MOSTLY POSITIVE REACTIONS TO FTA CONFERENCE

UNCLAS SECTION 01 OF 03 MANAMA 000378

SIPDIS

SENSITIVE
SIPDIS

STATE FOR NEA/ARP, EB
USTR FOR J BUNTIN
COMMERCE FOR FCS - B ORR
ALSO FOR ITA/MAC/AMESA - T HOFFMAN

E.O. 12958: N/A
TAGS: ETRD ECON BEXP PREL KPAO BA ECTRD BILAT
SUBJECT: MOSTLY POSITIVE REACTIONS TO FTA CONFERENCE

REF: A. MANAMA 326

B. MANAMA 314

C. MANAMA 305

Sensitive but unclassified; please protect accordingly. Not
for Internet distribution.

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Summary
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1. (SBU) The February 27 conference on "Free Trade in the
Middle East," attended by Commerce Secretary Gutierrez,
Bahraini Minister of Industry and Commerce Fakhro, and
Jordanian Minister of Industry and Trade Zubi, publicized the
benefits of the U.S.-Bahrain free trade agreement (FTA) and
brought together some 400 American and regional business
people to discuss business. Widespread media coverage of the
event and Secretary Gutierrez's press roundtable was
uniformly positive. Bahraini business people, in discussions
with EmbOffs, had mostly positive reactions to the
conference. Those familiar with doing business in the United
States and the West were the most optimistic, saying the FTA
would boost their business relations with American companies.
A textiles manager said he would pursue partnerships with
Jordanian companies, who are already familiar with the
provisions of their FTA with the U.S. Others thought the
agreement would boost Bahrain as an investment destination.
Those business people unaccustomed to doing business with the
United States are looking for government assistance and
guidance in taking advantage of the FTA. End Summary.

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Positive Headlines About FTA Conference
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2. (SBU) Commerce Secretary Gutierrez, Bahraini Minister of
Industry and Commerce Hassan Fakhro, and Jordanian Minister
of Industry and Trade Sharif Zubi headlined the February 27
conference on "Free Trade in the Middle East." Some 400
attendees, including over 100 American company
representatives, heard senior government officials and
business leaders discuss ways to benefit from the
U.S.-Bahrain FTA and participated in the five breakout
sessions on key industry sectors. The widespread press
coverage of the event and Secretary Gutierrez's press
roundtable was uniformly positive, with the media focusing on
the unique nature of the conference and speakers' calls for
business people to take advantage of the FTA.


3. (SBU) In conversations with EmbOffs, Bahraini business
people's reactions to the conference were mostly positive.
Those who are already doing business with American and
Western companies see immediate benefits and are looking to
expand their trade with the U.S., while those unfamiliar with
American or European markets continue to look for government
guidance on next steps. Yusuf Mashaal, General Manager of
Mashaal Chemical Industries, told EmbOff that he found the
conference to be very useful. He had productive discussions
with an American company representative about the possibility
of manufacturing patented chemical products on behalf of the
American firm for delivery to clients in the region. He
commented that Bahrain brings a lot of expertise and
experience in the chemicals and petrochemicals industries,
more so than Jordan, for example, which also has an FTA with
the U.S.

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Opportunities in Luxury Goods, Textiles
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4. (SBU) Ali Abdul Hussein, Marketing Director for Al Shaikh
Design Company, a manufacturer of high-end perfumes, said
that his company is already exporting to the U.S. but the
price benefits that will come as a result of the FTA tariff
exemption should boost his sales in the U.S. Similarly,
Abdulla Al Hawaj and Jawad Al Hawaj, both executives with the
Al Hawaj chain selling branded luxury items, believe the FTA
will allow them to sell more American products. Even without
the FTA, American products are less expensive than competing
French, Spanish, and German goods, and with the removal of
customs duties, the price gap will increase. Jawad Al Hawaj
said his company had recently signed deals with Donna Karan
New York and Calvin Klein to stock their products.


5. (SBU) The operations director of Manama Textiles Company,
which is already a big clothing exporter to the U.S., said
the FTA will help his company compete with lower cost
producers around the world. He was interested in taking
advantage of provisions of the agreement dealing with
clothing and apparel manufactured from American cloth. He
also was interested in partnering with Jordanian textile
companies that were experienced in working under the
provisions of the U.S.-Jordan FTA. Bahrain-based attorney
Qais Zubi (who is the cousin of Jordanian Minister Zubi) said
that Jordan and Bahrain should organize delegations to learn
from each other and develop joint ventures to benefit from
the FTA.

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Bahrain As An Investment Destination
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6. (SBU) Other conference participants hoped the FTA would
serve to promote Bahrain as an investment destination. Ahmed
Al Jawahery, Director of Middle East Trading and Engineering,
remarked that the large turnout for the conference reflected
increased interest among Bahraini and American business
people in the FTA. Although Bahrain itself is a small
market, it can act as a regional hub. He thought the FTA
"puts Bahrain on the map" along with other global commercial
centers as an investment destination. Malik Al Ghanem,
Regional Director of Yousif bin Ahmed Kanoo, told EmbOff that
his company wants to establish a joint venture with an
American company in the logistics field. He is negotiating
with several firms already. He commented that for American
companies coming to the region for the first time, Bahrain
offers many advantages, including easy access to the large
Saudi market.

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Some Need Guidance, Support of Governments
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7. (SBU) Ahmed Al Tahoo, owner of Al Tashel Jewelry, and
Mohan Kumar, General Manager of the Bahrain Import-Export
Company, were disappointed that no American companies in
their business sectors - jewelry, consumer products,
electronics, and home appliances - attended the conference.
They are interested in importing American products but are
unsure how to make contact with appropriate companies.
(Note: The Embassy Commercial Section is assisting.)


8. (SBU) Abdul Rahman Al Moayyed, a director at YK Al
Moayyed and Sons, one of the largest family conglomerates in
Bahrain, told EmbOff that he had hoped the conference would
discuss the technical aspects of the FTA. Instead, the
conference served as "a marketing campaign" but offered
nothing tangible. Greater focus on the practical aspects of
the FTA would have resulted in more deal making because the
parties would better understand what they have to gain. As
far as enhancing relations between the U.S. and Bahrain, the
agreement was already successful even though it had not yet
entered into force. Saeed Radhi, owner of Al Sharq Aluminum
Company, complained that the conference did not address
techniques and strategies for finding markets in the U.S. He
thought the Bahraini government should create an advisory
body to assist manufacturers expand exports to the U.S.
market.

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Comment
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9. (SBU) The FTA conference succeeded on many levels --
widespread media coverage of Secretary Gutierrez's visit,
focus on the benefits of the FTA to business people,
promotion of American exports and investments, and building
awareness of the positive role the United States plays in the
region. Those Bahraini business people already familiar with
American or other Western markets are most at ease with the
concept of the FTA and understand how to benefit from it.
They see the FTA as a means to expand the business they are
already doing with the U.S. Those unfamiliar with Western
markets are looking for something to grasp onto -- more
details about the agreement, more explanation of the
benefits, or a government advisory body to identify business
opportunities. The message of the conference was that
governments had negotiated the agreement, but it was up to
business people to realize the benefits. The savvy business
people are proactively making deals and establishing
relationships, while others wait to be led to opportunities.

MONROE