Testimony of Bill Reinsch, President, National Foreign Trade Council
Before the U.S. Trade Policy Staff Committee on a
U.S.-Bahrain Free Trade Agreement
November 5, 2003
Mr. Chairman and members of the Committee, thank you for the opportunity to testify today on the proposed United States-Bahrain Free Trade Agreement. I am Bill Reinsch, President of the National Foreign Trade Council (NFTC). The NFTC’s members are leading U.S. companies actively trading and investing around the world. We are also a founding member, along with the Business Council for International Understanding (BCIU), and the National U.S. – Arab Chamber of Commerce (NUSACC) of the U.S.-Bahrain FTA Coalition, a diverse group of U.S. corporations and associations supporting a bilateral free trade agreement between the two nations.
For almost ninety years, the National Foreign Trade Council has worked to promote an open rules based world trading system. Our mission is to assure that our member companies have the opportunity to pursue active commercial engagement that creates economic opportunity both at home and in the foreign markets they enter.
I am here today to testify on behalf of the U.S.-Bahrain FTA Coalition, which is being formed to support the rapid negotiation and passage of a commercially meaningful U.S.–Bahrain Free Trade Agreement (FTA).
We believe an FTA with Bahrain is in the strong interest of the United States. It provides the opportunity to eliminate bilateral tariff and non-tariff barriers, boost bilateral and regional trade flows, and stimulate economic growth and prosperity. Whereas U.S. business competes and thrives in markets with economic, regulatory and political stability, a U.S. – Bahrain FTA offers expanded potential for U.S. business and will enhance stability in Bahrain and ultimately in the region as a whole.
In strengthening U.S. ties with a key strategic ally committed to trade liberalization and economic reform, a U.S.-Bahrain FTA will demonstrate to other countries in the region the importance and benefits of free and open rules based trade.
Finally, pursuing a bilateral FTA strengthens our trade relationship in the context of our overall friendship and alliance with Bahrain. It fosters shared values and recognizes Bahrain’s strategic contributions to overall U.S. policy.
I would like to elaborate briefly on these points.
Increased Bilateral and Regional trade
Bahrain is already a reliable market for U.S. goods and services. Last year while U.S. imports from Bahrain totaled $395 million, U.S. business exported almost $420 million. American companies are exporting aircraft, machinery, vehicles, pharmaceuticals products, toys, sporting equipment and other products. U.S. business is also participating in the expansion of the aluminum smelter and many of the other oil related upstream and downstream industries being developed.
We see the potential for a high quality FTA to increase U.S. sales by:
– eliminating tariffs,
– improving customs and other trade facilitation procedures,
– assuring that product and safety standards are based on sound science that does not create unjustifiable barriers to trade,
– locking in intellectual property protection and enforcement to deter counterfeiting and piracy,
– undertaking a comprehensive approach to increased access to services markets that improves transparency and predictability in regulatory procedures and adequately addresses discriminatory and other barriers,
– building on the existing U.S. – Bahrain bilateral investment treaty to increase investor protection and increase opportunities for U.S. investment,
– taking necessary steps that encourage e-commerce, and
– increasing transparency and predictability in and access to Bahraini government procurement.
These and other elements of a high quality FTA will increase opportunities for U.S. manufacturing, financial services, distribution, construction and engineering, health, education, tourism and environmental services sectors. As the country diversifies its economy away from oil, the financial services sector has already surpassed oil in percentage contribution to GDP. There are strong opportunities for American financial services and insurance companies in Bahrain.
Other major projects in tourism, healthcare and education are well suited for U.S. business participation. High value U.S. food and beverage products should also see increasing opportunities in Bahrain, especially as the tourism and restaurant base grows. A high quality FTA will improve the overall investment climate in Bahrain and provide another partner in increasing free trade in the region
Supports Reform by a Proven Ally
Bahrain is a dependable and longstanding U.S. business partner in an unstable region. It has worked hard to diversify its economy; it has invested substantially in transportation and communications infrastructure, and already serves as an important hub for U.S. business in the Gulf region. As home to the U.S. Navy’s 5th Fleet, there is a strong foundation of U.S.-Bahraini relationships and familiarity with U.S. products, services and technology, as well as the U.S. educational and healthcare system.
Since the signing of the bilateral Trade and Investment Framework Agreement with the U.S. in 2002, the country has demonstrated its commitment to reform by upgrading its laws protecting intellectual property, agreeing to treat agricultural biotechnology fairly, and by taking steps to become party to the WIPO Internet Treaty. Bahrain is making valuable contributions to the WTO process, by offering to improve its existing services commitments and has joined the WTO Information Technology Agreement.
In the last two years, Bahrain has embarked on an historic program of democratic reform, instituting a constitutional monarchy with an elected lower chamber of parliament, undertaking the creation of an independent judiciary, and granting women the right to vote and stand for office.
A free trade agreement with the United States will serve to increase economic opportunity in Bahrain which will in turn encourage further reform.
Strategic Link in the MEFTA Strategy
The member companies of the NFTC and our colleague associations supporting a free trade agreement with Bahrain have been deeply involved in the negotiation of the U.S. –Morocco FTA over the past year and support the Administration’s strategy in moving toward a Middle East Free Trade Area (MEFTA). Bahrain is an important and logical next step in that strategy. Indeed Bahrain offers the best prospect for a high quality agreement in the Gulf region and will set a standard by which other nations seeking an FTA with the United States will be measured.
As the U.S. works with peaceful countries in the region to accede to the WTO and offers expanded GSP status; assists nations to develop the laws and institutions necessary to open markets through the TIFA process, and negotiates bilateral investment treaties and free trade agreements with eligible regional partners, Bahrain is a good choice, along with Morocco and Jordan, to serve as linchpins in the region. These nations all have the potential, through their FTAs with the U.S. to increase their leadership in their particular regions of the Middle East. Bahrain’s commercial and economic reforms and market opening measures as reflected in a high quality FTA are likely to encourage neighboring countries to pursue the same path.
The MEFTA strategy is a brick by brick approach, constructively engaging with all willing nations in the Middle East, regardless of their level of development, and it makes sense in this context to engage with Bahrain, as it does with other nations in the future, such as Egypt.
Maintains and Enhances momentum in trade liberalization
In Cancun we experienced a setback in the process of multilateral trade liberalization. While we maintain confidence and optimism in the negotiations of the WTO Doha Development Agenda, we also strongly support continuing efforts to identify nations and markets with opportunities to support and lock in gains in liberalization that will increase trade and access for U.S. business. Bahrain is such an opportunity. It also sends the strong signal to the world that the U.S. will continue its leadership in trade liberalization, working with nations that share these goals.
In conclusion, the NFTC and members of the U.S.-Bahrain FTA Coalition believe that the swift negotiation and completion of a U.S.-Bahrain Free Trade Agreement is in the national interest of the United States. Thank you for the opportunity to testify today.