U.S. and Bahrain Sign Free Trade Agreement (Congressional Approval, Etc. Still Required)

According to the press release, this is the first FTA with a Persian Gulf partner and it fulfills the recommendation by the 9/11 Commission that the U.S. needs a comprehensive strategy to counter terrorism that includes economic policies that encourage development, etc.

During remarks made at the signing of the U.S.-Bahrain FTA, USTR Zoellick stated that during the week of September 6, 2004, he consulted with Congress about moving forward with two other possible FTAs in the Gulf - with the United Arab Emirates and with Oman.

Next Step in Implementing U.S.-Bahrain FTA is Congressional Approval

According to U.S. government sources, since the U.S. and Bahrain have signed the U.S.-Bahrain FTA, the next step is for the President to formally submit the U.S.-Bahrain FTA implementing legislation package (U.S.-Bahrain FTA, implementing legislation, and statement of administrative action) to Congress. Congress will then have a total of 90 legislative days to consider the U.S.-Bahrain FTA implementing legislation, which cannot be amended.

If the U.S.-Bahrain FTA implementing legislation is passed by Congress (both House and Senate), it could then be signed into law by the President, the U.S. and Bahrain could exchange diplomatic notes, and the President could issue a proclamation implementing the U.S.-Bahrain FTA.

Administration sources continue to state that their "goal" is to complete the above steps in 2004 so that the U.S.-Bahrain FTA could take effect as early as January 1, 2005, noting that they expect to transmit the U.S.-Bahrain FTA implementing legislation package to Congress within the next few days.

Highlights of U.S.-Bahrain FTA

The USTR has previously described the U.S.- Bahrain FTA provisions, many of which would take effect immediately when it is implemented (partial list):

Bilateral trade in consumer and industrial products would become duty-free immediately. 100% of bilateral trade in consumer and industrial products would become duty-free immediately upon entry into force of the U.S.-Bahrain FTA.

Bahrain would provide immediate duty-free access for U.S. agricultural exports in 98% of agricultural tariff lines. Bahrain would provide immediate duty-free access for U.S. agricultural exports in 98% of agricultural tariff lines and would phase out tariffs on the remaining products within 10 years

U.S. would provide immediate duty-free access on 100% of Bahrain's current exports of agricultural products to U.S. Among other things, the U.S. would provide immediate duty-free access on 100% of Bahrain's current exports of agricultural products to the U.S.

Duty-free benefits for "yarn forward" and "transitional allowance" textiles and apparel. Under the U.S.-Bahrain FTA, textile and apparel trade would be duty-free immediately, promoting new opportunities for U.S. and Bahraini fiber, yarn, fabric, and apparel manufacturing. The U.S.-Bahrain FTA would require 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 Bahraini producers can develop and expand business contacts.

Nondiscriminatory treatment of digital products. 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.

Streamlined and transparent Customs procedures. The FTA requires transparency and efficiency in customs administration, including publication of laws and regulations on the Internet and procedural certainty and fairness. Both the U.S. and Bahrain agree to share information to combat illegal transshipment of goods, and special customs cooperation measures to prevent fraud in the textile and apparel sector. In addition, the FTA requires customs procedures designed to facilitate the rapid clearance through customs of express delivery shipments.

USTR press release (dated 09/14/04) available athttp://www.ustr.gov/Document_Library/Press_Releases/2004/September/United_States_Bahrain_Sign_Free_Trade_Agreement.html.

Transcript of U.S.-Bahrain FTA signing ceremony (dated 09/14/04) available at http://www.ustr.gov/Document_Library/Transcripts/2004/September/Transcript_of_U.S._-_Bahrain_Free_Trade_Agreement_Signing_Ceremony_U.S._Trade_Representative_Robert_B._Zoellick_Bahrains_Min.html.

USTR fact sheet on U.S.-Bahrain FTA Textile and Apparel Provisions (dated 09/15/04) available at http://www.ustr.gov/Document_Library/Fact_Sheets/2004/U.S._-_Bahrain_FTA_Textile_Apparel_Provisions.html.

Additional information on the U.S.-Bahrain FTA available at

http://www.ustr.gov/Trade_Agreements/Bilateral/Bahrain_FTA/Section_Index.html.