Following Bahrain’s independence from the United Kingdom, diplomatic relations were established with the US on August 15, 1971. The US embassy in Manama opened that same year with a resident ambassador in the country beginning in 1974. The Bahraini embassy in Washington DC then opened in 1977, which helped continue positive relations between the US and Bahrain. In October 1991, the US and Bahrain created the Defense Cooperation Agreement which allows US forces to use Bahrain’s facilities, and Bahrain to host the US Navy’s Fifth Fleet. Additionally, Bahrain was designated a Major non-NATO ally by the US in 2001. In 2006, Bahrain became one of only twenty nations to successfully establish a Free Trade Agreement with the US.
Free Trade Agreements
Bahrain was the first GCC nation, and only the third Arab country, to enter into a US Free Trade Agreement (FTA). The US-Bahrain FTA facilitates the flow of trade and investments between the two nations, helping to stimulate economic growth in Bahrain and increase the competitiveness of Bahraini goods in the US market. It has enabled Bahrain to find new markets, and created more opportunities and jobs for US financial service providers and companies within Bahrain. The FTA is overseen by the United States-Bahrain Joint Committee (JC) and is run by the Office of the US Trade Representative and Bahrain’s Ministry of Industry and Commerce.
The most recent trade figures for importing and exporting between Bahrain and the US are from April 2020. Fourth in the number of imports to Bahrain, the US had an import value of 25,249,593.404 BD or $67,153,173.946 USD. Bahrain exported goods and services to the US to the value of 18,052,419.672 BD or $48,011,754.44 USD, making it Bahrain’s third-largest export economy. Trade between the countries is fostered by the Free Trade Agreement and underpinned by positive relations between the two nations.
Tarrif & Tax Laws
Under the US-Bahrain FTA, bilateral trade may be conducted duty-free, with some agriculture exceptions. For goods outside of the FTA, they are imported under Bahrain’s tariff schedule. The regular tariff includes a five percent import duty on all goods except alcoholic beverages and tobacco products. Tobacco products have a 100 percent import duty and alcohol 125 percent. Imports to Bahrain must adhere to Bahraini customs laws, Islamic laws, and health and safety regulations.
Labour Cost Differences
The labour force in Bahrain is 611,000 strong compared to 154.9 million in the US. The cost of labour also varies between the two nations, amounting to 1.31 billion in Bahrain and 3.92 trillion in the US. Internationally, Bahrain is ranked 113th for labor cost, while the US is ranked 18th.
American Businesses in Bahrain
There are over 200 US businesses with a presence in Bahrain, including some of the world’s leading organisations. US companies benefit from Bahrain’s business-friendly regulatory environment and highly skilled workforce, and are in turn able to create more job opportunities within Bahrain. In particular, US technology, financial advisement, and communications companies have been able to thrive in Bahrain’s digitally-enabled ecosystem and startup culture. Some of the US companies with a presence in Bahrain include Boeing and Investcorp.
US-Bahrain Business Council
The US-Bahrain Business Council is an advocacy organisation dedicated to strengthening the economic and commercial relationship between the US and Bahrain. The council is composed of US and Bahraini companies that want to strengthen economic cooperation. The council is part of the US Chamber of Commerce and has access to its congressional and legal divisions. The Council creates programs and works with government officials in both countries to increase business opportunities. Council members include:
Bahrain Economic Development Board
Bahrain Petroleum Company (BAPCO)
Gulf Petrochemicals Industries Corporation (GPIC)
Sentinel Real Estate Corporation
Taher & Associates