The Bilateral Investment Treaty between the US and Bahrain was signed on 31 May 2001 after two years of negotiations. This was the first significant free trade agreement with the US and the first such treaty signed between the United States and any of the six member states of the Gulf Cooperation Council (GCC).

The treaty aspired to stimulate private investment between the two countries and it was also a strong international message of support for King Hamad’s reform programme, after ascending to the throne in 1999 and putting his new constitution to a referendum on 14 February 2001.

A year later, both sides went a step further and signed the Trade and Investment Framework Agreement on June 18, 2002. This agreement paved the way for negotiations towards a full Free Trade Agreement between the two parties. It was described as being a forum for bilateral dialogue on economic reform and liberalization and encouraging two-way trade.

The major breakthrough was on 11 January 2006, as the United States-Bahrain Free Trade Agreement first came into force (signed September 14, 2004). Immediately as the agreement took effect, all two-way trade in industrial and consumer products began to flow without tariffs.

At a 19 April 2016 event held by the US Embassy in Bahrain to mark ten years of this agreement, US Ambassador William Roebuck said, “The US-Bahrain FTA is a sign of our faith in the strength and transparency of Bahrain’s economy, and in the value we place on bilateral trade and investment with Bahrain.” 

Although Bahrain wasn’t the first partner for the US to sign such an agreement with; it was cited as being a particularly successful case. In the words of the US Administration: “Bahrain opened its services market wider than any previous FTA partner, creating important new opportunities for US financial service providers and companies that offer telecommunications, audiovisual, express delivery, distribution, healthcare, architecture, and engineering services”.


Why was the Free Trade Agreement good for both sides?

  • The FTA facilitates the flow of trade, stimulates bilateral investment, expands the manufacturing and services sectors and encourages the exchange of expertise.
  • Increased economic momentum resulting from the FTA creates employment opportunities and stimulates economic growth in Bahrain.
  • The FTA establishes free trade through the elimination of barriers to trade.
  • The FTA allows Bahraini and US businesspeople to be more competitive in each other’s markets because of the absence of tariffs and barriers.
  • The FTA enhanced the US’s commercial ties with an “economic leader in the Arabian Gulf”.
  • The FTA supported Bahrain’s economic and political reforms.
  • For many other nations the FTA made Bahrain a good place to set up a business as a gateway to US markets; or for US businesses as a gateway to GCC and Asian markets.
  • US farmers significantly increased their agricultural exports to Bahrain.
  • The FTA enhanced political ties by encouraging stronger economic relations.


The strong Bahraini banking and finance sector; its strong regulatory climate; and the stable rate of the dinar against the dollar made Bahrain a highly attractive market for investment.

With by far the most open economy in the region – avoiding the cumbersome bureaucracy which afflicts many neighbours – Bahrain is well-placed to attract Western companies and investors; as well as being a popular location for expats working in the region to set up home.

When US Secretary of State John Kerry was in Bahrain on 7 April, he pointed out the vital role that the Free Trade Agreement had played in a dramatic expansion of US-Bahrain bilateral trade. Bahrain exports to the US in 2015 stood at around $1.3 billion.



First for Bahrain

  1. Bahrain’s first mosque
  2. First artificial islands
  3. Female president of UN General Assembly
  4. First nation to host Gulf Cup
  5. First mention in historical record
  6. First modern schools
  7. First causeway
  8. First oil well in the region
  9. First media outlets
  10.  Bahrain’s first lady
  11.  Women in medicine
  12.  International Airshow
  13.  First referendum
  14.  First Grand Prix

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