(Excerpted)

USTR ZOELLICK: Thank you very much congressmen and I appreciate all of you joining us here today. 

It is a special privilege to be here with my very well respected colleague but equally friend, the Bahraini Minister of Finance and National Economy Abdulla Hassan Saif.  It’s a proud day for both our countries: for we are here to sign a free trade agreement between the United States and Bahrain, the very first of its kind with a Persian Gulf partner. And in doing so, we are opening a new chapter in a long history between our two countries.

For more than half a century, the United States has come to count on a partnership with Bahrain.  Over the last decade, that alliance has become even more crucial.  Since 1995, Bahrain has been home to the U.S. Navy’s Fifth Fleet.  And in the years since 9/11, Bahrain has been a valued ally in the War on Terror.

As the congressman mentioned, our friendship is even older.  It started in the 1880s when a young seminary student in New Jersey, Samuel Zwemmer, determined to bring modern medicine to the Persian Gulf.  In an apartment with a few books and a case of medicine, he founded what eventually became the American Mission Hospital.  And today, the hospital is mostly staffed by Bahrainis, and it stands as a symbol of our century-old friendship. 

In a region that has been swept by bitter winds of extremism and scorched by fires of hatred, Bahrain and its’ people are an oasis of progress, prosperity, and possibility.

Two weeks ago, in New York, just miles from the site of the World Trade Center, President Bush outlined America’s plan for trying to prevent future attacks.  “We are staying on the offensive – striking terrorists abroad,” he said, “And we are working to advance liberty in the broader Middle East, because freedom will bring a future of hope, and the peace we all want. … Men and women with hope, and purpose, and dignity do not strap bombs on their bodies to kill the innocent.”

Bahrain is an example of exactly what President Bush described to the American people.  This is a contest for the soul of Islam. And only Muslims will determine the outcome.

But we can help.

In Bahrain, a nation and its people are determined to make a future in the post-oil economy of the 21^st Century as an emerging hub of finance and services, distribution for the whole Persian Gulf region. 

In Bahrain, you can glimpse the hopeful future that President Bush supports and that Bahrain’s leaders have chosen. Bahrain is taking steps towards economic, political, and social reforms altogether.

This free trade agreement is the next step for a nation on the move.  Free trade negotiations often last more than a year, but Bahrain’s decisive embrace of open trade and free markets paved the way for these negotiations to close in four months.

The leadership of the Crown Prince and Minister Saif offers a light for the nations around the globe that are seeking a path to modernization and prosperity.

Now this ground-breaking free trade agreement will also benefit both our peoples. Our two-way trade was nearly $900 million in 2003.  And on the very first day this agreement, 100 percent of consumer and industrial products and 81 percent of U.S. agricultural exports will enter duty free.

Bahrain will open its services market wider than any previous FTA partner, it will streamline digital trade, protect intellectual property, facilitate government procurement, and provide for effective enforcement of labor and environmental laws. 

In 2003, U.S. exports to Bahrain totaled a little bit more than half a billion dollars.  This new trade opening will expand opportunities for aircraft, machinery, vehicles, and pharmaceutical products.

This agreement will help provide new opportunities for U.S. service firms including banks, insurance, securities, telecommunications.  U.S. farmers will be able to expand their existing exports of meats, and fruits and vegetables, cereals, and dairy products.

But, opening trade between the United States and Bahrain is about more than commerce … and even extends beyond a closer relationship between two friends.

This agreement is about a government bolstering reformers who are reclaiming the traditions of a greater Islamic past, when confident countries were open to new ideas and commerce thrived. 

Bahrain’s reforms – including new opportunities for women, the privatization of state-owned enterprises, and a new parliament – match its desire to become a regional and financial service center hub.

I had a chance to visit Bahrain last year. I attended some classes at the Bahrain Institute of Banking and Finance with which Minister Saif has been associated.  It was an incredible experience because I got to meet young people, from all across the region, who were coming to Bahrain to learn how to build a future.

Last year, President Bush outlined a step-by-step plan to try to achieve Middle East Free Trade Area.  With the hand of U.S. economic partnership, the United States will embrace and encourage reformers throughout this region.

In July, Congress passed and then President Bush signed legislation implementing a free trade agreement with Morocco in the Mahgreb, joining Jordan as our newest free trade agreement partner.  Reformers in Jordan, Morocco, and now Bahrain have spurred a new interest in trade across the region.

Since we announced those negotiations with Bahrain last year, we’ve added Trade and Investment Framework Agreements, or TIFAs, with five Gulf partners.  We now have TIFAs, which are the foundation for our work towards free trade agreements, with Algeria, Egypt, Kuwait, Saudi Arabia, Tunisia, the United Arab Emirates, Oman, Yemen and Qatar.

Last week, I had the opportunity to consult with the Congress about moving forward with two other possible FTAs in the Gulf -- with The United Arab Emirates and with Oman.

As Congressman Ryan said, the 9/11 Commission made a unanimous recommendation and they urged the United States to expand trade with the Middle East as a way to “encourage development, more open societies, and opportunities for people to improve the lives of their families.”

The Commission highlighted this free trade agreement with Bahrain, as well as our recently enacted free trade agreement with Morocco as positive examples. And it looked to more. Congress now has the opportunity to make the 9/11 Commission’s recommendation a reality by approving the free trade agreement with Bahrain.

Because of the commitment of such leaders as Congressmen Paul Ryan and Jim Turner, I’m delighted they are here with us today, Congress has already made tremendously progress this year on trade, passing free trade agreements with Australia and Morocco by overwhelming bipartisan margins.

And this agreement is another important step in America’s persistent drive to try to open markets in both developed and developing countries around the world.  In addition to our work on free trade with Australia and Bahrain, and Morocco, we’ve signed an historic free trade agreement with the five nations of Central America, and the Dominican Republic.

And more are on the way.  We have launched negotiations with Panama, the Andean nations, Thailand, and we’re continuing our efforts with the countries of the Southern African Customs Union.  We reached a constructive framework to give concrete guidance to the global trade negotiations in the WTO.  So with countries large and small, developed and developing, the Administration’s trade agenda is moving relentlessly forward.

Of course, we’re only here because of the hard work of the unmatched staff of USTR, and our colleagues across the U.S. government, as well as our partners from Bahrain.

I want to especially thank our lead negotiator, Cathy Novelli, whose spirit, whose skill and whose commitment to America’s partnership with our friends in the Middle East are making President Bush’s vision a reality on the ground.   Cathy, for me, epitomizes the exceptional public servants at USTR who make USTR a very extraordinary place.

And all of you who know Cathy know she has no plans to pause.  I see some of her staff in the audience nodding. This U.S.-Bahrain FTA is a model that can soon shared by Bahrain’s neighbors in the Gulf and I am confident that it will be.

I am also delighted to see we have members of our U.S.-Bahrain Business Coalition here today and particularly the coalition co-chair from Citigroup.  We depend on U.S. businesses and workers to tell their stories of trade success, and we very much deeply appreciate the support of all of you.  Congress has to hear directly from people in districts and states around the country about how important it is to expand trade opportunities and how it will help grow U.S. employment.

Now Bahrain is a small land, but it’s the birthplace of some very big ideas that we think are going to influence the course of nations throughout the Persian Gulf.  That region has been vital to the interests of the United States for more than 150 years.  Even before issues of energy and international terrorism focused global attention on the Middle East, U.S. leaders had recognized the importance of trade with the nations of the Gulf and sought treaties to try to encourage two-way commerce.

Indeed, all the way back in the 1850s, when the United States first opened trade negotiations with a Gulf nation, Bahrain took center stage in a different way.  It turned out that the Persian Shah was interested in signing a commercial treaty, but he had a price:  He wanted the United States to aid his planned attacks on Bahrain.  And the American negotiator, Carroll Spence, I am proud to say refused to even consider the proposal.

So in the years since that first trade emissary passed through the Straights of Hormuz, and our relationship with these Gulf nations has grown only become more important and Bahrain has been the center of that.

Just as in the 1850s, the United States and Bahrain share an interest in peace, and prosperity, and opportunity in the Middle East.  And now we are embarking on a new chapter in our relationship.  Because as we deepen our ties with a new level of economic openness, we sign this agreement as a symbol of our friendship and as a shining example for others to follow.

Thank you.

MODERATOR: The Minister of Finance and National Economy of Bahrain.

MINISTER SAIF: Really, I find myself very speechless because all the comments and the kind remarks that I heard, I cannot match these remarks.  But let me begin by really extending my thanks and gratitude to the Honorable Congressman Paul Ryan and Jim Turner, and of course to my close friend and associate the Honorable Ambassador Robert Zoellick and the Honorable Ms. Catherine Novelli for an excellent job that she has led the U. S. team for our negotiations.  Distinguished guests, ladies and gentlemen, and thanks go to you as well for being here sharing this historical moment with us.

May I at the beginning have the honor of conveying best wishes to you all from His Majesty the King Hamad bin Isa Al Khalifa, His Highness Prime Minister Khalifa bin Salman Al-Khalifa, and His Highness, the Crowned Prince Commander and Chief of the Bahraini Defense Salman bin Hamad bin Isa Al-Khalifa and the people of Bahrain.  It is really an historical opportunity, but I would be unfair at the outset not to thank our two teams of negotiators from the United States and Bahrain for their continuous dedication and hard work that made the United States and the Kingdom of Bahrain free trade agreement a reality.  They worked tirelessly to realize this historical moment.

I would like to thank the co-chairs of the Bahrain-Congressional Congress, the Honorable Paul Ryan and Jim Turner and the Honorable member of the Bahrain-Congressional Caucus.  I would also like to extend my appreciation and deep gratitude to the co-chairs of the US-Bahrain trade agreement coalition Mr. Lionel Johnson of Citigroup and William Rice of Alcoa.  That coalition would not have been to been functional, however, without the continuous efforts of the core secretariat.  The Business Council for International Understanding, the National Foreign Trade Council, the National US - Arab Chamber of Commerce, and members of different corporations and companies.  I would like also to address my appreciation to the embassies of both countries, the US Embassy in Bahrain and the Embassy of Bahrain in Washington and the Office of the Economic Representative for their hard work and dedication to achieving this agreement.

Our success, Honorable Ambassador Zoellick, is the result of a strong commitment by the political leadership in both countries.  To develop further the two nations with a strong historical relationship.  It is with great honor and great sense of history that I have the privilege to stand here at this magnificent place, the Indian Treaty Room of the Eisenhower Executive Office Building to have signed this US trade agreement. 

The signing of this free trade agreement between the governments of the United States.

The signing of this Free Trade Agreement between the government of the United States of America and the Kingdom of Bahrain is the capstone of five millennia of trade and commerce.

According to scholarly sources, the islands which now constitute the Kingdom of Bahrain first stepped onto the stage of history some 5,000 years ago as the center of one of the great trading empires of the ancient world.

This was the civilization of Dilmun which developed as the regional center of trade and commerce because of its location along the trade routes linking Mesopotamia with the Indus Valley. 

It is not without significance that Bahrain still finds itself as the most important gateway to the region sitting along the potentially crucial trade route between a resurgent Iraq and the great Indian-Pakistani subcontinent. 

Although a formalized Gulf Cooperation Council (GCC) would not be instituted until deep into the 20^th Century; Bahrain’s ties and other Gulf States over the centuries have made trade among and between them a principal activities.

In the early decades of the 20^th centuries, oil was discovered in Bahrain.  While the amount of oil which sits beneath Bahrain is small by Middle Eastern standards, it provide just enough revenue alone with man-made economic and social policies to allow the standard of living in Bahrain to rise quickly while maintaining a close focus on the traditional trading activities which has sustained Bahrain for thousands of years.  According to the recent figures, the petroleum industry accounts for less than 20%, to be exact 15% of our GDP. With more than 84% representative of the services, trade and manufacturing. This is a good indication, how the economy of Bahrain is diversified.

Bahrain sought and gained its independence on 15 August, 1971. Beginning in 1975,  many financial institutions began to look for a stable base in a troubled Middle Eastern region.  The natural choice was Bahrain.  Building on the long history of trade and commerce, it was an easy step for most of the world’s banking giants to move their operations into Bahrain.

A concerted effort to upgrade Bahrain’s legal, social, and technological infrastructures has allowed the financial industry to flourish with confidence in an environment of transparency of transactions, of highly-developed commercial law and of culture which not only permits, but also encourage the inclusion of all people at all levels.

Even in these times of instantaneous communications, Bahrain’s unique combination of location and history permits easy access to clients and home offices.  It is often said by senior financial officers that in Bahrain, we can do business with both Tokyo and New York during a full working day.

According to recent studies, the banking sector today has an asset of some $108 billion, of which the offshore sector accounts for almost $90 and the daily foreign exchange transaction of all Bahraini's financial institutions totals approximately $4 billion US dollars.

Bahrain is now home to some 362 financial institutions which include banking units, representative offices, money and foreign exchange broker, insurance companies and reinsurance. Bahrain is (inaudible) the financial capital of the Middle East.

The signing of this Free Trade Agreement is another crucial step in the long process of enhanced trade and commerce in Bahrain.  But it is also important to mention the long and significant history of culture and social progress of which Bahraini’s are justifiably proud.

The new Constitution of the Kingdom of Bahrain which was approved by the Bahraini people in early 2001 provides for universal suffrage for everyone over 18 years of age; an independent judiciary; a bi-cameral legislature which includes the Shura Council appointed by His Majesty, King Hamad bin Isa Al Khalifa and the House of Deputies, freely elected for four-year terms. October 2002 marked the first time that women in the Gulf monarchy could vote or run for national office. 

Bahrain continues the process of reform based on a commitment to the democratic value and social justice. In the United Nations’ Development Index which ranks nations on a variety of human development axes, Bahrain is number 36 out of 174 nations included in the survey, ahead of all Arab countries.

The people of Bahrain have embraced America since 1893 when the first American (inaudible) was filled by American missionaries in Manama. The US Navy’s Fifth Fleet is based in Bahrain continuing a tradition which was begun in January 1, 1949.

In the run-up to the 1991 Gulf War, Bahrain along with other allies participated with the U.S. in liberating Kuwait and fought against terrorism side by side to the U.S. today. Today in the reconstruction on Iraq, Bahrain stood fast to help America in this quest.

And so Honorable Ambassador Zoellick, we come together today in celebration of another major step on the long, proud history of Bahrain and the United States.  The signing of this Free Trade Agreement today will send a strong and very important signal not just to the Gulf region, but around the world that nations which are at the forefront of technology, of democracy, and of freedom will also be at the front of trade and commerce.

That, ladies and gentlemen, is a worthy goal for all people of all nations.

Thank you very much.