Bahrain-US free trade negotiations began in 1999 with the signing of the Bilateral Investment Treaty (BIT) which entered into force on March 30, 2001. A year later, the groundwork for the Bahrain-US Free Trade Agreement (FTA) was laid with the signing of the Trade and Investment Framework Agreement (TIFA) on June 18, 2002. Dialogue on economic reform and liberalization continued between both countries and negotiations for the FTA were launched on January 26, 2004 in Manama, Bahrain. With the goal of promoting increased trade between the two countries through the reduction of barriers between the two countries, the FTA was signed September 14, 2004 and entered into force on August 1, 2006. Bahrain is the first Gulf Cooperation Council member and third Arab country to enter into a free trade agreement with the U.S.
By removing or reducing tariffs and other trade barriers, the FTA represents an opportunity for Bahraini businesses to expand the market for Bahraini goods and services in the United States. First, duty-free access to the U.S. market will make Bahraini goods and services more cost competitive. Second, easier access to U.S. markets should make it possible to expand Bahrain’s services sector through the cross-border supply of services or through establishment in the U.S. Third, the FTA further reduces or eliminates remaining barriers to inward investment by American investors that were not already lowered under the bi-lateral investment treaty concluded between the two countries in September 1999. By so doing, the FTA creates new opportunities for partnering and other business arrangement that can facilitate the exchange of technology, know-how and expertise, all of which can contribute to making Bahraini goods and services more competitive in the U.S. and other export markets.
It is important to understand that the FTA is directed at revising government measures, tariff and otherwise, that have affected international trade between Bahrain and the U.S. It does not, by itself, create any new trade between Bahrain and the U.S. Rather it removes the impediment to international trade posed by these various measures. The purpose of this Guide is to provide Bahraini businesses with access to the tools, practice tips, and information resources they can use to take advantage of the new environment under the FTA.