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14 November 2000
Bahrain: October 2000

The Trade Policy Review Body of the World Trade Organization (WTO) concluded its first review of Bahrain trade policies on 11 and 13 October 2000. The text of the Chairperson's concluding remarks is attached as a summary of the salient points which emerged during the discussion.

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Summary of Secretariat report
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The review enables the TPRB to conduct a collective examination of the full range of trade policies and practices of each WTO member countries at regular periodic intervals to monitor significant trends and developments which may have an impact on the global trading system.

The review is based on two reports which are prepared respectively by the WTO Secretariat and the government under review and which cover all aspects of the country's trade policies, including its domestic laws and regulations, the institutional framework, bilateral, regional and other preferential agreements, the wider economic needs and the external environment. A record of the discussion and the Chairperson's summing-up together with these two reports will be published in due course at the complete trade policy review of Bahrain and will be available from the WTO Secretariat, Centre William Rappard, 154 rue de Lausanne, 1211 Geneva 21.

Since December 1989, the following reports have been completed: Argentina (1992 and 1999), Australia (1989, 1994 and 1998), Austria (1992), Bahrain (2000) Bangladesh (1992 and 2000), Benin (1997), Bolivia (1993 and 1999), Botswana (1998), Brazil (1992, 1996 and 2000), Burkina Faso (1998), Cameroon (1995), Canada (1990, 1992, 1994, 1996 and 1998), Chile (1991 and 1997), Colombia (1990 and 1996), Costa Rica (1995), C˘te d’Ivoire (1995), Cyprus (1997), the Czech Republic (1996), the Dominican Republic (1996), Egypt (1992 and 1999), El Salvador (1996), the European Communities (1991, 1993, 1995, 1997 and 2.000), Fiji (1997), Finland (1992), Ghana (1992), Guinea (1999), Hong Kong (1990, 1994 and 1998), Hungary (1991 and 1998), Iceland (1994 and 2000), India (1993 and 1998), Indonesia (1991, 1994 and 1998), Israel (1994 and 1999), Jamaica (1998), Japan (1990, 1992, 1995 and 1998), Kenya (1993 and 2000), Korea, Rep. of (1992, 1996 and 2000), Lesotho (1998), Macau (1994), Malaysia (1993 and 1997), Mali (1998), Mauritius (1995), Mexico (1993 and 1997), Morocco (1989 and 1996), New Zealand (1990 and 1996), Namibia (1998), Nicaragua (1999), Nigeria (1991 and 1998), Norway (1991, 1996 and 2000), Pakistan (1995), Papua New Guinea (1999), Paraguay (1997), Peru (1994 and 2000), the Philippines (1993), Poland (1993 AND 2000), Romania (1992 and 1999), Senegal (1994), Singapore (1992, 1996 and 2000), Slovak Republic (1995), the Solomon Islands (1998), South Africa (1993 and 1998), Sri Lanka(1995), Swaziland (1998), Sweden (1990 and 1994), Switzerland (1991 and 1996), Tanzania (2000), Thailand (1991, 1995 and 1999), Togo (1999), Trinidad and Tobago (1998), Tunisia (1994), Turkey (1994 and 1998), the United States (1989, 1992, 1994, 1996 and 1999), Uganda (1995), Uruguay (1992 and 1998), Venezuela (1996), Zambia (1996) and Zimbabwe (1994).


We have had a frank and most informative discussion of Bahrain's trade policies and practices. Members noted that Bahrain's liberal policies have played a role in helping it to maintain stable economic growth despite the recent fluctuations in petroleum prices. Bahrain's dependence on petroleum exports, nevertheless, remains significant. In this regard, Members were appreciative of Bahrain's efforts in trying to reduce this dependence through reforms aimed at diversifying the economic base. Recent measures include efforts to reduce the public sector's role in the economy through fiscal reform and privatization, as well as sectoral reform aimed at opening up sectors to private investment. Notwithstanding these efforts, Members also noted that the State continued to play a major role in the economy, urging Bahrain to maintain its efforts to reduce the size of the public sector and to increase private domestic and foreign investment in the economy. Some Members also suggested that competition policy legislation would be useful in enhancing competition in the economy.

Regarding trade policy measures, Members observed that Bahrain's applied MFN tariff was relatively low, averaging 7.7%. However, the bound tariff remained considerably higher at 35.6%, presenting some uncertainty for investors and traders as it gave the authorities scope to raise the applied tariff within bindings. They asked whether Bahrain would consider reducing or eliminating this difference and sought and received assurance from the Bahraini delegation that Bahrain was committed to reducing its applied tariffs.

Questions were also raised on non-tariff measures, including: Bahrain's import prohibitions and restrictions and the rationale for maintaining these; standards and technical regulations and their conformity with international norms; and sanitary and phytosanitary measures. In addition to its participation in the WTO, they noted that Bahrain was a member of the Gulf Cooperation Council (GCC) and was attempting to integrate itself more closely with regional economies of the GCC and others through the Greater Arab Free-Trade Area (GAFTA). Details were requested on the implementation status of the customs union between GCC members and the GAFTA and the question was also raised whether regional agreements might make Bahrain over-dependent on a few markets.

Members noted that Bahrain was making an effort to amend its laws to bring them into conformity with its WTO commitments, even though Bahrain's international treaty obligations superseded national law. In this regard, they asked whether Bahrain could provide more details regarding the status of its current legislation, in particular with respect to intellectual property rights. Several Members also expressed concern about the apparent discrepancy between Bahrain's legislation on trade-related measures and the implementation of these measures.

On sectoral issues, the discussion focussed on Bahrain's plans to further diversify the industrial base which is still largely based on energy intensive industries. In services, several Members asked for details on plans to encourage private sector participation in economic development, including through privatization of services such as transport and telecommunications. In addition, Members remarked that Bahrain had not made any commitments under the GATS in services sectors with the exception of financial services. They believed that making additional commitments under the GATS was important to enhance transparency and predictability in the trade and investment regime and to move the liberalization process forward.

Additional details were also sought on a number of issues, including:

- fiscal reform, in particular with regard to taxation;
- the "Bahrainization" programme (employment targets for Bahrainis in the private sector);
- Bahrain's priorities with regard to future trade negotiations in the WTO;
- customs procedures, valuation and rules of origin;
- infant industry protection and plans to phase these out by 2005;
- tariff exemptions on certain products based on local content and plans to bring these into conformity with the TRIMs Agreement;
- the rationale for import prohibitions and restrictions maintained on a number of products;
- import licensing procedures;
- anti-dumping and countervailing legislation and measures;
- state trading companies and plans to notify these to the WTO;
- government procurement procedures (preference for local and GCC suppliers, plans to accede to the WTO Agreement, procedures for appeals against decisions taken by the authorities);
- the current status of price controls and subsidies;
- sectoral issues including Bahrain's preparations for trade in textiles and clothing before the end of the implementation period for the Agreement on Textiles and Clothing, details about the construction sector, restrictions on foreign ownership of local banks and of companies listed on the Bahrain Stock Exchange, plans to join the Information Technology Agreement (ITA) and to establish a Telecommunications Act.

Members also expressed their appreciation of the written and oral responses provided by the delegation of Bahrain during the meeting.

In conclusion, I feel that this Review has helped us to better understand the trade policies and practices of Bahrain. Members were appreciative of Bahrain's efforts to implement wide ranging economic reforms to diversify the economy and increase real economic growth; they, however, recognized that there was a need for accelerated reform to tackle the problem of growing unemployment among Bahrainis. It is my view that Members were also reassured by Bahrain's statement that it was committed to the reform programme. However, they urged Bahrain to improve the transparency and predictability of its trade and investment regime. Views were expressed in favour of Bahrain's increased commitments under the GATS and through regular notifications to the WTO. The Bahraini delegation also reiterated Bahrain's strong commitment to a rules based multilateral system and its determination to bring all its legislation into conformity with its WTO obligations. On the whole it is my view that the review succeeded in achieving what it sought to do. I conclude by expressing my sincere thanks to H.E. Shaikh Daij and his delegation, all other participating colleagues and delegations, the discussant Dr. Barba in particular, Messrs. Boonekamp and Daly, Ms. Rohini Acharya and their team, the interpreters, and all those whose endeavours went into this effort.