Bahrain
Submitted by:
Anushka Khandelwal
Trade Summary
● The U.S. trade balance with Bahrain shifted from a goods trade deficit of $98
million in 2017 to a goods trade surplus of $1.0 billion in 2018. U.S. goods
exports to Bahrain were $2.0 billion, up 126.7 percent ($1.1 billion) from the
previous year. Corresponding U.S. imports from Bahrain were $991 million,
down 0.5 percent. Bahrain was the United States’ 64th largest goods export
market in 2018.
● U.S. exports of services to Bahrain were an estimated $344 million in 2017
(latest data available) and U.S. imports were $1.0 billion. Sales of services in
Bahrain by majority U.S.-owned affiliates were $270 million in 2016 (latest data
available), while sales of services in the United States by majority Bahrain-
owned firms were $1.4 billion.
● U.S. foreign direct investment (FDI) in Bahrain (stock) was $423 million in 2017
(latest data available), a 10.4 percent increase from 2016.
FREE TRADE AGREEMENTS
The United States-Bahrain Free Trade Agreement
● Under the United States-Bahrain Free Trade Agreement (FTA), Bahrain
provides duty-free access to all industrial and consumer products. The United
States-Bahrain Bilateral Investment Treaty, which took effect in May 2001,
covers investment issues between the two countries.
IMPORT POLICIES
Tariffs and Taxes
Tariffs
● In 2016, the Gulf Cooperation Council (GCC) Member States agreed to
introduce common GCC excise taxes on sweetened carbonated drinks (50
percent), energy drinks (100 percent) and tobacco products. However, as of
2018 not all GCC Member States have implemented the tax.
● U.S. beverage producers have noted that the current tax structure both fails to
address public health concerns and disadvantages U.S. products, noting that
sugary juices–many of which are manufactured domestically–remain exempt
from the tax. Bahrain began to levy the taxes on December 30, 2017.
Taxes
● GCC Member States agreed to introduce a common GCC value-added tax
(VAT) of five percent; implementation of the VAT varies by Member State.
Bahrain began applying the VAT in January 2019.
TECHNICAL BARRIERS TO TRADE / SANITARY AND
PHYTOSANITARY BARRIERS
Technical Barriers to Trade
Degradable Plastics
● In September 2018, Bahrain notified to the WTO a new technical regulation for
degradable plastic products. The United States has raised concerns related to
the scope of products covered and the timeline for implementation.
● Bahrain has limited its implementation to the first phase of the regulation,
covering plastic shopping bags, and has stated it plans to notify future changes
in products coverage of this regulation to the WTO.
Restrictions on Hazardous Substances – Electrical Goods
● In March 2018, GCC Member States notified to the WTO a draft measure that
would, among other things, require pre-market testing for restricted materials in
electrical goods using accredited labs. It would also require each type of good
to be registered annually, including submission of sample products prior to
receiving approval for use in the GCC.
● The United States raised concerns that pre-market testing could have a large
negative impact on the U.S. electrical and electronic equipment industries,
especially as the practice differs from common practice for restrictions on
hazardous substances (RoHS) regulations, which typically allow self-
declaration of conformity.
Energy Drinks
● In 2016, the six Member States of the GCC, working through the Gulf
Standards Organization (GSO), notified WTO Members of a draft regional
regulation for energy drinks. The U.S. Government and U.S. private sector
stakeholders have raised questions and concerns regarding the draft
regulation, including labeling requirements regarding recommended
consumption and container size, as well as potential differences in labeling
requirements among GCC Member States.
Conformity Assessment
In December 2013, GCC Member States issued regulations on the GCC Regional
Conformity Assessment Scheme and GCC “G” mark in an effort to “unify conformity
marking and facilitate the control process of the common market for the GCC
Members, and to clarify requirements of manufacturers.” U.S. and GCC officials
continue to discuss concerns about consistency of interpretation and implementation
of these regulations across all six GCC Member States, as well as the relationship
between national conformity assessment requirements and the GCC regulations,
with the objective of avoiding inconsistencies or unnecessary duplication.
Cosmetics and Personal Care Products
In April 2017, GCC Member States notified WTO Members of a new GSO
proposed regulatory and conformity assessment scheme that will govern market
authorization for cosmetics and personal care products. The United States raised
concerns that neither the GCC nor its Member States have indicated whether the
regional scheme will replace existing national-level registration requirements or will
function in addition to national programs, potentially introducing a scenario
whereby Member States require duplicative and discordant registration
procedures for relatively low-risk cosmetic and personal care products.
Sanitary and Phytosanitary Barriers
Certification
● In November 2016, the GCC announced that in 2017 it would implement a “GCC
Guide for Control on Imported Foods” (the Guide). The United States has raised
concerns about the Guide, particularly regarding the GCC’s lack of a scientific
explanation for requiring certain health certificate statements, some of which may
not follow relevant guidelines established by the Codex Alimentarius Commission
(Codex) or the World Organization for Animal Health (OIE).
GOVERNMENT PROCUREMENT
● The FTA requires covered entities in Bahrain to conduct procurements covered
by the agreement in a fair, transparent, and nondiscriminatory manner.
● Bahrain is neither a signatory to, nor an observer of, the WTO Agreement on
Government Procurement.
INTELLECTUAL PROPERTY RIGHTS PROTECTION
● As part of its FTA obligations, Bahrain enacted several laws to improve
protection and enforcement for copyrights, trademarks and patents. However,
Bahrain has yet to accede to the International Convention for the Protection of
New Varieties of Plants (1991), a requirement under the FTA.
● Bahrain’s record on intellectual property rights (IPR) protection and
enforcement continues to be mixed.
● As GCC Member States explore further harmonization of their IP regimes, the
United States will continue to engage with GCC institutions and the Member
States and provide technical cooperation and capacity building programs on IP
best practices, as appropriate and consistent with U.S. resources and
objectives.
OTHER BARRIERS
● As a result of a 2015 ban on network marketing schemes, direct selling and
multi-level marketing organizations are not allowed to operate in Bahrain.
Mexico
TRADE SUMMARY
The U.S. goods trade deficit with Mexico was $81.5 billion in 2018, a 14.9 percent
increase ($10.6 billion) over 2017. U.S. goods exports to Mexico were $265.0
billion, up 8.9 percent ($21.7 billion) from the previous year. Corresponding U.S.
imports from Mexico were $346.5 billion, up 10.3 percent. Mexico was the United
States’ second largest goods export market in 2018.
U.S. exports of services to Mexico were an estimated $32.9 billion in 2017 (latest
data available) and U.S. imports were $25.5 billion.
U.S. foreign direct investment (FDI) in Mexico (stock) was $109.7 billion in 2017
(latest data available), an 8.9 percent increase from 2016. U.S. direct investment
in Mexico is led by manufacturing, nonbank holding companies, and
finance/insurance.
TRADE AGREEMENTS
North American Free Trade Agreement
The North American Free Trade Agreement (NAFTA), signed by the United States,
Canada, and Mexico (the Parties), entered into force on January 1, 1994. Under the
NAFTA, tariffs on nearly all goods were eliminated progressively, with all final duties
and quantitative restrictions eliminated, as scheduled, by January 1, 2008. After
signing the NAFTA, the Parties concluded supplemental, and largely unenforceable,
side agreements on labor and the environment.
United States-Mexico-Canada Agreement
The United States entered into negotiations with the Parties seeking to update and
rebalance the NAFTA in August 2017. The United States-Mexico-Canada
Agreement (USMCA) was signed on November 30, 2018 and will replace the
NAFTA to better serve the interests of American workers, farmers, ranchers, and
businesses.
The USMCA modernizes and rebalances U.S. trade relations with Mexico and
Canada to benefit American workers and businesses and reduces incentives to
outsource by providing strong labor and environmental protections.The Agreement
is a mutually beneficial win for North American farmers, ranchers, businesses, and
workers that and help grow the U.S. economy. The USMCA expands U.S. access in
Canada for certain U.S. dairy, poultry, and egg products and, once implemented, will
help reduce costs and facilitate trade via new commitments on customs inspections,
automation, and the treatment of low-value goods.
IMPORT POLICIES
Tariffs
On June 5, 2018, Mexico adopted tariffs ranging from 7 percent to 25 percent on
various products imported from the United States, in retaliation against the
President’s decision to adjust U.S. imports of steel and aluminum articles under
Section 232 of the Trade Expansion Act of 1962, as amended. The imports to which
the new Mexican tariffs apply include a range of agricultural products, as well as
products of steel and aluminum. The United States will take all necessary action to
protect U.S. interests in the face of such retaliation. In this regard, on July 16, 2018,
the United States launched a dispute settlement proceeding against Mexico in the
WTO challenging Mexico’s retaliatory tariffs.
Nontariff Barriers
Import Licensing
On December 5, 2013, Mexico issued rules requiring importers to obtain a license
before certain steel products may be shipped into Mexico; those rules were revised
on August 11, 2014. Mexico’s stated objectives for the import licensing system is to
combat customs fraud, improve enforcement of trade remedy measures, and
improve statistical monitoring of steel imports. Because of administrative delays
and complicated procedures for the processing of applications by the Ministry of
Economy, however, U.S. steel exporters and their Mexican customers have
encountered disruptions in supply chains and additional shipment or demurrage
costs as a result of the licensing requirement, as shipments may not enter Mexico
until licenses are issued.
Customs Barriers and Trade Facilitation
Mexico ratified the WTO Trade Facilitation Agreement in July 2016. However, U.S.
exporters continue to express concerns about Mexican customs administrative
procedures, including insufficient prior notification of procedural changes and uneven
enforcement of Mexican standards and labeling rules. The U.S. Government
continues to monitor the situation and urge SAT to resolve audit cases in a timely
and transparent manner.
In the second half of 2016, several U.S. companies expressed concerns about a
draft SAT regulation that would impose new requirements on the customs entry
process for low-value goods entering Mexico, especially for goods purchased online.
On October 15, 2015, the U.S. and Mexican governments signed a Memorandum of
Understanding that allows for the launch of cargo pre-inspection pilot programs.
Nine cargo pre-inspection programs are currently in operation.
TECHNICAL BARRIERS TO TRADE / SANITARY AND PHYTOSANITARY
BARRIERS Technical Barriers to Trade
Information and Communications Technology Safety Requirements
On December 18, 2017, Mexico notified the WTO of its proposal to revise a 1998
technical regulation (NOM-019) that sets safety requirements for certain information
and communications technology products, such as servers, data centers, and
network devices, among others. U.S. industry is concerned that Mexico may no
longer exempt many U.S. information and communications technology exports from
the testing requirements and that Mexico would no longer recognize the results of
conformity assessment procedures from the United States as meeting the
requirements of NOM-019. This revision could potentially affect $24 billion of annual
U.S. information and communications technology exports to Mexico.
In March 2018, the United States sought confirmation that NOM-019 would be
based on the International Electro-technical Commission (IEC) standard, and
emphasized the need for Mexico to accept U.S. conformity assessment results,
renew the exemption for low-voltage products, and include an exemption for
Highly Specialized Equipment products.
Energy Efficiency Labeling and Standby Power Usage Regulations
On December 7, 2016, Mexico notified the WTO of its proposed measure from the
National Energy Efficiency Commission (CONUEE) (NOM-029), which sets
mandatory limits for energy efficiency of external power supplies for electrical and
electronic equipment, including test methods and marking. U.S. industry’s
concerns include certain labeling requirements and unique testing requirements
that are different from requirements in the United States or elsewhere.
CONUEE published a study in 2018 about energy efficiency trends in Mexico that
reported Mexican energy efficiency increased due to 31 energy efficiency
regulations, including NOM-029. In 2019, the United States will actively participate
in the review of remaining issues as well as any activities related to the alignment
of conformity assessment procedures.
Alcoholic Beverages
The final Mexican Official Standard NOM-199-SCFI-2017, Alcoholic Beverages-
Denomination, Physicochemical Specifications, Commercial Information and Test
Methods, published on October 30, 2017, included some positive changes from the
draft on which the United States and U.S. industry submitted comments, such as a
clarification of the standard of identity for bourbon and removing the restriction on
alcohol by volume for Sambuca. Nonetheless, U.S. industry continues to have
significant concerns with the final regulation. The wine industry also has expressed
concern about Mexico’s approach to measuring methanol.
The United States will continue to monitor implementation of NOM 199 and any
additional testing and certification requirements for wine and spirits, and will engage
with Mexico on any other proposed measures related to conformity assessment
procedures for alcoholic beverages.
Sanitary and Phytosanitary Barriers
Fresh Potatoes
Mexico prohibits the shipment of U.S. fresh potatoes beyond a 26 kilometer zone
along the U.S.-Mexico border. In 2003, the United States and Mexico signed the
Table Stock Potato Access Agreement, which provided a process for allowing U.S.
potatoes access to the whole of Mexico over a three-year period.
In late October 2018, the Supreme Court of Mexico agreed to address the appeal of
the June 2018 ruling. The U.S. Department of Agriculture (USDA) and USTR, in
consultation with the U.S. potato industry, continue to seek a solution that would
lead to expanded market access for U.S. potatoes to all of Mexico. The remaining
legal challenges are ongoing.
Stone Fruit
Mexico has stated that, due to concerns about the oriental fruit moth, it would only
accept peaches, nectarines, and plums from the Pacific Northwest if producers
allow on-site inspection and used methyl bromide fumigation. Mexico indicates
that this will continue until it completes its ongoing pest risk assessment for a
systems approach method, which could allow importation from this region without
regular on-site inspections or fumigation. Stone fruit from the Pacific Northwest
poses a low risk of transmission of the oriental fruit moth. The United States
continues to engage with Mexican authorities to reduce burdens associated with
the exportation of stone fruit from the Pacific Northwest to Mexico.
INTELLECTUAL PROPERTY RIGHTS PROTECTION
Mexico was listed on the Watch List in the 2018 Special 301 report. As described in
that report, obstacles to U.S. trade in intellectual property-intensive goods and
services include the wide availability of pirated and counterfeit goods, via both
physical and virtual markets. The online availability of copies of new- release
movies sourced from Mexico is a particular concern. Overall criminal enforcement
of intellectual property rights (IPR), including online, continues to be characterized
by weak coordination among federal, state, and municipal officials;
The United States continues to work closely with Mexico to make progress in
addressing other trade-related IP issues, and these efforts have resulted in some
significant progress. In 2018, Mexico also re-established enforcement officials’
authority to accept cases involving suspected counterfeit goods in transit through
Mexico.
Telecommunications Services
A number of important, longstanding market access barriers were removed by a
sweeping reform of the telecommunications sector in 2013 and 2014. These
barriers included limitations on foreign investment in telecommunications and
broadcasting, a weak regulatory agency, and an uncompetitive market dominated
by a near-monopolistic player. The telecommunications reform addressed these
issues by removing all caps on foreign investment in the telecommunications
sector; instituting a new, strengthened, and independent regulator; creating
specialized telecommunications courts; and implementing asymmetric regulations
to curb the dominance of any company with more than a 49 percent market share.
The removal of these barriers has produced positive results. Some U.S.
companies also have expressed concern that difficulties persist in the efficient
deployment of the telecommunications infrastructure necessary to provide
comprehensive and high quality services.
INVESTMENT BARRIERS
While the Mexican government retains ownership of subsoil resources, Mexico’s
2013 energy reform allows private companies to explore and extract hydrocarbons
and participate in downstream operations, including refining, petrochemicals,
transport, retail, and supply, subject to local content requirements. Local content
requirements vary by location and phase of project and are updated by the
Secretariat of Economy. Per regulations published in 2017, for on-land activities,
exploration and evaluation work require a minimum average local content of 26
percent. For development phase land projects, the local content requirement was
27 percent in the first year, increasing to 38 percent by 2025.
Certain other sectors or activities, such as ground transportation services and
transportation infrastructure, (such as airport management), are closed to foreign
participation. Under the Foreign Investment Law, foreigners may wholly own a
Mexican freight motor carrier company, but are restricted to carrying only
international cargo; foreign ownership is capped at 49 percent for express delivery
companies. Under the Foreign Investment Law, foreigners can invest up to 49
percent in land for agricultural, livestock, and forestry purposes if they are not in
the previously mentioned excluded areas. An interagency Comisión Nacional de
Inversiones (National Foreign Investment Commission) reviews foreign investment
in Mexico’s restricted sectors, as well as investments in unrestricted sectors in
which foreign equity exceeds 49 percent and for which the value exceeds $165
million (adjusted annually).
