Last Monday the European Union agreed upon an offer from the United States to open up a part of their service markets as a compensation for blocking foreign companies from their multibillion gambling industry.

As a matter of compensation for the missed economical opportunities, European businesses like Deutsche Post and TNT are granted access to the United States postal and courier, storage and warehouse, and R&D sectors.

The roots of this case lie at the complaint which the state of Antigua and Barbuda filed against the US for violating the World Trade Organization rules for free trade. This complaint was declared legitimate and the WTO ordered the US to open up the sector. The withdrawal of this commitment led Antigua to bring a new dispute case, requesting for $3.4 billion compensation.

The deal, which took place in Geneva, came as a shock for the online gambling industry, which claimed the European Union suffered a capital loss trying to open up the substantial US online gambling market. Share values dropped dramatically in October 2006 when the US introduced laws which prevented credit card companies from processing online gambling transactions, which in practice made it impossible for foreign companies to enter the market.


The WTO trade commission declared that the US offer is unrelated with the case for free trade in the US online gambling industry, and furthermore refused to rank the offer in monetary terms. The US trade representative refused to provide in-depth information on the value of the offer, but did claim that the deal gave the WTO members economic opportunities which would certainly be as valuable as the US gambling market. Next to this agreement the US made comparable deals with Canada and Japan.


The Remote Gambling Association, which represents a group of enterprises that claim to lose $4 billion in revenue every year, believes the European Union's most important negotiation instrument has been lost. Clive Hawkswood, CEO of the Remote Gambling Association said: "The Commission can still force the liberalization of the market, but the influence of the outstanding negotiations has vanished."


Peter Mandelson, WTO trade commissioner, promised he will continue the contest for liberalization of the sector and has confidence in the proposal of Barney Frank, chairman of the US House Financial Services Committee, to open up the online gaming sector for global competitors.


The type of bargaining as is described above is alarming for free trade in general, and the online gambling industry in specific. It is remarkable that the refusal of the US to liberalize one specific market is being resolved by granting access to a totally different market. This would mean that a country could determine by itself which markets to liberalize and which not to liberalize. When this is the case some business sectors will never enjoy the benefits of free trade, and in the end it will be the customer who pays for this. Let's hope this does not happen to the online gambling industry!