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The U.S. Virgin Islands (USVI) showcase a diverse and vibrant export economy, with significant contributions in sectors such as energy (crude petroleum oils at $177M), luxury goods (large motorboats >24m at $16.9M), fine jewelry (jewelry and parts of precious metal at $8.22M) and others.
Despite being a smaller player on the global stage, the strategic position of the USVI and its niche in high-value products present a unique opportunity for expansion into international markets. With a total export value of $2.43B (38th largest exporter out of the 43 exporters in the United States) in 2023, the USVI demonstrates its capability to engage with and penetrate global markets, signaling the potential for further growth in both existing and emerging sectors.
Moreover, the ongoing improvements in trade infrastructure and supportive local policies in USVI make it ideally placed to step up its export activities. The island offers promising prospects for global market expansion and fostering economic growth within the region. This introduction lays the groundwork for exploring the dynamics of the USVI’s export economy, showcasing its potential for diversification and growth in international trade.
The historical growth of the US Virgin Islands’ export sector reveals a trajectory of resilience and adaptation. From its early days of sugar cane production to its modern diversification into refined petroleum, rum, and creative industries, the USVI has continually evolved its export base to meet global demands. The pivot towards high-value-added products and the emphasis on sustainability reflect the territory’s commitment to economic innovation.
Current export statistics highlight this change, with a significant portion of the economy now reliant on the export of goods and services. In recent years, the USVI has seen a steady increase in the export of refined petroleum products, contributing notably to the territory’s GDP.
Additionally, the resurgence of artisanal and boutique industries has placed USVI arts, crafts, and rum on the global stage, opening new avenues for international trade and cultural exchange.
The main islands of USVI are St. Thomas, St. Croix, and St. John, with a combined population of approximately 107,000 residents. Home to stunning beaches and a vibrant tourism industry, the USVI also boasts an export economy that contributes significantly to its gross domestic product (GDP). From 2016 to 2020, exports from the USVI have steadily increased, with a record high of $2.43B in 2023.
The top exported products from the USVI in 2023 were crude petroleum, jewelry, and refined petroleum products. Crude petroleum accounted for 26% of total exports, followed by jewelry at 18% and refined petroleum products at 17%. Other significant export products included pharmaceuticals, rum (a Caribbean specialty), and electrical machinery.
Regarding export destinations, the USVI primarily trades with Western Hemisphere countries, with over 80% of its exports going to the United States, followed by Puerto Rico and the Dominican Republic. This strong trade relationship with the United States is due in part to being an unincorporated territory of the country, which allows for duty-free trade between USVI and mainland U.S.
Total trade in goods and services (exports plus imports) between the UK and U.S. Virgin Islands reached £146 million in the four quarters ending Q3 2023, up by 151.7% or £88 million compared to the four quarters ending Q3 2022. UK exports to U.S. Virgin Islands amounted to £144 million during the same period, a 171.7% increase from 2022. UK imports from U.S. Virgin Islands were £2 million, down by 60.0% from 2022. U.S. Virgin Islands ranked as the UK’s 146th largest trading partner in the four quarters ending Q3 2023, representing less than 0.1% of total UK trade.
Among varied industries, the US Virgin Islands is known for refined petroleum, rum production, and a growing creative sector.
The U.S. Virgin Islands (USVI) occupies a crucial geographic position that enhances its role as a key player in Caribbean logistics and shipping. Its proximity to major shipping routes positions it as a pivotal hub for transshipment operations, serving as a gateway for goods moving between the Americas, Europe, and Asia.
The infrastructure developments, such as the $12.2 million investment in the Gordon A. Finch Marine Facility and the upcoming opening of a new cargo facility at the Wilfred “Bomba” Allick Port and Transshipment Center, underscore the territory’s commitment to capitalizing on its strategic location. These enhancements are designed to facilitate smoother, faster cargo operations and accommodate larger vessels, reflecting an effort to boost efficiency and capacity in handling regional and international trade.
The significant increase in cruise calls to St. Croix, with a leap from 35 ships in the previous year to 69 ships in 2023, carrying 177,000 passengers, further illustrates the growing importance of USVI in the maritime sector.
The expansion of the shipping and intermodal transportation sector in the USVI presents numerous opportunities for both the public and private sectors. With the islands’ strategic location acting as a linchpin in the Caribbean logistics chain, stakeholders can leverage this advantage to foster partnerships with global shipping conglomerates, further establishing USVI as a central node in international shipping networks.
Additionally, the growth in intermodal transportation capabilities, which facilitate the seamless movement of cargo across different modes of transport, promises to enhance operational efficiency and reduce transport costs. This infrastructure supports not only the direct shipping industry but also stimulates ancillary services such as warehousing, distribution, and logistics management. For businesses, this means improved supply chain reliability and for the local economy, a potential increase in job creation and skill development in high-demand sectors.
The government’s investment in port facilities and technology underscores a commitment to fostering a competitive edge in the shipping industry, inviting further investment and collaboration in developing sustainable and resilient supply chains.
The Jones Act, formally known as the Merchant Marine Act of 1920, plays a pivotal role in United States maritime commerce, mandating that transportation of goods between U.S. ports be conducted by U.S.-flagged, -built, and -owned vessels.
For the US Virgin Islands, an exemption from the Jones Act presents unique opportunities and challenges in facilitating trade.
This exemption allows for more flexible shipping options and potentially lower transport costs, making the USVI more attractive for international shippers and traders. Consequently, it could lead to increased cargo volume and more diverse shipping routes connecting the USVI directly with foreign ports. This strategic advantage could enhance the islands’ position as a critical hub in the Caribbean and global supply chains, fostering economic growth and expanding employment opportunities in the maritime and logistics sectors.
Businesses operating within the USVI benefit from the ease of trade provided by its status, leveraging the U.S. dollar and enjoying the stability of U.S. law, including intellectual property rights protection and a legal system familiar to international investors. This dual advantage of geographical proximity to Latam countries and political alignment with the United States simplifies cross-border transactions, reduces trade barriers, and facilitates smoother entry and operations in Latam markets. This strategic positioning makes the USVI an unparalleled gateway for investors and businesses aiming to penetrate or expand within the Latin American region, all while mitigating some of the risks commonly associated with emerging market investments.
The US Virgin Islands (USVI) engages in several bilateral trade agreements and partnerships, primarily facilitated by its unique position as a U.S. territory. These agreements, often under the broader umbrella of the United States’ foreign trade policies, enable the USVI to have preferential trade relations with several Latin American countries.
Among USVI’s several government initiatives, the U.S. Virgin Islands State Trade Expansion Program (STEP) stands out as a flagship effort. Funded by the federal government, STEP provides financial grants to small businesses seeking to enter new international markets.
This program offers a spectrum of support, including funding for participation in trade shows, overseas market trips, and subscription services provided by the U.S. Department of Commerce.
Additionally, the U.S. Virgin Islands engages in targeted trade promotion efforts designed to showcase local products and services on the global stage, creating opportunities for local enterprises to expand their footprint and compete in the international arena.
To further incentivize growth and international expansion among local businesses, the USVI government offers a series of economic development incentives, including generous tax exemptions and financial aid. These incentives are primarily designed to reduce operational costs, thereby enabling businesses to reinvest their savings into scaling their international efforts.
Tax exemptions may cover income taxes, property taxes, customs duties, and other governmental fees, providing significant relief for businesses committed to growth and expansion. Additionally, financial aid might come in the form of direct grants, low-interest loans, and funding for training programs to improve the workforce’s skills.
The introduction and favorable reception of public-private partnership (P3) legislation highlight a strategic effort to enhance the infrastructure and services critical to export-driven businesses.
For exporters in USVI, the legislative climate is becoming increasingly supportive. With potential provisions for tax incentives for projects lacking a traditional revenue stream, as suggested by legislators, there’s an opening for export-oriented initiatives to garner the financial backing needed for sustainability and growth. This aspect is critical for sectors that have the potential for international trade but need more initial investment for infrastructure development.
Furthermore, the emphasis on creating a reliable framework for investors through the P3 legislation is a direct boon to the export sector. This legal infrastructure not only attracts private investment into necessary projects like transportation and logistics – which are vital for efficient international trade – but also signals to international markets that USVI is serious about becoming a competitive exporter.
The future prosperity of USVI’s international trade largely hinges on its ability to forge strong global trade relationships. Networking and collaboration opportunities are crucial, serving as the foundation upon which lasting partnerships can be built. Trade missions and expos, for instance, offer invaluable platforms for USVI exporters to showcase their products and services on a global stage, allowing them to connect with potential buyers, distributors, and investors from around the world.
Moreover, with the increasing trend toward globalization and digitalization, USVI has a unique opportunity to leverage technology to boost its international trade potential. E-commerce platforms have made it easier for businesses of all sizes to reach global markets, breaking down traditional barriers such as distance and language. This opens up new possibilities for USVI’s export sector to tap into untapped markets and diversify its trade portfolio.
Additionally, improving port facilities, transportation networks, and telecommunication systems will make it easier for businesses to engage in global trade and attract foreign investment to support economic growth.
If you’re having trouble navigating the complexities of international trade, the US Virgin Islands Economic Development Authority (USVIEDA) is here to provide guidance and support. From networking opportunities to navigating trade missions, we’ve got the resources and expertise you need.
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