ST. THOMAS - A new agreement between the Virgin Islands and the federal government will include the territory in the state gross domestic product reports produced by the Bureau of Economic Analysis at the Commerce Department.

The territory's GDP, sometimes referred to locally as the gross territorial product, is the value of goods and services that any economy produces at any given time.

"We look at many different sectors like consumption, imports and exports, taxes, government spending, corporate and personal income levels," V.I. Bureau of Economic Research Director Lauritz Mills said.

Using HOVENSA as an example, Mills said the refinery imports crude oil at a low price and exports refined oil at a higher price.

"The difference is value added, and that is what we count as growth," Mills said.

Mills said for 2007, the gross territorial product was about $4.6 billion. The last few years have shown growth of about 3.2 percent, she said.

Mills currently calculates the gross territorial product every year with the help of the U.S. Census Bureau, but the funding levels are inconsistent, she said.

A decade ago, Mills went to Washington to meet with federal officials and ask why the Virgin Islands is not included in the Commerce Department's GDP reporting. The answer was that it was not mandated by Congress, Mills said.

"We have complained over the years that they do not include us in this reporting," she said.

Wali Osman, an economist with the Office of Insular Affairs, said the agreement was signed in January and work will begin this summer. The first estimates will be produced by the summer of 2010, he said.

The agreement provides $1.6 million for data to be collected and analyzed from all the U.S. territories - the Virgin Islands, American Samoa, the Northern Mariana Islands and Guam - for an 18-month period.

"This work is really critical," Osman said. "The BEA is the authority. They know the methodology."

The bureau calculates and reports the GDP of the 50 states and the District of Columbia, but territories' statistics have never been included in the national figures.

"The absence of this critical information prevents the federal government and the territorial governments from knowing the value of the territorial economic output, how that output evolves over time and how that evolution affects the living standards of our islands," Gov. John deJongh Jr. said in a written statement.

As the federal government's authority on GDP methodology and statistics for the country, the Bureau of Economic Analysis is the final arbiter of macroeconomic accounting, analysis and reporting, deJongh said.

Osman said the Bureau of Economic Analysis will begin with already collected data, going back to 2002, and work up to current figures. The process may take several years to get to the current information.

Aside from collecting and analyzing data from the territories, the agreement provides training of local staff in the methodology used by the Bureau of Economic Analysis so that further down the line, the territories can produce their own data to be included in the quarterly and annual GDP reports.

"We want to get to a point where we really don't need the feds as much," Mills said.

Mills hopes that working with the Bureau of Economic Analysis will open the door to more data collection for the territory. She wants to create a retail sales index to track sales figures for the territory.

Osman shared Mills' vision.

"This is the first, very valuable step," he said. "If this program succeeds, and I hope that it will, it may open other doors."

- Contact reporter Aldeth Lewin at 774-8772 ext. 311 or e-mail alewin@dailynews.vi.