Is it appropriate to pay an advertising agency a higher retainer fee, than if they were local agencies?

Whether a supplier is local or international makes no difference in and of itself.   They are just suppliers.  You just choose the supplier who gives the service you want at the price you want: who cares where they are based?

In the case of advertising agencies a local supplier may know the market better, but an international one may have some other advantage.  You can't have both, so you have to choose which one will give best result.

Fortunately, there is a general rule in decision making.  The harder a decision is, the less important it tends to be.

Would you rather be given a million dollars or have your head cut off?    Really big consequences, but really easy decision.

Would you rather have buy the dark green underpants or the very dark green underpants?  Many people would spend half an afternoon deciding which shade of green they preferred, but it really, truly, doesn't matter.

If the Agency have very good referrals and success rates i  think it is a good investment...