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U.S. and Bahrain Conclude Free Trade Agreement

Model for Openness in the Persian Gulf

WASHINGTON - U.S. Trade Representative Robert B. Zoellick and
Bahraini Minister of Finance and National Economy Abdulla Hassan Saif today announced the
completion of a comprehensive Free Trade Agreement (FTA) designed to remove barriers and
facilitate trade between both countries. Bahrain is the fourth Middle Eastern country to have
negotiated an FTA with the U.S.


“This is a high-quality, comprehensive Agreement that will provide
American workers, consumers, and businesses unprecedented economic opportunity in Bahrain,”
said Zoellick. “It is a groundbreaking free trade agreement that will benefit both our peoples. Bahrain
will substantially open its services market, streamline digital trade, protect intellectual
property, facilitate government procurement and provide for effective enforcement of labor and
environmental laws.”


“This agreement is about more than opening trade with a friend and
ally in the Persian Gulf. Bahrain’s leaders, including Minister Saif, are reformers in a
region searching for the fresh winds of new ideas, and the U.S.-Bahrain FTA is a pacesetter showing the
way to implement the President’s initiative for building prosperity, opportunity and hope in the
Middle East. This free trade agreement with Bahrain will build on our existing FTA with a rapidly
modernizing Jordan, and on the FTA with a reforming Morocco that we will sign in two weeks,” said
Zoellick.


“I want to thank my Bahraini counterpart, Abdulla Saif, for his
leadership and commitment to open markets. The schedule for this FTA was ambitious, but so was
Bahrain. We finished even earlier than expected, because Minister Saif and his government moved so
decisively to embrace open trade and free markets. I also want to thank the U.S. lead negotiator,
Cathy Novelli, and the entire negotiating teams of both countries for their hard work,” said
Zoellick.


Under the Trade Act of 2002, the Administration must notify
Congress at least 90 days before signing the agreement. The Administration will continue to consult
with the Congress on the agreement and will soon send a formal notification of its intent
to sign the U.S.-Bahrain FTA to Capitol Hill.


Background:


Two-way goods trade between the United States and Bahrain was $887
million in 2003. U.S. goods exports to Bahrain in 2003 totaled $509 million, including
aircraft, machinery, vehicles, pharmaceutical products, and toys, games and sports equipment.
U.S. exports of agricultural products to Bahrain in 2003 totaled $14 million, including
poultry, snack foods, cotton, and processed fruit and vegetables. Two-way foreign direct investment
is about $195 million.

The June 2002 U.S.-Bahrain bilateral Trade and Investment
Framework Agreement (TIFA) paved the way for a robust economic dialogue on promoting closer
economic ties, freer trade, greater openness, a stronger investment climate, and economic reforms.
After liberalizing its telecommunications market and passing legislation for transparent
government procurement and labor rights as part of the TIFA process, Bahrain joined the WTO
Information Technology Agreement, provided an open environment for electronic commerce,
took the initial steps to join and implement the World Intellectual Property Organization (WIPO)
Internet treaties, and pledged to treat agricultural biotechnology fairly.

Based on progress made through the TIFA discussions and Bahrain’ s
commitment to opening its economy, the United States and the Kingdom of Bahrain announced on
May 21, 2003, their intention to seek to negotiate a U.S.-Bahrain Free Trade Agreement. This was
followed by a visit to Bahrain in June 2003 by Ambassador Zoellick where he met with government
officials and business leaders and discussed how their economic reform agenda and support for
trade liberalization will complement the FTA negotiations. Formal notice to Congress of the
Administration’s intent to initiate negotiations for an FTA with Bahrain was sent on August
4, 2003. After a 90-day period for consultations between the Administration and the Congress, the
United States and Bahrain launched bilateral negotiations in Manama, Bahrain on January 26, 2004. A
total of three negotiating rounds were held, with teams of negotiators and specialists meeting in
Washington, Manama, London, and via digital videoconference.

In May 2003, the President announced his initiative to create a
Middle East Free Trade Area by 2013. The initiative is designed to deepen U.S. trade
relationships with all countries of the region, through steps tailored to individual countries’ level of
development. Since that announcement, the United States has concluded FTA negotiations with Morocco and
Bahrain, signed TIFAs with Saudi Arabia, the United Arab Emirates, Kuwait, Qatar and Yemen, and is
negotiating a TIFA with Oman. The U.S. already has TIFAs with Egypt, Algeria and Tunisia. The
United States recently held its first TIFA Council meetings with Tunisia, the UAE and Kuwait. In
addition, the U.S. has made progress with the WTO accessions of Saudi Arabia and Algeria, and
in the case of Algeria, extended GSP benefits.

The United States is working to open markets globally in the Doha
World Trade Organization (WTO) negotiations; regionally through APEC and the Free Trade
Area (FTAA) of the Americas negotiations; and bilaterally, with FTAs. The Bush Administration
has completed FTAs with eleven countries – Chile, Singapore, Costa Rica, the Dominican Republic,
El Salvador, Guatemala, Honduras, Nicaragua, Australia, Morocco, and now Bahrain – in the
last two years. Negotiations are under way or about to begin with ten more countries: Panama,
Colombia, Peru, Ecuador, Thailand, and the five nations of the Southern African Customs Union (SACU).
New and pending FTA partners, taken together, would constitute America’s third largest
export market and the sixth largest economy in the world.

For more details, please click on the fact sheet.