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This is a press release, Gulf Press did not intervene in drafting or editing it, neither verified its contents
U.S. envoy sees growing trade ties with Bahrain
2 November 2006
MANAMA U.S. ambassador to Bahrain William Monroe has given a speech on the free trade agreement (FTA) at a meeting of the American Chamber of Commerce in Bahrain (Amcham).
He said the Amcham is a relatively new organization in Bahrain, established in the wake of the FTA negotiations with the aim of helping and serving what they -- and we -- hope will be a growing American business community in Bahrain. I am pleased that the Amcham in Bahrain is growing, and that it was further strengthened this fall by its merger with the American Association in Bahrain (or AAB), an organization that has long served the American business community in Bahrain.
As you all know, the U.S.-Bahrain Free Trade Agreement took effect on August 1. The FTA is a first-class agreement that offers unprecedented opportunities to expand trade and investment ties between our two countries. It reflects both the historically good relations between the United States and Bahrain, and the strong desire of both countries to promote free trade between the United States and the region.
I am frequently asked by Bahraini business people here how they can take advantage of the Free Trade Agreement. In asking this question, I am afraid that there are some people who have a misunderstanding of what exactly the FTA does. What it does do is provide a framework for trade and investment. It does this in several ways. It immediately reduces tariffs to zero for virtually all products. It eliminates barriers in the services sector. And the FTA signals to traders and investors that the U.S. Government considers Bahrain a good and sound place to do business. I call it the U.S. Government's "seal of approval." A Bahraini businessman put it to me a different way the other day. He said it signals that Bahrain is "pre-qualified" for business for U.S. companies. In other words, Bahrain is a good place to do business.
What the FTA does not do is automatically direct trade or business to Bahrain. There are no "FTA contracts" waiting to be handed out. There is no "FTA fund" ready to be tapped to finance trade between our two countries. The FTA, quite simply, provides the framework for trade and investment, but it is up to the private sector to take advantage of the benefits offered by the FTA.
So what should Bahrain do to make sure it maximizes the benefits from the FTA? What can the Government of Bahrain, and Bahraini companies, do to attract U.S. trade and investment?
Let me begin to answer that question by talking about a trip I just took with eight of my American Ambassadorial colleagues in the region to the United States. Called the "U.S. Middle East Ambassadors Tour," we met with prominent business groups in Los Angeles, San Diego and San Bernardino County, Chicago, and New York City. We had an opportunity to talk with numerous companies, large and small, interested in doing business in the Middle East. Naturally, I used the opportunity to spread the word about our new Free Trade Agreement with Bahrain.
Listening to the discussions and conversations we had throughout this trip, I came away with some interesting impressions:
First, business is booming between the United States and the Middle East. The countries of this region are welcoming U.S. business. Three countries -- Jordan, Morocco, and Bahrain -- already have FTAs. An FTA with a fourth country -- Oman -- should take effect by early next year. Discussions on an FTA with the UAE continue. U.S. trade with the region is up sharply. U.S. exports to the Arab countries of the Middle East and North Africa during the first eight months of this year have increased 38.4 percent compared to the same period in 2005. Exports to the Gulf are doing particularly well -- exports are up 58.5 percent to the UAE, up 44.5 percent to Oman, up 49.4 percent to Qatar, up 29.2 percent to Saudi Arabia, and up 17.3 percent to Kuwait. And exports to Morocco, the country with which a U.S. free trade agreement went into effect at the beginning of this year, have grown 60 percent in the first eight months of 2006.
So how is Bahrain doing? Quite well, actually. U.S. exports to Bahrain through the first eight months of the year totaled $296 million, an increase of 43.6 percent compared with the same period in 2005. And U.S. imports from Bahrain are up an amazing 72.9 percent from 2005. In fact, U.S. imports from Bahrain through August ($433 million) already exceed total U.S. imports from Bahrain for the entire year in 2005. We expect two-way trade between our two countries to exceed $1 billion for the first time this year.
What do these figures tell us? First, trade with Bahrain even before the FTA came into effect on August 1 is expanding markedly. I think this reflects both the strong economic performance of Bahrain this year, as the country benefits from high oil prices and the inflow of money into the region, as well as the fact that companies are already lining themselves up to benefit from the FTA. But these trade statistics also suggests that Bahrain is going to face tough competition from its neighbors. There are strong, attractive markets throughout the region. Companies are not going to come to Bahrain just because of the FTA. The FTA is a strong selling point. But Bahraini companies, and the Government of Bahrain, are going to have to sell Bahrain as well.
A second impression I came away during my trip to the United States is that there are many American companies -- both large and small -- that are interested in doing business in the Middle East, including the Gulf. And there are numerous organizations that have an interest in developing or promoting trade with the countries of the Middle East. Let me list some of the organizations that I ran into during my recent trip:
In Los Angeles, our program was organized by the Southern California Regional District Export Council, chaired by Candace Chen. This dynamic organization is interested in looking for opportunities to help promote trade with the Middle East.
In Chicago, I met officials from the World Trade Center - Chicago (the sponsor of our Chicago stop) as well as the State of Illinois Office of Trade and Investment. Both organizations are interested in helping companies from the state of Illinois develop commercial relations with the Middle East.
In New York, the Business Council for International Understanding took the lead organizing our program. While in New York, I met the Executive Director of the Houston-based Bilateral US-Arab Chamber of Commerce, who is ready to welcome trade missions from Bahrain and the region to Texas . And I also met the President of the Philadelphia-based Joint Middle East American Trade Center; she is planning to bring a small trade mission of American companies to Bahrain later this month.
In each city we visited, I was impressed with active U.S. Department of Commerce international trade specialists who stand ready to promote trade with the Middle East.
I should also mention the newly-formed U.S.-Bahrain Business Council, which held its inaugural meeting in Washington on September 14 with the aim of promoting commercial activities in Bahrain. Significantly, Daeman Harris of the American Chamber of Commerce in Washington has been named interim Executive Director of the Council. And the Middle East Free Trade Coalition of U.S. companies, which played an active role in promoting passage of the FTA, remains ready to promote trade and investment with Bahrain. And finally, Bahrain has an excellent and dynamic Ambassador in Washington, Dr. Nasser Al-Baloushi, who works tirelessly to promote Bahrain and the FTA in the United States.
In short, there is no shortage of people and groups in the United States ready to promote trade with the Middle East in general and, I believe, Bahrain in particular.
So what should Bahrain do? In a tough competitive region, how can Bahrain sell itself in the United States as a place to do business? Clearly, with the Free Trade Agreement in effect, now is the time for Bahrain to send trade promotion missions to different cities in the United States to spread the word about the FTA and the advantages of trading and investing in Bahrain. These could be organized by the private sector itself for example, the Amcham or the Bahrain Chamber of Commerce and Industry. Or they could be led by government leaders to give a broader promotional context.
And what should the message be? The FTA is an obvious selling point. American companies looking to do business in the region need to know about the FTA and the tariff and other advantages the FTA offers. But the FTA itself is not enough. Thought must also be given to what else Bahrain has to offer. For example:
-- Regional Hub: Bahrain has great potential as a regional hub serving the northern Gulf. It will soon have a new port. It has plans to expand its airport. It is opening up its telecommunications sector. It will soon have new office space coming open with such projects as the Financial Harbor, World Trade Center, and Bahrain Bay.
-- Location: Bahrains location just a causeway drive from the eastern province of Saudi Arabia can be a strong drawing point. Saudi Arabia is a huge market, and it can be serviced or exploited from Bahrain.
-- Financial sector: Bahrain may be facing increasing competition as a financial hub from places like Dubai, but its well-regulated financial system remains an important selling point.
-- Quality of Life: I think we can all agree that Bahrain is a nice place to live. Housing is cheaper than in Dubai. Dont underestimate the importance of a good American School. I was told by one business executive I met during my recent trip that he had chosen to open an office in Bahrain rather than Dubai because the waiting list for the American school in Dubai was three years.
-- Investor Friendly: Bahrain has an advantage over some of its neighbors in that it does not require a local partner for industrial investments. It has been introducing measures to streamline the investment approval process. It is opening up new industrial parks. Of course, the proof will come in the results: if investors find the process to be smooth, transparent, and investor friendly, the word will spread and that will be a strong selling point.
Let me conclude by saying there are many reasons to be optimistic. With high oil prices, the economies of the region are doing well. U.S. trade with the region is growing rapidly. The U.S. Free Trade Agreement with Bahrain offers an unquestioned opportunity for Bahrain to expand trade and investment relations with the United States. But the competition will be tough. Dubai continues to grow as the economic and commercial powerhouse of the Gulf. Oman will soon have an FTA of its own. We all know that Qatar has money and is ready to spend it. So the Bahrain Government, and Bahraini companies, will need to move quickly to promote the FTA and the advantages that Bahrain has to offer. And it will need to produce results for those companies that decide to come here to trade and invest.

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