Could running down flush draws online topple the world's free trade economy? That's the premise of an article by Businessweek which implores the current complaint many nations have against the United States about their internet gambling laws.

First it was the tiny island of Antigua that brought the first shot at the US in front of the World Trade Organization. The island nation's commerce was damaged by the decision to ban wire transfers going to and from internet gambling sites in the United States. They have legit beef since the US DOES allow such wagers from Horse Racing and interstate lotteries. The "we can do this but you can't" attitude has sunk the US into dark trading territory with even more nations including the not-so-small Japan, India, Canada, and European Union.

Hat tip to TripJax for the find. Here's part of the article from Businessweek, explaining some of the possible repercussions of the morally directed US internet gambling laws and what could happen with the WTO:

Few paid heed in 2003 when the tiny island nation of Antigua & Barbuda started griping about tough U.S. gambling laws. The complaint: Antigua's Internet gambling operations, a major source of jobs for the country, had been hurt because Americans weren't allowed to place bets online.

Four years later, this narrow and almost comical spat has boiled over into a broader dispute involving many of America's top trading partners. What turned up the heat? In May the U.S. unilaterally decided to exclude Web gambling from its list of services covered by the World Trade Organization. To do so, it invoked an escape clause in the WTO treaty that allows a country to "modify or withdraw any commitment" to provide open access. This move-almost unprecedented-came after the WTO ruled that the U.S. violated trade rules when it blocked "imports" of gambling services from other countries.

But the dispute could be a lose-lose proposition for free trade since the U.S. may have legitimized use of a big loophole in the WTO. Meanwhile an already intense populist American backlash against globalism could be exacerbated by steep sanctions.

The escape clause invoked by the U.S. requires reparations to any WTO members that claim to be hurt by the modified agreement. The diplomats who negotiated the treaty wrote the escape clause in a way that intentionally discouraged its use. The country imposing the trade restriction had to provide "compensatory adjustment" to other countries affected by the change-a vague term that includes the possibility of enormous claims.

Antigua wants the U.S. to pony up $3.4 billion a year in concessions to cover lost gambling revenues. Seven other WTO members-Japan, India, the European Union, Canada, Australia, Costa Rica, and Macao-are also seeking unspecified but potentially big amends, saying that their Web gambling operations, either existing or to be started in the future, have been harmed.

Despite the furor, the U.S. has been unwilling to back away from its aggressive stance on Internet gambling. One reason: It's a rare area where many Republicans and Democrats agree, on both moral and law enforcement grounds. The argument is that it's too easy for minors to gamble online and for criminals and terrorists to use Web gambling to launder money. That's why the U.S. beefed up enforcement in recent years and banned the use of credit cards to place online bets... (Continued at Businessweek.com)