meepas - Bahrain country profile: Economy and Politics



Bahrain - Trade and Diplomatic Relations with the EU

Individual country level

The UK government is Bahrain 's biggest import partner from the EU. The strong ties between the two countries are based on Bahrain 's colonial past during which the UK ran the country's affairs until 1971. Since then quite a number of UK petroleum and engineering companies have participated in Bahraini projects. At the same time many Bahraini students have studied in the UK , whilst a number of Bahraini Finance organisations and individuals have become investors in the UK Finance and Real Estate sector. The Armed forces of both countries have held joint exercises on a number of occasions. According to UK government sources 2001 saw trade between the two countries rise again, with UK exports to Bahrain reaching £155.9 million, and imports from Bahrain to the UK reaching £101.7 million. Although 2002 saw a dip in trade, the prospects for 2003 look good with an estimated 20% increase in exports from the UK to Bahrain and similar expected imports from Bahrain to the UK .

EU entity level

Bahrain's relations with the EU comes under the EU's relations with the GCC countries which include Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and United Arab Emirates. According to the EU in 1989 the EC and the GCC concluded a Cooperation Agreement under which the EU and GCC Foreign ministers meet once a year at a Joint Council/Ministerial Meeting. The objective of this agreement is to facilitate trade relations, as well as more generally to contribute to strengthening stability in a strategic part of the world. Working groups have been established in the fields of industrial cooperation, energy and environment. In 1996, decentralised cooperation (university cooperation, business cooperation and media cooperation) was added to the agenda.

The 1989 Cooperation Agreement also contains a commitment from both sides to enter into negociations on a Free Trade Agreement between the EC and the GCC. The negotiating mandate from the Council of the European Union adopted in 2001, states as condition for signature of such an agreement the constitution of a GCC Customs Union. Since then the Bahraini government alongside other GCC countries have established the GCC customs Union thus paving the way for negotiations with the EU for the establishment of a GCC bloc FTA with the EU. Discussions are currently taking place with the EU regarding the areas to be covered by the agreement.

The GCC remains the EU's sixth largest export market. Furthermore the EU consistently has an export surplus in the trade balance with the GCC. In 2000, the EU exports revenue from the GCC amounted to 29 billion euro whereas imports amounted to22 billion euro. Crude oil represents almost two thirds of EU imports from the GCC.

The EU exports to GCC are diversified, but the main weight remains on large machinery such as power generation plants, railway locomotives and aircrafts, electrical machinery items and mechanical appliances. These product groups make up about one third of the total exports. Medical equipment make up another large part, leaving the remaining exports to a wide variety of products.

Back