Trade Agreements

1. Bahrain and the WTO ⁽¹⁾

Kingdom of Bahrain has joined the World Trade Organization (WTO) on January 1, 1995 to support its participation in international trade and ensuring the use of the new opportunities offered by the international trading system.

2. Bilateral and Multilateral Agreements

Cooperation Council for the Arab States of the Gulf (GCC)

The highest authority of the organization is the Supreme Council of the GCC, which is represented by the heads of the member States. GCC Member States are : Bahrain , Kuwait, Oman, Qatar, Saudi Arabia , and the UAE.

GCC Member States established a custom union exempting from customs duties of all goods originating from within the GCC, and applying the common external tariff of 5% on most products and operates common laws on customs procedures and valuation; however, each Member State has the right to declare some products as prohibited and some as restricted.

In January 2008 the common services market was created. The GCC also has common legislation in several other areas including contingency measures, as well as SPS issues (including veterinary quarantine and plant quarantine), and standards and technical requirements.

The Greater Arab Free Trade Area (GAFTA)

Pursuant to Decision No. 1317 D 59, the Economic and Social Council, at a meeting held on 19/2/1997, adopted the Executive Program and set a timeline for the establishment of an Arab Free Trade Area in accordance with the 1981 Agreement for Facilitation and Promotion of Trade among Member Countries. Consequently, GAFTA has entered into force on 1/1/1998.

After entry into force of the agreement, all trade tariffs among Arab member countries were subject to a gradual phase-out from 1/1/1998 until 1/1/2005, which was the timeline set for establishing the Arab Free Trade Area. Since 1/1/2005 and on, all traded goods became exempted from all customs duties and other fees and charges having equivalent effect.⁽²⁾

GAFTA agreement consists of 18 member states – including Bahrain. They are Bahrain, Egypt, Iraq, Jordan, Kuwait, Lebanon, Libya, Morocco, Oman, Palestine⁽³⁾, Qatar, Saudi Arabia, Syria, Sudan, Tunisia, United Arab Emirates, Yemen and Algeria.

Bahrain – USA Free Trade Agreement ⁽⁴⁾

Bahrain is the first Gulf Cooperation Council (GCC) member and third Arab country to enter into a US free trade agreement. FTA between Bahrain and the United States was concluded in 2004. Bahrain was the first GCC country to conclude an agreement with the USA. This FTA, which entered into force in August 2006, covers trade in goods and services; it also has provisions on investment, intellectual property rights, e-commerce, labour, environment, and dispute settlement.

The Agreement provides tariff elimination in agricultural and non-agricultural goods with special provisions apply to trade in textile and apparel goods. All services sectors were liberalized, except for fishing, customs clearance, and postal services, and publishing of local newspapers.

This agreement carries specific rules of origin. The traded good should:⁽⁵⁾

• Be made entirely in Bahrain or US from Bahraini/US materials

• Or be made in Bahrain or US from significantly transformed foreign material with at least 35% of the value from Bahraini/US materials and costs of processing

• And be exported/imported directly from Bahrain or US. Combining/packaging operations and liquid dilution do not count as originating

For more information on Bahrain – USA FTA and for the text of Agreement, please visit http://www.amchambahrain.org/library/?book=8&book_title=US%20%20Bahrain%20FTA#section_11_tile_22

EFTA-GCC Free Trade Agreement ⁽⁶⁾

The GCC - EFTA⁽⁷⁾ Free Trade Agreement was signed in Hamar, Norway on 22 June 2009 and entered into force on 1 July 2015. The Agreement consists of a total of 93 Articles and 16 annexes; it also covers a broad range of areas including trade in goods, trade in services, government procurement, Intellectual property rights, Administration and dispute settlement and competition.

The EFTA-GCC Joint Committee, established by the Agreement, will supervise the application of the Agreement which also provides for dispute settlement through arbitration.

Industrial goods, including fish and other marine products, benefit from duty free access to the respective markets of the EFTA States as of the entry into force of the Agreement. For products imported into the GCC, most customs duties are eliminated. Certain products become duty free after a transitional period of 5 years, while some others remain excluded from tariff dismantling or excluded from the scope of application.

The Agreement also provides for tariff concessions on processed agricultural products. Basic agricultural products are covered by the bilateral agricultural agreements, which are part of the instruments establishing the free trade area between the Parties. With regard to rules of origin, the Agreement is based on the European model, incorporating EUR.1 movement certificates. It furthermore includes provisions on antidumping, state trading enterprises and subsidies, as well as sanitary and phytosanitary measures and technical regulations.

The Agreement also include separate arrangements for trade in services, investment, competition, e- commerce, IPR, and government procurement.

GCC-Singapore Free Trade Agreement (GSFTA) ⁽⁸⁾

The GCC-Singapore FTA (GSFTA) was signed in Doha, Qatar on 15 December 2008 and entered into force on 1 January 2015. It is a milestone agreement in strengthening ties between the GCC countries and Singapore, particularly because it is the first Free Trade Agreement (FTA) signed by the GCC and the second FTA that Singapore will be signing with the Middle East.

The GSFTAs Trade in Goods arrangements allows the GCC goods full duty-free access to Singapore market. The GSFTA also qualify 99% of Singaporean domestic exports to the GCC for tariff-free concessions. Some of the remaining goods shall maintain the base rates for five years from the date of entry into force of this Agreement. Thereafter, such goods shall be allowed import into the GCC free of customs duties The rest of the goods shall not enjoy any elimination or reduction of customs duties under the Agreement .Key GCC sectors benefitting include petrochemicals, jewelry, machinery and iron and steel-related industry.

The Agreement is a comprehensive one that includes also Trade in Services, mutual recognition, Rules of Origin, Customs Procedures, and Government Procurement.

Generalized System of Preferences (GSP) ⁽⁹⁾

Bahrain does not grant Generalized System of Preferences (GSP) treatment to any countries; while it is a beneficiary of GSP treatment provided by Australia, Turkey, Belarus, Kazakhestan, Russian Federation, and Switzerland.

3. On going negotiations ⁽¹⁰⁾

The GCC (including Bahrain) is currently negotiating free trade agreements with Australia, China, the EU, India, Japan, the Republic of Korea, MERCOSUR, Pakistan, and Turkey. A free trade agreement between GCC and New Zealand was signed by initials after 6 rounds of negotiations started in 2007.

^{(1) WTO Portal.}

^{(2) Provisions cited in this Program shall not apply to products or materials banned from importation, circulation or use in any member country for reasons related to religion, health, security and environment or because of quarantine rules. Member countries are required to submit a list of these products, as well as a list of any related amendments.}

^{(3) Palestine is the only country that is exempted from reducing its import duties, whereas its exports to Arab countries are exempted from any customs duties or other duties having equivalent effect; pursuant to the Arab Summit decision in Tunisia no.274 in 2004.}

^{(4) Trae Policy Review – Bahrain – WTO, 2014.}

^{(5) Bahrain Economic Development Board .EDB Bahrain}

^{(6) UAE Ministry of Economy}

^{(7) EFTA States are: Switzerland – Norway – Iceland -Liechtenstein}

^{(8) ibid}

^{(9) Generalized System of Preferences – List of Beneficiaries – UNCTAD report, 2018}

^{(10) UAE Ministry of Economy}