The bilateral trade witnessed a remarkable increase by almost the double since the FTA came into force from nearly $1.1 billion in 2006 to $2 billion in 2012.
“This is a clear message to our Bahraini business community that comprises of the growing SMEs to take a more active part in the rising bilateral trade relations between our two countries,” the Minister said.
The Minister was addressing the seminar titled “Free Trade Agreement and Export Opportunities for entrepreneurs and Small and Medium Bahraini enterprises” held at Bait Al Tujjar in collaboration with the Ministry of Industry and Commerce, SMEs Society, USA Embassy, Bahrain Chamber of Commerce and Industry.
During the opening ceremony, the Minister said that the FTA between Bahrain and the United States was signed with an aim of strengthening the commercial and economic relations between the two countries and providing Bahrain tariff free access to the world’s largest economy.
“Through elimination of trade barriers, the Free Trade Agreement not only promotes open and competitive markets but also has the potential of creating new employment opportunities, as companies in Bahrain expand in order to develop their exports to the United States, and the country generally benefits from economic growth and the transfer of new technology and know-how to Bahraini businesses,” he added.
“Moreover, the FTA also creates a strong set of economic, commercial and legal links between Bahrain and the largest economy in the world. As the first country in the GCC to execute a Free Trade Agreement with the United States, Bahrain achieved a unique first-foot advantage over other countries in the region, and at the same time enhanced its position as the regional financial and commercial centre.
“The elimination of tariffs under the US-Bahrain FTA allows Bahraini suppliers of goods and services to be more competitive prices in the US market. Bahraini manufactured goods which qualify under the Agreement will afford buyers considerable cost savings in terms of import duty. Bahraini exporters also have a competitive advantage in the US over competing third country exporters that do not have the duty benefits provided under the FTA,” he said.
Under the FTA, the US Government provides access for Bahraini service suppliers in important service sectors such as accounting, architecture, engineering, advertising, construction, tourist services, business consultancy and management, and publishing. In addition, Bahrain-based financial services providers are granted full rights to establish subsidiaries, joint ventures or branches for banks and insurance companies. Bahraini insurance providers are also able to supply insurance on a cross border basis.
The Minister added that these opportunities do not materialise simply from the ratification of the Free Trade Agreement by both countries.
“I would like to remind everyone that the Agreement creates only a legal framework for the exchanges of preferential trade treatment between the two nations, however it is the private sector that creates the commercial exchange, not the Governments, and it is up to the private sector to take full advantage of these opportunities and capture the benefits. For its part, the Ministry of Industry and Commerce is fully committed to promote the mutually beneficial implementation of the FTA, and to facilitating the private sector in the development of exports to the United States, and indeed to all export markets,” the Minister said.
“Bahrain was the first of only two countries in GCC to have a Free Trade Agreement with the world’s largest economy. The wise leadership of Bahrain has provided the private sector entrepreneurs with a significant export opportunity; an opportunity which the private sector, and in particular the small and medium enterprises (SMEs)must make efforts to realize as quickly as possible before the advantage is eroded by virtue of multi-lateral negotiations to reduced tariff levels.
“Whilst some SMEs may not have the infrastructure, institutional capacity or other resources needed to develop their products, services or their export mechanisms to take advantage of the FTA opportunities, it may be possible for SMEs to collaborate together, with others in the same or similar industry, and indeed even through a sector specific mechanism, such as a trade group or industry association. In any event the opportunities presented to SMEs by the FTA, are far too important for SMEs not to pull out all the stops to maximize the export advantages that the FTA provides.
“Opportunities may also exist to explore collaborative arrangements to attract US investment in Bahrain as the stable investment framework in Bahrain provides an enabling environment to attract US investment particularly for companies seeking a regional base.
“Opportunities may also exist for collaboration with other FTA countries, as the FTA agreement provides for ‘regional accumulation’, thereby allowing an export product to consist of elements from more than one country in order to meet the Rules of Origin requirement,” the Minister added.