RESTRICTED  WORLD TRADE  
ORGANIZATION  WT/TPR/G/185 
13 June 2007  
 
(07-2402) 
Trade Policy Review Body Original: English 
   
 
  
 
TRADE POLICY REVIEW 
 
Report by 
 
BAHRAIN 
 
  
 
Pursuant to the Agreement Establishi ng the Trade Policy Review Mechanism 
(Annex 3 of the Marrakesh Agreement Establishing the World Trade 
Organization), the policy statement by Bahrain is attached. 
 
 
Note: This report is subject to restricted circ ulation and press embargo until the end of the first 
session of the meeting of the Trade Policy Review Body on Bahrain. Bahrain WT/TPR/G/185 
 Page 3 
 
 
CONTENTS 
 
  Page 
 I. INTRODUCTION 4 
 
II. NATIONAL DEVELOPMENT 5  
III. ENHANCING PRODUCTIVITY AND CAPACITY 5 
  (1) Policy Initiatives 5 
  (i) Encouraging inward investment 7 
  (ii) Developing industry 7   (iii) Building on the financial services sector 7 
  (iv) Importance of intellectual property rights 8 
  (v) Competition 8   (vi) Privatization 9 
  (vii) Human resource development 9 
  (viii) Fiscal policy 10 
  (ix) Monetary policy 10 
  (x) Stability 11  
 (2) Growth Sectors 11 
  (i) Tourism 11   (ii) Financial services 11 
  (iii) Manufacturing 12 
  (iv) Telecommunications 12   (v) e-commerce 12 
  (vi) Construction 13 
  (vii) Education 14   (viii) Healthcare 14 
 
IV. TRADE POLICY  14 
 
 (1) Bahrain and the world 14 
  (2) Bahrain and the region 15 
  (i) GCC membership 15 
  (ii) GAFTA membership 15 
  (iii) Bilateral agreements 16 
 ANNEX I:  TRADE RELATED TECHNICAL ASSISTANCE 17 
 
ANNEX II:  CONTRIBUTORS TO THIS GOVERNMENT REPORT 18  
 
 WT/TPR/G/185 Trade Policy Review 
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 I. INTRODUCTION 
1. Being the only Island States in the regi on, and having a small population and limited 
resources, Bahrain has traditionally adopted an outward  looking posture to the world at large, and has 
thrived on sea-bed pearl prospecting, sea-borne merc handising, and trans-shipment. The discovery of 
oil in the early 1930’s triggered the start of the new era.  
2. Against this background, the Bahraini population, from both genders, has become highly 
skilled, market minded, and private business orie nted. It is no accident that basic services like 
education, healthcare and  hospitality, have been  launched in Bahrain ahead of many other peer 
countries, and no wonder then that Bahrain was welc oming foreign investors as early as the first half 
of the last century, and has now fully embr aced an open market philosophy as a means of 
underpinning future economic development.  
3. Today, Bahrain is one of the major commercial centers of the world, in the heart of the 
Arabian Gulf, and with strategic access to Asian an d European markets. Bahrain is also one of the 
most attractive financial, and investment destina tions in the world, ranking high among the world’s 
freest economies and most friendly investment destinations. Almost all sectors, including 
telecommunications are completely open to forei gn investor participation, either on a 100% 
ownership basis or in joint venture. 
4. Bahrain’s strong showing in the 2007 Heritage  Foundation Index of Economic Freedom as 
being the freest economy amongst Arab countries, and ranked 39th overall in the world, is an 
indication of Bahrain’s liberal policies and practices. 
5. Bahrain’s banking system ranks on a par with de veloped countries, and is  rated in Category B 
of the Fitch Banking Sector Indicator, as a reflecti on of the quality and strength of the intrinsic 
banking system. Furthermore, current economic refo rms have encouraged international rating agency 
Standards and Poors to raise Bahrain FC ratings to (A) with (Stable) Outlook  in 2006. In addition, 
Fitch Ratings has upgraded the outlook of Bahrain from Stable to (Positive).  
6. Bahrain’s position as the banking and financial hub of the region was reaffirmed in February 
2006, with the launch of the Middle East and North Africa (MENA) Investment Centre in Bahrain. 
The centre supports the joint MENA-OECD Investme nt Programme with the involvement of 18 
countries, placing Bahrain in a pivotal regional role to assist with coordinating the investment policy research activities of the OECD in the region.  
7. The award of "Middle East City of the Future ", by the Financial Times business magazine 
FDI, is also a measure of the success of Bahrai n in creating an environment conducive to inward 
investment. 
8. Bahrain’s economic growth rate in year 2005 rose to 7.8% compared to 5.6% in the previous 
year, with GDP at constant prices increasing to US$ 9,286m from US$8612.2m in 2004. This growth 
is attributed to improvement in most non oil sectors, particularly the financial sector, 
telecommunications, manufacturing, constr uction, education and health services. 
9. As the private sector led developments focus towards a knowledge based economy built 
around a number of key high value sector clusters, desi gned to generate high-skill,  high wage jobs to 
absorb the well trained and educated labour force,  human resource development becomes of great 
importance. Already Bahrain ranks 39
th globally, and second in the Arab world in the UN Human Bahrain WT/TPR/G/185 
 Page 5 
 
 
 
 Development Index, and women conti nue to play an effective role both in business and in social and 
political life. 
10. Bahrain has used its limited oil resources to create an enabling environment under which its 
people, institutions and infrastructure have deve loped and transformed the country into a modern 
democratic nation; a nation which is welcoming a nd tolerant of all nationalities and faiths; which 
actively encourages inward investment;  a nation wh ich upholds the rule of law, and a Government 
which empowers the private sector to be the engine of growth. 
11. The period from Bahrain’s last Trade Policy Revi ew has shown significant change in terms of 
economic transformation, but the next 6 years are projected to be nothing short of remarkable. 
Underscored by the democratic process, spearh eaded by institutional re organization and economic 
reforms, Bahrain is set to stand out in the Middle East region as an example of what can be achieved 
by a small nation which has invested heavil y in its major asset, the Bahraini people. 
II. NATIONAL DEVELOPMENT 
12. The transition into a constitutional monarchy  in 2002 based on a national referendum has 
resulted in political liberalization and strong back ing for economic reform programs. Elections in 
2006 following on from those in 2002 witnessed engagement from all parties and sections of society, 
and has brought with them a shift in perceptions of what can be achieved at an individual level, with 
an amplified sense of citizenship.  
13. The commitment to openness and democracy has invigorated economic development 
strengthened Bahrain’s one family spirit, and the Go vernment has been reshap ed in order to focus on 
the private sector as the economic driving force, an d consequently has been gradually removing itself 
from involvement in the productive processes, throug h the process of privatization and divestiture.  
14. A number of public boards and intergovernme ntal committees have been established to 
ensure full integration of the private sector into  the economic development process, with the whole 
process being coordinated with the Bahrain Economic  Development Board (EDB), which is focused 
on formulating and implementing Bahrai n's economic development strategy. 
15. An efficiency drive, spearhead ed by the Civil Service Bureau, aims at strengthening the 
performance and efficiency of government depart ments, whilst at the same time the process of 
outsourcing will lead to a downsizing of Government. 
III. ENHANCING PRODUCTIVITY AND CAPACITY 
(1) POLICY INITIATIVES  
16. Increased productivity is the principle economic growth trigger which is being adopted to 
ensure sustainable development, through a marriag e of improving the use of technology, stimulating 
innovation, and creating a more productive and skilled labor force in line with market requirements. 
17. Bahrain’s private sector has historically been one of the most active sectors in the region,  
moving from a mercantile focus to develop sizeab le industries and services, such as light 
manufacturing, retail, tourism, telecommunications  and financial services. Small and Medium-sized 
Enterprises ( SMEs) make up around 99%  of all businesses in Bahrain  WT/TPR/G/185 Trade Policy Review 
Page 6 
 
 
 18. Oil remains an important element to the Bahr ain economy in terms of its contribution to 
exports and the Government  revenue.  In order to maximize the potential from the Oil and Gas Sector, 
important changes have taken place with the fo rmation of the National Oil and Gas Authority 
(NOGA), being responsible for all petroleum and g as related institutions and issues. The mission of 
the authority is to maintain and develop Bahrain’s oil and gas res ources, maintain production levels, 
optimize utilization and secure highest returns. In this respect several royal decrees and ministerial 
legislative acts have been issued for the purpose of organizing and facilitating the business 
environment in the sector, as well as rationalizing the utilization of energy resources. 
19. The diversification process has resulted in Oil and Gas sector’s contribution to real GDP 
dropping from 44.5% in 1980 to 11% by 2005, and indi cation of the extent of the diversification 
process. The Government expects that its reform measures aimed at stimulating productivity, will create an enabling environment which will more than double GDP per capita by 2015, and annual 
labor productivity of between 4-5%. 
20. In order to increase productive capacity of bot h goods and services, the Government has set 
out to encourage inward investment and to remove  all barriers to enable businesses to set up more 
efficiently. In 2006, Bahrain introduced new regulations governing the start-up of businesses in 
Bahrain, making the process easier, faster, more transparent, and low cost. 
21. A new Company Law, now in the legislative pr ocess, will give focus to the SMEs, embodies 
relevant features from other developing and devel oped countries legislation, as well as key corporate 
governance and investment protection features (a se parate Corporate Governance Code is in draft 
form and undergoing public debate). It is expected  that the new law will have a significant impact on 
businesses by providing greater flexibility to act, yet at  the same time providing an appropriate level 
of protection for minority shareholders. 
22. The Government is a strong believer in open ec onomy policies and free trade. Bahrain seeks 
to stimulate business through creating an effici ent business environment by removing barriers to 
growth, (land, capital, infrastructure) creating private sector opportunities in economical, housing, 
industrial, tourism and other business development fields , and a level  playing field in Bahrain, so as 
to ensure competition and improve productivity.  
23. Bahrain is also keen to enable the deve lopment of a knowledge based economy, centered 
around a number of  key clusters, which include inter alia , healthcare, technology based services, 
business services and financial services, supported by  key infrastructure development in the living 
environment, hard infrastructure and education.  
24. Bahrain believes that future sustainable economic development lies in the strength and 
competitiveness of its labour force and developing a robust entrepreneurial culture.  Therefore, the 
Government has also embarked on a nu mber of economic reform initiatives to: 
• Transform the Government role from operato r to regulator, by initiating  business 
environment enablers and infrastructure. 
• Empower Bahrainis with world class education an d training to equip them with the skills 
needed to compete in the labor market. 
25. The large scale infrastructure and policy initiatives over the past few years in Bahrain are also 
part of the holistic, long-term strategy aimed at positioning and enabling the private sector to be the engine of future growth. Bahrain WT/TPR/G/185 
 Page 7 
 
 
 
 26. The Government’s comprehensive approach to enhancing economic performance includes 
encouraging inward investment, developing the indu strial sector, building on its existing comparative 
advantage in certain sectors, particularly the fina ncial sector, using Intellectual Property development 
as a key to encouraging investment in key sect ors, such as pharmaceuticals, enhancing the 
productivity and competitiveness of its indigenous la bour force, and using its Fiscal, Monetary and 
Trade policies, as well as the political stability of Bahrain, to the maximum advantage in order to 
leverage economic development.  
(i) Encouraging inward investment 
27. Foreign investment is encouraged in Bahrain,  for the potential knowledge transfer and cross 
fertilization to domestic business which it provides, a nd this is reflected in the 100% ownership which 
is permitted across practically all sectors. 
28. Key to the success of the  inward flow of inv estment, has been the commitment of Bahrainis 
themselves to invest in Bahrain, and which represents  approximately half of the total of private sector 
non-portfolio investment in Bahrain. 
(ii) Developing industry 
29. A new industrial policy has been adopted to   position the industrial sector for qualitative 
diversification, so as to underpin future econo mic development, by attracting new technology, 
building innovative local capacity, strengthening SM Es and cluster linkages, diffusing innovation, 
maximizing impacts, leveraging strengt hs and building for the future.  
30. The policy initiatives are complimented by the development of new industrial parks, to 
provide a world class infrastructure with excellent logistics and facilities, and includes a number of 
incubator projects, which are being supp orted by international institutions. 
31. A new resolution of the Cooperation Council for th e Arab States of the Gulf (GCC) Supreme 
Council with respect to the exemption of industri al installations from customs duties levied upon 
industrial inputs was adopted in 2004 and a GCC Un ified Law Governing Industrial Licensing and a 
Unified GCC Law for Anti-dumping, countervailing and safeguard measures was adopted in 2006. 
32. A $1 billion science and technology park, in additi on to two other main industrial investment 
parks (Bahrain International Investment Park and Bahrain Industrial Investment Wharf), is to be 
established over a two million square meter area, w ill be the base from which to build a dedicated 
international platform for research and developmen t to serve the region and strengthen the pace of 
industrial development in Bahrain. 
33. The new industrial policy is projected to incr ease industrial output by 2 -3%, add around 1000 
high quality jobs per year, facilita te downstream migration, enhance the business creation rate, and 
build knowledge and value in industry. 
(iii) Building on the financial services sector 
34. A milestone was reached in 2006 in the country’s financial history, with the establishment of 
the Central Bank of Bahrain (CBB), as successor or ganization to the Bahrain Monetary Agency 
(BMA) and as a central bank and regulator of Bahr ain’s financial services industry, including the 
regulation of insurance and the capital market.  WT/TPR/G/185 Trade Policy Review 
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 35. In April 2005, the CBB established a compre hensive regulatory framework to protect 
insurance policyholders, maintain market confidence and apply international standards of regulation.  
36. In June 2006, the Bahrain Economic Developm ent Board (EDB) announced the establishment 
of The Bahrain Financial Services Development Bureau (BFSDB), to provide a platform for 
developing the financial services sector in Bahrain.  
(iv) Importance of intellectual property rights 
37. Bahrain believes strongly that the innovative ideas and products emerging from the Research 
& Development sectors need to be effectively prot ected and converted into valuable intellectual 
property assets.  Consequently, during 2006 six new laws were promulgated covering Trademarks, 
Patents, Industrial Design, Trade Secrets, Geographi cal indication and Integrated Circuits, which are 
aimed at harmonizing and streamlining the formal pro cedures in respect of the national registration of 
all industrial property rights, with a str ong emphasis on protection and enforcement. 
38. The Intellectual Property Laws are viewed as a means of encouraging inward investment, 
particularly in sectors such as pharmaceuticals whic h relies heavily on the protection which these laws 
provide for producers. Evolving national, regional and international intellectual property regimes will 
impact on business processes as well as providing ne w growth opportunities and challenges for the 
future, and providing strong protection against im itations, infringements, piracy and the phenomenon 
of aggression against the rights of Intellectual Property 
39. Intellectual Property is a valuable corporate asset and a strategic business tool. As a result of 
issuing the above mentioned Industrial Laws and b ecoming a member of various international treaties 
and conventions, there has been a dramatic growth in the registration of na tional and international 
trademarks with the number of trademark registrati ons in Bahrain in 2006 raising to 6349 Trademark 
compared to 3298 in 2005.  
40. Bahrain also acceded to the Madrid Protocol on 15 December 2005 and the Patent 
Cooperation Treaty on 18 March 2007.  Bahrain also became member of the Nice Agreement and the 
Patent Law Treaty(PLT), and will shortly become a member of the Trademark Law Treaty (TLT), the 
Vienna Agreement and the Budapest Treaty. In  2005 Bahrain also became party to the WIPO 
Copyright Treaty and the Performances and Phonogr ams Treaty and in 2006 acceded to the Rome 
Convention for Protection of performers Producers of Phonograms and Broadcasting Organization. 
41. A new Copyright Law # 22 was issued in 2006, and a Ministerial Order issued in the same 
year regarding the publication of court judgments a nd decisions relating to the implementation of the 
Copyright Law. 
(v) Competition 
42. Whilst monopolies and cartels - not considered to be  in the public interest - are not permitted 
under the consumer law. Bahrain does not currently have a Competition Law per se . Nevertheless, the 
Government is considering such legislation. 
43. In 2005, the Bahrain National Competitiveness C ouncil (BNCC) was formed with the aim of 
monitoring and reporting on Bahrain’s economic perfo rmance as well as raising awareness of the 
need for the constant assessment of Bahrain’s competitive performance. Through its awareness 
campaign, the BNCC intends to impart an understa nding of competitive rankings and promote their 
use as policy and business decision tools. Bahrain WT/TPR/G/185 
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 (vi) Privatization 
44. Since 2006, privatization has been accelerated, w ith the privatization of the power generation, 
public transport, and deregulating the communication sector. To strengthen the momentum, a structural framework has been put in place, in cluding a high Committee for privatization formed 
under Law no 41 of 2002, consisti ng of representatives of EDB, Ministry of Finance (MOF) with 
Minister of Finance as the Chairman, with the responsibility for making policy decisions on privatization.  
45. The World Bank has been also been involved in  the preparation of a blueprint  on future 
privatization covering a ten year program. In add ition, a new Holding company (Mumtalakat),  has 
been formed, responsible for the operation of ma jority owned government companies among others. 
The companies within the Mumtalakat are themse lves candidates for privatization, as well as the 
Mumtalakat itself. 
46. Separate transactions teams which include EDB, MoF, and the relevant sector Ministry have 
been established to carry out each transaction, a nd with due considerati on being given to the 
establishment of multi sector regulators to ensure th at delivery of service is in accordance with best 
practice. 
47. So far the privatization of the Equestrian & Horse Racing Club, Postal services, a new IWPP 
(Power and Water), sewerage network and treatment pl ants, have been approved, and it is anticipated 
that many more will follow.  
48. In its major move to privatize its Port S ector,  Bahrain handed over Mina Salman Port 
operations from the Ministry of Finance to A.P. Moller Terminals (APMT) Bahrain, on 8 December 
2006. This concluded four years of determined effo rts to privatize Bahrain Ports. This handover is 
considered to be the largest privatization project in Bahrain’s history with 700 government employees 
involved. 
49. The privatization of ports in  Bahrain reflect s the government’s policy to support the national 
economy by developing the ports and sea-born trade in addition to other related sectors. Part of that 
policy was also to create the Shaikh Khalifa bin Salm an Port with its adjacent free zone and industrial 
areas which is located at the south of Hidd.  
50. By this the government presents the three ma jor factors necessary to develop the maritime 
transportation sector in Bahrain which are the developm ent of the infrastructure, the increase of ports 
handling efficiency, and the formation of a deve lopment and monitoring body to ensure smooth 
operations. 
(vii) Human resource development  
51. The population growth rate in Bahrain has reduced over the past 10 years from 3.6% to a 
current level of 2.7%, and with the population now standing at an estimated 650,000, with 62% being 
Bahraini. Bahrain , is a firm believer that its main natural r esource is that of its people, and equipping 
the national workforce to benefit from labor reforms,  by enhanced education and training, is a policy 
priority.  
Labour Market Reforms WT/TPR/G/185 Trade Policy Review 
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 52. In 2004, Bahrain embarked on an ambitious, comprehensive initiative to make structural 
reforms in the labor market, aimed at reducing the unemployment rate amongst Bahrainis to less that 4% within 15 years.  At the crux of th is initiative are two overarching objectives:  
• encourage the private sector to become the engine of growth in Bahrain  
• make Bahrainis the employee of choice for private sector employers   
 
53. As part of building the institutional capabiliti es, two new agencies we re created, the Labor 
Market Regulatory Authority and the Labor Fund. 
Education Reform  
54. Bahrain launched a comprehensive reform of  its education system in 2005 covering all 
educational levels, so as to help improve the comp etitiveness of Bahrainis in the labor market.  Four 
current initiatives include, creating an indepe ndent Quality Assurance Authority (QAA), 
strengthening the teaching profession, establishi ng a polytechnic, and improving upper secondary 
vocational education. 
(viii) Fiscal policy 
55. The 2005-06 Government Budget was based on a conservative forecast of oil revenues. For 
the 2006 budget, spending was budgeted to increase on both recurrent (4.4% over 2005 budget) and 
capital (16.5% over 2005 budget) for a total budgeted expenditure of BD1.58 billion ($4.2bn) against 
budgeted revenues of  BD1.27 billion ($3.4b) for 2006.  
56. Oil accounts  for around 70% of the total budgete d government revenue, however structural 
reforms in recent years, particularly in terms of privatization underpins Bahrain’s prudent fiscal policy 
for the future, and will support the growth of the non-oil sector. 
57. The establishment of the Public Tenders Board a nd the National Audit Bureau is expected to 
contribute to reducing government expe nditure and enhancing transparency. 
58. Prudent management of its resources in the face of dwindling oil stocks, and a early start on 
diversification after the discovery of oil in the 1930s, together with an open-market policy, has 
resulted so far in Bahrain not imposing a  taxation regime, and which has been a feature in Bahrain’s 
investment incentives. 
(ix) Monetary policy 
59. The Central Bank of Bahrain is responsible for setting monetary policy objectives, carrying 
out monetary operations and ensuring the health  of the financial sector. Its objectives are: 
• To protect the value and ensure price stability of  the currency both internally and externally. 
• To ensure stability of Bahrain’s financial markets. 
• To promote Bahrain as an international financial centre. 
 60. Bahrain follows a policy of maintaining a fixed exchange rate against the United States dollar. 
Bahrain and the other GCC countries all agreed to ha ve their currencies pegged to the U.S. dollar, as a 
first step towards creating a GCC Monetary Union, scheduled for 2010. Bahrain WT/TPR/G/185 
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 (x) Stability 
61. The Government believes that political and econo mic stability are the key enablers of growth 
and the principle determinants of the level of inwa rd investment, and that the democratic process is 
fundamental to achieving such stability in the long term. 
62. Monetary stability and a well developed financ ial system significantly mitigate Bahrain’s 
vulnerability to economic shocks, as does th e demand led nature of developments. 
63. Bahrain is also less at risk  to the migration of labor, since Bahraini citizens substantially 
outnumber foreigners, and which is also a good pr oxy for the quality of the local workforce. 
(2) GROWTH SECTORS  
(i) Tourism 
64. The Government envisions Bahrain becomi ng a high-quality leisure and business tourism 
destination for the outbound markets of the Middle East, Europe and Asia, and a process of redefining 
the tourism vision and roadmap and anchoring it with  the key stakeholders started in June 2005.  
65. Bahrain is strategically located as gateway to th e Middle East and has the added attraction of 
a safe and pleasant environment, warm climate, t ogether with history ,culture, traditions and 
international events. 
66. Bahrain is a country of  diversity- a financial hub with the presence of major multi-national 
companies, a cultural centre with rich archeology and traditions, and a haven for tourism with a 
wealth of activities, places to  visit and friendly people. 
67. The number of international overnight visitors grew at the rate of 12.4% between 1995 and 
2002, and with 70% of visitors originating fro m the GCC, and of these 89% coming from Saudi 
Arabia, there is ample opportunity to increase the flow of non-GCC tourism, particularly as linkages 
are developed with the Health, Education, Fi nancial and Exhibition and Conferences sectors. 
68. The growth in tourism revenues levied on hotel s and tourism apartments  has also increased 
progressively over the past few years, risin  from BD 3.382 million($8.9m) in 2002, to reach BD 5.812 million($15.4m) in 2006. The average per annum  growth rate at 14. 83%, is another clear 
indication of the potential for tourism in Bahrain. 
69. In addition to the causeway linking Bahrain with  Saudi Arabia, a planned new bridge linking 
Bahrain to Qatar, to include both road and rail tr ansportation, will enhance future transshipment and 
tourism opportunities. 
(ii) Financial services 
70. In 2005 the financial sector repr esented 27.6% of GDP compared to 25% in 2004, and there is 
a growing market demand for financial services and products, particularly  for Islamic financial 
instruments, and with the first launch of the Bahrai n Financial Harbor scheduled for 2007, growth is 
set to continue. WT/TPR/G/185 Trade Policy Review 
Page 12 
 
 
 71. Bahrain is currently home to 373 financial in stitutions, with total  Banking Assets of US$163 
billion at June 2006. The sector contributed some 27.6% to GDP in 2005.  
72. Bahrain has become host to the largest number of Islamic banks in the world, as well as a 
growing support industry. There are 134 Islami c financial institutions , which includes banks, 
insurance companies and investment funds.  
73. Bahrain has also invested $10 million to create a centre for studies, research an training for 
the Islamic banking industry, to complement the already well respected Bahrain Bankers Training Centre. Bahrain is also home to the Accounting and Auditing Organization for Islamic Financial 
Institutions. 
74. A new Trust Law, issued in 2006, will crea te a well regulated environment for the 
development of trustee and trust administration services. 
75. Insurance is a well developed industry in Ba hrain (80 companies) , and has an important 
growth potential.   
76. Bahrain was the first country to standardize the practice of the Takaful and Retakful industry 
(insurance and reinsurance) and to establish a specific regulatory framework for this purpose. 
77. Overall initiatives in the Financial sector are anticipated to grow GDP contribution and 
employment opportunities in the period to 2015 to BD1.6 billion and cr eating 5,700 new jobs. 
(iii) Manufacturing 
78. The manufacturing sector showed massive gains of 47.8% in year 2005 in its contribution to 
GDP, with current contribution standing at 13.1% of total GDP. New Industrial projections anticipate 
a  tripling of  the sector contribution to GDP by 2020. 
(iv) Telecommunications 
79. In 2002, the Telecommunications Law was issued  by Legislative Decree No. (48), to set out 
the basic and general policy of  the government regarding the sector, and since that date, the 
Telecommunications sector has been undergoing comp rehensive change through a government policy 
that seeks to rapidly create a free market envir onment to attract new private sector entrants. 
80. An independent Telecommunications Regulatory Authority (TRA) was established to regulate 
the telecommunications sector, assist in the availa bility of high quality competitive services, and issue 
licenses to operate and use spectrum through transparent procedures.  
81. To-day, the telecommunications market in Bahrai n is completely open to foreign investors, 
and the TRA continues striving to improve the dom estic environment in order to facilitate and 
encourage new entrants in fixed line, mobile and other services.   
(v) eCommerce 
82. Bahrain’s level of Information and Communi cations Technology (ICT) development and 
competitiveness , strong e-Government position and high level of eCommerce uptake, in part reflects 
the efforts made by the Government to implem ent ICT policies in infrastructure, institutions, Bahrain WT/TPR/G/185 
 Page 13 
 
 
 
 legislation and education, and to create a supportiv e environment for the a doption of ICTs, and will 
drive the country’s technological development and s upport the creation of a knowledge based society.  
83. The ICT sector has been growing rapidly duri ng the past five years, in particular e-
government, which is well advanced, as well as e-financial and IT services, underpinned by the 
regulatory environment of  transaction laws, a set of standards for accrediting international certificate 
authorities, and as a result of initiatives, by both th e private and public sector participants to raise 
person computer penetration and through targeted  training to boost Human Resource Development 
and business eReadiness. 
(vi) Construction 
84. Construction is a boom sector, attracting much new local and foreign investment, to take 
advantage of Bahrain’s zero taxation, 100% owne rship, family oriented and relaxed cosmopolitan 
environment.  WT/TPR/G/185 Trade Policy Review 
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 (vii) Education 
85. Bahrain is home to a growing number of privat e schools, colleges, universities and vocational 
training institutions, and the demand is expected to c ontinue to grow in order to cater for the demands 
of residents, and to serve the regiona l market, particularly Saudi Arabia. 
86. A number of initiatives are currently underway to  attract regional students, looking for a GCC 
environment, to take advantage of high quality affo rdable education in Bahrain as an alternative to 
going overseas. 
(viii) Healthcare 
87. The demand for  high quality an d affordable private healthcare services, which is growing at 
the rate of around 8% annually, has created the n eed for modern infrastructure and skilled manpower 
expansion, and the opportunity to accelerate the Go vernment’s privatization program in this sector. 
Bahrain is keen to liberalize health services, as part of its national health policy objectives, and 
opportunities exist for investment in specialized health services, drugs, disease control, food safety, 
technology, biotechnology, health information system, health insurance and human resource 
development.  
88. Bahrain is a net food importer, and the Codex Alim entarius is the main source for developing 
national standards, which can influence trade in foodstuffs.   
IV. TRADE POLICY  
89. Bahrain is currently a net importer of manuf actured products. The economy is services based, 
but with a growing industrial capability, the expansio n of which is being actively pursued as a policy 
objective by the Government. The Government is also a strong supporter of free markets and an open 
rules based global trading system, advocating econo mic openness as a strong development trigger, to 
encourage and facilitate export of its products a nd services, as well as to strengthen domestic capacity 
and competitiveness by encouraging inward investment. 
90. Having maintained it’s position as the financial cap ital of the Middle East, Bahrain is aiming 
to become a key regional trading hub, and retail tr ade center. Bahrain has traditionally cherished trade 
liberalization and efficient international trade transac tions, enhanced by it’s causeway connections to  
Saudi Arabia and eventually to Qatar, which w ould support its Trade Facilitation and supply chain 
logistics potential, not only with its GCC part ners, but also with the world at large. 
91. Import trade enjoys duty free entry for most basic raw materials, industrial inputs and basic 
foodstuffs. Of the remaining goods which are dutia ble over 90% of these incur very low customs 
duties of between 0 and 5%.  
92. Bahrain’s trading environment is stable and transparent. There are no import restrictions 
except for patrimonial heritage, environmen tal, health or security considerations. 
(1) BAHRAIN AND THE WORLD  
93. As a founding member of the World Trade Organization (WTO), Bahrain is a very keen 
proponent of the Multilateral Trading System. It  also  takes pride in the diligent implementation of all 
legislative and institutional requirements for th e implementation and enforcement of all WTO 
agreements and applications. As a small economy, Bahrain endorses the staunch application of the Bahrain WT/TPR/G/185 
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 Special and Differential Treatment for developi ng and small economy c ountries, and values the 
fairness and objectivity of WTO’s Dispute Settlement Body.   
94. Bahrain’s active participation in the Doha R ound of Multilateral Trade Negotiations (MTN) is 
evidenced, by the positive offers and proposals, submitted to different areas of the negotiations, 
especially in the field of services, to which Bahrain attaches great importance, in particular financial 
services, construction, telecommunications, trans portation, and tourism. Hoping that services’ 
negotiations will result in more effective market entry offers, especially under Mode 4 of services 
delivery. 
95. As far as Non Agricultural Market Access (NAMA) is concerned, Bahrain welcomes a fair 
and balanced tariff reduction formula, or appr oach, which would allow small and developing 
countries to achieve rewarding industrial policies a nd diversification objectiv es, to support national 
and niche industries, job creation and viable SMEs. Bahrain upholds Doha , and Hong Kong mandates 
for eliminating market access barri ers, tariff escalation, tariff peaks, in particular on products of 
export interest to developing countries. 
96. Trade Facilitation successful negotiations and agre ement is one of  Bahrain’s priorities to 
ensure supply chain logistics’ development, tec hnical and legislative ad justment requirements, 
standards and conformity implications, HRD and tr ade capacity building. Bahrain also supports the 
positive and equitable implementation of the Aid Fo r Trade initiative with sufficient funds and active 
involvement of all agencies involved with the WTO . 
(2) BAHRAIN AND THE REGION  
(i) GCC membership  
97. Bahrain is a founding member of the Gulf  Cooperation Council (GCC), along with Kuwait, 
Oman, Qatar, Saudi Arabia, and the United Arab Emirates. Since 1981, the free-trade area has been 
effected among GCC members by eliminating custom s duties on all the products originating in the 
member states.   
98. In December 2001, the GCC Economic Agreemen t was signed to provide for GCC Customs 
Union, and the harmonization of economic, financial,  and monetary policies, with a view to achieve 
more economic integration through the establishmen t of the Gulf Common Market (GCM), and the 
Gulf Monetary Union. 
99. In addition to cultural and kinship ties within  the region, the GCC provides Bahrain with 
common regional economic, social and political stability, economies of scale, industrial 
complimentarity, and trade creation advantages. 
100. The GCC is presently engaged in negotiating a Free Trade Agreement (FTA) with the 
European Union (EU). Other FTAs are also antic ipated with other regions and countries like 
European Free Trade Association (EFTA) , Japan , Southern Common Market (MERCOSUR), China, 
India, Pakistan, Singapore, and Turkey.  
(ii) GAFTA membership 
101. Bahrain is also a founding member of the Gr eater Arab Free Trade Area (GAFTA), which 
was signed on 19 February 1997, entered into fo rce on 1 January 1998, and supposed to have WT/TPR/G/185 Trade Policy Review 
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 eliminated most tariffs among its members on the 1st of January 2005. At present Bahrain is  
negotiating within GAFTA a regional agreement for trade in services, where Bahrain and most 
member countries have greater competitive advantage.  
(iii) Bilateral agreements 
102. Bahrain, as of August 2006, has a bilateral FTA with the United States, and maintains over 
40 bilateral agreements in various fields, such as: investment encouragem ent, avoidance of double 
taxation, economic,  trade and technical cooperation. 
 
 
 Bahrain WT/TPR/G/185 
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 ANNEX I :  TRADE RELATED TECHNICAL ASSISTANCE 
 
1. While Bahrain, is a small sized economy, yet, it is  determined to play a leading Role in  the 
Multilateral Trading System, and reaping it’s full rewards, by becoming the region’s trading and 
investment hub, after successfully, retaining the first position in financial services. 
 
2. Accordingly, Bahrain’s technical cooperation requirements include the following areas: 
• Enhancing Aid for Trade related technical and institutional support, within the WTO and 
other relevant internationa l institutions and funds; 
• Trade Facilitation legislative and logistic requi rements, customs valuation money laundering, 
and fraud prevention, support and HRD; 
• Supply- chain infrastructure enhancement, and adjustment needs; 
• IPR institutional upgrading, and HRD; 
• Sanitary and Phytosanitary (SPS), Technical Barriers to Trade (TBT), and Standards 
institutional upgrading, notifications and HRD; 
• Multilateral Trade Negotiations (MTN) and FTA s Negotiating Skills upgrading, and HRD; 
• Export promotion technical and institutional support; 
• Trade capacity building, and competitiveness enhancement, awareness, and networking; 
• Enhancing institutional capacity and export potential in negotia tions and implementation of 
trade in services agreements; 
• Development of competition policy and legislation;  and 
• Ensuring Bahrain’s participation in national, regional and international HRD and training 
programs for government, parliamentarians, and private sector. 
 WT/TPR/G/185 Trade Policy Review 
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 ANNEX II: CONTRIBUTORS TO THIS GOVERNMENT REPORT  
 
1. The Ministry of Industry and Commerce; the Ministry of Finance; the Ministry of Health; the 
Ministry of Information; the Ministry of Labor; the Ministry of Municipality Affairs and Agriculture; 
the Central Bank of Bahrain; Civil Aviation Affa irs; Customs, Ports and Free Zones Affairs; 
Economic Development Board; National Oil and Ga s Authority; Telecommunications, Frequency and 
Postal Affairs; Telecommunications Regulatory Authority, Tenders Board; and Tourism Affairs. 
 
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