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Administration Proposal to Bind Sensitive U.S. Storage, Postal Service Sectors to WTO as Compensation to EU in Gambling Case Must Obtain Congress’ OK

Statement of Lori Wallach, Director of Public Citizen’s Global Trade Watch Division

Under the U.S. Constitution, no administration can unilaterally change U.S. commitments under a trade agreement, so hopefully the Europeans know that the Bush administration’s offer to bind more sensitive service sectors to WTO jurisdiction is meaningless unless Congress approves such a proposal. Whatever the Bush administration is considering trading away to get out of its current WTO gambling mess would have to be approved by Congress.

To compensate Europe for the removal of the U.S. gambling sector from WTO jurisdiction, the Bush administration reportedly proposes to bind U.S. storage and warehousing, and postal and delivery to WTO jurisdiction, among other service sectors. Compensation talks have been conducted behind closed doors without input from congressional committees whose jurisdiction would be compromised by the proposal.

After the gambling case showed how the WTO places major constraints on non-trade domestic policy space, Congress’ approval to bind more sectors to WTO jurisdiction is by no means guaranteed. The U.S. Trade Representative must release full information about the scope of its compensation proposal so Congress can fully assess it.

Under WTO classifications, warehousing and storage services include the controversial liquefied natural gas (LNG) terminal sector, which has sparked concern in Congress as well as with state and local legislators because of the highly sensitive safety issues related to placement of these dangerous terminals. Surely, policymakers would not want the WTO to limit their ability to regulate the placement, size and other aspects of these terminals – something that would occur if the sector were required to adhere to WTO rules. Depending on the scope of commitments, the notion of putting the U.S. postal services and safety testing under WTO jurisdiction also could prove explosive in Congress.

Note: In March 2005, the WTO ruled for Antigua in a challenge of the U.S. ban on Internet gambling. The ruling implicated wide swaths of U.S. gambling regulation beyond Internet gaming. After a 2007 WTO panel authorized sanctions in retaliation for the U.S. refusal to alter its gambling laws, the administration announced that it would withdraw gambling from WTO jurisdiction. The WTO allows nations to “take back” service sectors from WTO jurisdiction, but only after compensating other WTO signatories for lost business opportunities. Today, the administration announced proposed compensation for the European Union.

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