Saudis threaten action over US-Bahrain FTA deal

Reuters

4 January 2005

RIYADH - Saudi Arabia threatened yesterday to impose customs duties on foreign goods imported duty-free through Gulf Arab countries, intensifying a Saudi-Bahraini row over a trade agreement with the United States.

Saudi Finance Minister Ibrahim Al Assaf said the kingdom would consider taking measures against “foreign goods imported through Gulf countries...to protect the local industry”. His comments were carried by the state Saudi Press Agency.

Bahrain signed in September a free trade deal with the United States which abolishes external tariffs and gives US goods a foothold inside the Gulf bloc, which had agreed to unify customs on foreign goods at 5 per cent.

The pact has angered oil-rich Saudi Arabia, the largest and least liberalised economy in the Gulf, which fears tax-free US products will be resold within its borders via Bahrain.

Goods can move without duties within the member states of the GCC.

“Any GCC member that signs an individual free trade agreement (with another country) contravenes the GCC’s economic agreements,” Assaf said.

Bahrain has defended the agreement and other Gulf states like Oman and the UAE are holding talks on a similar deal with the United States.

The US-Bahrain Free Trade Agreement has considerable US business backing and is expected to win easy approval in Congress this year.

US trade officials defend the agreement with Bahrain as part of broad US efforts to enhance economic integration development with the Middle East.