Investment Protection & Promotion Agreement
Double Taxation Avoidance Agreements
About the Free Trade Agreements (FTA)
Free Trade Agreements (FTA) are international agreements that promote trade between countries. In general, FTAs remove trade barriers between countries, allowing participants to be treated as citizens in foreign countries. Bahrain has seen a significant increase in import and export figures as it has built more FTA relationships, noticeably in the 48.76% increase in imports between 2013 and 2018.
The Benefits of Free Trade Agreements:
Facilitates trade flows between countries
Stimulates inward flows of investment
Explores key manufacturing and service sectors
Encourages the exchange of expertise to create jobs and stimulate growth
Bahrain’s Free Trade Agreements
Bahrain benefits from multiple FTAs. Each has unique relationships and benefits, but they have all contributed to the expansion of multiple sectors and increased Bahrain’s trade.
Greater Arab Free Trade (GAFTA)
The Greater Arab Free Trade Area (GAFTA) is a pan-Arab free trade zone promoting economic integration and trade in the Arab world. It removes trade barriers and increases intra-regional trade while promoting competition within domestic markets. Bahrain’s exports from the GAFTA totaled over USD 4.5 billion in 2018 and imports totaled USD 2.8 billion.
GCC Free Trade Agreement
The Economic Agreement between the GCC states was adopted by the GCC Supreme Council in December 2001. It grants national treatment to all GCC firms and citizens in any other GCC country. Doing so removes all barriers to cross country investment and trade. In 2018, there were over USD 3.6 billion in exports and USD 2.6 billion in imports from this trade agreement alone.
GCC-Singapore FTA (GSFTA)
The GCC-Singapore Federal Trade Agreement (GSFTA) allows GCC goods duty-free access to the Singaporean market. It includes trade in goods, customs procedures, rules of origin, as well as trade in services and government procurement. In 2018, exports from Bahrain to Singapore totaled over USD 61 million and imports totaled to USD 111 million.
The Free Trade Agreement between the GCC and the EFTA states was signed in June 2009 and includes 93 articles and 16 annexes covering trade in goods, trade in services, competition, and more.
Industrial goods, including fish and other marine products, benefit from duty-free access to EFTA States, while most products imported into the GCC have custom duties eliminated. In 2018, imports from this agreement to Bahrain have totaled USD 396 million while exports totaled USD 43 million. In addition, bilateral arrangements on agricultural products between three individual EFTA States and the GCC have been established.
View the bilateral agreements on agriculture
Bahrain is the first Gulf Cooperation Council (GCC) member and third Arab country to enter into a US free trade agreement. In 2018, there were USD 1.2 billion in imports and USD 683 million in exports from this trade agreement.
This agreement carries specific rules of origin. The traded good should:
- Be made entirely in Bahrain or US from Bahraini/US materials
- Or be made in Bahrain or US from significantly transformed foreign material with at least 35% of the value from Bahraini/US materials and costs of processing
- And be exported/imported directly from Bahrain or US. Combining/packaging operations and liquid dilution do not count as originating
Benefits of the US-Bahrain FTA
Preferential tariff rates
Eliminates all tariff and non-tariff barriers to trade. This reduces the cost burdens of exporting and increases the competitiveness of Bahrain products in US markets.
Duty-free and easier access to the US market
Eliminates all barriers to trade in services while opening the US market to Bahrain service providers. This presents an opportunity for Bahrain’s services to further expand as providers can arrange services through a local presence or across borders.
As part of the FTA, cross-country investment barriers are removed. When foreigners invest in participating countries, they are granted citizenship advantages.
Opportunities to leverage FTAs
Businesses in the manufacturing industries can face significant challenges with finances and logistics, but Bahrain makes the decision simpler. Companies in Bahrain benefit not only from international trade agreements, but also lower costs, a strategic location, a highly skilled workforce and world-class infrastructure with favorable tax regimes in areas such as Bahrain International Investment Park (BIIP).