MANAMA: The thriving textile and apparel industry in Bahrain gets a six months extension in the FTA’s Tariff Preference Level (TPL) clause bringing some hopes of continuation of the efforts aimed at renewing the TPL for yet another 10 years.
Before, the expiration date had been listed as December 31, 2015. As the Bahraini side pointed out, however, this date was incorrect since the programme was not initiated until August 2006, and therefore the ten (10) year program should be set to expire on July 31, 2016 not December 31, 2015.
If the TPL clause, as many fears, gets expire in the decade long operational US- Bahrain free trade agreement (FTA), the closure of local garments and apparel industry is imminent as the prices will go up 30% making the exports incompatible.
According the details on December 30, the US Government issued a Federal Register Notice (FRN) which corrected the previously incorrect expiration date of the US-Bahrain FTA TPL.
In case of failure in extending the TPL, a clause in the Bahrain-US FTA is set to expire now by the mid of next year, over $186million garments sector exports and thousands of jobs are at risk in addition loss in business of about $750million to the banks and financial institutions.
The FRN amends US note 13 to subchapter XIV of Chapter 99 by extending the TPL programme from January 1, 2016 to July 31, 2016. It also formally marks the end of the program as July 31, 2016.
It may be noted that this is not a new benefit. The amendment in Annex III of the FRN is entitled “To Make Technical Corrections.” Thus, it is clear that this is not a change in the programme. Rather it is merely a correction of a previous error which rightly sets the expiration date of the US-Bahrain TPL as July 31, 2016.
“The Bahraini side drew the US government’s attention to this mistake and to seek its correction. The extension is useful, however the objective of the coalition to extend the TPL for an additional 10 years remains,” Harinder B.S. Lamba on behalf of the M.R.S. Fashion and Ambattur Garment Industries told The24X7News Bahrain (www.twentyfoursevennews.com).
It is pertinent to mention that a full support of the Bahraini government and private sector is needed to convince the US Congress to extend the TPL in Bahrain through July 31, 2026. Legislation will have to be passed by the US Congress.
Given the Bahrain’s long commitment to the US on military, geo-political strategic objectives and the close relationship with the 5th Fleet demonstrates Bahrain’s commitment to its ally the United States, the TPL extension is seen a very natural course of action between the two sides.
“The United States can demonstrate its commitment to Bahrain through an economic commitment of allowing our three remaining apparel manufacturers and one home furnishing manufacturers to continue to export goods to the US duty free using third party inputs,” Harinder, added.
“We cannot let the TPL expire. Thousands of jobs are at risk. Bahrain demonstrated earlier this week that it is a key US ally in the fight against terrorism and in the region. The US needs to demonstrate its willingness to help Bahrain remain economically competitive in the US market, maintain social stability through employment and extend the TPL for the apparel sector. We need to work with the U.S. Congress to pass legislation that will do that.”