US Internet Gambling Issue With WTO Analyzed by Cato Institute

A respected policy analyst, Sallie James, at the Center for Trade Policy Studies of the Cato Institute has come to the following conclusion regarding the Internet gambling dispute at the World Trade Organization between the United States and the tiny twin island nation of Antigua & Barbuda:

"The ban on Internet gambling is a policy that is not in the interests of the United States. It overreaches into the private lives of citizens - telling them what they can do in their own time in their own homes and with their own money. Second, it is probably counterproductive. Banning gambling sites will likely push Internet gambling from jurisdictions where it is legal and regulated into areas where it is not. If the United States legalized online gambling for adults, then it would be more likely to be able to oversee the industry to prevent adverse possibilities, such as children accessing the sites. Third, and on a broader level, failure to comply with WTO rulings that show U.S. policies to be against the rules that the United States helped to design, paints the United States as hypocritical and undermines faith in the system - a system that depends on the perception that all players, rich and poor, big and small, have rights, as well as obligations and responsibilities. The interests of the United States would be better served by legalizing Internet gambling, with appropriate regulations, and allowing foreign as well as domestic entities to serve the market for online gaming services."

The Cato Institute is a well respected public policy research foundation headquartered in Washington, D.C. The Institute is named for Cato's Letters, a series of libertarian pamphlets that helped lay the philosophical foundation for the American Revolution.

Ben Bernanke, Chairman of the Federal Reserve, in a speech at the Montana Economic Development Summit said, "Of course current trading arrangements are far from perfect. Some features of the world trading regime, such as excessive restrictions on trade in services and the uneven protection of intellectual property rights, are both unfair and economically counterproductive. Working through the World Trade Organization or in other venues, we should continue to advocate the elimination of trade distortions and barriers in our trading partners, even as we increase the openness of our own economy. We should also work to ensure that both we, and our trading partners, live up to existing agreements under the World Trade Organization. When trading partners do not meet their obligations, we should vigorously press our case. Ultimately, a freer and more open trading system is in everyone's best interest."

Since 1993, according to the president's Export Council, the United States has imposed more than 40 trade sanctions against about three dozen foreign countries. The council estimates that those sanctions have cost American exporters $15 billion to $19 billion in lost annual sales overseas, and caused long-term damage to U.S. companies--lost market share and reputations abroad as unreliable suppliers.

As well as inflicting economic damage, sanctions have been a foreign policy flop. A comprehensive study by the Institute for International Economics found that sanctions achieve their objectives in fewer than 20 percent of cases. For example, the Nuclear Proliferation Act of 1994 failed to deter India and Pakistan from testing nuclear weapons in May of 1998. Sanctions have utterly failed to change the nature or basic behavior of governments in Cuba, Burma, Iran, Nigeria, Yugoslavia, and a number of other target countries.

Using trade as a weapon of foreign policy has harmed America's economic interests in the world without advancing national security.

June 22, 2007
Posted By Bob Hartman
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