WORLD TRADE  
ORGANIZATION  WT/TPR/M/185 
10 September 2007 
 (07-3760) 
Trade Policy Review Body 
18 and 20 July 2007   
 
 
TRADE POLICY REVIEW 
 
BAHRAIN 
 
Minutes of Meeting
 
 
Chairperson:  H.E. Mr. Vesa Himanen (Finland) 
 
   Page 
 
I.
 INTRODUCTORY REMARKS BY THE CHAIRPERSON 3  
II. OPENING STATEMENT BY THE REPRESENTATIVE OF  
BAHRAIN 4 
III. STATEMENT BY THE DISCUSSANT 7  
IV. STATEMENTS BY MEMBERS 8  
V. REPLIES BY THE REPRESENTATIVE OF BAHRAIN AND ADDITIONAL 
COMMENTS 14  
VI. CONCLUDING REMARKS BY THE CHAIRPERSON 20  
 
 
     
 
    
 
    
 
  
Note:   Advance written questions by WTO Me mbers and the replies provided by Bahrain are 
reproduced in document WT/TPR/M/185/Add.1 and will be available online at:  
http://www.wto.org/english/tr atop_e/tpr_e/tp_rep_e.htm.  WT/TPR/M/185 
 Page 3 
 
 
 I. INTRODUCTORY REMARKS BY THE CHAIRPERSON 
1. The second Trade Policy Review of Bahrain was held on 18 and 20 July 2007.  The 
Chairperson H.E. Mr. Vesa Himanen (Finland) welc omed the delegation of Bahrain, headed by the 
Minister of Industry and Commerce, Dr. Hassan Fakhro, and the discussant, Ambassador Ichiro 
Fujisaki (Japan).  As usual, the discussant woul d speak in his personal capacity and not as a 
representative of his country.  In accordance with th e established procedures, the discussant had made 
available, in advance, outlines of the main i ssues he intended to raise (document WT/TPR/D/161). 
2. The Chairperson recalled the purpose of the Trad e Policy Reviews and the main elements of 
the procedures for the meeting.  The report by Bahrain was contained in document WT/TPR/G/185 
and that of the WTO Secretariat in WT/TPR/S/185.   As indicated in WT/TPR/6/Rev.1, the Member 
under review should provide written answers, by the beginning of the review meeting, to questions 
submitted at least two weeks before the meeting.  Questions posed subsequently should be answered, 
to the extent possible, before the start of the second session of the meeting.  Questions left 
unanswered at the end of the second session should be  answered in writing no later than one month 
after the meeting.  Questions by the following dele gations had been submitted in writing at least two 
weeks in advance of the meeting and had been  transmitted to the delegation of Bahrain:  Singapore; 
Republic of Korea; United States; Separate Customs Territory of Taiwan, Penghu, Kinmen and 
Matsu; the European Communities; Japan; Canada; and Colombia .  Copies of these questions and 
of the answers provided by the delegation of Ba hrain were available in the meeting room.  Australia;  
and India  had submitted written questions after the two-week deadline.  These questions had also 
been transmitted to the delegation of Bahrain;  copies of these questions and of the answers provided 
by the delegation of Bahrain were available in th e meeting room.  All advance questions, as well as 
the responses received from the delegation of Ba hrain, are reproduced in WT/TPR/M/185/Add.1. 
3. The Chairperson noted that the documentation pr epared for this review emphasized Bahrain's 
impressive economic performance since its first TPR in 2000, mainly as a result of its development 
strategy, and the increase in oil and gas revenues. Bahrain had established one of the most diversified 
economies in the region, and had adopted measures to  increase foreign direct investment inflows. 
Nevertheless, foreign investment remained restri cted in certain activities; some of which were 
dominated by state-owned companies.  Bahrain's ma rket was quite open to foreign products, and the 
bulk of its trade took place on MFN basis. A key element in Bahrain's reform process related to full economic integration under the Gulf Cooperati on Council (GCC), of which the customs union 
component had been launched on 1 January 2003. He was sure that Members would be interested to 
learn more about the steps to be taken by Bahrain at the multilateral and regional levels. WT/TPR/M/185 
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II. OPENING STATEMENT BY THE RE PRESENTATIVE OF BAHRAIN 
4. The representative of Bahrain
 recognized that the TPR process was essentially a transparency 
exercise, which, by exposing internal policies and processes, highlighted the increasing need for 
continuous review and interdep artmental cooperation. Bahrain, with its small size and natural 
limitations, together with its island spirit, had hi storically been an open and inviting society. The 
small population had also emphasized the importan ce of an efficient manpower, and of gender 
equality, both in terms of the workplace and in society generally. Bahrain was a nation of equal 
opportunities, a principle that applied equally to foreign investors. 
5. Bahrain had little in the way of factor endowment s, other than very limited reserves of oil, 
and gas. The Government was doing everything possi ble to maximize the economic potential of the 
reserves and preserve their value for future generati ons. Nevertheless, oil had been the foundation for 
building a modern economy. Through wise investment in  its people, in terms of  health, education and 
security spending, and by developing an efficient and supportive infrastructure, the Government had 
created the conditions for a thriving private sector. 
6. Currently, oil represented less than 12% of GDP.  Oil revenues continued to contribute 
substantially to government reve nue.  The diversification process, the privatization of government 
holdings, and the strength of the services sector (par ticularly financial services and tourism), coupled 
with industrial development, were the future key dr ivers of economic growth.  What Bahrain lacked in 
terms of natural resources, it made up for it in the value of the workforce.  The preoccupation with 
ensuring that people were healthy, educated, work -ready, and calculated risk-takers, continued to 
shape government policies. 
7. With regard to political developments, the Bahr ain had been transformed into a constitutional 
monarchy, with the formation of a bicameral na tional assembly (one with elected and one with 
appointed members). The political liberalization had resulted in strong backing for economic reform programmes and a greater sense of national identity. The whole process had stimulated investment and economic development, and ha d given impetus to the Government's re-focus on supporting the 
private sector as the economic driving force. 
8. Among Bahrain's problems were a growing unemp loyment rate, which the Government had 
initially attempted to mitigate through a Bahrai nisation programme. However, the Government had 
been committed to an open market policy, and had become aware that the most effective measure to 
increase employment opportunities was to encourag e inward investment and a more competitive 
environment. 
9. With the establishment of a Labour Market Re gulatory Authority and a Labour Fund, the 
Government intended to enhance training of Bahraini s, so as to make them highly competitive in the 
workplace, thereby replacing many expatriate work ers through the process of private sector natural 
selection. The policies also included supporting effi ciency drives, particularly amongst small and 
medium-sized enterprises, to make them more productive and competitive. 
10. Foreign investment was welcomed in prac tically all sectors. Bahrain still preserved 
restrictions on a few activities for national security and other reasons.  These had been classified on a 
negative list, and were either not permitted or fore ign participation was restricted.   This list was 
available on the website of the Ministry of Industry and Commerce. 
11. Economic development was coordinated thr ough the Economic Development Board, to 
ensure a coordinated approach through a project-b ased process. Over the past six years, a lot of 
emphasis had been placed on creating a stimulating, a competitive and supportive business 
environment through privatization and divestitur es, as well as through legal and regulatory changes.  WT/TPR/M/185 
 Page 5 
 
 
 12. The Bahrain Investors Centre had been devel oped to provide a state-of-the-art facility, 
through which potential investors could incorporate a business in a single visit, sometimes within 
hours.  All Government ministries involved in the registration were in one place;  the registration 
process was supported by a web-based interface.  In addition, this one-stop-shop operated on the basis 
of a single application form.  The number of required steps had been consolidated, and the 
incorporation fee had been reduced to a si ngle annual fee of BD20 (approximately US$50). 
13. In 2001, Bahrain had issued an amended Co mpany Law to codify issues considered as 
hindering commercial development.  It had also been working on a new law, based on international 
best practice, which would underpin a surge in ne w business start-ups. The draft law, had undergone a 
process of national debate and was now in the legislative process. 
14. The signing of a Free Trade Agreement with the United States was part of the process of 
opening up the domestic market to foreign competiti on.  This should stimulate local activity, create 
new employment, and result in the development of new services and products. Through the GCC, 
Bahrain was also pursuing other FTAs w ith the EC and other economic blocks. 
15. Bahrain recognized the importance of world markets and foreign trade. In the process of 
opening up its markets, Bahrain had attempted to determine its competitive advantage, both regionally 
and internationally. The current economic polic y was based on an open-market philosophy, and 
defined services and industry as the twin pillars  of future development of a knowledge-based 
economy. 
16. Bahrain was an acknowledged regional and intern ational financial services centre, both in 
traditional retail and wholesale banking, as well as Islamic finance and insurance.  A number of 
important regulatory developments over the past si x years would provide the basis for the future 
expansion of this sector.   
17. A new industrial policy had been adopted, to pos ition the industrial sector for diversification, 
so as to underpin its future economic developmen t by attracting new technology, building innovative 
local capacity, strengthening SMEs and cluster linkages, diffusing innovation, and building for the 
future.  Key elements included strengthening clus ter linkages, innovation capacity, and Government 
and business efficiency. These elements were supporte d by other initiatives including the restructuring 
of education and the alignment of certain ministries  to support key industrial developments.  These 
policy initiatives were complemented by the developm ent of new industrial parks, to provide a world 
class infrastructure with excellent logistics and facilities. The parks included a number of incubator projects, which were being suppor ted by international institutions. 
18. Bahrain had come a long way in enhancing the competitiveness of its workforce, privatizating 
government undertakings and assets, stimulati ng commercial growth through legal and policy 
initiatives, and expanding internationa l trade and regional integration.  However, there was more to 
do, and this would require technical assistance. 
19. Bahrain had demonstrated its commitment to open markets.  Nevertheless, there were 
limitations, and it needed technical assistance in order to continue to take advantage of the 
opportunities from access to other markets.  It was need ed to strengthen institutional capacity in order 
negotiate, and participate in, international agreements  and better define national responses in line with 
development requirements. 
20. Bahrain strongly supported the multilateral tradi ng system and the application of special and 
differential treatment for devel oping and small economy countries.  Bahrain valued the fairness and 
objectivity of the WTO's Dispute Settlement Body.  It hoped for a successful conclusion of the Doha 
Round, especially with regard to mode 4 of servi ces delivery, and had submitted an offer on services, WT/TPR/M/185 
Page 6  
 
to which it attached great importance, par ticularly financial services, construction, 
telecommunications, transportation, and tourism. 
21. Regarding NAMA, Bahrain welcomed a fair and balanced tariff reduction formula or 
approach, which would allowed small and developing countri es to achieve industrial policy 
objectives.  Bahrain upheld the Doha and Hong Kong mandates for eliminating market access 
barriers, tariff escalation, and tariff peaks, in par ticular on products of export interest to developing 
countries. 
22. Trade facilitation was a policy priority for Bahrai n in order to ensure development of supply 
chain logistics, and support technical and legisl ative adjustment requirements, standards and 
conformity implications, and HRD and trade capac ity building.  Bahrain supported the positive and 
equitable implementation of the Aid For Trade initiative.  WT/TPR/M/185 
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 III. STATEMENT BY THE DISCUSSANT 
23. The discussant  (H.E. Mr. Ichiro Fujisaki) noted that Bahrain was one of the major financial 
centers in the world, as the result of carefully a nd courageously designed policies for human resources 
development, diversification, and opening up.   
24. While it was useful and necessary to know about  macroeconomic situations and policies as 
background information he proposed that discussions  in TPR should perhaps focus on trade and trade 
related policies, like the changes since the previ ous review, what should be improved, what more 
should bee done in such areas as market access, FDI, IPR, competition law, etc. 
25. The Secretariat Report, which was succinct, we ll-written, and informative, could have also 
focused on developments in the GCC customs union since 2003, and its potential impact on trade in 
the region and in the world.  Also, Members were inte rested in the effect of the bilateral FTA with the 
United States, in effect since August 2006, on Bahrain's economy and on the GCC customs union 
process.  According to available U.S. Commerce Depa rtment Statistics, bilateral trade in November 
2006 had been 40% higher than in the same month of  2005.  Some Members would also be interested 
to learn more about the relations between Bahrain and its neighbouring countries.   
26. There was overall appreciation for the strong performance of Bahrain's economy which had 
been supported by open trade and related policies.  It was widely recognized that its biggest asset was 
its well established credibility.  Bahrain would hopefully continue to make progress in increasing 
transparency, privatization, and opening up. The licensing process for FDI had been rationalized, but 
a further step by step reduction of items on the FDI negative list would be desi rable. Privatization in 
telecommunications was a positive step; such a m ove in other areas was awaited. Progress in 
copyright legislation was noted and further control would be appreciated. 
27. Bahrain was an important partner in the WTO a nd its eventual membership in the Agreement 
on Government Procurement was awaited;  Bahrai n should also improve its offer in the services 
negotiations, which was currently limited to the financial sector. The new Law on Consumer 
Protection was expected to bring more effective competition policy. Bahrain's trade policy was on the 
right track, and further development would surely follow.  WT/TPR/M/185 
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IV. STATEMENTS BY MEMBERS 
28. The representative of Jordan, on behalf of the Arab Group
, said that, through its unique 
geographic location, Bahrain was by nature a firm beli ever in foreign trade.  In recent years, Bahrain's 
economy had expanded, with GDP and productivity in creasing significantly.  Its reliable financial 
system, coupled with a strong drive towards a diversified economy, an investment-friendly 
environment, and a sound trade regime had resulted in  impressive growth rates. Other steps included a 
solid privatization programme;  transforming the G overnment's role from an operator to that of a 
regulator;  the creation of a competitive environment;  and motivating the private sector to assume a leading role.  These steps had made Bahrain a high ly developed financial hub and a major commercial 
centre.  Inflation was low and public debt mana geable. The annual inflow of FDI had doubled in 
recent years, due to a substantial privatization programme and sound fiscal and monetary policies.  
29. Since 2000, Bahrain had pursued a strategy of reducing its dependence on oil and gas.  This 
had been achieved partly by promoting downstrea m industries, financial services, and tourism;  
improving education and health services, and modern izing the infrastructure. Bahrain now had one of 
the most diversified economies in the region.  These initiatives would help it to deal with 
unemployment. Policy initiatives to develop the industrial sector would improve the business 
environment.  Bahrain was a member of the GA FTA and of the GCC, which proved its commitment 
to free trade policy and the multilateral trading syst em.  Bahrain's continu ous economic reforms had 
had a positive impact on its economy, telecommuni cations, construction, health and education 
services. The Arab States would continue to wo rk with Bahrain to promote regional economic 
development and to better integrate in the multilateral trading system. 
30. The representative of Singapore
 stated that Bahrain and Singapore shared many similarities. 
Like Singapore, Bahrain had become an attractive de stination for FDI and for the development of the 
industrial and the financial services sectors.  Sing apore had been trying to learn from Bahrain’s 
experience, in particular in the area of Islami c banking, financing, and insurance.  Singapore’s 
bilateral trade with Bahrain was modest, but had grown significantly over the years.  Business and 
investment relations were increasing: Bahraini comp anies had invested in industrial operations in 
Singapore. Bahrain had been implementing measures to improve its investment climate, through the 
creation of a one-stop shop, and the Bahrain Investors' Centre.  In January 2007, the Future Generation Fund was launched.  Adoption of th e GCC common external tariff had decreased 
Bahrain's simple average applied MFN tariff.  Fi xed and international telecommunication services had 
been liberalized. Foreign ownership was allowed in the majority of services subsectors, and Bahrain 
had never taken any anti-dumping, countervailing or safeguard actions.  Are as of Bahrain’s trade 
policy with room for improvement included exte nding the scope of tariff binding commitments, 
reducing bound rates, and undertaking further tari ff rationalization.  Singapore echoed the comments 
about the need for continued reforms, including th e lifting of remaining impediments to FDI and the 
adoption of a competition policy.  Singapore welcomed the possibility of Bahrain joining the 
Government Procurement Agreement.  There were  many areas in which Singapore and Bahrain could 
learn from each other and cooperate.  Bahrain had al ways been deeply committ ed to the multilateral 
trading system and would give all its support to the conclusion of the Doha Round.   
31. The representative of Korea
 welcomed the increasing bilateral trade between Korea and 
Bahrain.  He noted the economy's impressive annual average growth over 2000-06, and the 
diversification away from oil. Korea applauded Ba hrain's Government for leading its economy into 
sustainable and diversified development, and appreciated the improvement of the trade and 
investment environment.  Bahrain had introduced se veral new trade-related laws, including a revised 
Commercial Companies Law, and a Trade Remedies Law to enhance its conformity with WTO rules.  Bahrain had improved its investment climate with the creation of the one-stop shop and the Bahrain 
Investors' Center, resulting in a strong increase of FDI.  Korea encouraged Bahrain to continue its 
current reforms to achieve sustained growth by  removing some remaining obstacles to FDI, by 
adopting a competition policy and by further impr oving its multilateral commitments both on goods  WT/TPR/M/185 
 Page 9 
 
 
 and services.  In the ongoing DDA negotiations on trade facilitation, there was broad agreement on 
the need to abolish consular formalities, which cr eated export delays and increased transaction costs 
for exporters.  Korea encouraged Bahrain to phase out  its consular certification requirement, to further 
facilitate trade, and asked for its view on this issue. 
32. The representative of the United States  stated that this review had demonstrated the 
importance of trade to Bahrain’s economic success due  to its high ratio of exports and imports of 
goods and services to GDP.  Bahrain was increasingly a net exporter of services, which contributed nearly 75% to its real GDP and employed over 50% of  the workforce.  Bahrain was one of the most 
diversified economies in the Gulf, due to its economic  development and strategy.  Through its efforts 
to diversify it had become a major financial a nd business center.  Bahrain was working to develop 
other service industries such as information technolog y, healthcare, and education.  The provision of 
certain services, such as road transportation, were restricted to Bahraini nationals.  The United States 
urged Bahrain to consider less restrictive measures to  help it attain its employment goals.  Bahrain had 
vast untapped potential for attracting investors, a nd FDI had been inhibited by the slow progress on 
the privatization programme, such as the sale of pub lic utilities, the small market size;  and labour 
market rigidities.  Foreign companies still faced i nvestment restrictions in certain key activities, for 
example, retail, travel and tourism, and activities a ssociated with remaining state-owned entities.  The 
United States was interest ed to learn more about how Bahrain was addressing this situation in its 
development plans. 
33. Bahrain was a leader in the GCC, the United States encouraged Bahrain to accelerate the 
GCC's important work of reducing trade barri ers, harmonizing regulations and increasing 
transparency.  As the United States implemented th e U.S.-Bahrain FTA, it looked forward to further 
opportunities to expand the relationship.  This comp rehensive bilateral FTA eliminated tariffs and 
other barriers on substantially all goods and services  trade, thereby promoting economic growth and 
expanding trade between the two countries.  The Unite d States noted that Bahrain had a major stake in 
achieving an ambitious result in the Doha negotiatio ns, and looked forward to working with Bahrain 
toward bringing the round to a successful conclusi on.  The United States also hoped that Bahrain 
would join the Government Procurement Agreement.   
34. The representative of the Separate Customs Te rritory of Taiwan, Penghu, Kinmen and Matsu
 
(Chinese Taipei) stated that Bahrain had been ac tively endeavouring to diversify its economic base, 
especially in the financial, telecommunications, indus trial, education, and health-care sectors. Bahrain 
had joined the Information Technology Agreement in 2004, and had enacted new domestic laws and 
regulations in some key areas, including intellect ual property rights. Chinese Taipei commended 
Bahrain's substantial efforts to promote trade liberaliz ation.  Bahrain was one of its main suppliers of 
aluminium and petroleum, while its exports to, a nd investment activities in Bahrain were much less 
significant. Chinese Taipei recognized the potential offered by the measures adopted by Bahrain to 
open its market and improve its investment environment.  
35. The representative of the European Communities  stated that the EC's trade with Bahrain had 
been stable, with potential for further growth.  While the EC's priority remained the successful 
completion of the Doha Development Agenda nego tiations, complementary to this, it aimed to 
reinforce economic ties with Bahrain by negotia ting a FTA with the GCC partners.  The EC 
congratulated Bahrain for its successful efforts to di versify its economy, and noted that diversification 
would remain the focus of its development strategy.   To further increase foreign investment inflows 
and facilitate the business environment Bahrain needed  to remove certain restrictions in services. 
Bahrain was also working on strengthening the role  of the private sector and it would be crucial to 
improve the regulators framework for business.  It did not yet have legisla tion on competition policy, 
but wished to address this issue in the regional cont ext of the GCC.  The EC was interested to hear 
more about the timeframe for putting this into place.  Bahrain had quite a high share of unbound tariff 
lines as well as very high bound rates in a number of sectors.  The ongoing DDA negotiations would WT/TPR/M/185 
Page 10  
 
be the appropriate forum to tackle some of these  problems.  The EC had concerns regarding some 
sanitary and phytosanitary measures. Bahrain n eeded to establish fair, non-discriminatory and 
transparent rules, fully aligned with internationa l standards and guidelines;  and its BSE policy should 
be made consistent with the new international r ecommendations adopted by the OIE on trade in beef 
and beef products.  The current import ban on beef and beef products from EC countries with 
controlled or undetermined BSE risk was an unjustif ied measure.  The EC urged Bahrain to bring its 
SPS measures in conformity with its obligations under the WTO SPS Agreement.  Joint efforts and 
flexibility of all WTO Members, including Bahrai n, were needed to achieve the satisfactory 
conclusion of the DDA negotiations before the end of the year. 
36. The representative of Japan
 stated that Bahrain was taking leadership in the region, not only 
in opening up its economy, but also in promo ting its democracy.  Bahrain had emerged as the 
financial center of the region.  In April 2006, Japan and the GCC had agreed to start FTA negotiations, and in this context, Japan was inte rested to know about the prospect of the GCC 
currency unification, its principles for FTA negotia tions, and its policy for other bilateral economic 
arrangements.  With regard to government procurement, while Japa n appreciated Bahrain’s domestic 
laws enacted in 2002, it noted that it had not ye t decided to participate in the WTO Government 
Procurement Agreement.  The Secretariat Report had noted that the new procedures were not always strictly followed, and a similar complaint had b een made by a Japanese company.  Japan hoped that 
Bahrain would move towards the international le vel with regard to the transparency of its 
procurement system.  
37. Bahrain had no comprehensive competition legisl ation, although partial measures had been 
taken.  Japan asked about the Government's future  plans on competition policy.  As to the regulation 
of foreign capital participation, Bahrain had ma de efforts to streamline and facilitate licensing 
procedures, but foreign firms were still excluded from investing in several sectors.  The gradual 
elimination of these restrictions, together with the enhanced transparency of the system, would attract 
more FDI and contribute to the further developmen t of trade and the economy.  Japan had found some 
discrepancies between its own trade figures and the figures issued by the WTO. Japan hoped that the 
Government of Bahrain would improve its statis tics system in general and promote the early 
publication of trade statistics. 
38. The representative of Canada
 noted that bilateral trade flows had increased in 2006.  Canada 
welcomed Bahrain's engagement in multilateral in stitutions, including the UN General Assembly.  
Bahrain had no BSE measures in place that would rest rict the importation of Canadian beef, nor had it 
ever imposed such measures.  Canada expected th at Bahrain would continue its commitment to the 
World Organization for Animal Health guidelines an d science-based principles.  Canada appreciated 
this same adherence to science in Bahrain’s supp ort to lift the GCC ban on imports of live animals 
from Canada. 
39. The representative of Colombia  stated that bilateral trade was small with much room for 
growth.  Colombia appreciated Bahrain's effort s to adopt a development strategy based on its 
geographic proximity to the major oil producers and on promoting oil-related industries.  Bahrain could undertake more ambitious tariff commitments.   Colombia was confident that Bahrain would 
authorize foreigners to provide certain services th at were currently reserved to nationals. Colombia 
hoped that Bahrain would improve its commitments under Mode 4 in services, and awaited the 
adoption of standards on competition.  There was pot ential to improve bilateral trade relations as long 
as Bahrain had greater trade openness and a more transparent and pro-competition trade framework. 
40. The representative of Australia
 noted a long-standing bilateral relationship with a strong basis 
in trade.  Australia was Bahrain’s third largest source of imports. Australia commended Bahrain’s for 
its ongoing efforts to further diversify its economy, particularly through economic and infrastructure 
developments.  These had been characterized by openn ess to foreign participation, reform of internal 
systems and regulations, and increasing exposure to in ternational market forces.  Bahrain was a strong  WT/TPR/M/185 
 Page 11 
 
 
 supporter of an open rules based multilateral trad ing system, and recognized the importance of 
international trade to economic development.  The GCC had achieved significant regional economic 
integration;  and Australia and the GCC count ries had recently commenced negotiations on a 
comprehensive free-trade agreement.  At the bilate ral level, Australia and Bahrain were working on a 
Memorandum of Understanding (MoU) to ensure that trade in live animals guaranteed animal health 
and welfare consistent with OIE Te rrestrial Code and guidelines.  Australia encouraged Bahrain to 
consider early finalization of this MoU. 
41. The representative of India  recalled historical trade relati ons with Bahrain and noted that 
Bahrain's recent economic and political reforms had been more progressive than in other countries in 
the region.  Many modern industries had come up alongside traditional activities.  International 
banking was a major activity in Bahrain.  Pe troleum production and refining had underpinned 
Bahrain's strong economic growth in recent years. Other major segments of Bahrain's economy were 
the financial and construction sectors. Bahrain was actively pursuing the diversification and 
privatization of its economy to reduce the country's dependence on oil.  Despite the significant rise in 
oil and gas export revenues, Bahrain’s external de bt had more than doubled.  The contribution of 
manufacturing had been reduced to a single-digit fi gure. Agricultural exports had almost halved. FDI 
in Bahrain had been inhibited by the slow progress of the privatization programme and by investment 
restrictions in certain key areas.  India and Bahr ain had established several institutional arrangements 
to promote trade, investment, and economic relati ons.  India was negotiating an FTA with the GCC. 
42. The representative of Nigeria  noted Bahrain's impressive ec onomic performance, with low 
inflation and a public surplus since 2004. Bahrain was the most diversified economy in the Gulf 
region through its broad-b ased development strategy.  The services sector contributed almost 75% to 
GDP and employed 50% of the work force.  Th e high ratio of exports and imports in goods and 
services to GDP reflected the importance of trade.  The tariff structure was not complex;  all rates were ad valorem  (except on alcohol and tobacco), and ther e were no tariff quotas, other duties or 
taxes on imports. Nigeria was concerned by the rela tively high level of unemployment, particularly 
within the local labour force and hoped that progra mmes in place, particularly the Future Generation 
Fund launched in January 2007, and the various invest ments in health, education, and infrastructural 
projects, would help reduce unemployment.  Continue d reforms, especially lifting impediments to the 
flow of FDI, the adoption of a competition policy,  and increased trade regime predictability, would 
help to sustain economic progress. 
43. The representative of Tunisia
 commended Bahrain on its significant economic and trade 
liberalization efforts. This had been achieved by promoting competition;  tariff reductions;  
simplifying foreign trade procedures;  creating an investment-friendly e nvironment;  and broader 
diversification of trade and economi c relations through free-trade agre ements.  Bahrain was one of the 
most attractive financial markets, and ranke d high amongst the free and open economies and 
investment-friendly destinations.  Tunisia and Ba hrain were both members of the AFTA.  They 
worked together for better inclusion of the deve lopment dimension in the results of the Doha 
negotiations. Tunisia hoped that development part ners would meet the technical assistance needs 
identified by Bahrain. 
44. The representative of Morocco  noted that Bahrain's development strategy had generated 
impressive economic outcomes.  Bahrain had beco me one of the most dynamic economies in the 
region, thanks to a diversification.  Its exports we re still dominated by oil and gas, but major efforts 
had been made to improve the investment environm ent, including privatization. Morocco noted the 
adoption of a revised company law, and a law on  trade remedies (antidumping, subsidies, and 
countervailing and safeguard measures).  Bahrain was taking an active role in ongoing multilateral 
trade negotiations on NAMA and services, with a tim ely presentation of initial and revised offers. 
Concerning IPRs, Bahrain had adopt ed laws on patents, copyrights, trade marks, geographical WT/TPR/M/185 
Page 12  
 
indications, and industrial designs, etc.  Morocco an d Bahrain maintained excellent political relations, 
which had been enshrined in treaty.  
45. The representative of Brazil
 noted that Bahrain's economy had grown strongly, and that 
energy prices had had an important share of this economic performance. Bahrain had one of the most 
diversified economies in the region and was taking add itional steps to further diversify it:  the Future 
Generation Fund was a significant indicator of wise  economic leadership.  The establishment of the 
Central Bank of Bahrain (CBB) had contributed to  better management of the money supply, in 
addition to its role as regulator of financial servi ces. Trade and investment links between Brazil and 
Bahrain were expanding. Current  negotiations between MERCOSUR and the GCC would foster 
stronger commercial ties. Brazil asked why consumer  subsidies on livestock were granted only to 
imports from Australia and whether this was part of a bilateral economic cooperation agreement with 
Australia. If so, Brazil requested Bahrain to explain how this worked.  With regard to intellectual 
property rights, the Doha Declaration on the TRI PS Agreement and Public Health asserted that 
intellectual property rules should not prevent countries from protecting public health.  
46. The representative of Pakistan  said that Bahrain was the freest economy in the Arab region, 
and was rightly reaping the fruits of its mark et liberalization and from encouraging inward 
investment. The GCC Common External Tariff, had reduced Bahrain's average applied MFN tariff; 
no tariff quotas or other duties and taxes were a pplied on imports. Pakistan recognized the highly 
efficient services sector.  Bahrain and Pakistan enjo yed cordial political and economic relations. They 
were in the process of negotiating a bilateral trade de al to boost to their stagnant annual trade of over 
US$100 million. Pakistan was grateful to the Bahraini Ministry of Industry and Commerce for 
facilitating the procurement of goods and services by Pakistan's business community, and executing 
private sector deals. 
47. The representative of Saudi Arabia on behalf of the GCC  stated that Bahrain's liberal trade 
policies had enhanced its stable economic growth, and attracted FD I, through reducing tariffs and 
removing trade barriers and tariff restrictions.  Saudi  Arabia appreciated Bahrain's efforts to reduce 
the role of the public sector in the economy through privatization and diversif ication of its economic 
base.  Regionally, Bahrain was a member of the GCC customs union, initiated in 2003;  this had enabled it to achieve high GDP growth rates and a llowed its economy to complete efficiently. Bahrain 
had enacted and successfully implemented comprehe nsive trade policies designed to strengthen the 
economic base and enhance th e performance of the economy. 
48. The representative of New Zealand
 stated that Bahrain's impressive trajectory to become one 
of the most diverse economies in the Gulf reflected its comprehensive development strategy.  New 
Zealand noted Bahrain’s comparatively open and outw ard-looking attitude to international relations, 
investment, private sector activity, and domestic reform and development.  The expansion of non-
primary sectors, particularly finance, communicati ons, manufacturing, and services had contributed to 
solid economic growth.  New Zealand and Bahrain had a friendly bilateral relationship, based on 
modest two-way trade. Bahrain had been a regi onal centre for New Zealand business in the Gulf, 
facilitated by its good telecommunications and air and sea links. Bilateral economic linkages were 
fostered under the framework of the Arrange ment for Trade and Economic Cooperation.  
49. New Zealand and Bahrain had a common unde rstanding of the impor tance of economic 
transformation as a vehicle to raise the living standa rds of their citizens, a nd a shared commitment to 
promote international peace and stability. Both coun tries supported the removal of barriers to trade 
and unfair subsidy regimes. Bahrain was actively pa rticipating in the DDA.  New Zealand welcomed 
Bahrain's support for making progress in the Doha round.  Bahrain adhered to the GCC’s common 
external tariff with only a few exceptions.  New Zealand was pleased to note that agriculture was 
Bahrain’s least tariff-protected se ctor, and that Bahrain did not maintain any tariff quotas or other 
duties or charges on imports.  New Zealand supporte d Bahrain’s initiatives on sustainable agriculture  WT/TPR/M/185 
 Page 13 
 
 
 development to improve production and raise productivity, and encour aged the reduction of subsidies 
for a number of key agricultural inputs.   
50. New Zealand looked forward to the commencemen t of free-trade agreement negotiations with 
the GCC.  While bilateral trade with Bahrain was largely free from trade access irritants, exporters 
incurred significant costs and delays due to GCC members’ requirements for documentation on some 
imports to be authenticated by a GCC embassy. There were no GCC embassies in New Zealand, and 
New Zealand was of the view that these endor sements of assurances between the competent 
authorities provided no further guarantee of authenti city than the assurances themselves. Thus, New 
Zealand supported the discontinuation of all auth entication requirements currently imposed on its 
goods. New Zealand referred to Bahrain's notifi cation to the WTO SPS Committee of 11 May on new 
GCC guidelines for imported food products.  New Zealand was interested in the adoption of the 
proposed GCC standard, and looked forward to further discussions with Bahrain and other GCC 
member states.  
51. The representative of Turkey  stated that Bahrain's economic performance had been 
impressive as a result of the development strategy and favourable world oil prices. Bahrain had one of 
the most diversified economy in the Gulf.  Despite  its diversification efforts, there was room for 
further expansion of the range of economic activities.   Bahrain was taking steps towards improving its 
investment climate. However, the exclusion of fo reign companies from investing in certain activities, 
and limitations to foreign ownership in some othe rs, needed to be addressed to further improve the 
business climate. Efforts in that regard would have  positive repercussions on Bahrain's most important 
economic and social problem, which was the relati vely high unemployment rate. Bahrain’s trading 
environment displayed positive aspects of a genera lly open and competitive economy with relatively 
low applied tariff rates and few non-tariff measures. 
52. All of Bahrain's bound tariff rates were bound on an ad valorem  basis, and this was a positive 
element of its trade policy. However, the scope of  the bindings remained relatively low and should be 
extended in the DDA.  Together with the positive e ffects of further tariff reduction this could help 
further integrate Bahrain into the multilateral tr ading system. While the progress in enforcing the 
TRIPS legislation and the steps taken to review and amend trade remedies were positive, there was 
still room for improvement in some areas to bette r reflect Bahrain's economic potential. The adoption 
of a competition policy and improvement of multilateral commitments, especially in services, might be the most effective steps to take.  Bilateral relations did not reflect their full potential;  the 
conclusion of free-trade agreements with the GCC woul d raise the existing level of bilateral trade, and 
the further opening of services markets, especially  financial services, might further improve the 
bilateral economic environment, as Turkish banks ha d a considerable number of branches operating in 
Bahrain. WT/TPR/M/185 
Page 14  
 
V. REPLIES BY THE REPRESENTATIVE OF BAHRAIN AND ADDITIONAL 
COMMENTS 
53. The representative of Bahrain
 dealt with the principle i ssues under the three themes: 
economic environment, trade policies, and sectoral polices: 
(i) Economic Environment 
54. In terms of macroeconomic reforms, there we re a number of elements within the overall 
economic reforms aimed at increasing productivity by improving the use of technology, stimulating 
innovation, and creating a more productive and skilled la bour force in line with market requirements.  
Bahrain’s private sector had historically been one of the most active in the region, and SMEs made up over 90% of all businesses in Bahrain, it was for this  reason that SMEs became the focus of Bahrain's 
new industrial policy.  
55. In order to increase productive capacity of both goods and services, the Government had 
encouraged inward investment and removed a ll barriers to allow businesses to be set up more 
efficiently. In 2006, Bahrain had introduced new regula tions governing the start-up of businesses, 
making the process easier, faster, more transparent, and cheaper. 
56. A new Company Law, now in the legislative process, would focus on SMEs, embody relevant 
features from other members' legislation, and including key corporate governance and investment protection features. The new law was expected to have a significant impact on businesses by providing greater flexibility and an appropriate level of protection for minority shareholders. 
57. Bahrain believed that future sustainable ec onomic development lay in the strength and 
competitiveness of its labour force and a robust entr epreneurial culture.  Therefore, the Government 
had also embarked on a number of economic reform  initiatives to transform its role from operator to 
regulator, by initiating business environment enablers  and infrastructure, and to empower Bahrainis 
with world class education and training to equip them  with the skills needed to compete in the labour 
market. 
58. Foreign investment in Bahrain was encouraged, for the potential knowledge transfer and cross 
fertilization to domestic business it provided, and th is was reflected in the 100% ownership permitted 
across practically all sectors. The negative list appr oach to restricted activ ities added transparency. 
Bahrain would continuously review this list and, in light of Member s' specific questions, would look 
at those activities to determine what could be done  and the timelines.  Several advances had been 
made in competition policy, through the new Consum er Protection Law, as well as a draft competition 
law, which had had positive reviews from the World Bank.  
59. The Government had achieved a number of successful privatization projects, including in 
electricity generation.  The experience gained in  this regard, under the umbrella of the Bahrain 
Mumtalakat Holding Company, would help the Gove rnment to enhance private-sector participation, 
down-size Government, and divest other governme nt assets and holdings. While some government-
owned assets and activities, such as BAPCO, did not have divestiture timelines, the divestiture of all 
Government productive assets remained a strate gic policy objective. Privatization had been 
accelerated in 2006 with the privatizations in the power generation, public transport, and 
communication sectors. In order to strengthen the momentum, a structural framework had been put in place, including a High Committee for Privatization,   responsible for making policy decisions.  
60. The World Bank had been involved in the development of a blueprint for a ten-year 
programme of future privatization. The progra mme had commenced, and the privatization of the 
Equestrian and Horse Racing Club, the Postal Se rvices, the new IWPP (Power and Water) sewerage 
network and treatment plants had been approve d. Bahrain had handed over Mina Sulman Port  WT/TPR/M/185 
 Page 15 
 
 
 operations from the Ministry of Finance to A. P Moller Terminals (APT) in 2006, the largest 
privatization project in Bahrain’s history.  
61. The prospects for the Bahrain economy were hea lthy and robust. Bahrain had invested wisely 
in its people and infrastructure and would see the conti nuing returns on this investment in the future as 
the private sector took the economic reins. GDP was e xpected to increase at cl ose to 7% in 2007 and 
trade would continue to play an important role. 
62. Bahrain’s membership and active role in the WTO and its participation in the multilateral 
process had a significant impact on its ability to support macroeconomic reforms. Bahrain was following a policy of progressive economic liberaliza tion, including in services. Services were of 
particular importance given their strong contribution to GDP. Bahrain's initial commitment in 
services, at the time of joining the GATT, was made  only in respect of insurance services (offshore). 
Bahrain had made a new commitment in financial services under the Fifth Protocol to the GATS.  It had been increasingly opening its market to forei gn competition, and had submitted new and revised 
offers in the latest round of trade negotiations in line with its development perspectives, for example, 
in tourism, telecommunications, construction and related services, business services, air transport 
services, audiovisual services, education services, and health-related services. 
63. Bahrain was committed to regional integration,  as provided under Article V of the GATS, 
under the GCC Economic Agreement, which had established a free-trade area between the six 
Members.  Negotiations for the FTA with the United States had been effected on the basis of a WTO-
plus principle. All future negotiations on FTAs would be undertaken on a regional basis under the 
umbrella of the GCC.  Other FTA agreements, th rough the GCC, were being pursued with the EFTA 
states, India, Japan, China, MERCOSUR, Pakistan, Singapore, Australia, New Zealand, and Turkey. 
64. Bahrain expected these to lead to enhanced trade and investment flows to improve the 
prospects for market opening on a multilateral level,  complementing the work of the WTO. Bahrain 
was optimistic that greater regional integration through the GCC and the Greater Arab Free Trade Area (GAFTA) would lead to synergy and bette r complementarity, which would have positive 
impacts on Bahrain’s economic development. Bahrai n would remain active in all negotiating forums 
in order to increase the prospects for a successful conclusion of the DDA;  better trade prospects from 
the successive opening up of markets provided the b est route to sustainable economic development. 
65. In order to achieve its full potential Bahrain had requested technical assistance from 
Members, and had annexed a schedule of areas in which assistance was most needed. Bahrain had come a long way, supported by technical assistance from its major trade partners. Bahrain needed 
support in upgrading its institutional cap acity to play an even more eff ective role in negotiations at the 
multilateral and FTA levels, for export promoti on, trade capacity building and competitiveness 
enhancement, awareness raising and networking, an d ensuring Bahrain’s participation in HRD and 
training programmes for government, parliamentarians, and the private sector. 
(ii) Trade Policies 
66. As a member of the GCC, Bahrain applied the GCC common external tariff. Bahrain had 
bound almost all of its tariff lines at 35% in its in itial commitments to the GATT;  actual applied rates 
had been reduced to levels of between 0% and 5%, with only alcohol (125%) and tobacco (100%) 
being higher. In the ongoing DDA market access nego tiations several formulas were discussed for the 
reduction of bound rates with special considera tion for developing and small-economy Members.  
Bahrain’s position would be define d in coordination and harmonizati on within the GCC.  However, 
Bahrain’s history in terms of applied tariff ra tes and their application since its initial GATT 
commitments spoke volumes for its perspective on th is issue, particularly keeping in mind that WT/TPR/M/185 
Page 16  
 
Bahrain was a net importer of non-oil products.  Bahrain implemented the Customs Valuation 
Agreement, and expected to submit its notification to the WTO soon. 
67. As part of its obligations under the GCC cu stoms union, Bahrain applied the same non-
preferential rules of origin as the other five GCC Members. Under the non-preferential scheme, 
products were considered as originating from a count ry where they were wholly obtained or where 
they underwent substantial transformation with at le ast 40% of local value-added.  A certificate of 
origin issued by the original exporter and legalized  by a recognized authority in the country of export 
was required for import clearance.  Bahrain recognized that some Members were experiencing difficulties with the legalization process, and had pled ged to make efforts with its GCC neighbours to 
solve this issue. For imports from GAFTA, local value- added of at least 40% was  required in order to 
qualify for preferential treatment, while under the bi lateral trade agreement with the United States, 
local value-added of at least 35% was necessary.  Th e bilateral trade agreement with the United States 
stipulated specific "yarn forward"  rules of origin for textiles. 
68. Bahrain had included a few items on a list of prohibited or restricted products. These were 
restricted or prohibited for reasons of health, saf ety, or heritage protection. A common GCC list of 
prohibited and restricted goods was being develope d and was expected to be finalized before 
end-2007.  
69. A number of issues had been of concern to Me mbers, including the current requirement for a 
certificate declaring food products to be free of radia tion and dioxin.  The requirement with regard to 
radiation, had been in place since the Chernobyl nuclear plant accident in April 1986; the dioxin 
certificate was required following the incidence of  dioxin in chicken feed in Belgium. The 
requirements for radiation and dioxin certificates  were contained in the GCC Food Imports Control 
Guidebook.  Bahrain recognized the need to r eassess the necessity for these certificates and would 
notify to the WTO, for both radiation and dioxin, as soon as these requirements had been finalized and 
studied at the GCC level.  
70. Bahrain had limited resources in terms of laboratories and other technical infrastructure, and 
therefore, standardization work in Bahrain was clos ely linked with that of the Gulf Standardization 
Organization (GSO). No Bahraini standard was deve loped if there was a similar Gulf standard in 
existence and, in most cases, Bahraini standards were prepared through direct adoption of Gulf 
standards or international standards.  Standard s technical committees conducted the standardization 
work at the Bahrain Standards and Metrology Directorate (BSMD).  These committees were made up of representatives of industrial sectors, public aut horities, government agencies, and consumers. The 
BSMD participated in the GSO standards develo pment activities by submitting proposals of draft 
standards to the technical work program of GSO.  Th e BSMD also participated in studying draft Gulf 
standards through its local technical committees.  Following approval of Gulf standards by the GSO 
Board of Directors, the National Committee for St andards (NCSM) approved them for adoption as 
national Bahraini standards by the competent minister. 
71. Regarding standards on food labeling expiry pe riods, proposed for agreement at the GCC 
level, the following standards had been revised: GS 1023/2000 "Expiration of food products--Part 2"; 
GS 150/1993 "Expiration periods for food product s--Part 1"; and GS 9/1995 "Labeling of pre-
packaged foods".  Pursuant to Article 3a and Ar ticle 12 of Legislative Decree No. 16 of 1985, as 
amended by Legislative Decree No. 13 of 1992 GS standards became applicable in Bahrain only if 
adopted by the National Standards Committee and a pproved by a Ministerial Order. Bahrain would 
take into account its international obligations before adopting the afor ementioned Gulf standards.  At 
the present time, Bahrain was controlling food produ cts through national technical regulations, i.e. 
Codex Standard 1.  OIML R-79 was a technical re gulation that could be used for general products 
where no specific national laws or regulations were available.   WT/TPR/M/185 
 Page 17 
 
 
 72. The current ban on beef exported from Europe was imposed during the outbreak of BSE in 
the United Kingdom and some other EC members to pr otect consumers, and dealt with the fear the 
outbreak had caused amongst local consumers.  Howeve r, Bahrain was studying this issue in light of 
OIE developments, and would do so at the GCC level. 
73. The issue of government procurement a nd membership of the WTO-GPA was under 
discussion within the context of the GCC.  Bahrai n supported the goals of the GPA, as it helped to 
improve transparency and increase fair market ac cess. In October 2002, Bahrain had implemented a 
new government procurement law that established th e basic framework for a transparent procurement 
system. A tender board had been established in Ja nuary 2003 to oversee all government tenders and 
purchases.  Bahrain had signed an FTA with the United States (a GPA member), and was in the 
process, through the GCC, of negotiating FTAs with other members (EC, Singapore, and EFTA 
members).  Bahrain was not aware of any specific problems related to govern ment procurement that 
had been faced by foreign firms, but would be pleased to receive any details in this regard. 
74. The Government currently provided a preferen ce margin for domestically produced goods 
and for goods produced in other GCC States, at 10 % and 5% respectively.  These margins had been 
set at the GCC level, and any move to reduce or  eliminate them would be through the GCC.  The 
preference margins were applied to the product, not  the nationality of the producer, which meant that 
products produced in Bahrain by a company with foreign ownership would al so be considered as 
Bahraini products for this purpose. The 5% prefer ence margin was limited to firms owned at least 
51% by GCC nationals. As regards incentives schem es, the current concessions were applied across 
the board to all industries, and there was no selectivity. 
75. Under Law No. 3 of 2004, ratifying the GCC Supreme Council's exemption of industrial 
inputs from customs duties", the exemption was appli cable across-the-board, and was not specific to a 
particular industry or company;  it was granted to a ll factories that applied to the Ministry of Industry 
and Commerce on a non-discriminatory basis.  Items were exempted from customs duty by virtue of 
the list attached to the MOF Ministerial Order No. 12 of 2003, as updated.  Implementing regulations 
had been finalized within the relevant GCC tec hnical committee at the beginning of 2007, and 
notification to the WTO, in accordance with Ar ticle 32.6 of the WTO Agreement on Subsidies and 
Countervailing Measures, would be made in due co urse once adopted.  Current legislation no longer 
required local-content. Factories that had obtaine d benefits under Law No. 11 of 1985 on "Industries 
Support and Protection" (superseded by Law No. 3), which provided duty concessions for two renewable years, continued to benefit until these years expired. 
76. In addition to non-discriminatory import duty concessions on raw material, machinery, and 
equipment imported for local factories qualifying  under the local and GCC industries laws, other 
incentives were available to both local and foreign investors and included access low interest, short- 
and long-term loans from the Bahrain Developmen t Bank, to finance capit al assets and working 
capital components, low rents for land in governme nt industrial areas, and low energy tariffs.  
77. Bahrain  had recently enacted several new intellectua l property laws, including on patents, 
trade marks, copyright and neighboring rights, trade secrets, topographical designs of integrated circuits, industrial designs, geographical indications , and manufacture of optical discs.  It had also 
become a party to numerous international agreements  and treaties.  Bahrain considered that a solid 
IPR infrastructure was a vital component both to attract FDI and to foster domestic innovation.  Bahrain’s laws provided for the implementation of TRIPS Article 54 in the timeframes required for 
notifications.  Chapter IX Article 43 of Law No . 11 of 2006 on trade marks contained identical 
provisions.  Intellectual property rights were impo rtant in fostering local inventions and their 
exploitation as well as encouraging inward invest ment, and Bahrain would make every effort to 
ensure that IPR laws were fully enforced a nd the penalties for infringements applied. Bahrain WT/TPR/M/185 
Page 18  
 
welcomed technical assistance from Member States in order to enhance domestic capacity and assist 
building its institutional capacity at all leve ls, particularly in terms of training. 
(iii) Sectoral Policies 
78. Bahrain was a net importer of agricultural produc ts. Agriculture as a whole contributed only 
0.6% to GDP and only 1.3% to employment.  Agri cultural input subsidies were minimal, and were 
given primarily as part of the social welfar e support mechanism, which was now under review. 
79. The Government of Bahrain was currently rest ructuring the oil and gas sector, including the 
establishment of a holding company to manage its oil and gas interests. This was an indication of the direction of the future policy and of the manne r in which other assets were being held by the 
Government holding company "Mumtalakat", whic h was already divesting Government holdings 
based on commercial decisions.  No timelines had been  set for the divestiture of some of the major 
industries, such as ALBA (aluminium) and BAPCO (oil). Oil and the aluminium smelter contributed 
significantly to government revenue, and changing  the dynamics of an economy that based the 
attraction of inward investment on infrastructure and revenues derived from oil and the aluminium industry, could not be achieved easily or quickly.  
80. The Government was committed to the overarchi ng goal of divesting and re-investing its 
assets through privatization, so as to provide greater  investment opportunities for the private sector. 
Bahrain was following a process of private-sector-led growth, which had entaile d changing the role of 
the Government to facilitation, supp ort, and regulation.  This involv ed encouraging the private sector 
to become fully engaged in the economic developm ent process, including taking on elements of the 
economy that, to date, the Government had been involved in.  
81. The Government had already achieved a number of successful privatization projects and the 
experience gained, under the umbrella of the Mumtalak at, would help in its drive to enhance private 
sector economic participation, the down-sizing of Government, and the divestiture of government 
assets and holdings.  With regard to electricity gene ration and tariffs, this was not a Government-only 
domain, and Bahrain had a successful private sector initiative in power generation.  While electricity 
tariffs were currently lower than production cost , this was constantly under review based on the 
Ministry of Electricity and Water’s objective of achieving a full cost-recovery transfer price.  
Nevertheless, the Cabinet took into account the percep tions of the Parliament and the interests of the 
population. Lower tariffs were provided to indus try on a non-discriminatory basis to support the 
growth of local capacity. 
82. The services sector was a key component in Bahrain's overall policy of economic 
diversification. Financial services had developed strongly, serving both the domestic economy and 
those of its neighbours. In July 2004, Bahrain  liberalized its fixed and international 
telecommunication services. Foreign ownership was allowed in the majority of services sub-sectors. Bahrain had scheduled commitments only in some financial services; it had no MFN exemptions under Article II of the GATS.  Bahrain's policy of  progressive liberalization was in line with its 
economic development and applied to all sectors, incl uding services. Its new and revised offers in, for 
example, tourism, telecommunications, construction and related services, business services, air transport services, audiovisual services, education and health related services, were very ambitious.  
83. Bahrain had demonstrated its commitment to the Doha negotiations and to enhancing its 
commitments, particularly in services, as it was one  of only a few Members that had respected the 
initial deadline for submitting initial and revised offers, and had offered ambitious commitments, 
including in terms of mode 1 and mode 4 of supply for contractual services suppliers and installers 
and maintenance workers, as well as intra-corporate transferees.   WT/TPR/M/185 
 Page 19 
 
 
 84. Land transportation was under active considerati on, with Bahrain's GCC partners.  Bahrain 
would make every effort to achieve a result that w ould facilitate the removal of restrictions in this 
area. 
85. The discussant  was encouraged to hear that further harmonization in the GCC would be 
achieved by the end of the year, but would have li ked to say further information on FTAs in Bahrain's 
written replies.  Regarding FDI, it was encouraging to learn that there would be a continuous review 
of the negative list; he hoped that this would be  as frequent as possible. Special interest had been 
shown in the services sector, and the Minister had assured Members that Bahrain was continuing to follow a policy of progressive liberalization in line with its economic development in all sectors. He 
was pleased to hear that bound rates would continue to  decline. There had been wide interest in IPRs, 
the importance of which was fully recognized by the Government. Bahrain was committed to ensure a 
strong environment for IPRs through rigid enforcemen t, as this was a vital component to attracting 
FDI and fostering domestic innovation. There had also  been strong interest in the draft competition 
law, which was to be submitted to Parliament afte r the consultation period. Bahrain would undertake a 
leading role within the GCC to have the certifi cate requirement removed as soon as possible;  he 
hoped that Bahrain would be successful in this regard .  It was encouraging to learn that there were no 
limitations on foreign participati on in privatization projects.  Bahrain was following a process of 
private sector led growth and was committed to the divesture of government assets.  Bahrain was discussing the issue of the membership in the WT O Government Procurement Agreement within the 
context of the GCC. On paragraph 51 of the Secretariat report, which Bahrain had noted as 
"incorrect", he would further observe the situation. 
86. The representative of the European Communities
 took note of Bahrain responses concerning 
the requirements for radioactivity and dioxin certificat es.  The EC noted that Bahrain was studying the 
issue of import bans in the light of OIE rules and recommendations.  The EC encouraged Bahrain to 
continue this and to take appropriate steps as soon as possible. 
87. The representative of the Chinese Taipei commented on the importance of trade facilitation.  
Chinese Taipei had been one of the early financ ial contributors to capac ity-building projects and 
offered technical assistance. Regarding the lega lization of documents, he took note that Bahrain 
would try to solve the problems facing foreign exporters.  
88. The representative of India  stated that India would coopera te with Bahrain to bilaterally 
explore areas for technical assistance.   
89. The representative of the United States  welcomed Bahrain's intention to reduce the FDI 
negative list.  The United States looked forward to Bahrain's continued progress in privatization and 
appreciated the comprehensive information provided .  The United States took note that Bahrain was 
discussing membership in the WTO Government Proc urement Agreement within the context of the 
GCC. 
90. The representative of Japan  requested additional informati on on Bahrain's existing bilateral 
agreements and ongoing free-trade negotiations within the GCC. 
91. The representative of Canada  thanked Bahrain for extending the comment period for the 
inspection guide for imported foods at GCC entry points .  He requested a translated copy of the guide. 
92. The representative of Bahrain  appreciated Members' positive comments, particularly noting 
that Bahrain took the WTO very seriously and would continue to do so.  Bahrain was grateful to the 
WTO for showing it the road to sustainable future  development and for helping it on many issues.  
Bahrain hoped to host more WTO seminars and techni cal assistance activities in order to benefit fully 
from the multilateral trading system.  WT/TPR/M/185 
Page 20  
 
VI. CONCLUDING REMARKS BY THE CHAIRPERSON 
93. This second Trade Policy Review of the Kingdom of Bahrain has allowe d us to improve our 
understanding of its trade and rela ted policies, and the developments since its previous Review in 
2000. Our discussions have greatly benefited from th e participation of H.E. Dr. Hassan Fakhro, 
Minister of Industry and Commerce, and his delegation. Our thanks are also due to our discussant, 
Ambassador Ichiro Fujisaki, for his insightful cont ribution to our discussions, and the engagement of 
delegations. 
94. Members commended Bahrain for its impressive  economic performance over the past few 
years. This reflects its successful diversificati on strategy, supported by  its generally open and 
business-friendly environment, a large influx of fore ign labour, and in recent years, by high oil and 
natural gas earnings. Bahrain was praised for its ef forts towards ensuring intergenerational equity in 
the exploitation of its n on-renewable resources, through health, ed ucation, and infrastructure projects. 
Recent measures taken by Bahrain to further libera lize its investment regime were also welcomed, 
although delegations noted that the investment regi me remains restricted or limited in certain 
activities, some of which continue to be  dominated by state-owned companies. 
95. Members appreciated Bahrain's commitment to the multilateral trading system, including the 
DDA negotiations, and encouraged it to increase its pa rticipation in WTO activities and to fully meet 
its notification requirements. Bahrain's market for al l products is quite open, and the bulk of its trade 
has taken place on an MFN basis. Nevertheless, delega tions noted Bahrain's par ticipation in the Gulf 
Cooperation Council (GCC), the Greater Arab Free-Trad e Area (GAFTA), as well as in bilateral trade 
agreements, most of which are not yet fully established.  
96. Members welcomed the decrease in tariff prot ection from 7.7% in 2 000 to 5.3% in 2007 
following the application of the GCC common extern al tariff by Bahrain on 1 January 2003, but urged 
Bahrain to extend the scope of its tariff bindi ng commitments, and reduce the gap between applied 
and bound rates. Some Members also raised con cerns about Bahrain's requirement for consular 
formalities on imports, and its enforcement of WT O provisions on customs valuation. Delegations 
noted the absence of competition legislation, and encouraged Bahrain to amend its government 
procurement regime to remove, inter alia , the price preferences fo r domestic and GCC products. 
Other issues of interest to Members included TBT and SPS measures; protection of intellectual 
property rights; agriculture, including consumer subsidies to beef imported from Australia and 
domestic support; state control over , and development plans for, the energy sector; state support for 
manufacturing, in particular the aluminium i ndustry; and services, including GATS commitments, 
financial  services, telecoms, transport, and tourism. 
97. Members appreciated very much the responses provided by the Bahraini delegation, and look 
forward to receiving written answers to any outstanding questions. 
98. In conclusion, I congratulate the Kingdom of  Bahrain on the openness of its economy and 
encourage it to pursue its reforms, including by further improving its multilateral commitments, both 
on goods and services, with a view to enhancing th e transparency and predictability of its trade 
regime, and adherence to WTO principles.  Members c ould help Bahrain in its efforts by keeping their 
markets open for products and services of interest to Bahrain, and by providing adequate technical 
assistance.  
__________