RESTRICTEDWORLD  TRADE
ORGANIZATIONWT/TPR/S/101
10 June 2002
(02-3055)
Trade Policy Review Body
TRADE POLICY REVIEW
BARBADOS
Report by the Secretariat
This report, prepared for the first Trade Policy Review of Barbados, has been
drawn up by the WTO Secretariat on its own responsibility.  The Secretariat has,
as required by the Agreement establishing the Trade Policy Review Mechanism
(Annex 3 of the Marrakesh Agreement Establishing the World Trade
Organization), sought clarification from th e Government of Barbados on its trade
policies and practices.
Any technical questions arising from this report may be addressed to
Ms. C. Hennis-Pierre (tel. 739 5640) and Mr. R. Valdés (tel. 739 5346).
Document WT/TPR/G/101 contains the policy statement submitted by the
Government of Barbados.
Note: This report is subject to restricted circulation and press embargo until the end of the meeting 
of the Trade Policy Review Body on Barbados.Barbados WT/TPR/S/101
Page iii
CONTENTS
Page
SUMMARY OBSERVATIONS vii
(1) I NTRODUCTION vii
(2) E CONOMIC STRUCTURE AND DEVELOPMENTS vii
(3) T RADE POLICY viii
(4) M ARKET ACCESS FOR GOODS viii
(5) O THER MEASURES AFFECTING TRADE ix
(6) S ECTORAL POLICIES ix
I. THE ECONOMIC ENVIRONMENT 1
(1) I NTRODUCTION 1
(2) S TRUCTURE OF THE ECONOMY 1
(i) Recent economic developments 2(ii) Public finances 5
(iii) Monetary policy 6
(3) B
ALANCE -OF-PAYMENTS AND TRADE AND INVESTMENT FLOWS 8
(i) Merchandise trade 8(ii) Trade in services 12(iii) Income and net transfers 14
(iv) Capital and financial flows 14
(4) O
UTLOOK 14
Annex I.1: Barbados's Exchange policy and controls 16
II. TRADE POLICY REGIME:  FRAMEWORK AND OBJECTIVES 18
(1) I NTRODUCTION 18
(2) T HE BARBADOS LEGAL AND INSTITUTIONAL FRAMEWORK 18
(i) Form of government 18
(ii) Policy-making and administration 19(iii) Laws and regulations affecting trade and international investment 20(iv) Investment and tax treaties 22(v) Foreign investment regime 22
(3) I
NTERNATIONAL RELATIONS 23
(i) Participation in the WTO 24
(ii) Participation in regional and bilateral agreements 26(iii) Participation in unilateral preference programmes 28(iv) Relationship with the OECD 28
III. TRADE POLICIES AND PRACTICES BY MEASURE 30
(1) I
NTRODUCTION 30
(2) M EASURES DIRECTLY AFFECTING IMPORTS 30
(i) Import procedures 30(ii) Customs valuation 31(iii) Rules of origin 31(iv) Tariffs and other charges levied on imports 32
(v) Import licensing and prohibitions 41WT/TPR/S/101 Trade Policy Review
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(vi) Anti-dumping, countervailing, and safeguard measures 44
(vii) Government procurement 45(viii) Standards and other technical requirements 46(ix) Sanitary and phytosanitary measures 47
(3) M
EASURES DIRECTLY AFFECTING EXPORTS 48
(i) Procedures and documentation 48(ii) Export taxes, charges and levies 49(iii) Export prohibitions, restrictions, and licensing 49(iv) Export subsidies and other concessions in support of exports 49
(4) M
EASURES AFFECTING PRODUCTION AND TRADE 51
(i) Business registration 51(ii) Competition policy 53(iii) Assistance to business 54(iv) State trading enterprise, state-owned enterprises, and privatization 56(v) Intellectual property rights 57
IV. TRADE POLICIES BY SECTOR 62
(1) I
NTRODUCTION 62
(2) A GRICULTURE AND FISHERIES 62
(i) Participation in the WTO 64(ii) Main policy issues 64(iii) Policy measures in selected sectors 65
(3) M
INING ENERGY AND PRODUCTS 72
(4) M ANUFACTURING 73
(5) S ERVICES 76
(i) Commitments under international agreements 76(ii) Utilities and energy distribution services 79
(iii) Construction 79
(iv) Wholesale and retail trade 79(v) Tourism 80(vi) Transport services 81(vii) Telecommunications 84(viii) Financial services 86
(ix) Professional services 90
REFERENCES 93
APPENDIX TABLES 95
CHARTS
I. THE ECONOMIC ENVIRONMENT
I.1 Annual changes in real GDP and tourist arrivals, 1979-01 2
I.2 Gross domestic product indicators, 1979-00 3I.3 Merchandise trade balance, 1985-01 9I.4 Trade trends, 1990-00 11
I.5 Current account balance and net fo reign receipt from services, 1985-00 12Barbados WT/TPR/S/101
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Page
III. TRADE POLICIES AND PRACTICES BY MEASUREIII.1 Distribution of MFN tariff rates, 2001 35
IV. TRADE POLICIES BY SECTOR
IV.1 Sugar statistics, 1981-00 69
IV.2 Value added and export receipts from tourism services, 1991-00 81IV.3 Trade in insurance services, 1985-00 89
TABLES
I. THE ECONOMIC ENVIRONMENT
I.1 Basic macroeconomic indicators, 1997-01 4
I.2 Central government operations, 1996-01 5
I.3 Balance of payments, 1997-01 9I.4 Trade in non-factor services, 1997-01 13
II. TRADE POLICY REGIME:  FRAMEWORK AND OBJECTIVES
II.1 Government agencies involved in the formulation or administration of trade or
trade-related policies and area of responsibility 19
II.2 Notifications by Barbados to the WTO, December 2001 21
III. TRADE POLICIES AND PRACTICES BY MEASURE
III.1 Selected taxes on goods and services as a share of total current government revenue,
year ending March 1996-01 32
III.2 Summary analysis of Barbados's tariff, 2001 33III.3 Structure of applied MFN tariffs, 1999 and 2001 36III.4 Imports of products covered by tariff quotas 37
III.5 Products subject to import licensing, as at March 2002 42
III.6 Products and services subject to price control, March 2002 54III.7 Barbados's membership in international agreements on
intellectual property rights, December 2001 58
III.8 Intellectual property rights legislation in Barbados, March 2002 59III.9 Overview of IPR protection in Barbados, 2001 60
III.10 Trade marks, patents, and industrial designs registered, 1994-01 61
IV. TRADE POLICIES BY SECTORIV.1 Selected statistics on agricultural commodities 63
IV.2 Oil products, 1992-00 73
IV.3 Nominal and effective rates of protection, excluding surtax,
selected locally manufactured products, 1996 and 2001 74
IV.4 Indices of industrial production, 1990-01 75IV.5 Summary of Barbados's commitments under the GATS 77WT/TPR/S/101 Trade Policy Review
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Page
APPENDIX TABLES
I. THE ECONOMIC ENVIRONMENT
AI.1 Imports by region, 1995-00 97
AI.2 Exports and re-exports by region, 1995-00 98AI.3 Imports by product, 1995-00 99AI.4 Exports and re-exports by product, 1995-00 100
III. TRADE POLICIES AND PRACTICES BY MEASURE
AIII.1 Products subject to specific duty rates 101
AIII.2 Barbados's IPR enforcement regime 103Barbados WT/TPR/S/101
Page vii
SUMMARY OBSERVATIONS
(1) INTRODUCTION
1. Barbados has used foreign trade and
investment opportunities deftly to maintain
living standards well above those of most
developing countries.  Its trade and investmentpolicies have fostered world-class suppliers in
a few areas, particularly tourism and financial
services.  Based on Barbados's natural
endowments and on niche activities created by
government policy, these services havebecome the mainstay of the economy and the
main source of foreign exchange.  Of
necessity, however, specialization and the
small size of the economy have resulted in a
narrow production base that makes Barbadosvulnerable to external shocks.
2. Trade policy has also sought to
protect a small number of domestic activities,
mostly food production, from foreign
competition, while recognizing that most
domestic needs are best met by imports.  This
protection, and limited competition in certaindomestic sectors have weighed on the
competitiveness of the leading service
activities by restricting their access to inputs
at the lowest cost.  Barbados's historically
stable policy environment and wealth ofhuman capital bode well for its ability to
address this issue, adjust to new challenges
and, thus, attain and sustain further welfare
improvements.
(2) E
CONOMIC STRUCTURE AND 
DEVELOPMENTS
3. Barbados ranks 31st in terms of the
United Nations' Human Development Index;
life expectancy at birth is 77 years, the adult
literacy rate is 97%, and GDP per capita wasUS$9,700 in 2000.  Since the 1950s, the
economy has become increasingly reliant on
income from tourism.  Buttressed by a low tax
environment, financial services now contribute
to a significant share of GDP.
Simultaneously, there has been a falling share
of agriculture, especially sugar, in GDP.4. The Barbados economy performed
well between 1993 and 2000, driven by
domestic consumption.  However, the economy
remains vulnerable to external shocks, as
witnessed by the depth and duration of the
recessions experienced when worldwideeconomic decelerations have occurred,
notably during the early 1990s and again in
2001.  Real value added in tourism declined by
an estimated 6% in 2001, and the economy
contracted by 2.8% in real terms.
5. Sound monetary policy, underpinned
by a fixed exchange rate, has ensured investor
confidence and provided a framework of low
inflation.  Exchange controls on capital
movements are designed to reduce theeconomy's vulnerability to speculative attacks
against its currency.  However, rather large
fiscal deficits limit the room for counter-
cyclical policies.  Current account
transactions have shown a persistent large
deficit, as the surplus of the services account
has not offset the merchandise trade deficit.The current account deficit has generally been
compensated by public and private capital
inflows.
6. Revenues from exports of merchandise
have remained relatively small, at about onefifth of total exports of goods and services, and
11% of GDP.  Merchandise exports consist
mostly of sugar, rum, and crude petroleum and
are not, apart from niche products,
internationally competitive withoutgovernment support or preferential access to
foreign markets.  The main export destinations
are the CARICOM countries, the European
Union, and the United States.  Exports of
services consist mostly of tourism andfinancial services.  Imports of goods are
diversified, with a relatively strong reliance on
imported food.  Fastest import growth has
originated in the United States, which supplies
40% of imports, on an MFN basis.  This
concerns merchandise trade.  The next largest
suppliers are the CARICOM countries and theEuropean Union.  Imports of services consist
mostly of transportation, insurance, and
travel.WT/TPR/S/101 Trade Policy Review
Page viii
(3) TRADE POLICY
7. Barbados's trade policy formulation
takes place within a stable overall policy
environment, based on extensive consultation
among social and economic partners.  The
Government considers that trade openness(with the exception of a small range of agri-
food and service activities that are heavily
protected) is crucial in order to overcome any
constraints arising from the small size of the
economy, its restricted capacity to diversifyrisk, and limited institutional capacity.
8. Barbados is an original Member of
the WTO, and participates actively in its work.
It grants at least MFN treatment to all its
trading partners.  Barbados has never beeninvolved in multilateral dispute settlement
procedures, either as a defendant or
complainant.  However, it reserved its rights
to participate as third party in the dispute
relating to U.S. provisions on Foreign Sales
Corporations, as many such corporations are
established under Barbados law.
9. In the Uruguay Round negotiations,
Barbados bound all of its tariffs except on fish
and fish products, albeit at ceiling rates.
Agricultural products are bound at least at
100%, with some specific items bound at ratesranging to over 220%; manufactured goods
are bound at rates of at least 70%, with
certain items at considerably higher rates.
Barbados also made specific commitments
under the GATS in a few subsectors.Barbados undertook specific commitments in
the WTO negotiations on basic
telecommunications, but did not make new
multilateral commitments on financial services
within the context of the Fifth Protocol to theGATS.
10. Barbados's exports benefit from
unilateral trade preferences granted by a
number of trading partners;  Barbados seeks
to have these maintained.  Its trade policy has
been deeply influenced by its participation in
the Caribbean Community and CommonMarket (CARICOM), where it is urging a
rapid implementation of a single market.  Thecommitment to protect CARICOM industries
partly explains Barbados's relatively high
tariffs on goods not produced domestically.
(4) M
ARKET ACCESS FOR GOODS
11. Barbados has made important efforts
in recent years to liberalize and simplify itsimport regime, which is all the more important
given that most of domestic consumption is
imported.  In the context of the Common
External Tariff (CET) reduction programme,
tariffs were reduced between 1993 and 1999,as was reliance on quantitative import
restrictions.  A surtax of 100% on locally
produced goods, introduced in 1994, was
progressively reduced and abolished in
April 2000.  A VAT was introduced in 1997 toreplace multiple taxes and levies.  The
Customs Act was amended in 1999 to
implement the WTO Agreement on Customs
Valuation.  As a result of these reforms,
Barbados's import procedures are now
relatively simple and transparent.
12. The average MFN applied tariff is
16.5% and fulfils mainly a revenue generating
function.  Border protection for activities
where there is domestic production is high,
based on tariffs of 60% or more and import
licensing.  Domestic producers import most oftheir inputs duty free, under an array of
waivers and exemptions, which adds to
effective protection.  Taken together, all taxes
levied on imports amount to 22% of total tax
revenue.
13. Import licences cover about 60 mainly
food products.  They have been used to
monitor imports and to  protect domestic
production;  licences can be made automatic
or non-automatic by administrative decision.Information is not publicly available
regarding applications for licences or the
allocation of quotas.
14. Resort to anti-dumping and
countervailing duties consists of a single
measure.  The Agreement on Article 6 of the
GATT and the Agreement on Subsidies andCountervailing Duties have yet to beBarbados WT/TPR/S/101
Page ix
incorporated into Barbados law on these
matters.  Barbados does not have safeguard
legislation.
(5) OTHER MEASURES AFFECTING 
TRADE
15. Exports are not, in practice, taxed or
restricted, and take place mostly under trade
preferences.  Exports are also promoted via
various duty and tax concessions and financial
assistance measures, several of which have
been notified to the WTO as export subsidies.In general, most domestic production of goods
and services benefits from tax breaks or other
assistance, reflecting the Government's
commitment to actively support businesses.
There are no available estimates of the overallbudgetary cost of this support.
16. Competition policy legislation was
being put in place in early 2002 as part of the
establishment of a comprehensive competition
policy regime.  Legislation was expected to
eventually include provisions on fair
competition, consumer guarantees, andconsumer protection.  The need for a
comprehensive competition policy framework
stems from the observed high levels of
concentration and prices in the domestic
market.  Meanwhile, to limit the abuse ofmarket power, price controls are in place on a
number of goods and services.
17. The Government has shareholdings in
a number of commercial entities in such
sectors as utility services, transport services,hotels, and agri-food production.  It is
government policy not to be involved in new
ventures, except when there is a lack of
private-sector interest in an activity the
Government wishes to promote.  State tradingis limited to poultry imports.  Certain
companies are de facto sole traders: one
company is the sole exporter of crude
petroleum and the sole importer of diesel,
gasoline, and fuel oil.  Public procurement,
which represents approximately 10% of GDP,
relies mostly on foreign goods and servicesgiven the small size of the economy.  Smallcontracts may be allocated without inviting
tenders.
18. Barbados has recently taken steps to
help ensure the protection of intellectual
property rights, and its legislation covers all
major areas referred to in the TRIPSAgreement.  Barbados's IPR-related
legislation was reviewed by the WTO TRIPS
Council in November 2001.
(6) S
ECTORAL POLICIES
19. Barbados is a high-cost location for
production of goods, and except for some
niche products, is not competitive vis-à-vis
foreign producers.  Without stringent
protection from import competition, most of
the few existing activities in manufacturingand agriculture would likely contract strongly.
20. Border protection appears to be
highest in the agri-food sector, notably for
meat, dairy, and vegetables.  As tariffs ranging
to 240% have not been effective in deterring
imports, the authorities reintroduced non-
automatic import licensing on the mostimport-sensitive products in 2001, initially for
three months.  Special safeguards legislation
was being drafted in early 2002 to support
such measures.  Imports of all poultry
products are under government monopoly.  Anumber of tariff quotas were bound in the
Uruguay Round but were not being applied in
early 2002.  Barbados maintains a positive list
of a few source countries for fresh meat;
adding new countries would require a changeof law.
21. Preferential access to the EU market
has not prevented the decline of the sugar
industry, which has suffered from high costs
that in most years exceed guaranteed exportprices well above world levels.
22. The services sector is the cornerstone
of the economy, with tourism and financial
services playing a particularly important role.
Tourism services are provided mainly by
private operators.  The Government
encourages production and investment in theWT/TPR/S/101 Trade Policy Review
Page x
tourism industry mainly through tax incentives
and concessionary loans.  There are generally
no restrictions on market access for foreign
companies.  On the other hand, barriers to
food imports may have weighed on the
international competitiveness of touristcatering and other service activities by
restricting access to the best and most
competitively priced inputs.
23. Since the mid 1960s, legislation has
been in place to encourage the development of"international" companies, which have
enjoyed fiscal advantages not generally
available to other firms.  Such advantages
have resulted in the establishment of offshore
banks, exempt insurance companies, andsubsidiaries of multinational companies.  The
different legislation that is applied to firms
depending on whether they are supplyingresidents or overseas customers was the
subject of frictions with certain OECD
partners.  In this context, the Government has
campaigned for the right to fiscal sovereignty.
24. Foreign firms provide both air and
maritime transport services, notably passengerand cargo traffic.  Telecommunications are
under a private, foreign-owned monopoly, but
full competition is to be established by
November 2002 in cellular telephone services,
and in the provision of telephone sets andequipment; by August 2003, competition
should be extended to fixed telephone services.
Domestic insurance services and legal
services are protected from foreign
competition by local purchase obligations andqualification requirements, respectively.