences |
Appellate Body Report, European Communities – Conditions for the Granting of Tariff Preferences to Developing Countries, WT/DS246/AB/R, adopted 20 April 2004 |
India – Patents (US) |
Appellate Body Report, India – Patent Protection for Pharmaceutical and Agricultural Chemical Products, WT/DS50/AB/R, adopted 16 January 1998, DSR 1998:I, 9 |
Japan – Agricultural Products II |
Appellate Body Report, Japan – Measures Affecting Agricultural Products, WT/DS76/AB/R, adopted 19 March 1999, DSR 1999:I, 277 |
Japan – Alcoholic Beverages II |
Appellate Body Report, Japan – Taxes on Alcoholic Beverages, WT/DS8/AB/R, WT/DS10/AB/R, WT/DS11/AB/R, adopted 1 November 1996, DSR 1996:I, 97 |
Japan – Apples |
Appellate Body Report, Japan - Measures Affecting the Importation of Apples, WT/DS245/AB/R, adopted 10 December 2003 |
Korea – Various Measures on Beef |
Appellate Body Report, Korea – Measures Affecting Imports of Fresh, Chilled and Frozen Beef, WT/DS161/AB/R, WT/DS169/AB/R, adopted 10 January 2001, DSR 2001:I, 5 |
Mexico – Corn Syrup
(Article 21.5 – US) |
Appellate Body Report, Mexico – Anti-Dumping Investigation of High Fructose Corn Syrup (HFCS) from the United States – Recourse to Article 21.5 of the DSU by the United States, WT/DS132/AB/RW, adopted 21 November 2001, DSR 2001:XIII, 6675 |
Thailand – H-Beams |
Appellate Body Report, Thailand – Anti-Dumping Duties on Angles, Shapes and Sections of Iron or Non-Alloy Steel and H-Beams from Poland, WT/DS122/AB/R, adopted 5 April 2001, DSR 2001:VII, 2701 |
US – 1916 Act |
Appellate Body Report, United States – Anti-Dumping Act of 1916, WT/DS136/AB/R, WT/DS162/AB/R, adopted 26 September 2000, DSR 2000:X, 4793 |
US – Carbon Steel |
Appellate Body Report, United States – Countervailing Duties on Certain Corrosion-Resistant Carbon Steel Flat Products from Germany, WT/DS213/AB/R and Corr.1, adopted 19 December 2002 |
US – Certain EC Products |
Appellate Body Report, United States – Import Measures on Certain Products from the European Communities, WT/DS165/AB/R, adopted 10 January 2001, DSR 2001:I, 373 |
US – Corrosion-Resistant Steel Sunset Review |
Appellate Body Report, United States – Sunset Review of Anti-Dumping Duties on Corrosion-Resistant Carbon Steel Flat Products from Japan, WT/DS244/AB/R, adopted 9 January 2004 |
US – Corrosion-Resistant Steel Sunset Review |
Panel Report, United States – Sunset Review of Anti-Dumping Duties on Corrosion-Resistant Carbon Steel Flat Products from Japan, WT/DS244/R, adopted 9 January 2004, as modified by the Appellate Body Report, WTDS244/AB/R |
US – Countervailing Measures on Certain EC Products |
Appellate Body Report, United States – Countervailing Measures Concerning Certain Products from the European Communities, WT/DS212/AB/R, adopted 8 January 2003 |
US – FSC |
Appellate Body Report, United States – Tax Treatment for "Foreign Sales Corporations", WT/DS108/AB/R, adopted 20 March 2000, DSR 2000:III, 1619 |
US – FSC
(Article 21.5 – EC) |
Appellate Body Report, United States – Tax Treatment for "Foreign Sales Corporations" – Recourse to Article 21.5 of the DSU by the European Communities, WT/DS108/AB/RW, adopted 29 January 2002, DSR 2002:I, 55 |
US – Gasoline |
Appellate Body Report, United States – Standards for Reformulated and Conventional Gasoline, WT/DS2/AB/R, adopted 20 May 1996, DSR 1996:I, 3 |
US – Oil Country Tubular Goods Sunset Reviews |
Appellate Body Report, United States – Sunset Reviews of Anti-Dumping Measures on Oil Country Tubular Goods from Argentina, WT/DS268/AB/R, adopted 17 December 2004 |
US – Section 301 Trade Act |
Panel Report, United States – Sections 301-310 of the Trade Act of 1974, WT/DS152/R, adopted 27 January 2000, DSR 2000:II, 815 |
US – Shrimp |
Appellate Body Report, United States – Import Prohibition of Certain Shrimp and Shrimp Products, WT/DS58/AB/R, adopted 6 November 1998, DSR 1998:VII, 2755 |
US – Softwood Lumber IV |
Appellate Body Report, United States – Final Countervailing Duty Determination with Respect to Certain Softwood Lumber from Canada, WT/DS257/AB/R, adopted 17 February 2004 |
US – Tuna (Mexico) |
GATT Panel Report, United States – Restrictions on Imports of Tuna, 3 September 1991, unadopted, BISD 39S/155 |
US – Wheat Gluten |
Appellate Body Report, United States – Definitive Safeguard Measures on Imports of Wheat Gluten from the European Communities, WT/DS166/AB/R, adopted 19 January 2001, DSR 2001:II, 717 |
US – Wool Shirts and Blouses |
Appellate Body Report, United States – Measure Affecting Imports of Woven Wool Shirts and Blouses from India, WT/DS33/AB/R and Corr.1, adopted 23 May 1997, DSR 1997:I, 323 |
World Trade Organization
Appellate Body
United States – Measures Affecting the Cross-Border Supply of Gambling and Betting Services
United States, Appellant/Appellee
Antigua, Appellant/Appellee
Canada, Third Participant
European Communities, Third Participant
Japan, Third Participant
Mexico, Third Participant
Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu, Third Participant |
AB-2005-1
Present:
Sacerdoti, Presiding Member
Abi-Saab, Member
Lockhart, Member |
The United States, and Antigua and Barbuda ("Antigua"), each appeals certain issues of law and legal interpretations developed in the Panel Report, United States – Measures Affecting the Cross-Border Supply of Gambling and Betting Services (the "Panel Report"). The Panel was established to consider a complaint by Antigua concerning certain measures of state and federal authorities that allegedly make it unlawful for suppliers located outside the United States to supply gambling and betting services to consumers within the United States.
Before the Panel, Antigua claimed that certain restrictions imposed by the United States through federal and state laws resulted in a "total prohibition" on the cross-border supply of gambling and betting services from Antigua. Antigua contended that such a "total prohibition" was contrary to obligations of the United States under the General Agreement on Trade in Services (the "GATS"). In particular, Antigua asserted that the GATS Schedule of the United States includes specific commitments on gambling and betting services. Antigua argued that, because the United States made full market access and national treatment commitments (that is, inscribed "None" in the relevant columns of its GATS Schedule), the United States, in maintaining the measures at issue, is acting inconsistently with its obligations under its GATS Schedule , as well as under Articles VI, XI, XVI, and XVII of the GATS.
On 17 October 2003, after receiving Antigua's first written submission to the Panel and before filing its own first written submission, the United States requested the Panel to make certain preliminary rulings, including a ruling that Antigua had failed to make a prima facie case that specific United States measures are inconsistent with the GATS. In particular, the United States argued that a "total prohibition" on the cross-border supply of gambling and betting services could not constitute a "measure". According to the United States, by challenging such an alleged "total prohibition", rather than the laws and regulations underlying that prohibition, Antigua had failed to satisfy its burden as the complaining party to "identif[y] … specific measures that are the subject of [its] prima facie case." The Panel denied the United States' request on the ground that it was premature, given that Antigua had "two sets of written submissions and two panel hearings to convince the Panel that it [had] established a prima facie case."
In its oral and written submissions to the Panel, the United States maintained its objections to the Panel's consideration of Antigua's claims on the basis of an alleged "total prohibition", reiterating its argument that Antigua had failed to establish a prima facie case. In the Panel Report, circulated to Members of the World Trade Organization (the "WTO") on 10 November 2004, the Panel addressed this argument by "identify[ing] the measures that the Panel [would] consider in determining whether the specific provisions of the GATS that Antigua [had] invoked have been violated." The Panel determined, first, that Antigua was not entitled to rely on the alleged "total prohibition" as a "measure" in and of itself. The Panel then determined that the following laws of the United States had been "sufficiently identified [by Antigua] so as to warrant a substantive examination by the Panel" :
Federal laws:
Section 1084 of Title 18 of the United States Code (the "Wire Act");
Section 1952 of Title 18 of the United States Code (the "Travel Act"); and
Section 1955 of Title 18 of the United States Code (the "Illegal Gambling Business Act", or "IGBA").
State laws:
Colorado: Section 18-10-103 of the Colorado Revised Statutes;
Louisiana: Section 14:90.3 of the Louisiana Revised Statutes (Annotated);
Massachusetts: Section 17A of chapter 271 of the Annotated Laws of Massachusetts;
Minnesota: Section 609.755(1) and Subdivisions 2-3 of Section 609.75 of the Minnesota Statutes (Annotated);
New Jersey: Paragraph 2 of Section VII of Article 4 of the New Jersey Constitution, and Section 2A:40-1 of the New Jersey Code;
New York: Section 9 of Article I of the New York Constitution and Section 5-401 of the New York General Obligations Law;
South Dakota: Sections 22-25A-1 through 22-25A-15 of the South Dakota Codified Laws; and
Utah: Section 76-10-1102 of the Utah Code (Annotated).
After evaluating Antigua's claims with respect to these federal and state measures, the Panel concluded that:
(a) the United States' Schedule under the GATS includes specific commitments on gambling and betting services under sub‑sector 10.D;
(b) by maintaining the following measures, ... the United States fails to accord services and service suppliers of Antigua treatment no less favourable than that provided for under the terms, limitations and conditions agreed and specified in its Schedule, contrary to Article XVI:1 and Article XVI:2 of the GATS:
Federal laws
- (1) the Wire Act;
- (2) the Travel Act (when read together with the relevant state laws);1072 and
- (3) the Illegal Gambling Business Act (when read together with the relevant state laws).1073
State laws:
- (1) Louisiana: § 14:90.3 of the La. Rev. Stat. Ann.;
- (2) Massachusetts: § 17A of chapter 271 of Mass. Ann. Laws;
- (3) South Dakota: § 22-25A-8 of the S.D. Codified Laws; and
- (4) Utah: § 76-10-1102(b) of the Utah Code.
(c) Antigua has failed to demonstrate that the measures at issue are inconsistent with Articles VI:1 and VI:3 of the GATS;
(d) The United States has not been able to demonstrate that the Wire Act, the Travel Act (when read together with the relevant state laws) and the Illegal Gambling Business Act (when read together with the relevant state laws):
- are provisionally justified under Articles XIV(a) and XIV(c) of the GATS; and
are consistent with the requirements of the chapeau of Article XIV of the GATS.
_______________________________________________________
1072 That is, state laws that prohibit a "business enterprise involving gambling". Such state laws would include but are not limited to § 14:90.3 of the Louisiana Rev. Stat. Ann., § 17A of chapter 271 of Massachusetts Ann. Laws, § 22-25A-8 of the South Dakota Codified Laws, and § 76-10-1102(b) of the Utah Code.
1073 That is, state laws that prohibit a "gambling business ". Such state laws would include but are not limited to § 14:90.3 of the Louisiana Rev. Stat. Ann., § 17A of chapter 271 of Massachusetts Ann. Laws, § 22-25A-8 of the South Dakota Codified Laws, and § 76-10-1102(b) of the Utah Code.
The Panel further found that the following state laws are not inconsistent with of Article XVI: (i) Section 18-10-103 of the Colorado Revised Statutes ; (ii) Section 609.755(1) and Subdivisions 2-3 of Section 609.75 of the Minnesota Statutes (Annotated) ; (iii) paragraph 2 of Section VII of Article 4 of the New Jersey Constitution, and Section 2A:40-1 of the New Jersey Code ; and (iv) Section 9 of Article I of the New York Constitution and Section 5-401 of the New York General Obligations Law. The Panel decided to exercise judicial economy with respect to Antigua's claims under Articles XI and XVII of the GATS. The Panel accordingly recommended that the Dispute Settlement Body ("DSB") request the United States to bring the measures that the Panel had identified as GATS-inconsistent into conformity with the United States' obligations under the GATS.
On 7 January 2005, the United States notified the DSB of its intention to appeal certain issues of law covered in the Panel Report and certain legal interpretations developed by the Panel, pursuant to paragraph 4 of Article 16 of the DSU, and filed a Notice of Appeal pursuant to Rule 20 of the Working Procedures for Appellate Review (the "Working Procedures"). On 19 January 2005, Antigua also notified the DSB of its intention to appeal certain issues of law covered in the Panel Report and certain legal interpretations developed by the Panel, pursuant to paragraph 4 of Article 16 of the DSU, and filed a Notice of Other Appeal pursuant to Rule 23(1) of the Working Procedures. On 14 January 2005, the United States filed its appellant's submission. Antigua filed an other appellant's submission on 24 January 2005. The United States and Antigua each filed an appellee's submission on 1 February 2005. On that same day, the European Communities, Japan and the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu each filed a third participant's submission. Also on 1 February 2005, Mexico notified the Appellate Body Secretariat of its intention to make a statement at the oral hearing as a third participant, and Canada notified its intention to appear at the oral hearing as a third participant.
The oral hearing was held on 21 and 22 February 2005. The participants and third participants each made an oral statement (with the exception of Canada and the Separate Customs Territory of Taiwan, Penghu, Kinmen, and Matsu) and responded to questions put to them by the Members of the Division hearing the appeal.
Antigua's Prima Facie Case
The United States argues that Antigua did not make a prima facie case that any particular United States measure is inconsistent with any provision of the GATS. The United States therefore requests the Appellate Body to find that the Panel erred in law because it nevertheless made findings on Antigua's claims and thereby absolved Antigua from establishing a prima facie case. The United States further submits that the Panel made the case for Antigua with respect to three United States federal laws and eight state laws and thus denied the United States a "fair opportunity" to defend the laws at issue, inconsistent with the Panel's obligations under Article 11 of the DSU.
According to the United States, Antigua made its case on the basis that the measure at issue was "the total prohibition on the cross-border supply of gambling and betting services." The United States emphasizes, Antigua never specifically alleged that any particular law or laws violate Article XVI of the GATS. The United States emphasizes that, Antigua never specifically alleged that any particular law or laws violate Article XVI of the GATS. Thus, Antigua did not identify precisely what measures it was challenging or provide evidence and argumentation sufficient to establish a presumption of inconsistency of any measures with any provision of the GATS.
The United States contends that the Panel rejected Antigua's reliance on the alleged "total prohibition" as the measure at issue in this dispute and properly found that it could not identify the individual laws supporting Antigua's case where Antigua itself had not. Nevertheless, according to the United States, the Panel proceeded to review Antigua's submissions and exhibits and identify for itself whether and how particular laws resulted in a prohibition on the remote supply of gambling services. In so doing, the Panel exceeded the limits of its authority, and erred in the same way that the Appellate Body found the panels in Japan – Agricultural Products II and Canada – Wheat Exports and Grain Imports to have erred. The United States further contends that the Panel mistakenly found support for its approach in the Appellate Body decisions in Canada – Autos and Thailand – H-Beams. The Panel is said to have further erred in referring to a purported admission by the United States that "federal and state laws are applied and enforced so as to prohibit what it describes as the 'remote supply' of most gambling and betting services" , when the United States never conceded that any particular measure had this effect. The United States maintains that the approach taken by the Panel in this case—namely identifying a subset of United States measures from the "remarkably broad" list of "possibly relevant" laws in Antigua's panel request, and assembling arguments regarding their meaning, application and consistency with Article XVI—unfairly deprived the United States of any opportunity to respond and defend those specific measures.
In addition to alleging legal error on the basis that the Panel made findings on claims in the absence of a prima facie case by Antigua, the United States asserts that the Panel did not comply with its obligations under Article 11 of the DSU. Although the Panel explicitly recognized its lack of authority to make the case for the complaining party, the Panel is said to have nevertheless assumed the role of the complaining party in this dispute. Moreover, the Panel did not merely "fill in small gaps" in Antigua's claim, but rather, "created an entirely new approach to the case on behalf of the complaining party". In the submission of the United States, the "egregious" nature of the Panel's approach to Antigua's claims gives rise to a separate and distinct error, namely that the Panel failed to satisfy its duty under Article 11 of the DSU to "make an objective assessment of the matter before it". The United States thus requests that the Appellate Body find that the Panel failed to satisfy its obligations under Article 11 of the DSU.
For these reasons, the United States argues that the Panel erroneously concluded that: (i) it "should consider" three federal laws and eight state laws in order to determine whether the United States violated its obligations under the GATS; and (ii) Antigua had met its burden of proof that these laws result in a prohibition on the remote supply of gambling and betting services. "Separate and in addition to" this error , the United States argues that the Panel's resolution of Antigua's claims was inconsistent with the Panel's obligations under Article 11 of the DSU. Should the Appellate Body find error on either ground, the United States requests that the Appellate Body determine that the remaining Panel findings are "without legal effect".
United States' Schedule of Specific Commitments
The United States appeals the Panel's finding that the United States' Schedule to the GATS includes specific commitments on gambling and betting services under subsector 10.D, entitled "other recreational services (except sporting)". The United States maintains that it expressly excluded "sporting", the ordinary meaning of which includes gambling, from the United States' commitment for recreational services. In the United States' submission, the Panel misinterpreted the ordinary meaning of "sporting" and improperly elevated certain preparatory work for the GATS to the status of context for the interpretation of the relevant United States' commitment.
WT/DS285/R, 10 November 2004.
Ibid., paras. 6.154, 6.156-6.157.
Panel Report, para. 2.1(a).
Panel's Decision on the Request for Preliminary Rulings, para. 49, attached as Annex B to Panel Report, p. B-13.
Panel's Decision on the Request for Preliminary Rulings, para. 51, attached as Annex B to Panel Report, p. B-14.
Panel's Decision on the Request for Preliminary Rulings, para. 50, attached as Annex B to Panel Report, p. B-13. (footnote omitted)
Panel's Decision on the Request for Preliminary Rulings, para. 40, attached as Annex B to Panel Report, p. B-9.
United States' first written submission to the Panel, paras. 40-58; United States' statement at the first substantive panel meeting, paras. 11-21; United States' second written submission to the Panel, paras. 6‑9; United States' statement at the second substantive panel meeting, paras. 2-3 and 8-18.
Panel Report, para. 6.148.
Panel Report, para. 6.219.
Panel Report, paras. 7.2(a)-(d).
Panel Report, para. 6.383.
Ibid., paras. 6.397-6.398.
Notification of an Appeal by the United States, WT/DS285/6, 13 January 2005 (attached as Annex I to this Report).
WT/AB/WP/5, 4 January 2005.
Notification of Other Appeal by Antigua and Barbuda, WT/DS285/7, 16 February 2005; WT/DS285/7/Corr.1, 17 February 2005 (attached as Annexes II and II(a), respectively, to this Report).
Pursuant to Rule 21(1) of the Working Procedures.
Pursuant to Rule 23(3) of the Working Procedures.
Pursuant to Rule 22 and Rule 23(4) of the Working Procedures.
Pursuant to Rule 24(1) of the Working Procedures.
Pursuant to Rule 24(2) of the Working Procedures.
United States' appellant's submission, para. 43.
Ibid., para. 8 (quoting Antigua's first written submission to the Panel, para. 136). (emphasis omitted)
United States' appellant's submission, paras. 12-14 (referring to Appellate Body Report, Japan – Agricultural Products II, paras. 125-131; and Appellate Body Report, Canada – Wheat Exports and Grain Imports, para. 191).
Ibid., paras. 31-35 (citing Appellate Body Report, Canada – Autos, para. 184; and Appellate Body Report, Thailand – H-Beams, para. 136).
Ibid., para. 36 (quoting Panel Report, para. 6.164).
United States' appellant's submission, heading II.A.10, p. 23.
Ibid., para. 3. (footnote omitted)
According to the United States, in concluding that the ordinary meaning of "sporting" does not cover gambling, the Panel misapplied the customary rules of treaty interpretation and disregarded relevant WTO decisions. The Panel is said to have disregarded numerous English dictionaries that confirm that "sporting" in English includes activity pertaining to gambling and, thus, failed to give the word "sporting" in the United States' Schedule this ordinary English-language meaning, as required by the Vienna Convention on the Law of Treaties (the"Vienna Convention"). Furthermore, the United States contends that the Panel erred in relying on the meaning of the term "sporting" in French and Spanish, because the cover page of the United States' Schedule clarifies that "[t]his is authentic in English only".
The United States also asserts that the Panel erred in treating two documents, referred to in the Panel Report as "W/120" and the "1993 Scheduling Guidelines" , as context instead of as negotiating documents that constitute preparatory work. The United States points out that Members never agreed to memorialize W/120 and the 1993 Scheduling Guidelines, and that the disagreement of parties to the Uruguay Round services negotiations as to the content of these two documents prepared by the Secretariat is apparent in the divergent approaches adopted by Members in scheduling their specific commitments. Therefore, the United States asserts, neither W/120 nor the 1993 Scheduling Guidelines reflects an "agreement between the parties" or an "agreement made by all participants", within the meaning of Article 31(2) of the Vienna Convention.
According to the United States, the characterization of these documents carries important implications because, under Articles 31 and 32 of the Vienna Convention, context has primary interpretative significance, whereas preparatory work is merely a supplementary means of interpretation. A panel may look to preparatory work only to confirm an interpretation made in accordance with Article 31 of the Vienna Convention, or if such interpretation leaves the meaning ambiguous or unclear or leads to a result that is manifestly absurd or unreasonable. In this case, however, the Panel is said to have erred in using W/120 and the 1993 Scheduling Guidelines, which are "mere preparatory work" , to support a meaning that is at odds with the ordinary meaning of the "sporting" exclusion in the United States' Schedule. According to the United States, the Panel could not have reached the conclusion that it did, had it treated the 1993 Scheduling Guidelines and W/120 as preparatory work.
In the United States' submission, the proper context for its Schedule is the Schedules of other WTO Members. Consistent with the principle of effective treaty interpretation, the absence of any reference in the United States' Schedule to the United Nations' Provisional Central Product Classification (the "CPC"), in contrast to other Schedules, must be given legal effect. Therefore, the United States' Schedule must be interpreted according to its ordinary meaning and cannot be presumed to follow the meaning given to various terms by the CPC.Similarly, other Members' Schedules confirm that at least one Member made a commitment for gambling and betting services in subsector 10.E. Thus, the United States argues, the Panel erred in failing to find that, in the United States' Schedule, gambling properly resides in 10.E—where the United States made no commitment—rather than in the broad category of "recreational services" in 10.D.
The Panel is said, however, to have ignored the ordinary meaning of the United States' Schedule, read in the proper context, and instead erroneously created a "presumption" that, unless the United States "expressly" departed from W/120 and the CPC, it could be "assumed to have relied on W/120 and the corresponding CPC references." In this respect, the United States contends that the Panel confused the structure of W/120 with the cross-references to the CPC contained in that document, failing to recognize that Members, such as the United States, may have elected to adopt the former without necessarily embracing the latter. Thus, the Panel is said to have been wrong in construing any purported ambiguity against the United States and failing to acknowledge that there was no mutual understanding between the parties to the services negotiations as to the coverage of gambling in the United States' Schedule. In the United States' submission, such an approach, if upheld, would allow Members to expand negotiated commitments through dispute settlement.
The United States therefore requests the Appellate Body to reverse the Panel's finding that the United States undertook specific commitments on gambling and betting services in its GATS Schedule. Should the Appellate Body reach this issue and reverse the Panel's finding, the United States requests that the Appellate Body determine that the remaining Panel findings are "without legal effect."
The United States challenges the Panel's finding that the United States acts inconsistently with paragraphs (a) and (c) of Article XVI:2 by failing to accord services and service suppliers of Antigua "treatment no less favourable than that provided for" in the United States' Schedule. According to the United States, the Panel erred in converting two of the prohibitions on specific forms of market access limitations set out in Article XVI:2 into general prohibitions on any measure having an effect similar to that of a "zero quota", regardless of form.
The United States contends that, in interpreting Article XVI, the Panel failed to give meaning to the text and expanded the obligations set out in that provision. The Panel is said to have ignored the fact that Article XVI "represents a precisely defined constraint on certain problematic limitations specifically identified by Members" and that measures not caught by Article XVI remain subject to disciplines set out elsewhere in the GATS, including in Article XVII and Article VI. According to the United States, these errors are revealed in the Panel's misinterpretation of sub-paragraphs (a) and (c) of Article XVI:2.
As to Article XVI:2(a), the United States argues that the Panel misunderstood the ordinary meaning of this provision because the Panel ignored the requirement that limitations be "in the form of numerical quotas". In particular, the United States contends, the Panel erroneously found that "a measure that is not expressed in the form of a numerical quota or economic needs test may still fall within the scope of Article XVI:2(a)" if it has the "effect" of a zero quota. In the United States' submission, a limitation that has only the "effect" of limiting to zero the number of service suppliers, or their output, does not satisfy the "form" requirements of Article XVI:2.
As to Article XVI:2(c), the United States contends that the Panel did not come to the proper ordinary meaning of this provision because it used an incorrect reading of the French and Spanish versions as the basis for its interpretation, which is at odds with a plain reading of the English text. This approach, which is contrary to Article 33(4) of the Vienna Convention, is said to have led the Panel to the erroneous conclusion that Article XVI:2(c) refers to limitations "expressed in terms of designated numerical units" and limitations "in the form of quotas", when in fact the absence of a comma in Article XVI:2(c) requires these to be read together as a unitary requirement, namely, limitations "expressed in terms of designated numerical units in the form of quotas".
The United States submits that none of the United States state and federal laws imposes a limitation on the number of service suppliers "in the form of numerical quotas" or limitations on service operations or output "expressed as designated numerical units in the form of quotas". Rather, these laws represent domestic regulation limiting the characteristics of supply of gambling services, not the quantity of services or service suppliers. More specifically, these laws are "in the form of" and "expressed" as non-numerical, non-quota criteria that restrict certain activities, rather than restricting numbers of suppliers, operations, or output. As these laws match none of the "forms" identified in Article XVI:2(a) or XVI:2(c), the United States argues that the Panel should have found that these laws are not inconsistent with those provisions.
The United States contends that the Panel's interpretation of Article XVI:2(a) and XVI:2(c) would "unreasonably and absurdly" deprive Members of much of their right to regulate services by not allowing them to prohibit selected activities in sectors where commitments are made. The approach to market access liberalization reflected in the GATS is said not to provide an unlimited right to supply services throughout each committed sector or mode of supply. Such an approach would be at odds, so it is argued, with the balance between liberalization and regulation reflected in the Members' recognized right to regulate services. According to the United States, there is no reason why a Member's imposition of nationality-neutral limitations should violate Article XVI provided that they do not take the form of numerical quotas or any other form prohibited by Article XVI:2. Such limitations remain subject to other GATS provisions, however, including Article VI. In this regard, the United States also questions the Panel's finding that Article XVI, and Article VI:4 and VI:5, are mutually exclusive.
For these reasons, the United States requests that the Appellate Body reverse the Panel's findings that the United States failed to satisfy its obligations under Article XVI:2(a) and XVI:2(c) of the GATS. Should the Appellate Body so decide, the United States requests the Appellate Body to determine that the remaining Panel findings are "without legal effect."
The United States appeals the Panel's findings that the Wire Act, the Travel Act, and the Illegal Gambling Business Act are not justified under paragraph (a) or (c) of Article XIV of the GATS and are inconsistent with the requirements of the chapeau of Article XIV.
According to the United States, the Panel erroneously interpreted the term "necessary" in Article XIV(a) and XIV(c) to require the United States to "explore and exhaust reasonably available WTO-consistent alternatives" that would ensure the same level of protection as the prohibition on the remote supply of gambling and betting services. The United States contends that the Panel then misunderstood this obligation, in conjunction with the specific market access commitments set out in the United States' Schedule, as requiring the United States to hold consultations with Antigua before and while imposing the prohibition on the remote supply of gambling and betting services.
The United States underlines that the Panel erroneously read a "procedural requirement" of consultation or negotiation into Article XIV(a) and XIV(c). Such a requirement is said to find no support in either the text of Article XIV or in previous decisions of GATT panels and the Appellate Body. Pointing to Articles XII:5 and XXI:2(a) of the GATS, the United States asserts that the treaty drafters were explicit when they intended to impose a prerequisite of consultations before a Member could take certain actions, and that no such explicit requirement is found in the text of Article XIV. The United States also contends that, when examining whether a WTO-consistent alternative was reasonably available, the Panel departed from previous GATT and WTO decisions interpreting the term "necessary" under Article XX of the GATT and, in particular, from the decision of the Appellate Body in Korea – Various Measures on Beef. According to the United States, these decisions clarified that alternatives that are only "theoretical" —such as a possible negotiated outcome following consultations—cannot be regarded as "reasonably available".
Furthermore, the United States argues that a possible negotiated outcome following consultations does not qualify as a legitimate "alternative" in this case because it could not ensure the same level of protection vis-à-vis the remote supply of gambling. If the United States were to withdraw its prohibition and pursue consultations instead, it could not guarantee that the risks associated with the remote supply of gambling would not recur. Such an outcome, according to the United States, cannot be reconciled with the finding of the Appellate Body in EC – Asbestos that a Member is not required to adopt a measure that would render that Member vulnerable to the very risks sought to be avoided by the allegedly WTO-inconsistent measure.
The United States additionally contends that the mere fact that a Member made a specific commitment in its Schedule cannot, as the Panel found, imply some obligation to carry out consultations if that measure is to be justified under Article XIV. The Panel failed to explain how the inscription of the term "None" in the United States Schedule provided textual support for its conclusion. Moreover, according to the United States, the Panel's finding of a prerequisite of consultations is incompatible with the opening text of Article XIV, which provides that "nothing in this Agreement"—including in the Schedules of Members—can prevent Members from adopting measures that meet the requirements of Article XIV.
Finally, the United States asserts that the alleged failure to consult with Antigua was the sole basis for the Panel's findings that the United States' measures are not provisionally justified under paragraph (a) or (c) of Article XIV. Without the requirement of consultations, then, the Appellate Body is left with the Panel's finding that the measures serve important interests and with the absence of any finding on a reasonably available alternative measure. In this light, the United States argues, the Appellate Body has sufficient basis to complete the analysis and conclude that the United States' measures are provisionally justified under paragraphs (a) and (c) of Article XIV.
For the foregoing reasons, the United States requests that, in the event that the Appellate Body reaches the issues under Article XIV, it reverse the Panel's findings under Article XIV(a) and XIV(c), complete the analysis, and find that the Wire Act, the Travel, and the Illegal Gambling Business Act are "provisionally" justified under those provisions.
The United States claims that the Panel applied the wrong legal standard when interpreting the chapeau of Article XIV of the GATS, because it required the United States to demonstrate "consistent" treatment of foreign and domestic supply of services. The United States observes that the chapeau prohibits "arbitrary" and "unjustifiable" discrimination, and "disguised restriction[s] on trade in services". The United States argues that "inconsistent" treatment as between services supplied domestically and services supplied from other Members, in and of itself, does not necessarily constitute arbitrary or unjustifiable discrimination, or a disguised restriction on trade in services.
The United States additionally contends that the Panel improperly made the rebuttal for Antigua under the chapeau of Article XIV. The United States emphasizes that, in its analysis under Article XIV, the Panel "recycled" certain evidence and argumentation brought forward by Antigua in the context of its national treatment claim under Article XVII , as to which the Panel exercised judicial economy. Given the distinct legal standard of the chapeau—in particular, its focus only on discrimination that is "arbitrary" or "unjustifiable"—the United States argues that reliance on Antigua's argumentation and evidence in relation to its national treatment claim is inapposite when analyzing the United States' defence under Article XIV.
Furthermore, the United States alleges that, "[a]s a matter of law" , the fact that three domestic service suppliers have not been prosecuted under United States law, and that an Antiguan supplier has been prosecuted, does not rise to the level of "arbitrary or unjustifiable discrimination" or a "disguised restriction on trade" under the chapeau of Article XIV, and the Panel erred in finding otherwise. In addition, the United States contends that a relatively small sampling of cases, where a government has not prosecuted allegedly criminal acts, is not probative because "neutral considerations", such as resource limitations, prevent prosecutors from pursuing all violations of the law in a given jurisdiction.
The United States also claims that the Panel failed to satisfy its obligations under Article 11 of the DSU in its evaluation of the evidence relating to the chapeau of Article XIV. According to the United States, the Panel erred in assessing the United States' enforcement of certain federal laws because the Panel did not take into account "uncontroverted" evidence of the overall enforcement of United States law. The Panel is said to have also erred by failing to recognize that the Interstate Horseracing Act ("IHA") could not repeal pre-existing criminal statutes, including those challenged by Antigua and found by the Panel to be inconsistent with Article XVI of the GATS.
Should the Appellate Body reverse the Panel's findings under the chapeau, the United States requests that the Appellate Body complete the analysis and find that the Wire Act, the Travel Act, and the Illegal Gambling Business Act meet the requirements of the chapeau of Article XIV and are thus justified under Article XIV of the GATS.
The United States challenges the Panel's finding, in the course of its analysis of the measures at issue, that "practice" can be considered an autonomous measure that can be challenged "in and of itself". The United States contends that, in arriving at this finding, the Panel erred in two respects. First, it went beyond its terms of reference, as Antigua had not challenged any of the items that the Panel indicated could be considered "practice". Secondly, the Panel based its conclusion that "practice" can be challenged "as such" on a mischaracterization of prior WTO decisions with respect to what constitutes a "measure" under WTO law. The United States therefore requests that the Appellate Body reverse this finding of the Panel.
Antigua's Prima Facie Case
Antigua requests the Appellate Body to uphold the Panel's findings that Antigua made a prima facie case of GATS-inconsistency with respect to the relevant federal and state statutes. Antigua argues that, although the Panel should have considered this case on the basis of the "total prohibition" that the United States maintains against the cross-border supply of gambling and betting services, Antigua had in any event made out its case under Article XVI with respect to discrete federal and state legislation.
Antigua contends that, after searching through United States federal and state laws to identify those statutes it believed to be the source of the prohibition on the cross-border supply of gambling and betting services, it provided the Panel with the text and a summary of each statute. Antigua referred in its submissions to specific laws, such as the Wire Act, the Travel Act and the Illegal Gambling Business Act, as prohibiting the cross-border supply of gambling and betting services. Antigua emphasizes that it submitted evidence as to how the United States' authorities themselves understood various laws as operating to prohibit the cross-border supply of gambling services. In addition, Antigua referred the Panel to secondary sources that confirmed this understanding. According to Antigua, the discussion and evidence it presented were sufficient to substantiate its allegation that the United States acts inconsistently with Article XVI of the GATS as a result of this prohibition.
Antigua contests the argument that the United States has been denied a fair opportunity to defend itself in this case. The United States admitted on several occasions—including during consultations—that the cross-border supply of gambling and betting services is prohibited. Furthermore, the federal and state laws challenged by Antigua were identified at the outset of the dispute in Antigua's panel request. As a result, Antigua contends, the United States was aware that it would be expected to defend itself with respect to those laws.
As regards the United States' claim under Article 11 of the DSU, Antigua maintains that the Panel did not exceed its authority in determining that Antigua had established a prima facie case. In arguing to the contrary, Antigua submits, the United States fails to recognize the discretion afforded panels in the assessment of parties' prima facie cases, as determined by relevant WTO decisions.
Antigua accordingly requests that the Appellate Body uphold the Panel's findings regarding the United States measures identified by Antigua as the subject of its challenge.
United States' Schedule of Specific Commitments
Antigua requests the Appellate Body to uphold the Panel's findings that the term "sporting" does not include gambling and that, consequently, the United States undertook a specific market access commitment in its Schedule with respect to gambling and betting services.
Antigua argues that when examining the words of a treaty, a treaty interpreter must seek to determine the "common intention" of the parties. Although this should be done in accordance with Article 31 of the Vienna Convention, Antigua submits that this provision should be regarded as one "general rule of interpretation" rather than a hierarchical sequence of tests.
In Antigua's submission, the ordinary meaning of the word "sporting" does not include gambling and betting services. Because a Schedule is a classification of mutually exclusive services categories, an entry in such a classification can have only one meaning. Thus, it is inappropriate to interpret an entry in the United States' Schedule on the basis of the entry's divergent dictionary definitions. In order to determine the ordinary meaning of the term "sporting" in the United States' Schedule, it is more appropriate to examine the term in the light of other classifications, such as W/120, the CPC, other classification systems, and other WTO Members' GATS Schedules. Antigua submits that the Panel properly analyzed these classifications and found that they do not support the conclusion that "sporting" includes gambling, a result confirmed by the fact that the United States could not point to any classification that uses the word "sporting" to refer to gambling.
Given that, as the Panel itself observed, GATS Schedules simply cannot be understood without reference to the 1993 Scheduling Guidelines, Antigua urges the Appellate Body to uphold the Panel's findings that W/120 and the 1993 Scheduling Guidelines are "context" for the interpretation of the United States' Schedule and Article XVI of the GATS. In addition, the revised Scheduling Guidelines of 2001 should be considered a "subsequent agreement" and/or "subsequent practice", as provided for in Article 31(3)(a) and 31(3)(b) of the Vienna Convention. According to Antigua, the 2001 Scheduling Guidelines confirm that the existing GATS Schedules were prepared in accordance with the 1993 Scheduling Guidelines and W/120.
Antigua emphasizes that the United States' attempt to distinguish the structure of the W/120 from the meaning of its categories is without merit. When a Member uses the structure of the W/120, Antigua argues, it "inevitably" uses the content of its categories, unless this Member indicates explicitly that it is diverging from that content with respect to a sector or subsector. Antigua notes, in this respect, that the United States' Schedule includes no such indication with respect to "sporting" or "other recreational services".
Antigua requests the Appellate Body to uphold the Panel's findings with respect to Article XVI:2(a) and XVI:2(c) of the GATS. According to Antigua, a good faith interpretation of Article XVI:2 of the GATS, on the basis of its text, context, and object and purpose, reveals the flaws in the United States' understanding, and supports the Panel's interpretation of the relevant provisions.
Antigua contests the United States' understanding of the coverage of Article XVI:2 as limited to measures that take a certain "form", without regard to the effects of those measures. Instead, Antigua contends that the text of Article XVI:2(a) and XVI:2(c) is intended to provide a broad description of the types of measures caught by these provisions. For example, the word "whether" in these provisions suggests an illustrative list of prohibited measures, while the absence of any definition in the GATS of the terms "numerical quotas", "monopolies", "exclusive service suppliers", or "economic needs test" supports the view that these terms cannot be used to restrict the scope of Article XVI:2 to precisely defined "forms".
Antigua emphasizes that the 1993 Scheduling Guidelines and the Schedules of the United States and other WTO Members confirm that the United States' "narrow" interpretation does not represent the common intention of the parties. Antigua finds support in other Members' Schedules, including that of the United States, that list measures, including prohibitions, that are not caught by the United States' interpretation of Article XVI:2. According to Antigua, this context validates the Panel's view that Article XVI:2(a) and XVI:2(c) capture measures that are equivalent to a zero quota.
Antigua submits that the Panel did not err in interpreting Article XIV of the GATS or in applying its interpretation to the Wire Act, the Travel Act, and the Illegal Gambling Business Act.
According to Antigua, the Panel correctly found that the United States had not established that the laws in question were "necessary" within the meaning of Article XIV(a) and XIV(c) of the GATS. Antigua argues that, contrary to the United
Done at Vienna, 23 May 1969, 1155 UNTS 331; 8 International Legal Materials 679.
United States' appellant's submission, para. 51.
Services Sectoral Classification List: Note by the Secretariat, MTN.GNS/W/120, 10 July 1991.
Scheduling of Initial Commitments in Trade in Services: Explanatory Note, MTN.GNS/W/164, 3 September 1993.
United States' appellant's submission, para. 65.
Provisional Central Product Classification, Statistical Papers, Series M No.77, United Nations (1991).
United States' appellant's submission, para. 75 (quoting Panel Report, paras. 6.103-6.106).
United States' appellant's submission, para. 3. (footnote omitted)
Ibid., para. 109 (quoting Panel Report, para. 6.332).
United States' appellant's submission, para. 129.
United States' appellant's submission, paras. 3 and 101. (footnote omitted)
United States' appellant's submission, para. 183.
United States' appellant's submission, para. 205 (quoting Panel Report, para. 6.197).
Ibid., paras. 209-211 (citing Appellate Body Report, US – Corrosion-Resistant Steel Sunset Review, para. 84; Appellate Body Report, US – Countervailing Measures on Certain EC Products, paras. 12-16; and Appellate Body Report, US – Carbon Steel, para. 157).
Antigua's appellee's submission, para. 44 (quoting Article 31 of the Vienna Convention).
Antigua's appellee's submission, para. 52.
Antigua's appellee's submission, para. 64.
Ibid. Antigua submits a summary of listed measures of several Schedules in Annex B of its appellee's submission.
XVI:2(c) is intended to provide a broad description of the types of measures caught by these provisions. For example, the word "whether" in these provisions suggests an illustrative list of prohibited measures, while the absence of any definition in the GATS of the terms "numerical quotas", "monopolies", "exclusive service suppliers", or "economic needs test" supports the view that these terms cannot be used to restrict the scope of Article XVI:2 to precisely defined "forms".
Antigua emphasizes that the 1993 Scheduling Guidelines and the Schedules of the United States and other WTO Members confirm that the United States' "narrow" interpretation does not represent the common intention of the parties. Antigua finds support in other Members' Schedules, including that of the United States, that list measures, including prohibitions, that are not caught by the United States' interpretation of Article XVI:2. According to Antigua, this context validates the Panel's view that Article XVI:2(a) and XVI:2(c) capture measures that are equivalent to a zero quota.
Antigua submits that the Panel did not err in interpreting Article XIV of the GATS or in applying its interpretation to the Wire Act, the Travel Act, and the Illegal Gambling Business Act.
According to Antigua, the Panel correctly found that the United States had not established that the laws in question were "necessary" within the meaning of Article XIV(a) and XIV(c) of the GATS. Antigua argues that, contrary to the United States' understanding of the Panel's conclusion, the Panel determined that the United States had failed to meet its burden of proof as to the necessity of the three federal laws, and that the lack of consultations with Antigua "was simply evidence of that failure".
With respect to Article XIV(a), Antigua submits that the United States bore the burden of proving that its three federal laws were "necessary" to protect its citizens from organized crime and underage gambling in the context of the services from Antigua at issue in this dispute, but the United States submitted no evidence in this regard. Similarly, as regards Article XIV(c), it was incumbent on the United States to prove that the three federal statutes were "necessary" to secure compliance with the RICO statute in order to protect United States citizens against organized crime in the context of gambling and betting services from Antigua. Again, Antigua asserts, the United States submitted no evidence in this regard.
Antigua underlines that the United States would have met its burden of proof had it proven that there were no WTO-consistent alternative measures reasonably available that would provide the United States with the same level of protection. Instead, the United States argued that it was for Antigua or the Panel to establish that one or more reasonably available WTO-consistent alternatives to prohibition existed. In Antigua's submission, such a reversal of the burden of proof would not be justified in the light of previous WTO decisions examining affirmative defences.
Antigua recalls that it is for the party invoking an Article XIV defence to prove all elements of the defence, including the requirements laid down in the chapeau of Article XIV. According to Antigua, the United States did not accomplish this task.
Antigua submits that the Panel did not act inconsistently with Article 11 of the DSU in finding that, in the light of the evidence of: (i) the legality of inter-state remote access gambling under the IHA; and (ii) the non-enforcement of laws against major domestic suppliers of internet gambling services, the United States had not met its burden of proof. In particular, the IHA, on its face, allows interstate betting on horseracing over the telephone and over the internet. The United States' arguments regarding this statute amount to an assertion that the law has no legal effect and this, submits Antigua, is simply "not credible".
For these reasons, Antigua requests the Appellate Body to uphold the Panel's findings that the United States did not prove that the three federal laws at issue were "necessary" within the terms of Article XIV(a) or XIV(c) of the GATS.
With respect to the Panel's finding that practice "can be considered as an autonomous measure that can be challenged in and of itself" , Antigua submits that this finding is obiter dictum. Because, however, there may be circumstances under which the "practice" of a WTO Member should be considered as a measure for purposes of dispute resolution, Antigua requests the Appellate Body to dismiss the United States' appeal on this issue.
Antigua argues that the Panel erred by failing to assess Antigua's claims on the basis of the "total prohibition" of the cross-border supply of gambling and betting services in the United States. Antigua requests that the Appellate Body so find and that it complete the analysis and find the "total prohibition" to be inconsistent with Article XVI of the GATS.
According to Antigua, the Panel erroneously concluded that Antigua had not identified the "total prohibition" as a "measure" in the panel request. Antigua states that its characterization of the prohibition as "total" was "nothing but a description" that did not alter the focus of Antigua's challenge from the outset of the dispute, which was the undisputed prohibition on the cross-border supply of gambling and betting services. Although it did not expressly state in the panel request that the "total prohibition" is a measure "in and of itself", Antigua submits that it clearly identified the "total prohibition" in the panel request in a manner consistent with panel requests previously examined by panels and the Appellate Body. In the alternative, Antigua contends that any ambiguity regarding its challenge to the "total prohibition", in and of itself, was resolved by reading its first submission to the Panel.
Antigua also contests the Panel's legal conclusion that, in any event, the "total prohibition" does not constitute a measure that could be challenged in and of itself in WTO dispute settlement proceedings. According to Antigua, the Panel misinterpreted US – Corrosion-Resistant Steel Sunset Review in finding that a measure must be an "instrument", and that the total prohibition "is a description of an effect rather than an instrument containing rules or norms." According to Antigua, in that case, the Appellate Body regarded any act or omission attributable to a WTO Member as a "measure".
In addition, Antigua argues that the United States admitted not only the existence of the "total prohibition", but also its effect as prohibiting the cross-border supply of gambling and betting services in the United States. The Panel's failure to accord weight to this admission is inconsistent with the Panel's obligation under Article 11 of the DSU to "make an objective assessment of the facts of the case". Antigua asserts that, on the basis of the United States' admission and the other evidence submitted to the Panel, it had met its burden of proving the existence of the "total prohibition" and its effect, and that it was entitled to proceed in making out a case that the "total prohibition", as such, is inconsistent with the United States' obligations under the GATS.
Should the Appellate Body reverse the Panel's legal interpretation of Article XVI:2(a) and XVI:2(c) of the GATS, as requested by the United States in its appeal, Antigua seeks reversal of the Panel's erroneous conclusion that Article XVI:2 exhaustively defines those measures that would be inconsistent with the obligation in Article XVI:1. As a result of the Panel's interpretation, Antigua argues, a Member would be permitted to maintain measures inconsistent with the broad prohibition in Article XVI:1, provided only that they are not among those listed in Article XVI:2. Antigua submits that such an interpretation reduces Article XVI:1 to an introductory clause with no legal effect of its own, contrary to the principles of treaty interpretation. Therefore, Antigua requests the Appellate Body to find that the Panel erred in concluding that Article XVI:1 is limited by Article XVI:2 of the GATS and to complete the analysis by concluding that the United States' measures are inconsistent with Article XVI:1, regardless of their consistency with Article XVI:2.
Antigua challenges the Panel's conclusion that measures preventing consumers from using services supplied by a service provider in another WTO Member are not inconsistent with sub-paragraph (a) or (c) of Article XVI:2.
The Panel found that certain state laws of the United States are not inconsistent with sub-paragraph (a) or (c) of Article XVI:2 on the ground that they are not directed at "service suppliers", nor to "service operations" and "service output", but, rather, are directed at service consumers. In Antigua's submission, if the Panel were correct in its distinction between prohibitions directed at consumers and those directed at suppliers, then a Member that has made a full commitment on mode 1 would still be able to eliminate the possibility of cross-border supply of services, and thus circumvent that commitment, by imposing restrictions on the ability of its citizens to consume those services. It is argued that this would be an "absurd" result.
Instead, for the same reasons that the Panel found that a prohibition on the supply of a service falls within the scope of Article XVI:2(a) and XVI:2(c)—because it has the effect of a zero quota—the Panel should have found that a prohibition on the consumption of a service also falls within those provisions. A measure that imposes a prohibition on the consumption of services also has the effect of a zero quota on "service suppliers", "service operations" and "service output" within the meaning of Article XVI:2(a) and XVI:2(c). Antigua submits that such an interpretation nevertheless preserves Members' right to regulate because a Member that wants to maintain such a prohibition may continue to do so, provided that the Member either clarifies this in its Schedule or leaves the sector unbound.
Accordingly, Antigua requests the Appellate Body to reverse the findings of the Panel in paragraphs 6.383, 6.398, 6.402, and 6.406 of the Panel Report.
Antigua challenges the Panel's decision to consider the defence raised by the United States under Article XIV of the GATS. Antigua also argues that the Panel erroneously relieved the United States of its burden of proof with respect to Article XIV. In so doing, the Panel denied Antigua the right to respond to the defence, contrary to principles of due process and equality of arms, and inconsistent with the Panel's duty under Article 11 of the DSU. In addition, the Panel erred in its evaluation under paragraphs (a) and (c) of Article XIV, as well as under the chapeau of Article XIV. Antigua contends that the Panel's errors in this regard include a failure to make an objective assessment of the matter and the facts before it, contrary to Article 11 of the DSU.
According to Antigua, the Panel should not have evaluated the United States' defence in this proceeding. The United States' invocation of Article XIV only in its second written submission—and even then in an ambiguous manner—constituted an "extraordinary delay" and a "simple |
