You may find duty-free merchandise here at prices 20% to 40% lower than in the United States and Canada -- but you've got to be a smart shopper to spot bargains, and you should be familiar with prices back in your hometown. Duty-free shops have two prices listed on items of merchandise: the local retail price and the local retail price less the government-imposed tax.

Some of the best duty-free buys include cameras, watches, crystal, gold jewelry, bone china, cosmetics and perfumes, and liquor (including locally produced Barbados rum and liqueurs), along with tobacco products and cashmere sweaters, tweeds, and sportswear from Britain. If you purchase items made on Barbados, you don't have to pay duty.

The quintessential Barbados handcrafts are black-coral jewelry and clay pottery. The latter originates at Chalky Mount Potteries (no phone), which is worth a visit. Potters turn out different products, some based on designs that are centuries old. The potteries (which are signposted) are north of Bathsheba on the east coast, in St. Joseph Parish near Barclay's Park. In shops across the island, you'll also find a selection of locally made vases, pots, pottery mugs, glazed plates, and ornaments.

Island craftspeople weave wall hangings from local grasses and dried flowers, and also turn out straw mats, baskets, and bags with raffia embroidery. Leatherwork, particularly handbags, belts, and sandals, is also found on Barbados.

In Bridgetown -- Cruise passengers generally head for the cruise-ship terminal at Bridgetown Harbour, which has some 20 duty-free shops, 13 local shops, and many vendors.

At Articrafts, Broad Street (tel. 246/427-5767), John and Roslyn Watson have assembled an impressive display of Bajan arts and crafts. Roslyn's distinctive wall hangings are decorated with objects from the island, including sea fans and coral. The unique Colours of De Caribbean, the Waterfront Marina (next to the Waterfront Café, on the Carenage; tel. 246/436-8522), carries a limited selection of original hand-painted and batik clothing, all made in the West Indies, plus jewelry and decorative objects.

Cave Shepherd, Broad Street (tel. 246/431-2121), is the largest department store on the island and the best place for duty-free merchandise. There are branches at Sunset Crest in Holetown, Da Costas Mall, Grantley Adams Airport, and the Bridgetown cruise-ship terminal, but if your time is limited, try this outlet, as it has the widest selection. The store sells perfumes, cosmetics, fine crystal and bone china, cameras, jewelry, swimwear, leather goods, men's designer clothing, handcrafts, liquor, and souvenirs. You can take a break in the cool comfort of the Balcony, overlooking Broad Street, which serves vegetarian dishes and has a salad bar and beer garden.

Harrison's, 1 Broad St. (tel. 246/431-5500), has 6 branch stores, all selling a wide variety of duty-free merchandise, including china, crystal, jewelry, leather goods, and perfumes -- all at fair prices. Also for sale are some fine leather products handcrafted in Colombia. Harrison's is the major competitor to Cave Shepherd on the island, but we'd give the edge to Cave Shepherd.

Little Switzerland, in the Da Costas Mall, Broad Street (tel. 246/431-0030), offers a wide selection of watches, fine jewelry, Mont Blanc pens, and an array of goodies from Waterford, Lalique, Swarovski, Baccarat, and others. Also on Broad Street, at Mall 34, is a branch of Best of Barbados (tel. 246/436-1416).

About a 1/2 hour drive north of Bridgetown, Luna Jewelers, Queen St., Spice Town, St. Peter (tel. 246/419-5862), sells diamonds and precious stones. What makes Luna unusual is its emphasis on Art-Nouveau and Art-Deco designs set into gold and silver, crafted on Barbados in alluring designs. Fossilized Bajan coral is carefully polished and set into gold or silver settings, and in some cases, intricate mosaic-style inlays.

Pelican Crafts Center, Harbour Road (tel. 246/426-4391), offers bargains from Bajan artisans. In Bridgetown, go down Princess Alice Highway to the city's Deep Water Harbour, where you'll find this tiny colony of thatch-roofed shops. Some of the shops here are gimmicky, but interesting items can be found. Sometimes you can see craftspeople at work.

Elsewhere On The Island -- The best shop on the island for local products is Best of Barbados, in the Southern Palms, St. Lawrence Gap, Christ Church, on the south coast (tel. 246/420-8040). Part of an island-wide chain of eight stores, this tasteful shop sells only products designed or made on Barbados, such as prints, coasters, T-shirts, pottery, dolls, games, and cookbooks. Also in the town of St. Lawrence Gap is Walker's Caribbean World (tel. 246/428-1183), near the Southern Palms, which offers many locally made items for sale, as well as handcrafts from the Caribbean Basin and the famous Jill Walker prints.

One of the most interesting shopping jaunts in Barbados is to the previously recommended Tyrol Cot Heritage Village, the former home of the Bajan national hero, Sir Grantley Adams. On the grounds of the former prime minister's estate is a colony of artisans, who turn out an array of articles for sale ranging from paintings to pottery, from baskets to handmade figurines.

Earthworks Pottery/The Potter's House Gallery, Edgehill Heights 2, St. Thomas (tel. 246/425-0223), is one of the artistic highlights of Barbados. Deep in the island's central highlands, Canadian-born Goldie Spieler and her son, David, create whimsical ceramics in the colors of the sea and sky; many objects are decorated with Antillean-inspired swirls and zigzags. On the premises are a studio and a showroom that sells the output of at least half a dozen other island potters. Purchases can be shipped.

The Shell Gallery, Gibbes Hill, St. Peter (tel. 246/422-2593), has the best collection of shells in the West Indies. Also offered are shell jewelry, local pottery and ceramics, and batik.

Greenwich House Antiques, Greenwich Village, Trents Hill, St. James (tel. 246/432-1169), a 25-minute drive from Bridgetown, feels like a genteel private home where the objects for sale seem to have come from the attic of your slightly dotty great aunt. Dozens of objects fill every available inch of display space.