WT/REG219/3  
 
18 March 2015  
(15-1570)  Page: 1/7  
Committee on Regional Trade Agreements  Original: English  
 
 FREE TRADE AGREEMENT BETWEEN THE UNITED STATES  
AND THE KINGDOM OF BAHRAIN  
(GOODS AND SERVICES) 
QUESTIONS AND REPLIES 
 The following communication, dated 17 March 2015, is being circulated at the request of the 
delegations of the United States and the Kingdom of Bahrain. 
 
_______________ 
  
 This document reproduces the questions addressed to the Parties and the responses 
submitted. 
 
Questions from the delegation of Canada 
 
1.1.  Paragraphs 4.2 and 4.3: Note that Mode 3  (commercial presence) is not covered by 
the US – Bahrain FTA. Rather, the FTA defers to the previously signed United States – 
Bahrain Bilateral Investment Treaty (BIT) to  govern commercial presence. As all four 
modes are not covered by the FTA, Canada requ ests clarification on the elements of the 
previously signed BIT that enable the FTA to  satisfy the conditions stipulated by GATS 
Article V: 1(a).  
 As noted in paragraph 4.3 of the Factual Pr esentation, the 1999 United States-Bahrain BIT 
obligates Parties to accord national treatment and most-favoured-nation treatment with respect to 
the establishment, acquisition, expansion, management, conduct, operation and sale or other 
disposition of covered investments. Investments ar e defined broadly under the BIT, as "every kind 
of investment owned or controlled directly or indirectly by [a national or company of a Party]." 
Forms of investment covered by the BIT expressly include "a company" and "shares, stock, and 
other forms of equity participation … in a company," while the term "company" is defined as "any entity constituted or organized under applicable law … and includes, but is not limited to, a corporation, trust, partnership, sole proprietorsh ip, branch, joint venture, association, or other 
organization." As in the United States-Bahrain FTA, the BIT follows a "negative-list approach," 
whereby the obligations on national treatment and most-favoured-treatment apply to all sectors and activities, except where specific exceptions have  been negotiated by the Parties. Exceptions to 
national treatment and most-favoured-nation treatment scheduled by Bahrain and the 
United States in the BIT are indicated in Table 4.1 of the Factual Presentation.  
1.2.  Paragraph 4.32, there is a referenc e to the competition provisions of the 
Agreement; however, there is no distinct explanation of the Agreement's competition 
provisions. Are there competition provisions  in the Agreement? If so, could the WTO 
Secretariat please provide a description of the elements included in the provisions? 
 The U.S. – Bahrain FTA does not include general provisions on competition policy but does 
include some telecommunications-specific provisions aiming at constraining anticompetitive conduct in that sector. 
 
  
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  Questions from the delegation of Malaysia 
 
Trade in Goods 
Subsidies and State-aid  
 1.3.  While Article 2.11 prohibits export subs idies on any agricultural products in trade 
between the Parties, is there any article/clau se in the FTA which provides an extension 
of prohibition of Government subsidies in sp ecific industries such as agriculture? Are 
there instances where Party had invoked this Article to address "state aid"? 
 No to both questions. 
 
General Provisions of the Agreem ent Affecting Goods and Services 
Institutional Framework  
 
1.4.  The Parties discussed initiatives to monitor implementation and compliance with 
the labour and environmental obligations of the Agreement and additional cooperative efforts on labour rights and environmental protection. In this relation, with the on-going 
U.S.-Bahrain Joint Committee (JC) meetings, will there be a separate agreement (i.e. an 
extension to the current FTA) on labour and environment? 
 Although there are ongoing discussions regard ing labor matters and commitments under the 
FTA Labor Chapter and its Annex on Labor Cooperation, the Parties have no plans to create a 
separate agreement or extension of the agreement for labor issues. Regarding environment, as 
noted in paragraph 5.41 of the report, the Parties have already entered into a Memorandum of Understanding on Environmental Cooperation, which identifies priority topics for ongoing and 
future environmental cooperation and establishes an institutional body to oversee bilateral 
environmental cooperation. The Parties do not anticipate entering into other environmental agreements related to the FTA. As with the Ag reement as a whole, the labor and environment 
chapters and obligations of the Agreement do not expire and therefore do not need to be 
extended.   Question from the delegation of Peru 
 1.5.  Paragraph 5.3: The customs authoritie s of each Party must also provide written 
advance rulings prior to import, at the request of an importer, exporter or producer in 
the other Party, on matters relating to inter alia  tariff classification, customs valuation 
criteria, duty drawback, and qualification of the good as originating. The advance 
rulings, which are valid for three years unless there is a change in facts or 
circumstances on which the ruling was based,  must be issued within 150 days of a 
request, provided that the requester ha s submitted all the necessary information 
(Article 5.10). The advance ruling requirement applies to Bahrain as of two years from 
implementation of the Agreement (Article 5.10.9).  
 Advance rulings are valid for three year unless there is a change in facts or 
circumstances. Is it possible an immediate renewal?  
 The Agreement does not provide for renewal. 
Questions from the delegation of Thailand 
 
Rules of Origin 
 
1.6.  Paragraph 3.27 of the Report indicated that "The Agreement provides for bilateral 
cumulation both in terms of processing oper ations and the value of materials produced 
in the Parties' territories (Artic le 4.4). In light of the Partie s' desire to promote regional 
integration in the Middle East, at a time to be  determined by the Part ies, they shall enter 
into discussions to determine the extent to  which goods produced in the region can 
count towards meeting the Agreement's origin requirement as a step towards this goal 
of regional integration (Article 4.13)." WT/REG219/3 
 
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   Thailand would like to seek greater inform ation that since the US-Bahrain FTA has 
been implemented on 1 August 2006, whether the Parties have ever started a discussion 
on regional rules of origin cumulation. If yes, please kindly pr ovide more information 
regarding such matter.  
 
 The Parties had discussions regarding possible options for regional cumulation which raised a number of technical questions that needed to be addressed.  
 
Safeguard mechanisms 
Bilateral safeguards 
 
1.7.  Paragraph 3.38 of the Report stated that a bilateral safeguard measure may be 
applied if an originating good is imported in  such increased quantities and under such a 
condition that the imports constitute a subs tantial cause of serious injury, or threat 
thereof, to a domestic industry. 
 Could the United States and Bahrain please clarify how the investigating 
authorities evaluate/determine what cause is considered to be substantial to the point 
at which a bilateral safeguard measure should be applied? 
  As Thailand may be aware, as of this time, there have been no bilateral safeguard investigations conducted by the U.S. and Bahraini competent authorities under Chapter 8 of the 
FTA. Thus, we cannot refer you to any written reports from the investigating authorities of either 
FTA party that explain the approach taken in an ac tual case in evaluating and determining whether 
increased imports constitute a substantial cause of serious injury, or threat thereof to a domestic 
industry.
 
 
 In the absence of written reports from the competent authorities, we would call your 
attention to the text of Chapter 8 of the FTA. The text sets out definitions of key terms that relate 
to the conditions that the competent authorities must find to be satisfied in order to apply a safeguard measure, and also sets out the substantive and procedural requirements that the competent authorities must satisfy in making a determination and applying a safeguard 
measure. Article 8.5 defines the terms "substantial cause," "serious injury," and "threat of serious 
injury." Article 8.2 incorporates into and makes pa rt of the FTA the text of Article 3 of the WTO 
Safeguards Agreement, which pertains to the conduct of investigations by competent authorities, 
the reports the competent authorities must publ ish that set out their findings and reasoned 
conclusions on all pertinent issues of fact and law, and the protection of confidential 
information. Article 8.2 also incorporates and makes part of the FTA the text of Articles 4.2(a) and 
(c) of the WTO Safeguards Agreement that sets out the factors the competent authorities must 
consider and the detailed analysis of the case that they must provide in their report.   Trade in Services 
Scope and definitions 
 1.8.  Paragraph 4.2 of the Report indicated that "However, pursuant to Article 10.1.3, 
provisions on market access (Article 10.4) , domestic regulations (Article 10.7), and 
transparency (Article 10.8) apply to "measu res of a Party affecting the supply of a 
service in its territory by a BIT investment." 
 Refer to the Article 10.1 (Scope and Co verage) under the US-Bahrain FTA, please 
provide more details in general practice, including pros and cons of applying its 
provisions on market access, domestic regu lations and transparency to "measures of a 
Party affecting the supply of a service in it s territory" under the BIT between the US and 
Bahrain. 
  Paragraph 3 of Article 10.1 of the FTA prov ide that the market access (Article 10.4), 
domestic regulation (Article 10.7), and transparency (Article 10.8) obligations of the FTA's chapter 
on Cross-Border Trade in Services shall apply to services supplied through a BIT investment (i.e., services supplied through a commercial presence). The purpose of this paragraph is to 
ensure that these disciplines apply with respect to services supplied through any mode of supply, 
including mode 3, which is otherwise not covered by the scope of the Cross-Border Services chapter. The application of these types of di sciplines across all modes of supply is common WT/REG219/3 
 
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  practice in regional trade agreements, as well as a feature of the General Agreement on Trade in 
Services.  Transparency 
 1.9.  Paragraph 5.1 of the Report indicated that "Article 17.1 requires the Parties to 
promptly publish or make publicly availabl e their laws, regulations, procedures, and 
administrative rulings of general applicatio n. The Parties must also, to the extent 
possible, notify each other of any proposed or actual measure that might materially 
affect the operation of the Agreement or subs tantially affect the interests of the other 
Party (Article 17.2.1). Even if a Party does not notify a measure to the other Party, that 
other Party can request information on th at measure and should receive a prompt 
response (Article 17.2.2). A review and a ppeal mechanism shall be established or 
maintained through impartial and independent judicial, quasi-judicial, or administrative 
tribunals (Article 17.4.1)." 
a. Please advise whether failing to carry out the obligation under Article 17.2.1, 
namely the notification of any prop osed or actual measure that might 
materially affect the operation of the Agreement or substantially affect the 
interests of the other Party, would be subject to the dispute settlement 
mechanism under the Agreement. 
 According to Article 19.2: SCOPE OF APPLICATION, which states that: 
 
 "Except as otherwise provided in this Agreement or as the Parties agree otherwise, this 
Chapter shall apply with respect to the avoidance or settlement of all disputes between the Parties regarding the interpretation or application of this Agreement or wherever a Party 
considers that: 
 (b) the other Party has otherwise failed to carry out its obligations under this Agreement".   The failing to carry out the obligation under Article 17.2.1, namely the notification etc. would 
be subject to the dispute settlement mechanism under the Agreement. 
 
b. Please advise the basis for the determ ination as to whether a measure falls 
under the scope of Article 17.2.1. Does the Agreement set out the definitions 
for the terms "materially affect the operation of the Agreement" and 
"substantially affect the interest of the other Party"? 
 The definitions for the terms "materially a ffect the operation of the Agreement" and 
"substantially affect the interest of the other Party" are subject to the assessment of the parties 
and their constituent operators under the Agreem ent, and the judgment about such contentions 
would be dealt with through the different processes of dispute settlement as stipulated in 
Article 19 of the Agreement. 
 Institutional framework 
 
1.10.  Paragraph 5.9 of the Report indicate d that "The functions of the Joint Committee 
are: review of the general functioning of the Agreement; review and consideration of 
specific matters; settlement of disputes, in cluding through consultation; consideration 
and adoption of any amendment or other modi fication to the Agreement; consideration 
of ways to further enhance trade relations; and cooperation between the Parties."  
 Please clarify the role of the Join t Committee in settlement of disputes. 
 
 The role of the Joint Committee in settlement  of disputes could be summed up as follows: 
 1. Article 19.6: Referral to the Joint Committee: 
"If the consultations fail to resolve a matter within 60 days of the delivery of a Party's request 
for consultations under Article 19.5, 20 days where the matter concerns perishable goods, or such other period as the Parties may agree, either Party may refer the matter to the Joint 
Committee by delivering written notification to the other Party. The Joint Committee shall 
endeavor to resolve the matter ." WT/REG219/3 
 
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  2. Article 19.7: Establishment of Panel 
"1. If the JOINT COMMITTEE has not resolved a ma tter within 60 days after delivery of the 
notification described in Article 19.6, 30 days where the matter concerns perishable goods, or such other period as the Parties may agree, the complaining Party may refer the matter to a 
dispute settlement panel by delivering written notification to the other Party." 
And, 
"4. The panelists chosen pursuant to paragraph 3 shall: 
 (c) comply with a code of conduct to be established by the Joint Committee." 
 
3. Article 19.11: Non-Implementation 
"6. Unless the JOINT COMMITTEE decides otherwise, a monetary assessment shall be paid to the 
complaining Party in U.S. currency, or in an equi valent amount of Bahraini currency, in equal, 
quarterly installments beginning 60 days after the Party complained against gives notice that 
it intends to pay an assessment. Where the circumstances warrant, the Joint Committee may 
decide that an assessment shall be paid into a fund established by the Joint Committee and 
expended at the direction of the JOINT COMMI TTEE for appropriate initiatives to facilitate 
trade between the Parties, including by further reducing unreasonable trade barriers or by 
assisting a Party in carrying out its obligations under the Agreement."  
 
4. Article 19.12: Non-Implementation in Certain Disputes: 
"4. Assessments shall be paid into a fund established by the JOINT COMMITTEE and shall be 
expended at the direction of the Joint Committee for appropriate labor or environmental 
initiatives, including efforts to improve or enhance labor or environmental law enforcement, as the case may be, in the territory of the Party complained against, consistent with its law. In 
deciding how to expend monies paid into the fund, the JOINT COMMITTEE shall consider the 
views of interested persons in each Party's territory." 
 
Dispute Settlement  
 
1.11.  Chart 5.1 Synopsis of the Agreement's dispute settlement provisions. 
 What is the criteria for the Panel dete rmination of the amount of the monetary 
assessment? Please advise whether the losi ng Party may opt for monetary payment in 
lieu of full compliance.   
 The Panel determines the amount of monetary assessment in certain disputes, as stipulated 
in Article 19.12 of the FTA:  "Article 19.12: Non-Implementation in Certain Disputes:   
1. If, in its final report, a panel determines that a Party has not conformed with its obligations 
under Article 15.2.1(a) (Application and Enforcement of Labor Laws) or Article 16.2.1(a) (Application and Enforcement of Environmental Laws), and the Parties:  (a)  are unable to reach agreement on a resolution pursuant to Article 19.10.1 within 45 
 days of receiving the final report; or 
 (b)  have agreed on a resolution pursuant to Article 19.10.1 and the complaining Party 
 considers that the other Party has failed to observe the terms of the agreement,  
 the complaining Party may at any time thereafter request that the panel be reconvened to 
impose an annual monetary assessment on the other Party. The complaining Party shall deliver its request in writing to the other Party. The panel shall reconvene as soon as 
possible after delivery of the request. 
 
2. The panel shall determine the amount of the monetary assessment in U.S. dollars within 
90 days after it reconvenes under paragraph 1. In determining the amount of the assessment, the 
panel shall take into account: 
 (a) the bilateral trade effects of the Party's fa ilure to effectively enforce the relevant law; 
 (b) the pervasiveness and duration of the Part y's failure to effectively enforce the relevant 
  law; 
 (c) the reasons for the Party's failure to effectively enforce the relevant law;  (d) the level of enforcement that could reasonably be expected of the Party given its 
  resource constraints; 
 (e) the efforts made by the Party to begin remedying the non-enforcement after the final 
  report of the panel; and  (f) any other relevant factors. WT/REG219/3 
 
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   The amount of the assessment shall not exceed 15 million U.S. dollars annually, adjusted for 
inflation as specified in Annex19-A."   As for the question of  "whether the losing Party may opt for monetary payment in lieu of full 
compliance" , please note that for trade related disputes as described in Article 19.11 
(Non-Implementation) the resolution of a dispute is mutually agreed between both Parties. As for non-implementation in certain disputes related to obligations  under Article 15.2.1(a) 
(Application and Enforcement of Labor Laws) or Ar ticle 16.2.1(a) (Application and Enforcement of 
Environmental Laws), disputes are mutually settled between the Parties in accordance with Article 19.12.  
Government Procurement  
General Provisions 
 1.12.  Footnote 35 of the Report indicated th at "The United States is a member to the 
WTO Government Procurement Agreement (GPA ) since its entry into force (1 January 
2006), while Bahrain is an observer." 
 Bahrain is currently an observer to the WTO Committee on Government 
Procurement. Will and when Bahr ain decide to join as a me mber to the WTO Government 
Procurement Agreement?   
Bahrain is not yet considering joining as a member to the WTO Government Procurement 
Agreement.  
 
1.13.  Table 5.2 Procurement of services excluded by the scope of the Agreement. 
 Table 5.2 shows procurement of services excluded by the scope of the Agreement, 
and "Research and Development" is one of se rvices excluded by both Parties. Please 
clarify the definition and inclusiveness of services under "Research and Development".  
  Both parties exclude all research and development services procured by covered entities.  
 
Tendering Procedures 
 
1.14.  Paragraph 5.25 of the Report indicated that "The provisions of the Agreement 
apply for the United States to the same 52  central government and 7 other entities 
(List A and List B entities, respectively) as  listed in its WTO GPA Appendix 1. Bahrain 
listed 28 central governmental entities and 17 other entities (only List A entities)." 
 Paragraph 5.25 mentions "List A and List B entities". Please clarify what criteria 
using for differentiating List A entities and List B entities. Why while the United States 
include both List A and List B, Bahrain only include List A entities?  
 
  Other Entities, Annex 9-A-2, describes both List  A and List B entities. List A entities are 
subject to a $250,000 threshold for procurements of  goods and services while List B entities are 
subject to an adjustable $538,000 threshold. The United States has scheduled both List A and List B entities while Bahrain has scheduled only List A entities.  
Other 
Labour 
 1.15.  Paragraph 5.35 of the Report indica ted that "Under Chapter 15 on labour, the 
Parties reaffirm their obligations as member s of the International Labour Organization 
(ILO), and strive to ensure that their labo ur laws are consistent with internationally 
recognized labour rights and are enforced  through appropriate access to tribunals 
(Articles 15.1 and 15.3)." 
 
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  a. In order to reaffirm the Parties' obligations as members of the International 
Labour Organization (ILO), whether the Pa rties have to ratify all of the eight 
core conventions under ILO Declaration on Fundamental Principles and Rights 
at Work or not? 
 Under the Labor Chapter, the Parties reaffirm their obligations as members of the ILO. ILO 
members are not obligated to ratify conventions, but the ILO Declaration on Fundamental Principles and Rights at Work states that ILO members are obligated to respect, promote and 
realize the principles concerning fundamental labor rights. 
 
b. Could you please elaborate the defini tion and scope of "internationally 
recognized labour rights"? Whether it is  beyond the labour standards of ILO or 
not? If yes, please kindly clarif y and give some example on this.  
 The internationally recognized labor rights in the trade agreement are: the right of 
association; the right to organize and bargain collectively; a prohibition on the use of any form of 
forced or compulsory labor; labor protections fo r children and young people, including a minimum 
age for the employment of children and the prohibition and elimination of the worst forms of child labor; and, acceptable conditions of work with respect to minimum wages, hours of work, and 
occupational safety and health. The ILO has norms and standards in all of these areas. 
 
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