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Intellectual-Property Pirates of the Caribbean

February 22, 2013 in Economics

By Simon Lester

Simon Lester

Antigua recently made headlines by threatening to set up a web site offering pirated U.S. products. But this is not some modern-day, government-run file-sharing service like Napster. Antigua is attempting to enforce a successful legal complaint brought against the United States at the World Trade Organization (WTO), related to a U.S. ban on foreign online-gambling websites.

The case arose out of a U.S. commitment to open its market to cross-border trade in gambling. Antigua claimed that banning foreign gambling sites, while allowing some domestic online gambling, violated WTO rules. The United States contested that it had made such a commitment, but the WTO courts found that it did, and also that Antiguan gambling sites (think online poker) were being discriminated against.

While the legal victory at the WTO was nice, Antigua still had to enforce the verdict. Normally enforcement takes place through the complainant getting authorization to impose its own protectionism in an effort to induce compliance by the offending country. But Antigua took a different approach. Instead of imposing higher tariffs on U.S. goods, Antigua has proposed violating the WTO’s intellectual property rules by offering copyrighted (or patented) U.S. goods.

Antigua is attempting to enforce a successful legal complaint brought against the United States at the WTO, related to a U.S. ban on foreign online-gambling websites.”

Antigua is not the first to propose this, but its efforts have received the most attention. At this point, Antigua has offered only limited details of its plan. But essentially it is proposing to make available U.S. copyrighted or patented works at low prices or for free. For example, it could set up a website offering free downloads of American music and movies.

Antigua’s approach may seem odd, but it is within the bounds of WTO rules. Normally, if a country is found to have violated international trade rules (say, by imposing tariffs at a higher level than it promised), other countries affected by the higher tariffs can file a complaint. If the high tariffs are found in violation, the complainant can then seek the WTO’s authorization to retaliate, for example by imposing its own higher tariffs.

Although the ultimate goal is to have the violating country remove its protectionism, the short-term result may be more protectionism, as the complaining country adds its own tariffs to the equation. This approach may seem antithetical to the cause of open markets. How can …read more
Source: OP-EDS

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