evolution

Antigua is a tiny island in the Caribbean with a population about half that of Topeka, but what it has done before the World Trade Organization over the last few years may have a profound effect on the U.S. and the international law apparatus.

Antigua argued before the WTO in 2004 that the U.S. did not have the right to impinge upon Antigua’s right to free trade caused by the U.S. government’s banning of its own citizens from placing bets online. Online casinos, it turns out, are the island’s second-largest industry after tourism. The ruling against the U.S. was upheld twice on appeal.

There are several important issues raised by this Times story on the topic. Read it all, and then bear with me as I jump around through it to raise those issues here.

More than a few people in Washington initially dismissed as absurd the idea that the trade organization could claim jurisdiction over something as basic as a country’s own policies toward gambling. Various states and the federal government, after all, have been deeply engaged for decades in where and when to allow the operation of casinos, Indian gambling halls, racetracks, lotteries and the like.

On its face it should be absurd that a free nation such as the United States should find itself subordinate to any worldwide “governing” body*, but remember that the United States essentially created the WTO as a vehicle for liberalizing trade around the world, and provides most of the body’s motive force. The Times’s headline reads “Gambling Dispute With a Tiny Country Puts U.S. in a Bind”, and a bind is indeed what we are in.**

The way I see it, we have the following possible outcomes:

1. The Bush administration and Congress complies with the ruling by repealing the ban on placing bets with offshore casinos. Congress won’t do anything for which polling data and TV cameras aren’t available, and reversing course is something the Bush administration doesn’t do. This is the least likely scenario.
2. The Bush administration and Congress could comply with the ruling by banning all Internet-based gambling in the U.S., period. This would probably result in several expensive and time-consuming lawsuits from the several states, many of which would like to move their state lotteries online and have regulated casinos, dog tracks, horse tracks, and the like. These suits could put Uncle Sam between a rock and a hard place: Suppose the Supreme Court rules that such a ban is un-Constitutional.
3. The Bush administration and Congress could ignore the ruling.

The last of these presents several problems.

First, having the United States ignore the WTO’s order would undermine the WTO and might undermine the one thing for which most Americans have reliably stood — free trade.

Another is the unique compensation for which the Antiguans have asked — the right to violate U.S. copyright and intellectual-property law by freely distributing such things American music, movies, and software. That would set such a bad precedent for other large countries with emerging technological capabilities (say, India and China) that I doubt that the WTO will grant it. What will probably happen is that the U.S. ignores the ruling and pays some other penalty handed out by the WTO, The lawyers are presently arguing over just what “damage” has been done.

The arguments the Bush administration has offered to counter the WTO’s decision make me nauseous. Argument #1:

Washington responded to Antigua’s complaint by claiming it was within its rights to seek to block online gambling on moral grounds, just as any Muslim country would be within its rights under international trade agreements to ban the import of alcoholic beverages. The W.T.O. rejected this argument as inconsistent with American policy.

So does that mean that the FBI can chop off your hand if you bet overseas online? If it’s good enough for 11th-century theocracies, it’s good enough for us? The Bush administration official who made this argument should be slapped about the face and head repeatedly.

Argument #2:

If anything, the Bush administration raised those stakes in May when it announced it was removing gambling services from existing trade agreements. John K. Veroneau, a deputy trade representative, said that the federal government was only “clarifying our view” that it had never meant to include online gambling in any free trade agreements.

“It is truly untenable to think that we would knowingly bargain away something that has been illegal for decade upon decade in this country,” Mr. Veroneau said, adding that Washington is not defying the W.T.O. but simply pursuing its case through all legal channels.

I think he should read my footnote marked “**” again. Either way, it reveals a mistake on the part of the United States. Either the U.S. agreed to something the consequences of which were not fully understood (most likely) or did a poor job of negotiating the agreement.

None of this, though, goes to my larger point, which is that global governance — the WTO, the UN, the International Criminal Court — is neither possible nor desirable. To describe the ultimate futility of globalized governing bodies in a heterogeneous world, here’s Wretchard at The Belmont Club:

The Antigua story underscores how asymmetries operate in international trade and political relations. A regulatory regime is created, but that fact does not guarantee “fairness”. The huge disparity in the size between Antigua and the United States makes the island’s trade retaliatory power weak. And in a straight trade dispute the odds would weigh overwhelmingly in favor of the US. But lawyers are clever and the loophole cited by the New York Times makes it possible for Antigua to demand the right to pirate US intellectually property — under the rules — and “morally” too because a mechanism which allowed the US to use is preponderant economic power would be “unfair”. Where have we seen this before? Pretty much everywhere. While not exactly the same, the Antigua decision has structural similarities to the way some international lawyers think about the Geneva Convention and human rights legislation. The US is “bound” by the letter of the law, and if a terrorist mass murderer can find a legal loophole to escape then he is “entitled” to use it. But the Convention is not obeyed by weaker parties because it is impractical to enforce it. Just as pirated DVDs can be found being openly sold in many street corners in Asia without being similarly available in places like Australia, countries with well-functioning legal systems find themselves at a disadvantage compared to countries with no enforcement. In the area of human rights, for example, America has courts before which lawyers can appear. Al-Qaeda has a cave in Pakistan where accommodations are notoriously poor. The US will obey a legal judgment. Legal judgments against al-Qaeda are an exercise in futility. Who will lawyers sue? Under these conditions the full weight of international law will always come down hardest on the most law-abiding. It’s ironic that WTO may be reluctant to enforce its own judgment because it has such an appearance of unfairness that it may create a backlash against itself. But give them time and they will become as stone faced as the human-rights advocates.

The condition is so pervasive it almost seems natural. For example, illegal immigrants are allowed to use every US statute on the books to plead their case, as they should be. But others parties technically bound by the same obligation are under no de facto compulsion to behave similarly. “A Mexican Senate committee passed a measure Wednesday urging President Felipe Calderon to send a diplomatic note to the United States protesting the deportation of an illegal migrant who took refuge in a Chicago church for a year,” even though Mexico itself summarily deports thousands of Central Americans who cross into it. The power disparity between countries like the United States and other countries is offset by the disparity in expectations of compliance. It would be considered natural for Khalid Sheik Mohammed to ask for his “rights” under international law, but an American soldier captured by al-Qaeda can hardly make the same request — unless he wants to kill his captors with laughter — which might be a violation of the Geneva Conventions itself. The application of “international law” to heterogeneous world often results in a split-level regulatory environment in practice. And that, sad to say, is probably how it is intended.

Indeed.

Who would have thought that an online casino in Antigua could potentially cause legal upheaval in American law, society, and trade agreements? Maybe considering that question will cause us to more carefully consider the international arrangements and situations we involve ourselves in in the future.

But I doubt it.

*: Although that’s essentially what John Kerry ran for President on, and this “globalism” is pretty much de rigeur in both party platforms now.

**: For some reason, while I was writing this, I pictured George Washington looking at a copy of his Farewell Address and sighing deeply.