WT/TPR/S/74 Trade Policy Review
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III. TRADE POLICIES AND PRACTICES BY MEASURE
(1) OVERVIEW
1. Bahrain's trade policies and practices are generally liberal;  applied tariffs are relatively low
and import restrictions appear to be maintained mainly for health and security reasons.  In 2000
Bahrain's applied most-favoured-nation (MFN) tari ff was 7.7%;  around 96.9% of tariff lines have
rates of 10% or less.  Although the average rate is relatively low, there is, in general, considerableescalation due to lower tariffs on imports of raw materials and capital goods; as a result effective
protection imparted to manufactured products tends to be fairly high.  Escalation is not, however,
uniform across the tariff with some sectors displaying de-escalation, thereby providing higher
protection to primary products than to processed g oods.  The degree of de-escalation may in fact be
lower as a result of tariff exemptions granted fo r capital and raw material imports by the Government
of Bahrain.  It also suggests that a more uniform MFN tariff without exemptions for capital and raw
material imports would provide a more balanced set of market signals for investors.
2. Bahrain bound 77.1% of its tariff as a result of the Uruguay Round.  The average bound tariff
is 35.6%, considerably higher than the average applied rate, introducing an element of uncertainty for
traders and investors.
3. Under the Unified Economic Agreement of th e Gulf Cooperation Council (GCC), Bahrain
also maintains special trade and investment relations with other GCC countries (Kuwait, Oman,
Qatar, Saudi Arabia, and the United Arab Emirates).  This includes preferential treatment on tariffs,
rules of origin, local-content requirements, and investment.  Bahrain's trade and investment ties with
GCC nations are likely to grow still closer with the completion of the Customs Union planned for2005.
4. Although non-tariff measures are maintained on imports and exports mainly for health,
security and moral reasons, trade in key sectors appears also to be restricted through the presence of
state-owned companies that have a de facto monopoly on production and trade.  These include the
state-owned Bahrain National Oil Company (BANOCO), which conducts all petroleum related trade;
and the Bahrain-Saudi Aluminium Marketing Comp any (BALCO), which markets and exports all
primary aluminium production from Bahrain's smelter.  Some services, including
telecommunications, are also essentially closed to competition from the private sector.
5. The dominance of the public sector in Bahrain's economy has been reduced to some extent as
a result of stepped up efforts by the Government to divest itself of state-owned companies.  The
Government also aims to reduce the size of the public sector and improve competition by reducingsubsidies provided to consumers and industry, including on electricity and natural gas, and water
supply for farmers, which is currently provided free of charge, and to concentrate instead on
developing infrastructure.  Although Bahrain is not a member of the WTO Government Procurement
Agreement, competition may also benefit from refo rm of government procurement procedures, which
appear to be relatively non-transparent and discriminate in favour of Bahrainis and other GCCnationals.
6. As Bahrain's international treaty obligations supersede national law, the provisions of the
WTO TRIPS Agreement take precedence over national intellectual property rights legislation.
Nevertheless, for the purposes of enhanced domestic transparency, Bahrain is in the process ofupdating its national legislation, including on patents, trade marks and industrial designs.  Efforts have
also been made to step up enforcement of intellectual property rights, especially with regard to
copyright protection.  Bahrain is also taking steps to bring its legislation on customs valuation into
line with WTO obligations and has requested an extension of its implementation period.Bahrain WT/TPR/S/74
Page 27
(2) MEASURES DIRECTLY AFFECTING IMPORTS
(i) Customs procedures and valuation
(a) Registration and documentation
7. All importers and exporters are required to be listed in the commercial registry of importers
and exporters maintained by the Ministry of Commerce and Agriculture and to be members of theBahrain Chamber of Commerce and Industry.  An import licence is provided to a company or trader
at the time of registration, if requested.  Import licences are required for certain products for
commercial purposes but not if imports are intended for own use.
8. All imports into Bahrain, including those destined for bonded areas, must be accompanied by
the appropriate customs declaration, including: four copies of bills of lading (airway bills for air
cargo);  the original of the certificate of origin;  three commercial invoices;  and insurance certificatesfor all shipments insured by the exporter or shipper.
1  Commercial invoices must be certified by a
Chamber of Commerce in the country of origin, stating origin and current export price of the product,
and stamped by the relevant Consulate of Bahrain or any Arab Embassy in the country of origin
before the goods may be exported to Bahrain.  In the event that the documents are not duly
authenticated, the goods may still be cleared after inspection by Customs and on payment of a BD 10deposit, which is forfeited if the authenticated docum ents are not provided within six months from the
date of import.
9. Product-specific documentation is also required  for imports of drugs and medicines, food
products, live animals, birds and fish, and all meat and poultry products (section (viii)).  Import
licences must accompany certain products, including arms and ammunition and alcoholic beverages
(section (v)).
(b) Preshipment inspection
10. Bahrain has notified the WTO that it has no laws or regulations for preshipment inspection.
2
According to the authorities, there are no plan s to introduce preshipment inspection, although such
inspection is currently being discussed in the Gulf Standards and Metrology Organization for Gulf
Cooperation Council (GCC) members.  The Governme nt is not aware of any companies in Bahrain
that provide preshipment inspection services for exports.
(c) Customs valuation
11. Bahrain notified the Committee on Customs Valuation in 1997 that it was deferring its
implementation of the Agreement under the provisions concerning special and differential treatment
for developing country members of the WTO.3  A notification was made in January 2000 requesting
an extension for a three-year period from 1 January 2000 in order to finalize the necessary legislation,
complete computerization and training of Bahrain customs personnel, and to acquaint them with the
provisions of the Agreement on Customs Valuation.4
12. In cases of disagreements concerning valuation decisions made by the Customs Directorate,
the importer may appeal to a Bahraini court for arbitration.  There have been no such appeals recently.
                                                     
1 The insurance certificate is required only if the shipment is insured by the exporter and should state
that the company is not on the Arab League's Boycott Office list of companies with which it is forbidden to
trade as a result of the embargo on trade with Israel (Dun and Bradstreet, 1999).
2 WTO document G/PSI/N71/Add.6, 6 June 1997.
3 WTO document WT/Let/149, 11 July 1997.
4 WTO document G/VAL/W/57, 13 January 2000.WT/TPR/S/74 Trade Policy Review
Page 28
(ii) MFN tariffs
(a) Structure
General features13. Bahrain's applied most-favoured-nation tariff is based, since 1997, on the
Harmonized Commodity Description and Coding Syst em (HS 96).  As of June 2000, the applied MFN
tariff consists of 7,052 tariff lines at the HS 8-digit level.
5  Of these, 7,021 lines, or 99.6% of the tariff,
have ad valorem  tariff rates, 20 tariff lines have mixed rates of duty, and imports under 11 tariff lines
are prohibited;  there are no rates associated with th e prohibited lines.  The 20 specific rates, which
range from BD 0.6 per gross kg. to BD 15 per direct covered kg., are charged for imports of tobacco
products (Table AIII.1).  The 11 prohibited tariff lines include live animals (pigs), oilseeds, poppy
seeds, and cultured pearls (section (v)(a) below).  The 11 prohibited tariff lines have been excludedfrom the Secretariat's analysis of the tariff;  of the 20 lines with mixed rates, only the ad valorem
rates have been used.
14. Ad valorem  tariffs range from 0 to 125% and are levied on a "cost, insurance, freight" (c.i.f.)
basis.  Bahrain's tariff currently has seven bands:  zero, 5%, 7.5%, 10%, 20%, 100% and 125%.  Over
half (54.1%) of Bahrain's tariff lines are at rates of zero or 5%, while 3.1% of tariff lines, mainly
crude and edible oils, alcohol and tobacco products, protected items under the Industries Support and
Protection Scheme (see below), and motor vehicles, have rates greater than 10% (Chart III.1).
                                                     
5 The tariff analysis is based on the applied tariff provided to the Secretariat on 3 July 2000 by the
Permanent Mission of Bahrain in Geneva.5.848.3
6.736.1
2.8
0.1 0.2
0.010.020.030.040.050.060.0
0.0 5.0 7.5 10.0 20.0 100.0 125.0Chart III.1
Bahrain, MFN tariff distribution, 2000
Per cent of lines
Source : WTO Secretariat calculations, based on data provided b y the authorities.RateBahrain WT/TPR/S/74
Page 29
15. Bahrain grants at least MFN treatment to all its trading partners.  Trade with Israel is
embargoed.
Tariff rates
16. In 2000, Bahrain's average applied MFN tariff is 7.7%:  7.5% for agricultural products and
7.8% for industrial products (Table III.1).  Tariffs generally range from 0% to 125% for agricultural
products, and from 0% to 100% for industrial products.  Rates of at least 100% and 125% are appliedonly on tobacco and alcohol products, respectively.  Tariff dispersion as measured by the coefficient
of variation is high, at 113, especially in agriculture
6;  however, this dispersion is upwardly biased as a
result of the few lines, on tobacco and alcohol products, that carry high rates.
Table III.1
Applied MFN tariff, 2000
Per cent of all
tariff lines
(7,052)Average
(%)Range
(%)Dispersiona
Total 100.0 7.7 0-125 113.2
Agriculture, forestry and fisheries (HS 1-24) 16.6 7.5 0-125 261.3
Agriculture (WTO definition) 16.3 7.9 0-125 249.4
Industrial products (HS 25-97) 83.4 7.8 0-100 51.3
Escalationb
Unprocessed products 11.7 5.0 0-100 175.0
Semi-processed products 27.5 6.2 0-20 44.6
Fully processed products 60.8 9.0 0-125 113.8
a Dispersion is measured by the coefficient of variation.
b Based on ISIC classification.
Source: WTO Secretariat, based on data provided by the authorities.
17. Although Bahrain's tariff has remained relatively unchanged since the early 1990s, some
changes have taken place recently in the context of the GCC's decision to form a customs union.In this respect, as of 1 January 2000, the Government removed customs duties on essential goods and
fruit, previously 5% and 7%, respectively;  and duty on some goods for secondary use were reduced
from 10% to 7.5%.  However, duty on tobacco was raised from 70% to 100% on 1 July 1998
(section (b) below).  Future changes in the tariff, according to the authorities, will be made in the
context of the GCC Agreement and the WTO.
18. Under Legislative Decree No. 11 of 1985, which provides protection and support to national
infant industry, tariff protection of up to 20% on selected products is provided to firms registered with
the Industries Support and Protection Committee in the Ministry of Oil and Industry.  The items
covered include medical products, aluminium products, and edible oil (Table AIII.2).  To qualify for
protection, local (including GCC) content should be at least 20% in the first three years of production,
rising to over 40% within the next five years.
7  At present the 20% tariff protection provided to
national industries accounts for 0.3% of total customs tariff revenue.  According to the authorities,
there are no plans to add new products to this list and the additional protection is expected to be
phased out by 2005.
                                                     
6 The coefficient of variation is the standard deviation divided by the average.
7 Legislative Decree No. 11 of 1985, Article 5.  According to the authorities, a previous requirement
under Article 1 of the same Legislative Decree that to qualify for protection, Bahraini or GCC nationals musthold at least 51% of the equity in the relevant company, has been removed.WT/TPR/S/74 Trade Policy Review
Page 30
Tariff escalation
19. Although Bahrain's tariffs are relatively low, the Government's policy of maintaining lower
rates on imports of raw materials and capital goods yields significant escalation in the tariff;  tariffs on
fully processed products, in general, are considerably higher than on primary or semi-processed
products, providing greater effective protection for manufactured goods (Table III.1).  Additional
tariff exemptions granted on a case-by-case basis and to Bahraini industry (section (c) below) mostlikely cause further escalation in the tariff.
20. Escalation varies a great deal among sectors.  It is especially pronounced in food, beverages
and tobacco, fabricated metal products, machinery and equipment, and wood and wood products
(Chart III.2).  However, in some cases, tariffs on primary products are higher than for semi-processed
or fully processed goods, representing de-escalation, with protection for primary products being morepronounced than for processed goods.  This is especially so for non-metallic products (excluding
petroleum), textiles and clothing, wood and wood pr oducts and for other manufacturing although the
de-escalation may be reduced to some extent if tariff exemptions on raw materials and capital goods
were factored into the analysis.
8
(b) Tariff preferences
21. Imports from member States of the Gulf Co operation Council (GCC) currently enter Bahrain
duty free.  In addition, under the recently signed GCC Agreement proposing a customs union by the
year 2005, external tariffs will be lowered to three rates:  zero, 5.5% for "basic products", including
food and clothing, and 7.5% for "luxury goods" and electronics.  According to the authorities,
motor vehicles, which currently face import duties of 20% are also to be included in the
implementation of the agreement.  The Greater Ar ab Free-Trade Area (GAFTA), signed in 1998, aims
to reduce tariffs by 10% annually, with the goal of removing all tariff restrictions between memberstates by the end of 2007.
9
22. Bahrain has also signed bilateral free-trade agreements although the extent of tariff
preferences granted under these agreements is unclear  and, according to the authorities, dependent on
the individual agreement (Table III.2).
(c) Tariff concessions
23. Other than products qualifying for tariff concessions under preferential rules of origin
(section (iv)), Bahrain grants tariff exemptions on raw materials, machinery, and equipment imported
for local factories qualifying under the Local Industries Protection and Support programme.  Under
Amiri Decree No. 11 of 1985, local industries include industries that meet local and GCC content
requirements of up to 40% (section (a)). Bahrain is in the process of amending this system ofconcessions, such that, in the view of the author ities, there will be conformity with the WTO
Agreement on Trade-Related Investment Measur es (TRIMs).  In addition, concessions may be
granted to certain industries or companies for imports necessary for their operational use, based on
individual agreements with the State of Bahrain.
                                                     
8 Data on the extent of the tariff exemptions are not available.
9 The members of the GAFTA are Bahrain, Egypt, Ira q, Jordan, Kuwait, the Lebanon, Libya, Morocco,
Palestine, Qatar, Saudi Arabia, Somalia, Sudan, Syria, Tunisia, the United Arab Emirates and Yemen.Bahrain WT/TPR/S/74
Page 31
Table III.2
Regional and bilateral preferential trading agreements
Agreement/partner Entry into force Imports covered Exports covered Preferential margin
Gulf Cooperation
Council (GCC)25 May 1981 All All Zero customs duty on
products from the GCC area
Greater Arab
Free-Trade Area
(GAFTA)1 January 1998 All All Reduction of customs duties
by ten percentage points
annually until 2008 when alltariffs are expected to be
eliminated
Tunisia 8 November 1975 Food stuffs, furniture,
clothingAluminium, plastics,
petrochemicals..
Jordan 22 January 1976 Foodstuffs, furniture,
clothingAluminium, plastics,
petrochemicals..
Iraq 15 March 1982 Foodstuffs, furniture,
clothingAluminium, plastics
and petrochemicals..
Egypt 24 August 1994 Foodstuffs, furniture,
clothingAluminium, plastics,
petrochemicals..
Syria 14 October 1996 Foodstuffs, furniture,
clothingAluminium, plastics,
petrochemicals..
.. Not available.
Note: Please also refer to section (2) (iv) on rules of origin for preferential imports.
Source: Information provided by the authorities.024681012
Food, beverages 
and tobacco
Textiles, clothing
and leather
Wood and wood 
products, inc.
furniture
Paper and paper 
products, printing 
and publishing
Chemicals
Non-metallic 
mineral 
products, except
petroleum
Basic metal
Fabricated metal, 
machinery and 
equipment
Other
manufacturingChart III.2
MFN tariff escalation by 2-digit ISIC industry, 2000
Per cent
Unprocessed Semi-p r oc essed Fully processed
Source :  WTO Secretariat calculations based on data provided by the authorities.Av erage M F N rate
(7.7%)WT/TPR/S/74 Trade Policy Review
Page 32
(d) Minimum import duty
24. Minimum import customs duty rates are specified for cigarettes and other tobacco products.
In 2000, the rates ranged from BD 0.6 per kg. for Ji rak, to BD 15 per kg. for cigars, cheroots and
cigarillos (Table AIII.1).  The minimum rates of duty are imposed, according to the authorities,
mainly to dissuade consumption of these products and under directives of the GCC Committee of
Health Ministers.
(iii) Tariff bindings
25. Under its Uruguay Round commitments, Bahrain bound 77.1% of its tariff.  Most bound
tariffs are at ceiling rates of 35%;  however, a small number of lines (23) are bound at rates of 100%
and 200%, for tobacco and alcohol products, respectively.10
26. Bahrain's average bound tariff is 35.6% (Table III.3).11  Given that the overall average applied
tariff, at 7.7%, is currently considerably lower than the bound rate, the difference presents an element
of uncertainty to traders and investors, as it gives the Government the freedom to raise tariffs
unilaterally within its bindings.  In addition, the percentage of tariffs bound in some HS Chapters,
notably chemicals, wood and wood articles, mineral products, pulp and paper, and hides and skins,
which together represent 24% of the tariff, remains below 50% of all lines in those Chapters(Chart III.3).
Table III.3
Applied and bound tariff averages
(Per cent)a
Applied MFN rate, 2000 Cu rrent (a nd final) bound rate
Total 7.7 35.6
Agriculture, forestry and fisheries (HS 1-24) 7.5 38.0
Agriculture (WTO definition) 7.9 37.8
Industrial products (HS 25-97) 7.8 35.0
By degree of processingb
-Raw materials 5.0 35.7
-Semi-processed products 6.2 35.0
-Fully processed products 9.0 35.8
a Tariff analysis based on 7,041 lines at the HS 8-digit level.
b ISIC classification.
Source: WTO Secretariat based on data provided by the authorities.
27. Some applied rates, mainly on alcohol and tobacco, appear to exceed rates in Bahrain's
schedule of bindings.  This issue is presently under discussion with the Bahrain authorities;  in their
view, a misunderstanding has led to error in the Schedule.
                                                     
10 In addition, for agricultural products, municipality tax of up to 2% may be charged for fresh produce.
11 Bahrain did not schedule a base rate for the reduction of bound tariffs over the implementation
period;  it is assumed therefore that the bound rate would apply at the beginning of the implementation period in1995, and would apply for the whole period.Bahrain WT/TPR/S/74
Page 33
28. Bahrain notified the WTO Committee on Market Access that it reserved the right under
Article XXVIII:5 of the GATT 1994, to modify its Schedule XCVIII for three years beginning
1 January 1997.12  A further notification was made in February 2000 reserving Bahrain's rights to
modify its Uruguay Round Tariff Schedule for three years beginning 1 January 2000.13
29. Bahrain is not a signatory to the WTO Agreement on Trade in Information Technology
Products (ITA).
(iv) Rules of origin
30. Under the GCC Unified Economic Agreement pref erential rules of origin, Bahrain provides
duty-free access to products originating in GCC countries if 40% of value added is from the GCC
region, and if at least 51% of the capital of the company is owned by a citizen of the GCC.  For
products imported from Arab League member countries, a local-value-added content of 20% is
required in order to qualify for preferential rules of origin within the framework of the GAFTA.  In
addition, Bahrain allows preferential access for goods from countries with which it has signedbilateral agreements;  the local-content requirement in such cases ranges from 20% to 40%, depending
                                                     
12 WTO document G/MA/56, 1 April 1997.
13 WTO document G/MA/102, 7 February 2000.0102030405060708090100
Chart III.3
Share of bound tariff lines by HS section, 2000                                                             
Per cent
Source :  WTO Secretariat calculations, based on information provided by the authorities.01 Live animals and prod.        
02 Vegetable products03 Fats and oils      
04 Prepared food, etc.
05 Mineral products
06 Chemicals and products07 Plastic and rubber
08 Hides and skins09 Wood and articles
10 Pulp, paper, etc.
11 Textiles and articles
12 Footwear, headgear13 Articles of stones
14 Precious stones, etc.15 Base metals and prod.
16 Machinery
17 Transport equipment
18 Precision instruments19 Arms and ammunition
20 Miscellaneous manuf.21 Works of art, etc.WT/TPR/S/74 Trade Policy Review
Page 34
on the agreement;  according to the authorities, the rules of origin under specific bilateral agreements
are currently still under discussion.14
(v) Import prohibitions, restrictions, and licensing
(a) Import prohibitions
31. According to Bahrain's tariff, prohibited im ports include live animals (pigs), oilseeds, poppy
seeds, and cultured pearls (Table III.4).  Accordin g to the information provided by the authorities,
import prohibitions apply to products ranging from ornamental birds and live animals to fats and oils
and their fractions, tobacco, sugars and sugar confectionery, retreaded tyres, telecommunications
equipment, and armaments.
32. Imports from Israel, including through third countries, are prohibited.
(b) Import licensing and restrictions
33. Bahrain's legislation on import licensing is contained in the Rules of Import;  Prohibitions and
Restrictions Imposed on Some Imports;  and Ministerial Decree No. 10 of 1976 concerning
Limitations on Materials Considered Within the Rules for Explosives.15  Under these regulations,
import licences for raw materials and capital goods imported for manufacturing in Bahrain may be
granted to all companies;  however, licences for imports for the purposes of trading may only begranted to companies established locally with at least 51% ownership by nationals of Bahrain and/or
other GCC countries.
34. Most of the import restrictions maintained by Bahrain are on safety, health, or moral grounds,
including on foodstuffs, tobacco, armaments, fireworks, and radioactive materials (Table III.5).
Import licences for these products are issued on application by a company at the time of commercial
registration with the Ministry of Commerce.  According to the authorities the number of licences
issued are not restricted.
35. Food, plant, and animal imports, which are restricted for health reasons, must be accompanied
by sanitary and phytosanitary health certificates from the exporting country.  All imported meat and
poultry products must also be accompanied by a halal slaughter certificate issued by an approved
Islamic centre in the exporting country.  Imports of food products must be accompanied by a
certificate declaring them to be free of radiation and dioxin.  In addition, pharmaceutical productsmust be imported directly from a manufacturer with  a research department, and the products must be
licensed in the country of manufacture and in at least two GCC countries other than Bahrain, one of
which must be Saudi Arabia.
16
                                                     
14 The only such bilateral agreement notified to the WTO is with Tunisia.  The agreement was signed
on 24 October 1998, although the preferential rules of origin are not mentioned in the notification(WTO document, G/RO/N/7, 12 February 1996).
15 WTO document G/LIC/N/1/BHR/1, 13 June 1997.
16 Dun and Bradstreet (1999).Bahrain WT/TPR/S/74
Page 35
Table III.4
Prohibited imports, as of June 2000
HS Code Product description
Tariff Book
0103 1000 Live swine
0103 9100 Live swine
0103 9200 Live swine
0908 2000 Mace
1207 9100 Poppy seeds
1207 9910 Oilseeds
1207 9920 Oilseeds
1302 1100 Opium sap
1302 1910 Vegetable saps and extracts
7101 2100 Cultured pearls (unworked)
7101 2200 Cultured pearls
Other prohibitions
0106 0092 Ornamental birds
0106 0099 Other live animals
0202 Meat of bovine animals, frozen
1207 9920 Hemp seeds
1516 1000 Animal fats and oils and their fractions
1516 2000 Vegetable fats and oils and their fractions
17 Sugars and sugar confectionery
1704 9090 Other (sugar confectionery not containing cocoa)
2106 9093 Food preparations nes.
2207 2019 Unadulterated ethyl alcohol
24 Tobacco and tobacco products
3004 9000 Other – (medicaments excluding headings 30.02, 30.05 or 30.06, consisting of mixed or
non-mixed products for therapeutic or prophylactic use, in measured doses or inpackaging for retail sale)
3304 9930 Skin softening preparations
3305 2000 ..
3305 9090 Other (preparations for use in hair)
3922 9000 Other (plastic sanitary ware)
4012 1000 Retreaded tyres
4012 9000 Other (tyres)
4014 9090 Other (hygienic pharmaceutical products)
5608 1400 ..
6811 1000 Corrugated sheets (articles of asbestos, cement, etc.)
6910 1000 Sanitary ware of porcelain and china
7101 2122 ..
7326 9099 Other articles of iron and steel
7570 1000 ..
8517 1100 Line telephone sets with cordless handsets
8517 1900 Other (electrical apparatus for line telephony or line telegraphy)
8525 2090 Other (transmission apparatus)
8701 0000 Pedestrian controlled tractors
9301 0000 Military weapons other than revolvers, pistols and arms under heading 93.07
95 Toys, sports equipment
9503 8000 Other toys and models, motorized
.. Not available.
Source: Bahrain Customs Tariff.WT/TPR/S/74 Trade Policy Review
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Table III.5
Import restrictions, as of June 2000
HS Code Product
0407 0019 Other (bird eggs)
2106 9093 Food supplements, based on extracts from plants, fruit concentrates, honey, fructose
2207 2000 Inactive ethyl alcohol
24 Tobacco
2523 2100 White cement, whether or not artificially coloured
2844 Radioactive chemical elements and radioactive isotopes
3604 Fireworks, signalling flares, rain rockets, fog signals and other pyrotechnic articles
3923 2100 of polymers of ethylene
4011 1000 New pneumatic tyres of rubber of a kind used on motor vehicles (including station wagons and racing cars)
4818 2000 Handkerchiefs, cleansing or facial tissues and towels
5608 1100 Made up fishing nets (of textiles)
7101 100 Natural pearls
8423 Weighing machinery
8507 1000 Lead acid of a kind used for starting piston engines
8701 Tractors
8701 1000 Pedestrian controlled tractors
9015 1000 Rangefinders
9102 Wrist watches, pocket watches, including stop watches, other than those under heading No. 90.01
93 Arms and ammunition and parts thereof
9304 0010 Fish guns (underwater)
9306 Bombs, grenades, torpedoes, mines, etc.
9306 2190 Other (cartridges)
9307 Swords, cutlasses, bayonets, lances and similar arms and parts thereof and scabbards and sheaths
9307 0090 Other (swords, cutlasses, bayonets, lances and similar arms and parts thereof and scabbards and sheaths)
95 Toys, games and sports requisites
9503 9000 Other toys
9504 Articles of funfair
9508 0090 Other (roundabouts, swings, shooting galleries and other fairground amusements, travelling circuses,
travelling menageries and travelling theatres)
Source: Government of Bahrain.
(vi) Anti-dumping and countervailing measures
(a) Legislation
36. Bahrain notified the WTO in 1997 that it has no laws or regulations relevant to the WTO
Agreement on Subsidies and Countervailing Measures.17  Bahrain is not at present planning to enact
legislation in this regard.
(b) Measures
37. No anti-dumping or countervailing actions have been taken by Bahrain since the formation of
the WTO in 1995.
(c) Safeguard actions
38. Bahrain has no legislation relevant to the WTO Agreement on Safeguards18;  no safeguard
measures have been taken since 1995.  There are no pre-existing Article XIX safeguard measures
according to the authorities.
                                                     
17 WTO document G/ADP/N/1/BHR/1, 3 June 1997.
18 WTO document G/SG/N/1/BHR/1, 12 June 1997.Bahrain WT/TPR/S/74
Page 37
(vii) Standards and other technical requirements
39. Bahrain accepted the WTO Code of Good Practice in September 199719;  the Bahrain
standardizing body and Enquiry Point is the Bahrai n Standards and Metrology Directorate (BSMD) in
the Ministry of Commerce.20
40. According to Bahrain's notification to the WTO, "Bahrain's national standards are mandatory,
whereas technical regulations usually pertaining to Government departments do not enjoy nationalstatus until they are adopted as national standards.  Almost all Bahraini standards are based on
standards developed by the Gulf Standardi zation and Metrology Organization of the GCC
(GSMO)."
21  According to the authorities, Bahrain-specific standards are developed only when
necessary and when no Gulf standard exists.  At present there are only three Bahrain-specific
standards, on safety, local bread and warehouses for foodstuffs.  Bahraini standards are published inthe Official Gazette  and normally come into effect after a period of six months.
22
41. GCC-wide standards are formulated by th e GSMO, (following a proposal from a member
body) which is based in Riyadh, Saudi Arabia, and require support from two member countries in
order to be included in the Gulf standards work  programme.  Once approved, GSMO standards are
circulated to all GCC member States to be adopted as voluntary and mandatory standards.  In Bahrain,
all GSMO standards are adopted by a National Committee, comprising representatives from various
ministries and the Bahrain Chamber of Commerce,  an d two experts;  it is chaired by the Minister of
Commerce.  The National Committee is required by law to meet every three months.  Any proposed
standard is examined by seven technical committees, divided according to sector, under the National
Committee, which have a period of seven to ten months  to approve the standard.  Bahrain, like other
members of the GCC, subsequently has five years in which to harmonize any voluntary standard with
national requirements, during which time it remains voluntary;  the standard becomes mandatory onceharmonized.  In 1999, there were 1,018 Gulf Standards, of which 316 (31%), relating mainly to food
products, were mandatory in Bahrain.  According to the authorities, although Gulf Standards have not
been reviewed to establish conformity with internat ional standards, they are based to some extent on
international standards;  the GSMO is currently reviewing conformity of Gulf standards with
international standards.
42. All mandatory standards apply equally to locally produced and imported products, with the
exception of quality marks on gold (see below).  Imported products requiring conformity certificates
are given automatic entry if the conformity mark is in accordance with Bahraini standards or if the
product has been tested by an accredited laboratory.  (A list of such accredited laboratories was not
available.)  If not, conformity assessment may be carried out by the Ministry of Health, for foodstuffs,and other institutions, such as the University of Bahrain.
43. In addition to standards, there is a compulsory quality mark for gold and other precious
metals, which is applied only to domestically manufactured products;  imported gold is subject to
hallmarking.  The quality mark is issued by the Assay Office.  The GSMO is currently developing a
voluntary quality mark for the GCC area.
44. Bahrain signed a memorandum of understanding on technical cooperation in standardization,
quality and metrology with Egypt in November 1999.  Bahrain is also a member of regional
standardization organizations, including the GCC Standardization and Metrology Organization, the
                                                     
19 WTO document G/TBT/2/CS1/Add.2, 11 February 1998.
20 WTO document G/TBT/ENQ/6, 5 August 1996.
21 WTO document G/TBT/2/Add.1, 2 August 1996.
22 WTO document G/TBT/2/Add.19, 2 August 1996.WT/TPR/S/74 Trade Policy Review
Page 38
Arab Centre for Standardization and Metrology in  the Arab Organization for Industrial Development
and Mining;  and of the ISO and the OIML.
(viii) Sanitary and phytosanitary measures
(a) Sanitary and phytosanitary measures
45. As of 15 July 1999, Bahrain had not notified its national notification authority or enquiry
point under the SPS Agreement to the WTO.23  According to the authorities, enquiry points may be
set up under the Ministry of Health, for food safety, and the Ministry of Works and Agriculture for
animal and plant health and fisheries;  and discussions are currently taking place with the relevant
authorities in order to notify these in due course.
46. Imports and exports of, and all domestically produced plants and animals are subject to
inspection by the Agricultural Quarantine Unit of the Ministry of Works and Agriculture.
47. According to Legislative Decree No. 20 of 1983, w ith respect to Agricultural Quarantine, all
imports of plants must be accompanied by an agricultural clearance certificate issued by the
appropriate authorities in the country of export.  Phytosanitary certificates are also required for
imports of flour, rice, wheat seed, and agricultural seeds and plants.24  The Agricultural Quarantine
Unit in the Ministry of Works and Agriculture also examines and issues agricultural health certificatesfor all agricultural products prior to their export.
25
48. Health certificates and prior permission from the Ministry of Works and Agriculture, are
required for imports of live animals from countries other than Australia;  the Bahamas;  Barbados;
Cyprus;  Hong Kong, China;  Ireland;  Japan;  Malta;  the Netherlands;  New Zealand;  Norway;
Singapore;  Switzerland;  and the United Kingdom.26  For pets, health certificates are required for all
birds;  cats and dogs may be imported only from selected countries27, and must be accompanied by a
health certificate and certificate from the compet ent authority stating that the animal is free from
rabies.  Imports of pets from all other countries are prohibited.
49. Imports of foodstuffs are monitored and tested by the Ministry of Health to ensure
compliance with national food standards, and must be accompanied by a certificate declaring them
free from cyclamate.  According to the authorit ies, these are also required of locally produced
foodstuffs.  Meat and poultry products must also be accompanied by a health certificate from thecountry of origin and a halal slaughter certificate issued by an appropriate Islamic centre in the
country of origin.
28  Imported eggs must be stamped to distinguish them from locally produced eggs
(section (iv)).
50. For imports of drugs and medicines, a certificate stating that the drug is permitted and valid
for use in the United States is required.
                                                     
23 WTO document G/SPS/GEN/27/Rev. 5, 2 July 1999.
24 Dun and Bradstreet (1999).
25 Legislative Decree No. 20 of 1983 with respect to Agricultural Quarantine, Article 7.
26 BIA (undated).
27 Australia;  the Bahamas;  Barbados;  Bermuda;  the Comoros islands;  Denmark;  Djibouti;  Greece;
Hong Kong, China;  Iceland;  Ireland;  Japan;  the Republic of Korea;  Malaysia;  Malta;  Mauritius;  the
Netherlands;  New Zealand;  Papua New Guinea;  Portugal;  Qatar;  Samoa (American and Western);Singapore;  the Solomon Islands;  Sweden;  the United Arab Emirates;  the United Kingdom;  and Virginia(United States) (BIA, undated).
28 Dun and Bradstreet (1999).Bahrain WT/TPR/S/74
Page 39
(b) Marking and labelling requirements
51. All food products must be clearly labelled with  the following information:  product and brand
names;  production and expiry dates;  country of origin;  name of the manufacturer;  net weight in
metric units;  and a list of ingredients and additives in descending order of importance.  In addition,
all fats and oils used as ingredients must be clearly identified on the label.  Labels must be in Arabic,
or Arabic and any other language, although a small number of products with labels only in Englishmay be approved for import, on a case-by-case basis, for test marketing purposes.
52. As an Islamic country, Bahrain has strict marking and labelling requirements for meat and
poultry products, including that the product was slaughtered according to Islamic halal procedures, if
so required.  Packaged fresh or frozen meat and poultry must also carry the following information, in
addition to the mandatory labelling procedures foll owed in North America:  bilingual labelling, of
which one language must be Arabic;  country of origin;  production (slaughtering or freezing) and
expiration dates, including the name of the month
29;  shelf life of the product;  metric net weight;
product identification;  and a statement that the product was slaughtered according to Islamicprinciples, if so required.  Pre-packaged processed meat and poultry must be accompanied byproduction and expiration dates as well as the net weight of the product.
53. National standards for packing are restricted to general purpose polythene bags, such as
shopping bags, which are required to have a minimum thickness of 40 microns, and garbage bags,which must have a minimum thickness of 60 microns.
(ix) Government procurement
(a) Introduction
54. Despite declining from around 35% of GDP in the early 1990s, government budgetary
expenditure remains significant, at around 30% of GDP in 1998.  Government procurement thus
continues to account for an important share of purchases in the Bahrain economy.  It is estimated that
in 1998 the share of supplies purchased by the Government accounted for around 11% of GDP, or
BD 250 million, up slightly from around 10% of GDP in 1995.  Data are not available on the share of
procurement from foreign sources.
55. There is, according to the authorities, no centralized procurement agency in Bahrain.  The
Central Register of pre-qualified contractors, in the Central Stores Directorate of the Ministry of
Finance and National Economy, invites quotations for procurement of products listed in the Register
from pre-qualified companies, in order to meet th e specific requirements of individual ministries.
Pre-qualification for government construction projects, and engineering and technical consultancy
services supervised by the Ministry of Works and Agriculture is carried out by the Ministry.  Inaddition, for goods and services categories not listed on the Central Register, tendering may be carried
out directly by the individual ministries, which may also choose not to pre-qualify suppliers.
56. In order to qualify for a government procurement contract, the company should be registered
in Bahrain and have a commercial registration number in the field or activity relevant to the tender.
For Bahraini-owned companies bidding for procurement tenders, there also appears to be arequirement that the company "undertake to employ Bahraini staff at a percentage set by the Ministry
of Labour and Social Affairs".
30
                                                     
29 The production (slaughtering and freezing) date should also be accompanied by the statement,
"Product good for ___ months from date of production." (Agriculture and Agri-food Canada, 1997.)
30 Section 3.2 of the Instruction to Tenderers.WT/TPR/S/74 Trade Policy Review
Page 40
57. In addition, procurement agencies are required, under Prime Ministerial Edict No. 21, 1987,
to give preference to goods produced in Bahrain and in other GCC States, provided that the prices of
these goods are within specified margins of the value of their imported equivalents (10% for goods
produced in Bahrain and 5% for goods produced in the GCC).
58. Bahrain is not a member of the WTO Agreement on Government Procurement.  However,
according to the authorities, Bahrain would be willin g to participate in negotiations on transparency in
government procurement.
(b) Tendering procedures
59. For contracts with a value of BD 10,000 (under US$30,000) and above, a selective tendering
procedure is used, in which companies pre-qualify to bid for most tenders.31  The ministry or agency
concerned will first call for applications from suppliers and contractors wishing to include their names
in a Central Register of pre-qualified suppliers and contractors, established in the Central Stores
Directorate of the Ministry of Finance and National Economy;  pre-qualification of suppliers
providing goods and services for government construction projects and engineering and technical
consultancy services, supervised by the Ministry of Works and Agriculture, is carried out by theMinistry itself, which maintains its own Central Register of pre-qualified contractors.  The call for
tenders must be made in at least two local newspapers or magazines and, if believed to be suitable, the
foreign press, or may be individually notified to the relevant pre-qualified suppliers, if deemed
appropriate.  An annual call must be made for suppliers wishing to pre-qualify, according to Section
16.9.28 of the General Tenders Regulations, to allow new suppliers to register.
60. All bids are examined by a Central Tenders Committee, which maintains an updated list of
pre-qualified suppliers issued by the Central Stores Directorate and the Ministry of Works and
Agriculture.  Bids must be submitted in two separate envelopes, relating to the financial and technical
aspects of the tender, along with an initial bond, vali d for the period of the tender quotation;  the bond
may range from a nominal amount to between 1% and 3% of the expected bid.
32
61. After ensuring that the bids fulfil all the requirements, the Central Tenders Committee
forwards them to the appropriate government agency for technical evaluation.  Among the criteriaused to evaluate the bids are:  the bidder's qualifications, experience, organization and facilities;  price
and duration of the bid;  the proportion of Bahraini material/products to be supplied;  and the number
of Bahraini nationals to be employed.  The criteria may vary depending on the type of tender.  The
successful bidder is selected by the Government agency on the basis of these criteria.  The successful
bidder must submit a performance bond within ten days (may be extended by a further ten days) ofnotification of the provisional intention to award the contract.  The performance bond ranges from 5%
to 10% of the contract, in the case of recurrent expenditures, and around 10% of the contract for
                                                     
31 According to Section 16.9 of the General Tenders Regulations, pre-qualification and registration is
required for motor vehicles, agricultural machinery, co mputer hardware and software.  The Government agency
concerned may request the Central Stores Directorate to  exclude certain suppliers of highly specialized or
technical goods and services;  suppliers of goods and services demanded infrequently may also be excluded
from the Registry.
32 Government ministries and agencies, and consultancy services bidding for consultancy service
tenders, are exempt from payment of the initial bond.  The bond may be returned to the bidder if the bid iswithdrawn before the closing date of the tender, if the bid is unsuccessful, or if the bid is successful, in whichcase the bidder would have to pay a performance bond.Bahrain WT/TPR/S/74
Page 41
capital projects.  The initial and performance bonds must be underwritten by an approved locally
based bank.33
62. According to the authorities, there are no pr ovisions for complaints or appeals against a
particular award except through a Bahraini Court of Law;  however, the Ministry of Finance and
National Economy is considering the inclusion of this provision in the legislation.34
(x) State trading
63. Bahrain has not notified any state-trading act ivities to the WTO Council for Trade in Goods
under Article XVII and paragraph 1 of the Understanding.35  Nevertheless, imports of wheat (and,
until recently, rice and sugar) are carried out only by the Bahrain Import-Export Company.  In
addition, alumina, used in the production of aluminium, is imported only by the state-owned
Bahrain-Saudi Aluminium Marketing Co mpany (BALCO) (Chapter IV(4)(ii)).
64. Cartels are not specifically mentioned in the law;  however, in practice, they are not
permitted.  Monopolies, according to the authorities, are to be eliminated under Amiri Decree No. 18
of 1975.
(3) MEASURES DIRECTLY AFFECTING EXPORTS
(i) Customs procedures
65. As in the case of imports, exports may only be carried out by companies or individuals who
are registered with the commercial registry at the Ministry of Commerce and are members of the
Bahrain Chamber of Commerce and Industry.  Documents required include the commercial invoice
and a certificate of origin stamped by the Chamber of Commerce.  Additional documentation may be
required by the Customs Directorate if exports of  the products are restricted (section (iv) below).
(ii) Export duties and taxes
66. Bahrain abolished all its export duties on 1 September 1986.  However, export fees are
charged on ready-made clothes.36
(iii) Duty drawback
67. Duty exemptions are granted for imported inputs for goods to be exported.  Customs duty is
also suspended for goods stored in government bonded warehouses, until re-export, whereupon duty
is cancelled.  If the goods are sold in Bahrain instead of being re-exported, the appropriate duty is
levied.  The Customs Directorate may inspect all goods stored in bonded warehouses.
68. Duty drawback is allowed under Resolution No. 2 of 1986, permitting exporters to recover
the duty paid on an imported product once the product is re-exported from Bahrain.  The conditions
required to qualify for drawback, include:  that the exporter is also the original importer of the
product;  that the original c.i.f. value of the re-exported goods is not less than BD 500
                                                     
33 Section 9 of the Instruction to Tenderers.  Article 21.1 of the Appendix to the Instruction to
Tenderers lists approved local banks, which would provide the initial and performance bonds.
34 If a company wishes, the International Chamber of Commerce in Brussels, or the Gulf Cooperation
Council may be consulted for arbitration (Dun and Bradstreet, 1999).
35 WTO document G/STR/W/36, 8 October 1999.
36 According to the State Budget for fiscal year 1999, export fees on ready-made clothes amounted to
BD 100,000 (about US$300,000) (Ministry of Finance and National Economy, 1999).WT/TPR/S/74 Trade Policy Review
Page 42
(around US$1,325);  that the goods are re-exported within three years of payment of the import duty,
in the same condition and packaging as when they were imported;  and that the exports are not
restricted or granted protective duty under Bahraini Law, unless prior permission is obtained from the
relevant authority.37  Proof is required that the goods being exported are identical to the goods that
were imported.  The Customs Directorate imposes a service charge of 0.5% of the c.i.f. value of the
goods if the customs duty did not exceed 20%;  and 1% of the c.i.f. value of the goods for goods withcustoms duty above 20%.
69. Data on duty forgone from drawback are not available.
(iv) Export prohibitions and restrictions
70. Bahrain prohibits exports of a small number of products including sand, alcoholic products,
and antiques (Table III.6).  All exports to Israel are also subject to a ban.
Table III.6
Export prohibitions
Product
Antiquities
Foodstuffs subsidized by the Ministry of Commerce and Agriculture
"Bul-bul" bird
Alcoholic drinks and beverages unless exported by those authorized to do so
Sand
All goods destined for Israel
Source: Government of Bahrain.
71. Export restrictions apply, inter alia,  to motor vehicles, fish and seafood, boats, and yachts
(Table III.7).
Table III.7
Export restrictions, as of June 2000
Product Licensing authority
Live animals, poultry, except ornamental birds and one-day old chicks Ministry of Works and Agriculture
Alcoholic products ..
Motor vehicles and equipment Traffic Directorate
Fish and crustaceans Directorate of Fisheries, Ministry of Works and Agriculture
Boats and yachts Coastguard
Temporary exports ..
Old newspapers ..
Palm-tree seedlings Agriculture Directorate, Ministry of Works and Agriculture
Human cadavers Ministry of Interior
Food products prohibited entry by Ministry of Health Ministry of Health
Garbage, wastes Committee of Environmental Protection
Flour (may only be exported by the Bahrain Company for Flour) ..
.. Not available.
Source: Government of Bahrain.
                                                     
37 Customs Handbook, Resolution No. 2 (1986) Regarding Drawback of Import Duty paid on foreign
goods, on re-export.Bahrain WT/TPR/S/74
Page 43
(v) Free-trade zones
72. Bahrain currently has two free-trade zones, one at Mina Sulman, Bahrain's main port, and the
other in the North Sitra Industrial Estate.38  Mina Sulman provides a free transit zone to facilitate the
duty-free import of equipment and machinery.  Processing activities may be carried out in the
free-trade zones.  In addition, all raw materials and most capital goods intended for processing in
Bahrain may be imported and stored in these free-trade zones free of charge.  Bonded warehousesmay also be used for storage provided that certain customs procedures are fulfilled.  No distinction is
made between locally owned and foreign-owned co mpanies in respect of access to the free trade
zones or bonded warehouses.
73. Data on the number of industries established in the free-trade zones and the total annual value
of exports from the zones are not available.
(vi) Export operations of state enterprises
74. Primary aluminium exports are carried out onl y by the Bahrain-Saudi Aluminium Marketing
Company (BALCO);  there are some private sector  exports of recycled aluminium products (Chapter
IV(4)(ii).
39  In addition, petroleum exports appear to be  carried out only by the state-owned Bahrain
National Oil Company (BANOCO)40, merged in January 2000 with the Bahrain Petroleum Company
(BAPCO).
(vii) Export finance, insurance and guarantees
75. The Bahrain Development Bank, owned by the Government of Bahrain, the General
Organization for Social Insurance (GOSI), and the Pension Fund, was formed in 1991 to meet the
financing needs of small and medium-sized enterprises.41  The Bank, according to the authorities,
facilitates exports by small and medium-sized ente rprises through its role as national agent for the
Arab Trade Fund and the Islamic Development Bank.  It provides project loans at market rates ofinterest.
76. Export guarantees and insurance, according to the authorities, are made available through a
private sector company based in Kuwait.  However, due to the high rates of interest, GCC exporters
do not normally use this facility.  No further information was provided to the Secretariat on export
insurance and guarantees.
(viii) Export promotion and marketing assistance
77. Export promotion activities are carried out by the Bahrain Promotions and Marketing Board
(BPMB), a government agency;  its board of directors, chaired by the Minister of Commerce, includes
participation from the private sector and the Government.  The BPMB, established in 1993, currently
targets a number of sectors in its export promotion activities, including downstream aluminium, tradeservices, information technology and support services, and the activities of small and medium-sized
                                                     
38 Dun and Bradstreet (1999).
39 BALCO is jointly owned by the Government of Bahrain (77%) and the Saudi Arabian Basic
Industries Corporation (SABIC).
40 Ministry of Oil and Industry, Oil Affairs (1998).
41 Bahrain Monetary Agency (1994).WT/TPR/S/74 Trade Policy Review
Page 44
enterprises.42  Its budget allocation has been raised from BD 1.43 million for each of the years 1999
and 2000 to BD 2 million for 2001 and 2002.
(ix) Measures maintained by importing countries
78. Since 1995, only one anti-dumping action appears to have been initiated against exports from
Bahrain.  The action was initiated by South Africa on imports of overhead aluminium steel-reinforced
conductor cables on 30 April 1999.43  No countervailing measures on Bahraini exports were taken by
any WTO Member during this period.
79. Bahrain has been unable to export fish to the European Union due to SPS regulations.
(4) MEASURES AFFECTING PRODUCTION AND TRADE
(i) Registration procedures for companies
80. All commercial activities must be registered, under the Commercial Registration Law of
1961, with the Ministry of Commerce.  In order to trade, all companies have to be registered with the
Ministry of Commerce and be locally incorporated, although branches and representative offices of
foreign companies may be registered without local incorporation.  Incorporation takes place in
accordance with the Commercial Company Law of 1975 and subsequent revisions to the Law.
81. In general, most companies register in Bahrain as limited-liability companies (WLL) or
joint-stock (JS) companies (Table III.8).  Two kind s of JS companies may exist depending on the type
of activity conducted:  a closed JS company may not offer shares for public subscription;  if the
foreign shareholding in the company is greater than 49%, the company may only operate as an
industrial company or in services where Bahrain is used as a centre for regional distribution of its
goods and services (Chapter II(5)).  Another form of JS company is an exempt company, which may
only be established offshore.  Other types of registration include branch offices, representative offices,
and partnerships (Table III.8).
82. In addition to registering with the Ministry of  Commerce, a licence is usually required from
another Ministry.  For industrial licences, the relevant authority is the Industrial Development
Directorate (IDD) in the Ministry of Oil and Industry;  for services, licences are required from the
individual service licence issuing authority.  In the case of industrial licences, the IDD reviews and
submits the application for the Industrial Licensing Committee, which issues a preliminary, renewablelicence for three months.  Once the applicant has chosen a location for the industry, the IDD seeks
approval from the Central Municipal Council, the Ministry of Health, the Environmental Protection
Committee and the Civil Defence and Fire Service Directorate.  Following this, a final licence, valid
for one year, is granted.  Final commercial registration of a company by the Ministry of Commerce
takes place once the applicant has received all the relevant licences (Chapter II(5)(ii)).
44
(ii) Competition policy and regulatory issues
83. Bahrain has no competition legislation, per se;   however, articles 59-64 of the
Law of Commerce, No. 7 of 1987 deals with unfair co mpetition.  According to the authorities, these
articles seek to regulate the commercial practices of merchants and companies.  The legislation does
not deal specifically with monopolies, and in practice de facto monopolies do exist, such as the
                                                     
42 Bahrain Promotions and Marketing Board (undated a).
43 WTO document G/ADP/N/53/ZAF, 15 October 1999.
44 Ministry of Oil and Industry (undated).Bahrain WT/TPR/S/74
Page 45
Bahrain Telecommunications Company (Batelco).  Monopolies are, however, subject to elimination
under Amiri Decree No. 18 of 1975.  Competition policy is being considered in the context of
consumer protection legislation.
Table III.8
Commercial incorporation options
Type of company Characteristics
Up to 100% foreign equity allowed
Branch office Branch office of a foreign company;  may conduct full business operations and obtain import
licences.  The branch office may be set up with the permission of the Ministry of Commerce
provided that the activities of the branch office are not covered by categories included in
"commercial agencies".  The branch office is required to have a Bahraini sponsor except if it is
being established as a regional distribution centre for goods or services.
Exempt company (offshore) –residentJoint-stock company with a minimum capital requirement of BD 20,000 although the Ministry
of Commerce may place higher capital requirements.  The company would be incorporated for
25 years, which may be extended by the Ministry of Commerce.  Other requirements are that adeposit of BD 5,000 must be paid to the Bahrain Monetary Agency;  the head office must be in
Bahrain;  business should be conducted exclusively offshore;  and the company may not own
freehold land or buildings in Bahrain.
Exempt company (offshore) –
non-residentJoint-stock company other than if involved in insurance, banking or fund management.
Requirements are the same as for exempt company (offshore) – resident, except that the
minimum share capital required is BD 2,500 and the deposit required is equal to 1% of thecapital with a minimum BD 200.
Joint stock company (closed) A share holding company whose shares are not offered for public subscription, which must
have at least five promoters.  The minimum capital requirement is BD 200,000.  Up to 100%
foreign equity may only be held in industrial companies or in service providers using Bahrainas a regional centre for distribution of goods and services.  Such companies may be exempt
from the minimum capital requirement.
Limited liability company (WLL) A limited liability company must have a fully paid up minimum share capital of BD 10,000;
may not issue public shares or negotiable warrants, or conduct savings, banking or investmentactivities.  Up to 100% foreign equity is allowed in industrial companies or service providers
using Bahrain as a regional centre for distribution of goods and services.  In addition, although
foreign ownership by individuals is permitted, the Government prefers investment by
companies;  there must be between two and fifty shareholders of the company.
Representative office A representative office is allowed only to represent the interests of its company and not to
transact business directly with its clients or obtain import licences.  Representative offices may
not be established if their activities are covered under categories included in "commercial
agencies".
Up to 49% foreign equity allowed
Joint stock company (public) Public joint-stock companies are usually formed for a specific project and are incorporated for
the duration of the project.  Permission must be obtained from the Ministry of Commerce and
the Council of Ministers, following which a decree by the Amir must be issued, to allowforeign participation in the company.  The minimum capital stock required is BD 500,000, of
which a maximum 49% may be foreign owned.
Partnership Partnerships are generally restricted to professional consultancy or advisory services, including
branches of partnerships already established abroad.  Participation by foreigners is permitted,
subject to the consent of the Council of Ministers.
Simple commandite company Consists of partners with unlimited liability and partners with liability limited to the extent of
their capital contributions.  The company should be on the Commercial Registry and should
contain an adequate description of the share capital of sleeping partners while not necessarilynaming them.  Sleeping partners may, however, only be Bahraini;  in addition, the share of
Bahraini partners should not be less than 51% of the total equity of the company.
Source: Bahrain Promotions and Marketing Board, Formalities for Company Registration.
84. On 1 April 1998, Bahrain amended its Commercial Agency Law to end commercial agency
monopolies.  The new legislation allows foreign companies and exporters to Bahrain to appoint more
than one distributor of their products in Bahrain.WT/TPR/S/74 Trade Policy Review
Page 46
(iii) Public sector companies and privatization
85. The public sector is one of the largest employers in Bahrain.  It includes the Central
Government;  the General Organization for Social Insurance (GOSI), a pension fund for private sector
employees and a workers' compensation fund for expatriates in the public sector;  ten municipalities;
and several public sector companies.  According to statistics from the Directorate of Research and
Social Assistance, approximately 15% of the nation al workforce was employed by the public sector
in 1998, of which Bahrainis accounted for around 77%.  Although it is difficult to estimate the size of
public sector companies, their contribution to th e economy is significant:  ALBA and BANOCO (now
part of BAPCO), two state-ow ned companies, dominate production in aluminium and petroleum,
respectively, which together account for around 20% of GDP.  For a number of reasons, including a
need to increase the private sector's contribution to investment and economic growth, and to diversifythe economic base, the Government has increasingly deemed it important to reduce gradually the
public sector's role in economic activities.  This has become more evident during the last decade, with
relatively lower energy prices contributing to higher unemployment, especially among Bahrainis.
45
86. Although there are no laws or statutes relating specifically to privatization, the Government is
of the view that the role of the State needs to be redefined as that of a policy maker and regulatorrather than producer of marketable products.  In this regard, steps have been taken to gradually allow
government agencies to use the private sector for specific activities, such as printing and vehicle
maintenance and repair.  In addition, the Government has begun to reduce its stake, in an ad hoc
manner, in some government-run projects and state-owned companies, including a dates project, a
dairy project, industrial fisheries, and the slaughter house.  Disinvestment in the services sector
appears to be most advanced;  the Government has sold its stake in five service companies since 1989;
the companies are Bahrain Cinema Company;  Bahrain Hotels Company;  Bahrain TourismCompany;  Marina Club;  and the National Ho tels Company.  Other companies include BANZ
(imports of frozen meat);  Trafco (imports and distribution of food);  Import and Export Company
(imports of cement etc.);  Bahrain Aluminium Ex trusion Company;  Bahrain Atomizer;  and Bahrain
Cold Storage Company.  Details of the percentage of the Government's stake sold in these companies
are not available.
87. In addition, programmes are in various stages of planning or implementation to privatize
infrastructure, including electricity, water and sewerage, the airport and ports;  government
programmes such as government bus transportation and the Maintenance Directorate, and public
sector companies, such as in telecommunications and banking.  The Government has also begun to
contract out various services such as tug boat operations, transport of teachers, and cleaning andmaintenance, and intends to further deregulate other sectors including education, television, and
health, in which private investment is now permitted.
(iv) Incentives
(a) Subsidies
88. In 1997, Bahrain notified to the WTO Committee on Subsidies and Countervailing Measures,
the Human Resource Development Support Programm e in the Manufacturing Sector (HRDS).  The
HRDS provided:  incentives for the employment of Bahraini personnel
46;  a rebate of up to 50% on
                                                     
45 The overall unemployment rate is 2%, (Bahrainis and expatriate workers, the latter forming around
49% of the total labour force);  however, the Directorat e of Research and Social Assistance has estimated that
around 6% of Bahrainis are unemployed (Chapter I(1)).
46 The annual subsidy for employment of Bahraini nationals is BD 1,000 (around US$3,000) per
employee in existing industries;  BD 4,500 in pioneering industries;  and BD 3,000 in downstream industries.Bahrain WT/TPR/S/74
Page 47
power charges;  free rent in government industrial areas;  and exemption from duty on imports of raw
material and semi-finished goods.47  Bahrain's notification indicated the subsidy's availability to all
manufacturing industries fulfilling the condition of employing a certain percentage of Bahraini
personnel, through an annual cash grant up to a maximum of 40% of the company's value added.  Its
duration was for a maximum period of three years from the end of 1994 for existing industries and for
three years from the end of 1995 for new pioneering or downstream industries.
89. The purpose of the subsidy, according to the 1997 notification, was to increase employment
opportunities for Bahraini nationals and to encourage investment in the manufacturing sector.
Participation in the programme is open to companies with a value addition of at least 40%, in the year
previous to their qualification, in Bahrain and total capital of up to BD 10 million (around
US$30 million).  Companies qualifying under the programme also had to guarantee a minimum 10%annual wage increase for Bahraini employees;  contribute to the Government Organization for
Social Insurance for all employees;  ensure that the percentage of nationals employed was not less
than 30% of the total (at least 15% for the firs t year for new pioneering and downstream industries
and 25% in the subsequent two years);  and export at least 15% of annual production (25% for new
pioneering and downstream industries) or develop a new product for export by the end of the third
year of production.  Bahrain's notification covered the period up to 30 June 1997.
90. On 20 July 2000, Bahrain notified the Committee on Subsidies and Countervailing Measures
that the HRDS programme was terminated at the e nd of 1998.  Subsidies presently provided in the
industrial sector are free entry of machines, equipment and raw material;  a reduction in electricity
tariffs from 16 fils per k/h to 12 fils per k/h for investors in the industrial sector and a two-years free
rental for land in the industrial zones.
48
91. The Government currently provides food support, for flour and meat, which is available to all
persons in Bahrain.  It appears to involve the sale of these products at below market prices, although,
non-subsidized meat products, priced substantially hi gher, are also available to consumers.  Similar
supports for sugar and rice were removed in 1993.  Expenditure on the measure, according to the
Government's 1999 Budget, is around BD 3.3 million, equivalent to about 0.5% of the Budget.
92. Domestic agricultural production is also subsidized;  the Government provides most inputs,
such as material for irrigation, pesticides, and poultry feed, at below market prices to farmers.  Other
inputs, such as electricity, water and sewerage services are also provided at below market cost to all
consumers (section (b) below).
(b) Pricing and marketing arrangements
93. Prices of petroleum products and natural gas are set by the Government;  some effort has been
made in recent years to raise the price of natural gas products, which, nevertheless, remain below
international prices (Chapter I(1)(i)).  In additi on, prices of products included in the food support
scheme, flour and meat, are administered.
94. Rates for utilities, such as electricity, water and sewerage services, are at less than economic
cost.  Sewerage services are provided free of charge, and electricity rates are reported to besubstantially below break-even costs of production.  In addition, water appears to be supplied free of
charge to farmers, although there are plans to begin charging a nominal rate of BD 0.05 per cubic
metre for the supply of ground water to farmers (Chapt er IV(2)).  According to the authorities, there
are plans to phase out these subsidies in the future.
                                                     
47 WTO document G/SCM/N/3/BHR, 25 August 1997.
48 WTO document G/SCM/N/38/BHR, 26 July 2000.WT/TPR/S/74 Trade Policy Review
Page 48
95. Although there are no explicit restraints on marketing and distribution, petroleum and natural
gas distribution and retail is carried out only by the state-owned company BANOCO (now merged
with BAPCO).  In addition, in the aluminium sector , Bahrain's largest industry, distribution activities
are carried out by the majority state-owned company BALCO, which markets the output of Bahrain's
only aluminium refinery.
(c) Tax incentives
96. In general, Bahrain has no personal income or corporate taxes.  However, petroleum and gas
companies are subject to a tax of 46% on income derived from the sale of processed or
semi-processed products manufactured from natural hydrocarbons in Bahrain, and from the sale of
raw materials if produced in Bahrain.49  There is no sales tax but there is a 5% tax on hotels, which,
according to the authorities, is used to fund tourism promotion.
(v) Performance requirements
97. Bahrain has not notified any trade-related investment measures (TRIMs) to the WTO.
Information available to the Secretariat suggests that export performance and local-content
requirements were specified in assistance programmes, such as the HRDS (section (iv)(a)).50  On 20
July 2000, the authorities notified removal of the programme at end 1998 (section (iv)(a) above).Under the Industries Support and Protection Law Legislative Decree 11 of 1985, tariff protection of
up to 20% is provided for industries if they fu lfil certain local-content and equity requirements
(section (2)(ii)(a)).
(vi) Intellectual property rights
(a) Introduction
98. Once ratified by the Amir, all Bahrain's international treaty obligations supersede domestic
legislation.  Thus, when Bahrain became a found ing member of the WTO, the WTO Agreement on
Trade-Related Aspects of Intellectual Property righ ts (TRIPS) took precedence over existing national
law.  The authorities are currently in the process of updating national legislation to bring it into
compliance with the TRIPS Agreement.  In this  regard, Bahrain is working with the World
Intellectual Property Rights Organization (WIPO) to amend its legislation on patents, industrial
designs, trade marks and service marks, unfair competition, integrated circuits, and plant varieties.
99. Bahrain is also a member of the Paris Convention for the Protection of Industrial Property
Rights and the Berne Convention for the Protection of Literary and Artistic Works, both of which it
joined in 1996.
(b) Patents, trade marks, and industrial designs
Patents100. Patents are granted for a period of 15 years, from the date of filing, under the Patent, Design
and Trademark Law, 1955, as amended by Ministerial Decree No. 22, 1977 and its accompanying
regulations (Table III.9).  The legislation includes both product and process patents,  The patent may
be renewed for five years if it is deemed to be of special importance and not to have realized revenue
proportionate to the expenditure incurred in developing the innovation.
                                                     
49 Ernst and Young (1999).
50 WTO document G/SCM/N/3/BHR, 25 August 1997.Bahrain WT/TPR/S/74
Page 49
Table III.9
Summary of intellectual property rights protection in Bahrain corresponding to its TRIPS obligations
IPR Main legislation Duration of protectionMinimum duration of protection
under TRIPS
Copyright Legislative Decree
No. 10 of 1993Life of author plus 50 years;  for
computer software, 50 years from
date of completion of work or40 years from date of publication,
whichever is earlierLife of author plus 50 years
Patents Patents, Designs and
Trade Marks
Regulations;  amended
by Legislative Decree
No. 22 of 197715 years from date of filing;
five year extension possible20 years from date of filing
Industrial designs Patents, Designs and
Trade Marks
Regulations;  amendedby Legislative Decree
No. 22 of 1977Five years, renewable for two terms
of five years eachTen years
Trade marks Legislative Decree
No. 10 of 1991Ten years, renewable indefinitely for
periods of ten yearsAt least seven years;  renewable
indefinitely
Geographical
indicationsNone None Unlimited
Layout designs for
integrated circuitsNone None Ten years from first commercial
exploitation
Confidential data/test
dataNone None No specific period
Source: Information provided by the authorities.
101. Patents are filed with the Industrial Property Office in the Directorate of Agencies and
Industrial Property in the Ministry of Commerce.  There appear to be no examination procedures;
patents examined and subsequently granted by the Patent Office of the Gulf Cooperation Council,
based in Riyadh, Saudi Arabia are automatically registered in Bahrain without further examination
(Box III.1).  The following persons may apply for a patent in Bahrain:  Bahraini nationals, foreign
companies or individuals registered in Bahrain, nationals of countries that have reciprocalarrangements with regard to intellectual property rights with Bahrain, and government departments.
51
Box III.1:  The Gulf Cooperation Council Patent Office
The Unified Patent Law for the Gulf Cooperation Council (GCC) member States was issued by the
Supreme Council of the GCC in December 1992 and its accompanying implementing regulations in 1996.The Patent Office, based in Riyadh, Saudi Arabia, began accepting patent appli cations on 3 October 1998.
Applications for patents are examined for their novelty and, if approved, the patent is granted for 15 years
from date of grant, extendable for another five years.  Applications made individually in any of the GCC
States must be withdrawn once an application is made to the GCC Patent Office.
If the patent has not been exploited in the GCC countries within two years of being granted, the Patent
Office may grant a compulsory licence for exploiting the patent to any applicant capable of exploiting thepatent.  In some cases, the patent holder may be granted an extension of the two-year period before
compulsory licensing may be permitted, from the Patent Office.
Source : Mondaq online information, "Bahrain:  GCC Patent Office – General" Available at:  
www.mondaq.com/article [10 January 2000].
                                                     
51 Article 9 of Amiri Decree No. 22 of 1977.WT/TPR/S/74 Trade Policy Review
Page 50
Trade marks
102. Trade marks are protected under Legislative Decree No. 10 of 1991, which replaced the
section on trade marks in the Patent Design and Trademark Law, 1955.  Under Legislative
Decree No. 10 of 1991, registration of trade marks is valid for a period of ten years, renewable
indefinitely for single periods of ten years each.52  All Bahrainis involved in commercial projects in
Bahrain, foreigners residing in Bahrain and having authorization to engage in commercial, industrialor vocational business activities, citizens of foreign countries granting reciprocal rights to Bahraini
nationals applying for trade mark protection, and public interests, may apply for trade marks under the
law.
53  Foreign applicants must prove registration of the trade mark abroad by including a certified
copy of the foreign registration.  Applications for trade marks are normally published in the
Official Gazette  for a period of 60 days to allow for opposition or comment.  The trade mark may be
cancelled if it is not used within a period of two years from registration.
Industrial designs
103. Industrial designs are protected under the Patent, Design and Trademark Law, 1955 and
Amiri Decree No. 22 of 1977.  Under the 1977 amendment, designs may be registered for a period of
five years, renewable for two terms of five years each.  Applications for industrial designs may bemade by Bahraini nationals or companies;  foreign companies registered in Bahrain;  foreign nationals
(in Bahrain and abroad) of countries with which Bahrain has reciprocal agreements;  and Government
departments.
54
(c) Copyright
104. Bahrain's copyright law is Legislative De cree No. 10, 1993.  The law extends copyright
protection, including for computer software, to Bahr aini and Arab authors who are nationals of States
that have ratified the Arab Copyright Protection Agreement of 1958, and are publishing for the firsttime in one of the member States;  the authorities have indicated to the Secretariat, in the course of
preparing this Report, that the law applies to all nationals.
55  In any event, other foreign authors may
apply for copyright protection under this law if their work is being published for the first time in
Bahrain.  The copyright law offers protection for up to 50 years after the death of the author;  for
computer software, protection is granted for 50 year s from the date of completion of the work or 40
years from the date of publication, whichever is earlier.56  The registering authority is the Copyright
Protection Office (CPO) within the Ministry of Cabinet Affairs and Information.
(d) Compulsory licensing and parallel imports
105. According to the authorities, Bahrain allows compulsory licensing of intellectual property
rights under strict conditions, including that it is in the public interest and that it should not prejudicethe financial rights of the holder.
                                                     
52 As long as the applicant applies for renewal within the last year of the ten year period (Article 18).
53 Article 4 of the Legislative Decree No. 10 of 1991.
54 Article 9 of Amiri Decree No. 22 of 1977.
55 Article 43 of Legislative Decree No. 10 of 1993.
56 Protection is granted for 50 years from the date of publication for cinematographic films, applied art
works and photographs;  works published under a pseudonym or anonymous works;  works belonging to privateor public corporate entities;  works published for the first time after the authors' death (Article 31 of LegislativeDecree No. 10 of 1993).Bahrain WT/TPR/S/74
Page 51
106. Under Article 13 of the Copyright Law No. 10 of 1993, compulsory licensing is permitted, if
the public interest so requires.  If, despite being formally requested to do so, the copyright holder does
not publish or republish a work, the Minister of Cabinet Affairs and Information may issue an order
authorizing the National Council for Culture, Arts and Literature to publish the work after one year
following the formal request to the copyright holder.  Fair compensation in this case must be ensured,
if necessary, through the High Court.  The copyright holder may contest the decision in the HighCourt.
107. Although there is no reference to compulsory licensing in the Patent, Design and Trademark
Law, compulsory licenses may be granted by the G CC Patent Office, which grants GCC-wide patents.
108. Parallel imports of products, according to the authorities, are allowed, except if the imported
goods violate intellectual property rights.  According to the authorities, this is dealt with byadministrative action.  However, it is planned that new legislation will have the relevant provisions.
(e) Penalties and enforcement
109. Under Part V of the Bahrain Patent, Design and Trademarks Law, 1955, infringements of
patents, industrial designs and trade marks are liable to challenge in a Court of Law, and persons
found guilty of infringement are liable to pay any damages awarded by the Court.  This includesimprisonment not exceeding 12 months and/or a fine of not more than BD 150 (around US$400).
57
The new Trademarks Law enacted in 1991, however, appears to reduce the penalty for trade markinfringements to a period of imprisonment not exceeding 12 months or a fine of up to BD 100.
58  A
recurrence of such infringement is punishable by no more than double the maximum limit of the
prescribed time of punishment, and may include closing the offender's business premises for a period
of between 15 days and six months.59  The authorities may not seize material ex officio and must wait
for reports of alleged violations before acting, including obtaining a court order to receive assistancefrom the police.
110. For copyright offences, a maximum penalty of imprisonment of one year and/or a fine not
exceeding BD 1,000 may be imposed through the courts.
60  The court may also order the confiscation
and destruction of the pirated goods and the tools and facilities used to pirate or sell the good.
Significant steps have been taken since September 1997 to stop violations of copyrights.  As a result,according to the authorities, piracy has declined from 90% to 30%.
111. Enforcement was stepped up initially through media campaigns to educate the public,
followed by a warning period of two months to businesses and retailers to remove all pirated goods
from their premises.  Since then, continuous monitoring by the Copyright Protection Office both in
Bahrain and, in cooperation with the Customs Directorate, at the border, has ensured a decline in ratesof piracy.  The Office has been granted significan t powers, including joint powers with the police to
arrest alleged infringers and confiscate goods suspected of violating copyright laws.  According to the
authorities, the Office may also act in an ex-off icio capacity in taking action against alleged
infringers.
                                                     
57 Article 54(1).
58 Article 31 of Legislative Decree No. 10 of 1991.
59 Recurrence in this case is defined as infringement by a person convicted for a period of six months or
more within five years of committing the second offence (Article 32).
60 Article 37 of Legislative Decree No. 10 of 1993.