Gulf Daily News (Bahrain) 11 October 2005
Bahrain-US FTA backed
By TARIQ KHONJI
BUSINESS giants in the US are backing the Free Trade Agreement with Bahrain as it comes under scrutiny in hearings at the Senate and House of Representatives in Washington.
The FTA will bring political, strategic and economic benefits to both sides, say representatives of Hewlett-Packard (HP), Citigroup and the National US-Arab Chamber of Commerce (NUSACC) told the Senate hearing.
But strong objections were raised by American Federation of Labour and Congress of Industrial Organisation Industrial Union Council executive director Robert Baugh.
He said the agreement was unfair to workers on both sides and also criticised Bahrain for not consulting its labour unions before signing it.
Mr Baugh said the FTA would also exacerbate the US trade deficit, as similar agreements had done.
But NUSACC president and chief executive officer David Hamod said Bahrain could become the US’ gateway to the Gulf, similar to the role played by Singapore in its region.
"US exports to Bahrain for this year are expected to reach $362 million (BD136.8m), with an increase in 2006 to $449m (BD169.7m), a jump of nearly 25 per cent," he said.
"Bahrain is undertaking significant economic reforms and the FTA is the centrepiece of this effort."
HP Global Trade specialist Megan Aslaksen said Bahrain and other Middle Eastern countries had great potential in terms of consumer demand and human capital.
"In an attempt to diversify its economy, Bahrain has established itself as a centre for banking, information technology, telecommunications and healthcare," she said.
"HP looks forward to winning support for this FTA in Congress so we can expand our market access to this region with such a need for our solutions."
Citigroup international government affairs vice-president and director Lionel Johnson said the FTA would help the banking sector, as market access becomes more liberalised.
Senator Jeff Bingaman said while he agreed that Bahrain needed to reform its labour practices, the FTA was critical because it represented another step towards economic growth and political stability in the region.
"No-one was under the illusion when we began this process that Bahrain would be an export magnet for US goods," he said.
"Instead, the purpose was to take another incremental step toward a greater Middle East Free Trade Agreement and in the process provide concrete employment opportunities for a region where violence has been one of the only viable options."
But Mr Baugh said the FTA with Bahrain was fundamentally flawed.
"In our view, the Bahrain FTA provides precisely the wrong answers to the challenges faced in Bahrain and the US," he said.
"The agreement is based on a failed model that will neither address the problems confronted by workers in Bahrain nor contribute to the creation of good jobs and wages at home."
Mr Baugh said the workers’ rights provisions were inadequate to ensure that their fundamental human rights would be respected and that the FTA failed to specify a dispute settlement mechanism for them.
"Perhaps most disturbing, workers and unions in Bahrain have not been adequately consulted by their government on the provisions contained in the agreement," he said.
"In fact, the unions have never even received an Arabic translation of the agreement, despite having asked their government repeatedly to provide one."
He said this called into question the Bahrain government’s willingness to engage substantively with its own civil society organisations.
The FTA’s combination of unregulated trade and increased capital mobility puts jobs at risks and places workers in both countries in more direct competition over the terms and conditions of their employment, said Mr Baugh.
He said Bahrain’s labour laws, which prohibited trade unions from engaging in political activities and did not specifically provide for collective bargaining and the right to strike, should be a cause for concern.
"Strikes are prohibited in security services, civil defence, airports, ports, hospitals, transportation, telecommunications, electricity and water services, in violation of international standards that only allow denial of the right to strike in ’essential services’," said Mr Baugh.
He also criticised the treatment of expatriate labour, including domestic servants, whose salaries he said were at times withheld for months or years.
He also said the FTA would not help the US to close its trade deficit, which hit $617 billion (BD233.2bn) last year.
"While the Bahrain FTA is not likely to have a significant economic impact on the US because of the small size of two-way trade and the Bahraini economy, the agreement will likely only exacerbate our trade imbalance, as most previous bilateral FTAs have done," said Mr Baugh.
Senate and House of Representatives hearings into the FTA are expected to go on for several weeks, as politicians debate whether or not to ratify it.
His Majesty King Hamad issued a decree ratifying the FTA on July 21, after it was passed by parliament and the Shura Council earlier that month.
The agreement aims to achieve extensive liberalisation across a wide spectrum of trade issues, both in terms of goods and services.
With regards to labour rights, the FTA states that each government reaffirms its obligations as members of the ILO and commits to strive to ensure that laws provide for the highest labour standards.
Each government will also be required to effectively enforce its labour laws. The agreement states that it is inappropriate to weaken or reduce domestic labour protections to encourage trade or investment.
It also has procedural guarantees to ensure workers and employers access to fair, equitable and transparent labour tribunals or courts.
A labour co-operation mechanism is also to be established to promote higher labour standards and further advance common commitments.
The Bahrain Economic Development Board and the Finance Ministry were not available for comment yesterday.