Herbies helps Antigua in WTO outsourcing victory

Herbert Smith has secured a key World Trade Organisation (WTO) ruling on cross-border gambling for Antigua, the wider implications of which could put the kibosh on US Democratic presidential candidate John Kerry’s anti-outsourcing campaign.

Last Monday (29 March), a WTO panel ruled against the US’s ban on internet gambling services based in Antigua.

The ruling went wider than gambling, stating that the US could not prohibit cross-border telephonic services, which Antiguan gambling internet sites are one example of.

A negative result for Antigua would have strengthened Kerry’s campaign to stop US companies outsourcing their call centres to developing countries, a key theme in his attempt to steal the protectionist business vote from the Republicans.

A WTO panel, which involved Richard Plender QC of 20 Essex Street, ruled that all member states must allow cross-border telephonic services, such as the internet or outsourced call centres, under the General Agreement on Trade in Services (Gats).

The outcome of the case is known by all parties involved, but at the time of writing had not been made official by the WTO. Craig Pouncey, a partner from the Brussels office of Herbert Smith, said that he could not comment on the outcome of the case, but that a positive outcome for Antigua would have important ramifications for the outsourcing industry.

Antigua, which has a sizeable chunk of the global online gambling market, claimed that a US crackdown on internet gambling had forced its 119-strong industry of online gambling operators to shrink to just 30.

Antigua argued before the panel that US commitments under Gats required it to allow foreign gambling operators to compete with the domestic industry.

The US claimed that gambling was not covered by its Gats commitments and that restrictions on online gambling were justified to protect citizens, especially children, from social, psychological and financial harm.

The US was represented by in-house government lawyers.