Claiming Preferential Treatment
The Bahrain importer is required to submit to the customs authorities, upon request, a declaration setting forth all pertinent information concerning the growth, production, or manufacture of the good to support a claim of preferential treatment. The U.S.-Bahrain FTA establishes a minimum amount of information that may be required. Therefore, a Bahrain importer may request at a minimum the following information from a U.S. exporter:
• a description of the good, quantity, invoice numbers and bills of lading;
• a description of the operations performed in the growth, production, or manufacture of the good in the territory of one or both of the Parties and, where applicable, identification of the direct costs of processing operations;
• a description of any materials used in the growth, production, or manufacture of the good that are wholly the growth, product, or manufacture of one or both of the Parties, and a statement as to the value of such materials;
• a description of the operations performed on, and a statement as to the origin and value of, any foreign materials used in the good that are claimed to have been sufficiently processed in the territory of one or both of the Parties so as to be materials produced in the territory of one or both of the Parties, or are claimed to have undergone an applicable change in tariff classification specified in Annex 3-A or Annex 4-A; and
• a description of the origin and value of any foreign materials used in the good that are not claimed to have been substantially transformed in the territory of one or both of the Parties, or are not claimed to have undergone an applicable change in tariff classification specified in Annex 3-A or Annex 4-A.
• Agreement states that the importing Party’s customs authority should request a declaration only when that Party has reason to question the accuracy of a deemed certification referred to in subparagraph (a) of Article 4.10, when that Party's risk assessment procedures indicate that verification of a claim is appropriate, or when the Party conducts a random verification. The importer shall retain the information necessary to prepare the declaration for five years from the date of importation of the good.
• note that there are standard export documentation requirements separate from those discussed above for all shipments of goods from the United States to Bahrain.
Using the Rules of Origin to Qualify your Product
Origin rules are used to determine in which country an imported product is manufactured. The rules are designed to ensure that only products that have been significantly manufactured in the United States or Bahrain will enjoy preferential treatment when exported to the other country.
For U.S. goods to meet FTA standards for export to Bahrain, they must meet the following requirements:
• Goods must be made entirely in the United States and/or Bahrain
• For goods not subject to the specific rules of origin found in Annex 3-A or Annex 4-A, if any third-country materials are used, they must be “substantially transformed” by manufacturing or processing in the territory of one or both of the parties and must contain not less than 35% U.S. and/or Bahrain content.
• Goods covered by the specific rules of origin found in Annex 3-A or Annex 4-A must satisfy the relevant rules found in those Annexes.
• Goods must be imported into Bahrain directly from the United States.
Substantial Transformation Requirement
Few products, other than agricultural products, are made up completely of U.S. content. A product is substantially transformed when it undergoes a change in "name, character, or use" that is deemed "substantial." Examples of a substantial transformation include:
Wood => Wood table
Glass sheet => Car Windshield
Some examples of manufacturing that do not meet the substantial transformation qualification include:
Blank ceramic vase => Hand-painted vase
Unfinished wood chairs => Finished wood chairs
35% U.S./Bahrain Content Requirement
Goods not covered by the rules in Annex 3-A and Annex 4-A must also meet the quantitative origin requirement to qualify for preferential treatment under the FTA. Under this requirement, 35% of the appraised value of the good imported into Bahrain must be attributable to the cost or value of U.S./Bahrain origin materials and/or the direct costs of processing the product in the United States/Bahrain. (Unlike the U.S.-Jordan FTA, a U.S. exporter may apply the full value of components imported from Bahrain, as long as the components meet the requirements specified in Article 4.1 of Chapter 4 of the FTA, toward satisfying the 35% value-content requirement.)
It is important to note that the cost or value of materials incorporated in the imported good may be counted toward the 35% domestic content requirement only if such materials are produced in the United States and/or Bahrain. Materials will be considered produced in the United States and/or Bahrain if the materials are wholly the growth, product, or manufacture of one or both of the Parties; or the materials are substantially transformed in the United States into a new and different article of commerce, which is then incorporated into the finished good.