RESTRICTEDWORLD TRADE
ORGANIZATIONWT/TPR/G/74
11 September 2000
(00-3371)
Trade Policy Review Body Original:  English
TRADE POLICY REVIEW
BAHRAIN
Report by the Government
Pursuant to the Agreement Establishing the Trade Policy Review Mechanism
(Annex 3 of the Marrakesh Agreement Establishing the World Trade
Organization), the policy statement by the Government of Bahrain is attached.
Note: This report is subject to restricted circulation and press embargo until the end of the meeting
of the Trade Policy Review Body on Bahrain.Bahrain WT/TPR/G/74
Page 3
CONTENTS
Page
I. ECONOMIC DEVELOPMENTS 5
(1) D EVELOPMENTS IN 1998 5
(2) P RELIMINARY OUTCOME FOR 1999 5
II. KEY ISSUES AND POLICIES 6
(1) F INANCIAL SECTOR 6
(2) F INANCIAL POLICIES 7
(3) T RANSPARENCY 8
III. GENERAL INVESTMENT CLIMATE 8
(1) A REAS FOR POTENTIAL INVESTMENT 8
(2) I NCENTIVES FOR FOREIGN COMPANIES 9
(i) Establishing an industry 9(ii) Tax, duty and ownership incentives 9(iii) Active government support 9(iv) Labour force and amenities 9
(v) Stable currency 10
(3) L
EGAL STRUCTURE OF COMMERCIAL COMPANIES 10
(4) G OVERNMENT POLICY ON PRIVATIZATION 10
IV. MONETARY POLICY 12
(1) T HE BAHRAIN MONETARY AGENCY 12
(2) E XCHANGE RATE REGIME 13
(3) I NTEREST RATES 13
(4) G OVERNMENT SECURITIES 13
(5) C REDIT POLICY 13
(6) C APITAL MOVEMENT AND TAXATION 13
V. IMPLEMENTATION OF URUGUAY ROUND COMMITMENTS 13
(1) T ARIFFS 14
(2) A GREEMENT ON IMPORT LICENSING PROCEDURES 14
(3) A GREEMENT ON AGRICULTURE 14
(4) A GREEMENT ON TECHNICAL BARRIERS TO TRADE .1 5
(5) A GREEMENT ON THE APPLICATION OF SANITARY AND PHYTOSANITARY MEASURES
(SPS) 15
(6) A NTI-DUMPING AND COUNTERVAILING MEASURES ;  AGREEMENT ON SAFEGUARDS ;
AGREEMENT ON PRESHIPMENT INSPECTION 15WT/TPR/G/74 Trade Policy Review
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Page
(7) A GREEMENT ON SUBSIDIES AND COUNTERVAILING MEASURES 15
(8) A GREEMENT ON CUSTOM VALUATION 15
(9) G ENERAL AGREEMENT ON TRADE IN SERVICES (GATS) 16
(10) A GREEMENT ON TRADE -RELATED ASPECTS OF INTELLECTUAL PROPERTY RIGHTS
(TRIPS) 16
(11) A GREEMENT ON GOVERNMENT PROCUREMENT 16
(12) T RADE IN INFORMATION TECHNOLOGY PRODUCTS (ITA) 16
VI. FUTURE NEGOTIATIONS 16
(1) F UTURE NEGOTIATIONS 16
(2) E LECTRONIC COMMERCE 17
(3) A CCESSION 17Bahrain WT/TPR/G/74
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I. ECONOMIC DEVELOPMENTS
(1) DEVELOPMENTS IN 1998
1. Recent macroeconomic performance has been strongly affected by the large swings in world
oil prices.  In 1998, the average export price of Bahraini crude oil plunged by 35%, thereby causing
substantial budget and balance of payments deficits.  Notwithstanding the terms-of-trade shock,
domestic demand remained strong and the rate of economic growth accelerated, rising to 4.8%, thanksprimarily to an increase in both crude oil production (from the Abu Saafa field) and overall
investment.  In the non-oil sector, economic activity increased by 3.6%, reflecting growth in the retail
and wholesale trade, tourism and utility sectors.  Consumer prices fell slightly owing mainly to a fall
in import prices.
2. The state budget experienced a sharp deterioration.  As a result of the large drop in oil prices,
and hence fiscal receipts, the small surplus achieve d in 1997 turned into a deficit of 6.5% of GDP in
1998.  No new revenue-raising measures were introduced in 1998.  Instead, a cut in budgeted current
expenditures of 5% was applied across-the-board, with exceptions made for priority spending
programmes (primarily in healthcare and education) and the 3% annual increment in wages and
salaries.  Food (lamb and beef) subsidies were cut and a freeze on civil service employment wasintroduced;  in fact, civil service employment fell by 1.4%.  Net extra budgetary operations recorded a
surplus, and the overall fiscal deficit was equivalent to 4.0% of GDP, nearly the same as in 1997.
3. The consolidated balance sheet of Bahrain’s banking system (commercial banks, offshore
banking units, and investment banks) rose fro m US$83.5 billion at end-1997 to US$99.4 billion at
end-1998, an increase of 19.0%.  Offshore banking units accounted for 88.0% of the total balance
sheet of the banking system at end-1998, while commercial and investment banks accounted for 8.8%
and 3.2% respectively.  Interest rates in Bahrain continued to track closely those on U.S. dollardenominated short-term assets.
4. The balance of payments in turn mirrored the lower world prices for Bahrain's oil and
aluminium exports.  Trade balance moved into deficit, and the current account deficit increased, from
0.5% of GDP in 1997 to 12.6% in 1998.  This was matched by a surplus on the financial and capital
account and an increase in net errors and omissions.  The overall balance in Bahrain’s balance ofpayments registered a deficit of BD 6.3 million in 1998.
(2) P
RELIMINARY OUTCOME FOR 1999
5. Preliminary assessment of the economic situation in 1999 indicates a better record.  The
average export price of crude oil partly recovered, rising to US$17 a barrel, and world aluminium
prices stabilized.  The expansion of oil output decelerated to 2.9% as a result of a temporary(two-month) halt of production at  the Abu Saafa field.  At the same time, the performance of the
non-oil sectors continued to be robust, recording an average growth rate of 3.8%, thanks to a pick-up
in financial sector services, tourism, manufacturing, and construction.  Private sector demand receded
and savings rose.  Consumer prices fell in line with declining import prices.
6. The state budget deficit contracted to 2.4% of GDP consequent upon the recovery of oil
prices and revenues.  A number of non-tax revenue  measures, approved in late 1998 and implemented
in 1999, also contributed to the increase in public  revenues.  At the same time, policies involving
restraining expenditures were maintained and outlays were held closer to the budget allocations,
which provided for a modest increase of 2.5% over the 1998 levels.  Measures applied included,
inter  alia, continuation of freezing policy of hiring, a limited salary increase, restricted to the normalWT/TPR/G/74 Trade Policy Review
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3% annual increment, and a drop in capital expenditures.  Education and health continued to be
priority areas in which outlays increased more rapidly than in others.
7. The consolidated balance sheet of the banking system in Bahrain (commercial banks, offshore
banking units, and investment banks) rose fr om US$99.4 billion at end-1998 to US$102.1 billion at
end-1999, an increase of 2.7%.  Offshore banking units accounted for 86.4% of the total balance sheet
of the banking system at end-1999, while commerci al and investment banks accounted for 9.7% and
3.9% respectively.
8. The balance of payments benefited from the recovery in world oil prices.  The goods balance
switched from a deficit of BD 10.7 million in 1998 to a surplus of BD 270.4 million in 1999.  The
result was a reduction in the current account deficit from 12.6% of GDP in 1998 to 6.3% of GDP in
1999.  As a result, Bahrain’s overall balance of payments registered a surplus of BD 9.6 million in1999.
II. KEY ISSUES AND POLICIES
9. Indications are that the Bahraini economy will continue its strong performance in 2000 thanks
to such factors as the return to normal of crude oil production at the Abu Saafa field, higher world oil
prices and strict financial policies.  Notwithstanding the uninterrupted implementation of prudentpolicies involving the establishment of an open and private sector oriented economy, Bahrain still
faces the challenges of enhancing economic growth and diversification as well as generating increased
employment opportunities for its citizens.
10. Economic objectives in the medium-term involve continued diversification of the economic
base, with emphasis on downstream oil and aluminium activities, financial services, tourism,
knowledge-based industries, and encouraging small and medium size enterprises.  Generation of more
employment opportunities represents another important goal.  In order to achieve these objectives,several measures have been adopted, notably promoting the private sector, mainly by maintaining an
open economic system attractive to foreign direct investment, ensuring a well-supervised financial
sector, streamlining the regulatory environment, upgrading infrastructure and redefining the role of
the government.
11. The reform strategy has so far proved a success.  It has manifested itself, among other things,
in government services and public enterprises being privatized, simplifying administrative business
licensing procedures, and promotional activities for attracting foreign direct investment.
12. Aimed at creating more jobs, the employment strategy rests on four pillars.  These are
increasing productivity by investing in human skills through the education system and training
programmes;  helping nationals find suitable jobs through employment placement centers;encouraging the private sector to employ national employees;  and improving conditions in the work
place.
(1) F
INANCIAL SECTOR
13. Bahrain's small economy notwithstanding, the financial system is well diversified.  As of
end-1999, the financial system in Bahrain comprised some 176 financial institutions.  This included19 full commercial banks (FCBs), 48 offshore banking units (OBUs), 33 investment banks (IBs),
2 specialized banks, 19 money changers, 36 representative offices, 6 foreign exchange and money
brokers, and 13 investment advisory and other financial services.  The sector's contribution to the
GDP is around 23%, more or less the same share as the oil sector.  Banks are profitable, adequately
capitalized, and hold high quality assets.  The sound management of Bahrain's banks together with theBahrain WT/TPR/G/74
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BMA's prudent regulatory and supervision policies have enabled the sector to withstand the recent
volatility of world financial and oil markets.
14. Bahrain's transparent legal framework supports the sector's growing role as a major financial
center in the region.  The financial sector is open to foreign investors with virtually no restrictions on
capital ownership.  The BMA has successfully introduced and enforced international standards and
best practices in accounting, auditing, prudential regulation, and banking supervision.  The BMA'srecent efforts to develop a comprehensive regulatory and operational framework for Islamic banking
will further help to reinforce Bahrain’s position as a leading Islamic financial center.
15. The BMA applies a comprehensive and effective off- and on-site monitoring system of
financial institutions, complying in general with the standards set out in the Basle Core Principles for
Effective Banking Supervision.  Following an IMF report on compliance with the Basle CorePrinciples of Effective Banking Supervision, further improvements are still being pursued in the
following areas:  (i) greater legal independence of supervisory authorities, (ii) the provision of
additional resources for financial supervision, and (iii) the legal definition of permissible “banking
activities” and “banks”.
16. 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 that broadly encompass
the fundamentals of a sound supervisory system”.
17. The Bahrain Stock Exchange is adequately supported by modern computer equipment and
information system.  The average number of trades per day is about 70, and shares traded in each
transaction stand at 400 on the average.  Overall, there are 41 listed companies, with market
capitalization amounting to around BD 2.7 billion, or  approximately 115% of GDP at the end of 1999.
Efforts are under way to strengthen the role of th e stock exchange in the economy by increasing the
number of listed companies, introducing new investment instruments, cross-listing shares at the
regional level, and developing automated depository, clearing and settlement procedures.  The
Government 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 tothe Stock Exchange.
(2) F
INANCIAL POLICIES
18. Efforts are being made within the framewor k of a medium-term expenditure strategy to
promote fiscal consolidation by increasing non-oil revenues and restructuring expenditures.  The
ultimate objective is to balance the budget by 2006.
19. The combination of expenditure and revenue measures currently under consideration will
allow the government to accommodate prospective pressures.  Such pressures include retrenchment
costs in the context of privatizing public sector activities, the upfront cost of the proposed Early
Retirement Scheme and the cost of growing healthcare and education needs.  In addition, expenditure
restraint is being exercised through the existing freeze on the size of the civil service and the relativewage structure.  However, at the same time the Go vernment is aware of the need to maintain the
attractiveness of civil service employment in order to attract highly qualified and skilled employees so
as not to erode the capacity of the government to play an effective role in the economy.
20. Similar favourable trends are projected for the balance of payments in 2000 and beyond.
However, the authorities remain mindful of the vuln erability of the external position to developments
in world prices of oil and aluminium.  On the basis of the IMF's WEO price projections, Bahrain's oilWT/TPR/G/74 Trade Policy Review
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export prices are expected to initially rebound to US$23 per barrel before settling at around US$17.5
per barrel.  Based on the assumption that the existing agreement on the Abu Saafa oil field is
maintained and production from the Awali field declines by 1% a year, revenues from oil and
oil-related exports are expected to reach about US$3 billion.  With the continued implementation of
diversification policies non-oil exports are projected to increase by about 4% a year.  Efforts aimed at
consolidating the fiscal position and promoting export-oriented private sector investment wouldlargely improve the external position.
21. The conduct of monetary policy continues to be geared towards maintaining the de facto link
between the national currency and the U.S. dollar.  Together with prudent and effective supervision of
the financial system, this policy has contributed to lo w inflation and interest rates in line with those
prevailing in the USA.
(3) T
RANSPARENCY
22. Attracting foreign direct investment and promoting the private sector are essential for
maintaining sustainable growth.  In this context transparency proves a sine qua non  for creating the
enabling environment for private sector investment.
23. In order to improve transparency, efforts are being made to ensure timeliness and coverage
quality of economic and labour statistics.
III. GENERAL INVESTMENT CLIMATE
24. Bahrain provides very attractive and competitive investment opportunities for foreign
investors.  Unrestricted repatriation of profits and capital, along with the absence of exchange control
constraints, add to the appeal of Bahrain to those wishing to invest in a dynamic growing economy.
The Government, an ardent supporter of private enterprise, has adopted a policy of ensuring that new
companies may be registered with administrative ease.
(1) AREAS FOR POTENTIAL INVESTMENT
25. Industrial diversification is important to Bahrain and other Arabian Gulf economies, and
import substitution receives vital government support.  Opportunities for new industrial operations
exist in the following areas:
(a) Downstream investments from existing primary aluminum, oil, gas and steel industries,
especially in petrochemicals, plastics, engineering, ship repair services and product
fabrication;
(b) Manufacturing to meet demands of fast expanding consumer markets in the  region;
(c) Food processing, packaging and distribution;
(d) Local assembly and parts manufacture for finished goods;
(e) High-technology production processes;
(f) Manufacture of components for industrial, drilling, refinery and mining applications;
(g) Equipment and machinery repair and maintenance;Bahrain WT/TPR/G/74
Page 9
(h) Machine shop services for regional needs;
(i) Production of construction equipment and materials;
(j) Other specific opportunities include pharmaceuticals, transportation equipment and systems,
educational and healthcare materials, furnishing, machinery, packaging systems, materials for
agriculture and fishing, textiles, clothing, toys and leisure goods and craft.
(2) INCENTIVES FOR FOREIGN COMPANIES
(i) Establishing an industry
26. Assistance with every aspect of establishing a new industry or service is provided by the
Ministry of Oil and Industry through the Projects and Industrial Investment Directorate (PIID).  PIID
coordinates the entire industrialization drive, providing assistance and guidance for new and existing
manufacturing operations.
27. The services provided extend through the development process from "fast-track" commercial
registration with the Ministry of Commerce to the start-up of operations.  Other services include
assistance with land surveying, maintenance and liaison with municipal authorities.  Decisions are
made quickly, thereby minimizing red tape.  In recognition of the importance of small and medium
enterprises (SMEs) to the national economy and in order to develop them, the Small and MediumEnterprises Unit (SMEU) has been established in the Ministry of Oil and Industry, Bahrain, for the
implementation of comprehensive policies to assist SMEs.
(ii) Tax, duty and ownership incentives
28. The following incentives are offered:  no restriction on repatriation of capital, profits,
royalties or wages, and freedom of movement of foreign exchange;  foreign ownership of up to 100%
of a company allowed;  duty-free import of materials and machinery for manufacturing, and duty-free
merchandise for re-export.
(iii) Active government support
29. The Government offers active support in the following ways:
(a) Consistent government policy of encouraging overseas investment.
(b) Administrative ease of company registration.
(c) Mature, internationally oriented and highly developed legal framework.
(d) Cheap energy and fuel costs.
(e) Competitive industrial, commercial and residential rents;  duty-free zones at ports and
industrial estates;  and serviced industrial estate.
(iv) Labour force and amenities
30. The labour incentives and amenities offered include the following:WT/TPR/G/74 Trade Policy Review
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(a) Well-educated, skilled indigenous workforce, proficient in English, at one third of the cost in
industrial countries.
(b) Excellent housing, schooling and social amenities.
(c) Modern healthcare, hospital and medical facilities.
(d) Unique quality of life with superb sports and leisure activities.
(e) Highly stimulating business and cultural environment.
(v) Stable currency
31. The Bahrain dinar, which is freely convertible, is linked to the United States dollar at the
fixed rate of one US$ equal 0.376 dinar.
(3) LEGAL STRUCTURE OF COMMERCIAL COMPANIES
32. A new Company Law, introducing an even  more liberal and open ownership and
incorporation process is in the final process of adoption.  The current law permits up to 100% foreign
ownership in the form of an Exempt Company (offshore);  Closed Joint Stock Company;
Branch/Representative Office and a Company With Limited Liability (WLL).
33. At the present time a Joint Stock Company (public), is restricted to a maximum foreign
ownership of 49%.
34. Although the current Law states that "all ... partners of joint stock companies shall be
Bahraini nationals", it provides that "some partners... may be non-Bahraini ... if and when the need for
foreign capital or expertise arises".  In that case, the company may be established after approval has
been sought from both the Ministry of Commerce and the Council of Ministers, followed by the issue
of an Amiri Decree.  Normally, joint-stock comp anies are formed to undertake a specific major
project, sometimes with government participation.  Its name must indicate its objectives, and must
always be followed by "Bahraini Joint-Stock Company".  It will have a specific duration, usually theperiod needed to fulfil its objectives, which may only be extended by permission of the Ministry of
Commerce.
(4) G
OVERNMENT POLICY ON PRIVATIZATION
35. The government’s privatization policy entails defining the role of government as policy
maker and regulator, rather than producer of marketable goods and services, resulting in downsizinggovernment, deregulating the private sector and introduction of rules and regulations friendly towards
business.  It encompasses all areas of government as follows:
- Infrastructure projects.
- Government programmes.
- Government shareholdings.- Deregulation.Bahrain WT/TPR/G/74
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Infrastructure projects
- Privatization of electricity and water production;  sewerage
-A i r p o r t
- Sea port
Government programmes
A. Privatization
- Government transportation (bus transport)
- Maintenance directorate
B. Contracting out
- Tug boat operation port
- Teacher transport- Cleaning and maintenance
C. Government shareholdings
- Telecommunication
-B a n k i n g
-O t h e r
D. Deregulation
- Education, television, healthcare
Privatization in the past
36. Privatization commenced in 1989, the projects privatized are as follows:
Infrastructure:  nil
Government programmes
A. Privatization
- Dates project
- Dairy project
- Industrial FisheriesWT/TPR/G/74 Trade Policy Review
Page 12
- Slaughter House
B. Contracting out:  Nil
C. Government shareholdings
Shares in:
Bahrain Aluminium Extrusion Co.
Ship repairingCold Storage Co.
Hotels
Cinema
General Trading and Food Processing Co. (TRAFCO)
Deregulation
- Private sector investment in education, healthcare, TV are now allowed.
Under Active Consideration (tendering)
- Public transport
- Electricity and Water (Generation & Production)
Projects privatized since 1995
- Bahrain Aluminium Co. (1995)
- Marina Club (1997)
- National Import and Export Co. (1997)
- Bahrain Atomizer (1997)
- Slaughter House (1999)
IV. MONETARY POLICY
(1) T
HE BAHRAIN MONETARY AGENCY
37. The Bahrain Monetary Agency is an independent juristic body enjoying wide ranging powers
as the central monetary institution of the State of Bahrain.  The general administration of the Agency
is vested in a Board of Directors.  As fiscal agent of the Government, the Agency makes arrangements
for the redemption of Treasury Bills and Devel opment Bonds, and for the payment of interest on
them.  The Agency also publishes its results by way of freely available public accounts and reports.Bahrain WT/TPR/G/74
Page 13
38. The statutory objectives of the Agency are to:
(a) Organize the issue and circulation of the currency of the State of Bahrain as well as
the foreign exchange operations.
(b) Maintain the value of the currency of Bahrain and endeavour to ensure monetary
stability.
(c) Organize the banking business and control the banking system.(d) Control and direct bank credit so as to realize the objective of the economic policy of
the State.
(e) Participate in the creation of a developed money and financial market.
(2) E
XCHANGE RATE REGIME
39. The Bahrain dinar has a fixed relationship to the SDR at the rate of BD 0.47619 per SDR 1.
The exchange rate of the dinar in terms of the SDR may be set within margins of + or – 7.25% of this
fixed relationship.  In practice, however, the dinar has maintained a stable relationship with the
U.S. dollar, the intervention currency.  The middle rate of the dinar for the U.S. dollar is quoted by the
Bahrain Monetary Agency and has remained unchanged since December 1980.  The Bahrain
Monetary Agency provides daily recommended rates to banks for amounts up to BD 1,000,pound sterling, and deutsche mark, based on the available U.S. dollar rates against those currencies.
(3) I
NTEREST RATES
40. Interest rates in Bahrain are determined by market forces with no intervention from the
Bahrain Monetary Agency.
(4) GOVERNMENT SECURITIES
41. The Agency issues Treasury Bills and Development Bonds on behalf of the Government of
Bahrain.  The maturity of Bonds is between 5- 30 years and Treasury Bills between 3-6 months.
Development Bonds are used by the Government to raise funds in the domestic capital market.  The
Government issues Treasury Bills to serve as an additional source of temporary finance for the
Government, and to promote the development of th e domestic money market by providing banks and
other investors with a marketable instrument for the employment of surplus liquidity within Bahrain.
(5) CREDIT POLICY
42. The Bahrain Monetary Agency monitors credit of the commercial banks because of its
important economic significance.  However, no quantitative or selective measures of intervention are
practiced by the Agency.
(6) CAPITAL MOVEMENT AND TAXATION
43. No exchange control requirements are imposed on capital receipts or payments by residents or
non-residents.  Also, Bahrain is free from taxation on income and profits.WT/TPR/G/74 Trade Policy Review
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V. IMPLEMENTATION OF URUGUAY ROUND COMMITMENTS
44. Bahrain joined The GATT, and became a contracting party on 13/12/1993 on a de facto basis,
and in April 1994 participated in the Marrakesh Mi nisterial Meeting and signed the Final Act of the
Uruguay Round and the Marrakesh Agreement Establishing the WTO.  This Agreement was
subsequently ratified by Decree No. 7 of 1994 and Bahrain became a member of the WTO with effect
from 01/01/1995.
45. WTO Agreements are ranked as national legislation in Bahrain, and may be invoked before
the national courts.
46. The status of the implementation of the WTO Agreements is as follows:
(1) TARIFFS
47. Schedules were sent to the Director General of the GATT on 9th March 1994, and
Schedule XCV111 shows that Bahrain bound all of it s Customs Duties at 35%, with the exception of:
- Manufactured and Raw Tobacco 100% ADV
- Alcoholic Beverages 200% ADV
- Cultured Pearls Prohibited
48. The average applied customs duty in Bahrain is between 5% and 10%.  However, subsequent
to an administrative order issued by HH.  The Prime Minister, customs duties on food commodities
have been reduced to 0%, with the rates on secondary products also being reduced from 10% to 7.5%,
effective 1st January 2000.  A copy of the schedules related to this order was sent to the Director of
Market Access Division at the WTO on 23rd May 2000, so as to make it available to interested
members.  In addition, the GCC, of which Bahrain is a member, has decided to form a Customs Union
by the year 2005, and as a consequence uniformed customs duties are in the process of being
negotiated, which will have the effect of reducing duties still further.  Bahrain is also a member ofThe Greater Arab Free Trade Area (GAFTA), which aims to reduce tariffs amongst its members by
10% annually, starting in 1998, and with the goal of reaching a zero tariff by the year 2007.
(2) A
GREEMENT ON IMPORT LICENSING PROCEDURES
49. Bahrain does not have an import license per se , however there are some restrictions on
imports of certain items,(for health, security, moral and religious reasons) and documentG/LIC/N/1/BH R/1 dated 13
th June 1997, shows that Bahrain notified the Committee on Import
Licensing on 27th May 1997 to that extent, and enclosed the following:
- Rules of Import in Bahrain
- Prohibitions and restrictions imposed on certain imports
- Ministerial Decree No. 10/1976 “Limitations on materials which are considered within the
rules of explosives”.Bahrain WT/TPR/G/74
Page 15
(3) AGREEMENT ON AGRICULTURE
50. Bahrain is a net food importing country.  During the past 20 years, the agricultural sector has
contributed less than 1% per annum to GDP, and the amount of support given to agriculture has been
minimal at less than US$1 million per year, and is then mainly provided for technical assistance.
(4) AGREEMENT ON TECHNICAL BARRIERS TO TRADE
51. Bahrain Standards and Metrology Directorate (B SMD), at the Ministry of Commerce, is the
standardizing body and Enquiry Point for Bahrain.  Bahrain has accepted the WTO Code of Good
Practice.  The Bahrain national standards, which are applied on an MFN basis and national treatment
basis,  are mandatory, and are published in the Official Gazette, normally coming into effect after six
months.  Bahrain’s policy is to develop specific Bahraini standards only when necessary, and when no
Gulf standard has been developed, and are usually based on the standards developed by the GCC’sGulf Standardization and Metrology Organisation (GSMO).
(5) A
GREEMENT ON THE APPLICATION OF SANITARY AND PHYTOSANITARY MEASURES
(SPS)
52. Bahrain notified two Enquiry Points and Notification Authorities for the SPS Agreement,
these being the Directorate of General Health at the Ministry of Health, for food safety;  theDirectorate of Agriculture Relations, at the Ministry of Works and Agriculture, for animal and plant
health and fisheries.  Bahrain has been prevented from exporting its fish products to the EU due to the
SPS specifications of the EU, and has requested the EU  for technical assistance in this regard in order
to meet the EU specifications, so that fish export to the EU may be resumed.
(6) A
NTI-DUMPING AND COUNTERVAILING MEASURES ;  A GREEMENT ON SAFEGUARDS ;  
AGREEMENT ON PRESHIPMENT INSPECTION
53. Bahrain does not have any Laws or Regulations related to these Agreements, but reserves its
right to introduce such Laws and Regulations whenever it deems necessary, and in which event these
will be based on the articles of these Agreements, and Bahrain’s rights and obligations under the
WTO.
(7) AGREEMENT ON SUBSIDIES AND COUNTERVAILING MEASURES
54. Bahrain notified the WTO of the “Human Resource Development Program in the
Manufacturing Sector” (HRDS) (Document G/SC M/BHR dated 25/8/1997).  This Program was
subsequently terminated at the end of 1998.  The present subsidies provided to the industrial sector are
as follows:
- Free entry for machines, equipment and raw material required by industry
- Reduction in electricity tariff from 16 fils per k/h to 12 fils per k/h for investors in the
industrial sector
- A two-year rent free period for investors renting land in the industrial zones.
55. These subsidies are provided on an MFN and national treatment basis, and will be phased out
in accordance with the provisions of the Subsidies Agreement.WT/TPR/G/74 Trade Policy Review
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(8) AGREEMENT ON CUSTOM VALUATION
56. Bahrain invoked the five-year transitional period to implement the provisions of the
Agreement, and has requested an extension for a three year period to delay (up to 1st January 2003)
the application of the provisions of the Agreement.  The additional period is required in order to
finalize the necessary legislation, complete computerization and train the Bahrain customs personnel.
(9) GENERAL AGREEMENT ON TRADE IN SERVICES (GATS)
57. During the Uruguay Round, Bahrain submitted  Schedules of Commitments covering
insurance (offshore) and reinsurance.  In April 1997, Bahrain participated in the Financial Services
negotiations, and submitted a schedule of commitments covering certain activities in the banking
sector and the Stock Exchange, and signed the fifth Protocol on 5th June 1998.  As GATS is open for
negotiations, different Ministries and Government Agencies are in the process of studying thepossibility of submitting additional commitments in services, before the end of 2000, related to their
areas of responsibility, including telecommunications;  tourism;  air transport services;  maritime
services;  and other professional services.
(10) A
GREEMENT ON TRADE -RELATED ASPECTS OF INTELLECTUAL PROPERTY RIGHTS
(TRIPS)
58. Bahrain is committed to fulfilling its obligations under the TRIPS Agreement, and has been
reviewing Laws and Regulations relating to this Ag reement, in order to comply with its commitments,
and has scheduled a review of this legislation by November 2000.  Bahrain is a member and signatory
of WIPO, the Paris Convention for Protection of Industrial Property, and the Bern Agreement for the
Protection of Copyright.
(11) AGREEMENT ON GOVERNMENT PROCUREMENT
59. Bahrain is not a signatory to this Agreement.  However Bahrain does support the
commencement of negotiations for an Agreement on Transparency on Government Procurement,
based on the findings of the Working Group established by the Singapore Declaration of the First
Ministerial Conference.
(12) TRADE IN INFORMATION TECHNOLOGY PRODUCTS (ITA)
60. Bahrain did not sign the Ministerial Declaration on Trade in Information Technology
Products.  However, Bahrain is considering joining this Declaration and providing zero customs duty
on such products, with the purpose of accelerating the transfer of technology to Bahrain.
VI. FUTURE NEGOTIATIONS
(1) FUTURE NEGOTIATIONS
61. Bahrain believes that any future negotiations should be governed by the following principles:
- A fully transparent process of ensuring the effective participation of all WTO Members;
- longer transition period to enable Developing and LDCs to adopt the WTO Agreements;
- providing preferential treatment for “infant”  industries in Developing and LDC countries;Bahrain WT/TPR/G/74
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- decision making consensus should be maintained;
- greater transparency in conducting informal consultations;
- the “Green Room” basis to be expanded to allow for a broader representation and conducted
on an open-ended basis;
- new issues that have no direct relations to trade should not be introduced into the WTO
Agenda.
(2) ELECTRONIC COMMERCE
62. Bahrain supports the current practice of not imposing customs duties on electronic
transmissions, and believes that technical assistance from developed countries should be made
available to developing and LDCs, particularly to assist with  training and the development of the
basic infrastructure.  The Government is working on a number of levels to ensure the development ofthe necessary physical, legal, payments, and security aspects, and to encourage the private sector to
embrace electronic commerce.  In this regard the Government seeks to act as an exemplar to the
private sector, by actively pursuing excellence in the online delivery of government services and in its
dealings with business.  The Government is establishing a special unit for the purpose of monitoring
developments in this area, and to act as a catalyst for developing Bahrain as the regional e-commercecentre.
(3) A
CCESSION
63. Bahrain supports the view that the accession process should be accelerated, particularly in
respect to developing and LDCs, and gives a special endorsement to the applications of Saudi Arabia,
the Sultanate of Oman, and other Arab Countries.
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