Bahrain US trade deal an attempt to squeeze out of financial trouble
According to recent US Census Bureau data, total U.S. exports to Bahrain were $ 903 million and imports from Bahrain were $768 million.
Bahrain had in November asked Gulf Arab allies for financial assistance as it seeks to replenish its foreign-exchange reserves and avert a currency devaluation that could reverberate across the region.
Bloomberg’s Alaa Shahine said that Bahrain’s foreign reserves at the Central bank have dipped to $1.6bn at end August, and that the IMF expects that by year’s end, the country will have just enough to cover about 1 month worth of imports, which are very dangerously low levels.
As for the ripple effects on the region, he said though Bahrain is a small economy, the entire region is under pressure.
Bahrain decided to do something about that and in dramatic fashion.
Billions in trade with US
Bahrain Crown Prince Salman bin Hamad Al Khalifa, announced on December 1 a series of cross-sector trade agreements with US companies valued at $10 billion, according to a statement by the Bahrain News Agency.
The trade agreements, which cover sectors such as economy, trade, industry, oil and aviation were signed on the sidelines of a visit for the prince to the United States.
“The Kingdom of Bahrain is constantly pursuing opportunities to advance bilateral trade ties in order to drive development and progress, while meeting the aspirations of Bahrain’s citizens,” said the prince.
Free trade agreement
He noted that the 10-year free trade agreement with the United States has served to strengthen Bahrain-U.S. relations by increasing cooperation across a range of economic and commercial areas.
The Bahrain Free Trade Agreement (BHFTA) went into effect on August 1, 2006. Under the agreement most Bahraini goods enter the United States free of duty and the merchandise processing fee (MPF) and virtually all will enter free by the time it is fully implemented by January 1, 2015.
The Crown Prince that as a result of Bahrain’s open and innovative business environment, over 200 American companies have chosen to operate in the Kingdom, noting in particular the recent announcement that Amazon Web Services (AWS) is due to open its first regional headquarters in Bahrain.
But what do the latest trade agreements comprise?
Bilateral trade on this trip
The prince’s visit to the US witnessed the signature of various trade agreements and Memorandums of Understanding (MoUs).
An MoU was also agreed between Alba Mineral Resources and General Electric (GE) for the implementation of the fourth gas turbine unit at Power Plant 5, was signed by Alba representative Tim Mori and Todd Lamar Smith, Chief Financial Officer of International and Vice President at GE
Another agreement between Alba and Bechtel-regarding the Alba line 6 expansion project, which will result in Alba becoming the world’s largest single-site aluminium smelter- was signed by Alba representative Tim Mori and Brendan P. Bechtel, Chairman and CEO of Bechtel Group Inc.
Trade with US rising
According to WorldCity, a platform for export-import Trade Numbers, Bahrain ranked No. 80 among the United States’ top trade partners through the current period.
A WorldCity analysis of latest U.S. Census Bureau data reveals that Bahrain’s trade with the United States rose 10.55 percent this year, from $1.26 billion to $1.39 billion when compared to the same period the previous year.
It said that US exports to Bahrain increased 3.08 percent while imports from Bahrain rose 18.58 percent. The U.S. deficit with Bahrain was $47.7 million.