Special Report – Macau since 1995

A US decision to ban offshore gambling was contested by Macau at the WTO in 2007. The matter is still pending.

MB October 2021 Special Report | China at the WTO

In the late 1990s, companies based in the Caribbean nation of Antigua and Barbuda began providing gambling services over the Internet. In 2009 the online gambling industry was the twin islands’ second-largest employer after tourism: 93 licensed gambling organizations employed 1,900 persons, and Antigua and Barbuda’s annual online gambling revenue peaked at $90 million in 1999. 

Since it was estimated that 60 per cent of worldwide online gambling revenue came from US customers, the US decided to crack down on offshore internet betting at the turn of the new century.

According to Isaac Wohl, an International Trade Analyst in the US Office of Industries, “In March 2003, Antigua and Barbuda initiated a dispute resolution process at the WTO to challenge the United States’ ban on the cross-border supply of online gambling services.”

In March 2007 the WTO’s Compliance Panel ruled in favour of Antigua and Barbuda, and the United States responded in May, modifying its schedule of commitments* to specifically exclude online gambling from its recreational services commitments. “This is the first time a WTO member has withdrawn a commitment in response to a WTO ruling,” Mr Wohl emphasises.

“Macau is still an important member of the WTO”, Chao Wang

A condition of withdrawing from a commitment is that the withdrawing country must compensate any affected WTO members, and after the United States’ announcement, Australia, Canada, Costa Rica, the European Union, India, Japan and Macau all filed claims for compensation, arguing that they would be negatively impacted by the modification.

The United States negotiated settlements with Australia, Canada, the EU and Japan, making commitments to maintain liberalized markets in some US industries, but negotiations with Macau have yet to reach a conclusion.

The Macau Economic and Technological Development Bureau explains to Macau Businessthat “regarding the United States’ proposal in 2007 to exclude gambling and betting services from its service commitments under the WTO, although the United States offered compensation to the affected WTO Members in exchange for acceptance of the modification, not every one of them has accepted the offer to date. Therefore, the proposed commitment modification is currently still on hold.”

With its economy highly dependent on gambling, Macau has almost no foreign trade. So what role should Macau play in the WTO?

The Government responds that, “having been an original Member of the WTO since 1995, Macau remains committed to the rules-based multilateral trading system by maintaining the consistency of its trade measures and practices with the WTO rules, formulating and implementing its trade policy with the aim to promote a free and open trade environment, and upholding its support to the further liberalization of global trade,” highlighting as well that last year the MSAR underwent its fifth Trade Policy Review under the WTO.“Members fully acknowledged Macau as an open economy. Macau was also highly commended for supporting the rules-based multilateral trading system and for having responded promptly to the COVID-19 pandemic through relief measures.” (More on this below.)

Professor Chao Wang, Faculty of Law, University of Macau, explains, “Although there is virtually no manufacturing sector in Macau and Macau does not export any goods to other WTO members, the trade in services (including financial, tourism and all other service sectors) is also a very important part of the WTO.

“Besides, Macau also imports a lot of goods from other WTO economies. As we know, importing countries usually have a stronger voice than do exporting countries within the WTO. From this aspect, Macau is still an important member of the WTO,” Professor Wang tells Macau Business.

*schedule of commitments= documents in which each country identifies the service sectors to which it will apply the market access and national treatment obligations of the General Agreement on Trade in Services (GATS) and any limitations it wishes to maintain