FTA delay hits garment industry - Bahrain
Bahrain Tribune
FTA delay hits garment industry - Bahrain
4 June 2005
Bahrain’s beleaguered garment industry will face additional pressure from a move being presently considered by the American government to sign trade agreements with 16 countries that will allow major garment industry hubs such as Sri Lanka and Bangladesh to move more finished garments to US buyers with reduced or no customs duties. Called the "Unilateral Benefits Program for Least Developed Countries", it has Bahrain-based garments industry leaders worried that U.S. buyers will re-align their orders towards these countries to take advantage of the programme and bypass Bahrain.
"The advantage that Bahrain had even after the dismantling of the global quota system was that the US-Bahrain FTA would offer attractive customs duty waivers to make buying from Bahrain cost-effective," said a garment industry source, "But with the FTA with Central America (CAFTA) still being debated in Congress, there is some concern now that the U.S. Congress will break for summer before tabling the Bahrain FTA and then it will be close to the end of this year before the Bahrain FTA is ratified. This puts an enormous strain on Bahrain’s garment industry and many factories are closing."
Officials say the slimming down of Bahrain’s garment industry is more the result of the dismantling of the quota system and while garment industrialists agree, they also aver that if the FTA were to become reality sooner, the industry would have a better fighting chance. The American Embassy in Manama, when contacted, would not set a time-table for the passing of the Bahrain-US FTA through Congress and a spokesperson said that while it was true that the CAFTA would have to be cleared before the Bahrain FTA came up for discussion, no date was being set yet for the latter.
It was also pointed out that the FTA had not been discussed even by the Bahrain parliament as yet.
"What has happened is that with the whole world now a quota-free zone, there is additional pressure on Bahrain-based manufacturers to be cost-effective," said MRS Fashions’ Harinder Lamba, "We need to be fitter to compete effectively in the international market and for this we need more government support in the form of more "understanding" labour laws and less onerous training levies."
Lamba and others called for Bahrain to look at practices in other Arab countries like Egypt which offer the industry subsidies to help it compete internationally.
Bahrain government sources, meanwhile, continue to maintain that the FTA will swing into effect by the middle of this year.
