Monday, December 17, 2007

US, EU reach deal over online gambling

The United States will provide the European Union with new trade concessions in mail services and warehousing as part of a compensation deal over Washington's refusal to lift restrictions on Internet gambling, the EU said Monday.

The agreement also includes new U.S. market opportunities for European companies offering testing and analysis services, as well as in research and development, Brussels said in a statement.

The postal and courier concessions will affect how Germany's DHL, the express and logistics division of Deutsche Post World Net AG, competes with U.S.-based companies FedEx Corp. and UPS Inc., EU officials said.

But the overall trade valuation of the package is believed to fall far short of the US$100 billion (euro69 billion) European online gaming sites had claimed the United States owed. EU officials could not immediately say how much the deal was worth.

"This compensation cannot be quantified up to the euro," the EU mission to the WTO said in an e-mailed statement. "Nonetheless, it is clear that new trade opportunities are created for EU service suppliers in important sectors in the U.S."

Washington stopped U.S. banks and credit card companies last year from processing payments to online gambling businesses outside the country. The decision closed off the most lucrative region in a growing market currently worth US$15.5 billion (euro11 billion). About half of the world's online gamblers are based in the U.S.

In March, the World Trade Organization delivered a final ruling that the U.S. ban was illegal.

The commerce body found that the U.S. had the right to prevent offshore betting as a means of protecting public order and public morals. But it said the U.S. was breaking trade law by targeting online gambling without equal application of the rules to American operators offering remote betting on horse and dog racing.

"While the U.S. is free to decide how to best respond to legitimate public policy concerns relating to Internet gambling, discrimination against EU or other foreign companies should be avoided," said Peter Power, spokesman for EU Trade Commissioner Peter Mandelson.

The WTO is expected to rule in the coming weeks on a request by Antigua and Barbuda to impose US$3.4 billion (euro2.34 billion) in commercial sanctions against the U.S. for its failure to comply with the ruling. The tiny Caribbean nation, the smallest ever to win a WTO dispute, has threatened to target U.S. patents and trademarks.

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