The US has warned Antigua and Barbuda not to go ahead with a plan to operate a legal piracy site, approval from the World Trade Organization (WTO).
The move from Antigua to operate the site follows a US refusal to lift a trade blockade which prevented the country from providing internet gambling services.
Antigua’s government is planning to sell movies, music and software with the help of new site without paying fees to US copyright holders.
A spokeswoman for the US Trade Representative’s office told the BBC "Government-authorised piracy would undermine chances for a settlement."
"It would also serve as a major impediment to foreign investment in the Antiguan economy, particularly in hi-tech industries."
"The United States has urged Antigua to consider solutions that would benefit its broader economy. However, Antigua has repeatedly stymied these negotiations with certain unrealistic demands."
In February 2006, the US ban on overseas gambling web sites was attacked by Antigua and Barbuda, who accused the US of failing to comply with current WTO rulings.
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In 2007, WTO granted Antigua the right to suspend US copyrights of around $21m per year.
