Note: Advance written questions by WTO Members and replies provided by the Government of 
Barbados are reproduced in document WT/TPR/M/101/Add.1 and will be available online at:
http://www.wto.org/english/tratop_e/tpr_e/tp_rep_e.htm.WORLD TRADE
ORGANIZATIONWT/TPR/M/101
13 August 2002
(02-4402)
Trade Policy Review Body
9 and 11 July 2002
TRADE POLICY REVIEW
BARBADOS
Minutes of Meeting
Chairperson:  H.E. Ms. Amina Chawahir Mohamed (Kenya)
Page
I. INTRODUCTORY REMARKS BY THE CHAIRPERSON 3II. OPENING STATEMENT BY THE REPRESENTATIVE OF BARBADOS 4III. STATEMENT BY THE DISCUSSANT 7
IV. STATEMENTS BY MEMBERS OF THE TRADE POLICY REVIEW BODY 10
V. REPLIES FROM THE REPRESENTATIVE OF BARBADOS AND
ADDITIONAL COMMENTS 16
VI. CONCLUDING REMARKS BY THE CHAIRPERSON 19WT/TPR/M/101
Page 3
I. INTRODUCTORY REMARKS BY THE CHAIRPERSON
1. The first Trade Policy Review of Barbados was held on 9 and 11 July 2002.  The
Chairperson (H.E. Ms. Amina Chawahir Mohamed) welcomed the delegation of Barbados, headed by
H.E. Ms. Billie Antoinette Miller, Deputy Prime Minister and Minister of Foreign Affairs and Foreign
Trade, and the discussant H.E. Mr. Pekka Huhtaniemi  (Finland).  As usual, the discussant would
speak in his personal capacity and, in accordance with established procedures, he had made available
in advance a broad outline of the themes he intended to raise (document WT/TPR/D/80).
2. The Chairperson recalled the purpose of the Trade Policy Reviews and the main elements of
the procedures of the meeting.  The Report by the Government of Barbados was contained in
document WT/TPR/G/101 and that of the Secret ariat in document WT/TPR/S/101.  Copies of
advance written questions, submitted by Hong Kong, China;  Japan;  Canada;  the European Union;
the United States;  and New Zealand, had been transmitted to the delegation of Barbados.  Thesequestions and the replies provided by the delegation of Barbados are reproduced in
WT/TPR/M/101/Add.1.
3. Both the Government and the Secretariat Reports noted that foreign trade and investment
were of paramount importance to explain Barba dos's high living standards amongst developing
countries over the years.  Barbados's close insertion in the world economy had naturally involvedspecialization which, combined with the small size of its economy, had resulted in a narrow
production base.  The two reports concurred that this had made Barbados vulnerable to external
shocks.
4. Against this background, it did not come as a surprise that in its Government Report,
Barbados had restated its belief that the global trading system had to recognize the vulnerability of
small states, and make adequate provision to avoid their marginalization.  The Secretariat Report
noted that continued government assistance to selected sectors had weighed on the competitiveness ofBarbados's leading services activities.WT/TPR/M/101
Page 4
II. OPENING STATEMENT BY THE REPRESENTATIVE OF BARBADOS
5. The representative of Barbados considered that for a small island developing country like
Barbados, with a very narrow resource base, the pursuit of an effective and dynamic trade policy by
the Government was of critical importance.  All the more so given the constantly changing
international environment.  The peculiar nature of the Barbados economy and the challenges this
posed to its development highlighted the heroic effort that successive governments had made in
providing and maintaining decent standards of living for the people of Barbados.
6. Barbados was one of the small island developing countries in the Caribbean, with a land mass
of approximately 432 square kilometres (166 square miles) and a population of 267,000 souls.
Barbados continued to be one of the most densely populated countries in the world.  In addition,
Barbados had no natural resources, apart from its physical environment and some small deposits of oil
and natural gas that currently satisfied less than a third of its energy requirements.  Barbados's mainasset, therefore, lay in its human capital.  Consequently, Barbados had placed a high priority on the
development of its human resources, and a significant percentage of the Government's annual budget
was devoted to the provision of health, education and social services.
7. Since independence in 1966, successive governments had sought to diversify the productive
base of the economy.  Given the island's soil, topography, and rainfall patterns, sugar produced fromsugar cane had emerged as its most significant agricultural product, both in terms of contribution to
GDP and to foreign exchange earnings.  An import substitution strategy together with fiscal incentives
to industry had enabled rapid growth of the manufacturing sector which, in the 1970s, surpassed the
contribution of sugar to GDP.
8. The exceptional beauty of the island, its climate, social stability, and hospitality services were
mainly responsible for the establishment of a highly developed tourism sector, which was by far the
largest earner of foreign exchange.  Stable economic management had contributed to an attractiveinvestment environment, which, together with tax and investment incentives, had facilitated the
development of an international business sector.
9. Development policies pursued by Barbados, over the years, were considered relatively
successful.  This was evidenced by the achievement of a reasonable per capita income, which caused
international pundits to categorize the Barbados mi cro state as a middle-income developing country.
Barbados had consistently been given a high ranking in the United Nations Human Development
Index (UNHDI).  Its achievements were widely regarded as rooted in its tradition of participatory
parliamentary democracy and social and economic stability.
10. Notwithstanding its progress, Barbados still had many of the classic features of a small
developing economy, which posed a constant challenge to its stability.  First, Barbados was an openeconomy.  Its high dependence on imports, and its need to export goods and services to finance its
development readily confirmed this.  As a result, Barbados was susceptible to the vagaries of the
international economic environment, including the changing fortunes of its major trading partners.
11. Second, the Barbados economy was highly dependent on a very limited number of sectors.
For example, the tourism sector currently earned three times the foreign exchange that agriculture andindustry earned together.  In addition, agricultural and industrial firms were small, with a small
production, and were unable to benefit from economies of scale.  As a result, Barbados's exports were
comparatively uncompetitive.WT/TPR/M/101
Page 5
12. Third, the narrow production base severely limited reemployment opportunities during
periods of economic downturn.  This could impact very quickly and severely on Barbados's 83,000households.
13. Furthermore, there was high susceptibility to natural disasters and environmental damage, and
the spectre of sea-level rise as a consequence of climate change.  Given its geographical location,
Barbados was threatened yearly by adverse climatic conditions, such as hurricanes and floods on the
one hand, and droughts on the other.  The high a nnual influx of tourists almost doubled Barbados's
population, placing pressure on its delicate ecosystem.
14. Barbados recognized the potential benefits of trade liberalization and globalization, while
being cognizant of the limitations and challenges  of a small economy seeking to capitalize on the
opportunities presented by globalization.  Barbados strongly believed that the emerging global trade
and economic architecture had to recognize small economies' vulnerability, and make adequateprovision to avoid their marginalization.  It was incumbent on Members to ensure that concrete
measures were put in place to assist these countries in increasing their share of world trade from the
present level of 0.00%.
15. In the early 1990s, Barbados experienced one of its most serious economic crises ever, which
severely impacted on its productive sectors, leading to exceedingly high unemployment rates and adepletion of its foreign reserves.  The Government had sought IMF assistance in 1992.  The agreed
package included measures on trade reform, a restructuring of the taxation system, and a
rationalization and streamlining of public sector spending, including, inter alia , an 8% reduction in
public sector salaries and wages for an eighteen-month period.
16. In 1994, as part of its economic reform programme, Barbados had initiated a process of trade
liberalization, through the removal of import restrictions on a number of competing manufactured
goods, including those in the traditional areas of garments and furniture.  This process had beencompleted by April 2000.  The only remaining restrictions were for  health and safety reasons or to
protect public moral.  At a later stage, the Government had instituted a public sector reform
programme to make it more efficient and cost effective.  A value- added tax (VAT) of 15% had been
introduced in 1997, replacing a number of existing taxes that, to some observers, could have been
deemed protective.
17. In 1993, a National Productivity Board was set up to implement productivity enhancement
programmes, and to monitor levels of productivity in both the public and private sectors.  In the same
year, the Government had succeeded in effecting, with social partners, the first Prices and Incomes
Protocol;  though limited in scope, this had paved the way for subsequent protocols, whose
implementation had facilitated the achievement of the needed economic reforms.
18. Barbados's social partnership, on which these protocols were founded, was a unique
consultative process among the Government, private sector, and trade unions, chaired by the
Prime Minister.  All major government policy a nd draft legislation was put before the social
partnership for consideration.  Thus far, the social partnership had had the salutary effect of
minimizing confrontation.  The International Labour Organisation proposed to use Barbados as amodel for other countries.
19. Barbados fully recognized that it had to operate in and adjust to the rapidly changing global
environment in which it needed to survive.  Give n the country’s narrow resource base and its small
size, the Government was hard-pressed to find viable alternative economic activities to agriculture
and manufacturing, where Barbados found it extremely difficult to compete.  While accepting thatthese sectors had to be managed so as to allow its integration into the global economy,  BarbadosWT/TPR/M/101
Page 6
believed that the timing and phasing of trade liberalization would be critical to their long-term
survival.  The WTO had a duty in ensuring that co untries like Barbados were not marginalized or,
indeed, overwhelmed in the turbulence of globalization and liberalization.
20. The question of special and differential treatment for small economies like Barbados was of
urgent and immediate relevance.  The Doha Ministerial Decision to set up a work programme on the
treatment of the small economies within the mult ilateral trade context was, therefore, greatly
welcomed.  Effective participation of these countries in the multilateral trading system should be apriority concern of the WTO.
21. Countries with a share of trade as small as 0.00%, should be allowed to maintain incentive
schemes to promote their domestic production and exports, and to continue to benefit from
preferential or alternative trading arrangements to achieve their economic development goals.  Such a
miniscule percentage of trade could not possibly distort global trade.
22. The special and differential treatment that Barbados considered should be granted to small
developing economies had to help them to acquire the capacity to participate effectively in, and derive
maximum benefits from, the multilateral trading system.  Consequently, Barbados believed that such
treatment should include:  (i) permitting these states  the necessary flexibility to assist businesses and
sectors, especially those deemed strategically critical to their development, and which faceddifficulties as a result of trade liberalization;  (ii) granting adequate transitional periods for the
commencement of the liberalization process, and for the implementation of complex arrangements;
(iii) allowing for adequate thresholds before action could be taken against the products of small
suppliers;  (iv) providing technical and other assistance to enable these countries to overcome their
basic constraints.
23. The Government of Barbados was committed to trade liberalization, as clearly demonstrated
by the reforms undertaken since 1993.  It was also keenly aware that liberalization would create newand significant challenges, given the country's size and the fragile nature of its economy.  While it
would continue to face up to these challenges, Barbados believed that the onus was on the WTO to
allow it to participate with confidence in the multil ateral trading system, so that it might provide and
maintain the quality of life to which its people aspired.  In the WTO it was often said that, as
Members sought to restructure the global economy,  there would be winners and losers.  Barbados
wished to be a winner.
24. The representative indicated that her delegation had provided a number of updates to the
Secretariat Report.WT/TPR/M/101
Page 7
III. STATEMENT BY THE DISCUSSANT
(i) General points
25. The discussant (H.E. Mr. Pekka Huhtaniemi) was convinced that Barbados was a truly
interesting case, from which Members could learn important lessons, through full use of the TPR
instrument.  TPRs were useful and interesting, and particularly enlightening if they disclosed facts and
trends that illustrated more generic issues, thus serving as examples for a broader audience.  Several
aspects of the Barbados case could serve that purpose.
26. First, Barbados had showed that government, and government policies mattered crucially.  A
democratic system provided social stability, and investment in human development contributed to a
political culture propitious to good practices and sound policies, in other words, to good governance.
Trade policy formulation in Barbados appeared to have benefited from its stable overall policy
environment.
27. Second, Barbados showed that WTO rules, rights, and obligations could be used in a flexible
manner, and that these rules had not prevented Barbados from carrying out policies considered
essential to safeguard its key economic interests.  Furthermore, the WTO could be an instrument of
development, if the country concerned knew how to approach and use it.
28. Third, Barbados demonstrated that even a very small country with a surface of 1% of
Switzerland's, and a population half that of the Canton and Republic of Geneva, could, by working
diligently and in a focused manner, impact on the international community agenda within a
multilateral institution like the WTO.  When it spoke, all Members listened, as they knew that they
would hear a considered, constructive view, pr oviding important information about not only
Barbados's concerns but also of small countries facing similar challenges.
29. The multilateral system could provide, even to its smallest participants, amazing opportunities
for influence.  However, to reach necessary visibility and impact, it was necessary to be present, workhard, and know how to articulate broader interests rather than one's own narrow national aspirations.
In this sense, Barbados had given benchmark performances in the WTO.
(ii) Economic policies and issues
30. Barbados had been an economic success story over  most of the past few decades:  a GDP per
capita close to US$10,000, an adult literacy rate of 97 %, an average life expectancy of 77 years, andits rank of 31st in the UNHDI.
31. He agreed that the economy of Barbados was vulnerable to external shocks.  Serious
recessions had hit the island in the early 1990s and in 2001.  The shock-waves of 11 September 2001
were quickly felt in Barbados:  real value-added in tourism had declined by an estimated 6% in 2001,
and the whole economy had contracted by 2.8% in real terms.  Fortunately, Barbados tourismbusiness did not depend solely on air traffic;  if that had been the case, figures would probably have
been worse.
32. Barbados had based its economy increasingly on tourism and financial services, more
precisely, on world-class services.  The results had been encouraging.  One of Barbados's trade policy
objectives had been to protect a small number of domestic activities, of which food production wasthe most obvious.  The GATT and the WTO had clearly not been obstacles to these choices.
However, a question that could be asked was whether import substitution had always been
economically sensible or justified.WT/TPR/M/101
Page 8
33. When a country opened its markets to foreign investors, whether providing services or
manufacturing goods, investor confidence became crucial.  Barbados had clearly recognized this factby conducting sound monetary policies, underpinned by a fixed exchange rate vis-a-vis  the
U.S. dollar, and by keeping inflation successfully low.  Being so closely linked to the U.S. dollar had
been a source of stability, but it could also take Barbados on a roller-coaster if the dollar became
erratic.  A fall of the dollar could have both positive and negative consequences for Barbados.
(iii) Trade policies, including sectoral issues34. The Government considered that trade openness, as a general rule, was crucial to overcome
constraints arising from the island's small size, its weak capacity to diversify risks, and limited
institutional resources.  Most domestic consumption was met by imports, which explained recent
efforts by Barbados to liberalize and simplify its import regime.  However, bound tariff rates were
high and did not enhance predictability.  Agricultural products were bound at 100% at least;manufactured products were bound at 70% at least.  Specific commitments under the GATS covered
only a few subsectors.  Barbados had made new commitments in the negotiations on
telecommunications, but not on financial services.
35. Border protection had diminished, but remained significant.  The average MFN applied tariff
rate was 16.5 %, but much higher tariffs, coupled with import licensing in some cases, protected thefew areas where there was domestic production, notably in agriculture.  Domestic manufacturers
imported most of their inputs duty free, under an array of waivers or exemptions, which added to
effective protection.  He asked whether barriers on food imports might have impacted negatively on
the international competitiveness of tourist catering and other related activities.  The discussant also
noted that total taxes levied on imports amounted to 22 % of tax revenue, a high figure.
36. Among the border measures, licensing had been used as an instrument for protection.  Import
licences covered about 60 products, mainly food items, and could be made automatic ornon-automatic by administrative decision.  Non-automatic licensing seemed to have been the most
effective means to curb imports of certain agricultural products.  Open, public information did not
seem to be available on applications for licences or quota allocation.  Better transparency would be
welcome.  Barbados seemed to be in the proces s of complementing or replacing its non-automatic
system of import licensing with a safeguard legislation.  He sought further information on thislegislation.
37. He noted that certain SPS measures applied by Barbados appeared unduly restrictive.  For
example, Barbados maintained a positive list of only a few sources of permitted imports of fresh meat.
It seemed that a change of law was required to add new countries to the list.  This sounded
cumbersome.  He asked whether Barbados considered that this system was in the broader interest ofits economy.
38. Barbados's exports benefited from a multifaceted system of preferences.  Under these
preferences it had managed to export merchandise such as sugar, rum, and crude petroleum, which,
under other circumstances, might not have been competitive enough to penetrate external markets.
On the other hand, preferential access to the EU sugar market had not prevented the decline ofBarbados's sugar industry, which had suffered from high costs.  Another problem was that as a small
country, Barbados could not exploit economies of scale.  Barbados exports, he said, did not survive
only through preferences granted by others:  Barbados promoted them via a panoply of measures,
including duty consessions, tax concessions, and financial assistance, several of which had been
notified to the WTO as export subsidies.  Large segments of domestic production of goods andservices benefited from tax breaks or other assistance.  The Government was thus involved inWT/TPR/M/101
Page 9
managing, and even micro-managing, the Barbados economy through numerous incentives.  No
assessments were available of their propitiousness in global cost/benefit terms.
39. Barbados's fiscal policies encouraged certain services that catered exclusively to foreign
consumers, and had fostered the establishment of offshore banks, exempt insurance companies, and
susidiaries of multinational companies.  The reasons that had led Barbados to promote an international
economy of this type were understandable, and this strategy had brought a lot of wealth, know-how,
and jobs.  However, a vibrant, lucrative offshore economy might also attract economic operators withhazy motives, and certain frictions had also arisen with other governments as the volume of these
international activities had increased.  The Secretariat Report described the troubles Barbados had
faced in this area with some of its OECD partners .  However, Barbados had clearly sought to respond
to their misgivings.  Legislation and controls had been strengthened, and this potentially damaging
issue now seemed to have been diffused.
40. Competition policy issues were also a matter of concern.  Foreign suppliers were barred from
certain retail activities.  Telecommunications were under a private, foreign-owned monopoly,
although competition was being introduced progressively.  Domestic insurance services and legal
services were protected from foreign competition by local purchase obligations and qualification
requirements.  Absence of full competition had resulted in high levels of concentration and highprices, which, in turn, had made it necessary to impose price controls on a number of goods and
services to limit abuse of market power.  Little information seemed to be available on government
procurement.  He asked about Barbados's intentions regarding competition policy, and whether more
transparency would be introduced in government procurement.WT/TPR/M/101
Page 10
IV. STATEMENTS BY MEMBERS OF THE TRADE POLICY REVIEW BODY
41. Members welcomed the delegation of Barbados, headed by Ms. Billie Antoinette Miller,
Deputy Prime Minister and Minister of Foreign Affairs and Foreign Trade, and thanked her for the
comprehensive introductory remarks on the Barbados economy.  Some Members noted that they had
submitted questions in writing and looked forward to Barbados's replies.
42. The representative of Hong Kong, China commended efforts by Barbados over recent years to
liberalize and simplify its import regime, despite its difficulties as a small economy.  A simplified
tariff and tax structure, and a transparent import regime were trade-facilitating and conducive to
foreign investment.  However, for non-agricultural products, about 27% of tariff lines exceeded 15%,
and maximum rates reached or exceeded 60%.  Barbados was encouraged to participate actively in the
new round of non-agricultural market access negotiations to further reduce or eliminate tariffs on
those products.  She noted that Barbados's import guidelines were available on the Internet andcustoms documents were processed electronically.  However, there had been no publication of
information on quota allocation or licence applications.  She encouraged Barbados to publish
sufficient information to further enhance the transparency of its import regime, thus facilitating trade.
43. The representative of Japan noted that trade and economic reforms since 1992 had led to a
good economic performance between 1993 and 2000.  The Barbados economy remained, however,
vulnerable to external shocks;  its GDP had declined in 2001 due to deceleration of the world
economy.  Japan believed that further economic reform would contribute to the recovery and
stabilization of Barbados's economy.
44. In January 1991, the Single Market and Economy (CSME) project had been launched among
CARICOM partners, and in 2001, the Prime Minister of Barbados had urged its rapid implementation.
She sought an explanation of the benefits and any predicted negative impacts, that could derive from
the CSME, as well as of measures foreseen by Barabados to overcome possible negative impacts.  Shealso asked how Barbados saw the role of th e CSME after the establishment of the FTAA.
45. Although Barbados had not included tourism in its GATS Schedule of Commitments, market
access conditions were relatively liberal for foreign suppliers wishing to establish a commercial
presence in Barbados.  The representative asked whether, and to what extent, Barbados intended to
make commitments in this sector.  She also asked whether there were any exceptions to nationaltreatment, noting that business licences for travel agents and tour operators were reserved, in priority,
to residents.
46. The representative of Canada said that his country appreciated the importance placed by
Barbados, an original Member of the WTO, in the multilateral trading system, and was pleased that
Barbados had set-up a permanent mission in Geneva.  He recognized the challenges faced by smalleconomies like Barbados in benefiting fully from trade liberalization and globalization, and
encouraged its efforts to expand its trade beyond tourism and financial services.
47. Canada welcomed the removal of licensing restrictions on most of Barbados's imports.  It
appreciated the replacement of multiple taxes and levies by the VAT, which might result in lower
prices for imported goods.  Canada encouraged further telecommunications liberalization, throughenactment of the Telecommunications Act.  The two countries cooperated in many areas, including a
foreign investment protection agreement, and a double taxation agreement, currently being
renegotiated.  Barbados had transparent tax and regulatory systems, as well as a mechanism enabling
it to engage in effective information exchange.WT/TPR/M/101
Page 11
48. Barbados had the fiduciary responsibility for the Caribbean Regional Negotiation Machinery
(CRNM), which developed and coordinated trade pol icy for CARICOM members.  He hoped that this
project would achieve its expected results.  Th e Caribbean Policy Development Center, based in
Barbados, had received funding to undertake an  extensive advocacy campaign of NGO groups across
the Caribbean.  This was one of the attempts to reach ordinary citizens and to engage in a dialogue on
the impact of trade liberalization on their lives.
49. Many Caribbean countries looked to Barbados to  provide leadership in the area of special and
differential (S&D) treatment for small economies.  S&D treatment was a very complex issue
involving Members' rights and obligations.  Granting S&D treatment to one country, or a group of
countries must not adversely affect other developing-country Members, and principles and objectives
of S&D treatment needed to be clarified and agreed to by Members.
50. The representative of the European Union noted that despite the small size of its economy,
Barbados had managed to deal well with the impact s of the transition to new global requirements, and
to maintain living standards well above those of most  developing countries.  Its high living standards
were to a large extent due to Barbados's intensive participation in international trade.  These
achievements remained fragile, however, due to the i nherent vulnerability of small island states with a
narrow production base.  He encouraged Barbados to continue its efforts to stabilize its economy,reduce its high unemployment rate, further encourage foreign direct investment, and privatize
remaining state-owned enterprises.
51. Barbados was one of the 15 signatories in the Caribbean region to the Cotonou Agreement,
signed in June 2000 for a period of 20 years, and granting duty- and quota-free access for
manufactured goods to the EU.  The European market accounted for approximately 20% of
Barbados's imports, and for 15% of its exports.  In the EU, the annual quota of over 50,000 tonnes
under the Sugar Protocol had traditionally provided the largest and most lucrative market forBarbados exports.  The Cotonou Agreement set out basic principles for negotiating Economic
Partnership Agreements (EPAs), intended to enhance the contribution of trade to development.  EPAs
would be negotiated with ACP regions engaged in an economic integration process, and were
intended to facilitate the transition towards full pa rticipation in a liberalizing world economy, thereby
complementing any multilateral initiative.
52. Barbados's strategic location on the main trad ing routes in the Western Hemisphere, meant
good perspectives for a successful interaction with the world economy.  He agreed, however, that the
integration of small developing economies into the world economy was not easy.  Further efforts were
to be made to help Barbados survive successfully in the global economic environment, taking into
account its special characteristics.  The EU apprecia ted Barbados's commitment to the WTO, and the
importance it attached to an open market policy, aimed at deeper trade liberalization.  Small-size and
international-trade-dependent island economies like Barbados could only benefit from a multilateral
trading system with predictable, tr ansparent, and fair rules.  He hoped to see Barbados taking a pro-
active and constructive approach in the new round.
53. He sought clarification on measures taken by the Government and/or the private sector, to
tackle the economy's high production costs.  He th en asked how Barbados's licensing requirements
and tariff increases corresponded to measures agreed  within CARICOM, to tariff bindings agreed by
Barbados in the WTO, to its liberalization commitm ents taken in Doha, and to the spirit of the
Cotonou agreement.  He encouraged Barbados to participate actively in the Doha Development
Agenda negotiations, particularly in the field of services.  Progressive liberalization of services wasbeneficial to all Members, including developing and least developed countries.  Liberalization of trade
in services, in particular infrastructure-related services, allowed better access to high-quality services,WT/TPR/M/101
Page 12
which benefited the whole economy by increasing productivity in all sectors.  Finally, he sought
Barbados's views on the interface between its regional efforts and the WTO.
54. The representative of the United States considered that the Government of Barbados deserved
considerable credit for policies that had, over time, produced respectable economic growth, moderate
inflation, and low unemployment.
55. She noted the relatively high levels of both applied and bound tariffs in Barbados, and asked
whether changes in legislation and practice were being contemplated to reduce the level ofdependence on border taxation as a source of government revenue.  High tariffs and taxes in the food
and agricultural sector might not complement efforts to stimulate growth in services, and  may
negatively affect consumers, particularly those whose food costs were a substantial proportion of total
expenditures.  The extremely high bound tariff on motor vehicles was difficult to understand.  The
United States also sought clarification on the status of Barbados's non-automatic import licensingregime and on whether the system had reverted back to automatic licensing.  She was pleased to note
that Barbados had supplied its 2001 applied tariff rates to the WTO, and encouraged other CARICOM
members to do the same.  Up-to-date tariff and trade data would be critical to better understand
Barbados tariff structure in the context of the negotiations in agricultural and non-agricultural market
access.  She also commended Barbados's active and productive engagement in the WTO, and inregional trade liberalization initiatives.  Barbados's success in the tourism sector was a proof that it
could compete with impressive results.  As Members moved forward with the DDA, the United States
hoped that Barbados would actively seek opportunities to further open its economy to enhance the
livelihood of its people.
56. The representative of Mauritius shared the discussant's view on the importance of TPRs for
the WTO system.  Mauritius and Barbados were both welfare states, providing free health and
education services, with human resources as their main asset, and social services to be catered for inthe annual budget.  Both countries had developed their local manufacturing sectors, were members of
the ACP group, and parties to the Cotonou Agreem ent.  They were net-food-importing developing
countries, grew sugar cane, produced rum, and had picturesque sea shores.  This had prompted some
people in the WTO to say that small was beautiful, forgetting that sometimes small could also be very
painful.
57. To achieve a high standard of living in an island with an open economy was not an ordinary
achievement.  Mauritius congratulated Barbados for its hard work, but also stressed its vulnerability.
58. The tourism industry, Barbados's main economic sector, was particularly fragile, at the mercy
of adverse climatic conditions;  hurricanes and droughts could severely upset its economic balance.
The events of 11 September 2001 had resulted in a decline in tourists arrivals from the United States.A drop in income per capita could have a domino effect on almost all sectors from health and
education, to transport and other basic services, which, in turn, could upset political and social
stability.  Mauritius was satisfied to see that, to some extent, Barbados's plans had worked out:
international business and financial services had been developed;  so had local manufacturing sectors;
diversification had taken place in agriculture with the introduction of sea island cotton, black bellysheep, and cut flowers;  and sugar cane production was being rationalized.
59. He joined previous speakers in stressing that small economies' concerns needed to be
addressed to enable them to participate effectively in the multilateral trading system.  They still had
unique problems, including an insignificant trade share in the multilateral trading system, a limited
availability of exploitable land, physical isolation, and remoteness from main markets, which madethem vulnerable.  Thus, it was important to support Barbados in its efforts to diversify its economic
base.WT/TPR/M/101
Page 13
60. The representative of India acknowledged Barbados's strong economic performance, and
noted that Barbados had recorded eight consecutive years of GDP growth at an annual average of 3%
in real terms.  Economic growth had also translat ed into a large reduction of the unemployment rate.
It was praiseworthy that Barbados's literacy rate was among the highest in the world, and that public
health was free for all.  India also commended Barb ados's resolute commitment to fully abide by its
WTO obligations, as witnessed by the amendments to customs valuation and intellectual property
legislation.
61. The representative of Kenya noted that Barbados's open foreign trade and investment policies
had maintained living standards well above those of most developing countries.  Barbados's economic
slowdown in 2001 was to be expected given Barbados's openess and vulnerability to international
economic developments.  Kenya shared Barbados's views that the new emerging global trade and
economic architecture had to recognize the vulnerability of small states and take necessary measuresto avoid their marginalization.
62. He also complimented Barbados on its sectoral initiatives intended to foster growth and
development, and overcome some of its constraints as a small developing economy.  These initiatives
should be supported by the international community to ensure sustained economic growth.  The
highly uncompetitive production environment was a major constraint to Barbados economic growth;for instance, the manufacturing sector was characterized by high production costs, relatively high
excess capacity, obsolete technology, and limited access to financing.  Multilateral initiatives,
including identification and implementation of measures to increase the flow of technology to
developing countries would go a long way in addressing some of these difficulties.
63. The agriculture sector was severely affected by natural hazards and high costs of production;
this had had a negative impact on food security.  He considered that non-trade concerns and S&D
treatment for developing countries needed to be addressed in the current negotiations on agriculture.He took note of Barbados's efforts in introducing WTO-compatible legislation, and called for
enhanced technical assistance.
64. The representative of Jamaica considered this Review to be important as was the case of
others.  It enabled Members to gain an appreciation of the problems and concerns of small economies
as they sought to adapt to an evolving and increasingly competitive multilateral trading system.  Henoted that the Barbadian Government had been undertaking measures to offset the negative impact of
recessions in major developed countries in the early 1980s, 1990s, and in 2001, and to facilitate
adjustment in key sectors, including tourism and financial services, manufacturing and agriculture.
65. At the regional level, Barbados had a leading responsibility in ensuring the implementation of
the CSME, which would create a single economic space among CARICOM members.  He considered
that the set-up of the CSME was of particular im portance to CARICOM members as it would provide
a platform to achieve the level of competitiveness ne eded to survive in a changing multilateral trading
system, to facilitate the development of economies of scale, and to encourage sectoral linkages.  The
CSME, once fully established, would serve as a vehicle to address some of the constraints of its small
size member economies.
66. The representative of Trinidad and Tobago considered this Review of Barbados particularly
timely and useful within the context of the ongoing discussions and deliberations on the DDA, the
special needs of small economies, their place in the global trading system, and their challenges.  She
stressed the space and special and differential treatment that should be accorded to enable them to
participate effectively in, and draw benefits from, the world trading system.  Judicious liberalizationand/or protection of certain sectors, continued access to unilateral trade preferences, maintenance ofWT/TPR/M/101
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fiscal incentives and advantages to encourage the establishment and development of companies and
businesses needed to be maintained to ensure a sustainable development of  these countries.
67. She noted that changes in real GDP were closely associated with variations in tourist arrivals,
pointing to an economy highly exposed to a narrow range of external factors over which policy
makers had little, or no, control.  Unemployment remained a main economic challenge, especially in
today's world where migration wa s a rapidly disappearing option.
68. Barbados had recognized that most of its domestic needs were met by imports but, quite
rightly, had sought to protect a small number of domestic industries, mostly in food production.
While some Members might criticize Barbados for its protectionist policies, Barbados had clearly
demonstrated that, with the right mix of trade and socio-economic policies, and adequate space to
pursue such policies, small economies and small island developing economies could aspire to achieve
and sustain an enviable level of socioeconomic development.  As a fellow CARICOM, developing
small economy, Trinidad and Tobago congratulate d Barbados for its achievements, resulting from
well thought-out socio-economic policies, and implementation of trade and investment strategies,
within a stable policy and political environment.
69. The representative of Malaysia noted Barbados's good economic performance, which had
resulted in higher living standards than many developing countries.  Barbados had a well-developed
services sector focusing on financial, construction, and tourism services.  Thus, it broke the pattern of
reliance mainly on commodity exports, and was more resilient and able to withstand  vagaries of
commodity fluctuations.  Barbados had the advantage of its location, close to its major markets in the
United States and Europe, and enjoyed trade preferences granted by its major trading partners.  With
its pragmatic investment and industrial policies, Barbados was well positioned to further develop its
agro-industries and other manufacturing industries.  Its CARICOM membership, together with trade
preferences by the United States and Europe, should provide Barbados with a strong incentive todevelop its manufacturing to complement the better-developed services sector.  Malaysia recognized
the challenges faced by Barbados as a small market, with high costs of production.  She hoped that
Barbados could tap the synergies between its CARI COM membership and a bigger regional market to
enhance the development of its agriculture and manufacturing industries.
70. The representative of Cuba joined previous speakers in highlighting the needs of small
developing countries in the WTO.  The Government Report reflected efforts made by a small
Caribbean island developing country, a net-food-importing developing country, lacking natural
resources, and vulnerable to external shocks, and to natural disasters.  Barbados's TPR was taking
place at a very important time, within the scope of the ongoing discussions on the DDA, and in
particular those on S&D treatment, and on small economies.  Cuba, as a small island developingcountry dependent on primary commodities, understood Barbados efforts.  She pointed to the
deterioration of primary commodities prices, and of sugar cane, Barbados's main agricultural product.
As a result, Barbados had had to make major efforts to ensure the living standards of it people over
the past years.
71. She praised Barbados's efforts in guaranteeing free health care, and in raising literacy rates.
She called for effective and rapid support by Members for Barbados's requests (spelled out in the
Government Report, para. 79).  These measures would, in her view, provide these countries with
enough flexibility to assist enterprises that played a strategic role in their economic development, and
which faced difficulties resulting from trade liberalization.
72. The representative of Brazil noted that despite its vulnerability to external shocks as a small
economy, Barbados had been improving its overall economic situation over the last years.
Implementation of an open trade and investment regime, as well as sound macroeconomicWT/TPR/M/101
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fundamentals, had been instrumental not only in helping Barbados to overcome difficulties associated
with external factors, but also in achieving higher  living standards.  These efforts would have been
hampered in the absence of Barbados's historical record of political stability.  Brazil encouraged
Barbados to pursue further liberalization of its trade and investment regimes, and, in particular, of its
tariff structure.  Brazil appreciated Barbados's  active and constructive participation in the WTO.
73. The representative of Switzerland found that Barbados's economic policy had drawn
inspiration from the WTO spirit, whereby an open economic policy, supported by a stable and
predictable legal basis, contributed to growth and development.  Barbados had used its trade and
investment regime as a catalyst for its modernization and growth, notably in the areas of tourism and
financial services.  This had reflected directly in socioeconomic indicators, including per capita
income, spread of literacy, and life expectancy.  Economic growth over the last decade had allowed a
fall in unemployment of 50%.  Barbados's exports depended mainly on tourism and financial services.Its high degree of specialization made Barbados vulnerable to international fluctuations.
74. He remarked upon the considerable gap between average bound customs duties and average
MFN applied rates, which led to uncertainty and  unpredictability of trade conditions.  He also noted
that trade in services had played a key role in Barbados's long-term economic results.  Despite the
recent economic slowdown, Barbados was well equipped to conclude the reforms necessary tostrengthen its competitive position on the international scene.  Switzerland welcomed Barbados active
participation in the WTO, and in the negotiations launched at the Doha Ministerial Conference.WT/TPR/M/101
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V. REPLIES FROM THE REPRESENTATIVE OF BARBADOS AND ADDITIONAL
COMMENTS
75. The Chairperson invited the representative of Barbados to focus her responses on three main
themes:  (i) economic environment;  (ii) trade policies and measures;  and (iii) sectoral policies and
measures.
(i) Economic environment
76. The representative of Barbados stated that discussions had confirmed the difficulties that a
small economy hers faced in seeking to integrate into the newly emerging global economic system,
and the need to even more closely manage its economic development process.  In doing so, it was
sometimes necessary to take measures that might be deemed by the international community to be
incompatible with the multilateral trading system.  This Review had highlighted certain areas in which
Barbados was seemingly out of step, but the reality was that because of its small size, lack ofeconomic power, and limited range of policy options, it was forced to struggle for its survival.
77. In this highly constrained situation, Barbados had sought within CARICOM to strengthen its
capacity to interface with the rest of the world, and to facilitate its integration into the new
international economic order.  To some, this proce ss might appear to be somewhat slow, to others it
might seem superfluous in view of changes taking place in the world economy.  Barbados believedthat this strategy would afford it time to build on its regional capacity, and give it greater confidence
to engage its partners.  Time was not on its side.  Negotiations were under way in the WTO, and
might well lead to additional obligations;  the FTAA was evolving and the ACP/EU New Partnership
agreement was imminent.  Given these realities, these challenges meant that invariably Barbados was
forced to deploy its limited resources in ways that would undermine its potential to negotiate
effectively.  It was, thus, incumbent on the internat ional community to assist Barbados in confronting
these challenges.  The Government did not wish to be presented with impossible hurdles as a rewardfor having been relatively successful in overcoming past hurdles and balancing difficult and
competing objectives.  The experience of past efforts allowed Barbados to recognize the need for
special and differential treatment in the present circumstances.
78. Barbados was a small economy with circumscribed choices.  It was, therefore, expected to run
government deficits from time to time.  Barbados  recognized that in an environment of global
economic downturn, it would be a challenge to cont ain its fiscal deficit.  The Government would be
called upon to take up some of the slack created by the slowdown in private sector activity.  Its record
showed that Barbados had been successful in k eeping such deficits within manageable limits.
(ii) Trade policies and measures
79. The nature of Barbados trade and trade-related policies would necessarily be a reflection of its
peculiar economic circumstances.  The setting of adequate tariff levels, which might appear to be
high, must be viewed, inter alia,  in the context of diseconomies of scale, and resulting high unit costs.
For the country to survive, a measure of insulation was needed for its fledgling industries.  It was the
Government’s responsibility to ensure that an appropriate balance was struck between competing
interests within the Barbados economy.  The record showed that since the early 90s, Barbados hadembarked on a deliberate programme of trade liberalization, but it was occasionally distracted by
external developments over which it had little or no control.  Only recently, Barbados had had to
interrupt its programme to deal with the devastating effects of 11 September 2001.  This forced it to
introduce its National Emergency Economic and Fi nancial Programme, which had now been brought
to an end.  Further, its inability to move at a faster pace explained, in part, why Barbados had not beenable to fully meet all its WTO obligations.  A case in point was the re-drafting of its anti-dumping andWT/TPR/M/101
Page 17
subsidies legislation.  Barbados welcomed the WTO Secretariat's acceptance of its request to provide
technical assistance in this area.
(iii) Sectoral policies
80. The viability of Barbados's economy relied on the positive performance of agriculture,
manufacturing, tourism, and other services.  The Government had always sought to introduce policies
that would stimulate these sectors.  Barbados imported over 70% of food consumed domestically.
Food security was therefore of paramount concern.  The agriculture sector was small, but critical tothe stability and viability of the Barbados economy, in respect of employment and foreign exchange
earnings.  Tariffs remained the principal legitimate tool to avert the destruction of the agriculture
sector.  Barbados did not have the array of tools available to its developed partners.
81. It was the Government’s responsibility to ensure that an appropriate balance was struck
between competing interests within the economy.  Such  trade-offs were evident in its policies for the
agriculture and tourism sectors.  The Government was acutely aware of the potential impact of its
trade policies on the tourism sector, the major sector of its economy.  Barbados had taken, and would
take, measures as it deemed necessary to mitigate any possible negative effects.
82. The discussant agreed that regional cooperation was a useful tool for small economies with
similar economic interests.  The Caribbean was an example of value-added regionalism and showed
that when conducted in harmony with multilateral efforts regionalism was a win-win situation.
83. He welcomed indications that Barbados was wi lling to consider new commitments in services
in the framework of the ongoing DDA negotiations.  He also welcomed Barbados's pledge to provide
further information, more transparency, and notifications on a number of issues, in the area of import
licensing.  He noted with satisfaction that the National Emergency Economic and Financial
Programme had been brought to an end, and that import licencing was no longer used for protective
purposes.  He asked Barbados to identify its trade-related technical assistance needs, including indrafting legislation.
84. The representative of the United States agreed that Barbados, as a small vulnerable island
nation, had to be treated in a way that would not undermine its development goals.  The United States
acknowledged that it was the responsibility of the Government of Barbados to use all the instruments
at its disposal to maximize the welfare of its people.  However, on average over the last twenty years,the Barbados economy had been growing at just over 1% annually.  For most countries, a 1% real
economic growth would translate into stagnant or pe rhaps even declining per capita growth rates.  It
also meant that average labour productivity had declined over the last twenty years.  In this context,
he asked whether the protection of agriculture, industry, and certain services, with the admirable goal
of protecting or enhancing employment had prevented the redeployment of resources that would havetaken place in a competitive economy, thus resulting in low growth rate.  If labour productivity stayed
low over time, the fundamentals of the Barbadian society could come under pressure.  He asked
Barbados about the appropriateness of insulating itself from adjustment.
85. The representative of the Saint Lucia invited Members to reflect upon Barbados's extremely
small size, and on the impact of the WTO rules on such a small economy.  WTO rules impacted upon
every inch of Barbados's territory.  Barbados could not rely on a large domestic market to insulate
itself from external developments.  It was, in her view, inequitable to place the same terms and
conditions on Members that, because of their level of development, were not in a position to derive
equal benefits from the system.  When reflecting upon the impact of WTO rules on Barbados, and
discussing vulnerability, restrictive measures at the border, and insulating, Members had to keep inmind Barbados size and population.  In this respect, she recalled that tourists inflows had almostWT/TPR/M/101
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doubled Barbados's population, thus putting pressure on its delicate eco-system.  While Barbados had
been spared by natural disasters, including hurricanes, this was not enough to explain its success:sound social and economic policies were also a factor.  While congratulating Barbados for its
achievements, she stressed that it remained vulnerable.
86. The discussant asked whether, although the WTO allowed that choice, the decision to insulate
itself from the vagaries of the external world was the wisest economic policy choice.  In the WTO,
Members were used to negotiating on how to brin g down one's insulation, and offered steps, in the
form of concessions, to that end.  However, de-insulating could be in a country's economic interest.
This was one of the fundamental themes revealed by this Review.
87. The representative of Barbados recalled that since 1993, her country had paid special
attention to productivity, which had been improving over time.  It was, however, the Government’s
responsibility to ensure that an appropriate balanc e was struck between competing interests within the
Barbados economy in the light of Barbados's social partnership.  To survive, Barbados had to provide
itself a certain level of insulation.  It had chosen this policy, and had made it work, but all its
achievements could be wiped out because of its size, vulnerability, and dependance.
88. The TPR process had been worthwhile, both at capital, where Barbados had been working
with different Committees, and in Geneva.  The TPR had been an enlightening and engaging exercise,thus providing a data base and a benchmark for Barbados's future reviews.  This Review would spill
over to the negotiating processes with the EU and within the FTAA.
89. The Chairperson agreed that the TPR process was particularly useful for developing, least
developed and middle-income countries.WT/TPR/M/101
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VI. CONCLUDING REMARKS BY THE CHAIRPERSON
90. In this, our first Review of Barbados, we have gained what I believe to be a very constructive
insight into Barbados's trade policies and practices.  Our very much improved understanding of
Barbados is due in no small measure to the whole hearted cooperation and frankness of the Barbados
delegation, led superbly by the Deputy Prime Minister, and by the active involvement of Members.
Barbados has brought to our attention the special characteristics of countries with small economies
and populations, and hence limited diversification capacity, and high infrastructure and social costs.These factors can result in considerable vulnerability to external shocks, as witnessed by the depth of
past recessions experienced by Barbados.  Members noted that, despite such challenges, Barbados has
achieved high standards of living.  They attributed this in good part to the country's remarkable social
and institutional stability and its intensive participation in international trade despite its peculiar
economic circumstances.
91. Despite the small size of the Barbadian bureaucracy and the consequent strain on trade policy
and negotiating resources, Members appreciated Barbados's active and productive engagement in the
WTO, as well as in regional trade liberalization initiatives.  Some were clear that Barbados was an
example that the WTO can be a true instrument of development if the Member involved knows how
to approach and use it.  Members expressed support for additional technical assistance, especially forcapacity building, in implementin g WTO commitments.  It is my view that Barbados has been
successful in balancing difficult and often competing interests and objectives.
92. The Government of Barbados has made clear that its future economic prosperity rests upon a
successful integration into the world economy, but that this success was conditional on specific
measures designed to avoid marginalization of small countries.  Several Members were understanding
of the request by Barbados for special consideration, anchored in the principle of special and
differential treatment granted in the WTO to developing countries.
93. We have all recognized the concrete steps ma de by Barbados to reform its economy and
further liberalize its trade regime during the 1990s, particularly through tariff reductions in the
framework of CARICOM.  Concerns were expressed, however, with respect to the recent increase in
tariffs on certain food and other manufactured products, and the resurgence of non-automatic import
licensing on sensitive agri-food imports.  Members also noted that, although reduced, tariffs remainedrelatively high at over 16%, with several peaks at or above 60%.  Such high tariffs and taxes may not
complement efforts to stimulate growth in services, the most important sector of the economy.  The
adoption of a value-added tax was welcomed as an alternative revenue source to tariffs.  Barbados
was urged to lower tariff bindings to rates closer to the currently applied rates, and thus improve the
predictability of its import regime.
94. The announced liberalization of the telecommunications services market was welcomed, and
Members noted the generally liberal market access and national treatment conditions in most of
Barbados's services industries.  Several Members encouraged Barbados to make further commitments
under the GATS, as this would better reflect their current, relatively liberal practices.
95. Specific questions were also asked on:
- WTO-consistency of anti-dumping legislation;
- use of quantitative restrictions on sensitive agricultural products;
- prospects for customs modernization and trade facilitation;WT/TPR/M/101
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- assistance and promotion activities and their budgetary cost;
- government procurement procedures;
- new legislation on the protection of IPRs;  and
- market access conditions and incentives in specific service sectors.
96. We appreciate the oral and written responses and explanations provided by the Barbados
delegation, and look forward to receiving answers on outstanding questions.
97. In conclusion, it is my sense that this Review has amply fulfilled its main objective of
understanding Barbados's trade regime in the framework of its development needs and objectives as
well as of the external environment.  Barbados has once again reaffirmed its full commitment to the
multilateral trading system, and the presence of Her Excellency the Deputy Prime Minister is a strong
testimony to this.  But we have also been made aware of the problems and difficulties hindering the
fuller participation of Barbados in the system.  In this respect, I am convinced that small and openeconomies like Barbados can only benefit from predictable, transparent and fair multilateral trade
rules, and I congratulate Barbados for their performance and for a successful Trade Policy Review.
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