In January, Antigua announced that it was preparing to use the $21 million settlement the WTO gave it years ago and would apply it by suspending U.S. intellectual property rights (TRIPS).  Apparently the plan is to produce cheap versions of software, movies and music and sell it at a ridiculously low price with no reimbursement to U.S. companies who have trademarked and copyrighted those products. The hope is that doing so would cause such an outcry in the U.S. by companies like Sony and Microsoft to settle the dispute that the U.S. would either agree to allow Antiguan gambling companies access to the U.S. market or more likely that the U.S. would give Antigua a better deal in other areas of trade that would benefit their economy. The two sides apparently met in February and March to try and work out a settlement but neither side was close to what they believed was an equitable agreement. If Antigua does indeed proceed with the option it would likely be done through Slysoft, an Antiguan software company which would ensure it wouldn’t have to deal with countries that have tough anti-piracy laws.

I spoke to a former trade representative under the Bush administration who still has close ties to the current USTR and he informed me that if Antigua does indeed use TRIPS its method for retaliation that “Antigua would pay dearly.” Without going into great detail, the former representative said that the current government is prepared to go after the two industries that Antigua values most – high tech and tourism. Nkenge Harmon, a current U.S. Trade Representative has gone on record warning Antigua against using the TRIPS option.

“Government-authorized piracy would undermine chances for a settlement. It also would serve as a major impediment to foreign investment in the Antiguan economy, particularly in high-tech industries,” Harmon stated.

But the threat against tourism is new and if applied would have devastating consequences to the Antiguan economy. Tourism accounts for half ofAntigua’s GDP and a large number of those visits are by Americans. In fact Antigua has boosted its efforts to attract American tourists by increasing the number of ads and promotions to get U.S.citizens to fly to the tiny island. But if the U.S. does indeed take actions to prevent that (possibly by stopping advertising from Antigua or even issuing a travel advisory), the ramifications could possibly lead the country into bankruptcy. At the same time, the Antiguan government has indicated that the U.S. actions have practically ruined their economy anyways, since most online gambling operators have left and since they invested so much into setting up remote gambling that these actions may be a last resort anyways to help save Antigua’s economy from collapse.

Ironically the USTR won a case against China at the WTO around the same time that Antigua won their case against the U.S., where the WTO agreed that China wasn’t doing enough to protect intellectual property rights and ordered China to do more to protect the TRIPS agreement. China in turn has hinted at the Antigua case (namely the U.S.ignoring the ruling) as a reason not to comply. The fact that Antigua is prepared to use TRIPS as its retaliation measure just makes China’s argument more compelling.

Antigua has done everything in its power to get the U.S. to come to the table with a reasonable offer to settle the dispute but by all accounts the USTR refuses to cooperate fully because they believe the WTO ruling was wrong. So far there has been no harm nor foul on the USTR’s parts but if they actually use Antigua’s tourism industry to hit back at the Caribbean island, then all gloves are off and any sympathy or support internationally for the U.S. in this dispute will quickly disappear.

Contact Hartley via email at Hartley[at]osga[dot]com.

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