Bahrain's textile sector gets 7-month TPL respite

28 Jan '15

2 min read

Bahrain’s textile and apparel sector has got a seven-month respite as the US government has corrected the expiration date of the US-Bahrain free trade agreement (FTA) tariff preference level (TPL) to July 31, 2016, from the previous expiration date of December 31, 2015.

The Federal Register Notice (FRN) also formally marks the end of the TPL programme as July 31, 2016.

The correction has been made following the attention drawn by the Bahrain side to the US administration that the expiration date listed as December 31, 2015 for the 10 years TPL clause was incorrect as the FTA was not initiated until August 2006, and hence, the 10-year programme should be corrected to expire on July 31, 2016.

The US-Bahrain FTA contains ‘yarn-forward’ rule of origin, but the rule was suspended for the first ten years of the FTA, with the TPL set at 65 million square metres equivalent. This allowed domestic companies to use raw materials imported from third counties for making products meant for exports to the US and avail zero-duty benefit.

Once the TPL expires on the corrected date of July 31, 2016, all textile and apparel trade would come under ‘yarn-forward’ principle, and garment makers will need to use yarn or fabric made either in the US or Bahrain to avail duty-free facility for export to the US.

Bahrain’s textile industry annually exports around US$ 200 million worth of goods to the US, and the expiration of TPL will increase the price of Bahraini goods making them unattractive.

Hence, Bahrain-based textile and apparel exporters—including MRS, Ambattur, Noble, and WestPoint Bahrain which together employ more than 6,000 people—want extension of the TPL for a further 10-year period until July 31, 2016. (RKS)

Fibre2fashion News Desk - India

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