From the archive, originally posted by: [ spectre ]

VERDICT:

NO WE WONT REWARD YOU
BUT YOU CAN STEAL FROM THEM
http://www.wto.org/english/tratop_e/dispu_e/285arb_e.pdf
http://www.antigua-barbuda.org/

COURT-ORDERED RIGHT TO PIRACY
http://www.tax-news.com/asp/story/WTO_Gives_US21m_Compensation_To_Antigua_xxxx29437.html

WTO Gives US$21m Compensation To Antigua, by Leroy Baker, Tax-
News.com, Washington
December 28, 2007

The World Trade Organization has awarded US$21m worth annually of
compensatory measures to Antigua and Barbuda in its fight against the
USA over the country’s unilateral suspension of its WTO obligations in
regard to on-line gaming.

The islands would be allowed, for instance, to disregard intellectual
property rules under TRIPS in order to sell US-generated content such
as films and music on the open market. But Antigua had asked for US
$3.4bn in damages.

Mark Mendel, Antigua’s lawyer, said in a conference call: “I am
pleased that the panel approved our ability to cross-retaliate by
suspension of intellectual property rights of United States business
interests. That has only been done once before and is, I believe, a
very potent weapon.”

Antigua’s Minister of Finance and the Economy, Dr Errol Cort, said:
“Although we are pleased that the extraordinary sanction of the
suspension of intellectual property right protection for US interests
has been given to us – only the second such authorisation in WTO
history – we are disappointed by the portion of the decision limiting
our annual compensation to such a mere fraction of our industry’s lost
revenues.”

But he said that it was not Antigua’s immediate intention to apply the
sanctions; it remained preferable for Antigua to reach a compromise
solution with the US, although it’s not clear what that might be.

The office of the United States Trade Representative, never a good
loser, said sourly with a split infinitive that: “it would establish a
harmful precedent for a WTO Member to affirmatively authorize what
would otherwise be considered acts of piracy, counterfeiting, or other
forms of IPR infringement.”

The ruling by the WTO’s Dispute Settlement Body remains in place until
the US comes into conformity with the WTO’s previous ruling, which the
US rejected, or until there is a mutually agreed settlement.

The compensation for Antigua followed hard on the heels of an agreed
settlement between the USA and other countries which had demanded
compensation, when the European Commission accepted a US offer of
openings in other sectors as compensation. “A bilateral agreement was
signed in Geneva, which provides EU service suppliers with new trade
opportunities in the US postal and courier, research and development,
storage and warehouse sectors,” said the Commission. “The US also made
concessions in the testing and analysis services sector.

Canada and Japan have apparently also accepted similar US offers, and
the office of the USTR said it hoped that India, Costa Rica and Macau
would fall in line as well.

The deal between the EU and the US was probably cut in November when
EU Trade Commissioner Peter Mandelson visited Washington for meetings
on “Transatlantic Economic Cooperation.”

Mandelson met US Trade Representative Susan Schwab and Representative
Barney Frank (D-MA), who has been leading so far abortive efforts in
the Congress to modify the Unlawful Internet Gambling Enforcement Act,
passed in 2006, which prohibits the use of payment instruments by
financial institutions to handle the processing of any form of
internet gambling that is illegal under US federal or state law. It
was this law which led to the collapse of many global gaming
operations.

Barney Frank introduced legislation into the House of Representatives
in April that would create an exemption to the ban on online gambling
for properly licensed operators, allowing Americans to lawfully bet
online. The Internet Gambling Regulation and Enforcement Act of 2007
would establish a federal regulatory and enforcement framework to
license companies to accept bets and wagers online from individuals in
the US, to the extent permitted by individual states, Indian tribes
and sport leagues. All such licenses would include protections against
underage gambling, compulsive gambling, money laundering and fraud.

“The existing legislation is an inappropriate interference on the
personal freedom of Americans and this interference should be undone,”
said. Rep. Frank, who is Chairman of the House Financial Services
Committee.

“I think Representative Frank takes a fair-minded, common sense
approach to this and we look forward to that being effective
legislation,” said Mandelson. But the bill has floundered so far.

http://www.thoroughbredtimes.com/national-news/2007/December/21/WTO-awards-Antigua-and-Barbuda-21-million-annually.aspx
http://www.pokerpages.com/poker-news/news/music-industry-blasts-wto-award-to-antigua-for-us-online-gambling-stance-30228.htm

http://www.casinogamblingweb.com/gambling-news/gambling-law/us_piracy_laws_need_not_be_followed_in_antigua_says_wto_panel_47913.html

US Piracy Laws Need Not Be Followed in Antigua, Says WTO Panel
BY Bob Hartman  /  December 21, 2007

In a conference call held midday on Friday the successful Antigua
lawyer, Mark Mendel, pointed out that Antigua cannot be vilified by
the United States government as criminals as they will not actually be
breaking copyright and piracy laws.

The WTO ruled that Antigua may meet the sanctions, worth $21 million
per year, by selling American company copyrighted materials, such as
music, video, and software, legally. Mendel said that Antigua should
not be looked upon as a criminal and as a violator of these laws
because Antigua was legally granted access to sell the material by the
WTO.

Mendel insisted that Antigua was not aiming for this judgement,
rather, they simply would like for the US to follow the rules of the
WTO by allowing Antiguan gaming operators to offer horse race betting
to Americans, just as American gaming operators are currently allowed
to do. Until they do meet the legalities of the WTO rulings it will be
legal to sell copyrighted materials, Mendel said.

The likelihood of the US ever meeting all its obligations it must meet
after removing its commitments to the GATS are minimal because Antigua
will most likely never settle.

Although the online gambling industry has seen the $21 million ruling
as a setback, Mendel pointed out that this includes 2006, combined
with 2007, and will continue every year. After a few years the
sanctions will add up to hundreds of millions of dollars.

.

http://news.bloodhorse.com/viewstory.asp?id=42821
http://casino.pokernews.com/news/2007/12/antigua-trade-sanctions-gats-online-gambling.htm

http://www.casinogamblingweb.com/gambling-news/gambling-law/wto_decision_destroys_world_wide_belief_in_trading_system_47916.html

WTO Decision Destroys World-Wide Belief In Trading System
BY Tom Jones  /  December 23, 2007

After reviewing the decision by the WTO on compensation for Antigua,
it appears that two of the three persons who were impaneled to decide
the extent of award, violated their mandate to make such determination
which was to be based on the findings of earlier rulings.

While the WTO found that the U.S. violated its trade agreements in the
area of cross-border trade in services for Internet gambling, the
panel that released the monetary and penalty decision has narrowed the
scope of that prior ruling to include only horse-racing, and ignored
all other areas, which was the full scope of the violation.

This gives the appearance of undue influence by a major (U.S.) player
in the decision making process.

After years of trial and appeals, the WTO made clear that the
violation was in fact protectionism, and clearly was targeting only
foreign firms, and that the U.S. must come into compliance with its
treaty obligations by either opening the market to foreign companies
or restrict domestic companies from providing these services.

The award granted Antigua does not and can not accomplish this.

The final determination has undermined the spirit of the WTO decision
and has given a very weak slap on the wrist to the offender.

There is no appeal allowed by either party on this decision, yet, it
does not give the appearance of a decision that was come to in a
manner consistent with the panel’s obligations.

The WTO will now be looked at as a rubber stamp for the U.S. as a
result.

With this narrowed decision and the minimal penalty, why would any
trading partner continue to have faith in the entire WTO process, and
more imporantly, why would they not use this as a means to withdraw
obligations they are no longer comfortable with?

A precedent has now been set that effectively sets aside any
meaningful position regarding sanctions that must and should be
effective to demand compliance by offending countries, and to ensure
that if a country violates it’s treaties, there will be major
consequences.

A reasoned appeal to the WTO body regarding this decision may be the
proper method to correct this.

The WTO was developed to give all countries a balance in trade, this
decision will destroy the purpose of the WTO. Any country that is
committed to this organization should be offended by the methods used,
as they were not consistent with their own published rules.

As an American, I am glad that the final determination was minimal,
however, the decision was not just and does nothing to enhance the
faith and determination of any country that is necessary to ensure
fair trade.

Worldwide respect of the WTO has now diminished to a point that many
wonder why it even exists.

http://news.bbc.co.uk/2/hi/business/7156394.stm

US faces sanctions for gaming ban
December 21, 2007

Antigua had hoped online betting would allow it to rely less on
tourism.

The US faces $21m (£10.6m) in annual trade sanctions as a result of
its online betting ban, the World Trade Organization has ruled.
Antigua and Barbuda was awarded the right to impose sanctions that
target US services, copyrights and trademarks. Laws passed in the US
in October 2006 effectively made it illegal for foreign internet
gaming firms to trade there.

But in March the trade body delivered a final ruling saying that the
US online betting ban was illegal. Antigua had hoped to impose $3.4bn
in retaliatory measures against the US and the amount awarded was
described as a token gesture, given the massive size of the US
economy. The US said that Antigua’s claim was excessive and more than
three times the size of Antigua’s entire economy.

“The United States is pleased that the figure arrived at by the
arbitrator is over 100 times lower than Antigua’s claim,” said Sean
Spicer, a spokesman for U.S. Trade Representative Susan Schwab.
Antigua, a former British colony of about 80,000 people, had been
promoting electronic commerce as way to end the country’s reliance on
tourism, which was hurt by a series of hurricanes in the late 1990s.

Piracy risk

The Caribbean nation is the smallest country to litigate a case
successfully in the WTO’s 12-year-history. The case had drawn the
attention of US industry because Antigua has threatened to target US
trademarks and copyright, which could make the nation a safe haven for
intellectual property piracy. The ruling could “establish a harmful
precedent for a WTO member to affirmatively authorise what would
otherwise be considered acts of piracy, counterfeiting or other forms
of … infringement”, the US said. The US and Antigua cannot appeal
against Friday’s decision.

Mark Mendel, the lawyer who led the case for Antigua, said that the
country was unlikely to violate US copyrights. “Antigua doesn’t want
to negate American intellectual property rights. They don’t want to
sell … DVDs and copies of Microsoft Office.”

Unequal laws

Last year the US stopped US banks and credit card companies from
processing payments to online gambling businesses outside the country,
effectively killing off the market for overseas gambling firms. About
half of the world’s online gamblers are based in the US, and the
market is estimated to be worth $15.5bn.

The WTO ruling said the US was breaking trade law by targeting online
gambling firms, without equal application of the rules to US firms
offering online betting on horse and dog racing. Earlier this week,
the EU said the US would offer its member countries trade concessions
as compensation for its refusal to lift internet gambling laws.

http://www.theregister.co.uk/2007/12/21/antigua_us/

US TKOs Antigua in bizarre WTO arbitration decision
Dispute strangely reaches climax
BY Burke Hansen  /  December 21, 2007

The long-running dispute between little Antigua and the mighty US over
the cross border provision of gaming services came to a head this
morning, with the announcement of a US $21 mil award in Antigua’s
favor. The amount was quite a bit less than the $3.4 bil demanded by
the Antiguans, but considerably more than the $500,000 offered by the
US.

The panel agreed with Antigua that it had no effective trade sanctions
against the United States other than to suspend its WTO obligations to
the United States in respect of copyrights, trademarks and other forms
of intellectual property. Antigua now has the right to produce
counterfeit copies of Hollywood movies, Microsoft software, or whatnot
to satisfy the judgment.

The arbitrators assessed Antigua’s level of damages based upon a
hypothetical form of compliance proposed by the United States, rather
than through the withdrawal of the overall prohibition – a prohibition
that in fact has been expanded in the years since Antigua initially
brought the case through the passage of the Unlawful Internet Gambling
Enforcement Act, which targeted banks and other financial
institutions, and provided for a whole new series of domestic carve-
outs. In light of the way the US has been thumbing its nose at
previous WTO rulings in the case, the feeble award comes as a definite
shock.

In a conference call, Mark Mendel, Antigua’s lead attorney, referred
to the decision to use a hypothetical on gambling on horse racing
estimate of damages rather than actual damages as “unsound” and
“incredible.”

“There was never an assessment that the only discrimination was in
horse racing. I think it’s a horrible ruling.”

“It’s an extraordinary document. It’ll have academics and lawyers
talking for years. First off, just the length. The previous record was
52 pages. Second, the existence of a dissenting opinion. There’s never
been a dissenting opinion in an Article 22 hearing.”

Although the arbitrators were tasked only with assessing damages –
after all, Antigua had already won, and won big – two of the three
arbitrators managed to knee-cap the prior compliance panel ruling by
resorting to the Article 22 principle of “reasonably expected
compliance,” and adopting the approach sought by the US. The majority
ruling essentially gutted the prior compliance panel ruling by
adopting the US position of what constitutes reasonableness under the
circumstances.
This decision also resulted in an unprecedented disagreement among the
arbitrators, with one panelist dissenting from the approach adopted by
the other two members over the unprecedented use of the Article 22
provision to eviscerate a prior compliance panel decision.
“What kind of precedent does this set?” asked Mendel.

Mendel did express satisfaction that the panel approved Antigua’s
right to cross-retaliate by suspension of intellectual property rights
of United States business interests. He expressed notably less
satisfaction with the amount of damages assessed. In a move sure to
throw fuel on the fire of this controversial trade dispute, the
arbitrators decided on the $21 mil figure based solely on what
Antigua’s hypothetical share of the US online horse racing market,
although previous rulings had interpreted Antigua’s trade rights far
more broadly.

“I find it astonishing that two of the three panelists would in
essence grant the United States the benefit of a hypothetical method
of compliance most favorable to the American side in assessing
Antigua’s level of trade impairment. What appears to have been done
here is assuming a form of compliance that has not happened and
probably will not happen without giving Antigua the ability to contest
the method under the WTO’s normal procedures,” he added.

Unlike other WTO rulings, awards of arbitrators are not subject to
review by the Appellate Body of the WTO. However, were internet
gambling to continue to expand in the US – as seems almost certain –
Antigua would have the right to return to the WTO to reassess the
damage award. Antigua’s position will also have to be revisited as the
US continues its Article 21 proceedings to withdraw gambling services
from its WTO commitments.

While expressing dismay at the low number and the dodgy method by
which it was reached, Mendel tried to stay upbeat about what the
future has in store.

“I hope that the United States government will now see the wisdom in
reaching some accommodation with Antigua over this dispute and look
forward to seeing efforts in this regard.”

http://ap.google.com/article/ALeqM5hK0rIeo9wzXhQ1LnVyzXLy53BtkgD8TLUQDG0

WTO Clears $21M in Sanctions Vs. US
BY Bradley S. Klapper  /  Dec 21, 2007

GENEVA (AP) — The United States faces a token $21 million in annual
trade sanctions as a result of its online betting ban, the World Trade
Organization said Friday in awarding Antigua and Barbuda the right to
target U.S. services, copyrights and trademarks.

The decision is a setback for the Caribbean island nation, which
sought the right to impose $3.4 billion in retaliatory measures
against U.S. commercial services and intellectual property.
Washington acknowledged its Internet gambling restrictions were ruled
illegal by the WTO, but argued that Antigua should only be compensated
for about $500,000 for lost annual revenue.
The case has drawn the attention of a number of U.S. industries,
partly because of the ways Antigua has proposed retaliating against
the much larger U.S. economy. Washington’s attempt to escape its legal
loss by proposing a revision of the WTO’s key treaty on trade in
services has also fueled interest.

The office of the U.S. Trade Representative noted that Antigua was
seeking sanctions worth more than three times the size of its entire
economy.

“Antigua’s claim was patently excessive,” it said in a statement. “The
United States is pleased that the figure arrived at by the arbitrator
is over 100 times lower than Antigua’s claim.”
The U.S. and Antigua cannot appeal Friday’s decision.

Realistically, it would have been very difficult for a country the
size of Antigua’s to implement hundreds of millions of dollars worth
of trade sanctions on the U.S. without harming its own economy and the
welfare of its citizens. Ecuador was awarded similar retaliation
rights in a bananas dispute with the European Union in 2000, but
failed to come up with an effective way to introduce countermeasures.

The WTO arbitration panel said it had to adopt its own approach to
come up with a fair retaliation figure in view of the wide difference
in how the U.S. and Antigua estimated the economic effect of the
gambling ban.

“In doing so, we feel we are on shaky grounds,” the panel said in an
88-page decision.

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
worth about $15.5 billion last year. About half of the world’s online
gamblers are based in the U.S.

The arrest in 2006 of two British Internet gambling executives while
traveling through the United States also highlighted the U.S.
government’s escalation of its battle against the industry.
The WTO, however, upheld in March previous rulings striking down the
U.S ban.

The trade 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 Washington was violating trade law by targeting online
gambling without equal application of the rules to American operators
offering remote betting on horse and dog racing.

Antigua, the smallest country to successfully litigate a case in the
WTO’s 12-year-history, had hoped the ruling would lead the U.S. to
revoke the restrictions.

The former British colony of about 80,000 people had been promoting
electronic commerce as a way to end the country’s reliance on tourism,
which was hurt by a series of hurricanes in the late 1990s. There are
32 licensed online casinos in Antigua, employing 1,000 people and
generating a yearly revenue of around $130 million. Seven years ago,
its casinos had an annual income closer to $1 billion.

But Washington responded to its legal defeat by announcing it would
take the unprecedented step of revising the conditions under which it
signed the WTO’s 1994 General Agreement on Trade in Services, or GATS.
That allowed a number of countries to seek compensation under a
separate process.

The U.S. has since agreed on deals with the 27-nation European Union,
Canada and Japan to change the treaty — but has failed to do so with
Antigua, Costa Rica, India and Macau.
Until it gains the approval of all 151 members of the WTO, the U.S.
online betting ban is illegal under international trade rules. As a
result, Antigua will have the right to penalize U.S. services and
intellectual property until the U.S. government either permits
Americans to gamble over foreign-based sites or eliminates exceptions
for off-track betting on horses, including over the Internet.
British gambling companies — which bankrolled Antigua’s efforts and
heavily lobbied Brussels for tough action — were disappointed earlier
this week when the EU announced that it had received some minor U.S.
trade concessions in exchange for accepting the U.S.-proposed revision
to the GATS.

The deal fell far short of the $100 billion in new commercial
opportunities the Internet gaming sites claimed the United States
owed.

http://www.nytimes.com/2007/12/22/business/worldbusiness/22gambling.html

In Trade Ruling, Antigua Wins a Right to Piracy
BY JAMES KANTER and GARY RIVLIN  /  December 22, 2007

PARIS — In an unusual ruling on Friday at the World Trade
Organization, the Caribbean nation of Antigua won the right to violate
copyright protections on goods like films and music from the United
States — an award worth up to $21 million — as part of a dispute
between the countries over online gambling.

The award follows a W.T.O. ruling that Washington had wrongly blocked
online gambling operators on the island from the American market at
the same time it allowed online wagering on horse racing.

Antigua and Barbuda had claimed damages of $3.44 billion a year. That
makes the relatively small amount awarded Friday, $21 million,
something of a setback for Antigua, which had been struggling to
preserve its gambling industry.

The United States argued that its behavior had caused $500,000 damage.

Yet the ruling is significant in that it grants a rare form of
compensation: the right of one country, in this case Antigua, to
violate intellectual property laws of another — the United States — by
allowing it to distribute copies of American music, movie and software
products.

“That has only been done once before and is, I believe, a very potent
weapon,” said Mark Mendel, a lawyer representing Antigua, after the
ruling. “I hope that the United States government will now see the
wisdom in reaching some accommodation with Antigua over this dispute.”

Though Antigua is best known for its pristine beaches and tourist
attractions, the dozens of online casinos based there are important to
the island’s economy as its second-largest employer.

By pressing its claim, trade lawyers said, Antigua could set a
precedent for other countries to sue the United States for unfair
trade practices, potentially opening the door to electronic piracy and
other dubious practices around the world.

Still, carrying out the ruling will prove difficult, the lawyers say.

“Even if Antigua goes ahead with an act of piracy or the refusal to
allow the registration of a trademark, the question still remains of
how much that act is worth,” said Brendan McGivern, a trade lawyer
with White & Case in Geneva.

“The Antiguans could say that’s worth $50,000, and then the U.S. might
say that’s worth $5 million.” He predicted that “the U.S. is going to
dog them on every step of the way.”

The United States has aggressively fought Antigua’s claims.

A W.T.O. panel first ruled against the United States in 2004, and its
appellate body upheld that decision a year later. In April 2005, the
trade body gave the United States a year to comply with its ruling.

That deadline passed with little more than a statement from Washington
that it had decided it was in compliance.

From the start, the United States asserted that it had never intended
to allow free cross-border gambling or betting. Those activities are
restricted in the United States, though some form of gambling is legal
in 48 states.

In May, the United States said it was rewriting its trade rules to
remove gambling from the jurisdiction of the W.T.O.

Washington has agreed on deals with the European Union, Canada and
Japan to change the treaty but not with several other nations,
including Antigua.

On Friday, the United States trade representative issued a stern
warning to Antigua to avoid acts of piracy, counterfeiting or
violations of intellectual property rights while talks continue.

The trade office said such behavior would “undermine Antigua’s claimed
intentions of becoming a leader in legitimate electronic commerce, and
would severely discourage foreign investment” in the country.

http://www.businessweek.com/ap/financialnews/D8TJ7DB81.htm

US, EU reach deal over online gambling
BY Bradley S. Klapper  /  December 17, 2007

GENEVA (AP) – 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.

After losing the case, Washington sought to fix the problem by
rewriting its obligations under the WTO’s treaty on trade in services.
That allowed Canada, Costa Rica, India, Macau, Japan and the EU to
file compensation claims.

EU officials said their deal creates new U.S. market opportunities for
European companies seeking to expand investment and trade in the
international letters business.

Washington also agreed to ease access to European providers of
research and development in the natural sciences, social sciences and
humanities, and companies offering technical testing and analysis
services. The commitments do not cover programs funded by the U.S.
government, according to the EU’s Geneva mission.

The U.S. and Canada are also believed to be close to a deal.

The office of the U.S. Trade Representative in Washington declined to
immediately comment.

http://www.antigua-barbuda.com/finance_investment/offshore_sector.asp

Offshore Business in Antigua and Barbuda
The Antigua and Barbuda Advantage…

Since its independence in 1981, the twin-island state of Antigua and
Barbuda in the Caribbean has continued to practice a tradition of
English Common Law. Located less than 300 nautical miles Southeast of
Puerto Rico, in the Leeward Islands. Its legal procedures are
structured in accordance with strong democratic principles of good
governance, patterned after the British parliamentary system. In 1982,
legislation was enacted under the International Business Corporations
Act, with subsequent amendments in 1984 and 1985, to make Antigua and
Barbuda a choice jurisdiction for offshore banking. Operations under
this Act are controlled by the Ministry of Finance in Antigua.

While Antigua and Barbuda is probably best known as an up-market
destination for more discriminating tourists, its natural and
developed assets have also allowed it to emerge as an attractive
offshore business centre. The country is in a convenient time zone,
sharing the same time as New York, Toronto, Central and part of South
America, and falling five hours behind the UK and Europe in the summer
and four hours in the winter which allows international business to be
transacted easily within an appropriate time frame. Antigua’s
international airport is a major gateway for the Caribbean, serving
British Airways, US Air, Virgin Atlantic, American Airlines, Air
Canada, BWIA and LIAT, with direct flights from New York, Miami,
Toronto and London. Its international telecommunications are
excellent, with direct access into the global stream of financial and
business data. Electronic funds transfer is readily accomplished,
providing same day value, and securities can be placed and executed
within 24 hours.

There is a prosperous English-speaking community, with a resident
population of 80,000. Its people are involved primarily in business
related to the tourism industry and in commerce. The country enjoys
the highest per-capita income in the Eastern Caribbean. First-rate
professional services are widely available, including banking, law,
accounting, and management resources.

International commercial banking has been conducted on Antigua for
many years. Offshore banking is more recent, having started in 1983.
Since that time the industry has grown rapidly. Working in co-
operation with the private sector, the Government has improved
Antigua’s offshore company and banking environment through the
introduction of new foreign residency, trust, and partnership
legislation.

International Business Corporations Act of 1982

The prevailing offshore legislation provides for speedy formation of
international business corporations (IBCs) at very competitive
charges. The formation can be carried out by a locally registered
trust company or by an accountant or attorney. Formation can usually
be completed within 24 hours and full corporate and trust services are
available to both private and corporate investors including:

1. Registration and maintenance of corporate charters for offshore
companies;
2. Reception, management, and disbursement of the assets of offshore
companies;
3. Provision and maintenance of a registered office;
4. Maintenance of the company’s records and statutory register;
5. Preparation of all necessary corporate returns and reports to the
Director;
6. Provision of directors and officers on request;
7. Incorporation and management of offshore banks and captive
insurance companies; and
8. A full range of traditional trust services.

Some of the benefits provided to offshore companies formed under the
IBC Act include the full exemption of all direct taxes in respect of
any international trading, investment or commercial activity including
withholding taxes and stamp duties. For banking there is a 3% tax on
gross income (i.e. interest income and fees derived from the
operations and investments of the banking business minus interest
expense). No minimum capital is specified for an IBC and shares may
have a nominal or no par value. The transfer of the charter of an IBC
to a foreign jurisdiction, or vice versa, is explicitly permitted. The
board of directors of a corporation may consist of a single member. In
the case of banking, trust and insurance corporations, at least one
director must be a citizen and resident of Antigua and Barbuda.

Confidentiality Provisions

The IBC Act provides criminal penalties for any disclosure of the
business affairs of customers regarding banking or trust matters. The
only exception for the disclosure of information relates to sound
evidence regarding an alleged criminal offence that is triable in
Antigua (or which would have been triable, if it has been committed in
Antigua).

There are specific advantages for Canadian entities to form an IBC in
Antigua that generates an active business income, because dividends
paid out of income earned in Antigua are considered to be paid out of
exempt surplus. Antigua is one of the countries listed in the Canadian
Regulation 5907 (ii) which allows this arrangement. There are no tax
treaties with European countries, except in the case of the UK and
this is being updated through negotiations.

Incorporation Procedures

Every IBC must have a registered office and a resident agent in
Antigua. This function is regularly performed by the trust company or
by the professional who performed the incorporation process. The
resident agent is responsible for paying the annual government fees
and for keeping the company in good standing. The annual government
licence fee for an IBC is US$300; for an IBC licensed to carry on
international banking it is US$15,000 and for an IBC licensed to carry
on an international insurance business it is US$10,000.

Fees charged by trust companies or professionals for incorporation and
annual maintenance will vary, but fees for the formation of an IBC
without an international banking or insurance licence start at about US
$725, with an annual maintenance fee of US$350. Thus the total cost
for an IBC formation (including the government licence fee) is
typically US$975, with an annual maintenance fee of US$600. If the
applicant for an IBC wishes to have a registered agent serve as its
corporate director, an additional fee will be charged, between US$250
and US$1,000 for each director.

Incorporation and maintenance fees for an IBC with an international
banking or insurance licence are higher and may be related to the
level of required management services. Fees for trust management
services are also dependent on the nature and value of assets and the
required level of service.

Ship Registry

In 1985, Antigua enacted the Merchant Shipping Act, which further
expanded the facilities of its offshore centre. The designated port of
registry in St John’s, Antigua, is under the supervision of the
Registrar of Ships, Department of Marine Services and Merchant
Shipping. Registration can also be carried out in Germany by the
Commissioner of Maritime Affairs, Department of Marine Services and
Merchant Shipping, Patentbusch No. 4, 26125 Oldenburg, Germany.

The procedures for ship registration or parallel (bareboat)
registration are efficient and can be organised through several of the
offshore operators. With the submission of required documentation, the
Department of Marine Services provides quick response. The
registration fees are competitive with other jurisdictions and are
transparent, with no hidden costs. No age is set for the acceptance of
ships for registration, but all ships over 499GRT must be in class.
The Department of Marine Services does not duplicate safety
inspections, but complements and controls the work of class societies.
Unlike some other registers, Antigua has no nationality requirements
for manning vessels. For more information please see the Antigua and
Barbuda international shipping register website at http://www.antiguamarine.com

Antigua and Barbuda’s Financial Sector

Establishing a Financial Institution

An international banking licence to an IBC is granted at the sole
discretion of the Supervisor of Banks and Trust Corporations. The
supervisor may revoke the licence at any time if, in his opinion, the
revocation is in the public’s interest. The minimum capital
requirement is currently five million US dollars or its equivalent in
another major currency. However, it is exempt from any exchange
control or foreign currency levy. IBC banks are required to appoint an
auditor and to file unaudited quarterly returns and annual audited
accounts with the Supervisor of Banks and Trust Corporations. The
accounts are provided in a consolidated form.

Internet Gaming

Internet gaming facilities are deemed to be financial institutions
under the law. They are regulated by the Financial Services Regulatory
Authority (FSRC), which gives the internet gaming operators a high
level of comfort in the jurisdiction and in the ability to conduct
business on a predictable basis. It is useful to take note of the
following points:

(a) A 3% tax is payable by operators on their “Net win” defined as
“the difference between the gross stakes laid and the winnings paid
out”.

(b) Operators are entitled to deduct software licensing or software
development costs from (a) above, capped at no more than 40% of the
Net win for all companies provided claims for the deduction of such
costs are accompanied by documentary support evidencing the costs.

(c) Operators are entitled to deduct charge backs on credit cards for
a period up to 18 months after the original charge was made provided
claims for the deduction of such charge backs are accompanied by
documentary support evidencing the original credit and the charge
back.

(d) The 3% tax on Net Win and the deductibles, as described at (a),
(b) and (c) above, are fixed until 2006, after which they will be
subject to review by the Government and the representatives of the
Industry.

(e) Operators are entitled to a maximum cap of US$50,000.00 per month
on taxes and the Commissioner of Inland Revenue would have no interest
in the books of entities that pay the full cap. However, such
operators are obliged to continue to maintain financial books and
records and to provide access by the Government through its authorised
agencies in the event of the need to examine such books and records in
accordance with the laws of the State particularly the Money
Laundering (Prevention) Act, the International Business Corporations
Act and the Proceeds from Crime Act and their amendments.

(f) The maximum cap of US$50,000.00 per month on taxes and the terms
and conditions described in (e) above would remain unchanged until
2004, after which they will be subject to review by the Government and
representatives of the Industry.

(g) Gaming Licence fees are US$75,000.00 per annum for those Operators
who maintain a primary server and operations in Antigua and Barbuda
and who pay the tax as described above.

(h) Wagering Licence fees are US$50,000.00 per annum for Operators who
maintain a primary server and operations in Antigua and Barbuda and
who pay the tax as described above.

The internet gaming industry benefits from high quality
telecommunication facilities provided by Cable and Wireless. The costs
of such telecommunications are highly competitive and are lower than
in the vast majority of jurisdictions which provide a home for
internet gaming.

Applications to operate Internet Gaming Entities should be directed
to:

Financial Services Regulatory Commission, Division of Gaming
2nd Floor – West Wing, First Caribbean Financial Centre
Old Parham Road, P.O. Box 588
St John’s, Antigua and Barbuda, West Indies
Tel: (268) 481 3300
Fax: (268) 481 3305
Email: Director: director [at] antiguagaming [dot] gov [dot] ag
General Information: info [at] antiguagaming [dot] gov [dot] ag

Insurance Licence

An internal insurance licence permits an IBC to engage in any
insurance business other than domestic insurance. The Superintendent
of International Insurance Corporations is empowered to revoke or
suspend the licence if its registration is deemed to be detrimental to
public interest. A stated capital of at least US$250,000 must be
maintained at all times. Annual audited accounts must be filed with
the Superintendent of International Insurance Corporations.

Trust Services

Trusts administered by Antigua and Barbuda trust companies are not
subject to any legislation imposing taxes on inheritance, profits,
income, or on any capital assets, gain or appreciation on any assets
or dividends, and interest paid out by an IBC as a trustee on behalf
of a non-resident of Antigua and Barbuda, for a period of 20 years
from the date of incorporation of the IBC.

Although there is no requirement that a trust instrument be recorded,
it may be recorded in the non-public records of the Director of
International Business Corporations who will issue a Certificate of
Recordation attached to the original of the trust instrument.

There is also no restriction on accumulations by trusts and the rule
of law known as the rule against perpetuities does not apply to any
property vested in a trust corporation. The minimum capital
requirement for a trust corporation is US$500,000. The IBC Act and
domestic laws governing trusts, based on the British Common Law, which
was adopted by Antigua as a colony and readopted after independence,
still apply to all international trusts.

Off Shore Banks and Companies

In 1982, the Government introduced the International Business
Corporations Act permitting off shore banking, insurance and trust
corporations.
The benefits of the Act include:

* no control on exchange and freedom to operate bank accounts
anywhere
* no minimum capital requirement
(except for
(i) banking where US$5 million is required together with the filing of
quarterly returns;
(ii) Trusts where a minimum capital requirement of US$500,000 and the
filing of quarterly returns; and
(iii) Insurance companies which must file annual reports and have a
reserve capital of US$250,000)
* The formation of an off shore company costs US$975 and is renewable
every year.

MEETING INTERNATIONAL STANDARDS

Antigua and Barbuda has paid serious attention to the various
initiatives by the G7 countries to ensure that the highest
international standards are applied to its financial services sector.

In 2000, the Financial Action Task Force (FATF), a body established by
the G7 as an ancillary entity of the Organisation for Cooperation in
Economic Development (OECD), declared Antigua and Barbuda to be fully
cooperative in the fight against money laundering. The FATF found
Antigua and Barbuda’s legislative regime and its regulatory and
enforcement machinery, developed and strengthened between 1999 and
2001, to be consistent with the highest international standards.

The offshore sector is regulated by the Financial Services Regulatory
Commission (FSRC) whose Board of Directors is comprised of public
officials of high repute who are subject to severe penalties under the
law for any breaches of their fiduciary responsibilities. The staff of
FSRC is also governed by strict laws governing their behaviour.

The Supervisory Authority for money laundering and other financial
crimes is the Office of National Drug Control and Money Laundering
Policy (ONDCP). ONDCP and IFSRA work closely together to ensure that
Antigua and Barbuda enjoys a good reputation in the international
banking community.

Antigua and Barbuda expects to join the OECD’s Global Tax Forum as a
full partner and will participate with OECD and other countries in
ensuring that tax practices across the globe are on a level playing
field and that the rights of persons and companies are fully respected
with regard to exchange of information on tax matters.

Background

The original legislation governing the Antigua offshore jurisdiction
is the International Business Corporations (IBC) Act of 1982. Within
fifteen years the number of offshore banks registered in Antigua
exceeded seventy institutions. In 1998 the government of Antigua and
Barbuda undertook a major exercise to over-haul legislation for
banking and money laundering prevention. The task was challenging and
the closure of more than thirty offshore banks indicates the depth of
the major re-organisation that took place.

Offshore banks are still licensed under the original IBC Act, but
amendments to this Act as well as to the Money Laundering (Prevention)
Act (MLPA) in 1999, 2000 and 2001 have created a regulatory and
compliance environment equal to, or stronger, than most international
financial centres. The Government of Antigua and Barbuda received, the
support and cooperation of most of the private sector, which is
generally committed to meeting or surpassing the international
standards set for the Sector.

Regulatory Control

To focus regulation more closely, the Government established a
statutory authority in 1998, known as the International Financial
Sector Authority (IFSA) and charged it with responsibilities to
supervise and develop the sector. Concerns were later raised, however,
that the IFSA depended upon the private sector for assistance. In
response, the Government amended the legislation, to separate the
IFSA’s functions for supervision from any promotional activity. It
also provided for a new International Financial Sector Regulatory
Authority (IFSRA) that is fully independent of the private sector.

Know Your Customer

Entrenched in the amended IBC Act, are strong “know your customer”
requirements to govern the conduct of banks and their clients. No
anonymous accounts can be established. Each account application must
provide evidence of identity, place of residence and other current
banking relations. Also, customers cannot hide behind corporate veils.
Banks require disclosure of true beneficial ownership and the true
identity of directors and shareholders. It is the responsibility of
banks to know their customers, so that in the event the Supervisory
Authority requires information under the law, it can be made
available.

Banking Secrecy

The confidentiality afforded to clients by banks will not provide a
safe harbour to criminals. In fact, subject to the provisions of the
Constitution, the provisions of the MLPA will stand as the governing
Act, notwithstanding any obligation to secrecy or other restriction
regarding the disclosure of information by any law or otherwise. Bank
clients need not to be concerned with this issue. It is only relevant
to those who are the subject of a criminal investigation involving the
offence of money laundering and when the Court in Antigua has, on
application by the competent Antiguan authority, ordered the
disclosure of information. In other words, the privacy of customers’
banking information remains fully confidential unless it can be
established in a Court of competent jurisdiction that a crime has been
committed.

No Cash Deposit

In April 1999, Antigua and Barbuda became the first, and possibly
only, jurisdiction to ban the acceptance of cash or bearer negotiable
instruments in any amounts. Antigua demonstrated its commitment to be
pro-active against money laundering. Given that money laundering
begins with the conversion of currency, and one of the concerns
expressed has been that anonymous and illicit funds can be returned to
their financial systems via correspondents for offshore banks, the
Antigua prohibition is a positive and innovative action. And, while it
does not prevent money laundering by other means of fund transfers,
such other means allow for full identification of the transaction
details.

Transaction Record Keeping

The IBC Act as amended requires banks to maintain full details of all
transactions in relation to deposits and withdrawals, and to retain
the information obtained by the regulation for a period of five years.
As no offshore bank may serve as originator or recipient in the
transfer of funds on behalf of a person who is not an account holder,
all transactions should be easily traceable in the event of an enquiry
by the Supervisory Authority or from a correspondent bank.

Suspicious Activity Reports

In keeping with international standards, offshore financial
institutions are required under the MLPA as amended, to pay special
attention to all complex, unusual or large business transactions,
whether completed or not, and to all unusual patterns of transactions
and to insignificant but periodic transactions, which have no economic
or lawful purpose. On reasonable suspicion that a transaction could
institute or be related to money laundering, the bank is obligated to
promptly report the suspicious transaction to the Supervisory
Authority. The Act also requires banks to pay attention to relations
and transactions with persons, including business and other financial
institutions, from countries that have not adopted a comprehensive
anti-money laundering programme.

International Cooperation

In 1995, Antigua was amongst the first countries in the Caribbean
region to sign a maritime law enforcement counter drug agreement and
an updated extradition treaty with the US. Mutual Legal Assistance
Treaties in criminal matters were signed with both the US and the UK
in 1996. The jurisdiction is a member of the Caribbean Financial
Action Task Force (CFATF) and is in full compliance with all its
requirements. In March 2000, Antigua became the first country to sign
a commitment letter to the principals of the UN Offshore Forum (UNOF),
which confirmed government’s agreement to adhere to the UN’s minimum
performance standards relating to banking practices, transparency
rules and international cooperation.

The cooperation provided under these various agreements and treaties
is also supported under the MLPA. It allows for the Court or the
Competent authority in Antigua to cooperate with the Court or other
competent authority of another state, and to take appropriate measures
to provide assistance in matters concerning money-laundering offences,
provided the measures are in accordance with the MPLA and within the
limits of their respective legal systems. Assistance includes
providing original or certified copies of relevant documents and
records, save that no information related to a client account held by
a financial institution shall be disclosed unless the client is the
subject of a criminal investigation involving the offence of money
laundering and the Court has, on application by the competent
authority, ordered the disclosure of the information.

Antigua has successfully cooperated with the authorities of the United
States, the United Kingdom. Switzerland, Canada, Belgium and Ukraine
in enforcing the law against money laundering and drug traffickers.
The role of the authorities in Antigua has been publicly acknowledged
and praised by the governments of the US, Belgium, Canada and the
Ukraine.

In the fiercely competitive environment of offshore centers, Antigua
has placed emphasis on ensuring that the reputation of its centre and
the quality of its regulation meets international standards. The
various steps taken to address the concerns of the international
community will benefit the offshore financial institutions and their
clients, as well as their correspondent relations with other banks.
Antigua has made the decision to remain a strong competitor in the
international financial market by maintaining a well-regulated sector
in which financial institutions are committed to providing a secure
environment for their clients, with full compliance to international
standards.

Antigua and Barbuda has comprehensive anti-money laundering
legislation in place. Below is a consolidated version of the anti-
money laundering Laws”
http://www.antigua-barbuda.com/finance_investment/MoneyLaunderingPreventionAct18-9-02.pdf

The Supervisory Authority for anti-money Laundering has issued
guidelines to banks and other financial institutions registered in
Antigua and Barbuda. Below are the guidelines.
http://www.antigua-barbuda.com/finance_investment/MoneyLaunderingGuidelines9-9-02.pdf

High Commission for Antigua and Barbuda
2nd floor, 45 Crawford Place, London W1H 4LP
Tel: 020 7258 0070 Fax: 020 7258 7486

http://mendel-blumenfeld.com/mendel.htm
http://www.antiguawto.com/
http://www.aoga.ag/

http://www.wto.org/english/news_e/news_e.htm#bkmk598
http://www.antiguawto.com/LinksPg.html
http://www.gamblingandthelaw.com/links.html