RESTRICTED  WORLD TRADE  
ORGANIZATION  WT/TPR/G/190/KNA 
1 October 2007  
 
(07-3988) 
Trade Policy Review Body Original:  English 
   
 
  
 
TRADE POLICY REVIEW 
 
Report by 
 
SAINT KITTS AND NEVIS 
 
  
 
Pursuant to the Agreement Establishi ng the Trade Policy Review Mechanism 
(Annex 3 of the Marrakesh Agreement Establishing the World Trade 
Organization), the policy statement by Saint Kitts and Nevis is attached. 
 
 
Note: This report is subject to restricted circ ulation and press embargo until the end of the first 
 session of the meeting of the Trade Policy Review Body on Saint Kitts and Nevis. Saint Kitts and Nevis WT/TPR/G/190/KNA 
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CONTENTS 
 
  Page 
 
 INTRODUCTION 5 
 
 SECTORS 5 
  Agriculture 5 
  Services 5 
  Tourism 6 
  Financial Services 6   Telecommunications 6 
  Manufacturing 6 
 TRADE RELATIONS 7 
  CSME 7 
 
 CBI/CBERA/CARIBCAN 7  
 TRADE POLICY AND IMPLEMENTATION 7 
  Technical Standards 8 
  Sanitary and Phytosanitary Measures 8 
 FISCAL POLICY 8 
  MONETARY POLICY 8 
 
 CONCLUSION 9 
  Saint Kitts and Nevis WT/TPR/G/190/KNA 
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INTRODUCTION 
1. Although St. Kitts and Nevis faces several challe nges as a small vulnerable economy it is still 
committed to participation in the multilateral trad ing system of the World Trade Organization.  
St. Kitts and Nevis is aware however that the deve lopment agenda of the Doha Round is incomplete 
but hopes that the promise of development give n in that Round would yet be achieved.  The 
constraints of size, lack of resources, vulnera bility and openness of the economy determine its 
dependence on the articulation and development of sp ecial and differential treatment to enable its 
desired full participation in the global trading system and its ability to benefit from trade liberalization. 
2. Trade liberalization however ha s affected the economy of St. Kitts and Nevis as the WTO 
dispute settlement ruling has impacted its sugar industr y and led to the closure of the most significant 
manufacturing enterprise and agricultural production.  The resulting loss of foreign exchange earnings 
and mass unemployment in a small population has necess itated an effort to restructure the agricultural 
sector and to seek other opportunities for export earnings. 
3. St Kitts and Nevis clearly supports a NAMA ne gotiation which would take into account its 
reliance on trade taxes for revenue.  Within the ag ricultural negotiations the special products proposal 
would assist the country in its restructure of its agricultural sector.  St. Kitts and Nevis welcomes the 
Aid for Trade initiative.  Such an initiative should ad dress the supply side constraints of St. Kitts and 
Nevis and assistance should move beyond training sessions. 
SECTORS 
Agriculture 4. Agriculture’s contribution to GDP has declined falling to 3% of GDP in 2005, mainly as a 
result of decreasing sugar cane production.  The gover nment’s decision to close the sugar industry in 
2005 means a restructuring of the agriculture sector .  The sector is expected to ensure the food 
security of the country, reduce its net food importing status, provide rural employment and contribute 
to foreign exchange earnings and sustainable deve lopment.  The government plans to increase the 
production of its non-sugar agricultu re, to add value to primary products and seek export markets. 
Areas of niche production will be explored and new products added to the current production. 
5. The small physical size of St. Kitts and Nevis rules out the possibilities of economies of scale 
in agricultural production.  Agricultural production takes place on small holdings of fruits, vegetables 
and livestock.  However the linkages with the touris m sector are expected to assist that sector.  Trade 
in agricultural products will benefit from the reducti on of agricultural subsidie s given to farmers by 
developed countries.  The sector is beginning to pr ovide initial optimism.  Agricultural production has 
grown by 67.1% for the first quarter of 2007 compared  to the previous year.  The government intends 
to make more land available to farmers and to co ntinue to provide extension and advisory services. 
6. St. Kitts and Nevis expects that the special products initiative in the WTO would assist its 
agricultural development policy. 
Services 
7. The services sector is a major focus of the readjustment of the post-sugar economy.  
Investment in tourism is encouraged with infrast ructural investment on air and seaport facilities.  
Although tourism is the major service industry the government has indicated that financial services and information technology services are targets for diversification objectives. WT/TPR/G/190/KNA Trade Policy Review 
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Tourism 
8. Over the period of the review the tourism sector  has remained steady.  Tourism growth fell in 
2005 after extremely high growth in the previous year.  Tourism continues to contribute significantly to Gross Domestic Product and is the main foreign exchange earning industry. 
9. Tax and duty concessions are offered to the to urism industry through the Hotel Aids Act.  
St Kitts and Nevis considers that these concessions  have assisted in attracting investment to the 
industry.  During the period under review new invest ment in the sector contributed to overall growth 
in the economy.  Most of the foreign direct invest ment that St. Kitts and Ne vis receives is in the 
tourism industry. The tourism industry is a major employer. 
10. St. Kitts and Nevis promotes sustainable tour ism and is especially determined that 
development takes into consideration environmental and social impacts. 
11. With the decline and eventual closure of th e sugar industry during the period under review 
St. Kitts and Nevis expects to continue to need su ch incentives to further develop the sector to provide 
employment for a large portion of the populatio n including the workers made redundant from the 
sugar industry. 
Financial services 
12. The financial services sector has been identified as an area for development.  To offset some 
setbacks in the sector several pieces of legislation were introduced to improve the regulation in the 
industry.  A Financial Services Intelligence Unit was also created. 
Telecommunications 
13. The liberalization of the telecommunications i ndustry has introduced a competitive market for 
the provision of such services.  Licen ces were issued in both the fixe d line and mobile markets.  The 
mobile market is very buoyant with three providers .  There is high penetration of internet service and 
broadband subscription has increased to 75% of subscribers.  The resulting infrastructure and 
investment has provided a platform which will enc ourage investment in information technology based 
service industries.  Reductions in telecommunicati on costs to subscribers have resulted from 
liberalization and increased competition in the industr y.  The government considers that such cost 
reduction would be an impor tant consideration in attracting new i nvestment in services to make this 
industry a route for diversification. 
Manufacturing 
14. The contribution of manufacturing to the ec onomy declined during the period under review 
mainly as a result of decreasing production in suga r manufacturing and the eventual closure of the 
sugar industry.  Production in manufacturing consis ts of beverages including beer and malt, and 
electronic components such as switc hes, filter traps and capacitors. 
15. The manufacturing sector is the largest exporter of  goods contributing 9.5% to GDP in 2005.  
Investment and diversification into manufacturi ng is assisted by tax in centives under the Fiscal 
Incentives Act.  The government recognises the need  to assist the manufacturing sector in order to 
provide employment opportunities, increase export trade and earn foreign exchange. 
16. Many of the manufactured exports are marketed in the United States under the CBI plan as 
well as to Canada under the CARIBCAN programme.  St. Kitts and Nevis considers the sector as a Saint Kitts and Nevis WT/TPR/G/190/KNA 
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major part of its participation in internati onal trade, an important component of economic 
diversification and crucial for employment generation. 
TRADE RELATIONS 
17. St. Kitts and Nevis, along with the rest of CA RICOM, is currently engaged in the ACP-EU 
negotiations to create a free trade arrangement called an Economic Part nership Agreement.  
Participation in these negotiations shows the commitment of St. Kitts and Nevis to trade 
liberalization.  The expectations are that the EPA  will provide more opportunities for exports to the 
European Union.  It will however result in mo re competition for domestic industries and service 
providers. 
CSME 
18. St. Kitts and Nevis is committed to the Cari com Single Market and Economy.  As a small 
country with a small population, St. Kitts and Nevis is provided through the CSME with a larger 
market for intra regional trade as well as an opportunity to address some of the human resource constraints in the economy because of the freedom of movement of labour. 
19. The government is of the view that the CSME can stimulate trade and help to improve the 
competitiveness of domestic producers. 
CBI/CBERA/CARIBCAN 
20. The Caribbean Basin Initiative of the USA has provided export opportunities in manufactures 
for St. Kitts and Nevis.  A specified group of products  can be exported duty free into the United States 
under this initiative.  Although these exports declined slightly after the September 11
th attacks in the 
United States, there has been steady recovery sin ce.  These products constitute the major share of 
exports to the United States.  Exports to Canada  also benefit from the arrangements available under 
CARIBCAN. 
TRADE POLICY AND IMPLEMENTATION 
21. With the closure of the sugar industry St. Kitts and Nevis is further committed to its 
objectives of achieving economic diversification, improving competitiveness in the various sectors, 
attracting investment as avenues for economic growth and development. 
22. The government has decided on a policy of divers ification through the development of service 
industries.  The infrastructure for the provision of information technology services is available 
through the opportunities provided by the liberalized  telecommunications industry and the regulatory 
oversight of ECTEL.  The government intends to attract  investment in this industry with the provision 
of an infrastructure ready technology park.  Othe r services for diversification include tourism and 
financial services.  Widening the market for tourism from traditional countries of origin and creating a 
tourism brand are some of the goals of the tourism sector. 
23. To achieve some of its goals the government intends to create an Investment Promotion 
Agency to provide information and advice to both do mestic and foreign investors.  A One Stop Shop 
investment facility will be established to make th e investment process more timely and effective. 
24. St. Kitts and Nevis is still concerned about  the difficulty of meeting implementation 
obligations under the various ag reements of the multilateral trading system.  Human resource 
constraints in the Ministry responsible for interna tional trade persist.  Three members of staff deal WT/TPR/G/190/KNA Trade Policy Review 
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with all trade matters including subregional, regional, and intern ational trade matters as well as for 
ongoing negotiations and consulting and advising the private sector.  These officials are also responsible for the implementation of the CSME. 
25. Capacity constraints also exist in other re lated public sector departments and are compounded 
by financial constraints for the proper impl ementation especially of TRIPS, SPS and TBT 
Agreements.  St. Kitts and Nevis continues to need  technical assistance for implementation of its 
WTO obligations.  The Aid for trade initiative can be  used to provide equipment in some of these 
areas. 
Technical Standards 
26. The government recognizes the importance of internationally accepted standards in the 
trading process.  The government has established a Bureau of /standards with empowering legislation 
and the oversight of the Standards Council.  A multi purpose lab serves the Standards Bureau.  The 
Bureau of Standards has the responsibility of creatin g technical regulations to protect consumer health 
and safety from goods unsuitable for consumption.  It is also expected to advise producers of 
standards in foreign markets that are targets for exports.  The Standards council has begun work on 
food labeling standards and cond ucts training for domestic producers on labeling requirements and 
food safety standards. 
Sanitary and Phytosanitary Measures 
27. St. Kitts and Nevis implements  sanitary and phytosanitary measures for the protection of 
agriculture and for the safety of human and anim al life.  Capacity constraints exist in the 
modernization of legislation and for risk analysis. 
28. Technical assistance would be required for bot h TBT and SPS measures to be effective to 
promote trade.  Laboratory accreditation and a certif ication system would greatly facilitate trade. 
FISCAL POLICY 
29. The fiscal position of St. Kitts and Nevis is showing some improvement after initial 
weakening in the earlier years of the review pe riod.  Improvements in revenue collection, some 
economic growth from construction activity may ha ve contributed to the stronger fiscal position. 
30. The fiscal position remains vulnerable however as increased government expenditure on fuel 
imports will begin to affect the ba lance of payments.  The fiscal re venue continues to depend on trade 
taxes.  This source is under threat from proposed redu ction in tariffs in the multilateral negotiations.  
St. Kitts and Nevis will also experience reduced revenues upon the implementation of the final phase 
of the CARICOM Common External Tariff. 
31. Government has not yet made a decision to change its tax system. 
MONETARY POLICY 
32. The monetary council of the Eastern Caribbean Central Bank is responsible for the monetary 
policy of St. Kitts and Nevis and the other OECS countries.  The Eastern Caribbean dollar is pegged 
to the U.S. dollar at the rate of EC$2.71.  The rate remains stable. 
 Saint Kitts and Nevis WT/TPR/G/190/KNA 
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CONCLUSION 
33. St Kitts and Nevis is committed to the process of trade liberalization.  It is however 
confronted by the challenges that  such liberalization entails.  St. Kitts and Nevis will support the 
premise that small vulnerable economies like its own,  require special and differential treatment to 
participate in the international trading system.  The benefits of market liberalization require the 
cooperation and assistance of developed countries within  the WTO.  St. Kitts and Nevis has a difficult 
task to restructure its economy after its depende nce on sugar production.  The present negotiations 
should consider the special circumstances of small, open vulnerable economies. 
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