BAHRAINIS TELL COMMERCE DELEGATION THEY ARE

C O N F I D E N T I A L SECTION 01 OF 03 MANAMA 001700

SIPDIS

SIPDIS

STATE FOR NEA/ARP, EB
STATE PASS USTR FOR J BUNTIN
COMMERCE FOR 4520/ITA/MAC

E.O. 12958: DECL: 09/24/2016
TAGS: ETRD ECON EINV PREL BEXP BA BILAT ECTRD
SUBJECT: BAHRAINIS TELL COMMERCE DELEGATION THEY ARE
ANXIOUS TO IMPLEMENT, BENEFIT FROM FTA

Classified By: Ambassador William T. Monroe for reasons 1.4 (b) and (d)

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Summary
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1. (C) Deputy Assistant Secretary of Commerce Vineyard's
September 12-14 visit to Bahrain served to celebrate the
August 1 implementation of the U.S.-Bahrain Free Trade
Agreement (FTA),the first with a Gulf country. Vineyard
stated that the agreement enables the bilateral commercial
relationship to catch up to the long-standing strategic
relationship, noting that two-way trade could exceed $1
billion for the first time in 2006. Minister of Industry and
Commerce Fakhro stressed that King Hamad is fully committed
to the FTA and the bilateral relationship. He cautioned that
Bahraini firms would have to improve the quality of their
products to penetrate the American market, and hoped that
U.S. companies investing in Bahrain would share their
technology, training, and management expertise. Economic
Development Board Deputy CEO Hejres pledged a "fast track,
transparent process" for Americans investing in Bahrain.
Several interlocutors identified the need for further
outreach and education on the FTA so that the benefits of the
agreement are spread throughout the business sector. End
Summary.

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Celebrating the FTA
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2. (SBU) Deputy Assistant Secretary of Commerce Holly
Vineyard and Commerce Office of the Middle East Desk Officer
Carl Oberg, accompanied by the Ambassador and Pol/Econ Chief,
met with a range of Bahraini government officials, business
leaders, and organizations during a September 12-14 visit to
celebrate the August 1 implementation of the U.S.-Bahrain
Free Trade Agreement. In all the delegation's meetings,
Bahrainis expressed a strong interest in implementing and
benefiting from the agreement, but many pointed to a need for
Bahrain's private sector to become more pro-active in
pursuing business deals with American companies and improving
their product quality, packaging, and marketing.


3. (SBU) In the meetings, DAS Vineyard explained that the
FTA enables the bilateral commercial relationship to catch up
to the long-standing strategic relationship between our two
countries. In recognition of Bahrain's importance as the
first country in the Gulf with both an FTA (and an AmCham),
the newly released 2006 National Export Strategy discusses
implementation of the FTA and steps to promote it. The FTA
is an essential building block in realizing the President's
vision of a Middle East Free Trade Area by 2013. She noted
that bilateral trade could exceed $1 billion for the first
time in 2006. Several organizations, in addition to the
AmCham, were in place to assist businesses pursuing
opportunities, such as U.S.-Bahrain Joint Business Council
(which was launched September 14 in Washington) and the
Bahraini FTA Implementation Committee. DAS Vineyard offered
the resources of the Department of Commerce, in particular
the over 100 Export Assistance Centers in the United States,
to help Bahraini trade missions and companies do business
with American counterparts.

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Bahrain Fully Committed to FTA, Bilateral Relations
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4. (C) Minister of Industry and Commerce Hassan Fakhro
opened the September 12 meeting with the delegation by
emphasizing that King Hamad is fully committed to the FTA and
the bilateral relationship with the United States. Reading a
statement (that was later issued to the media),he lauded
both countries for negotiating, ratifying, and implementing
the FTA. He cautioned, however, that Bahraini industries
must improve quality standards to meet U.S. requirements and
benefit from commercial opportunities. "A lot will depend on
the readiness of our private sector to meet the challenges of
penetrating the vast, sophisticated U.S. market," he said.
Bahraini companies must meet the expectations of their
American counterparts, in particular in quality and
conforming to standards. He hoped that U.S. companies that
decide to invest in Bahrain would be able to share their
technology, training, and management expertise. "This should
further bolster our status as the industrial and financial

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hub of the region and also spread the benefits of the FTA to
the rest of the region and beyond," he concluded.


5. (C) In a September 13 meeting, Bahrain Economic
Development Board (EDB) Deputy CEO Zakariya Hejres told the
delegation that the FTA should be a role model for the
region. The EDB had already begun promoting and marketing
the agreement to attract other regional countries to invest
in Bahrain. The EDB is also focusing on encouraging U.S.
joint ventures in Bahrain. He pledged to provide a "fast
track, transparent process" for American investors. In the
same meeting, Director of Agreements and Treaties in the
Ministry of Cabinet Affairs Jameel Al Alawi said that the FTA
is having beneficial impacts inside Bahrain in areas other
than trade. Fro example, it is promoting transparency in
government decision-making. He noted that in discussions
with colleagues, they agree now on the need for consultations
with stake holders on new laws and regulations.

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Time for Private Sector Leadership
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6. (C) Ministry of Finance Assistant Under Secretary for
Economic Activities Mahmoud Al Kooheji told the delegation
September 14 that completing the agreement was a major
accomplishment, but now it is time for the private sector to
take the lead. He indicated that Bahraini business people
have failed to take advantage of other trade deals completed
by the government, and that the government's role is to push
the private sector to take on a sense of ownership. Ministry
of Finance Director for Economic Planning Yousef Humood added
that Bahrain stresses the positive impact of the FTA on
raising standards when discussing the FTA with other GCC
countries. Kooheji said that some Saudi companies have
expressed an interest in investing in Bahrain to benefit from
the tariff advantages granted to Bahraini exports under the
agreement.

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Requests for Technical Assistance
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7. (C) President of Ports and Customs Shaikh Daij bin Salman
Al Khalifa committed the Customs Department to full
implementation of the FTA, saying Customs will be a
facilitator of trade. He expressed his appreciation for
earlier training from U.S. Customs, and said he still has
much to do to modernize, streamline, and right-size his
department. He promised to forward a request for additional
technical assistance. He suggested establishing a hotline to
link the two customs services to resolve issues quickly, and
named Director of Customs Affairs Sami Humaid as the single
point of contact for any customs issues related to bilateral
trade.


8. (C) The EDB's Hejres also requested continued USG
technical support. He said that Booz Allen Hamilton (BAH)
had drafted a report, funded by MEPI, identifying the sectors
of the Bahraini economy that could benefit the most from the
FTA. The companies in those sectors now need additional
guidance on making contact with American counterparts and
marketing and promoting their products. He asked whether the
USG could fund additional BAH work to organize
sector-specific matchmaking sessions and tutorials on
breaking into the American market. DAS Vineyard agreed to
consider any Bahraini proposals, but suggested that the FTA
Implementation Committee meet with similar groups in Jordan
and Singapore to learn about how those countries benefited
from their U.S. FTAs. Additionally, USDOC could play a role
in organizing video conferences on specific FTA topics with
Bahraini business people.

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Comment
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9. (C) The Commerce delegation's visit served to highlight
the historic accomplishment of Bahrain being the first Gulf
country to implement a free trade agreement with the United
States. Bahraini papers covered the visit and the FTA for
five days of extensive press play. DAS Vineyard's appearance
at the best-attended AmCham event ever held in Bahrain, and
at a reception hosted by the Ambassador to celebrate the FTA,
added to the positive press coverage. There is tremendous

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interest among Bahraini officials and business people in
understanding the agreement and benefiting from it. Coupled
with Bahrainis' joy and pride, however, is a feeling that
they do not know how to take the first small steps to pursue
trade in the U.S. Even those familiar with exporting to
Europe express concern that they do not know how to attract
the attention of potential American business partners, and
that U.S. standards and packaging regimes are different from
and more complex than those in Europe. Bahraini business
people, with support from their government, can learn from
each other and from their counterparts in Jordan and
Singapore on how to trade with American companies. But we
will also have to remain focused on spreading awareness of
the FTA so that the benefits are felt throughout the business
community and economy.


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MONROE