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United States and Bahrain Sign Free Trade Agreement

September 14, 2004

First FTA with Persian Gulf Partner; Opens Markets, Promotes Liberty and
Opportunity in the Middle East and Fulfills 9/11 Commission Recommendation

WASHINGTON – U.S. Trade Representative Robert B. Zoellick and Minister of
Finance and National Economy Abdulla Hassan Saif today signed the U.S.-Bahrain
Free Trade Agreement, a comprehensive agreement that will not only remove trade
barriers and expand regional opportunities for the peoples of both countries,
but will also promote liberty and opportunity in the Middle East.

Two-way trade was nearly $900 million in 2003. On the first day this
agreement goes into effect, 100 percent of consumer and industrial products and
81 percent of U.S. agricultural exports will be duty free. Bahrain will open its
services market wider than any previous FTA partner, streamline digital trade,
protect intellectual property, facilitate government procurement, and provide
for effective enforcement of labor and environmental laws. In 2003, U.S. exports
totaled more than half a billion dollars. This new trade opening will expand
opportunities for exports of aircraft, machinery, vehicles, pharmaceutical and
agricultural products such as meats, fruits and vegetables, cereals, and dairy

"The U.S.-Bahrain FTA will enhance commercial relations with an economic
leader in the Gulf, and set the stage for improving trade relations and
expanding openness with other countries in the region, creating prosperity,
opportunity, and hope," said Zoellick. "This free trade agreement is the next
step for a nation on the move. Free trade negotiations often last more than a
year, but Bahrain’s decisive embrace of open trade and free markets paved the
way for these negotiations to close in four months.

"Last year, President Bush outlined a step-by-step plan to achieve a Middle
East Free Trade Area. With the hand of U.S. economic partnership, the United
States will embrace and encourage reformers across the region. The 9/11
Commission urged the United States to expand trade with the Middle East and
highlighted this FTA with Bahrain, as well as our recently passed FTA with
Morocco as examples of positive steps in this direction," said Zoellick, who
visited Bahrain in June 2003.

Also in attendance were Representatives Paul Ryan (R-WI) and Jim Turner
(D-TX) and representatives from the U.S.-Bahrain FTA Business Coalition, which
is co-chaired by Alcoa and Citigroup and currently has 50 members. The Business
Coalition represents a broad range of industries including construction, energy,
services, autos, pharmaceutical, information technology, and defense

The signing of the final agreement took place in the Indian Treaty room in
the Eisenhower Executive Office building, where the UN Charter and the treaty
establishing the International Monetary Fund (IMF), were signed.


U.S.-Bahrain Free Trade Agreement

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. Bahrain’s goods exports to the United States in 2003 totaled
$378 million, including articles of apparel and clothing accessories, aluminum,
fertilizers, organic chemicals, mineral fuels and oils, plastics, and electrical
machinery. Two-way foreign direct investment is about $195 million.

Based on progress made through discussions under the U.S.-Bahrain bilateral
Trade and Investment Framework Agreement (TIFA) and Bahrain’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. 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, and agreement was reached in May. President
Bush formally notified Congress of his plan to sign an FTA with Bahrain on June
15. The draft text was made available to the general public on June 18, 2004,
only 3 weeks after conclusion of the negotiations.


The 9/11 Commission Report and the Bahrain Free Trade Agreement

The U.S. government has announced the goal of working toward a Middle East
Free Trade Area, or MEFTA, by 2013. The United States has been seeking
comprehensive free trade agreements (FTAs) with the Middle Eastern nations most
firmly on the path to reform. The U.S.-Israeli FTA was enacted in 1985, and
Congress implemented an FTA with Jordan in 2001. Both agreements have expanded
trade and investment, thereby supporting domestic economic reform. In 2004, new
FTAs were signed with Morocco and Bahrain, and are awaiting congressional
approval. These models are drawing the interest of their neighbors. Muslim
countries can become full participants in the rules-based global trading system,
as the United States considers lowering the trade barriers with the poorest Arab

Recommendation: A comprehensive U.S. strategy to counter terrorism should
include economic policies that encourage development, more open societies, and
opportunities for people to improve the lives of their families and to enhance
prospects for their children’s future.

The 9/11 Commission Report

Pages 378-379


U.S. Efforts to Promote Trade Globally, Regionally and Bilaterally

In May 2003, the President announced his initiative to create a Middle East
Free Trade Area (MEFTA) 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, and signed TIFAs
with Saudi Arabia, the United Arab Emirates, Kuwait, Qatar, Yemen, and Oman. The
United States already has TIFAs with Egypt, Algeria, and Tunisia. The United
States recently held its first TIFA Council meetings with Tunisia, the UAE,
Kuwait, and Qatar. In addition, the United States has made progress with the WTO
accessions of Saudi Arabia and Algeria, and in the case of Algeria, extended GSP

The U.S. Congress recently approved free trade agreements with Australia and
Morocco by wide margins (Australia passed the House 314 to 109 and the Senate 80
to 16; Morocco passed the House 323 to 99 and the Senate 85 to 13). In addition,
Congress also recently passed the African Growth and Opportunity Act (AGOA)
Acceleration Act, a duty-free preference program designed to promote economic
development in sub-Saharan Africa’s by expanding access to the U.S. market.

This Administration has completed free trade agreements with 12 countries:
Jordan, Chile, Singapore, Guatemala, El Salvador, Honduras, Nicaragua, Costa
Rica, Australia, Morocco, the Dominican Republic, and Bahrain. The United States
is currently negotiating free trade agreements with ten more countries: Panama,
Colombia, Ecuador, Peru, Thailand, and with the five nations of the Southern
African Customs Union (SACU) – Botswana, South Africa, Lesotho, Swaziland, and
Namibia. New and pending FTA partners, taken together, would constitute
America's third largest export market and the sixth largest economy in the

The United States is working to open markets globally in the Doha World Trade
Organization (WTO) negotiations. On July 31, WTO negotiations were moved ahead
in Geneva with an agreement that puts the WTO on course to open markets for
agriculture, goods and services. The agreed framework provides structure and
direction to the ongoing trade talks, which are designed to promote global
economic growth and development in developed and developing countries. The
United States is also working to open markets regionally with the Free Trade
Area of the Americas (FTAA) negotiations.