World Trade Organization |
RESTRICTED |
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WT/TPR/S/185 | |
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(07-2436) |
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Trade Policy Review Body |
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TRADE POLICY REVIEW Report by the Secretariat BAHRAIN |
This report, prepared for the second Trade Policy Review of Bahrain, has been drawn up by the WTO Secretariat on its own responsibility. The Secretariat has, as required by the Agreement establishing the Trade Policy Review Mechanism (Annex 3 of the Marrakesh Agreement Establishing the World Trade Organization), sought clarification from Bahrain on its trade policies and practices. Any technical questions arising from this report may be addressed to Mr. Jacques Degbelo (tel: 022/739 5583), or Mr. Ricardo Barba (tel: 022/739 5088), or Mr. Samer Seif El Yazal (tel: 022/739 5459), or Mr. Carlos Perez del Castillo (tel: 022/739 5336). Document WT/TPR/G/185 contains the policy statement submitted by Bahrain. |
Note: This report is subject to restricted circulation and press embargo until the end of the first session of the meeting of the Trade Policy Review Body on Bahrain.
CONTENTS
Page
SUMMARY OBSERVATIONS vii
(1) The Economic Environment vii
(2) Institutional Framework vii
(3) Trade Policy Instrument viii
(4) Sectoral Policies ix
(5) Trade Policy and Trading Partners x
I. Economic environment 1
(1) Major Features of the Economy 1
(2) Recent Economic Developments 2
(3) Trade Performance and Investment 4
(i) Trade in goods and services 4
(ii) Foreign direct investment 7
(4) Outlook 8
II. trade and Investment regimes 10
(1) The Institutional Framework 10
(2) Trade Policy Formulation and Implementation 11
(3) Policy Objectives 14
(4) Trade Agreements 14
(i) WTO 14
(ii) Regional agreements 17
(iii) Bilateral agreements 18
(iv) Other preferential agreements 18
(5) Investment Framework 19
III. trade policies and practices by measure 22
(1) Introduction 22
(2) Measures Directly Affecting Imports 22
(i) Registration and documentation 22
(ii) Customs procedures and valuation 23
(iii) Rules of origin 24
(iv) Tariffs, other duties, and taxes 24
(v) Import prohibitions, restrictions, and licensing 28
(vi) Contingency trade remedies 30
(vii) Standards and other technical requirements 30
(viii) Government procurement 34
(ix) Local-content requirements 36
(x) Other measures 36
(3) Measures Directly Affecting Exports 36
(i) Registration and documentation 36
(ii) Export duties and taxes 36
(iii) Export prohibitions and restrictions 36
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(iv) Export subsidies, finance, insurance, and assistance 37
(v) Free zones 38
(4) Measures Affecting Production and Trade 38
(i) Incentives 38
(ii) Competition policy and price controls 39
(iii) State-owned enterprises and privatization 39
(iv) Intellectual property rights 41
IV. trade policies by sector 47
(1) Introduction 47
(2) Agriculture and Related Activities 47
(i)
(ii) Agricultural policy 49
(iii) Fisheries 50
(3) Mining, Quarrying and Energy 52
(i) Overview 52
(ii) Petroleum 54
(iii) Natural gas 56
(iv) Electricity 57
(4) Manufacturing 58
(i)
(ii) Policy framework 58
(iii) Aluminium 59
(5) Services 61
(i) Overview 61
(ii) Financial services 62
(iii) Telecommunications and postal services 68
(iv) Transport 72
(v) Tourism 76
REFERENCES 79
appendix tables 83
CHARTS
Page
I. Economic environment
I.1 Structure of merchandise trade, 1995-06 6
III. trade policies and practices by measure
III.1 Breakdown of applied MFN duties, 2007 25
III.2 Tariff escalation by ISIC 2-digit industry, 2007 27
IV. trade policies by sector
IV.1
TABLES
I. Economic environment
I.1
I.2 Selected economic indicators, 2000-06 3
I.3 Balance of payments, 2000-06 5
I.4 Foreign direct investment, 2000-06 7
II. trade and investment regimes
II.1 Main trade-related laws in
II.2
II.3 Bilateral investment treaties, March 2007 21
III. trade policies and practices by measure
III.1 Structure of MFN tariffs in
III.2 Summary analysis of Bahrain MFN tariff, 2007 26
III.3 Prohibited imports, 2007 29
III.4 Restricted imports, 2007 29
III.5 Import controls, 2007 31
III.6 Government procurement, 2002-06 35
III.7 Prohibited exports, 2007 36
III.8 Restricted exports, 2007 37
III.9 Selected state-owned enterprises, 2007 40
III.10 Summary of IPR legislation in
IV. trade policies by sector
IV.1 Livestock, poultry, and fisheries production, 1999-05 48
IV.2 Vegetable crops production, 1999-05 49
IV.3 Production, consumption and exports of oil, gas, and refined products, 2000-06 55
IV.4 BANAGAS gas production and export, 1999-06 56
IV.5 Electricity tariffs, 2007 57
IV.6 Structure of the banking system, December 2006 63
IV.7 Selected telecommunication indicators, 2000-05 68
IV.8 Shipping and maritime transport services, 2000-05 72
IV.9 Air transport serices, 2002-06 74
APPENDIX TABLES
Page
I. Economic environment
AI.1 Structure of exports, including re-exports, 2000-06 85
AI.2 Destinations of exports, including re-exports, 2000-06 86
AI.3 Structure of imports, 2000-06 87
AI.4 Origins of imports, 2000-06 88
III. trade policies and practices by measure
AIII.1 Applied MFN tariff averages by HS2, 2007 89
IV. trade policies by sector
AIV.1 Applied MFN tariffs by ISIC Rev.2 category, 2007 93
AIV.2 Summary of
(1) The Economic Environment
1. Since its first TPR in 2000, Bahrain's development strategy, together with high world oil prices, has resulted in an impressive economic performance. Its real GDP growth rate rose from an annual average of 4.8% during 1989-98 to 6.2% over 2000-06, while its annual average inflation rate was contained at 0.3%, on average, during 2000‑04, before moving to 2.6% in 2005 and 2.1% in 2006, reflecting increased demand. Largely due to a significant surge in oil and gas earnings, the external current account has recorded surpluses since 2000, with the exception of 2002, peaking at an estimated 18.1% of GDP in 2006; the overall public deficits of 3.9% of GDP in 2002 and 2% in 2003 turned into surpluses thereafter.
2.
3. Bahrain has invested in health, education, infrastructure projects, and its Future Generation Fund was launched, in January 2007, to ensure inter-generational economic equity in the exploitation of its non-renewable natural wealth. Bahrain has been implementing measures to improve its investment climate, such as the creation of the one-stop shop,
4. The Central Bank of Bahrain (CBB) was established on 7 September 2006, replacing the Bahrain Monetary Agency (BMA). The CBB carries out all the tasks previously undertaken by the BMA, but has wider enforcement powers. Pegged to the U.S. dollar since 2001, the Bahraini dinar, the national currency, has remained fairly stable in real terms.
(2) Institutional Framework
5. Formulation and implementation of
6.
7. A Contracting Party to the GATT since
8.
(3) Trade Policy Instruments
9.
10. On aggregate, Bahrain's tariff displays positive escalation, from first-stage processed products, with an average tariff of 4%, to semi-finished goods, with an average rate of 4.9%, and fully processed products, on which tariffs average 5.8%. Bahrain has bound 72.7% of its tariff lines (all agricultural goods and 67.3% of non-agricultural tariff lines) at rates ranging from 35% to 200%, i.e. an average bound rate of 35.6%; this leaves ample margins for applied tariff increases. It has never taken any anti-dumping, countervailing or safeguard actions. Duty concessions can be granted (including on a selective basis) as part of various investment incentives to, inter alia, encourage economic diversification and promote exports. Extension of the scope of tariff binding commitments, reduction of bound rates, and further tariff rationalization in the light of the structure of the economy should introduce more predictability in the tariff regime, reduce the need for concessions, and ensure further integration of Bahrain into the multilateral trading system.
11. The documentation for all imported products must be authenticated by the Consulate of
12. In 2002, Bahrain adopted a new government procurement regime; it still provides for 10% and 5% price preferences for local and GCC products, respectively.
(4) Sectoral Policies
14. The services sector is a key component in Bahrain's overall policy of economic diversification; financial services, in particular, have developed strongly over the last few years, serving both the domestic economy and those of its neighbours. In July 2004,
15. The mining and quarrying sector, basically petroleum and natural gas, is dominated by several state-owned companies, notably BAPCO and BANAGAS.
16.
17.
(5) Trade Policy and Trading Partners
18. With a generally open and increasingly diversified economy, Bahrain is committed to the multilateral trading system, and it is actively participating in the
19. Increasingly, a key element in