According to press reports, the U.S. is planning to "clarify" its GATS commitments relating to gambling services, pursuant to GATS Article XXI:
The United States said Friday it was not required to comply with a WTO ruling to open its borders to the Internet gambling industry because of an "oversight" in a decade-old trade agreement.
US officials said they were submitting documents to "clarify" Washington's commitment to "recreational services," which was interpreted in a WTO dispute settlement as including a commitment to allow cross-border Internet gambling services.
The clarification "should dispose of this matter," said Deputy United States Trade Representative John Veroneau.
...
US officials said Article 21 of the GATS agreement allows a member to file clarifications to their original schedule of commitments, a procedure that has been used only once.
Under the procedure, an affected country may file a claim for compensation that may be subject to arbitration at the WTO. A finding against the US might allow a country to retaliate by restricting some services, US officials said.
I take it this means the U.S. will not appeal the Article 21.5 panel report circulated on March 30, and will pursue GATS Article XXI instead, but I haven't seen anything definitive to that effect.
I didn't see anything in the press about Antigua's response, so I emailed Mark Mendel, one of Antigua's lawyers, and we had this brief exchange:
Simon Lester: I have seen a number of press reports regarding the planned U.S. response to the Article 21.5 Gambling Panel report findings, indicating that the U.S. intends to seek modification of its GATS commitments pursuant to GATS Article XXI.
I wonder if you could offer any comments regarding Antigua's likely response to this development?
Mark Mendel: It is over all a most shocking development. To my knowledge, Article XXI has never been used before (other than by the EU in connection with harmonising schedules upon enlargement), and to use it in the face of an adverse DSU ruling is nothing short of incredible. If the United States goes forward with this most unwise plan, Antigua will once again be breaking new ground in pushing forth a claim for compensation for the withdrawal of the commitment. We are currently assessing our options, although it may take some time to sort through all of the implications of this decision. It is, however, simply stunning that the United States would take this action and I would expect it will have very serious adverse implications for the WTO and the Doha round.
One of the really incredible things about the USTR's statement today is this allegation that it was simply a "mistake" or drafting error to make the commitment. Over 100 WTO members managed to exclude gambling commitments from their schedules, over a dozen of them by explicit reference. It is simply impossible for the United States to have made a mistake in this regard.Simon Lester: Do you view recourse to GATS Article XXI as precluding suspension of concessions under DSU Article 22? In other words, assuming the Article 21.5 panel report gets adopted, would Antigua pursue suspension under DSU Article 22 at the same time the U.S. is pursuing modification under GATS Article XXI?
Mark Mendel: Just off the cuff, under Article XXI, it appears that we would pretty much be using the same process that we would use under Article 22 of the DSU, but measuring damages on a permanent rather than an annual basis, so it seems there wouldn't be much sense in going to Article 22. I wouldn't think, however, that we would be precluded from Article 22. We may well consider arguing that the US is precluded from withdrawing the commitment with respect to Antigua under the circumstances. It is all going to be new ground.
This is certainly a novel procedural situation, and it's going to be interesting to see how it develops.
ADDED: I thought it was worth updating this post with a couple points.
First, in an ASIL Insight piece from November 2004 that was particularly insightful, Joost Pauwelyn concluded his short article on the original Gambling panel report with the following: "... if necessary, the United States can always re-negotiate its GATS commitments and withdraw the one on internet gambling (GATS Article XXI). All it needs to do is offer equivalent compensation or accept reciprocal trade retaliation by Antigua." This is not to say that Joost would endorse going to Article XXI in the midst of an Article 21.5 compliance proceeding, but nevertheless it was a pretty good call!
Second, not surprisingly, Antigua is not happy with this development: See the Antigua Online Gaming Association Press Release and the Antiguan Government Press Release.
Third, I've been wondering what the GATS Article XXI rules mean for the possibility of cross-retaliation under another agreement. DSU Article 22.3(c) explicitly allows this under certain conditions. On the other hand, GATS Article XXI:4(b) merely says: "If the modifying Member implements its proposed modification or withdrawal and does not comply with the findings of the arbitration, any affected Member that participated in the arbitration may modify or withdraw substantially equivalent benefits in conformity with those findings." Does the absence of a mention of this kind of cross-retaliation in Article XXI mean that such cross-retaliation is not permitted there? A quick web search led me to this answer: "While there is some dissent, the predominant view appears to be that Article XXI permits cross-retaliation; retaliatory sanctions need not be confined to services but could also be applied, to exert maximum pressure, to agricultural or goods trade." (Page 33 of this document: http://policyalternatives.ca/documents/National_Office_Pubs/facing_facts.pdf ) But I wonder how the Article XXI arbitration body would interpret the provision.
