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ZNY CCCCC ZZH
O 251419Z SEP 06
FM AMEMBASSY MANAMA
TO RUEHC/SECSTATE WASHDC IMMEDIATE 5666
INFO RUEHEE/ARAB LEAGUE COLLECTIVE PRIORITY
RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY
RHMFISS/HQ USCENTCOM MACDILL AFB FL PRIORITY
RHBVAKS/COMUSNAVCENT  PRIORITY

C O N F I D E N T I A L SECTION 01 OF 03 MANAMA 001700 
 
SIPDIS 
 
SIPDIS 
 
STATE FOR NEA/ARP, EB 
STATE PASS USTR FOR J BUNTIN 
COMMERCE FOR 4520/ITA/MAC 
 
E.O. 12958: DECL: 09/24/2016 
TAGS: ETRD ECON EINV PREL BEXP BA BILAT ECTRD
SUBJECT: BAHRAINIS TELL COMMERCE DELEGATION THEY ARE 
ANXIOUS TO IMPLEMENT, BENEFIT FROM FTA 
 
Classified By: Ambassador William T. Monroe for reasons 1.4 (b) and (d) 
 
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Summary 
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¶1.  (C) Deputy Assistant Secretary of Commerce Vineyard's 
September 12-14 visit to Bahrain served to celebrate the 
August 1 implementation of the U.S.-Bahrain Free Trade 
Agreement (FTA), the first with a Gulf country.  Vineyard 
stated that the agreement enables the bilateral commercial 
relationship to catch up to the long-standing strategic 
relationship, noting that two-way trade could exceed $1 
billion for the first time in 2006.  Minister of Industry and 
Commerce Fakhro stressed that King Hamad is fully committed 
to the FTA and the bilateral relationship.  He cautioned that 
Bahraini firms would have to improve the quality of their 
products to penetrate the American market, and hoped that 
U.S. companies investing in Bahrain would share their 
technology, training, and management expertise.  Economic 
Development Board Deputy CEO Hejres pledged a "fast track, 
transparent process" for Americans investing in Bahrain. 
Several interlocutors identified the need for further 
outreach and education on the FTA so that the benefits of the 
agreement are spread throughout the business sector.  End 
Summary. 
 
------------------- 
Celebrating the FTA 
------------------- 
 
¶2.  (SBU) Deputy Assistant Secretary of Commerce Holly 
Vineyard and Commerce Office of the Middle East Desk Officer 
Carl Oberg, accompanied by the Ambassador and Pol/Econ Chief, 
met with a range of Bahraini government officials, business 
leaders, and organizations during a September 12-14 visit to 
celebrate the August 1 implementation of the U.S.-Bahrain 
Free Trade Agreement.  In all the delegation's meetings, 
Bahrainis expressed a strong interest in implementing and 
benefiting from the agreement, but many pointed to a need for 
Bahrain's private sector to become more pro-active in 
pursuing business deals with American companies and improving 
their product quality, packaging, and marketing. 
 
¶3.  (SBU) In the meetings, DAS Vineyard explained that the 
FTA enables the bilateral commercial relationship to catch up 
to the long-standing strategic relationship between our two 
countries.  In recognition of Bahrain's importance as the 
first country in the Gulf with both an FTA (and an AmCham), 
the newly released 2006 National Export Strategy discusses 
implementation of the FTA and steps to promote it.  The FTA 
is an essential building block in realizing the President's 
vision of a Middle East Free Trade Area by 2013.  She noted 
that bilateral trade could exceed $1 billion for the first 
time in 2006.  Several organizations, in addition to the 
AmCham, were in place to assist businesses pursuing 
opportunities, such as U.S.-Bahrain Joint Business Council 
(which was launched September 14 in Washington) and the 
Bahraini FTA Implementation Committee.  DAS Vineyard offered 
the resources of the Department of Commerce, in particular 
the over 100 Export Assistance Centers in the United States, 
to help Bahraini trade missions and companies do business 
with American counterparts. 
 
--------------------------------------------- ------ 
Bahrain Fully Committed to FTA, Bilateral Relations 
--------------------------------------------- ------ 
 
¶4.  (C) Minister of Industry and Commerce Hassan Fakhro 
opened the September 12 meeting with the delegation by 
emphasizing that King Hamad is fully committed to the FTA and 
the bilateral relationship with the United States.  Reading a 
statement (that was later issued to the media), he lauded 
both countries for negotiating, ratifying, and implementing 
the FTA.  He cautioned, however, that Bahraini industries 
must improve quality standards to meet U.S. requirements and 
benefit from commercial opportunities.  "A lot will depend on 
the readiness of our private sector to meet the challenges of 
penetrating the vast, sophisticated U.S. market," he said. 
Bahraini companies must meet the expectations of their 
American counterparts, in particular in quality and 
conforming to standards.  He hoped that U.S. companies that 
decide to invest in Bahrain would be able to share their 
technology, training, and management expertise.  "This should 
further bolster our status as the industrial and financial 
 
MANAMA 00001700  002 OF 003 
 
 
hub of the region and also spread the benefits of the FTA to 
the rest of the region and beyond," he concluded. 
 
¶5. (C) In a September 13 meeting, Bahrain Economic 
Development Board (EDB) Deputy CEO Zakariya Hejres told the 
delegation that the FTA should be a role model for the 
region.  The EDB had already begun promoting and marketing 
the agreement to attract other regional countries to invest 
in Bahrain.  The EDB is also focusing on encouraging U.S. 
joint ventures in Bahrain.  He pledged to provide a "fast 
track, transparent process" for American investors.  In the 
same meeting, Director of Agreements and Treaties in the 
Ministry of Cabinet Affairs Jameel Al Alawi said that the FTA 
is having beneficial impacts inside Bahrain in areas other 
than trade.  Fro example, it is promoting transparency in 
government decision-making.  He noted that in discussions 
with colleagues, they agree now on the need for consultations 
with stake holders on new laws and regulations. 
 
---------------------------------- 
Time for Private Sector Leadership 
---------------------------------- 
 
¶6.  (C) Ministry of Finance Assistant Under Secretary for 
Economic Activities Mahmoud Al Kooheji told the delegation 
September 14 that completing the agreement was a major 
accomplishment, but now it is time for the private sector to 
take the lead.  He indicated that Bahraini business people 
have failed to take advantage of other trade deals completed 
by the government, and that the government's role is to push 
the private sector to take on a sense of ownership.  Ministry 
of Finance Director for Economic Planning Yousef Humood added 
that Bahrain stresses the positive impact of the FTA on 
raising standards when discussing the FTA with other GCC 
countries.  Kooheji said that some Saudi companies have 
expressed an interest in investing in Bahrain to benefit from 
the tariff advantages granted to Bahraini exports under the 
agreement. 
 
--------------------------------- 
Requests for Technical Assistance 
--------------------------------- 
 
¶7.  (C) President of Ports and Customs Shaikh Daij bin Salman 
Al Khalifa committed the Customs Department to full 
implementation of the FTA, saying Customs will be a 
facilitator of trade.  He expressed his appreciation for 
earlier training from U.S. Customs, and said he still has 
much to do to modernize, streamline, and right-size his 
department.  He promised to forward a request for additional 
technical assistance.  He suggested establishing a hotline to 
link the two customs services to resolve issues quickly, and 
named Director of Customs Affairs Sami Humaid as the single 
point of contact for any customs issues related to bilateral 
trade. 
 
¶8.  (C) The EDB's Hejres also requested continued USG 
technical support.  He said that Booz Allen Hamilton (BAH) 
had drafted a report, funded by MEPI, identifying the sectors 
of the Bahraini economy that could benefit the most from the 
FTA.  The companies in those sectors now need additional 
guidance on making contact with American counterparts and 
marketing and promoting their products.  He asked whether the 
USG could fund additional BAH work to organize 
sector-specific matchmaking sessions and tutorials on 
breaking into the American market.  DAS Vineyard agreed to 
consider any Bahraini proposals, but suggested that the FTA 
Implementation Committee meet with similar groups in Jordan 
and Singapore to learn about how those countries benefited 
from their U.S. FTAs.  Additionally, USDOC could play a role 
in organizing video conferences on specific FTA topics with 
Bahraini business people. 
 
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Comment 
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¶9.  (C) The Commerce delegation's visit served to highlight 
the historic accomplishment of Bahrain being the first Gulf 
country to implement a free trade agreement with the United 
States.  Bahraini papers covered the visit and the FTA for 
five days of extensive press play.  DAS Vineyard's appearance 
at the best-attended AmCham event ever held in Bahrain, and 
at a reception hosted by the Ambassador to celebrate the FTA, 
added to the positive press coverage.  There is tremendous 
 
MANAMA 00001700  003 OF 003 
 
 
interest among Bahraini officials and business people in 
understanding the agreement and benefiting from it.  Coupled 
with Bahrainis' joy and pride, however, is a feeling that 
they do not know how to take the first small steps to pursue 
trade in the U.S.  Even those familiar with exporting to 
Europe express concern that they do not know how to attract 
the attention of potential American business partners, and 
that U.S. standards and packaging regimes are different from 
and more complex than those in Europe.  Bahraini business 
people, with support from their government, can learn from 
each other and from their counterparts in Jordan and 
Singapore on how to trade with American companies.  But we 
will also have to remain focused on spreading awareness of 
the FTA so that the benefits are felt throughout the business 
community and economy. 
 
 
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MONROE