The World Trade Organization just made it legal to be an online pirate of the Caribbean, provided you’re based in Antigua and Barbuda.

In a meeting in Geneva yesterday, the organization gave its full blessing to the twin-island nation to sell or stream movies, music, TV-shows, and software carrying US copyrights without paying anything to the people or companies who own them. Essentially, the country has a free pass to become the next Megaupload, and there’s nothing the US can do to stop it.

The reason is recompense. Antigua and Barbuda’s $1 billion economy loses tens of millions of dollars a year due to US restrictions on online gambling that the WTO has deemed a trade violation.

“Cross-retaliation”

In 1994, the year online gambling software was first developed, Antigua and Barbuda quickly established itself as a legal safe haven for operating internet casinos. According to the government, the online gambling industry grew to be the country’s second-largest employer, boasting 4,000 workers or 10% of the total workforce.

But over the years, anti-gambling legislation and judicial rulings in the US have made deep cuts in the consumer base of Antigua and Barbuda’s cyber casinos. Today, only 500 citizens work in online gambling.

In 2003, Antigua and Barbuda complained to the WTO that, by restricting online gambling, the US was violating its own rules of fair trade with other WTO member nations. The organization concurred, ruling that the US trade agreement “includes a commitment to grant full market access in gambling and betting services.” The agreement does permit exceptions to trade rules based on moral considerations, but in this case, gambling didn’t qualify.

By the end of 2007, the US had not only failed to change its regulations, it had made it even more difficult to gamble online by banning the transfer of money from banks to internet casinos. In December, the WTO decided that if the US is going to gouge Antigua and Barbuda’s gambling industry, then the island nation can hit Hollywood and American pop music in return—at least hard enough to make $21 million a year, the WTO’s estimate for how much US gambling restrictions is costing the island nation. (Ironically, it was the US that initially proposed the WTO allow for this sort of “cross-retaliation”)

Antigua and Barbuda’s next move

Antigua and Barbuda’s next move is unclear. If the country does start hosting websites chock-full of American media for sale, then a number of business models are possible. There could be a dirt cheap Antiguan Spotify or similar membership services that have music, movies, and TV shows available for live streaming. Or there could be super-fast torrent buffets that charge a cent or two per download. Or a totally free website that makes money off advertising.

According to the New York Times, some analysts think that Antigua and Barbuda doesn’t really want to make money off of copyrighted material, but is attempting instead to prod American filmmakers and musicians to lobby in favor of online gambling.