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Bahrain free trade agreement to boost port business
By Dan McCue
Staff Writer
The city and Port of Charleston are in a “very strong position to benefit” from a pending free trade agreement with the Persian Gulf nation of Bahrain, according to those familiar with the Lowcountry’s standing in the global market.
Not only will it open new opportunities for South Carolina businesses, they said, but it should also help rectify a long-standing trade imbalance with the island sovereignty.
Currently, “(Bahrain) is a heavily export-oriented trade,” said Byron D. Miller, spokesman for the S.C. State Ports Authority. “Bahrain’s exports into Charleston account for 62% of the activity; cargo going the other way, 38%.”
From January to September 2005, the total value of imports into Charleston from Bahrain was $37.8 million, according to statistics provided by the S.C. World Trade Center. The value of exports to Bahrain through Charleston during the same period was $3.2 million.
In a written statement, President George W. Bush said the pending agreement would further open Bahrain’s market for U.S. manufactured goods, agricultural products and services.
“As soon as it goes into effect, the agreement will eliminate tariffs on all manufactured goods that the United States sells to Bahrain and immediately remove Bahrain’s import duties on over 80 percent of U.S. agricultural products,” the statement said.
The pact will also reduce trade barriers on Bahrain’s services market.
The bill now goes to the full U.S. Senate, which is expected to ratify the agreement.
“Free trade agreements create atmospheres conducive to long-range growth in imports and exports,” said Mark Condon, executive director of the SCWTC. “As companies choose where to invest time and money, this free trade agreement will add a higher level of comfort in deal-making.”
The largest traders in the Middle East region, Israel, Jordan, Saudi Arabia and the United Arab Emirates, currently account for 36% of all containers passing through ports from Virginia to Miami.
The Port of Charleston has long held the leading position in the Southeast for U.S. container trade with the Middle East. In the third quarter of this year, U.S. trade with the Middle East through Charleston rose 20%, Miller said.
But Condon thinks the timing of the free trade agreement, and its removal of Bahrain’s import duties and tariffs, will significantly alter that balance.
“The S.C. World Trade Center sees huge export opportunities in the Middle East,” he said. “Countries in this area tend to be cash rich and import most of their products. Currently, their biggest supplier is Europe, but the euro is very high, so we have a real opportunity now.”
Miller said the top commodities coming into Charleston from the Persian Gulf region are plastic products and apparel.
“Outbound to the Middle East, the top cargoes are forest products, food products, automobiles and air conditioners—all important industries in our region,” he said.
According to the Bahrain Country Commercial Guide, a publication of the U.S. Department of State last updated in 2004, trade between the two countries has been fairly steady in recent years.
In addition to those Miller cited, the guide said U.S. products that do particularly well in Bahrain include aircraft, machinery, pharmaceutical products, medical equipment, high quality cotton, computers, furniture, beef and poultry.
For companies wishing to export goods from South Carolina, Bahrain offers a number of advantages, according to the Department of State. English is widely spoken in the country, and it has a thoroughly modern infrastructure; there is no personal or corporate taxation and no restriction on capital or profit repatriation.
In addition, Miller said, “Bahrain has some of the strongest economic indicators in the Middle East region. Real gross domestic product has grown at least 5 percent annually over the past few years, while inflation has been somewhat kept in check.”
Bahrain is the fourth country in the Middle East to negotiate a free trade agreement with the United States; the others are Morocco, Jordan and Israel. The Bush administration is expected to sign a similar deal with Oman in January and is reportedly in the final stages of negotiations with the United Arab Emirates.
The Bahrain agreement, which Congress endorsed Dec. 7, is part of a larger White House effort to create a Middle East Free Trade Area by 2013, a recommendation included in the 9/11 Commission Report.
Condon, who serves on the World Trade Centers’ interregional task force for trade, said individual free trade agreements like the one with Bahrain are essential building blocks to expand markets for the Port of Charleston and regional exporters.
He quoted the task force chairman, Chadi Abou Daher, director of the World Trade Center Cyprus, who said he sees “a huge future in Middle East trade with the United States,” a future in which the Suez Canal trade lane will grow in importance to Charleston.
Currently that trade lane serves almost exclusively as a conduit for goods between Persian Gulf states and Western Europe.
“The biggest challenge from here on out will be relationship building with individual trading nations,” Condon said.
Miller sees the prospects as not only good for Charleston, but for the Persian Gulf as well.
“Increasing trade and stronger economic relations can only help stability in the region,” he said.
Dan McCue is a staff writer for the Business Journal. E-mail him at dmccue@charlestonbusiness.com.
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