Expanding U.S. Maritime Reach: The Case for a USVI Open Registry

An interesting proposal has been floated by the Massachusetts-based Northeast Maritime Institute Center for Ocean Policy and Economics (COPE) highlighting the need for an expanded role for the United States in international maritime shipping.  Specifically, their “Revitalization Plan for U.S. Maritime Trade, Commerce and Strategic Competition” calls for the creation of a responsibly managed international open vessel registry based in the U.S. Virgin Islands.  This second U.S. registry proposal would allow a United States territory flag to fly on a much larger fleet of vessels engaged in international trade around the world, while allowing for U.S. oversight and environmentally friendly practices to set an example in the often murky world of open registries or “flags of convenience”.  This proposal deserves consideration as a potentially useful tool in the growing competition for maritime dominance with China.  As stated previously in this journal, America’s maritime power depends just as much on its civilian maritime prowess as it does on its military dominance.  Perhaps the creation of a U.S. Virgin Islands registry can expand our economic reach, reform the opaque world of open registries and respect the domestic Jones Act trade currently conducted under the U.S. flag.

While the entire proposal contains several actionable items that merit a closer read, including the construction of an environmentally “green” automated port in the Virgin Islands; the creation of an independent, yet closely overseen, U.S. Virgin Islands ship registry is quite interesting to think about.  The concept of a territorial possession second flag registry is not unique.  The United Kingdom has long had Crown oversight over its so-called “Red Ensign Group”, which maintains separate registries for a long list of UK, Crown Dependency, and UK Overseas Territories – all of which are “British ships” but maintain distinct registrations of merchant ships.  Hong Kong maintains one of the world’s largest ship registries and is separate from the China registry, yet those ships are certainly considered to be Chinese ships by most of the world at this point. 

To be clear, it would be good to see more vessel tonnage register in the United States under the current U.S. flag registry system, but I worry that it may be too naïve to believe that this is possible with current U.S. laws regarding vessel construction, repairs, labor, and regulatory standards.  And while many have argued for systematic reforms to those areas of the law, including the Jones Act itself, it is uncertain that - even if that was a good idea - those legislative and regulatory hurdles could be overcome in the near term. This proposal advocates maintaining the Jones Act in its current form and not disrupting the nature of domestic maritime trade and regulation.  Rather it calls on the United States to compete in the international open registry market in a way that might enhance our domestic trade - boosting the Jones Act’s positive impacts by feeding additional coastwise trade, provide additional maritime capacity in times of conflict, all while encouraging the shipping industry towards more environmentally friendly behavior.

Currently, the top registries of the world are open registries, meaning that any vessel may register there without any substantial ties to that country.  Panama alone registers over 9,500 ships- a staggering number of vessels to maintain oversight and accountability for.  These large open registries are not known for transparency and often inadvertently facilitate illicit maritime activity through a lack of robust due diligence practices.  Under international law, these flag states maintain exclusive jurisdiction over those vessels on the high seas.  Expanding the number of vessels subject to a responsibly governed, transparent U.S. registry would enhance the ability to prevent illicit activity, dangerous environmental practices, and labor abuses.  The old adage: “If you can’t beat’em, join’em” might not be the most accurate argument here, but rather, “If you can’t beat’em, lead’em”.  This proposal seems to acknowledge the limitations of current U.S. maritime policy, while attempting to build a business-friendly, yet accountable and transparent U.S. option in the Virgin Islands.     

There is little doubt that the U.S. lacks the merchant shipping capability to support extended wartime operations.  This expanded pool of U.S. Virgin Island flagged vessels could be called upon to support U.S. Maritime Administration and U.S. Transportation Command sealift programs in times of conflict.  Additionally, this proposal would seem to be well poised to bring economic benefits to the U.S. territory of the Virgin Islands.  The U.S. Virgin Islands are heavily dependent on tourism and recent hurricanes have shown the vulnerability of a non-diversified economy.  This new role as an open international registry for international shipping, alongside other maritime infrastructure developments, may be a long-overdue investment in our fellow citizens in the Caribbean. 

Regardless of the merits of any particular plan, the important thing is to spur engagement from government and industry on this topic.  It will be important for administration officials to consider this proposal carefully and craft a meaningful oversight role for the U.S. Coast Guard and other agencies with maritime governance responsibilities, while keeping this registry competitive and distinct from the U.S. registry.  The time, however, seems ripe for a bold move in our maritime economy, as our current system is ill-equipped to compete with global maritime economic competition.  Supply chain vulnerabilities, increased infrastructure spending, global tax reform, and calls for more transparency in multi-national corporations make this the best time for the United States to take a leadership role in maritime governance again. 

It seems appropriate that the founding father who most championed our merchant marine was a native son of the Virgin Islands.  As Alexander Hamilton reminded us in the Federalist #11, America has an “unequaled spirit of enterprise, which signalizes [sp] the genius of the American merchants and navigators, and which is in itself an inexhaustible mine of national wealth.”  It’s past time to put our genius back to work in revitalizing the maritime economy of this great maritime nation.

Jeremy Greenwood is a Federal Executive Fellow at The Brookings Institution.

 Top image: The U.S. and USVI flags in St. Thomas, 2018 (file image courtesy Lorie Shaull / CC BY 2.0)