Bahrain Begins Construction of US Trade Zone

Economic analyst to The Media Line: The project will increase US-Bahraini trade to $4 billion.

 Foundation stone-laying ceremony for the United States Trade Zone in Salman Industrial City, Bahrain, Feb. 20, 2022. (photo credit: BAHRAIN NEWS AGENCY)
Foundation stone-laying ceremony for the United States Trade Zone in Salman Industrial City, Bahrain, Feb. 20, 2022.
(photo credit: BAHRAIN NEWS AGENCY)

Bahrain laid the foundation stone for the United States Trade Zone project on Sunday in Salman Industrial City. According to the project’s announced plan, Bahrain and United States will promote the zone as a regional center for trade, manufacturing, logistics, and distribution between American companies in Bahrain and markets of the Gulf Cooperation Council and abroad.

The project will be built on 110,000 square meters of land and will reach 1.11 million square meters in the future.

The project developed after the visit of Bahraini Crown Prince and Prime Minister Salman bin Hamad to the United States in November 2019, which was followed by the signing in 2021 of a memorandum of understanding to strengthen the economic, commercial, and industrial cooperation between the two countries, including the establishment of the zone.

“The availability of economic opportunities in the region is an ideal opportunity for American companies to invest and expand their business through the American commercial zone in the Kingdom of Bahrain, which will enhance broader prospects for joint commercial relations between the two countries in accordance with the advantages of the free trade agreement,” said Bahraini Minister of Industry, Commerce and Tourism Zayed Al-Zayani during the foundation stone-laying ceremony.

According to customs data reviewed by The Media Line, Bahraini non-oil exports to the US were valued at $1.33 billion in 2021, making the US market the third-largest in terms of the value of Bahraini non-oil exports. Aluminium Bahrain B.S.C. alone exported more than $750 million in aluminum products to the US.

 Bahrain Foreign Minister Abdullatif bin Rashid Al-Zayani addresses the media, 2021 (credit: Michael Sohn/Pool via REUTERS) Bahrain Foreign Minister Abdullatif bin Rashid Al-Zayani addresses the media, 2021 (credit: Michael Sohn/Pool via REUTERS)

Bahrain’s non-oil imports from the US amounted to $740 million in 2021, making the US the sixth-largest importer to Bahrain’s market in terms of the value of imports.

Bahrain and USA are linked by a free trade agreement, signed in 2006, which boosted trade exchange between the two countries from $400 million in the year the agreement was signed to nearly $3 billion in 2021, according to data from the Bahrain Chamber of Commerce and Industry.

It is hoped that American companies will benefit from 22 free trade agreements signed by Bahrain with various countries around the world, in addition to 34 agreements to protect and encourage investment, agreements with 41 countries to avoid double taxation, and the Gulf economic agreements, most notably the customs union, according to information published by the Bahraini Economic Development Board.

According to the official statement of the project, 

Companies operating in the US Trade Zone will get several advantages, most notably exemptions from customs duties for manufacturing, imported raw materials, construction machinery, and spare parts.

These companies will also receive help from several Bahraini government agencies that support startup companies.

The United States Trade Zone is five minutes from Khalifa Bin Salman Port, Bahrain’s main port; 10 minutes from Bahrain International Airport; and 25 minutes from the King Fahd Causeway that links Bahrain and Saudi Arabia.

Omar Abdullah, a Bahraini economic analyst, told The Media Line that the zone will increase trade between Bahrain and the United States. He predicted that “the trade exchange will reach $4 billion over the next two years, and we will witness the opening of many American companies’ offices in Bahrain.”

“There are companies from countries that do not have free trade agreements with Bahrain, and they will seek to establish headquarters for their companies here,” Abdullah added.

He stressed that “Bahrain will benefit from this zone, as it seeks to increase the revenues of the logistics sector, and there will be many other large projects that will enhance this trend.”

The United States Trade Zone is one of the strategic projects announced by the Bahraini government for enhancing Bahrain’s economic position and competitiveness and achieving sustainable growth in accordance with Bahrain’s Economic Vision 2030. 

Akbar Hussein, an economic analyst, told The Media Line: “The King Hamad Causeway projects, and the train line with the Gulf states, will speed up the process of American goods arriving to and from Bahrain, and from there to all the GCC countries, and possibly the region.”

He continued, “Also, Bahrain is now moving toward [completion of] the ring roads, and vital areas in Bahrain can be reached without stopping, and there are storage areas and large industrial areas near the United States Trade Zone.”

Mohammed Baker, a Bahraini economist, told The Media Line, “Companies will benefit from the advantages here. There are hundreds of graduates in the economic and logistics sector annually, and operating costs are lower by at least 30% than in the rest of the Gulf Cooperation Council countries.”

Regarding the benefits Bahrain expects from the project, Baker commented, “Of course, job opportunities for citizens will increase, and Bahrain’s income and GDP will increase. The focus now should be on attracting these companies, which is not a difficult task after recovering from the effects of COVID-19.”