Bahrain: Over 4,000 employees risk losing their jobs next July

Bahrain –  more than 4,000 employees who work in the ready-made clothing industry in are at risk of losing their jobs by the end of the period of exemption from US customs duties in July, 2016.

These ready-made clothing factories may be shut down if the period of US customs duties exemption isnt extended. Bahraini factories have been enjoying this duty-free period over the past 10 years based on a free trade agreement signed in 2008.

After annulling this preferential tariff treatment, Bahraini manufacturers will have to pay between 18 and 24 percent of export value, and thus increase costs, making these companies lose their competitive advantage.

The agreement provided several features to these factories, including the availability of the logistical structure to facilitate their access to the US market and the presence of a high level of production, delivery and safety.

The Made in Bahrain mark reaches various US stores, including Wal-Mart and Macys store chains. However, after Bahraini manufacturers lose their preferential trade treatment, Bahraini products will no longer be seen in US stores. It is noteworthy that the United States is the main market for clothing manufacturers in Bahrain.

Prior to 2005, there were about 24 factories in Bahrain that were more like small workshops with twenty sewing machines, these workshops benefited from the American tissue «quota» system. The system allowed countries to access  the US market by exporting made-ready clothing. However, due to the depletion of this quota in most states and the presence of a large margin of Bahrains share, the booming export market to the United States has not been exploited until 2005 and it required a transition period of three years before signing a free trade agreement in 2008 . 

During the period between the end of export quota for textiles system until the entry of the Free Trade Agreement with Bahrain, a few well established factories managed to operate. The number of factories had shrunk to only three factories with foreign investments, including investments from India and Dubai.