Friday, November 12, 2004

What "trade in services" actually means

The WTO has ruled against US laws banning cross-border gambling, judging that they harm the economies of online gambling havens and are an impediment to "trade in services". While I don't have much against gambling (other than thinking its a tax on stupidity and hope, and that casinos are precisely the sorts of things we have planning laws to prevent), the ruling is still troubling. The WTO panel refused to apply the "public morals clause" - meaning that they viewed the issue solely as a question of whether someone could make more money without the laws than with them. But there are other cross-border trades, in intangibles, even, which people could make money off if they weren't illegal, and which this ruling could be applied to - child pornography, for example. In fact, the ruling is a perfect example of how the free market is blind to (and thus erodes) any values other than the pursuit of profit.

What's also troubling is that the ruling is unenforceable. The case was brought by the tiny Caribbean banking haven of Antigua and Barbuda, where the casinos reportedly employ almost 5% of the population. According to WTO rules, and adverse ruling eventually entitles the injured party to impose trade sanctions equal to the value of the trade lost. Antigua and Barbuda is simply too small for this to be an effective threat, and the US can hurt them significantly if they even try. In other words, it confirms once again that the WTO is a forum by which the rich nations enforce their rules on the poor, but refuse to reciprocate.

This latter problem at least can be fixed. The WTO mirrors early legal systems in using private prosecution to resolve disputes. Ancient Athens introduced the idea that certain crimes were crimes against the community, where suit could be brought by anyone on the public's behalf. Punishment was also enforced by the public in these cases. This is what needs to be done with the WTO. If our framework for international trade is to be fair to small countries as well as large ones, it must permit public enforcement of judgements. Otherwise, we simply have the law of the jungle.