Bahrain Free Trade Agreement Fact Sheet

Free Trade With BahrainA Model for Trade in the Persian Gulf Region

New Market Access for U.S. Consumer, Industrial, and Agricultural

- 100% of bilateral trade in consumer and industrial products will
become duty-free immediately upon entry into force of the Agreement. In addition, Bahrain and
the United States will provide immediate duty free access on virtually all products in their
tariff schedules and will phase out tariffs on the remaining handful of products within ten years.

- Under the Agreement, which covers all agricultural products, Bahrain will provide immediate duty-free access for U.S. agricultural exports in 98% of agricultural tariff lines. Bahrain
will phase out tariffs on the remaining products within ten

- The United States will provide immediate duty-free access on
100% of Bahrain’s current exports of consumer, industrial, and agricultural products to the United States. The United States
will phase out remaining tariffs under the Agreement within ten

- Textiles and apparel trade will be duty-free immediately,
promoting new opportunities for U.S. and Bahraini fiber, yarn, fabric
and apparel manufacturing. The Agreement requires qualifying
textiles and apparel to contain either U.S. or Bahraini yarn and fabric and
contains a temporary transitional allowance for textiles and apparel that do not meet
these requirements in order that U.S. and Bahrain producers can develop and expand business

Broad Commitments to Open Services Markets

- Bahrain will accord substantial market access across its entire
services regime, providing among the highest degree of market access of any U.S. free trade
agreement negotiated to date. The Agreement uses the so-called “negative list” approach, meaning
that all sectors are covered unless specifically excluded.

- Key services sectors covered by the Agreement include
audiovisual, express delivery, telecommunications, computer and related services, distribution,
healthcare, services incidental to mining, construction, architecture and engineering.

- The Agreement provides benefits for businesses wishing to supply
services cross-border (for instance, by electronic means) as well as businesses wishing to
establish a presence locally in the other country.

- Strong and detailed disciplines on regulatory transparency
supplement the Agreement’s crosscutting transparency provisions.

New Opportunities for U.S. Banks, Insurance, Securities and
Related Services

- U.S. financial service suppliers will have the right to
establish subsidiaries, branches and joint ventures in Bahrain and enjoy the benefits of strong regulatory
transparency, including prior notice and comment and license approval within 120 days.

- For life and medical insurance, Bahrain agreed to allow access
upon entry into force of the Agreement, and for non-life insurance will allow access within six
months after entry into force of the Agreement.

- Bahrain will allow U.S.-based firms to supply insurance on a
cross-border basis (through electronic means) for key markets including reinsurance,
reinsurance brokerage upon entry into force of the agreement, and marine, aviation and transport (MAT)
insurance and brokerage one year after entry into force of the agreement.

- Bahrain has also committed to approve new insurance products within 60 days.

- Bahrain has agreed that in revising its insurance laws and regulations, it will not discriminate against US insurance suppliers and will allow existing insurance suppliers to
continue current business activities.

- Bahrain will allow U.S.-based firms to offer services
cross-border to Bahrainis in areas such as financial information and data processing, and financial advisory services. Bahrain will also allow U.S.-based asset managers (including insurance companies) to manage the portfolios of collective investment schemes established in Bahrain.

- The agreement underscores Bahrain’s open and developed financial sector, which includes both conventional and Islamic financial services.

An Open and Competitive Telecommunications

- Each government commits that users of the telecom network will
have reasonable and nondiscriminatory access to the network, thereby preventing local
firms from having preferential or “first right” of access to telecom networks.

- U.S. phone companies will have the right to interconnect with
former monopoly networks in Bahrain at nondiscriminatory, cost-based rates.

- U.S. firms seeking to build a physical network in Bahrain will
have nondiscriminatory access to key facilities, such as telephone switches and submarine cable landing

- U.S. firms will be able to lease elements of Bahraini telecom
networks on nondiscriminatory terms and to resell telecom services of Bahraini suppliers to build a
customer base.

E-Commerce: Free Trade in the Digital Age

- Each government commits to nondiscriminatory treatment of
digital products and agrees not to impose customs duties on digital products.

- For digital products delivered on hard media (such as a DVD or
CD), customs duties will be based on the value of the media (for instance, the disc), not on the
value of the movie, music or software contained on the disc.

- The e-commerce commitments will help establish Bahrain as a
leader in the Gulf Region for the  further development of electronic commerce.

Copyrights: Protection for Copyrighted Works in A Digital

- The Agreement ensures that authors, composers and other
copyright owners have the exclusive right to make their works available online. The Agreement also
ensures that copyright owners have rights to temporary copies of their works on computers, which
is important in protecting music, videos, software and text from widespread unauthorized
sharing via the Internet.

- Each government commits to protect copyrighted works, including
phonograms, for extended terms (e.g., life of the author plus seventy years), consistent
with U.S. standards and international trends.

- The Agreement includes strong anti-circumvention provisions,
requiring each government to prohibit tampering with technologies (like embedded codes on
discs) that are designed to prevent piracy and unauthorized distribution over the Internet.

- Each government commits to using only legitimate computer
software, thus setting a positive example for private users.

- The Agreement requires protection for encrypted program-carrying
satellite signals (including the signal itself and the programming), to prevent piracy of satellite
television programming.

- The Agreement sets out obligations concerning the liability of
Internet service providers, reflecting the balance struck in the U.S. Digital Millennium Copyright Act
between legitimate ISP activity and the infringement of copyrights.

Patents & Trade Secrets

- Patent terms can be adjusted to compensate for unreasonable
delays in granting the original patent, consistent with U.S. practice.

- Grounds for revoking a patent are limited to the same grounds
required to originally refuse a patent, thus protecting against arbitrary revocation.

- The Agreement provides protection for newly developed plant

- Test data and trade secrets submitted to a government for the
purpose of product approval will be protected against unfair commercial use for a period of 5 years
for pharmaceuticals and 10 years for agricultural chemicals.

- The Agreement ensures that government marketing-approval
agencies will not grant approval to patent-infringing pharmaceuticals.

Trademarks: State-of-the-Art Protection in the Digital

- The Agreement requires each government to maintain a system to
resolve disputes involving trademarks used in Internet domain names, which is important to
prevent “cyber-squatting” with respect to high-value domain names.

- The Agreement applies the principle of “first-in-time,
first-in-right” to trademarks and geographical indications, so that the first person who acquires a right to a
trademark or geographical indication is the person who has the right to use it.

- Each government will be required to establish transparent
procedures for the registration of trademarks, including geographical indications, and to develop an
on-line system for the registration and maintenance of trademarks, as well as a
searchable database.

IPR Enforcement: Tough Penalties for Piracy and

- The Agreement requires each government to criminalize end-user
piracy, providing strong deterrence against piracy and counterfeiting.

- Each government commits to having and maintaining authority to
seize, forfeit and destroy counterfeit and pirated goods and the equipment used to produce
them. IPR laws will be enforced against goods-in-transit, to deter violators from using U.S. or
Bahraini ports or free-trade zones to traffic in pirated products. Ex officio action may be taken in
border and criminal IPR cases, thus providing more effective enforcement.

- The Agreement mandates both statutory and actual damages under
Bahraini law for IPR violations, which will deter piracy. Under these provisions,
monetary damages can be awarded even if actual economic harm (retail value, profits made by
violators) cannot be determined.

Commitments on Sanitary and Phytosanitary Measures and
Barriers to Trade

- Bahrain’s commitments to a science-based regime and transparency
in standard-setting will serve as an excellent example for the rest of the Gulf

Strong Government Procurement Disciplines Set Precedent for the

- The Agreement includes disciplines on procurement by most Bahraini government agencies.

- The Agreement requires that covered Bahraini government purchasers not discriminate against U.S. firms, or in favor of Bahraini firms, when making covered government purchases in excess of agreed monetary thresholds.

- U.S. and Bahraini suppliers will have increased certainty due
to strong and transparent disciplines on procurement procedures, such as requiring advance public notice of purchases, as well
as timely and effective bid review procedures.

- Each government must maintain criminal and other penalties
for bribery in government procurement.

Streamlined and Transparent Customs Procedures

- The Agreement requires transparency and efficiency in customs
administration, including publication of laws and regulations on the Internet and procedural
certainty and fairness.

- Both governments agree to share information to combat illegal
transhipment of goods, and special customs cooperation measures to prevent fraud in the textile and
apparel sector. In addition, the Agreement requires customs procedures designed to facilitate the
rapid clearance through customs of express delivery shipments.

- Strong but simple rules of origin will ensure that only U.S. and
Bahraini goods benefit from the Agreement. Rules are designed to be easy to administer and are
consistent with other U.S. free trade agreements in the region.

Commitments and Cooperation to Protect the

- The Agreement fully meets the environmental objectives set out
by the Congress in TPA. Environmental obligations are part of the core text of the

- Each government will be required to effectively enforce its
environmental laws, and this obligation is enforceable through the Agreement’s dispute settlement

- Each government commits to establish high levels of
environmental protection, and to not weaken or reduce environmental laws to attract trade or investment.

- The Agreement also promotes a comprehensive approach to
environmental protection. Procedural guarantees that ensure fair, equitable and transparent
proceedings for the administration and enforcement of environmental laws are married
with provisions that promote voluntary, market-based mechanisms to protect the environment.

- As a complement to the Agreement, the governments will sign a
Memorandum of Understanding on Environmental Cooperation that will establish a Joint Forum on
Environmental Cooperation, develop a plan of action and set priorities for future
environment-related projects.

- Priority areas for cooperation include development and
implementation of Bahrain’s environmental laws and its capacity to conduct environmental
impact assessments.

Cooperative Activities to Promote Worker

- The Agreement fully meets the labor objectives set out by the
Congress in TPA. Labor obligations are part of the core text of the Agreement.

- Each government reaffirms its obligations as members of the
International Labor Organization (ILO), and commits to strive to ensure that its laws provide for
labor standards consistent with internationally recognized labor rights. The Agreement makes clear
that it is inappropriate to weaken or reduce domestic labor protections to encourage trade or

- Each government will be required to effectively enforce its
labor laws, and this obligation is enforceable through the Agreement’s dispute settlement

- Procedural guarantees in the Agreement require each government
to provide access for workers and employers to fair, equitable and transparent labor tribunals
or courts.

- The Agreement includes a cooperative mechanism to promote
respect for the principles embodied in the ILO Declaration on Fundamental Principles and
Rights at Work, and compliance with ILO Convention 182 on the Worst Forms of Child Labor. The
labor ministries, together with other appropriate agencies, agree to establish priorities and
develop specific cooperative activities. Cooperative activities may include:

- Discussions of legislation, practice and implementation related
to the core elements of the ILO Declaration on Fundamental Principles and Rights at Work.

- Development of social safety net programs.

- Discussion of treatment of non-national workers.

- Improving systems for the administration and enforcement of
labor laws.

Transparent Rule-Making and Procedural Protections for

- Each government must publish its laws and regulations governing
trade, and publish proposed regulations in advance and provide an opportunity for public
comment on them.

- Each government commits to apply fair procedures in
administrative proceedings covering trade matters directly affecting companies from the other country.

- Each government must ensure that traders from the other country
can obtain prompt and fair review of final administrative decisions affecting their

Commitments to Combat Bribery

- The Agreement requires each government to prohibit bribery,
including bribery of foreign officials, and establish appropriate criminal penalties to punish

- Each government also commits to adopt or maintain measures
protecting whistle-blowers.

Tools to Enforce the Trade Agreement

- All core obligations of the Agreement, including labor and
environmental provisions, are subject to the dispute settlement provisions of the Agreement.

- Dispute panel procedures set high standards of openness and

- Open public hearings;

- Public release of legal submissions by governments;

- Opportunities for interested third parties to submit views.

- Emphasis is on promoting compliance through consultation and
trade-enhancing remedies.

- The Agreement includes strong enforcement mechanisms, including
the ability to suspend trade concessions or establish monetary assessments.

Implementation of High-Level Commitments

- Separate from the Agreement, we are working with Bahrain on
targeted assistance to assist Bahrain in implementing the high level of commitments achieved in
the negotiations in areas such as:

- Modifying Bahrain’s current laws and regulations to meet its FTA

- Expanding trade linkages and business development

- Exploring retraining programs for textile employees for work in
other sectors, and

- Exploring opportunities for bilateral and regional cooperation
concerning tobacco control