The case “David and Goliath at the WTO” presents an interesting look at the interaction between domestic policies and international obligations. In the case we are presented with the issue of gambling on sports events online which is considered illegal by the domestic law of the United States. However, Antigua, which is a completely separate state, has no such laws and lawfully allows businesses to setup shop in the country in order to conduct online gambling activities. Due to the nature of the internet, it does not really matter where a service is being conducted; so long as it can be accessed online anyone in the world can utilize it.
As a result of online operations such as World Sports Exchange Ltd. which was run by Jay Cohen, the U.S. arbitrarily attempted to stop the service by arresting Cohen and charging him under U.S. law. Cohen, in his defense, stated that as a foreign nation, Antigua is not subject to the domestic laws of the U.S. It was based on this initial argument that the legal conflict between the two states commenced with one arguing for the validity of its gambling rights with the other stating that such activities are a violation of its domestic policies and are a corrupting influence for the nation.
Understanding the Specifics of the Case
First and foremost, what you have to understand regarding international law is that based on the realist theory of international relations, states are the primary actors in international relations with interactions between states often being the result of a power struggle between stronger and weaker states which often results in a zero sum game (i.e. the stronger state can force the younger to state to comply through military or economic power) (Adlung, 135- 139). Furthermore, the realist theory also specifically states that no outside entity, aside from another state, has the authority or the capacity to dictate the actions of a state if that state does not wish to comply with a particular set of decisions. In the case of World Trade Organization (WTO) it is a nongovernmental entity that is attempting to impose a set of trade rules to ensure proper and fair trade relations between states.
However, what you have to take into consideration is that there is no “international police” so to speak that can enforce compliance. As seen in the case, the U.S. had violated WTO directives a total of 8 times in the past with little in the way of forced compliance being possible (Doces, 1). The only reason why the U.S. is even considering placing itself under an informal set of rules that are binding so long as it lets itself be bound, is due to its desire for proper relations with other members of the international body of states. What you have to understand is that international law is a set of informal “rules and regulations” that dictate the behavior of states with no legally binding attribute aside from the concept of reciprocity (i.e. I do you do, I do not do, you do not do) (Zleptnig, 133-157.). Such actions help to create a sense of order to prevent chaotic relationships among states.
In the arbitration case between Antigua and the U.S., yes it is true that the U.S. is liable to follow on through its its GATS obligations, however, to do so would be a clear violation of its domestic policy which it would not be willing to do. Thus, while it would reflect badly on the U.S. it would definitely be willing to violate its GATS obligations in order to protect its own domestic policy agendas since there is no global authority that would force it to keep its obligations. However, what you have to understand is that under the neoliberal institutionalist theory of international relations, while states are the primary actors, institutions (such as the WTO) help to act as intermediaries to improve the relations in between states.
Thus, while the U.S. is willing to prevent violations of its domestic agenda, it is unlikely that it would wish to present itself as a consistent violator of international agreements due to the possibility that other states would take a similar stance against it which could result in severe financial ramifications (Zleptnig, 133-157.). It is based on this that it is likely that the U.S. will continue to seek arbitration regarding the current issue between it and Antigua through another institution (most likely the WTO) in order for it to be resolved. However, it is unlikely that it will accede to the requests for an “opening up” of its borders regarding online gambling. What is most likely to happen is that it will continue to negotiate for a proper compensatory measure for Antigua involving the loss of its online gambling industry through better trade agreements or monetary compensation as seen in the case of the offer made by the U.S. in the case.
What this paper has shown is that when international obligations and domestic agendas clash, it is likely that the state would focus on its domestic obligations rather than its international ones with the likelihood of arbitration being able to force a state to do something it does not want to do being slim to none.
Adlung, Rudolf. “The (Modest) Role Of The GATS.” Intereconomics 40.3 (2005): 135-139.
Doces, John. “David And Goliath Negotiations: WTO Stalemates And The Proliferation of Preferential Trade Agreements In Latin America.” Conference Papers – International Studies Association (2008): 1.
Zleptnig, Stefan. “The GATS And Internet-Based Services: Between Market Access And Domestic Regulation.” Cambridge Review Of International Affairs 20.1 (2007): 133-157.