JEDDAH, 27 October 2005 — Saudi Arabia is all set to join the World Trade Organization tomorrow when a WTO working team is likely to approve Riyadh’s accession to the body after final negotiations.

Commerce and Industry Minister Dr. Hashem Yamani, who has been authorized by the Cabinet to sign WTO accession papers, will leave for Geneva shortly for the final talks. Yamani, who recently addressed the Shoura Council, allayed fears of some members on the aftermath of WTO accession. “The negative effects are not restricted to Saudi Arabia but encompass all member countries,” he pointed out.

WTO accession is expected to boost foreign investment in the country, providing funds for diversification of the largely oil-based economy, and bring new export opportunities for Saudi firms, especially in the petrochemical industry.

Yamani expressed his confidence that Saudi Arabia would be able to attend the WTO ministerial meeting in Hong Kong in December after becoming a full member of the organization.

He said consumers in the Kingdom would benefit from the WTO as it would intensify competition between companies to provide quality services at reasonable rates.

“Every WTO member country has the right to stop dealing with a member country for reasons related to national security and international relations,” the Saudi Press Agency quoted Yamani as telling the Shoura.

The Kingdom has taken into consideration matters such as Saudization and the interests of small businesses while opening up certain sectors, Yamani said. The Shoura has endorsed the Kingdom’s WTO accession.

The Kingdom’s admission has to be agreed by the WTO’s ruling General Council in early November, but that is seen as a formality and will clear the way for Saudi Arabia to attend a key ministerial meeting in Hong Kong.

The talks have dragged on partly because of domestic fears that WTO free trading rules would limit the country’s right to restrict imports of goods prohibited under Islam, including pork, alcohol and pornography.

Negotiating partners like the United States have taken years to accept that Saudi Arabia’s economy is sufficiently open to join. The European Union held eleventh hour talks this week on insurance sector access.

The visit of Custodian of the Two Holy Mosques King Abdullah to the US in April, while he was crown prince, and his meeting with President George W. Bush played a big role in accelerating Riyadh’s WTO agreement with Washington. Fears among small Saudi firms at the international competition which WTO accession will bring are echoed by petrochemical producers in Europe who worry that cheap oil and gas give Saudi firms an unbeatable advantage. Diplomats say the Kingdom finally persuaded the 25-member EU this month that low prices for its petrochemical feed stocks are a natural advantage stemming from abundant oil resources rather than a case of market fixing.

But Saudi economists express concern that many smaller firms are not prepared to battle for share in an open market. “Are we ready? No, we are not. Even though we have been negotiating for 10 years we didn’t do anything to get ready,” said Ihsan Bu-Hulaiga, a member of the Shoura Council.

Bu-Hulaiga said Saudi Arabia’s services sector may be particularly affected by an influx of foreign companies, but argued that the long-term impact of liberalization and competition would stimulate the economy.

The Kingdom is expected to record a budget surplus of up to SR200 billion ($53 billion) this year on record world prices for its crude exports, but is trying to ease dependence on oil and create jobs for a fast-growing population. “The most important thing about the WTO is that it gives comfort to foreign investors that Saudi Arabia’s laws and regulations are in line with international standards,” said Amr Dabbagh, governor of the Saudi Arabian General Investment Authority or SAGIA.

Bankers say much of the WTO effect is already being felt as a result of accession preparations. Foreign licensed banks can now set up branches and existing joint venture banks can increase their foreign equity to 60 percent from 40 percent.

— Additional input from Reuters