Union officials are blasting a rum tax pact the US Virgin Islands has inked with the world's largest alcoholic beverage company as 'un-American' and are asking Washington leaders to block the deal.

The secretary-treasurer of Workers United, a 150,000-member affiliate of the Service Employees International Union, is urging House Speaker Nancy Pelosi to prevent a 30-year deal that would move Diageo PLC's production of Captain Morgan rum from Puerto Rico to St Croix by 2012.

The union leader, Edgar Romney, claims the planned rum distillery in St Croix will slash 350 union jobs in Puerto Rico and potentially impact 5,000 additional jobs. He also said Diageo will be rewarded with an outsize chunk of an obscure rebate against excise taxes for rum produced in the two cash-strapped Caribbean territories.

"We have a chance to save good jobs in Puerto Rico that pay a living wage and offer benefits. The government should stand behind these workers and not contribute to Diageo's attempts to make a profit off the backs of working people," Romney said Friday in an email to The Associated Press.

UK-based Diageo has signed a long-term lease to build a Captain Morgan rum distillery in St Croix in exchange for a share of the territory's excise tax revenue - an estimated $2.7 billion over 30 years.

The Treasury Department sends all but 25 cents of the $13.50 in federal excise taxes levied per proof gallon of rum produced in Puerto Rico and the Virgin Islands to the territorial governments to spend on infrastructure and public services.

Diageo says that without the incentives offered by the Virgin Islands it would have had to source its rum supply outside the US, and Virgin Islands officials accuse Puerto Rico of spreading misinformation to try to block the deal.

Diageo spokeswoman Zsoka McDonald said Friday that the company has an agreement through 2011 with a third-party supplier in Puerto Rico to produce rum for the Captain Morgan brand. After deciding not to continue with supplier Destileria Serralles, Diageo contacted the Virgin Islands' non-voting delegate to Congress, Donna Christensen, to explore building its own facility there.

"We are creating jobs in the US, not eliminating them," McDonald said.

The company plans to start production by 2012 at the St Croix distillery, where it will supply all the rum used to make Captain Morgan products for the US market.

In recent weeks, Christensen and Virgin Islands Governor John P. deJongh Jr met with Pelosi and other US leaders to criticise Puerto Rico's lobbying efforts and explain their economic strategies.

On Friday, the Virgin Islands issued a statement saying Romney's concerns about the immediate elimination of jobs in Puerto Rico are unfounded, and the impact on the island depends on the ability of Serralles to negotiate new supply contracts with other rum makers.

The Department of the Interior's Insular Assistant Secretary Tony Babauta recently praised the Virgin Islands' partnership with Diageo, crediting the territory's political leaders with the "foresight and ingenuity to anchor rum production" in the islands for years to come.

But Puerto Rico's nonvoting delegate to Congress, Pedro Pierluisi, has complained that the Virgin Islands is unfairly using its share of the excise tax to lure Diageo to move rum production out of Puerto Rico.

Pierluisi said he has drafted a bill to set a "reasonable limit" on the tax revenues that Puerto Rico and the Virgin Islands can use to subsidise private rum companies. He has been joined by three other House Democrats of Puerto Rican descent lobbying for a cap.

The deal to rebate federal excise taxes on rum from the US tropical territories dates back to a 1917 act of Congress.

- AP