Trade rulings called threat to Utah firms
In fact, Utah's total ban on gambling could be in jeopardy as international trade agreements trump state laws.
Such agreements will have profound repercussions on a state's ability to regulate economic activity and to pursue its own social policy choices, according to Peter Riggs, director of the Forum on Democracy and Trade, a nonprofit organization that focuses on how trade impacts democracy.
Riggs, who on Wednesday addressed the Utah Legislature's Public Utilities and Technology Interim Committee, said the state's industries do not have to be at the center of a trade dispute in order to be targeted.
"It means that your industries potentially can be caught in the crossfire, in the crosswinds, in the case of a trade dispute," Riggs said. "Your state businesses can be targeted with sanctions, with punitive tariffs or other kinds of judgments."
A dispute involving the Caribbean island of Antigua and the United States grabbed international attention in 2004 after a World Trade Organization panel ruled in favor of Antigua's Internet gaming industry.
In April, a WTO appellate body ruled that U.S. gambling laws are subject to challenge but that most federal restrictions on gambling are justified under a "public morals" exception.
"In many respects the lower tribunal was reversed," said Bill Waren, policy director for the forum, which is based in Washington, D.C. "But the appellate tribunal nonetheless was forced to conclude the United States did offer up gambling as something that should be covered by the WTO."
Despite the ambiguous decision, Waren said, additional gambling cases are sure to surface.
"Gambling will be a major trade issue between the European Union and the United States," Waren said. "The major gambling multinationals are British, and they want to break open the U.S. market and have access to it."
Such a claim has already been filed against Mexico, Waren said, by a Canadian multinational called Thunderbird Gaming Corp., which is seeking more than $100 million, arguing that a ban on gambling is in violation of so-called "minimum treatment" international laws.
"Mexico, just like Utah and Hawaii, has a total ban on gambling," Waren said. "They had problems with crime and family breakdown. They banned casinos in the 1970s."
Yet more worrisome to Waren is the pending Central American Free Trade Agreement, also known as CAFTA, which has a provision that would allow Internet gaming operations in Central America to file cases against the United States demanding damages.
"Sportingbet out of the United Kingdom paid over $300 million for a small Costa Rican Internet gambling site," Waren said. "It clearly wasn't because of the physical assets they had on the ground in San Jose. It was because of the opportunity of having a subsidiary in Costa Rica to break into the U.S. market."
E-mail: danderton@desnews.com
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