nations. PETA is angry about how chickens are handled by these suppliers, but their facilities are out of pub- lic view and make targets. KFC, with its pop- ular restaurants, is highly vulnerable to attack. By assaulting its brand image PETA hopes to make KFC use its market power as the world’s largest purchaser to force reform on growers and slaughter ‘group's mccruelty.com Web site the compai _cumbed, imposing stricter animal welfare standards for ending the assault int growers, including, Se in stunning of chickens After McDonald's capitulated lowed. Burger King adopted animal welfare guidelines after a five-month campaign. Then Wendy's buckled. Safeway lasted only three months, “Albertsons and Kroger’s were subdued by campaigns of only one week each. INITIAL SKIRMISHES fered to put the company in touch fare experts, and added “we are looking ahead to our next targ Over the next several weeks Friedsich had a series cof phone calls and meetings with Bachelder and David Novak, CEO of KFC’s parent corporation Yum! day, Yumt isthe world’s largest quick-service restau- rant corporation with 35,000 restaurants worldwide. ‘The KFC brand traces its origins to the Kentucky * The eter is at www kfccrucly.conetter.042501 asp. Chapter 4 Critics of Business 108 Fried Chicken franchise started by the avuncular Colonel Harlan Sanclers in 1952. It has 14,500 rest rants in 100 countries and serves about 12 million customers every day. The dialogue revealed a wide gulf between the company and its int \cluded humane He accused the company of industry standards permitting -kens and considering theit ynere deaths from abuse atthe suffering of chick- al issue going beyond fina said it would review its g and promised to keep PETA informed. In the months that followed, KFC took several ac- tions. Itconvened an Animal Welfare Advisory Coun- cil composed of outside academic and industry experts. Itbegan unannounced audits of growers and ‘Cameras in slaughter ts and ma that mechanical catching systems are less bruises and broken bones. mins of chickens. The chickens eaten in KFC restaurants, known as “broilers,” are bred to gain weight rapidly over theit brief ives. How- ever, the “broiler breeders” used to produce the flocks of chickens slaughtered for restaurant meals live longer. They exhibit the rapid weight gain “Letter of May 14, 2001 D. Blum, senior vce pre wwowkfecruelty comet formeriy named Tricon|108 Chapter 4 Chties of Business FIGURE 4.4. Timelines of Ideological Conflict ‘Alexander JonnD. 3. Ronald George Hemton Reagan Vi Bush Robert Emerson thomas Owenend ond, Mary Mother Huey poe ‘Ralph ——_Aniiglobalism JJelerzon New Harmony Thoteou Lease Jones Long Nader Movement New Progressives. 17901810 1820«1880-«1670«1890«19T0.«1930««1950 197019902010 ‘The two timelines show how a debate between business and its critics moves through American history. Each timeline represents the sweep of people and ideas associated with one side ofthis enduring debate. ess transactions in the end, a broad spectrum of criticism is an important check on power. Le- ‘and demands attention. If criticism is properly channeled, it can preserve the best of the business institution and bring wide ber Nader's words: “Whenever, in our nation’s history, people successfully challenge ive power of commerci Jumers and the environment, the country became better and the sm. Many now believe that progress even as companies corporate-led economic development und 1s behave badly, They have come to accept that growing trade holds the ‘poverty. These critics now promote the doctrine of corpo- , the subject of our next two chapters. rate social responsi © "Human Need Trumps Corporate Greed,” The Wall Street Jourmal, October 25, 2000, p.A22. A Campaign against KFC Corporation It demanded that KFC force new, more humane prac- tices on its suppliers. KFC responcled with a state- ‘ment dismissing “allegations made by PETA” and saying that its ted humanely? chickens. In the United sm from 18 independent companies wan 50 chicken farms and slaughter- similar arrangements in other PETA held KFC responsible for the “cruel ‘of poultry raised and slaughtered for its restaurants." 1 Animal Welfare Reforms,” press atment of Animals, January 6, 2003, avalabe at www peta oa, KFC Corporation,10 Chapter 4 rites of Business characteristic of all broiler strains, but thei s is do not grow commensurate ‘and they are prone to p: conditions as they age. PETA requested ion of leaner genetic strains that did not ex: ler strains bred for growth regimens + from metabolic pathologies and excess mor- y. Slowing, growth means longer upkeep of ‘Kens before slaughter, but it reduces prema- ture deaths. ; a i 2 rior of chickens. PETA suffer from wluced by suppres- chro: stress and boredo Debate between the antagoni tional, PETA addeessed the corporation ing an erzant child. It was “extremely the firm “has no interest in making Ihave pressed you to take: have done nothing.”* KFC, of open commun! ving only brief and gen- eral information about conducting audits, holding ‘meetings, and working on animal welfare standards ‘with industry groups’ PETA believed that KFC was dragging its feet. A LOOK AT PETA PETA is dominated by its founder, Ingrid Newkirk, training to become a stockbroker. A neighbor moved, abandoning cats that soon bred litters of kittens ‘nearby. She gathered them up and took them to a nearby anim tobe cared for. Yeta short time later she learned they had been killed. The episode changed her. With no desire to become a stockbroker remaining, she talked her way into a job at the shelter. Observing brutal treatment of ani arrive early in the morning to way before others came. “I mi sand of them,” she says, “somet day.”® From the shelter Newkirk moved on to work as a deputy sher ‘investigations, then headed a co imal disease. She ‘was inspired to form PETA after reading a book, Ani- nal Liberation, by philosopher Peter Singer” In the book, Singer argues that animals have moral rights. Moral rights are strong entitlements to dutiful treat- ment by others—in this case human beings. He ‘asserts that the traditional, absolute dominion of hu- exploitation. Because , sentient beings capable of suffer- led to equal consideration th human interests. In his words: “No matter what the being, the principle of equality re- suffering be counted equally with the of any other being.” Thus, he ar- ike suffering gues, animals have an unalienable right to have their needs accommodated by humans. Denial ofthis right is speciesism, or the prejudicial favoring, of one spe- cies over another. Speciesism, according to Singer, is ‘moral rights to one species just as racism and sexism have restricted them to one race or sex. The PETA Mission Statement, Exhibit 1, reflects the inspiration Newkitk found in this ide about animal "she says. “They ight back. But we can. And After reading about a Palestinian bomb put on a donkey land detonated by remote control she wrote to Yas ‘Arafat requesting that innocent animals be left out of ‘Quoted in Specter, "The Extremist,” p. $4EXHIBIT 1 the Arab-Israeli conflict, Her will stipulates that when she dies the meat on her body is to be cooked for a ‘human barbeque, her skin used to make leather prod- ‘ucts such as purses, and her feet made into umbrella stands.!? PETA is cres most people give no thought to animal ri actions are designed to attract attention, ev cost of offending some. PPethaps the mildest attention-getting tactic is the use of theater. For example, PETA demonstrators have dragged themselves down streets with their feet in leg, traps to publicize the evils of fur trapping. An- other tactic is that of the outrageous act. To protest pictures of women wearing fur in Vogue, activists Went to the expensive Manhattan restaurant where its editor was having lunch and threw a dead racoon on her plate. Young ladies at county fairs are crowned as the American Meat Institute puts Dog Lunches for government officals in Washington, erwise be disregarded with the celebrity's aura of success and legitimacy. PETA also uses the Internet well to get its message out. It has multiple Web sites for issues such as 200s, circuses, and animal testing. The network of sites is easy to navigate, informative in depth, and often entertaining. There are facts, Chapter 4 Critics of Business 111 ‘games, pictures video clips, humor, and celebrities PETA makes a special effort to influence children, All these tactics, and more, have been employed in the fight against KFC, THE CHICKENS At the center ofthe conflict are the chickens. Chick- that feed on insects and seeds, nest on the ground, and hatch precocial (sef-caring) young. They are so- cial birds that communicate with each other and es- spread across the globe. In ancient Greece they were valued for the sport of cockfighting, and in imperial Rome prophets read the future in their entrails Chickens had such a hold on the superstitious Ro- ‘mans that generals kept special flocks in the belief that their behavior could foretell victory or defeat in In the hours before combat, hardened legion- ‘crowded around these flocks seeking portents. ‘As the legions marched, they spread Gallus domesticus across the empire, Centuries later, the earliest Euro- pean settlers brought chickens to North America, Ar wanwfursdead com114 Chapter 4 Critics of Business Sharpton spoke out asking the black community to boycott KFC. “Taking advantage of Securities and Exchange ‘Commission rules, PETA gained entry to the Yum! Brands 2003 annual shareholders meeting in Louis- ville. After activists spoke, CEO Novak called of ‘group to end its eampaign, saying, “We don’t w be abused, just like you don’t want the chickens to be "In 2004 PETA qualified a shareholder reso for a company report on actions to re- toward chickens. Only 7.6 percent of voted for it, When PETA introduced a it went down to defeat "ETA sued Yi leging false statements about treatment of chickens on its Web site. The com- pany: the wording, In a bizarre show of dedi- Cation a PETA staff member changed his from Chris Garnett to KentuckyFriedCrue! PETA has conducted tions at KFC supp! Europe, and Asia documenting incidents of sicken- imal abuse. Protests continue. There have been (000 all around the world, many with wearing bikinis to get attention? ‘A MUTED CORPORATE DEFENSE ‘Throughout the PETA campaign, KFC and Yum! Brands have tried to maintain a low media profile While working to elevate animal welfare standards. ‘This reticence is characteristic of the animal agriculture, food, and restaurant industry generally when animal ‘wellare becomes an issue. In mass growing and slaugh- ter some pain for animal is inevitable. Altering pro- duction to address chicken discomfort, injury, and ‘behavioral deprivation raises costs. Most consumers are ignorant of fac ‘methods and fail to entertain the link between 2 KFC meal and the life experience of the creature in it 7 Dave Golowenski, “Activist Group Squawts over KFC's Treatment of Chickens,” The Columbus Disp Lewy, “Bi Times, August 2, 2006, and "Bare Boycott” South China Morning Post, November 6, 2008, P-3. Despite PETA's efforts, there is no grounds ‘Public opinion for more humane treatment fens. Reacting to a protest going on outside a restau- rantin Israel, a KFC customer said: "There's nothing js all part of the food chain. lop an sunning should be effective at (a] mini- mum ies in [a] 500-bird sample.”™" This standard may be defined as humane, but itis met ens out of every 500 are water to loosen plunged in a tank of sc their feathers before furthe: wurce of power is the desire of average people to remselves as humane and decent.®' The ty of defending a standard that lets chick- ‘cautious nonconfrontation aa better policy than frontal attack on PETA. In response to attacks, the company consistently makes these points. It complies with all laws in the ‘more than 100 countries where it has restaurants. [tis only a purchaser and does not own the animal farms land slaughterhouses where abuses may occur. Tt ac- is size asa chicken buyer gives it responsi- sad in the humane treatment 3g action. llowed the Yurn! Brands An- {mal Welfare Guiding Principles (Exhibit 2) and since -mented a more comprehensive set oF sare Guidelines covering breeding, transport, holding, stun- rning, and slaughter. KFC calls these guideli ‘dustry leading,” but PETA rojects them because they ddo not require the changes it demands. Yum! Brands Set up an Animal Welfare Advisory Council com- posed of distinguished animal scientists and industry yaw fi org p2 5% Ere Dezenhall, Nal Em (Amherst, NY Prometheus Books, 2003), p. 0.eee Cirecbtosinees, SE, ‘Yun Brands Fed Safety: Above cious meals and ens oy else, we are committed to providing our customers with safe, do- raat" FS ESRI SRE Hs Four ere operations Principles vwmmyum. Amal Treatment: Yum! Brands believes treating animals humanely and with care is a comin) key part of Partnership: Yum! Brands partners with experts on out ‘Advisory Council ‘and our su plement humane procedures/quidelines and to audit our suppliers to determine whether the adopted gui 10 ensure our quality assurance employees and suppliers have t ledge necessary to further the humane Performance Quantification & Follow he National Council of 0 implement continuous improve- CChain Restaurants and the Food Marketing In ‘ment of industry standards and operation. representatives from supplier companies. When the tions, but it refused. Soon after, PETA renewed its ‘campaign and two of the three resigned. KFC STANDS FIRM As the campaign moved into its fourth stood firm. PETA’s boyc: "consequence. Yurn! Bra vate standards for chickens. Their recommendations by each of its restaurant ch called for actions that would have satisfied all of cial performance has been very strong. Between PETA’s demands:® At about this time PETA had sus- 33 per- far exceeding a 52 the S&P 500 over the same period.* March 11, 2005, 2 January 6, 2003, 0 January 5, 2007,March 11, 2005, for actions that would have satisfied demands.” At a Chapter 4 Critics of Business 115 Food Safety: Above al else, we are committed to pr licious meals and ensuring that our restaurants are ing our customers with safe, de- ined and operated under the highest food safety standards. This commitment is at the heart of our entire operations ‘and supply chain management, and is evident in every aspect of our business—from raw material procurement to our restaurant food preparation and delivery. ‘Animal Treatment: Yum! Brands believes treating animals humanely and with care is a efforts. This means animals should be free from mis- id processed. Our goals to only deal with suppliers who provide an envi- is free from cruelty, abuse and neglect. ble. Yum! Brands measures performance against these guidelines Nur suppliers on a consistent bass. two of the three resigned. KFC STANDS FIRM ,- As the campaign mov stood firm. PETA's boys Gia pesformance hos been thistime PETA had su 2003 and 205, revenue was up income fa trong. Between percent and net its campaign, your shares would have risen 133 per- cent by its fourth anniversary, far exceeding a 52 percent rise in the S&P 500 over the same period.®> January 6, 2003, to January 5, 2007116 Chapter 4. Critics of Business During that time earnings per share rose 26 percent and the company would have increased your divi- dend by 48 percent. Now and then KFC and Yum! about PETA show. At the! spokesperson promised th cernment we will not negot {sts." In 2004 Gregg Deadrck, who replaced Bachelder as president of KFC, said that PETA had “distorted the truth time and time again” in its “campaign of harassment, invasion of privacy and what I'd call ‘corporate terrorism." strong feelings tive said, “we're not going to capitulate” giving as his reason that “PETA’s ultimate goal isto end meat consumption.”"* ‘This comment points to an assumption, surely ex- isting at KFC though unstated by the company, that meat eating is good. ‘company is supported by Richard Mart of the industry magazine ‘Nation's Restaurant News. Martin says PETA errs in its “rejection of the ani chain paradigm” and in: ‘wide acceptance of me for descendants of ing as a proper option “©? This position is ns to Combat PETA, Using Siar the Best Method," PR Week, Apri 2-Press Conference Comments by KFC Present Gregg Dect,” July 21, 2004, at wawe kf com, p. 2 Dtonathan Blum, senor vce president of publi affairs, quoted in Tom Price, Att inthe Boarcroom: How Advocacy Groups Seek to Shape Corporate Behavior Washington, OC: Foundstion for Puble Afar, 2006) p. 11 whom our pleas for mercy sound like nothing, than bleats and squeals and clucks—mere ‘noise’ 0 Ay at odds with the values of animal rights ac- i ding one who wr - agine how chickens m try to imagine ourselves placed helplessly hands of an overpowering extraterrestrial spe: the master race in whose ‘superior’ minds we are ‘only animals.” Questions 1, Do you support KEC Corporation ot People for the Ethical Treatment of Animals in this contro versy? Why? What are the basic criticisms that PETA makes of KFC? Are they convincing? Are its criticisms simi- lar to timeless criticisms of business mentioned in the chapter? 3. What methods and arguments has KFC used to sup- port its actions? Is it conducting the best defense? 4, Is the range of PETA’s actions acceptable? Why ‘does the group use controversial tactics? What are its sources of power in corporate campaigns? Is it proper for PETA to pressure KFC for change ‘hen the company is following the law and pub- ie custom? Does PETA represent so compelling a truth or enough people to justify attacks on, and ppethaps damage to, major corporations supported ‘by and supporting millions of customers, employees, and stockholders? 6, Doanimals have rights? Iso, what are they? What duties do human beings have toward animals? Does KFC protect animal welfare at an acceptable level? 38 karen Davi, “Animal Suffer ‘Chicago Sun-Times, SeptemberChapter 12 Globalization 395 ‘The Conference Board asked respondents to name the measures that they found. ‘most effective in their anticorruption programs. Here they are in descending order of importance. * A detailed statement of company anticorruption policies. + A required follow-up report if questionable practices have been disclosed. * Group sessions with local managers in which actual or potential corruption statements are discussed. + Arrequirement that employees sign a statement of adherence to anticorruption policies. * An annual requirement that country managers must report q practices.”* stionable Despite international, national, and corporate efforts at eradication, corruption and bribery endure. In 2007 the US. government collected more than $100 from corporations in foreign bribery cases.”” Companies from EU nations continue to pay bribes and prosecution varies. Great has never brought a bribery prosecution resulting in conviction. France, Japan, an have only recently begun to prosecute bribery cases. Only a decade ago, they allowed their corpora- tions to deduct foreign bribes from taxes CONCLUDING OBSERVATIONS Globaliz a revolutionary phenomenon. for people all over the world. At the same ti tion, and suffering for some who have changed business-government-si ance, there seems to be little qui cial and promise rising benefits. To achieve reforms are necessary. has created enormous ithas led to exploitati jowever, important bid. p. 28. ie Johnson, "US. Targets Bribery Overseas," Washington Post, December 5, 2007, p.O1 David and Goliath at the WTO. In 1996 Jay Cohen had a lucrative job in San Francisco trading options and derivatives. However, he wanted of gambling. Prosecuted by his own country, Cohen tumed to the tiny nation that embraced his business to start his own business and make more money. So, he and two friends set up an Internet sports betting site on the island nation of Antigua and Barbuda. The business was successful, perhaps too successful, lur- ing Americans to bet online and provoking opponents {for help. Eventually that nation challenged the United States atthe World Trade Organization. To everyone's surprise it prevailed ‘We begin the story in the balmy Caribbean, about 1,300 miles to the southeast of Florida,396 Chapter 12 Globalization ANTIGUA AND BARBUDA Antigua and Barbuda consists of two small islands. ‘Antigua (an-TEE-ga) is the larger with 108 square les and is more developed. Barbuda (bar-BOO- duh) is smaller with 63 square miles. The two low- »wing them to oper- ate tax free. It expected that gambling activity ‘would create jobs for Antiguans, who suffer from high unemployment. All an online gambling company needed to set up shop was 2 license that cost $100,000. The govern- JAY COHEN’S MISADVENTURE When Jay Cohen and his partners, all American zens, founded World Sports Exchange Ltd. (WSE) ‘became one of about 25 gambling businesses in sua that ran telephone and online betting. The market for these businesses, including Co- line and place bets on. baseball, soccer, and other sports. Within two years, WSE had 2,000 customers. In one 15-month period it collected approximately $5.3 million in funds wired from the Us Its profits came from taking, a 10 percent commis- sion on each bet. Like other gaming c operated with a sense of censed by the governm« erations, even advi 1g in American sports "Bret Pull, "With Technology land Bookis Skit US, Lay." The New York Times, January 31, 1998, p. Al magazines and newspapers. “People are more com- fortable with us than with the illegal bookmakers,” ‘Cohen said, “They know that when they win, we py ‘Meanwhile, opponents of gambling in the U States were givanized by what hey sould seduce teenag- xs, and undermine yn, major sports other offshore op- 1m names and links to official leagues demand erators remove Teague Web sites. Soon FBI agents started a sting operation. As part we do here by a sovereign government,” he told one reporter? Cohen volunteered to return to the US, convinced laws did not apply to his business in Antigua rbuda and believing that common sense Was €n his side. He was so wrong, Federal officers ar- rested him on his arrival. He was charged with eight counts of violating the Wire Wager Act of 1961 (the which reads: engaged inthe business of betting tion assisting in the placing of bets or wager, shall title or imprisoned for more than theo years, or both ‘Cohen argued that his business was a foreign cor- poration engaged in legal its headquarters was located. were conducted outside the U.S. Based on the advice Quoted in bd, pA 2 Quoted in Benjamin Weiser, “74 Facing Charges in Fist US Action on Intemet Betting," The New York Times, March 5 1998, p. Al US. § 1084.Jay Cohen in a 2003 photograph taken at Nellis Federal ‘Camp in Nevada. Source. Aaron Mayesas Vegas Wayne Coffey, "An Offshore Thing,” New York Daly News, March 26, 2000. Chapter 12 Giot 37 ENTER THE WORLD TRADE ORGANIZATION island against the ‘The WTO was established in 1995 by 94 (now 144) to replace the treaty system of international trade that developed after World War! WTO isto admis liberalization bui older system, ‘An important function of the WTO is to adjudi- cate trade disputes between nations. These disputes rules and procedures Exhibit 1. The first step is in which members are given fan impart cate the dispute. Panels are c members, each an expert i e. They are chosen from I and agreed upon and may not tructions from their governm terms. They and must be broadly represent ‘membership. five of the WTO. ® world Sports Exchange, “About Us,” at hitpuNwwcwsex. com,THE ANTIGUA AND BARBUDA COMPLAINT In 2003 the government of Antigua and Barbuda started the dispute process by requesting the WTO to form a dispute setiement panel. There followed a se- ries of efforts by the two nations to settle their differ- ences. They were unable to agree and the dispute process went on. The debate between A\ the USS. flew back and forth like a sh ver time led to thousands of pages of documents in hich lawyers on both sides argued fine nuances and by operators US. is illegal and in all instances States law. The U.S. had further adopted a series of, federal and state measures and taken actions to pre- ‘vent operators in Antigua from offering these serv- persons in the USS. (including ‘ne person related to an "This violated a commitm« a treaty named the General Agreement on ‘Trade in Services (GATS), which was ratified by all WTO nations in 1995, GATS commits the United States to open its borders to trade in a wide range of services, including “recreational services.” This phrase includes gambling, argued Antigua, ‘Antigua stated that its enterprises operate legally allows gambling in casinos, bingo parlors, ack, and state lotteries. Horse racing be placed through US-based Intemet sites, for example, Youbet.com in Pennsylvania, and Xpressbet.com in California. Existence of these prac- tices makes the U.S. moral argument ring hollow. THE UNITED STATES RESPONSE ‘The United States thought it had a strong defense on both legal and moral grounds. It claimed that opera- tors in Antigua and Barbuda plainly violated its do- ° befoce the Panel ofthe Word Tade Organization on United States— Measures Affecting the Cross-Border Supply of ‘Gambling and Betting Serves," WWTDS285, Fst Submission of Artigua and Barbude, Executve Summary, October 8, 2003, Chapter 12. Globalization 399 mestic laws py gambling, Federal laws also made it illegal to accept a Aporte wige from he Unie Sate i any org ‘Three specific st Wire Act, the Travel the use of phone wires for ‘These laws banning inters ‘had been in existence for decades and predated the WTO. The US. also alleged a sovereign right to ban ‘goods and services that harmed its social fabric. ‘There is evidence that Internet gambling is rapidly increasing in the US., creating growing numbers of teenage gambling addicts. This is a legitimate con- ‘cern to Americans and a danger to public moras, THE PANEL'S DECISION In late 2004 the WTO panel hea report. The rl sion the pane! smbling laws to offshore Internet gambling estab- ments was contrary to the market access treaty gto entered no by the United States ander be interpreted as services.” There in federal and state laws were an unfair trade barrier to foreign businesses. °° World Trade Organization, “United States—Measures ‘Affecting the Cross-Border Supply of Gambling and Betting Senvces: Report of the Panel,” WT/DSZBSR, Noverber 10, 2004, bid, p. 270400 Chapter 12. Globalization ‘The panel agreed that the U.S. denied offshore ‘gambling operators the same freedom as domestic enterprises, It affirmed that the gambling enterprises THE APPELLATE BODY'S DECISION The US. appealed to the WTO sta 2005 upheld mo spheld the panel's find- cluded that the laws could, indeed, be j pprotect the American public from the growth of im- ‘moral behavior. the WTO Gambling Dispute with Antigua and Barbuda,’ November 10, 2004, at wawust gow Unite States—Measures Border Supply of Gambling and Betting the Appellate Body, WI/DS2BS/RBM, AB- hibits foreign operators from accepting the same bets. Tn such circumstances, the moral justification raised by the USS. lacked force and consistency and could not prevail. ANTIGUA ASKS FOR SANCTIONS ld change its laws to sing with foreign gambling Or itcould change its laws to ban al 1g over phone lines or the Internet. Neither ‘an end run around Under WTO rules ifthe losing party in a dispute fails tocomply with the decision, it must offer compensation to the aggrieved party or accept retaliation. Retaliation requires imposing trade sanctions equivalent to the harm suffered by the complaining country Antigua and Barbuda harm of $3.4 ues, The US. jeved that this figure was too high 00,000 was more appropriate. Japan, India, Canada, Australia, Costa Rica, , and the European Union nations—piled on. ‘They asked that the United States be forced to open markets as compensation for closing offits Internet gambling market to companies within their borders. ‘Trade san on take the form of raising ffs on imports noncomplying country How does a speck of a nation such as Antigua and. ‘World Trade Organization, "United States—Measures -Afecting the Cross-Border Supply of Gambling and Betting Services: Recour e215 of the DSU by Antigua and jing Fight Could Harm 2007,the US. is microscopic, iguans have asked and exporting copyri from the U.S. This wé islands to copy and and films. Of cour companies an whose products might be copied.!® ‘Meanwhile, the United States has passed a new the cross-border gambling, “met Gambling Enforce: ‘ment Act of 2006 prohibits banks and credit card companies from processing financi fest gaming sites, such as PartyPoker.com announced they would no longer accept wagers from Americans. ‘World Sports Exchange, however, continued to accep! GAMBLING IN THE UNITED STATES ‘Gambling has an uneven history in the United: It has gone through cycles of lowed by rejection and prohibition. Today strong forces in favor and opposed are locked in a cont ‘Company of Lonclon financed its Jamestown colony with a lottery. Soon the colonists were holding their own lotteries, using them to finance public works such as street paving and harbor construction. ion superseded lotteries inding. By the 1860s only Delaware, Mis- Kentucky held state-au "paul Blustein, “Against A Odes.” 17" WTO. Sanetions against US. Are Urged," The New York Times, June 21,2007, p12 tur of the ambling became incr today the country is awash wi termet, Americans gamble around the w ‘comfort of their homes.!® Internet gambling attracts special ire from anti ‘gambling forces—including law enforcement orga sites. Without the mat quences they are lure Arecent survey-based est to predict the conse- a destructive habit. ler group, fequency of gambling doubled in 2006, imong, women ages 18 to 22,35 perc "monthly gambling (as opposed to 56 percent of si THE UNLAWFUL INTERNET GAMBLING ENFORCEMENT ACT OF 2006 ‘As mentioned, in 2006 Congress reinforced U. S. rejection ofthe WTO's rulings by passing the Unlaw- ful Internet Gambling Enforcement Act (UIGEA), |The Annenberg Public ‘Young People Use Internet Gam ‘October 2, 2006.402 Chapter 12. Globalization Passage of the IGEA culminated a 10-year effort th casinos, parimutuel ga interests, and the legal online gaming industry. voices were muted by sporting event or ‘a game to place, receive, or ‘wager by any in pact, of the ‘otherwise knowingly transt means which involves the where itis i gambling, such as bet tocontinue. The muscle of the new law is ic fund transfer, a check, or “the ‘transac jon.” Those who assist the transmission of, or , funds relating to prohibited Internet gam- bling may be prosecuted. card, proceeds of any other form of financi ARGUMENTS FOR THE UIGEA Congress did not give birth to the new law without debate. The most open disagreement emerged during floor debate in the House of Representatives over an early version of the ‘we extract arguments of the bill’s proponents. In the next section we set forth some arguments by ‘opponents. for gamblers’ ys. There is no alcohol on the breath. You just the mouse and lose your house. These comments son gambled away $7,500 playing online Texas Hold’Em, then confessed to robbing a bank to try to : Leach lamented that “[w]hi Congress has failed t0 a fernet ga has boomed. ‘Americans spend more than $6 billion to un- 3105, half the $12 bile smbling sites are vulnerable wey laundering, drug trafficking ‘evade rigorous US-based regulations that control ‘gambling by minors and problem gamblers and en- sure the integrity of the games." Representative Spencer Bachus (R-Ala.) noted that 1e negative effects of gambling have been widely to0 often, gambling results in adic. jon, bankruptcy, divorce, crime and moral decline. Internet gambling magnifies the destructiveness of ‘gambling by bringing the casino into your home, . Internet gambling has been linked to terrorists and organized crime.”® ive Joseph Pitts (R-owa) said, “{glambling online is unique. No casinos, horse tracks of betting parlors are required. All one needs 29 See also Internet Gambling Prohibition Act of 2006, Hearing before the Subcommittee on Crime, Te Homeland Security of the Committee on the Judiciary, House of Representatives, 109th Congress, 2nd Sesion, Api 5, 2006, Congressional Record uly 11,2006, p. W498, 9. 14984 +p. 44987 andChapter 12 Globalization 403, isa computer, credit card, and Internet access. With nature of the Internet, it is probably unlikely to do that, players are able to play 24 hours day from the that, and that is because even if we are successful in privacy of their homes. Minors are easily able to defy closing clown business sites in the United States or in age requirements if they wish to play. And the online countries we ean get to cooperate, it will be ineffec- environment and credit carel payment system com tive because it will have no effect on those opera~ bine to promote addiction, bankruptcy, and tions run outside the reach of the Department of crime.” Justice.” Representative Scott was concerned about the burdensome expense and administrative efforts ARGUMENTS AGAINST required of financial ions that would be THE UIGEA called on to identify funds destined for gambling mn prohibits the use of Here are some arguments made by opponents o ‘gambling debts. ” teret gambling restrictions, ‘an enforcement nightmare for Representative Barney Frank (D-Mass.), chair- because it requires them to ‘man of the Financial Services Committee, opposed sgal Internet gambling transac- what he believed was an unworkable infringement tions. It is hard to identify those transactions, ‘on freedom of choice. “Are we going to go back to because they are not going to be identified as an Prohibition? Prohibition didn’t work for alcohol -gal Internet transaction... With some Internet didn’t work for gambling. When people abuse 2 gambling operations being legal, how would the particular practice, the sensible thing is to try to financial institution distinguish between what is deal with the abuse, not outlaw it... . In areas legal and what is illegal? ... Over 85 foreign coun- ‘where we need to act together to protect the quality yw some form of gambling online, and that of our life, in the environment, in transportation, in ly to grow as well, So what govern- public safety, we abstain; but in those areas where ments are likely to cooperate with us in prosecuting individual ved to make their own businesses that they authorize to operate?” Now, people have said, Representative Shelley Berkely (D-Nev.) also ‘work to try ie misinformed ‘we were to outlaw for supporters it lege students abuse, we se la- enforcement capabilites of States govern the autonomy of the individual ment. Instead, passing this bill will do the exact o ns of Americans who currently. [R-Tex) _ wager online will continue to use offshore Web sites umbling would out of the reach of US, law enforcement. [OInce you make something illegal, whether I continue to be astounded by the Members of this, itis alcohol or whether itis cigarettes or whether itis body who constantly rail against an intrusive gambling on the Internet, it doesn’t disappear be- federal government; and yet when it comes to gam- ‘cause of... increased demand. All that happens is, it ing, they are the first, the first to call for govern is turned over to the criminal element, So you won't ment intrusion.” “Supporters of this bill,” she get rid of it.” continued, “argue that online gaming is a great Representative Robert Scott (D-Vir) said he ciety and our youth because some peo- ‘opposed the bill, “... because it does not prohibit too much. . .. By that logic, the next Internet gambling; it only tries to prohibit running mn we should be considering is an Internet gambling operation. But because of the 1 shopping.” bid, . H4990 bid, H4985 bid, p. H4986, Ibid, p. 4996404 Chapter 12. Globalization Questions righted entertainment material equal t0 the Was Jay Cohen's conviction justified? 2. Do you concur with the decisions of the World ‘Trade Organization in the dispute between Anti- gua and Barbuda and the United States? 3 3 é i i a 8 3 ‘of 20062 Was Congeess justified Ww after the WTO's rulings about ould the US. regulate gambling? Should gambling be banned? 4, Should Antigua and Barbuda be allowed to retali ate against the United States by exporting copy-