The tiny Caribbean nation of Antigua and Barbuda asked the World Trade Organisation (WTO) on Tuesday for the right to authorise US$3.4 billion (€2.5 billion) in commercial sanctions against the United States for its failure to comply with a ruling that its Internet gambling restrictions are illegal.

Washington acknowledged that its online betting ban was ruled illegal by the WTO, but challenged Antigua's right to retaliate because it says it is in the process of changing the details of its obligations under the 1994 General Agreement on Trade in Services.

The United States also rejected the amount requested by Antigua as "patently excessive."

The WTO set up an arbitration panel to rule on the matter.

Several times GDP

"The level sought by Antigua and Barbuda is several times higher than Antigua and Barbuda's annual gross domestic product of all goods and services," U.S. trade lawyer Juan Millan told the WTO's dispute settlement body.

The U.S. made the unprecedented move to explicitly remove online betting from the services agreement after losing a WTO ruling earlier this year. Australia, Canada, Costa Rica, India, Macao, Japan and the 27-nation European Union have all joined Antigua in filing compensation claims as a result, but those are separate from the twin-island nation's ongoing WTO dispute with the United States.

Millan said Washington accepted that U.S. gambling laws were not in compliance with its WTO obligations. But he said Antigua's request for retaliation was unnecessary because the U.S. was negotiating compensation with all interested WTO members - despite having originally argued that it was exempt from sanctions or having to pay compensation.

Antigua, the smallest country to successfully litigate a case in the World Trade Organisation's 12-year-history, had its documents circulated among the delegates at the meeting, but was not present for the discussion. It has said it will target U.S. trademarks and copyrights if Washington refuses to change its legislation.

- AP