WORLD TRADE
ORGANIZATIONWT/TPR/M/74
15 November 2000
(00-4848)
Trade Policy Review Body
11 and 13 October 2000
TRADE POLICY REVIEW
BAHRAIN
Minutes of Meeting
Chairperson:  H.E. Dr. Iftekhar Ahmed Chowdhury (Bangladesh)
Page
I. INTRODUCTORY REMARKS BY THE CHAIRPERSON 3II. OPENING STATEMENT BY THE REPRESENTATIVE OF BAHRAIN 4III. STATEMENT BY THE DISCUSSANT 7
IV. STATEMENTS BY MEMBERS OF THE TRADE POLICY REVIEW BODY 10
V. REPLIES FROM THE REPRESENTATIVE OF BAHRAIN AND
ADDITIONAL COMMENTS 17
VI. CONCLUDING REMARKS BY THE CHAIRPERSON 24ANNEX I ADVANCE WRITTEN QUESTIONS BY MEMBERS 27
ANNEX II WRITTEN RESPONSES BY THE DELEGATION OF BAHRAIN 43WT/TPR/M/74
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I. INTRODUCTORY REMARKS BY THE CHAIRPERSON
1. The first Trade Policy Review of Bahrain was held on 11 and 13 October 2000.  The
Chairperson, H.E. Dr Iftekhar Ahmed Chowdhury (Bangladesh), welcomed H.E. Shaikh Daij Bin
Salman Al-Khalifa, Assistant Under-Secretary for Foreign Trade and Promotion, Ministry of
Commerce, and his delegation from Bahrain and from the Mission in Geneva.  He also introduced the
discussant, Dr. Ricardo Barba (Mexico) and reminde d Members that he would speak in his personal
capacity and not as a representative of his Government.  In accordance with the established procedure,
the discussant had made available in advance, an outline of the main issues he intended to raise.These were contained in document WT/TPR/D/53.
2. The Chairperson recalled the purpose of the Trade Policy Reviews and the main elements of
the procedures of the meeting.  The report by the Government of Bahrain was contained in document
WT/TPR/G/74, and that of the WTO Secretariat in document WT/TPR/S/74.  Copies of advance
written questions submitted by Thailand;  the European Union;  Canada;  Hong Kong, China;  Japan;
India;  Australia;  Korea;  and the United States, had been transmitted to the delegation of Bahrain
(Annex I).  Replies to these and other questions raised during the meeting are reproduced in Annex II.
3. The Chairperson noted that Bahrain's liberal trade and investment policies had helped it to
maintain steady economic growth in the 1990s desp ite fluctuations in international energy prices.
Bahrain had also instituted fiscal and structural reforms to diversify the economic base and reduce its
dependence on petroleum revenue.  The Government Report, he said, provided greater detail on
reforms undertaken thus far, which included promotion of the private sector through the provision ofupgraded infrastructure and a streamlined regulatory environment, including for foreign investment.
An improvement in private sector investment since 1998 was a sign of greater confidence in the
economy and the reform programme.  The Secretariat Report had noted, however, that the reform
programme needed to be accelerated in order to address concerns about economic diversification and
rising unemployment.
4. Bahrain was also pursuing regional integration through preferential trade agreements such as
with the Gulf Cooperation Council (GCC) and the Arab Free-trade Area (GAFTA).  Import
restrictions were maintained on a relatively small number of products although the Secretariat Report
had noted some discrepancy between the documentation on these restrictions and their application.
Several Members had raised questions on market access, including non-tariff measures such as importrestrictions, standards, and sanitary and phytosanitary measures and he anticipated lively discussion
on these and other market access issues.
5. The Chairperson first gave the floor to the Se cretariat for a brief announcement regarding the
Secretariat Report.  The Secretariat said that the Report on its cover page noted that comments were
received from Bahrain on Chapters II, III and IV.  Subsequently, after the Report was sent fortranslation and circulation, comments were rece ived on Chapter I.  Those comments did not
materially change the nature of the Report and they would be fully reflected in the publication.  There
had also been some changes in the tariff, which did not affect the tariff analysis in Chapter III.  On a
point relating to foreign direct investment, however, there was some question about the complete
accuracy of Chart I.6 on page 13 of the Report.  The Secretariat was currently discussing this with the
authorities and the accurate picture would be reflected in the publication.WT/TPR/M/74
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II. OPENING STATEMENT BY THE REPRESENTATIVE OF BAHRAIN
6. The representative of Bahrain said he was pleased to represent his Government at the first
Trade Policy Review of Bahrain.  Having had the opportunity of working with the visiting WTO TPRteam, Bahrain appreciated the enormity of the Secretariat's work in progressing the WTO mandate and
he expressed thanks for the assistance and forbearance of the TPR team.  Bahrain had had to work
hard to respond to questions raised by the Secretariat and to gather and collate information and data,
but the exercise had enforced greater cooperation between government departments, resulting in the
establishment of an inter-Ministerial working group.  He noted that although Bahrain's TPR was heldonly once in six years, it had nevertheless been a rewarding and to some extent a cultural exchange
exercise.  He looked forward to responding to qu estions already put and any other questions arising
from the Review, although further time might be  needed to ensure comprehensive replies.
7. The Secretariat Report was thorough, although there were areas where it gave the wrong
impression of the real situation, particularly with regard to bound tariffs.  All tariff lines, except
tobacco and alcohol products, had been bound at 35%.  Bahrain's current applied tariff rates ranged
from 0 to 20% with higher rates for alcohol and tobacco for health and religious reasons.  TheSecretariat Report was factually correct in terms of the tariff range however, only a small number of
lines had higher rates.  While the Secretariat was correct in saying that bound rates were higher than
applied rates, the conclusion implied that this provid ed a margin for the Government to increase rates.
In fact, it was the Government's stated policy to reduce rates and indeed rates on food items,
previously at 5%, had been eliminated on 1 January 2000, and had been reduced from 10% to 7.5% ona number of goods.
8. On the apparent anomaly in Bahrain's bound and applied rates he explained that the Minister
of Commerce had requested technical assistance at the time of preparation of Bahrain's bound tariff
Schedule.  The GATT Secretariat had agreed but was subsequently unable to provide assistance and
had re-written the Schedule and misinterpreted it to show the bound rates only for raw tobacco at100%;  it had been the intention of the Government that all tobacco, raw and manufactured, be bound
at 100%.  The Ministry of Commerce was in contact with the Secretariat on this issue.  Incentives for
manufacturing, referred to in the Secretariat Report, had been scrapped and notified to the WTO.
9. Since the Secretariat and Government Reports provided the facts and described the current
economic, fiscal, and trade environment and policies, he discussed where Bahrain had come from,where it was now, its future goals and aspirations, and the issues that Bahrain, as a developing small
island country, believed critical to its future economic stability.  Before that, however, he noted that
due to pressure at the WTO Secretariat and in Bahrain, comments on Chapter I of the Secretariat
Report had not been included and hoped that these would be reflected in the final report.
10. Bahrain was not rich in oil and had no other factor endowments;  it required the use of oil
revenue to build a world class physical and legal infrastructure and to develop the economy based on
its real assets, its people.  To create an environment in which entrepreneurship would flourish and to
encourage skills acquisition, the Government had embraced the open market concept, becoming a
founding member of the WTO, to which it was fully committed, to foster world trade through the
multilateral trading system.  Through careful resource management, Bahrain had developed an
economy able to regenerate and re-base.  Its history showed that it had moved from agriculture, to oil,
and then to a services-based economy in under one generation without conventional taxation or highimport levies.  The global market had been important:  while nominal GDP had increased by around
70% during the last ten years, a 32% increase in the population over the same period had meant an
overall per capita growth rate of around 3.3%.  Real economic growth had averaged around 4.9%
annually since 1992 and inflation had averaged 0.7% annually over the last decade.  The economy
was based on services, which accounted for around 63% of GDP, compared with 18% from oil.WT/TPR/M/74
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Services also provided employment for over 50 % of the population.  Manufacturing was based on
petrochemicals and a highly efficient aluminium smelter, ALBA.  The nature of these two products
opened the economy to external shocks so that the future manufacturing focus would be on addingvalue to existing production through downstream operations.  The relative shortage of land, water, and
energy, as well as the other characteristics of a small island State also required Bahrain to look to
trade and services for its future prosperity.
11. Recognizing the importance of world mark ets and inward investment, Bahrain had
progressively opened the economy and sought to find a regional and international competitiveadvantage.  Bahrain's was ranked fourth by the Heritage Foundation in its index of Economic
Freedom, an indicator of how far it had come along this route.  Bahrain believed that the new global
economy and its openness provided it with the best opportunity for future economic success, provided
that adequate modalities were in place to ensure that developing and least developed countries were
not marginalized by the increasing global reach and political and economic influence of the major
developed countries.  Bahrain was cooperating with its regional partners to further the GCC Economic
Accord, which would result in a customs union by  2005.  The GCC would also increase cooperation
with other trade blocks, including the EU.  Bahrain believed that regional trade liberalization was an
important step towards full multilateralism, as was the expansion of the WTO to new Members.
12. Bahrain was a net importer of manufactured and food products and the import bill in 1999
was US$3.4 billion compared with exports of around US$4.1 billion, including oil exports of
US$2.7 billion.  Regional trade remained a relatively small part of the total although this wasincreasing and reflected a change in Bahrain's major trading partners;  Saudi Arabia was Bahrain's
leading trade partner, followed by the EU and the United States in terms of relative importance.
13. In the evolution from an agrarian society to a mixed economy, the Government had played a
central role, not only in developing physical and human capital, but also in developing industries and
services, by itself establishing companies and projects in the national interest.  The success of theeconomy was due to the Government's efforts.  The Government had created the necessary technical
and commercial expertise through the formal and vocational education system, and through the
acquisition of knowledge and cross-fertilization of ideas from companies such as BAPCO and ALBA.
Recognizing that the private sector was now able to determine its own destiny, the Government was
refocusing its efforts to that of business facilitator.  A number of government-owned companies andprojects had already been privatized and further privatization would divest the Government of
substantially all its ownership of the productive process over the coming few years.
14. The Government was making efforts to ensure that the private sector and foreign investors
were not subject to unnecessary bureaucracy but was also conscious of the need to maintain close
supervision, particularly with regard to entry and exit from the market.  In addition, the Governmentcontinued to monitor banking and non-bank financial institution operations to ensure Bahrain's
legitimacy as an international financial and business centre and in accordance with its responsibilities
of mitigating economic risk both locally and internationally.  Foreign investment was encouraged
through the Bahrain Promotions and Marketing Board, and while practically all sectors were now
open to foreign investors in the form of 100%-owne d locally incorporated companies, investment in
sectors that required less land, water, and energy was emphasized.  To date Bahrain had around
US$3.9 billion of FDI in issued capital.
15. For the future, the Government, working with the private sector, was encouraging electronic
commerce and was playing the role of exemplar by providing its services to the private sector through
electronic commerce and web-enabled applications.  Being a service economy, and since many
services were ideally suited to electronic delivery , the Government believed it was essential that the
private sector fully embrace this new medium and was encouraging and facilitating innovation in thisWT/TPR/M/74
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area and re-focusing the economy on knowledge-based services and industry.  A Government Data
Network (GDN) had been established, and the Ministry of Commerce, the principle organ of
Government and responsible for the registration and supervision of commercial companies in Bahrain,had set up an interactive web-based application for the speedy delivery of its registration services, and
an on-link line to other external entities involved in the approval process.
16. Bahrain was also reviewing and amending its Commercial Laws to bring these into line,
where necessary, with its WTO commitments and with international best practice.  Progress had been
made on the new Company Law, Insurance Law, a nd Commercial Law but the system of Government
necessitated that various organs of the executive and legislative branches reviewed such legislation
before final enactment, which took time.  However, Bahrain's laws were subrogated by international
treaties and in the case that a law was not in conformity with the WTO Agreements, the WTO
Agreements took precedence and could be invoked before the national courts.  This was important to
understand the position on the TRIPS Agreement.  The TRIPS Council would review Bahrain's
legislation, which was being written in coordination with WIPO, by July 2001.  However, Bahrain
was in de facto compliance with the Agreemen t and had made progress in enforcement and
particularly in eliminating copyright piracy.  The importance placed on IPR issues was indicated by
Bahrain's efforts to bring its national legislation into conformity with the TRIPS Agreement.
17. In conclusion, he expressed hope for more commitment, particularly from developed
countries, to liberalize access to their markets and to provide more technical assistance to developing
countries to help them in the process of institution building.  At the same time he cautioned againstthe inclusion of non-trade-related issues, which he believed should be left to the appropriate
responsible organizations.WT/TPR/M/74
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III. STATEMENT BY THE DISCUSSANT
18. The discussant (Dr Ricardo Barba) noted that the Trade Policy Review of Bahrain was taking
place at a particularly interesting time in view of recent developments in the world oil market, inwhich Bahrain played a very important role, and the successful reforms undertaken by the country in
recent years.  He was grateful for the excellent introduction given by the delegation of Bahrain, and
particularly appreciated that senior members of the delegation were attending, led by the Assistant
Under-Secretary for Foreign Trade and Promo tion, Shaikh Daij Bin Salman Al-Khalifa.
19. He welcomed the Secretariat and Government Reports and would concentrate on three areas:
(1) the macroeconomic situation;  (2) trade policy and trade measures;  and (3) sectoral aspects;  and
would try to identify areas in which it would be interesting to hear the delegation's thoughts.
(1) M
ACROECONOMIC SITUATION
20. The discussant congratulated the authorities on their adoption of healthier macroeconomic
policies, accompanied by diversification, deregulation, and trade-liberalization measures, despite
having to deal, for much of the decade, with a drop in oil and aluminium prices, which together
accounted for over 80% of merchandise exports.  As the Government recognized in its Report, heavyreliance on energy and aluminium prices made Bahrain vulnerable in terms of economic growth,
(average annual real GDP growth fell from 8.1% in 1992-94 to 3.6% in 1994-99);  public finances (a
small surplus in 1997 to a deficit of 6.5% of GDP in  1998);  the external balance (the current account
deficit rose from 0.5% of GDP in 1997 to 12.6% in 1998);  and growing unemployment among
Bahrainis (around 6% in 1998).  This explained why Bahrain had been striving towards economicdiversification.
21. Bahrain's fiscal situation showed that oil and gas generated 56% of state revenue, around 15%
of GDP in 1999.  Budgetary reform, explained in the Secretariat Report, included reduced current
expenditures, increased domestic prices of natural gas, enhanced non-oil revenues, and the
privatization of certain activities.  These measures had reduced fiscal vulnerability to sudden changesin world oil prices.  However, given the size of the public sector and the number of key industries in
which monopolies existed, a broader and more systematic privatization programme and promotion of
foreign direct investment would seem appropriate.  The fiscal situation in any country required not
only conventional decisions to reduce expenditure and/or increase public revenue.  A complete fiscal
effort was necessary in order, at the macro level, to adequately plan and control the fiscal deficit andto determine precisely the economic accounting system for the public sector as a whole;  and, at the
micro level, to provide suitable monitoring of the financial accounts of public sector enterprises.
22. Without an efficient tax system, he believed it was practically impossible to achieve sustained
growth to generate the jobs required by Bahrain's growing labour force.  The tax system needed to be
modernized to increase public revenue.  He understood that Bahrain did not have a value-added tax(VAT), which could help achieve an enhanced and more efficient allocation of resources and boost
industrial efficiency.  He asked for a full account of plans for fiscal policy, since he understood that
the objective was to balance the budget by 2006.  He asked whether Bahrain had envisaged
introduction of VAT or other taxes, strengthened privatization, which dated from 1989, and the
promotion of foreign direct investment, for example by enacting a law in that area.
23. Another challenge was the administration of resources from petroleum sales.  As the
experience of various countries showed, owing to a phenomenon often referred to as the "Dutchdisease",  while the substantial foreign exchange earnings from petroleum exports had a positive
effect, enabling Bahrain to finance its high current account and public sector deficits, in the long-term
there could be a negative effect on the rest of the economy if the relative competitiveness of otherWT/TPR/M/74
Page 8
products in terms of production, exportation, in vestment, and employment was impaired by an
appreciation of the real exchange rate.  He asked whether the authorities planned to establish a
mechanism, for instance a petroleum buffer fund, to  enable them to save some petroleum income to
deal with pressure on the exchange rate and hence on the general competitiveness of the economy.
(2) TRADE POLICY AND TRADE MEASURES
24. Measures taken to open up the economy, including an average applied MFN tariff of 7.7%
and the binding of 77.1% of its tariff under the Uruguay Round, had helped to improve the
multilateral trading system.  The GCC's Unified Economic Agreement, which aimed to achieve acustoms union by 2005, was the most important factor influencing Bahrain's trade policy.  This was
evident from the fact that Saudi Arabia, the United  Arab Emirates, Kuwait, Oman, and Qatar were the
main destination for Bahrain's non-oil exports and the origin of almost all foreign direct investment in
Bahrain.  While this would appear logical from various points of view, it also led to an excessive
reliance on a few markets, something Bahrain was attempting to change.  Although improved trade
links with other GCC countries was welcome, Bahrain would do well in its efforts to diversify its
commercial structure not only in terms of products, but also in terms of countries, to avoid losing theactivity base and essential security afforded by traditional and other markets.
25. He noted that the marked difference between the average applied tariff rate of 7.7% and the
average bound tariff of 35.6% represented an element of uncertainty for investors and traders because
of the wide margin available to the authorities to increase their tariffs.  He asked whether Bahrain had
considered implementing autonomous trade liberalization, enabling it to reduce or eliminate thisdifference, or whether it had considered binding all of its tariffs.  While Bahrain's applied tariff was
relatively low, as shown in the chart on page 31 of the Secretariat Report, tariff escalation varied
greatly from sector to sector presenting an unclear idea of the effective protection given to industry;
he asked the delegation of Bahrain to comment on this.  On non-tariff measures he referred to the
apparent discrepancy between import restrictions in the Customs Handbook and the list provided tothe WTO.
26. Bahrain had no legislation to stimulate competition in the domestic market, nor, as he
understood, were there any state bodies responsible for regulating or defending competition.  As the
Secretariat Report pointed out, it would appear necessary to establish a competition policy and a
regulatory mechanism, in view of the dynamic process of liberalization and diversification affectingthe economy, which had in turn encouraged private sector participation, both domestic and foreign.
He asked whether the delegation would comment on this point, as well as on the review of its
intellectual property legislation, and on its lack of laws or regulations on dumping or safeguards.
(3) 
SECTORAL ASPECTS
27. Whereas Bahrain was not a member of OPEC, it played an important role in the petroleum
market as an exporter and an importer.  Bahrain's manufacturing base was also more diversified than
that of other countries in the region;  the services sector accounted for 64% of GDP, and provided half
of total employment.  One of the medium-term objectives was continued economic diversification,
and the Government Report described the opportunities and incentives offered to the manufacturing
sector.  However, the share of manufacturing in GDP fell from 17.5% in 1995 to 12.3% in 1999 while
aluminium, which accounted for 36.5% of manufacturing, was owned almost entirely by a single
company.  He therefore believed that there was considerable scope to diversify the industrial basethrough an emphasis on less energy-intensive manufacturing to broaden market access;  and an
increased role for small and medium-sized enterprises, given the present concentration of production.
He also asked about programmes in cooperation with UNIDO and other international organizations
for industrial diversification.WT/TPR/M/74
Page 9
28. He highlighted the degree of development, diversification, and sophistication of financial
services, which accounted for 22.9% of services in 1998.  Bahrain had participated in the Fifth
Protocol to the GATS, making commitments, inter alia , in banking and insurance.  Other services,
such as maritime and air transport and tourism, had also been liberalized, although to a lesser degree.
He singled out basic telecommunications, since the only provider of this service was the state
company Batelco, and he understood that there were no plans to open this market up to competition.
While Bahrain had not made GATS commitments in these sectors, the Government Report indicated
the possibility of making commitments in these areas and in others, such as professional services,before the end of this year.  This was important because the positive effects of the economic reforms
relied critically on the confidence of domestic and foreign economic agents in the stability of current
policies.  Indications of the irreversible nature of these policies, such as GATS commitments, played a
crucial role, benefiting Bahrain's trading partners, and boosting Bahrain's credibility and stability.
29. He congratulated the authorities for progress in economic and trade policy, which had
benefited Bahrain and the multilateral trading system, and hoped that the authorities would persist in
this task for which they required the support of the international community.WT/TPR/M/74
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IV. STATEMENTS BY MEMBERS OF THE TRADE POLICY REVIEW BODY
30. Members welcomed the delegation of Bahrain headed by the Under Secretary for Foreign
Trade and Promotion.  They appreciated Bahrain's efforts to diversify its economic base andcommended recent efforts to implement budgetary and sectoral reform, reduce the size of the public
sector, increase privatization, and bring its trade-related legislation in line with WTO commitments.
They also thanked the Government of Bahrain and the Secretariat for their Reports and looked
forward to receiving written answers to their questions.
31. The representative of Thailand noted that despite slower economic growth in the 1990s due to
variations in international energy prices, Bahrain had maintained a liberal and transparent trade and
investment regime.  Privatization had been co ntinued and she commended Bahrain's far-sighted
policies and encouraged it to continue with these.  Thailand was concerned, however, about non-tariff
measures, including import restrictions such as for sugar, cultured pearls, toys, and sports equipment,
and she asked whether these bans would be eliminated.  Rules on the importation of pets from
selected countries appeared to be inconsistent with WTO rules and she asked if Bahrain would
consider importing pets from other WTO Member countries if a rabies-free certificate were attached.
32. The representative of Canada said that despite limited economic relations, there was room for
growth in bilateral trade.  Services showed partic ular potential, especially given Bahrain's efforts to
become a regional centre for services.  Like in Bahrain, the services sector in Canada contributed
significantly to economic and trade performance.  She was pleased that Bahrain was thinking of
making additional GATS commitments before the end of 2000, for telecommunications, tourism, airand maritime transport services, and other profession al services.  Canada looked forward to working
with Bahrain and other WTO Members on market access negotiations.  Canada had followed with
interest Bahrain's liberalization and investment promotion policies, and encouraged continued
economic reform and efforts to promote predictability and transparency in the trade and investment
regime.  Canada looked forward to a fruitful exchange during the Review and remained committed toits excellent working relationship with Bahrain in the WTO.
33. The representative of Hong Kong, China, said  that bilateral trade with Bahrain amounted to
US$56 million in 1999 and that Hong Kong, China ranked 28th among Bahrain's trading partners.
Trade with Bahrain had been declining, however, and he hoped for a reversal of this trend in the near
future.  He commended Bahrain for considerin g joining the Information Technology Agreement
(ITA) as this would accelerate technology transfer and enhance access to cheaper IT products.  He
encouraged Bahrain to start the accession process for the ITA as soon as possible.  He also welcomed
efforts to improve transparency in government procurement by indicating support for the negotiations
on transparency in government procurement.  Hong Kong, China believed that a liberal and
transparent trade and investment regime was important for economic growth and encouragedmeasures to provide an open and level playing field for local and foreign traders and investors.
34. The representative of Japan welcomed the Trade Policy Review of Bahrain as this would help
to better understand Bahrain's economy and trade policy.  Japan and Bahrain maintained good
economic relations, with both exports and imports increasing.  In 1998, Japan's exports to Bahrain
amounted to US$269 million while imports from Ba hrain were US$487 million.  Japan's exports to
Bahrain included cars and electrical household appliances while imports from Bahrain consisted of
petroleum and aluminium products.  Japan invested around US$300 million in Bahrain in 1998.
35. Japan commended Bahrain in its pursuit of liberal trade and investment.  Bahrain had made
efforts to reduce tariffs, eliminate non-tariff barriers, liberalize investment, and pursue regulatory
reform, and Japan hoped such efforts could continue.  Although Bahrain's average applied MFN tariff
rate was low, the average bound rate, at 35.6%, was much higher than applied rates and she hopedWT/TPR/M/74
Page 11
that this gap would be eliminated to ensure predictabi lity and certainty in the tariff rates.  Japan noted
some divergence between the legislation and actual practice for non-tariff measures such as import
and export prohibitions and labelling and hoped this legislation would be brought in compliance withpractice to improve transparency.  The representative asked whether any measures were planned for
this.
36. Bahrain had made GATS commitments only in financial services.  Since services contributed
around 77% to GDP, a positive commitment in servic es would be important for trade liberalization
and would show a positive attitude towards the WTO.   Japan looked forward to seeing further GATS
commitments by Bahrain, including the Fourth Protocol.  She appreciated Bahrain's trade
liberalization efforts and hoped that it would make substantial contributions to negotiations in a new
trade round.
37. The representative of the European Union said that Bahrain was a valuable partner, in the
EU's efforts to increase cooperation with the region.  Bilateral relations were based on the 1988
Cooperation Agreement between the EC and the GCC, which covered trade, investment, and other
fields.  He hoped that trade relations with Bahrain would be improved and deepened by finalizing the
ongoing negotiations for a free-trade agreement between the EU and the GCC.  The EU appreciated
Bahrain's liberal trade and investment regime;  partly because of this, significant results had been
achieved in economic diversification and increased foreign investment.  The economic outlook was
positive.  While recognizing the short-term interest in maintaining high oil prices, he advised caution
in this respect.  The current volatility of oil prices could have serious negative repercussions on theworld economy and international trade and the long-t erm trade and trade diversification prospects of
countries like Bahrain.  The EU would hence appreciate support from Bahrain and other GCC
countries in favour of international measures to achieve reasonable oil prices.
38. Although Bahrain's overall applied tariff was relatively low, and he hoped it would remain
that way, bound tariff rates significantly exceeded the applied levels, thereby introducing an elementof uncertainty for traders and investors.  He encour aged Bahrain to lower its bindings in the context of
a new round of trade negotiations.  He was also concerned at the size of the public sector and the
number of economic activities where there appeared to be a lack of competition;  he therefore
encouraged further liberalization and speeded up privatization of state-owned companies to adapt to
market economy conditions in areas such as telecommunications and public procurement.
39. The EU regretted that Bahrain had postponed the review of its TRIPS legislation, scheduled
for November 2000, and encouraged Bahrain to undergo this exercise as soon as possible.  However,
he welcomed Bahrain's accession to the WIPO and the Berne Convention.  He also regretted that
Bahrain had not met its obligations under the Agreement on Customs Valuation at the end of the
three-year transition period and had only belatedly presented a request for a further extension.Bahrain had signed the Financial Services Protocol and he urged liberalization of other services and
corresponding GATS commitments.  Given the impor tance of government expenditures, Bahrain
should increase transparency in procurement procedures and join the Agreement on Government
Procurement.  For the benefit of its own industries and services, Bahrain should also join the ITA.
40. He had noted Bahrain's concerns about developing countries' difficulties in implementing
certain WTO obligations and appreciated that additional effort was necessary, notably through
technical assistance.  A majority of the issues raised could only be addressed, however, in a newround of comprehensive trade negotiations and he hoped Bahrain would join with the EU in launching
a new trade liberalization round;  adapting WTO rules to today's economic realities;  fully integrating
developing countries in the global economy;  and addressing the expectations of civil society.WT/TPR/M/74
Page 12
41. On a personal note he said that the TPRM was one of the most important innovations of the
Marrakesh Agreement.  It was based on peer pressure to enable Members to think about their policies
and to better integrate their economies into the global trading system.  It was also a stimulating andchallenging exercise for other Members and there might be a need to develop it further.
42. The representative of India noted Bahrain's commitment to the multilateral trading system and
the Government's view that a liberal and transparent trade and investment regime was important for
continued growth and prosperity.  Bahrain's trade and related laws had been periodically revised to
ensure consistency with WTO obligations.  The Se cretariat Report noted that economic growth was
strongly affected by variations in international energy prices.  The dependence on small petroleum
resources had prompted Bahrain to implement reforms, including privatization, aimed at diversifying
economic activity and raising economic growth.  However, the Report also noted that privatization
had not met with great success in sectors that were controlled by the Government and suggested that
more systematic and stepped-up privatization would increase private investors' confidence in the
economy and attract foreign investment.  He asked whether the privatization programme was to be
accelerated.
43. Bahrain had integrated its economy with those of its partners, through agreements such as the
Unified Economic Agreement of the GCC and the GAFTA.  The GCC was also negotiating a
free-trade agreement with the EU, based on the cooperation agreement signed in 1998.  India believed
that regional agreements should be consistent with WTO rules and not be trade diverting, and that the
primacy of the multilateral trading system should be kept intact with regional agreements playing asupportive role.  He was confident that Bahrain would ensure consistency between its regional
arrangements and multilateral obligations.  He was happy to note that no major difficulties had been
reported by Indian exporters or businesses in Ba hrain.  However, Indian exporters of medicinal
product were experiencing difficulties in registering, which was apparently necessary to enable them
to export medicines to Bahrain.  This, he understood, was due to a preference to import thesemedicines under bilateral arrangements and he was not aware if these rules had been notified to the
WTO or if they were consistent with WTO rules.  He requested clarification on this, and for Bahrain
to facilitate such registration.  India supported Bahrain's efforts in fulfilling its WTO commitments
and wished the Government and people of Bahrain all success in their endeavours.
44. The representative of Australia welcomed Bahrain's efforts to further liberalize its economy,
particularly through structural and legal reform in the area of commercial structures and privatization.
He noted the emphasis in the Government Report on privatization and was interested in measures to
encourage private sector participation and further liberalization in transport and telecommunications.
Bahrain had signed several preferential trading arrangements and several more were under active
consideration.  While not wishing to suggest that Bahrain should forgo any of the tangible benefitsarising from such arrangements, he expressed concern about the potential of such arrangements in
distorting trade and investment flows to the detriment of other countries.  He encouraged Bahrain to
use preferential trade arrangements to liberalize all trade, including sensitive sectors, and to ensure
that third parties were not disadvantaged as a result of such arrangements.  He wished Bahrain well in
its TPR and looked forward to its active participation in and dedication to a strong, rules-based,
multilateral trading system.
45. The representative of Korea noted that total bilateral trade with Bahrain was US$215 million
during the first seven months of the year, a significant increase over the same period the year before;
trade relations between the two countries were strong.  Korea was also Bahrain's fourth largest export
market.  Nevertheless, he had some concerns regarding Bahrain's trade policies.
46. As mentioned in the Secretariat Report, companies were expected to ensure that at least 50%
of their employees were Bahraini nationals.  Gi ven that 40% of the population were expatriates,WT/TPR/M/74
Page 13
however, this requirement could be burdensome, es pecially for foreign companies in Bahrain.  Fees
paid by expatriate employees for work visas also appeared to have been raised in 1996, from BD 50 to
BD 100 for a two-year work permit and from BD 40 to BD 150 for renewal.  He asked whether these
requirements were to be eased with a view to encouraging more foreign direct investment.  He also
noted from the Secretariat Report that Bahrain had signed an agreement with other GCC countries for
a customs union.  He asked under which category of reduced tariff rate the current 20% import tariff
for motor vehicles would fall in 2005, and for any plans to advance the lowering of import duties for
motor vehicles.  Given the importance of gove rnment procurement, around 11% of GDP in 1998, he
encouraged Bahrain to join the WTO Government Procurement Agreement and to initiate bilateral
consultations.  This could address some of the problems faced by Korean firms in Bahrain.  Bahrain
also had no complaints or appeals process on procurement decisions and he asked whether these
would be introduced.  Access for foreign firms could also be eased through a single national enquiry
point to address all procurement issues and publish notices in English.
47. On services he noted that foreign ownership of locally incorporated "onshore" banks was
limited to 49%, whereas up to 100% foreign ownership was permitted for offshore banks.  He asked ifthis special treatment, which seemed to be in cont radiction with the MFN principle, was specified in
the GCC Agreement, or if it was a unilateral measures.  He also asked for justification of special
treatment for GCC nationals.  Korea had noted that Bahrain was considering making GATS
commitments in the basic telecommunications sector and asked for further elaboration on these plans.
48. The representative of the United States noted Bahrain's liberal trade and investment policies,
which were important to integrate the economy closely with other countries in the region.  Bahrain
was heavily dependent on petroleum, which accoun ted for some 64% of merchandise exports, and had
recognized the need to diversify the economy to protect  itself from future declines in oil prices and to
ensure economic growth.  Diversification of Bahrain's markets for non-oil products had been largely
successful.  Bilateral economic ties with the United States during this period had grown dramatically:in the past two years the value of exports to the United States had nearly doubled with the U.S.
becoming the largest market for Bahrain's non-oil exports.  In 1999, the two countries signed a
bilateral investment treaty, the open skies agreement, which would help to attract investment from
U.S. firms in the region.
49. Notwithstanding this she noted from the Secretariat Report that non-GCC countries accounted
for under 10% of FDI in Bahrain and asked about pl ans to attract investment from outside the region,
including changes in FDI policies.  While Bahrain should be proud of its economic achievements,
several trade and investment policies appeared to be impeding economic development, including
inadequate intellectual property rights protection, which limited technology transfer needed to expand
production capabilities in line with the rate of population growth.  Bahrain had strengthenedprotection for copyright and trade marks but the current IPR regime remained deficient.  The
United States was particularly interested in knowing how Bahrain would ensure that the GCC patent
system would allow it to fulfil its TRIPS commitments.  The United States was concerned about
protection of undisclosed information, including technical know-how and commercial information,
and was disappointed that the November 2000 review of Bahrain's legislation by the TRIPS Council
was postponed to June/July 2001 but was willing to provide any technical assistance in this regard.
50. She noted that Tables III.4 and III.5 of the Secretariat Report showed a large number of
import restrictions.  There was some overlap in the two tables for banned and restricted imports.  She
felt that many of these items were unlikely to pose particular problems relating to health, safety or
moral concerns, e.g. toys and sports equipment, skin softening and hair preparations.  Some, such as
cement, tractors, and telecommunications equipment seemed necessary to develop the overall
economic infrastructure.  Bahrain had also requested an extension to implement the WTO CustomsValuation Agreement and she asked what steps Bahrain was taking towards implementation.WT/TPR/M/74
Page 14
51. From the Secretariat Report, services appeared to account for over 75% of GDP although
Bahrain's GATS commitments were only in financial services.  There was considerable scope for
further GATS commitments especially in energy, tourism, and telecommunications services.  TheSecretariat Report also described privatization and progress made in some services;  participation in
ongoing services negotiations could help Bahrain reinforce privatization.  On Bahrain's WTO
notifications, she believed that several companie s, including BAPCO, should be notified as state
trading enterprises as they had exclusive trading rights;  and the GCC Agreement should be notified to
the Council on Trade in Services, a requirement under GATS Article 5.  She asked about notificationof the GAFTA and for details on Bahrain's efforts to reduce tariffs by 10% annually under the
agreement.  She commended efforts at economic diversification and believed that improved policies
on FDI, intellectual property, and more extensive GATS commitments would reinforce these
achievements.
52. The representative of Tunisia noted that, as a developing country and a founding Member of
the WTO, Bahrain, with which his country maintained excellent relations, had made commendable
efforts to reform and modernize the economy and had made remarkable progress, which should besupported and consolidated.  These efforts had been highlighted in the Secretariat Report, which
especially mentioned budgetary reform for tackling the deficit resulting from low petroleum revenue,
accelerated privatization, and private investment in public sector dominated industries.  These
measures illustrated the authorities' determination to continue with liberalization to integrate the
economy into the multilateral trading system, one of the objectives of the WTO.  Bahrain deservedsupport and encouragement and Tunisia would be ready to help it to play a constructive role in the
WTO.  He stressed the importance of the TPR and its impact on the efficiency of the WTO, and hoped
that all delegations acknowledged the importance it had been given in the Marrakesh Agreement.
53. The representative of Mauritius hoped that the Review would be a constructive exercise for
Bahrain.  He noted that Mauritius, like Bahrain, was an island State.  Bahrain had a population of
around 640,000 as opposed to 1.1 million in Mauritiu s, although with a population growth rate of
3.5% per year, almost double that in Mauritius, Bahrain might soon catch up.  The significant
difference between the two was that Mauritius was an oil importer while Bahrain was still an oil
exporter.  Mauritius was deeply affected by the sw ing in oil prices, and he acknowledged that Bahrain
was also strongly affected by price changes, which had partly been the reason for slower GDP growthin Bahrain in the 1990s.  This was not surprising given that petroleum's share of GDP was some 14%
of GDP and 64% of merchandise exports.  However, the share of petroleum in GDP was declining
and Bahrain had moved from agriculture to oil to a services-based economy.
54. The authorities had actively pursued liberaliza tion, which laid down a framework for greater
efficiency.  Other measures included reduced government spending to rationalize fiscal expenditure,and fiscal reform to respond to budgetary deficits.  Sectoral reform has also been pursued, particularly
in services, which contributed around 77% of GDP in 1998 and 50% of employment.  Further
development of services formed an important part of the diversification strategy.  Bahrain had made
commitments under the GATS and under the Fifth Protocol, and whilst they had not participated in
the negotiations on Basic Telecommunications, the authorities were considering making GATS
commitments.  He emphasized the improvement in private sector investment since 1998 due to
increased investor confidence, although this may also be due to the opening up of more sectors toprivate investment.  Certain government services had also been contracted out to the private sector.
Bahrain had reoriented its industrial policy to diversify the industrial base through the development of
downstream activities related to Bahrain's energy intensive industries.
55. Like Mauritius, Bahrain attached importance to regional cooperation and maintained close
trade and investment ties with other GCC countries.  However, he asked how the preferentialinvestment access to Bahrain granted to investors from the GCC countries had could be reconciledWT/TPR/M/74
Page 15
with efforts to attract other foreign investors.  Bahrain also maintained non-tariff measures in the form
of import and export prohibitions and licences for a limited number of products, mainly for health and
security reasons, and while appreciating the need for precaution, it was not certain that this explainedall the import restrictions.  He nevertheless acknowledged and supported efforts to strengthen the
economy and to comply with WTO obligations, as this was not always an easy task.  He congratulated
Bahrain and welcomed the recent appointment of four women to the Bahrain Consultative Council
and he wished the country continued progress and prosperity.
56. The representative of Qatar, also speaking on behalf of Kuwait and the United Arab Emirates,
supported the comprehensive statement highlighting major developments in the Bahraini economy.
The Government had pursued an ambitious trade policy aimed at improving economic efficiency.
Bahrain had also modified several national laws to meet its WTO obligations.  Bahrain had succeeded
in building a strong, modern economy and had also consolidated its trade relations with a number of
countries.  It had been an important partner in many areas including being a productive member of the
GCC, which included Kuwait, Oman, Saudi Arabia, and the United Arab Emirates.  The GCC had
endorsed the principles of a multilateral trading system and the value of integration andinterdependence.  He looked forward to fruitful discussions on Bahrain's Trade Policy Review, which
would enhance and strengthen the multilateral trading system.
57. The representative of Malaysia said that his country had a strong and growing trade
relationship with Bahrain.  While in value terms total trade between the countries was relatively small,
the rate of growth in trade had been encouragin g, increasing rapidly from 29% in 1998 to 48% in
1999.  Malaysia thus welcomed the relatively low average applied MFN tariff of 7.7%, which was
comparable with that of many developed countries.  She encouraged Bahrain to bring down its bound
tariffs from 35.6% where possible, and welcomed recent reductions in tariffs on essential goods and
fruits.  She asked for clarification on the 20% tariff on edible oils, noting that prohibited imports
included vegetable oils.  She hoped that other prohibitions on sanitary wares, line telephone sets, andretreaded tyres would be lifted in line with Bahrain's WTO obligations.  Malaysia welcomed Bahrain's
efforts to improve economic growth, particularly to increase FDI and economic diversification.
Policies to encourage this process had been improved and she believed that Bahrain was on the right
track towards economic development.  Malaysia and Bahrain had signed investment guarantee and
double taxation treaties and Malaysia looked forward to closer trade and investment ties with Bahrain.
58. The representative of Morocco said that relations between Morocco and Bahrain were good.
Bahrain, one of the founding Members of the WT O, was a small economy based on services, which
applied MFN principles to all Members and did not restrict foreign participation in offshore banks.
Bahrain had implemented a liberal policy in trade and investment.  Even though the manufacturing,
petroleum, and telecommunications sectors had not been liberalized, Bahrain had undertakenstructural reform to speed up growth, reduce the size of the public sector, and open up a number of
sectors to private investment to absorb the defic it from low petroleum revenues.  This had increased
domestic and foreign private investment.  Increased private investment since 1998 showed greater
trust in economic reform.  Morocco encouraged Bahrain to continue its reform, promote
diversification, and attract FDI to ensure sustainable development.  The TPR had revealed some
inconsistencies in the regime but the authorities were no doubt aware of these and, given the
enthusiasm they had shown during the Review, wo uld try to remedy some of them.  Morocco was
pleased with efforts to review legislation and to bring it into line with the WTO Agreements, and to
simplify foreign investment policies.  Bahrain needed to make other WTO commitments.
59. The representative of Pakistan appreciate d the Government's commitment to implement
reforms aimed at economic diversification and commended it for setting the conditions for stable,
sustainable growth.  Pakistan also noted Bahrain's commitment to stable microeconomic policies, to aWT/TPR/M/74
Page 16
strengthened financial structure, and the privatization plan to address long-standing structural
impediments to growth.
60. The representative of Turkey said that his country placed importance on its links with
Bahrain.  He asked about privileges granted for aluminium production and noted that differential
tariffs for electricity could be considered an export subsidy.  He asked whether new legislation was
planned for FDI.WT/TPR/M/74
Page 17
V. REPLIES FROM THE REPRESENTATIVE OF BAHRAIN AND ADDITIONAL 
COMMENTS
61. The representative of Bahrain said that his delegation had attempted to answer all the specific
questions raised, and he would structure his remarks under three themes:  (1) recent economic
performance;  (2) trade policies by measure;  and (3) sectoral policies.
(1) RECENT ECONOMIC PERFORMANCE
62. Bahrain was not an oil-rich State;  it had limited onshore reserves, estimated at around
200 million barrels or 0.1% of the world's proven reserves.  However, recovery was still at theprimary stage and additional reserves would be reco vered through Enhanced Oil Recovery techniques.
Bahrain was not an OPEC member and not an importa nt player in the world oil market.  Petroleum
had traditionally been Bahrain's largest foreign exchange earner despite its share of merchandise
exports declining to 53.4% in 1998 from 76.1% in 1992.  Most oil exports were from the Abu Safa
field, and while oil formed a significant share of government revenue, it accounted for under 15% of
GDP, an indication of the success of the diversification policy.
63. During 1999, improved oil prices had had a positive effect and the budget deficit contracted
to 2.4% of GDP.  The budget was also affected positively by new revenue measures, and continued
rationalization of expenditure, in particular on recurrent elements.  Non-oil sectors also performed
well with growth averaging 3.8%, mainly due to financial services, tourism, manufacturing, and
construction.  The consolidated balance sheet of Bahrain's banks rose to US$102.1 billion in 1999,
from US$99.4 billion in 1998, and the balance of paym ents improved to a surplus of BD 9.6 million.
The Government aimed to balance the budget by 2006 through, inter alia , a medium-term expenditure
strategy to promote fiscal consolidation by increasing non-oil revenue and restructuring expenditure,
the latter being tightly controlled by the Ministry of Finance and National Economy.
64. Expenditure was controlled through, inter alia , a freeze on the size of the civil service and the
relative wage structure, and out-sourcing and privatization of government services.  Furtherliberalization and privatization would assist in reducing net government spending on services.
Bahrain had, through careful planning and fiscal constraint, built a sophisticated modern infrastructure
without resorting to direct taxation.  Fees were charged for several services, such as for the
registration of businesses, import levies, and for utilities and other government services.  The
Government was consciously expanding the private sector's role in economic development, and when
considering revenue generation and expenditure limitation, it tried to ensure that measures taken did
not impede growth.  The budget was expected to be balanced without the need for taxation or VAT.
65. Monetary policy primarily focused on maintaining the nominal exchange rate peg of the
Bahrain Dinar (BD) to the SDR at a rate of BD 0.47619 per SDR.  The exchange rate against the SDR
could be set within a margin of +/- 7.25%.  The middle rate against the U.S. dollar was quoted by theBahrain Monetary Authority (BMA) and had been unchanged since December 1980, at US$2.6596.
The BMA also had a number of monetary policy instruments at its disposal.  Treasury bills were used
to regulate liquidity positions of commercial banks in Bahrain dinars.  Liquidity was provided through
secondary operations in Treasury bills, including discounted Treasury bill operations and sales of
Treasury bills by commercial banks to the BMA with an agreement to repurchase them later and at a
higher price.  Market forces determined interest rates with no intervention from the BMA.  The BMA
also monitored credit of the commercial banks because of its economic significance although noquantitative or selective measures of intervention were used.  There were no exchange controls on
capital receipts or payments by residents or non-residents and no taxation on income and profits.WT/TPR/M/74
Page 18
66. In general, subsidies were not used to support local industry.  However, in a limited number
of special cases, some support, through increased import duties, had been applied for a small number
of infant industries, but the rates were within the bound rates.  Where appropriate, in the past, certainmeasures had been provided, such as the Human Resource Development (HRD) programme and other
social support measures to maintain basic living standards.  The HRD programme was eliminated in
1998 and other support measures, such as for lamb and beef, were also cancelled.  Bahrain had
notified its subsidies to the WTO through document  G/SMC/N/38/BHR, dated 27 July 2000.  There
were no longer any controlled prices other than for local bread, for stabilization purposes.
67. Privatization entailed re-defining the role of the Government as policy maker and regulator
rather than a producer of marketable goods and services, resulting in downsizing Government,
deregulating the private sector, and introducing business-friendly regulations.  It encompassed all
areas of government including infrastructure and services.  A number of projects and services had
been privatized and others defined for privatization, as detailed in the Government Report.  Bahrain
actively promoted foreign direct investment (F DI) through a marketing campaign by the Bahrain
Promotions and Marketing Board.  Virtually all sectors were open to foreign investment through100% foreign owned With Limited Liability (WLL) a nd Closed Joint Stock (JS) Companies.  FDI in
all manufacturing operations and most services sectors was allowed.  At end 1999, Bahrain had a total
stock of FDI, narrowly defined as paid-up capital, in excess of US$3.9 billion.
68. The new Company Law, currently being finalized, would provide an even more liberal and
transparent regime for the incorporation of companies and would act as a stimulus to attract more FDIin the future.  In addition, the Ministry of Commerce, as the main government organ for the
incorporation of companies in Bahrain, had created a new interactive computer system, which was
web-enabled and would permit investors to incorporate companies directly on-line thereby reducing
the start up time.  This system was now at the stage of a parallel run and was expected to be fully
operational within the current year.  There was no specific law dealing with foreign investment sinceBahrain did not differentiate between local and foreign investors.  Bahrain did not have any
competition law per se .  However, elements of other laws, including those dealing with consumer
protection did establish a policy to eradicate monopolies and restrictive practices.
69. The Bahrainization programme did not employ any fixed mandatory percentages for
employment of local manpower.  The 50% local take-up was a target, set for planning purposes and toassist companies with identifying local human reso urces.  The present target was 20%, and was also
flexible.  It was recognized that where local expertise was not available, companies were free to
employ expatriates.  However, the Ministry of Labour and Social Affairs did make an effort to assist
companies in finding suitable local manpower.  In  addition, national treatment was applied, ensuring
equal application to local and foreign-owned companies.  Government fees, including those for workvisas, were revenue devices and, apart from Commercial Registration fees, companies did not incur
any other charges in relation to their establishment.
70. Bahrain was committed to the multilateral trading system as part of its economic development
strategy, believing that open markets and competition were the best way of ensuring a strong, vibrant
and competitive economy.  All international treaties signed by Bahrain superseded national legislation
and could be invoked before the national courts.  Bahrain had met all its notification requirements,
except the rules of origin, which was being addressed as part of negotiations in the GCC, EU, andGAFTA and would conform to the WTO Agreement on Rules of Origin.  There were no anti-dumping
or countervailing laws, although, as stated in its notifications, Bahrain reserved the right to introduce
such laws whenever the need arose and in line with the Agreement.
71. Bahrain was not in favour of linked issues and though it believed that issues such as labour
standards and the environment were important for preserving human dignity and the global systemWT/TPR/M/74
Page 19
against harmful human intervention, they were best tackled by the relevant competent authorities
within their particular remits.  Governments should, therefore, support these organizations,
independent of the WTO, which should itself concentrate on its core responsibilities of facilitating theglobal environment.  Bahrain supported free and open markets, which encouraged competition,
discouraged monopoly players, and encouraged fore ign investment against a background of national
treatment.  The Company Law allowed up to 100% foreign ownership of locally incorporated
companies in most sectors.  Bahrain therefore supported a new round that placed emphasis on
competition and investment.  Bahrain also believed that the next round would be enriched by theparticipation of acceding countries such as Saudi Arabia and other Arab countries, which should be
allowed to play an active role in the negotiations.  Transparency, inclusiveness, preferential treatment,
and effective participation by all should be a priority in the new round.
72. The discussant thanked Bahrain for the complete statement, which had covered all the issues
dealt with in the section.  Clearly the macroeconomic results were good over the last few years as
exemplified by real GDP growth and low inflation.  He took note of the responses on fiscal measures
but these were based on consolidated expenditure rather than collection.  He had his doubts aboutsuch a policy, believing that a balanced approach with more emphasis on tax collection was needed.
He took note that privatization would be continue d and strengthened and that FDI promotion would
be improved.  It was important to avoid distortions, where possible, throughout the productive base of
the economy.  He sought details on Bahrainization:  the Secretariat Report stated that between 1992
and 1997 the share of Bahrainis employed grew by 48% and he requested updated figures.
73. The representative of the European Union asked what was the difference between the OPEC
and the OAPEC;  Bahrain was a member of the latter.  He appreciated Bahrain's comments on a new
round of trade negotiations, including subjects such as competition and investment.
74. The representative of Egypt commended Bahrain on its economic policies and measures to
attract FDI, and appreciated that these policies were to be continued.  He shared Bahrain's view that
labour and environmental issues should be delinked.
75. The representative of Bahrain thanked all the delegations for their valuable inputs and
insights.  His delegation had listened and learned from the various statements and questions, and
would try to convey these points to the relevant parties in Bahrain.  In general, Bahrain was fully
committed to the multilateral trading system, and wa s perhaps more open to foreign investment than
many developed countries.  While oil still played an important role in the government budget, efforts
to diversify the economy away from a reliance on oil, was paying healthy dividends, and further
progress was intended in these efforts.  Urgent steps were being taken to balance the budget, and
through a combination of good house-keeping and new revenue measures, the Government hoped to
achieve this without resorting to direct taxation.  Bahrain was bullish about its economic future, afuture which would be supported by its WTO membership.  He would respond later to the question on
the difference between OPEC and OAPEC.  However, the role of OAPEC appeared to be a
mechanism for the formation of joint ventures between companies based in its member countries.
(2) T
RADE POLICIES BY MEASURE
76. All tariffs were bound at 35% except tobacco and alcohol, which were bound at higher rates
for health and religious reasons.  A unified tariff and perhaps a new bound rate would be established
as part of the GCC customs union;  this would be notified to the WTO.  While the Secretariat hadmentioned tariff escalation, there were a small number of tariffs with higher rates of duty;  hence, the
average tariff calculation was misleading.  Applied tariffs were lower than bound rates and the
Government would continue to reduce rates to zero.  A Prime Minister's Decree removed tariffs on
most foodstuffs, from 5%, and reduced rates on several items from 10% to 7.5% on 1 January 2000.WT/TPR/M/74
Page 20
77. Bahrain's customs valuation was based on c.i.f. values and commercial invoices.  On average,
90% of sales contracts had been accepted by Customs for determining the value of imported goods.
Where the Customs Directorate was in doubt regarding the value indicated on commercial invoices,the importer was provided with sufficient time to satisfy Customs that the value indicated was the
same as identical or similar imported goods.  Otherwise a committee of specialists evaluated the value
and the importer had the right to take any dispute arising from this process to the local courts.  The
Customs Directorate was computerizing, and providing training for staff, and therefore required time
for full implementation.  In the meantime Bahrain was joining the WCO and would requestappropriate technical assistance.  Rules of origin were being formulated in the GCC/EU and GAFTA;
these would comply with the WTO Agreement and would be notified once finalized.
78. There was some confusion regarding items that were prohibited and restricted for health or
safety reasons, and Bahrain would clarify these with the Secretariat.  This information, categorized
according to safety or health reasons, was contained in the CD provided to the Secretariat by the
Bahrain Customs Directorate;  Bahrain did not restrict the import of sugars and sugar confectionery,
and sports equipment.  The Ministry of Interior restricted imports of certain toys for health and safetyreasons, in particular high-speed and high-powered  mini cars with four wheels, which could be used
by children on public roads;  radio remote control model airplanes, due to interference with air traffic;
and toys containing methyl chloride and other chemicals were prohibited by the Ministry of Health for
health reasons.  The import of cultured pearls were  prohibited to assist in the regeneration of the
natural pearl industry, on which Bahrain's traditional economy was based.  Being the natural pearlcentre in the Gulf, Bahrain was concerned that its reputation not be diminished by the intrusion of
cultured pearls into the market.  There were no other restrictions or prohibitions.
79. Bahrain had notified its state trading enterprises to the WTO.  Only one such enterprise
existed within the definition of the WTO, this wa s the Ministry of Commerce, for the import of live
sheep from Australia.  Others such as BAPCO did not have exclusive trading rights, and therefore didnot qualify as state trading enterprises.  Bahrain was not a signatory to the plurilateral Agreement on
Government Procurement, but consented to an agreement on transparency in government procurement
in line with the outcome of the working group establ ished for this purpose, and looked forward to the
conclusion of it work.  As mentioned, international conventions including TRIPS, of which Bahrain is
a signatory, took precedence over national legislation, and could be invoked before the nationalcourts.  However, Bahrain was amending its national legislation in line with the TRIPS Agreement
and in coordination with WIPO.  The TRIPS Council would review Bahrain's legislation by June/July
2001.  Bahrain was also amending Amiri Decree 11 of 1985 in line with the TRIMs Agreement;  the
amendment was with the legislative and executive organs of the Government for finalization.
80. The representative took note of the comment from India regarding the difficulty experienced
by companies in registering medicinal products, and would convey this to the Ministry of Health for
their appropriate response and action.
81. The discussant said that as Bahrain was a fairly new actor on the multilateral stage, having
becoming a GATT contracting party in 1993, he was interested in hearing about its experiences in the
WTO so far and its views on the relationship between regional and multilateral approaches to trade
liberalization.  He also asked for a response on the question raised about the gap between the bound
and applied tariff, and whether Bahrain would consider binding its entire tariff in the context of a newround of trade negotiations.
82. The representative of India asked whether Bahrain could do anything to lower recent oil price
increases.WT/TPR/M/74
Page 21
83. The representative of the United States noted that Bahrain had sent its draft Industrial
Property Law to the U.S. State Department for co mment and would try to respond as soon as possible.
84. The representative of Korea asked whether Bahrain intended to join the existing Agreement
on Government Procurement.
85. The representative of Malaysia asked for a clarification on the table on page 35 of the
Secretariat Report, which included vegetable oils in its list of import prohibitions.
86. The representative of the European Union noted that most of its technical questions concerned
TRIPS, to which Bahrain had provided a general response stating that legislation was being reviewed
and amended and would be reviewed in the WTO in June/July 2001.  He asked if there was any
possibility of receiving more specific responses to the questions before that date.
87. The representative of Bahrain said that Bahrain would try to respond to specific questions on
TRIPS before June/July 2001.  Imports of vegetable oi ls were not prohibited.  Bahrain did not intend
to join the current WTO Government Procurement Agreement but was interested in evaluating the
findings of the Committee on transparency in government procurement.  On regional agreements, he
noted that the GCC had been notified to the WTO under the Enabling Clause through Kuwait since1993.  A further notification of the customs union, to be completed in 2005, would be made.
88. A number of delegations had asked about the disparity between the Customs Handbook and
the actual situation.  He responded that the removal of restrictions had perhaps been faster than the
ability to correct official documentation.  Nevertheless, a correct list had been provided to the
Secretariat on a CD, which was available to any other interested party from the Bahrain CustomsDirectorate.  Since the GCC Agreement would result in a unified tariff,  this made it unnecessary to
correct the Customs Handbook.  He assured Members that Bahrain's draft TRIPS legislation would be
reviewed by next July, at which time all would be welcome to comment.  He welcomed the offer of
technical assistance made by the United States.  He hoped that rationalized and improved customs
procedures would speed the throughput of products and attract foreign investment.
(3) S
ECTORAL POLICIES
(i) Agriculture
89. Bahrain was a net food importing country;  and agriculture had contributed under 1% to GDP
during the past 20 years, and 3% of employment.  Some subsidies were provided on inputs for poultry
and dairy products, as well as technical assistance.  These had been notified to the WTO.
(ii) Manufacturing, aluminium, textiles and clothing
90. Industrial policy aimed to establish a broad base concentrated on value-added downstream
manufacturing, and encouraged industries that did not consume a disproportionate amount of energy
and land compared with their GDP contributions.  Assistance from international organizations such as
UNIDO was welcomed.  Small and medium-sized companies were encouraged, and incubators hadbeen established to foster local industry development.  The aluminium industry was based on the
smelter ALBA, one of the world's largest and most efficient, which was recently merged with the
aluminium marketing company.  Alumina imports were not restricted, although presently ALBA was
the only importer.
91. For textiles and clothing the "Garment Committee" established by the Bahrain Chamber of
Commerce and Industry, had appointed an international consultant to review the industry and to set aWT/TPR/M/74
Page 22
strategy given the dynamics of the new market re sulting from the ATC.  Emphasis would be placed
on the production of value-added products and identifying new potential markets.  The initial study
was expected to be completed by the end of 2000.  The issue was basically one for the private sector,with initiatives provided through the Chamber of Commerce.  Government support was provided
through training by the Bahrain Training Institute, for machine operators and supervisors, with a
capacity of 240 trainees per year in facilities initially funded by the LTNDP.  Oversight was provided
by a committee with members from concerned Ministri es and private-sector garment-factory owners.
By maintaining international credibility and providing a supportive legal, administrative, and physicalinfrastructure, the Government supported the private sector, including in textiles and clothing.
(iii) GATS
92. Bahrain had signed the Fifth Protocol on services, and made commitments in offshore
insurance, reinsurance, banking and capital mark ets.  The Government was considering commitments
in other sectors;  these would be submitted to the GATS Council.
93. The discussant noted Bahrain's transformation from an agrarian to oil and then to a
services-based economy, which had become the driving force for economic change and employment.
He also took note of Bahrain's intention to make  further GATS commitments and encouraged them to
do so.
94. The representative of Japan asked if more details could be provided on the services sectors in
which Bahrain intended to make commitments and the extent of these commitments.
95. The representative of Bahrain said that at present, additional commitments were being
discussed in civil aviation, tourism, maritime, and telecommunications services.
96. The representative of India sought clarification on the contribution of services to GDP.  The
delegation of Bahrain had mentioned a figure of 64% whereas others quoting the Secretariat Report
had said 77%.  He asked which was correct and why there was a discrepancy.
97. The representative of Bahrain said that the services sector's contribution to GDP was in
excess of 70% in 1998, although it fluctuated from year to year.  The discrepancy may have been due
to definition.  He would provide figures for the period 1990-99 later.  He noted that economic
diversification was being pursued without resort to general support measures for industry.  Previous
support, such as the HRD scheme had been eliminated.  Bahrain was aware of the importance of
private-sector involvement, and small and medium-sized companies, which were being fosteredthrough the creation of incubators.  Industrial policy aimed to increase output by adding value through
downstream manufacturing.  Policy on FDI would provide new inputs for industry and open up
regional and international opportunities.  These would be directed through the Government's strategic
plan, which, inter alia , emphasized value-added tourist-based industries, development of Bahrain as a
centre of excellence in areas such as electronic commerce, vocational and professional training, andother areas where Bahrain's main natural resource, its people, could best be utilized
(4) C
ONCLUDING REMARKS
98. The representative concluded by noting that the first Trade Policy Review of Bahrain had
been a very valuable exercise and he thanked the Chair and others for their valuable inputs and
supportive comments.  He appreciated that the exercise was meant to provide lessons for the country
under review, and his delegation had certainly learned some valuable lessons over the past three days.
He thanked the Chairman for his efficient handling of the proceedings, and his very perceptiveinterventions;  Dr. Ricardo Barba for his comments, which focused on the main issues, and theWT/TPR/M/74
Page 23
distinguished delegates whose questions, apart from keeping the delegation very busy for three days
and nights, also focused attention on some areas where attention needed to be concentrated.
99. He said that the WTO was one of the main pillars of world economic stability, and through
economic stability, peace.  He was hopeful that in future years the role of the WTO would continue to
develop in support of a global trading system without barriers, in which all parties, developed,
developing, and least developed had equal opportunities.  Finally he thanked Mr. Boonekamp, the
Director of the Trade Policies Review Division, and his team, the Secretariat, and the interpreters,
who had made communication possible.WT/TPR/M/74
Page 24
VI. CONCLUDING REMARKS BY THE CHAIRPERSON
100. 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 maintainstable 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 toprivate 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 legi slation would be useful in enhancing competition
in the economy.
101. 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 trader s 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.
102. Questions were also raised on non-tariff measures, including: Bahrain's import prohibitions
and restrictions and the rationale for maintaining th ese;  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 theimplementation status of the customs union betw een GCC members and the GAFTA and the question
was also raised whether regional agreements might make Bahrain over-dependent on a few markets.
103. 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 detailsregarding 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.
104. On sectoral issues, the discussion focused on Bahrain's plans to further diversify the industrial
base which is still largely based on energy intensive industries.  In services, several Members askedfor 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.
105. Additional details were also sought on a number of issues, including:
- fiscal reform, in particular with regard to taxation;WT/TPR/M/74
Page 25
- 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 se ctor, restrictions on foreign ownership of
local banks and of companies listed on the Bahrain Stock Exchange, plans to join theInformation Technology Agreement (ITA) and to establish a Telecommunications
Act.
106. Members also expressed their appreciation of the written and oral responses provided by the
delegation of Bahrain during the meeting.
107. 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 accelerat ed 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 improvethe 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 re view 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.WT/TPR/M/74
Page 27
ANNEX I
ADVANCE WRITTEN QUESTIONS BY MEMBERS
THAILANDImport prohibition, restrictions, and licensing, Table III.4, p. 35
We note that Bahrain has import restrictions on cultured pearls, sugars and sugar confectionery and
toys and sports equipments.  We are of interest to know whether Bahrain has any plan to eliminate the
import ban on these products.  If yes, when?
Sanitary and phytosanitary measures, p. 38, para. 48
We note that only live animals impor ted from some countries do not need health certificates and prior
permission from the Ministry of Works and Ag riculture of Bahrain – we would like to seek
clarification on this matter.
We also note that Bahrain allows importation of pe ts from only a number of selected countries.  We
are of the view that this measure is inconsistent with the WTO rules, and would like to hear the view
from Bahrain on this matter.  In this connection, we would like to know whether Bahrain will consider
to import pets from other WTO members if certificate of rabies-free is attached.
HONG KONG, CHINA
Secretariat Report (WT/TPR/S/74)
P. vii, para. 4
It is mentioned that Bahrain has maintained quanti tative targets for firms to employ Bahrainis.  We
would be interested in knowing the targets set for services sectors, and whether there is any flexibility
in the application of the targets and any plan to relax/phase out the arrangement.
P. 34, para. 31;  Table III. 4
It is understood that imports are prohibited on 11 tariff lines including oilseeds, poppy seeds, and
cultured pearls.  In addition, import prohibitions also apply to products ranging from ornamental
birds and live animals to fats and oils, sugars, retreaded tyres, telecommunications equipment and
toys.  We would appreciate details on the rationale for such prohibitions.
P. 27, para. 8
It is noted that all imports into Bahrain must be accompanied by a number of documents including
four copies of bills of lading, original certificate of origin, three commercial invoices and insurance
certificates for shipment insured by the exporter or shipper.  Moreover, commercial invoices must becertified by a Chamber of Commerce in the country of origin and stamped by the relevant Consulate
of Bahrain or any Arab Embassy in the country of origin before export.  We consider that import
documentation should be kept to the minimum and be required only when necessary so as to facilitate
international trade.  We are also interested to know if Bahrain has any plan to simplify its import
documentation requirements.WT/TPR/M/74
Page 28
P. 34, para. 33
It is noted that import licences for raw materials and capital goods imported for the purposes of
trading may only be granted to companies established locally with at least 51% ownership bynationals of Bahrain and/or other Gulf Cooperati on Council (GCC) countries.  We would like to
know the reasons for such restriction.
P. 71, para. 74
It is noted that foreign companies are subject  to more stringent requirements than domestic
companies when requesting a listing in the Bahrain Stock Exchange.  Would Bahrain considereliminating the difference in requirements between fo reign and domestic companies in order to attract
more foreign companies in listing in the Bahrain market?
P. 78, para. 97
It is noted that while Bahrain is currently having no overall telecommunications law, the
establishment of a Telecommunications Act is un der consideration.  We would be interested in
knowing the intended coverage of the Act and whether the authorities would consider incorporating
the elements of the Basic Telecommunications Reference Paper in this new legislation.
P. 83, para. 117
It is noted that foreign companies must obtain gov ernment approval for the provision of shipping and
transport services for passengers.  We would like to know if similar requirements also exist in cargo
transport and whether domestic service suppliers are also subject to same requirements.
CANADA
Government Report (WT/TPR/G/74)
III(1) para. 25 (j)
The Report states that opportunities for new industrial operations exist in a number of areas,
including textiles and clothing.
Under the Agreement on Textiles and Clothing (ATC), all quotas in these sectors will disappear on
31 December 2004.  At that point, countries with strong and competitive textiles and clothing
industries will be able to penetrate further previously restrained markets, potentially eliminating
weaker suppliers from several markets.  How will Bahrain make itself attractive to investors in the
sectors of textiles and clothing, shortly before the end of the ATC?  How will it prepare itself for the
competitiveness level of the post-ATC markets?
EUROPEAN UNION
Government report (WT/TPR/G/74)
In paragraph 61 of the report Bahrain sets out its priorities in relation to future negotiations.  The EU
attaches great importance to the launch of a new comprehensive round of trade negotiations which
would address the concerns of all members of the WTO.  The EU would therefore be grateful for amore detailed explanation of which issues Bahrain would like to see addressed in a new round.  InWT/TPR/M/74
Page 29
particular, what are the priorities of Bahrain in relation to trade and competition, trade and
investment, and trade and environment?
Equally in the context of the launch of a new round;  what means does Bahrain use to make its trade
policy supportive of sustainable development?  To what extent does Bahrain use, or is planning to
use, instruments such as sustainability impact asse ssments, as a tool in this sphere?  In particular,
what other mechanisms is Bahrain using to promote synergies between its trade policy and its
environmental policy?
In relation to the question of free trade areas/regional trade agreements, the EC notes that Bahrain is
a Member of the Gulf Cooperation Council (GCC) and also of the Greater Arab Free-Trade Area
(GAFTA).  In the Secretariat Report it is menti oned that GAFTA has not been notified to the WTO.
We would be grateful for receiving information fr om Bahrain on when the GAFTA will be notified to
the WTO.
We note that the customs union between the GCC Members is to be completed in 2005.  Could
Bahrain provide information on the state of im plementation in Bahrain of this agreement?
Secretariat Report (WT/TPR/S/74)
II, p. 18, para. 22, Trade policy regime:  Framework and objectives
Could the Bahraini Government provide further clarification on how it intends to increase
transparency in public procurement if the application of existing national policies and domestic
procurement procedures should be continued?
P. 23, para. 34
Could the Bahraini Government explain the cond itions under which the Minister of Commerce may,
through a resolution increase the maximum percen tage for foreigners from non-GCC countries to
own shares of joint-stock and limited liability companies from the normally applied 49%?
III(2), para. 11, Measures directly affecting imports
We note that Bahrain has requested a further extension to complete the preparation of the Bahrain
customs authorities for the full implementation of the Customs Valuation Agreement and that this
request is still under examination.  Could Bahrain confirm that if an extension is given that they will
be prepared to fully implement the Customs Valuation Agreement by the agreed date of extension and
that no further extensions will be sought?
Para. 29
We note that Bahrain is not a signatory to the WTO Agreement on Trade in Information Technology
(ITA).  The ITA is an essential plank in facilitating trade by electronic means, as it commits
signatories to eliminating customs duties on products listed in the Annex to th e Agreement.  That in
turn reduces the cost of introducing the technology and encourages its use.  As Bahrain, according to
the policy review, maintains a relatively liberal trading regime, we should ask her of her intentions tojoin.  Does Bahrain intend to sign the ITA and if not what concerns prevent her from signing it?WT/TPR/M/74
Page 30
P. 32, para. 27
The report points out that some applied rates, mainly on alcohol and tobacco, appear to exceed rates
in Bahrain's schedule of bindings and that accord ing to Bahraini authorities a misunderstanding has
led to error in the Schedule.  Would the Bahraini Government clarify the nature of the
misunderstanding and explain whether it plans to rectify its applied rates?
P. 34, para. 31
Does the Bahraini Government have plans to decrease  the relatively significant number of items on its
list of prohibited imports?
P. 37, paras. 39-44
When there is a reference to mandatory standards in  the text, we understand that it is referring to
technical regulations (as defined by the TBT Agreement).  Could Bahrain confirm it?
It Is indicated that "Bahrain-specific standards are developed when necessary and when no Gulf
standards exists.  At present there are only three Bahrain specific standards" (para. 40).  In addition,
it is pointed out (para. 41) that "in 1999 there were 1018 Gulf standards, of which 316 (31%),
relating mainly to food products, were mandatory in  Bahrain".  Could Bahrain indicate in which
other areas the standards are mandatory?
How many Gulf standards, which are mandatory in Bahrain, are based on ISO standards?
Could Bahrain explain and provide more information on the procedure to get the conformity mark in
accordance with Bahraini standards?  How many accredited laboratories are not national ones?
P. 38, para. 50
Could the Bahraini Government explain why for im ports of drugs and medicines a certificate stating
that the drug is permitted and valid for the use in the U.S. is required?
P. 41, para. 64-65
According to the report Bahrain has not notified any state-trading activities to the WTO Council for
Trade in Goods though, for example imports of al umina are carried out only by the state-owned
Bahraini-Saudi Aluminium Marketing Company.  Fu rthermore, it seems as monopolies were to be
eliminated under Amiri Decree No. 18 dating from  1975.  Could the Bahraini Government provide
clarification on the existence of state trading and monopolies?
III(4)(vi) Intellectual Property Rights
Please, inform when Intellectual Property Laws which are being arranged in the field of industrial
property, will be notified.
Please, identify relevant provisions of the new trademark law 1991 which was adopted to conform
with the TRIPS Agreement.
Please. explain whether or not your trademark registration authority refuses a trademark application
if it contains a geographical indication.WT/TPR/M/74
Page 31
Please, state the term of protection granted by your legislation to patent.
Please, explain if and how your legislation ensures the protection of undisclosed and confidential test
data and other data submitted to governmental agenc ies for market authorization of a pharmaceutical
or of an agricultural chemical product against disclosure and unfair commercial use by a competitor.
Please, explain if and how your legislation will provide protection for industrial designs, plant
varieties and topographies as well as enforcement of these rights.  In particular, please identify
relevant provisions of your legislation that pr ovide for special requirements related to border
measures.
We would like to congratulate Bahrain on achieving a dramatic reduction in copyright piracy levels.
We understand that a new copyright law was due in June 2000, which we are currently studying.  We
seek clarification on the following points:
- Please, identify relevant provisions of the new copyright law 1993 which were adopted to
conform with the TRIPS Agreement.
Paras. 100-111
We seek clarification as to the extent to which copyright protection is offered in a number of areas
(e.g. rental rights, performances, sound recordi ng, pre-existing copyright works).  Could Bahrain
clarity the extent to which the following areas are offered copyright protection in line with the TRIPS
Agreement:  sound recordings, pre-existing copyright works, performers rights, rental rights for
computer programs/audio-visual works or sound recordings?  In particular, we would also like
clarification over whether foreign sound recordings up to 50 years old have retrospective protectionin Bahrain.
Table III.9
We are concerned that there appears to be no protection for the layout design of integrated circuits
(topographies) as this is contrary to Articles 35-38 of TRIPS.  The TRIPS standard is that there
should be a minimum of ten years protection.  Co uld the delegation of Bahrain clarify whether
protection exists for the layout design of integrated circuits?  If not, what plans does Bahrain have to
conform to Articles 35-38 of TRIPS and by when?
Para. 104
We seek clarification as to whether computer programs are protected as literary works, in compliance
with TRIPS Article 10.1.  As literary works, computer programs should be entitled to copyrightprotection for the life of the author, plus 50 years (Article 12 of TRIPS) and not, as indicated in this
paragraph, protected only for 50 years from completi on or 40 years from publication.  Could Bahrain
please explain how computer programs are offered protection as literary works.  What steps are
planned to bring this fully into conformity with Article 12 of TRIPS by providing copyright protection
for the life of the author, with an additional 50 years, and by when?
We seek clarification as to whether Bahrain's copyright law also provides national treatment to other
WTO members, on the same basis as it offers to Bahrain nationals, in accordance with Article 3 of
TRIPS.
Could Bahrain provide clarification as to whether c opyright registration is mandatory?  If so, what
plans do they have to conform with Article 5 of the Berne Convention and Article 9.1 of TRIPS?WT/TPR/M/74
Page 32
Para. 110
We note that the maximum penalties for copyright infringement in Bahrain are one year and/or a fine
not exceeding BD 1,000 may be imposed by the courts.  Please provide elements of comparison onwhich penalties for copyright infringement can be considered as a sufficient deterrent compared to
other penalties imposed by Bahrainese courts.
INDIA
Paragraph 13 of the summary observations of the Secretariat Report points out the divergence that
exists between the legislation concerning non-tariff measures and the application of the legislation.This divergence is glaring in the case of application of the list of restricted imports and exports by the
authorities.  Further, it notes that 'other measures, such as labelling requirements for imported eggs,
appear not to be applied equally to imported and domestically produced goods, although there seems
to be no explicit mention of this in the legislation provided.  The apparent discrepancy between
legislation and practice potentially reduces transparency and predictability in Bahrain's trade regime
and may increase the scope for administrative discretion, particularly at the border'.
We would like to know the reaction of the delegation of Bahrain to the Secretariat's observations.  We
would also like to know the details of any concrete  steps that are envisaged to correct the situation.
Paragraph 7 of the summary observations in the Secretariat Report points out that 'notifications in a
number of areas, including preferential rules of origin, legislation of technical barriers to trade,
sanitary and phytosanitary measures, and state trading, have, not however, been made'.  In
paragraph 29 thereof, the Secretariat notes that 'predictability and transparency of the trade andinvestment regime would be enhanced were Bahrain to more actively notify its legislation to the
WTO'.
We would like to know if Bahrain has any special difficulties in fulfilling its notification obligations?
AUSTRALIA
Customs Union
Bahrain is a member of the GCC Customs Union.  Could Bahrain provide details on product
coverage, product/sectoral exemptions and phasing plans of the Common External Tariff which we
understand will be phased in over the coming years and on which were reportedly concluded late in
1999?
Services
Could Bahrain advise what measures will be take n to encourage private sector participation in
economic development through privatization of services such as transport and telecommunications?
KOREA
II(5) Foreign Investment Regime
Under the "Bahrainization" programme, as explained in Box 1.1, p. 5, of the Secretariat Report,
companies are supposed to employ at least 50% of Bahraini nationals.  Give n that 40% of Bahrain's
population are expatriates, this requirement can be burdensome especially to foreign invested
companies in Bahrain. Also, "fees paid by expatriat e employees for work visas were raised in 1996,WT/TPR/M/74
Page 33
doubling for a two-year work permit from BD 50 to BD 100 and increasing from  BD 40 to BD 150 for
renewal".  Does the Bahraini Government have any plan to ease this requirement and reduce visa
fees with a view to inviting more foreign direct investment?
III(2)(ii),  para. 18, p. 29,  MFN tariffs
The Bahraini Government is implementing increased tariff protection on certain infant industries on
the basis of local contents requirement.
Could the Bahraini Government confirm that items in Table AIII.2, p. 100, are the only products
covered by this measure and the Government will not add new products to this list?
Could the Bahraini Government elaborate on its plan to phase out the protection by 2005?
Para. 21, p. 30
The Bahraini Government has recently signed  the GCC Agreement proposing a customs union.
Under which category of reduced tariff rate will the current 20% import duties for motor vehicles fall
in 2005?  Does the Bahraini Government have any plan to advance the lowering of import duties for
motor vehicles?
Para. 23, p. 30
Could the Bahraini Government elaborate on its plan to bring its measure of tariff exemptions on
certain products based on local contents into conformity with the WTO TRIMs Agreement?
(vi) Anti-dumping and countervailing measures  paras. 36-38, p. 36
Bahrain does not have laws or regulations relevant to the WTO Agreement on Subsidies and
Countervailing Measures and WTO Agreement on Safeguards. However, given that trade treaties arepart of Bahrain's national legal system and supers ede any national legislation, the WTO Agreements
are part of Bahrain's laws. Does it mean that the Bahraini Government can resort to anti-dumping,
countervailing measures or safeguard measures on the basis of the relevant WTO agreements? Could
Bahrain confirm that it will not take such measures unless the relevant domestic legislation is put in
place?
(vii) Para. 45, p. 38 , Standards and other technical requirements
When will the Bahraini Government notify its national notification authority or enquiry point? When
will Bahrain start to submit its SPS/TBT notifications?
(ix) Government procurement paras. 54-62, pp. 39-41
Given that the share of supplies purchased by the Government is estimated to account for around
11% of GDP in 1998, does Bahrain intend to accede to the WTO Government Procurement
Agreement in the near future?
Bahrain seems to have no procedures for complaints or appeals against a particular award.  Will the
Bahraini government introduce such procedures?WT/TPR/M/74
Page 34
Is there any plan to improve access for foreign firms, for example by setting up a national single
enquiry point which integrates most of the procurement opportunities and gives public notices in
English?
The Bahraini Government's willingness to participate in negotiations on transparency in government
procurement is welcomed.  What is its position on th e threshold to be adopted or the 'scope' of entities
to be covered by the Transparency Agreement on Government Procurement?  In the Bahraini
Government's view, should the negotiations covers goods and services or goods only?
(4)(vi) Intellectual property rights,  Table III.9, p. 49
There are a number of discrepancies between its la ws and the TRIPS Agreement.  Could the Bahraini
Government explain in detail about its plan to resolve these differences?
Bahrain has not yet undergone the TRIPS review.  When will the Bahrain Government be prepared
for the review?
IV(1) Overview
Chart IV.6, p. 65, the construction sector const itutes 4.1% of Bahrain's GDP.  However, the
Secretariat Report does not cover this sector.  Please provide an overview of this sector.
(5)(iii) Financial services,  para. 63, p. 68
Foreign ownership of locally incorporated "onshore" banks is limited to 49%, whereas up to 100%
foreign ownership is permitted for offshore banking units.  However, GCC nationals may own up to
100% of locally incorporated "onshore" banks.  Is  this special treatment,  which seems to be in
contradiction with MFN principle, specified in the GCC Agreement, or is it implemented as agovernment's unilateral policy measure?  How does the Bahraini Government justify this special
treatment for GCC nationals?
Para. 100, p. 79
Bahrain is considering making GATS commitments in  the basic telecommunications sector. Could the
Bahrain Government elaborate in detail on its plan in this regard?
UNITED STATES
Government Report (WT/TPR/G/74)
I(1) para. 2
The report states that due to an across-the-board cut in budgeted expenditures, lamb and beef
subsidies were cut in 1998.  Were these subsidies  permanently eliminated or were they onlyeliminated  in 1998?
II(2) para. 19
Please provide more details on the proposed early retirement scheme.  When is this scheme scheduled
to take effect?  How will the scheme be funded?WT/TPR/M/74
Page 35
III(1) para. 25
The report notes "import substitution" receives vital government support.  Please explain this
statement more fully.  What types of support is offered by the government?  Who is eligible to receivesuch support?
The report lists the areas of development in whic h new opportunities exist.  Please explain whether
any government support or incentives are offered to encourage development in these areas.  Are all
potential industries or investors eligible for any support or incentives offered?
IV(1) para. 38
The report says that one of the statutory objectives of the Bahrain Monetary Agency is to "organize
the banking business and control the banking system."  In what ways does the BMA accomplish this?
Much of the banking business in Bahrain has been privatized.  Does the mandate of the BMA
authorize it to have effective control of the private banks?
One of the statutory objectives of the Bahrain Monetary Agency is to "control and direct bank credit
so as to realize the objective of the economic policy of the state."  Please explain more fully whether
this objective also applies to lending activities of private and commercial banks.  Are banks directedto lend to all sectors of the economy on an equal basis?  In what industries were the banks directed to
lend credit in 1999 and 2000?  Have new objectives been discerned for 2001?
Secretariat  Report (WT/TPR/S/74)
Summary Observations
Para. 6
We understand Bahrain's treaty obligations supersede national law once a treaty has been ratified.
However, the government is also revising its laws to ensure that legislation reflects WTO
commitments.  What is the status of Bahrain's efforts to revise its trade and related laws?
Para. 13
The Secretariat Report states there is a certain degree of divergence between legislation and practice
in the customs area.  Could you please describe  these divergences and explain why customs practice
differs from the legislation?  What is being done to increase transparency and predictability in
customs administration?
Para. 29
What plans does Bahrain have to encourage privatization?  Is  there any intention to undertake
privatization in the telecommunications sector?
I(4) para. 22
The Government is trying to improve the climate fo r private domestic and foreign investment. We note
that new legislation has been enacted to raise limits  on foreign investment in certain sectors of the
economy.  Please identify the sectors?  What are the limits?  What conditions?  When does  it takeeffect?WT/TPR/M/74
Page 36
II(3) para. 22
The Secretariat Report notes that Bahrain is interested in obtaining another opportunity to notify
existing TRIMs to the WTO."  Does Bahrain have any  existing TRIMs that should have been notified?
If so, please describe.
(4)(i) para. 23
Bahrain requested in January 2000 an extension of its transition period for the implementation of the
WTO Agreement on Customs Valuation.  However, to our knowledge no such extension has been
granted.  What steps has Bahrain taken to obtain the extension that they have requested.  What stepshas Bahrain taken since it applied for the extensi on to ensure that the Customs Valuation Agreement
is implemented?
(4)(ii) Regional agreements
Please identify the services sectors for which there is preferential access to GCC providers?  Which
services sectors are included under the GCC?  What is the schedule to obtain substantial sectoral
coverage?  Do the agreements extend beyond investment rights to include cross-border supply
guarantees?  Will the Greater Arab Free-Trade Area have a companion services agreement?
Para. 28
What are the plans for moving forward with negot iations on a free trade area between the GCC and
the European Union?  What is the scope of this agreement?  Will it provide for duty elimination in all
sectors?
Para 31
We note that Bahrain has a number of economic reform efforts underway aimed at diversifying its
economy, including liberalizing certain services se ctors for foreign investment.  Does Bahrain have
any plans to accelerate the pace of services liberalization?
Please describe how your plans to attract foreign investment will relate to services liberalization?
What services sectors are most likely to benefit from this reform?
(5)(i) para. 31
What additional actions is the government taking to accelerate investment liberalization to attract
foreign investors?
Para. 39
The Secretariat Report notes Bahrain is "currently studying" the possibility of opening the stock
market still further to foreign participation, both in terms of 100% ownership  of listed companies as
well as services rendered to the stock exchange.  How long has this review process been underway?
What entities within the government of Bahrain are participating in the study?  When will the review
process be complete?  What arguments are being discussed in favor of and in opposition to full
liberalization?WT/TPR/M/74
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III(2)(i) para. 11
What methods is Bahrain currently using for customs valuation?  What steps is it taking to prepare
for implementation of the Customs Valuation Agreement?  What specific problems has Bahrainexperienced in its efforts to implement the CVA?
Para. 21
The Secretariat Report notes that the Greater Arab Free-Trade Area signed by Bahrain calls for the
reduction of customs duties at a rate of 10% annually.  We request that Bahrain provide an update on
its reduction of customs duties under this agreement.
Para. 30
Please describe the rules of origin that are used for non-preferential and preferential trade regimes,
particularly with regard to determining origin for purposes of the certificate of origin required for
imported goods.
Please describe how Bahrain ensures that it issues assessments of origin within the 150 days of
requests by exporters and importers as required under the WTO Agreement on Rules of Origin.
Please describe the process under which determi nations of origin may be appealed.  Is there an
administrative review process?
When will Bahrain make a notification concerning its rules of origin in accordance with the WTO
Agreement on Rules of Origin?  If Bahrain does not have non-preferential rules of origin, please
explain how Bahrain ensures that origin determinations for purposes of certificates of origin are done
in a non-discriminatory manner consistent with th e obligations of the Agreement on Rules of Origin.
Para. 40
Please provide further information on how national standards and technical regulations are
developed and adopted?  Are all interested parties allowed to participate in the development of both
national standards and technical regulations?  Is there a comment period for  both national standards
and technical regulations?  How long is the comment period?
Bahrain cites three Bahrain-specific standards, on safety, local bread and warehouses for foodstuffs.
What products does the safety standard address?  How long have these Bahrain-specific standards
been in place?
Para. 41
The Secretariat Report states that Bahrain and the other members of the GCC are working to
harmonize any voluntary standard with national requirements.  What is the reason for making such
voluntary standards mandatory once harmonized?
We note with interest GSMO's revi ew of Gulf standards for conformity with international standards.
What is the status of this review, what are the results to date, and when will the GSMO complete the
review?  Once the review is complete, what st eps will GSMO take to bring Gulf standards into
conformity with international standards?WT/TPR/M/74
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Para. 45
When will Bahrain notify its national enquiry point under the Agreement on the Application of
Sanitary and Phytosanitary Measures?
Para 54
We note in the Secretariat Report that governmen t budgetary expenditures account for 30% of GDP.
However, Bahrain is not a member of the WTO Agreement on Government Procurement.  We believe
that participation in this agreement can result in greater efficiency and transparency.  We strongly
encourage Bahrain to consider becoming an observer to the Government Procurement Committee.
Para. 62
What type of appeal system for complaints against  a particular award, in addition to the courts, is
Bahrain considering?
Para. 87
Please provide details on Bahrain's privatization plans and process, particularly in the
telecommunications and banking sectors?
Table III.9
We note from table III.9 that Bahrain law does not provide terms of protection for copyrights, patents,
industrial designs, geographical indications and layout designs for integrated circuits for the
minimum period required by TRIPS.  Please explain why these periods fall short of TRIPS
requirements.  How does Bahrain ensure that its courts apply the treaty obligations rather than the
provisions provided for in domestic legislation?
Para. 100
Please explain how Bahrain intends to fulfill the obligation in paragraph 2 of TRIPS Article 39, which
requires members to provide protection for all undi sclosed information, including technical know-
how and commercial information, that meets certain criteria.
What measures, as required by TRIPS Article 42, will be taken by judicial authorities in Bahrain to
protect the confidentiality of undisclosed information furnished by a party during legal proceedings to
enforce rights in such information, or for other purposes?
Please explain how Bahrain intends to implement the obligation in paragraph 3 of TRIPS Article 39,
which requires members to protect certain test data associated with requests to obtain approval to
market pharmaceutical and agricultural chemical products from disclosure and from "unfair
commercial use." Please explain procedures if any that other affected ministries in Bahrain will use to
implement this provision to give practical effect to this obligation.
Please explain whether inventions within the categories specified below will be eligible to be patented
under Bahrain's patent law if they are otherwise novel, involve an inventive step, and are industrially
applicable:
- process inventions which, in whole or in part, consist of steps that are performed by a
computer and are directed by a computer program;WT/TPR/M/74
Page 39
- product inventions consisting of elements of a computer-implemented invention
including:
(i) machine-readable computer program code stored on a tangible medium such
as a floppy disk, computer hard drive or computer memory;  or
(ii) a general purpose computer whose novelty over the prior art arises primarily
due to its combination with a specific computer program;
- a process invention that facilitates the conduct of business;
- a micro-organism;- plants and animals;
- pharmaceutical products;  and
- agricultural chemicals.
Please identify the rights that will be conferred by a patent in Bahrain, for both product and process
patents.
Please identify any exceptions to the rights that will be conferred by a patent in Bahrain and indicate
the manner in which the law of Bahrain will ensure that such exceptions do not unreasonably conflictwith a normal exploitation of the patent and do not unreasonably prejudice the legitimate interests of
the patent owner, taking account of the legitimate interests of third parties.
Please describe any provisions that will be put  in place for compulsory licensing of patents in
Bahrain's law and explain how Bahrain will ensure that each of the conditions in Article 31 of the
TRIPS agreement will be met in relation to any compulsory licenses.
Please indicate the number, if any, of compulsory licenses issued under Bahrain's patent law in each
of the last five years.
Please describe the term of protection for patents that will be available under Bahrain's patent law
and indicate if there is any variation in that term, based upon the area of technology to which the
patent relates.  If so, please indicate what the variations are and for what technologies and describeBahrain's plans to comply with Article 27.1, which prohibits discrimination in the enjoyment of patent
rights based on the field of technology.  Additionally, as the TRIPS requirement is a minimum
requirement, please indicate whether Bahrain will provide patent term extension to compensate for
term lost due to regulatory review, where applicable.
Please verify that the terms of all patents in existence in Bahrain on the date of application of the
TRIPS agreement to Bahrain, will not end before the expiration of a period of 20 years measured
from the date of filing.
Please describe in detail the manner in which plant varieties will be protected under Bahrain's laws.
Para. 101
It is noted that the current GCC Patent Office has received hundreds of patent applications.
However, we have received no information that the GCC Patent Office is examining those
applications and  actually granting patents.  As a functi oning GCC patent system is critical toWT/TPR/M/74
Page 40
Bahrain's compliance with the TRIPS patent requi rements, it is important that the GCC be a
functioning system that actually grants patents to applicants desiring to obtain patent protection in
Bahrain.  What steps is Bahrain taking to ensure  that the GCC Patent Office will be a functioning
patent office that will grant patents?
What steps is Bahrain taking to amend its patent law to give proper effect to the patents issued by the
GCC office, i.e., that GCC patents would be  recognized and enforceable in Bahrain?
What steps is Bahrain taking to implem ent Part III of the TRIPS Agreement?
What steps is Bahrain taking to join the Patent Cooperation Treaty?What steps is Bahrain taking to provide patent protection for the full range of patentable subject
matter as required by TRIPS Article 27, especially the last proviso of TRIPS Article 27(2)?
What steps is Bahrain taking to ensure that the exclusions from patentability in the GCC patent law,
especially that for business methods, do not go beyond those permitted by TRIPS Article 27?
What steps is Bahrain taking to ensure that the GCC patent law clearly states that local working is
satisfied by importation?
Para. 103
Please describe in detail the way in which industrial designs, including textile designs, will be
protected under Bahrain's laws.
Please describe how Bahrain intends to implement the obligations of Section 6, Part II of the TRIPS
Agreement.
Para. 109
What steps is Bahrain taking to ensure that the enfo rcement provisions of Part III of TRIPS, as those
provisions relate to patents, are given effect in Bahrain?
IV(2)(i) para. 6
The Secretariat Report states that with the exception of petroleum and some food products, no other
manufacturing activity appears to be subject to price control.  Please confirm that there are no pricecontrols on other products.  Which food products are subject to price controls?
Para. 11
Are there any restrictions on the importation of wheat?  If so, please describe these restrictions.
Para. 15
Agricultural production has been promoted through the provision of subsidies for a number of inputs.
What are the levels of subsidies for inputs in the last three years  for poultry, feed, seeds, and dairy
products?WT/TPR/M/74
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Para. 16 and Table AIV.1
What is the state intervention programme for flour, meat, and sheep?  What is the relationship
between the price stabilization programme and food price controls?
Para. 26
It appears  from the description in the Secr etariat’s Report that Bahrain Petroleum Company
(BAPCO) satisfies the definition of a state trading enterprise because it enjoys an exclusive right to
export petroleum.  However we note that no notification has been provided to that effect.  Does
Bahrain agree that it is a state trading enterprise that should be notified?  If not, why not?
(5)((i) Services
Although currently only one foreign company participat es in the energy sector, Bahraini authorities
have indicated that participation by other companies may be possible in the future.  Please elaborate
on the scope of the intended liberalization of energy services.
What restrictions exist for the provision of professional services by foreign companies?  Are foreign
companies allowed to provide legal, accounting, architectural, engineering or energy services?
Para. 51
What steps is the government taking to liberalize and privatize transport, telecommunications, and
other infrastructure services?
Para. 53
We note that the GCC services agreement has not b een notified as required under the GATS and ask
when Bahrain plans to make this notification.
Bahrain has made commitments in both insurance and financial sectors under the GATS.  Is Bahrain
planning to expand these commitments?
Financial services
Bahrain appears to provide better access for insurance provided locally (vs. offshore) than is
reflected in its schedule.  When will Bahrain improve its scheduled commitments in this regard?
Telecommunications
While Bahrain does not participate in the Basic Telecommunications Agreement, we were pleased to
note that it was considering additional commitments.  In what subsectors does Bahrain see new
commitments as furthering its plans for development of the this infrastructure?
Is the "majority state-owned provided" BATELCO a par tially-privatized entity?  If so, who owns the
non-government held shares?  What plans does Bahrain have to transfer the remaining state-held
shares?
In addition to current opportunities for foreign competition in VSAT and audio-text services, which
other value-added services may be opened in the future?  Which GATS bindings are anticipated?WT/TPR/M/74
Page 42
We note that many member states have opened their telecommunications services market to
competition.  When does Bahrain plan to introduce competition in its telecommunications market?WT/TPR/M/74
Page 43
ANNEX II
WRITTEN RESPONSES BY THE DELEGATION OF BAHRAIN
Questions from Thailand(v) Import prohibition, restrictions, and licensing, Table III.4, page 35
There appears to have been some confusion regarding those items which are prohibited and those
which are restricted, for health or safety reasons, and we will be responding to the Secretariat directly
to clarify the specific items within each category.  However, this information, categorized by reason,
of safety or health, is contained in the CD provided to the Secretariat by the Bahrain CustomsDirectorate.
More specifically in answer to the question from Thailand, Bahrain does not place any restrictions on
the import of sugars and sugar confectionery, and sports equipment.
As per the directives of the Ministry of Interior certain toys are restricted for health and safety
reasons, in particular Mini Cars with four wheels with high power and speed, and which can be used
by children on public roads.  As regards Radio Remote Control model airplanes, these are restricted
due to interference with Air Traffic.  Also toys containing Methyl Chloride and other chemicals,which are declared to be injurious to health, are prohibited on the basis of instructions from the
Ministry of Health.
The prohibition on the import of cultured pearls is intended to assist the regeneration of the natural
pearl industry, on which Bahrain's traditional economy was based.  Being the centre of the Gulf's
industry in natural pearls, Bahrain is concerned that its reputation for natural pearls should not bediminished by the intrusion of cultured pearls into the market.
(viii) Sanitary and phytosanitary measures, page 38, para. 48
Bahrain does not discriminate between countries, and will consider the import of live animals and pets
from any country provided that such country meets Bahrain's health and safety standards.
Accordingly, we do not agree that these measures in any way are inconsistent with the WTO rules.
Questions from Hong Kong, China
Secretariat Report (WT/TPR/S/74)
General, page vii, para. 4
This statement reflects the summary conclusion of the WTO Secretariat, but the reality is that the
Human Resource Development Program which is the basis for this conclusion, was terminated in1998 and duly notified to the WTO under reference G/SCM/N/38/BHR
The general programme for Bahrainization is based on the premise of having local trained manpower
available to international standards in all sectors.  The authorities do not place any restriction on the
employment of non-Bahrainis in circumstances when local manpower of the required standard is not
available.  In general companies are encouraged to strive towards a 20% local manpower absorption
rate, but this is not a fixed rule, and considerable flexibility is practiced.WT/TPR/M/74
Page 44
Tariffs, page 34, para. 31; Table III.4
In our response to the question on the same subject raised by Thailand, we pointed out that some
confusion had arisen by the Secretariat regarding those items which are restricted or prohibited, andthe Bahrain authorities will be clarifying this issue directly with the Secretariat.
There are restricted items, which are restricted for health, security, safety, environment, or religious
reasons.  This list is subject to change as the circumstances dictate.
More specifically in response to the question from Hong Kong, China, Bahrain does not apply any
restrictions to oilseeds in general.  There appears to be some confusion in the Secretariat's Table III.4on page 35 of the list, and we will provide the Secretariat with a corrected list in due course.
However, we do believe that the detailed information of prohibitions and restrictions included in the
information already provided in the Bahrain Customs Tariff, which was handed to the WTO
Secretariat in the form of a CD, does already include this information.  We would mention that within
the general heading of oilseeds, only HS Code 12 07 91 00, poppy seeds, 12 07 99 10, poppy, and
12 07 99 20, hemp seeds are prohibited, to combat their use for illegal purposes.  Our response to
Thailand provided the rationale for our restriction on cultured pearls.
Customs Procedures:  documentation page 27, para. 8
Bahrain is in agreement with Hong Kong, China, that import documentation should be minimized,
and efforts are being made to eliminate unnecessary documents, and in particular the Customs
Directorate is now actively engaged in the development of a new integrated computer system which
will inter alia  link the Customs, forwarding agents, banks and merchants in a system to provide
pre-arrival clearing and automatic payment of customs duties.
Notwithstanding the current documentary requirements, the Customs Directorate does apply a fast
track system which permits importers to clear their products even though documentation may not be
readily available at the time of import.
Import Licensing, page 34, para. 33
Ministerial Decree No. 10/1976 referred to in paragraph 33 of the Secretariat Report refers
specifically to the rules of explosives, and has no connection with the import licensing for other raw
materials.
In respect to the importation of materials for trading purposes, the Company Law provides for 100%
foreign owned locally incorporated companies, stru ctured in the form of either a With Limited
Liability Company, or Joint Stock Company, to engage in the import and distribution of their own
products or services.  Other products are also permitted provided that these do not conflict with the
terms of the Commercial Agency Law.
Bahrain's general policy as regards to Commerce is to continuously review and enhance the Company
and Commercial Laws, and to render the market as open as possible.  We recognize that there remainareas for improvement in terms of openness and transparency, however our consistent high ranking,
sharing the fourth position with the United States and Luxembourg in the year 2000 Heritage
Foundation's Index of Economic Freedom, is a good indication of how far we have already come
when comparing Bahrain with even developed countries.  Specifically the new Company law has
already received approval from the Council of Ministers, and is now in its final stage.  It may be
premature to discuss the particulars of this law, but it will provide for greater transparency andWT/TPR/M/74
Page 45
openness in terms of company structures and activities; and in general will comply with the
requirements of the WTO.
Securities, page 71, para. 74
As a capital market regulator, the BSE sees it as being realistic and beneficial to both parties if it deals
direct with the regulator of the foreign company wishin g to list on the BSE, in order to ensure that the
company is abiding by its home country's regulations.  Although the requirements are more stringent
than for local companies, the requirements are de signed to ensure that the company meets with
international standards and most acceptable practices.
Also such regulations will be considered as a yardstick in order to protect investors and discourage
any type of malpractice, such as money laundering, tax evasion and other harmful practices which
affect the global financial stability.
Telecommunications, page 78, para. 97
The Telecommunications legislation is in the final stages of drafting, so that it is premature at this
stage to enter into a discussion regarding its content and coverage.
However, the current draft does not incorporate the elements of the basic Telecommunication
reference paper.
Maritime Transport, page 83, para. 117
The same national treatment requirements are applied for both local and foreign service suppliers for
both passenger and cargo.
Questions from Canada
Government Report (WT/TPR/G/74)
III.  General Investment Climate, (1) Areas for Potential Investment;  para. 25 (j)
The "Garment Committee" established by the Bahrain Chamber of Commerce and Industry, has
appointed an international consultant to review the garment industry and to map a strategy for
Bahrain's industry to follow given the dynamics of the new market which will result from the ATC.In particular the emphasis will be placed on the production of value added products and in
determining new potential markets.  It is anticipate d that the initial study will be completed by the
year end.
The issue is basically one for the private sector , with initiatives being progressed through the
Chamber of Commerce.  However, the Government is providing encouragement to the work of theChamber, and in particular stresses the Government policy of abiding by international rules on labour
and other issues.  In particular the Bahrain Government is an adamant adversary of child labour,
which is not permitted in Bahrain.
The sector is further supported by the Government through training provided by the Bahrain Training
Institute.  Training is conducted for machine operators and supervisors, with a capacity of 240 traineesper year, in training facilities that were initially funded by the UNDP.  The training receives the
oversight of a committee comprising members from  various concerned Ministries and owners of
garment factories from the private sector.WT/TPR/M/74
Page 46
By maintaining international credibility and providing a supportive legal, administrative and physical
infrastructure, the Government is also supporting the private sector initiatives, amongst which are
those concerning textiles and clothing.
TRIPS Agreement
Relating to the questions raised by USA, EU, Japan and Korea
We should first reiterate that International Conventions, including the TRIPS Agreement, of which
Bahrain is a signatory, take precedence over national legislation in Bahrain, and may be invoked
before the national Courts.  However, notwithstanding this, Bahrain is nevertheless amending itsnational legislation to be in line with the terms of the TRIPS Agreement and in coordination with
WIPO.
The TRIPS Council has agreed to review the Bahrain Legislation by June/July 2001, and any country
wishing to comment or raise any questions on these issues, are welcome to submit questions during
this meeting.
Questions from EU
Government Report (WT/TPR/G/74)
1.1 Bahrain is not in favour of linked issues, we believe that whilst issues such as the labour
standards, and environment, are important for preserving human dignity and the global natural system
against harmful human intervention; the issues are best tackled by the relevant competent authorities,
such as the International Labour Organization, within their particular remits.  Governments should,
therefore, support the efforts of these organizations independent of the WTO, which should itselfconcentrate its efforts on its core responsibilities of facilitating the global trade environment.
We support free and open markets which encourage competition and discourage monopoly players,
and we encourage foreign investment against a background of national treatment.  In particular our
Company Law provides for 100% foreign ownershi p of locally incorporated companies in most
sectors.  We are therefore, supportive of a new round which places emphasis on the development ofcompetition and the encouragement of investment.
We believe that the next round would be enriched by the participation of acceding countries, which
should be allowed to play an active role in the negotiations.
Transparency in the new round should be a priority principle as should inclusiveness, preferential
treatment, and effective participation by all.
1.2 Bahrain believes that an open trade policy is naturally supportive of sustainable development
since it enriches local experience, promotes cross-sector fertilization and enables local expertise to
develop from the knowledge gained.
Bahrain has a good track record of effective economic planning.  We are not an oil-rich State, but
nevertheless we have been able to build a modern infrastructure and a fairly well diversified economywithout resorting to the imposition of taxation;  this we attribute to good house-keeping.
We encourage inward investment and try to target this investment into sectors which have the greatest
overall benefit in terms of net gains in GDP and in particular, employment generation, yet at the sameWT/TPR/M/74
Page 47
time do not consume an economically disproportionate amount of land, energy and water and thus
place a strain on our natural resources.
Investments are carefully monitored for their impact on the economy, and through the use of
clustering techniques, reverse assessment profiling and base-line target monitoring, we attempt to
profile the investments in terms of our initial analysis of economic impact, which then provides an
input into future planning and marketing programs.
We do not actively discourage investment in any area, but rather we seek to encourage investment in
areas where we believe Bahrain can provide a competitive advantage, and which our naturalenvironment and factor endowments can sustain.
Bahrain is a small island State, with a shortage of land, water and energy.  Accordingly, we have
adopted environmental policies which protect the environment from the negative impacts of industry.
A cost/benefit analysis is carried out in respect to prospective new industry, so as to assess the impact
on natural resources and the draw down on current capacity of power and water etc.
Industry must conform to Bahrain's environmental policy and this is ensured through the intervention
of the Environmental Protection Committee, which has recently been enhanced to that of a permanentDirectorate, and which is an integral part of the licensing procedure for new industry.  Products
imported into Bahrain must also conform to relevant standards.
1.3 The Greater Arab Free Area, GAFTA was formed in 1996 pursuant to an agreement reached
at the Summit Meeting of Arab countries.  The agreement provides for the gradual reduction of tariffs
amongst the Arab countries by 10% per year, starting 1998, with the objective of totally eliminatingall tariffs by December 2007.
It appears that due to an administrative oversight on the part of the GAFTA member countries, and
the Secretariat of the Arab League, the appropriate notification was not sent to the WTO.  However,
Bahrain will take steps to raise this issue to the Arab League Secretariat to ensure that appropriate
action is taken as soon as possible to rectify this situation.
1.4 It was agreed during the last GCC Summit in 1999, to fix unified import duties at rates of 0%,
5.5% and 7.5%, and to form the GCC Customs Union, to be achieved by March 2005.  Bahrain,
pursuant to the directives of His Highness the Prime Minister, has already reduced its import duty on
many foodstuff items from 5% to 0%, and on some other items from 10% to 7.5% effective January
1
st, 2000 as stated in our Government Report.  Gradual further reductions will be made until the
unified tariff target is reached in 2005.
Secretariat Report (WT/TPR/S/74)
II.  Trade Policy Regime:  Framework and Objectives
Page 18, para. 22
Bahrain agrees with enhancing transparency in Government procurement, and indeed we supported
this principle in our statement made on this issue at Seattle for an agreement on transparency in
Government procurement.  We believe that the best way to increase transparency in Government
procurement is by reaching an agreement on this issue.WT/TPR/M/74
Page 48
2.2 Page 23, para. 34
This paragraph relates specifically to public joint stock companies listed on the Bahrain Stock
Exchange.  The provision within the Law which permits the Minister of Commerce to issue aresolution increasing the percentage of foreign ownership, is a mechanism to facilitate the across the
board change in the ownership rules for non-Bahrainis once a Government decision has been taken to
do so.  To clarify, this rule does not provide the Minster with the power to deal with such issues on a
case by case basis; but rather permits the ownership percentage to be changed when conditions are felt
to be justified.  It is the policy of the Government to increase such foreign ownership provisions up to100%.
The Company Law does in fact permit 100% foreign ownership of both With Limited Liability
Companies and closed Joint Stock Companies engaged in manufacturing and service activities.
III.  Trade Policies and Practices by Measu re, (2) Measures directly affecting imports
Para. 11
We can confirm that dependent on an extension being granted, and the requested technical assistance
provided, we hope to be able to meet our commitment in this respect.
Para. 29
As stated in our Government Report, we are considering joining this Declaration and providing zero
customs duty on such products, with the purpose of accelerating the transfer of technology to Bahrain.
Page 32, para. 27
The applied rates do not exceed the bound rates.  Bahrain's schedule of commitments included tariff
bindings at 35%, with the exception of raw and manufactured tobacco and alcohol products which
were subject to higher rates of 100% and 200% respectively.
The Minster of Commerce had requested technical assistance for the preparation of such schedules,
which had been agreed to by the GATT Secretariat, but which subsequently had been unable to
honour due to other commitments at that time.  In the event the Secretariat had re-written Bahrain'sschedules and had misinterpreted the schedules to show the bound rates for raw tobacco only at 100%,
whilst it was the clear intention of the Bahrain Government in its schedules which referred
specifically to "Tobacco Raw and Manufactured", that all tobacco products both raw and
manufactured should be covered by the 100% bound rate.
The Ministry of Commerce has been in subsequent correspondence with the WTO Secretariat on this
issue, which is still under discussion.
The relatively higher bound rates in respect to tobacco and alcohol products are for health reasons, but
these rates have not adversely effected the level of imports of these products which have remained
fairly constant in the period from 1996.
Page 34, para. 31
We confirm that Bahrain does not prohibit the import of a large number of items.  With regard to the
prohibition list Table III.4 on page 35 of the Secretariat Report, please refer to our response toWT/TPR/M/74
Page 49
Hong Kong, China answer number 2 on page 2.  There are restricted items for health, security, safety,
environment, or religious reasons.  This list is subject to change as the circumstances dictate.
Page 37, paras. 39-44
(a) Yes.  We confirm that wherever a reference is made to mandatory standards, that this is
referring to technical regulations.
(b) The other areas in which the Gulf standards are mandatory are electrical, construction, health,
and safety sectors
(c) There is an on-going study within the GCC to identify those standards, mandatory in Bahrain,
which are based on ISO standards.  Once this study is complete we will be happy to share this
information with the WTO Secretariat.
(d)+(e) A detailed response to this question and the question relating to page 38, para. 50 concerned
with the import of drugs and medicines, will be pr ovided by the Bahrain authorities in due course.
Page 41, paras. 64-65
Bahrain has notified the WTO regarding its State Trading Enterprises, dated October 5th, 2000,
reference G/STR/N/4/BHR
In respect to the Bahrain Saudi Aluminum Marketing Company, BALCO, we would confirm that this
company does not enjoy any privilege for the import of aluminum, and as such is not considered as a
State Trading Enterprise according to the definiti on of the WTO.  Recently this company merged with
the Bahrain Aluminum Company, ALBA.
(4) Measures Affecting Production and Tr ade, (vi) Intellectual Property Rights
Please refer to our response under the heading TRIPS.
Questions from India
Summary Observations, para. 13
We acknowledge that there is some divergence between the Customs Handbook, and the actual
situation.  Notably, Bahrain does not impose an embargo on South Africa.  However, Bahrain does
not have any plans to revise this Customs Handbook, since the GCC States have agreed to compulsory
implement the newly revised GCC Unified Custom Law in 2001.
In respect to the issue of imported eggs, we reject that there is any discrimination.  The stamp placed
on imported eggs is simply to identify the country of origin in line with the labeling requirements.
Bahrain eggs for local consumption are not required to stamp, for the simple reason that it is
transparent that eggs which do not carry a stamp are produced in Bahrain.  In the event that Bahrain
eggs are to be exported, then these products would also be subject to labeling requirements.
The Bahrain Government does not have any plans at this stage to change this practice, which we
believe is transparent.WT/TPR/M/74
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Summary Observations,  para. 7
Bahrain is in the process of discussing the rules of origin with GAFTA, EU and GCC and will notify
the WTO Secretariat in due course.
In respect to the other notifications mentioned by I ndia, we are pleased to state that these notifications
were made as follows:
Notification Document Reference Date of Notification
TBTs G-TBT-2-ADD.19 02.08.1996
SPS Submitted to WTO Submitted 03.07.2000
STEs G-STR-N-4-BHR 05.10.2000
Bahrain does not have any difficulties in fulfilling its notification obligations.
Questions from Australia
Customs Union
The GCC Customs Union will come into effect in 2005.  The product coverage, product/sectoral
exemptions etc. are still in the process of discussion by the parties, and the WTO will be notified in
due time.
The Common External Tariff will come into effect by 2005.  However, Bahrain has already began the
implementation of the reduced tariff by reducing its tariffs on many foodstuff items from 5% to 0%,
and on some other secondary items from 10% to 7.5%.  This list of items subject to the reduced
tariffs, has already been submitted to the WTO, Market Access Committee.
Services
Recognizing that the private sector is now more  than able to determine its own destiny, the
Government is now in a process of refocusing its effort to that of business facilitator.  A number of
Government owned companies and projects have already been privatized, and a program of further
privatization is being articulated which will divest the Government of substantially all of its
ownership of the productive processes over the coming few years.
The companies and projects already privatized, and identified to be privatized, are included in our
Government Report on pages 10-12.
Questions from Korea
II.  Trade Policy Regime:  Framework and Objectives, (5) Foreign Investment Regime
The Bahrainization programme does not employ any fixed mandatory percentages for employment of
local manpower.  The 50% local take-up is a target, which the authorities have set for planning
purposes, and in order to assist companies with identifying local human resources.  At the present
time the target applied is 20%, which is also regarded as flexible.  It is recognized that where localexpertise is not available, then companies are free to employ expatriates.  However, the Ministry of
Labour & Social Affairs does make every effort to assist companies in finding suitable local
manpower.WT/TPR/M/74
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We should add that national treatment is applied, so that these planning tools are equally applied to
both local and foreign owned companies.
Government fees, including those for work visas, are intended as revenue devices, and apart from
Commercial Registration fees, companies do not incur any other Government charges in relation to
their establishment and labour.
The Government does not consider that these relatively small charges are a hindrance or barrier to
foreign investment, which the Government actively seeks to encourage.
III.  Trade Policies and Practices by Measure, (2 ) Measures Directly Affecting Imports (ii) MFN
tariffs
We can confirm that the products listed in the refere nced table, are the only items subjected to this
increased tariff protection.  Bahrain has in fact already removed vegetable oil from this list, and
intends to remove all other items from the list by 2005.  In the meantime no new items will be added.
The GCC Customs Union will come into effect in March 2005.  The product coverage,
product/sectoral exemptions etc. are still in the process of discussion by the parties, however all tariff
lines, with the exception of two items have been agreed, and the only remaining two items whichincludes motor vehicles will be dealt with in the very near future.
Whilst motor vehicles have not been specifical ly dealt with at this time, the import duty will
inevitably be reduced to either the rate of 7.5% or 5.5% depending on what will be agreed upon by the
GCC States.
The Common External Tariff will come into effect by 2005.  However, Bahrain has already began the
implementation of the reduced tariff, for example, by reducing its tariffs on many foodstuff items
from 5% to 0%, and on some other secondary items from 10% to 7.5%.  This list of items subjected to
the reduced tariffs, have already been submitted to the WTO, Market Access Committee.
The Bahrain Government is in the process of am ending Amiri Decree No. 11 of 1985 to be in line
with the TRIMs Agreement.  It is important to note  that the issue is already being processed with the
legislative and executive organs of the Government for finalization.
(vi) Anti-dumping and countervailing measures
Bahrain could resort to anti-dumping, countervailing and safeguard measures on the basis of the
relevant WTO Agreements.  However, in practice the precedence of international conventions is
applied only when local legislation exists, and at the present time no such legislation exists inBahrain.
Bahrain does, however reserve the right to introduce such legislation as and when it becomes
necessary, in which case this would be in conformity with the WTO Agreements.
(vii) Standards and other technical requirements
Bahrain has already notified its TBT Enquiry point through document G-TBT-2-ADD.19, and the
SPS two inquiry points have been notified on July 3rd, 2000.WT/TPR/M/74
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(ix) Government Procurement
Bahrain is not a signatory to the plurilateral Agreement on Government Procurement.  However,
Bahrain agrees in reaching a transparency agreement on Government procurement, and is awaiting theoutcome of the working group.  We believe that an ag reement on transparency will de facto answer all
of the questions raised by Korea and other countries regarding the issue of Government procurement.
(vi) Intellectual Property Rights
Please refer to our separate answers on the issue of IPR, which we believe will answer all of the
questions relating to this subject.
(iv) Overview
The construction sector has remained fairly stable over the past few years contributing around 4%
per annum to GDP and around 20,000 jobs.  Most employment in this sector is taken up by foreign
labour.
The construction sector is open to foreign companies provided that they comply with the requirements
of the Company and Commercial Registration laws.  In practice most of the large construction
projects have been undertaken by international companies, usually in joint-venture with a localcompany.
In recent years the construction industry has been characterized by a number of large scale projects,
such as the Bahrain/Saudi Causeway together with a number of smaller scale domestic construction
projects.
Much of the primary infrastructure is now complete, however a number of large scale projects are still
to be commenced, including the development of a new sea port, a proposed new causeway linking
Muharraq with Manama, and a number of road sewerage and other infrastructure projects.
Tourism is one of Bahrain's identified target sectors, and this is itself giving rise to a considerable
amount of construction in terms of new hotels and the upgrade of apartment buildings and other
private sector housing projects.
(iii) Financial Services
The special treatment in terms of ownership of lo cally incorporated full commercial banks provided
for GCC nationals is not in conflict with the MFN principle, since the Unified Economic Treaty was
notified by Kuwait in 1983 and put under the enabling clause, which permits the exchange of
preferences between concerned countries as an exception to the MFN clause.
Furthermore, Bahrain and the other GCC States ar e forming a Customs Union, which provides similar
privileges as an exception to the MFN.
Bahrain is considering making GATS commitments in the basic telecommunications sector, however
this issue is still under discussion by the concerned authorities, so that we are not in a position to
elaborate further on this issue at this time.WT/TPR/M/74
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Questions from the United States
Government Report (WT/TPR/G/74)
I.  Economic Developments
The subsidies for lamb and beef were permanently eliminated in 1998.
II.  Key Issues and Policies
The early retirement scheme provides the Government with a means of enabling its down-sizing
policy, by permitting qualifying employees to take early retirement through the Government's direct
purchase of additional qualifying years.
This scheme is already being deployed by specific Ministries in the process of re-engineering their
operations and organizational structures.
The additional years purchased is being funded by a specific direct allocation from the budget,
whereas other retirement benefits are provided through the Pension Fund.
III.  General Investment Climate
The Government is supportive of manufacturing initiatives which involve import substitution as well
as export oriented industries.  However, no direct support is provided, only in general terms by way ofdeveloping and maintaining the necessary physical and administrative infrastructure, and by applying
its marketing polices to direct investment into those particular industries.
IV.  Monetary Policy
The Bahrain Monetary Agency
The BMA seeks to maintain the integrity of the banking system and Bahrain's reputation as a
competitive and reputable regional and international financial center by ensuring that appropriate
international standards, such as the Basel Core Principles for effective banking supervision are
applied.  The IMF noted in its report that the BMA had "achieved full compliance with 24 of the 30
Core (and sub-core) Principles and is largely compliant with another five (4 core and 1 sub-core)
Principles.  These 29 Principles cover virtually all of the supervisory factors and broadly encompassthe fundamentals of a sound supervisory system".
All banks operating in and from Bahrain are required to be licensed by the BMA.  The BMA mandate
covers control of the activities of all licensed Banks.
A more comprehensive statement with regard to the tools employed by the BMA in managing the
banking sector is contained in the Secretariat Report on pages 68 through 70.
It may be useful to clarify that all banks in Bahrain, with the exception of the Housing Bank and the
Bahrain Development Bank, are private banks.
The BMA monitors credit of the commercial banks, because of its important economic significance.
However, no quantitative or selective measure of intervention are practiced.WT/TPR/M/74
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Secretariat Report (WT/TPR/S/74)
Summary Observations
Para. 6
The Government has already made significant progress in amending its Commercial Law, Company
Law, Insurance Law and IPR legislation to be in conformity with the WTO Agreements.  However, as
we have already mentioned, it is necessary in Bahrain that such laws should be passed over by all
branches of the Government, and we can confirm that these changes are in the process of finalization.
Para. 13
We acknowledge that there is some divergence between the Customs Handbook, and the actual
situation.  Notably, Bahrain does not impose an embargo on South Africa.  However, Bahrain does
not have any plans to revise this Customs Handbook, since the GCC States have agreed to compulsory
implement the newly revised GCC Unified Custom Law in 2001.
Para. 29
Bahrain's privatization plans are in the process of articulation as regards to timing and
implementation.  The list of sectors currently targeted are included in the Government Report, furtherdetails will be available as and when the plans have been finalized.  Certain elements of the
telecommunication sector are already targeted for private sector involvement, and discussions are now
under way with regard to some other subsectors.
I.  Economic Environment, (4) Outlook
Para. 22
The sectors are already identified on pages 22 and 23 of the Secretariat's Report.  These conditions
and limits are already in effect.
II.  Trade Policy Regime:  Framework and Objectives, (3) Trade Policy Objectives
Para. 22
The Amiri Decree No. 11 of 1985 does include some Articles which are inconsistent with the TRIMs
Agreement, however we are in the process of amending this Decree to comply with the TRIMs
Agreement and for this reason no notification is required at this time.
(4) Trade Agreements and Arrangements
Para. 23
Bahrain requested a three year extension to the Cu stoms Agreement, which is still to be decided by
the Council of Goods.  The questionnaire provid ed by them has been answered, and we have
requested technical assistance.  We are still awaiting a response on these issues.WT/TPR/M/74
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(ii) Regional agreements
The exact nature of the coverage of the GCC Unified Economic Agreement and that of the GAFTA
are still in the process of discussion, we are not in a position, therefore, to provide a comprehensivelist of sector coverage or other related issues at this time.  However, we can confirm that GAFTA is
limited to goods and does not extend to other areas such as services etc.
Para. 28
Negotiations are still underway, however it is hoped that efforts will be intensified over the coming
year, with a view to an early establishment of a free trade area.  The agreement will provide for trade,investment and cooperation in various fields.  As regards the duties, this issue is under negotiation,
with the ultimate goal of eliminating customs duties.
Para. 31
The services sector is already relatively liberalized, with 100% foreign ownership permitted in most
services when conducted by companies incorporated in the form of either a With Limited Liability
Company or Closed Joint Stock.  Other areas will also be liberalized in accordance with the
Government's plans for privatization and liberalization, which as we have mentioned earlier are still inthe process of being finalized.
The Government exercises its marketing program to attract foreign investment through the Bahrain
Promotions & Marketing Board, BPMB.  The BPMB  marketing programs are linked directly with
targeted sectors, and as plans are finalized, so the BPMB marketing efforts are directed to those areas.
There are no elements of the services sector which are excluded in the Government's overall
liberalization plans.
(5) Foreign Investment Regime
Para. 31
Please refer to answer to the previous question.
Para. 39
At the present time non-GCC nationals are allowed to participate in public joint stock companies up
to 49%.  It is the intention of the Government to extend such ownership rights up to 100% in due
course, and studies are on-going to determine the nature and timing of this issue.  In common with
other issues of national concern, all competent authorities within the Government as well as the
private sector, and where necessary independent consultants are employed to study these issues andrecommend an appropriate strategy in line with the national objectives and international requirements.
The issue is being discussed from all perspectives.
III.  Trade Policies and Practices by Measure
Para. 11
Bahrain uses the c.i.f. value and Commercial Invoices as the basis for customs valuation.  An average
of 90% of the sales contract has been accepted by Bahrain Customs for determining the CustomsWT/TPR/M/74
Page 56
Value of goods being imported.  In cases where the Customs Directorate is in doubt regarding the
value indicated in the commercial invoices, the impor ter is provided with sufficient time to satisfy
Customs that the value indicated is the same as id entical or similar goods being imported.  Otherwise
a committee of specialists is formed to evaluate th e goods and the importer has the right to take any
dispute arising from this process to the local Co urts, if he is not satisfied with the Committees
valuation decision.  The goods subjected to the dispute may also be cleared on a deposit basis.
The Customs Directorate is in the process of computerization and training their staff accordingly.
Some time is required for full implementation, and in  the meantime they are in the process of joining
the WCO, and will request appropriate technical assistance from both the WCO and WTO.
Para. 21
The participating countries in the GAFTA have now reached to a reduction of 30%, and the GAFTA
is now in the process of agreeing a set of rules of origin to implement the agreement.
Rules of Origin
Para. 30
Bahrain is in the process of formulating a set of Rules of Origin with the framework of the GCC/EU
and GAFTA, and within the Articles of the Rules of Origin of the WTO, and these will be notified to
the WTO once finalized.
Paras. 40 and 41
The answers to these questions are dealt with fully  within the body of the Secretariat's Report, in
particular in page 37.  However, if more clarification is required the delegation is welcome to contactthe Bahrain authorities, through the Bahrain Mission in Geneva.
Para. 45
Bahrain has already notified its national enquiry point under the Agreement on the Application of
Sanitary and phytosanitary measures on 03.07.2000.
Para. 62
Please refer to para. 62 and the footnote which refers to the process of available arbitration.
(4) Measures Affecting Production and Trade
Para. 87
We have already answered this question in relation to Bahrain's privatization plans.  As mentioned,
these plans are presently being articulated as to their coverage and implementation timetable.  Boththe Government and Secretariat's Report contain full details of these privatization plans.
TRIPS
With regard to the questions contained in the U.S. Question paper beginning with reference
(vi) Intellectual Property Rights on page 6 through para. 109 on page 9, please refer to our specific
answer dealing with IPR on page 7 of this response.  However, it is worth noting, in this context, andWT/TPR/M/74
Page 57
considering the U.S. delegate's offer of technical assistance, that a copy of our draft law on Industrial
Property Rights was sent to the Stat e Department via the U.S. Embassy in Bahrain in July of this year,
for their comment.  We are awaiting a response.
IV.  Trade Policies by Sector
(2) Agriculture and Fisheries
Para. 6
We can confirm that there is no other manufacturing activity subject to price controls.  The only
control of food prices exist on local bread, which is considered as a stabilization measure.
Para. 11
There is no control exercised on the importation of wheat.
Para. 15
We do notify on the level of subsidy on the inputs for poultry and dairy products.  However, it is
worth mentioning that Agriculture is a relatively  small sector contributing less than 1% to GDP.
Moreover, Bahrain is a net food importing country.
Para. 16 and Table AIV.1
The Government intervention for meat and sheep wa s scrapped.  As regards flour, the Government
operates a price stabilization program by way of a social subsidy.
Para. 26
BAPCO does not have a de jure  monopoly, and whilst enjoying a de fact monopoly, is not granted
any sole privilege, and does not, therefore cons titute a State Trading Enterprise within the WTO
definition.
(5) Services, (i) Overview
The liberalization of energy services is dealt with within the context of Bahrain's privatization and
liberalization plans, which as we have previously indicated are in the process of articulation as to the
definition of implementation and timing.
Practically all professional services are open to foreign companies, provided that the requirements of
the Companies Law are complied with.
Yes.  Foreign companies are allowed to provide th e services mentioned, provided that they comply
with the requirements of the Companies Law and its attendant regulations.
Para. 51
We have already answered this question, please refer to our response to your question regarding
para. 29.WT/TPR/M/74
Page 58
Para. 53
In answer to the U.S. question regarding the expansion of Bahrain's commitments in insurance and
financial services, Bahrain is considering the expansion of its commitments which it is hoped to notifyshortly.
(iv) Telecommunications
Bahrain is studying the subsectors to determine which areas will be targeted for new commitments.
BATELCO is a public joint stock company, listed on the Bahrain Stock Exchange, and in which the
Government is a shareholder.  The remaining shares of BATELCO are widely held, and it is notpossible in the context of this response to provide a list of the large number of shareholders who are
currently owners of the BATELCO shares.  The tran sfer of the Government shareholding will form
part of the Government privatization program, which we have dealt with elsewhere in this response.
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