fb tracking

Bush Administration Illegally Withholding Terms of Deal That Binds New Sectors of U.S. Economy to WTO Authority

May 19, 2008

Bush Administration Illegally Withholding Terms of Deal That Binds New Sectors of U.S. Economy to WTO Authority

Public Citizen Sues to Force U.S. Trade Office To Release Details of WTO Internet Gambling Deal

WASHINGTON, D.C. – The Bush administration is illegally withholding the details of its offer accepted by the European Union to bind more sectors of the U.S. economy to World Trade Organization (WTO) jurisdiction as part of a settlement relating to a WTO ruling against the U.S. ban on Internet gambling, Public Citizen contended today in a lawsuit filed in the U.S. District Court for the District of Columbia.

After a 2007 WTO ruling authorized trade sanctions because the United States had failed to conform U.S. gambling law to WTO rules, the Bush administration announced it would remove the gambling sector from WTO coverage. But to do so, WTO rules require that the U.S. must negotiate compensation for other WTO countries. Although it has announced that deals have been reached with the European Union and other countries, the Office of the U.S. Trade Representative (USTR) has refused to release the details of its compensation agreements. In December, the USTR provided a hint at the scope of the deals by revealing that they involved new U.S. WTO commitments for “warehousing services, technical testing services, research and development services and postal services relating to outbound international letters.”

“Americans have a right to know what kinds of trade concessions the U.S. government is granting other countries, especially when those deals have a significant impact on domestic policy and may be worth billions of dollars,” said Bonnie I. Robin-Vergeer, a Public Citizen attorney. “The Bush administration’s decision to withhold the agreement under the Freedom of Information Act (FOIA) has more to do with its desire to prevent public and congressional scrutiny of the settlement before it is enshrined in a new WTO schedule than it does with national security. FOIA requires the agreement’s release.”

Submitting new U.S. service sectors to the WTO’s authority would constrain U.S. federal, state and local government’s ability to regulate in these sectors and expose existing and future domestic policies in these sectors to challenge before WTO tribunals, as occurred with the U.S Internet gambling ban.

The USTR claims the settlement is classified and cannot be released as a matter of national security. Public Citizen is representing journalist Ed Brayton, who filed a FOIA request for the compensation deal. The USTR denied Brayton’s request and his administrative appeal, contending that the settlement was properly classified in the interest of national security.

In 2005, the WTO ruled for Antigua and Barbuda in a challenge to U.S. laws banning online gambling and ordered the United States to make changes to its laws to conform to WTO rules. After a 2007 WTO panel authorized sanctions in retaliation for the U.S. refusal to alter its gambling laws, the Bush administration announced that it would withdraw gambling and betting services from WTO jurisdiction.

To modify its schedule of commitments in the WTO’s General Agreement on Trade in Services (GATS), the U.S. was required under GATS Article XXI to negotiate agreements or else proceed to arbitration with affected WTO members to compensate them for lost revenues as a result of the removal of the gambling and betting sector from the schedule of U.S. WTO commitments. Compensation talks behind closed doors yielded the U.S. settlement with the European Union, along with other WTO members. The U.S. offer to commit new sectors of the U.S. economy to WTO jurisdiction – and thus to guarantee access under favorable terms by foreign firms – is rumored to be worth billions of dollars and may have serious implications for U.S. domestic policy. However, neither Congress nor the public can know the details of the agreement and whether it is in the public interest unless it is released. 

Brayton, who writes for the Michigan Messenger, is a fellow with the Center for Independent Media. He has written extensively about U.S. online gambling restrictions and their effect on international trade.

The suit asks the court to find that the USTR is illegally withholding the settlement agreement and to order the agency to provide Brayton a copy of the agreement.

READ the complaint.