US embassy cable - 04MANAMA969

UNCLAS SECTION 01 OF 02 MANAMA 000969 
 
SIPDIS 
 
DEPT FOR NEA/ARP 
DEPT PASS USTR JBUNTIN 
USDOC FOR CLOUSTAUNAU 
CAIRO FOR SBONDY 
 
E.O. 12958: N/A 
TAGS: ETRD, BEXP, ECON, BA 
SUBJECT: GOB FORGES AHEAD TO HELP FTA DREAM BECOME A 
BUSINESS REALITY 
 
1. SUMMARY: Bahrain's government and business community are 
actively pursuing ways to make the Free Trade Agreement (FTA) 
with the United States become a powerhouse for the economy, 
as responsibility begins to shift from the givernment to the 
private sector.  Seeking to strengthen commercial ties with 
the United States, whether through support of an AmCham in 
Bahrain or by sending to and receiving from the United States 
business delegations, the GoB is in strong support of 
business objectives.  The business community, too, is 
beginning to look outside its borders to benefit from the 
Jordanian FTA experience, to learn from it and to replicate 
its success.  Interministerial and government to business 
dialog are boosting Bahraini business confidence that FTA is 
a good thing that can work for them if they decide to take 
responsibility for its success.   END SUMMARY 
 
------------ 
COMMERCE MINISTER PLEDGES PARTNERSHIP WITH CHARGE 
-------------- 
 
2. In his initial meeting with CDA on June 16, Commerce 
Minister Ali Saleh Al Saleh noted that we have much work 
ahead to make the dream of the "era of FTA" a reality for 
business.   The Commerce ministry, he stressed, will exert 
every effort to help the private sector achieve success. 
Saleh said that he wants to see Bahrain become a model for 
the region and the economic envy of its neighbors.  Making 
Bahrain the regional base for American companies and 
investors, he emphasized, is one way to accomplish this goal. 
 The Minister agreed with the CDA regarding the importance of 
establishing an American Chamber of Commerce as a mechanism 
for U.S. business to learn about Bahrain and to penetrate the 
region.  To strengthen an AMCHAM Bahrain's chances for 
success, the Minister noted that he had facilitated an 
unprecedented cabinet decision to authorize registration of 
the AMCHAM with the Ministry of Commerce rather than the 
Ministry of Labor. 
 
3. Minister Saleh noted that the office of Assistant 
Undersecretary of Foreign Trade Relations Shaikh Daij Al 
Khalifa is charged with creating a post-FTA five year plan 
for the Ministry of Commerce to help Bahrain capitalize on 
the FTA.  Shaikh Daij added that the GOB made public in a 
June 15 press conference that it would establish permanent 
contact with the private sector on FTA.  Further, an 
interministerial committee under Ministry of Finance 
leadership is creating an action plan to follow up on FTA 
implementation. 
 
4. The Minister noted that he had reserved E-commerce and 
entrepreneurship as the Commerce Ministry's areas of 
responsibility for post-FTA promotion.  He highlighted that 
Microsoft has joined with the GOB to develop e-government and 
is working on a five year plan to boost the commercial IT 
sector, but Saleh said he would like to see more assistance 
and cooperation in this arena.  Further, working together 
with the Bahrain Chamber of Commerce and Industry, and in the 
future hopefully with AmCham membership as well, the Minister 
envisions young people creating companies, not just jobs. 
Capitalizing on U.S. entrepreneurial spirit and expertise, 
the Minister hopes to send a specialized delegation to the 
United States to discover how to promote these issues and 
encourage these new developments. 
 
------------------------------------------- 
PRIME MINISTER MAKES FTA SUCCESS A PRIORITY 
------------------------------------------- 
 
5. Upon his return to Bahrain, Prime Minister Shaikh Khalifa 
bin Salman Al Khalifa publicly praised the FTA and urged 
Bahraini businesses to exert every effort to make the 
agreement a success.  Bahrain Chamber of Commerce and 
Industry (BCCI) Chairman Khalid Kanoo told POL/ECON Chief on 
June 10 that the Prime Minister had reiterated his public 
message in a private meeting with the BCCI board of 
directors.  Kanoo pledged that BCCI would aggressively 
develop post-FTA business promotion. 
 
----------------------------------- 
BCCI LOOKS TO JORDAN FOR FTA ADVICE 
----------------------------------- 
 
6. BCCI invited Jordanian trade expert Rasim Samih Abdul 
Rahim to address the BCCI membership June 7 on methods for 
the private sector to benefit from the Free Trade Agreement 
(FTA) with the United States.  Abdul Rahim served as an 
advisor for the FTA Unit in the Support and Developing 
Business Environment program in Jordan. He is also working as 
an International Advisor to the International Trade 
Organization and UNCTAD and is a member of several 
specialized professional international associations.  Abdul 
Rahim noted that all countries have benefited from an FTA 
with the United States.  The agreement's effectiveness, he 
continued, will depend on how businesses take advantage of 
the agreement, which sets up a framework to develop 
investment opportunities between the two countries.  Like the 
FTA with Jordan, the economic goal of Bahrain's FTA with the 
US, he said, was to establish clear trade regulations to 
promote mutual trade and to encourage innovation.  This would 
strengthen friendly ties, improve the country,s economic 
relationship with the US, improve the standard of living in 
Bahrain, facilitate investment opportunities, and achieve 
sustainable development.  Abdul Rahim highlighted the 
exemption of custom duties on consumer products, and 
industrial, agriculture, and electronic goods, including the 
protection of intellectual property rights and labor rights 
along with commitments to protect the environment. 
 
7. Abdul Rahim stated that the US-Jordan FTA had produced a 
huge increase in Jordan,s exports to the US following the 
signing of the agreement.  To duplicate that outcome in 
Bahrain, Abdul Rahim stressed the responsibility of the 
business community in implementing the FTA.  The private 
sector, he noted, must examine the provisions of the 
agreement in order to facilitate access into the 
international market and to realize the best investment 
opportunities presented by the agreement.  Other countries' 
experience could provide useful lessons.  He recommended that 
Bahrain's private sector establish a strong commercial 
presence in US markets.  Jordanian companies that had opened 
branches in the US had achieved much success.  Abdul Rahim 
highlighted the role of the Jordanian Chamber of Commerce and 
Industry in studying anticipated commercial and investment 
opportunities. He called upon Bahrain's business community to 
strengthen their relationship with the Chamber of Commerce, 
and to participate in their efforts to inform citizens about 
business opportunities opened by the FTA.  He also stressed 
the importance of cooperation between the public and private 
sectors for identifying and exploiting new business 
relationships. 
 
8. BCCI Vice Chairman Chairman of the BCCI FTA Steering 
Committee Essam Fakhro commented that once the agreement is 
signed, responsibility for its success will be transferred 
from the government to the private sector.  Increased 
competition will bring new challenges to the private sector. 
Fakhro stressed that BCCI is conducting a comprehensive 
program conducted to inform Bahrain's business community of 
the opportunities the FTA presents. 
 
----------- 
COMMENT: 
--------- 
 
9. FTA negotiations have begun a remarkable development in 
Bahrain: Ministries have started coordinating and cooperating 
to achieve ends that are beneficial to Bahrain as a whole. 
The creation of an interministerial committee to follow up on 
FTA implementation would not have been possible as little as 
two years ago.  Further, the Government and business 
communities are talking frequently, and the Government is 
showing business its strong support. The business community 
is also beginning to look independently for ways to make the 
FTA work for them, and as a first step toward broadening this 
horizon, have opened up to the Jordanian business community, 
to profit from their experience. If Bahrain's business 
community continues on this trajectory and continues to 
receive the support and encourageent it clearly needs from 
government officials, they will make FTA a success for 
Bahrain.  END COMMENT 
 
WILLIAMSON