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Bahrain stares at loss as FTA with US nears expiry
Apr '15
Bahrain textile industry is bracing for a possible loss of millions of dollars and thousands of jobs if the US does not renew a tariff agreement next year, say media reports.

The deal which was included in the US-Bahrain Free Trade Agreement (FTA), waived limits on how much yarn and fabric could be sourced from third parties before exporting products to the US.

The clause expires on July 31 next year and US lawmakers have so far failed to secure its extension.

Last week, the Senate Finance Committee rejected an attempt by Senator Bill Nelson and Congress members Gwen Graham and Jeff Miller to extend the Tariff Preference Level (TPL) until 2026.

Nelson had sought to attach the extension to a larger trade bill called the African Growth and Opportunity Act (AGOA), which provides about 6,000 African products with preferential quota and duty-free access to the US market.

The AGOA is due to expire in September this year and the Obama administration is seeking a 15-year extension.

Another bill seeking the TPL extension was introduced by Graham and Miller last month as a part of the Northwest Florida Jobs Certainty Act and referred to the Ways and Means Committee, but no date for hearing has been set.

After the TPL expires, all trade under the Bahrain FTA must adhere to the "yarn forward" rule of origin, limiting allowances for the use of yarn and fabric from third parties.

The rule was suspended for the first 10 years of the FTA, which took effect in August 2006.

This allowed companies like Bahrain's MRS Fashions, West Point Bahrain, Ambattur Clothing International and Noble Garments Factory to use raw materials imported from countries that are not signatories to the FTA and then export products to the US duty-free.

In the post-TPL regime, the four Bahrain-based textile exporters, which together ship an estimated $200 million worth of goods to the US every year, will no longer be able to export to the US duty-free - unless they can prove all constituent parts "from the yarn to the fabric to the thread" are made either in the US or Bahrain.

Bahrain’s textile industry employs around 6,200 people.

Apparel and textiles contribute 27 per cent of total exports from Bahrain to the US and investment in the sector is believed to be in excess of $250 million. (SH)

Fibre2fashion News Desk - India

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