Traders still paying duty

Gulf Daily News, Bahrain

Traders still paying duty

By Rebecca Torr

7 October 2006

Bahrain businesses trading with the US may still be paying duty on customs-free products because they haven’t amended their paperwork. Bahrain Export Development Society (BEDS) chairman Dr Yousef Mashal said 96 per cent of Bahrain’s industrial and agricultural products now received immediate duty-free access to the US markets because of the Bahrain-US Free Trade Agreement (FTA), but some traders were missing out.

"Importers from the US should start informing their principals to submit their invoices for customs as per the FTA that their products are made in the US, or Bahrain," Dr Mashal told the GDN.

"There are still lots of traders importing from the US and paying customs when they shouldn’t, because their documents are not per the FTA and the information doesn’t certify the product is made in the US.

"All industries and traders who are importing US products, or grown in the US will benefit from the FTA, both small and big businesses."

Dr Mashal said traders should take advantage of the FTA because they would also benefit from transparent and efficient customs administration, including the publication of laws and regulations on the Internet and establishing prompt customs clearance procedures.

"We want to inform exporters and importers that there is no heavy load of documents because of the FTA," he said.

"It should be very easy for people now because there is no red tape, it is open.

"There is less work because they just need an invoice that shows it is made in Bahrain, or the US, or it is a 35 per cent value-added product."

The BEDS chairman said it would also be easier and quicker for goods to be cleared at ports and through express shipment.

"Now it only takes 48 hours for the shipment to be cleared from the port," explained Dr Mashal.

"And for express shipment it should not take more than six hours. People should go and look into this and see what they need to do to have their product customs exempted.

"Ultimately, customs exemption should reflect a saving on the end users, which are the consumers."

The BEDS chairman said the FTA laid out specific rules of origin to ensure that only Bahrain and US goods benefit from customs exemption.

Products to benefit from the agreement include originating goods. These are goods that are imported directly from the territory of one party (US or Bahrain) into the territory of another, and are wholly the growth, product, or manufacture of one or both of the parties, he explained.

The second type of goods are those that have undergone a substantial transformation with at least 35pc value added.

Dr Mashal said this means that the direct costs of processing operations performed in the territory of one or both of the parties is not less than 35pc of the appraised value of the good at the time it is imported into the territory of a party.

In addition, goods must be new or different articles of commerce. This means that they have been substantially transformed from a good or material that is not wholly the growth, product, or manufacture of one or both of the parties.

Goods should also have a new name, character, or use that is distinct from the good or material from which it was transformed.

No good shall be considered a new or different article of commerce by virtue of having merely undergone simple combining or packaging operations or a mere dilution with water or with another substance that does not materially alter the characteristics of the good.

"The manufacturer will certify it is a Bahraini, or American product, but there is no certification body," noted Dr Mashal.

"Now if there is any doubt for either country then an investigation will be made, otherwise it is straightforward."

Dr Mashal added that tariffs on the remaining 4pc of Bahrain’s industrial and agricultural products, which are not currently produced in the country, would also be phased out within 10 years.

Goods falling into this category include tobacco, alcohol and some medical equipment.