Identifier
Created
Classification
Origin
06MANAMA2046
2006-12-14 13:29:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Manama
Cable title:
U.S.-BAHRAIN FTA: TRADE, INVESTMENT BOOMING, BUT
how-toVZCZCXRO5303 PP RUEHDE RUEHDIR DE RUEHMK #2046/01 3481329 ZNR UUUUU ZZH P 141329Z DEC 06 FM AMEMBASSY MANAMA TO RUEHC/SECSTATE WASHDC PRIORITY 6187 INFO RUEHZM/GULF COOPERATION COUNCIL COLLECTIVE PRIORITY RUEATRS/TREASURY DEPT WASHDC PRIORITY RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY RHMFIUU/HQ USCENTCOM MACDILL AFB FL PRIORITY RHBVAKS/COMUSNAVCENT PRIORITY
UNCLAS SECTION 01 OF 03 MANAMA 002046
SIPDIS
SENSITIVE
SIPDIS
STATE FOR NEA/ARP, EB/CBA
STATE PASS USTR FOR J BUNTIN
COMMERCE FOR 4520/ITA/MAC AND OGC/CLDP
TREASURY FOR JROSE
E.O. 12958: N/A
TAGS: ETRD ECON EINV PREL BEXP BA BILAT ECTRD
SUBJECT: U.S.-BAHRAIN FTA: TRADE, INVESTMENT BOOMING, BUT
PRIVATE SECTOR UNSURE OF PATH AHEAD
REF: A. MANAMA 1956
B. MANAMA 1700
C. 05 MANAMA 1919
Sensitive but unclassified; please protect accordingly. Not
for Internet distribution.
-------
SUMMARY
-------
UNCLAS SECTION 01 OF 03 MANAMA 002046
SIPDIS
SENSITIVE
SIPDIS
STATE FOR NEA/ARP, EB/CBA
STATE PASS USTR FOR J BUNTIN
COMMERCE FOR 4520/ITA/MAC AND OGC/CLDP
TREASURY FOR JROSE
E.O. 12958: N/A
TAGS: ETRD ECON EINV PREL BEXP BA BILAT ECTRD
SUBJECT: U.S.-BAHRAIN FTA: TRADE, INVESTMENT BOOMING, BUT
PRIVATE SECTOR UNSURE OF PATH AHEAD
REF: A. MANAMA 1956
B. MANAMA 1700
C. 05 MANAMA 1919
Sensitive but unclassified; please protect accordingly. Not
for Internet distribution.
--------------
SUMMARY
--------------
1. (SBU) The U.S. - Bahrain Free Trade Agreement (FTA)
entered into force on August 1, 2006 amid a period of booming
U.S. trade with the region. A number of U.S. companies,
including Tactics Middle East, Microsoft, Westpoint Home,
Kraft, and others have announced substantial new ventures,
many of them directly related to the FTA. The Bahraini
Economic Development Board (EDB) and the Embassy are each
working to track and respond to commercial inquiries related
to the FTA. U.S. and Bahraini government officials have
taken steps to support the FTA's implementation and encourage
its success. However, the GOB continues to rely upon the USG
and AmCham for guidance. The Bahraini business community is
beginning to understand that the onus ultimately rests with
it to secure the benefits of the Gulf's first FTA. End
Summary.
--------------
TRADE DATA
--------------
2. (U) The U.S. - Bahrain Free Trade Agreement entered into
force on August 1, 2006. U.S. domestic exports to Bahrain
during the first three months of FTA implementation (August
through October) were up 58.8 percent compared to the same
period in 2005. January through October 2006 exports totaled
$395 million, an increase of 51.6% compared with the same
period in 2005. This exceeds the growth rate of total U.S.
domestic exports to the rest of the Gulf (Kuwait, Oman,
Qatar, Saudi Arabia and the United Arab Emirates) through
October, which reached 41.9%. The growth in U.S. exports to
Bahrain was broad-based, covering traditional product lines
like vehicles, aircraft and parts, and electrical and
mechanical machinery.
3. (U) U.S. imports from Bahrain during the first three
months of FTA implementation were down 5.25%, due mainly to a
decline in U.S. imports of Bahraini textiles and unusually
high U.S. purchases of fertilizer and petroleum in October
2005. However, U.S. imports from Bahrain for January through
October totaled $536 million, an increase of 50.8% compared
with the same period in 2005. This compares to the growth
rate in total U.S. imports from the rest of the Gulf of 20.6%
through October. U.S. imports from Bahrain grew mostly as a
result of a new aluminum production line coming into service.
--------------
NEW VENTURES
--------------
4. (SBU) U.S. firm Westpoint Home announced December 5 that
it had finalized negotiations to acquire three of Manama
Textiles' four divisions for an undisclosed sum, which
officials privately place at between $100 and $200 million
(Please protect as business proprietary information). Manama
Textiles CEO Hamid Nishat told the Ambassador that the
recently-implemented FTA had been a significant incentive to
Westpoint Home. Manama Textiles exports 75% of its
production to the U.S. Under the FTA, these exports are now
duty-free.
5. (U) The Ambassador attended the official ground-breaking
ceremony for Kraft Foods' $40 million cheese and beverage
plant December 6. The 600,000 square foot factory, which
will employ 250-300 workers, is due to be completed in 2007
and will produce cheese and powdered beverages for export in
the region.
6. (SBU) Microsoft recently decided to relocate its MENA
region headquarters from Turkey to Bahrain. Country Manager
Sherif Bayoumi said Microsoft had selected Bahrain for its
MANAMA 00002046 002 OF 003
favorable investment climate and regionally competitive cost
of living. He noted that EDB had done everything in its
power to facilitate Microsoft,s decision.
7. (SBU) Arcapita, Investcorp and Kuwait Finance
House-Bahrain (KFH) each hold a number of U.S. investments
and are open to considering more. KFH-Bahrain Project
Development Manager Osama Al Khajah told EconOff November 16
that Second Deputy Chairman Waleed Rashdan had traveled to
Colorado October 22 at the invitation of Bahraini Ambassador
Nasser Belooshi to study renewable energy-related joint
venture opportunities (Please protect as business proprietary
information).
8. (U) Tactics Middle East (TME) CEO Scott Revell announced
plans July 29 to build a $60 million car parts factory in
Bahrain, employing 100 workers. In addition to the
availability of affordable aluminum, Revell cites the FTA as
a draw for investment in Bahrain. Revell has said he
expected to begin exporting Bahrain-made products to the U.S.
in 2007.
--------------
INQUIRY TRACKING
--------------
9. (SBU) Post's Econ/Commercial Unit currently records an
average of thirty FTA-related inquiries per week from U.S.
and/or Bahraini entities. These calls range from questions
regarding specific FTA provisions to entrepreneurs seeking
joint-venture partners. Many of these calls reflect
inadequate understanding regarding international trade.
Typical are questions such as, "How can I use the FTA to
start a business in the U.S.?"
10. (SBU) The EDB plans to compile and consolidate the
FTA-related inquiries that it currently receives, as well as
those received by other governmental offices, including the
Ministries of Industry and Commerce, Finance, and the Central
Bank. Post will add the GOB,s figures to our database.
--------------
ACTIVITIES/PROMOTIONS/REACTIONS
--------------
11. (U) The International Executive Service Corps implemented
a three-part MEPI-funded program from May through November
2006 to educate Bahraini entrepreneurs regarding export
technicalities including customs regulations and procedures,
shipping procedures, marketing strategies and e-business
practices.
12. (SBU) Deputy Assistant Secretary of Commerce Vineyard's
visited Bahrain September 12 - 14 to celebrate the
implementation of the FTA (Ref. B). Vineyard told audiences
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. During the visit,
Minister of Industry and Commerce Hassan 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. EDB 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.
13 (U) The Ambassador delivered the keynote address at an
AmCham luncheon November 2 before an audience of over 100
guests and reporters in which he urged Bahrainis to work with
American companies to benefit from the FTA. The Ambassador
shared his observations following his return from a four-city
Ambassadors' tour in the U.S. to promote trade with the
Middle East. He noted that business is booming between the
United States and the Middle East and that while Bahrain is
currently doing well, Bahrainis would have to compete
aggressively to maximize Bahrain's share of trade
MANAMA 00002046 003 OF 003
opportunities.
14. (U) In an AmCham-sponsored FTA promotional breakfast
November 16, Commerce Assistant Secretary for Market Access
and Compliance Bohigian said the U.S. welcomes Bahraini
investment and noted that the majority of American foreign
trade takes place with our FTA partners. He called on the
business community to pursue the full benefits of the FTA in
the interest of furthering "friction-free" trade in Bahrain
and the region. A/S Bohigian responded to questions from the
audience following his remarks. As was the case during
Commerce Deputy Assistant Secretary Holly Vineyard's visit,
several questions illustrated an ongoing desire among many in
the local business community for specific guidance on
benefiting from the FTA (Ref. A).
15. (SBU) The AmCham is planning a trade mission to the
United States to raise Bahrain's profile with American
businesspeople, reportedly in February or March 2007. The
EDB is expected to participate and there is speculation that
the Crown Prince will participate in at least a part of the
trip.
16. (SBU) The Economic Development Board and the Bahrain
Chamber of Commerce and Industry formed the Bahrain FTA
Implementation Committee (FTAIC) December 2005 to develop a
strategy for maximizing the benefits of the FTA. (Ref. C).
The FTAIC has since reached out to various entities,
including the Bahrain Businesswomen's Society and the AmCham
to ensure an inclusive effort. The FTAIC November 12 signed
a memorandum of understanding with the National U.S.-Arab
Chamber of Commerce to promote the FTA. However, the FTAIC
has been criticized as being long on ceremony and short on
substance. One EDB official recently told EconOff that EDB
will look increasingly to the AmCham and the USG to help
point the way.
********************************************* ********
Visit Embassy Manama's Classified Website:
http://www.state.sgov.gov/p/nea/manama/
********************************************* ********
MONROE
SIPDIS
SENSITIVE
SIPDIS
STATE FOR NEA/ARP, EB/CBA
STATE PASS USTR FOR J BUNTIN
COMMERCE FOR 4520/ITA/MAC AND OGC/CLDP
TREASURY FOR JROSE
E.O. 12958: N/A
TAGS: ETRD ECON EINV PREL BEXP BA BILAT ECTRD
SUBJECT: U.S.-BAHRAIN FTA: TRADE, INVESTMENT BOOMING, BUT
PRIVATE SECTOR UNSURE OF PATH AHEAD
REF: A. MANAMA 1956
B. MANAMA 1700
C. 05 MANAMA 1919
Sensitive but unclassified; please protect accordingly. Not
for Internet distribution.
--------------
SUMMARY
--------------
1. (SBU) The U.S. - Bahrain Free Trade Agreement (FTA)
entered into force on August 1, 2006 amid a period of booming
U.S. trade with the region. A number of U.S. companies,
including Tactics Middle East, Microsoft, Westpoint Home,
Kraft, and others have announced substantial new ventures,
many of them directly related to the FTA. The Bahraini
Economic Development Board (EDB) and the Embassy are each
working to track and respond to commercial inquiries related
to the FTA. U.S. and Bahraini government officials have
taken steps to support the FTA's implementation and encourage
its success. However, the GOB continues to rely upon the USG
and AmCham for guidance. The Bahraini business community is
beginning to understand that the onus ultimately rests with
it to secure the benefits of the Gulf's first FTA. End
Summary.
--------------
TRADE DATA
--------------
2. (U) The U.S. - Bahrain Free Trade Agreement entered into
force on August 1, 2006. U.S. domestic exports to Bahrain
during the first three months of FTA implementation (August
through October) were up 58.8 percent compared to the same
period in 2005. January through October 2006 exports totaled
$395 million, an increase of 51.6% compared with the same
period in 2005. This exceeds the growth rate of total U.S.
domestic exports to the rest of the Gulf (Kuwait, Oman,
Qatar, Saudi Arabia and the United Arab Emirates) through
October, which reached 41.9%. The growth in U.S. exports to
Bahrain was broad-based, covering traditional product lines
like vehicles, aircraft and parts, and electrical and
mechanical machinery.
3. (U) U.S. imports from Bahrain during the first three
months of FTA implementation were down 5.25%, due mainly to a
decline in U.S. imports of Bahraini textiles and unusually
high U.S. purchases of fertilizer and petroleum in October
2005. However, U.S. imports from Bahrain for January through
October totaled $536 million, an increase of 50.8% compared
with the same period in 2005. This compares to the growth
rate in total U.S. imports from the rest of the Gulf of 20.6%
through October. U.S. imports from Bahrain grew mostly as a
result of a new aluminum production line coming into service.
--------------
NEW VENTURES
--------------
4. (SBU) U.S. firm Westpoint Home announced December 5 that
it had finalized negotiations to acquire three of Manama
Textiles' four divisions for an undisclosed sum, which
officials privately place at between $100 and $200 million
(Please protect as business proprietary information). Manama
Textiles CEO Hamid Nishat told the Ambassador that the
recently-implemented FTA had been a significant incentive to
Westpoint Home. Manama Textiles exports 75% of its
production to the U.S. Under the FTA, these exports are now
duty-free.
5. (U) The Ambassador attended the official ground-breaking
ceremony for Kraft Foods' $40 million cheese and beverage
plant December 6. The 600,000 square foot factory, which
will employ 250-300 workers, is due to be completed in 2007
and will produce cheese and powdered beverages for export in
the region.
6. (SBU) Microsoft recently decided to relocate its MENA
region headquarters from Turkey to Bahrain. Country Manager
Sherif Bayoumi said Microsoft had selected Bahrain for its
MANAMA 00002046 002 OF 003
favorable investment climate and regionally competitive cost
of living. He noted that EDB had done everything in its
power to facilitate Microsoft,s decision.
7. (SBU) Arcapita, Investcorp and Kuwait Finance
House-Bahrain (KFH) each hold a number of U.S. investments
and are open to considering more. KFH-Bahrain Project
Development Manager Osama Al Khajah told EconOff November 16
that Second Deputy Chairman Waleed Rashdan had traveled to
Colorado October 22 at the invitation of Bahraini Ambassador
Nasser Belooshi to study renewable energy-related joint
venture opportunities (Please protect as business proprietary
information).
8. (U) Tactics Middle East (TME) CEO Scott Revell announced
plans July 29 to build a $60 million car parts factory in
Bahrain, employing 100 workers. In addition to the
availability of affordable aluminum, Revell cites the FTA as
a draw for investment in Bahrain. Revell has said he
expected to begin exporting Bahrain-made products to the U.S.
in 2007.
--------------
INQUIRY TRACKING
--------------
9. (SBU) Post's Econ/Commercial Unit currently records an
average of thirty FTA-related inquiries per week from U.S.
and/or Bahraini entities. These calls range from questions
regarding specific FTA provisions to entrepreneurs seeking
joint-venture partners. Many of these calls reflect
inadequate understanding regarding international trade.
Typical are questions such as, "How can I use the FTA to
start a business in the U.S.?"
10. (SBU) The EDB plans to compile and consolidate the
FTA-related inquiries that it currently receives, as well as
those received by other governmental offices, including the
Ministries of Industry and Commerce, Finance, and the Central
Bank. Post will add the GOB,s figures to our database.
--------------
ACTIVITIES/PROMOTIONS/REACTIONS
--------------
11. (U) The International Executive Service Corps implemented
a three-part MEPI-funded program from May through November
2006 to educate Bahraini entrepreneurs regarding export
technicalities including customs regulations and procedures,
shipping procedures, marketing strategies and e-business
practices.
12. (SBU) Deputy Assistant Secretary of Commerce Vineyard's
visited Bahrain September 12 - 14 to celebrate the
implementation of the FTA (Ref. B). Vineyard told audiences
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. During the visit,
Minister of Industry and Commerce Hassan 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. EDB 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.
13 (U) The Ambassador delivered the keynote address at an
AmCham luncheon November 2 before an audience of over 100
guests and reporters in which he urged Bahrainis to work with
American companies to benefit from the FTA. The Ambassador
shared his observations following his return from a four-city
Ambassadors' tour in the U.S. to promote trade with the
Middle East. He noted that business is booming between the
United States and the Middle East and that while Bahrain is
currently doing well, Bahrainis would have to compete
aggressively to maximize Bahrain's share of trade
MANAMA 00002046 003 OF 003
opportunities.
14. (U) In an AmCham-sponsored FTA promotional breakfast
November 16, Commerce Assistant Secretary for Market Access
and Compliance Bohigian said the U.S. welcomes Bahraini
investment and noted that the majority of American foreign
trade takes place with our FTA partners. He called on the
business community to pursue the full benefits of the FTA in
the interest of furthering "friction-free" trade in Bahrain
and the region. A/S Bohigian responded to questions from the
audience following his remarks. As was the case during
Commerce Deputy Assistant Secretary Holly Vineyard's visit,
several questions illustrated an ongoing desire among many in
the local business community for specific guidance on
benefiting from the FTA (Ref. A).
15. (SBU) The AmCham is planning a trade mission to the
United States to raise Bahrain's profile with American
businesspeople, reportedly in February or March 2007. The
EDB is expected to participate and there is speculation that
the Crown Prince will participate in at least a part of the
trip.
16. (SBU) The Economic Development Board and the Bahrain
Chamber of Commerce and Industry formed the Bahrain FTA
Implementation Committee (FTAIC) December 2005 to develop a
strategy for maximizing the benefits of the FTA. (Ref. C).
The FTAIC has since reached out to various entities,
including the Bahrain Businesswomen's Society and the AmCham
to ensure an inclusive effort. The FTAIC November 12 signed
a memorandum of understanding with the National U.S.-Arab
Chamber of Commerce to promote the FTA. However, the FTAIC
has been criticized as being long on ceremony and short on
substance. One EDB official recently told EconOff that EDB
will look increasingly to the AmCham and the USG to help
point the way.
********************************************* ********
Visit Embassy Manama's Classified Website:
http://www.state.sgov.gov/p/nea/manama/
********************************************* ********
MONROE