JEDDAH, 29 October 2005 — Major trading nations yesterday approved Saudi Arabia’s accession to the World Trade Organization during a key meeting in Geneva as WTO chief Pascal Lamy called the decision historic.
Commerce and Industry Minister Hashem Yamani, who led the Saudi negotiating team, called it “a victory for the principles and objectives of the multilateral trading system.” Saudi economists applauded the WTO accession as “an important milestone” in the Kingdom’s history.
The WTO working team, including all major trading nations, yesterday approved the final package of Saudi entry terms, which must be endorsed by the ruling General Council on Nov. 11. Approval in the Council is seen as a foregone conclusion, officials said.
“Saudi Arabia is on the threshold of the WTO,” said Lamy. “I know the negotiations have been difficult and long. But I also know that both Saudi Arabia and the members have gone the extra mile to ensure the success that we see today,” he added. “We look forward to the Kingdom’s participation in the Hong Kong ministerial meeting as an active member of this organization,” Lamy said.
Yamani told the final working team session that his country had sought WTO membership “because we pride ourselves in having an open and liberal trade regime and believe in market mechanism” as a means to growth and development.
He said Saudi Arabia had made “far-reaching, very substantial and commercially meaningful concessions and commitments on goods and services” that would benefit its trading partners.
“This is a historic occasion for the WTO and for the multilateral trading system,” Lamy said, in a statement read out on his behalf by Munir Akram, the Pakistani ambassador who chaired the WTO working party on Saudi accession.
“Our road to accession has been long but finally rewarding,” Yamani told the meeting. After missing its target of joining the WTO last year, the Kingdom fixed its sights on membership in time for a WTO ministerial meeting in Hong Kong starting Dec. 13.
The formal decision lies with the WTO’s ruling General Council. Although no date has yet been fixed officially, the body could hold a special session on Nov. 11, Akram said. The next scheduled General Council meeting is on Dec. 1 to 2. “By the time of Hong Kong, Saudi Arabia will be in the WTO,” Akram said after the meeting.
The Council of Ministers last week authorized Yamani to sign WTO accession documents, which included 38 bilateral agreements with member states, accession protocol and the final report of the working team.
“The WTO working team approved the accession documents and agreed to pass them to the General Council for its endorsement within two weeks,” the Saudi Press Agency said quoting an official statement.
Amina Muhammad, chairman of the General Council, said the Kingdom’s accession papers would be presented to the Council’s Nov. 11 meeting to endorse them during a ceremony at WTO headquarters in Geneva.
Major WTO members yesterday welcomed Saudi Arabia to the body after the key decision. The Geneva meeting was attended by State Minister Abdullah Zainal, Saudi Ambassador Abdul Wahab Attar, members of the Saudi team and representatives of 52 member countries.
WTO accession will boost foreign investment in the Kingdom, providing funds for diversification of the largely oil-based economy, and bring new export opportunities for Saudi firms, especially in the petrochemical industry. Investment has already become less cumbersome and fewer sectors are restricted to local businesses, Samba Financial Group economist John Sfakianakis said in a report on the Kingdom’s economic policies.
“Adherence to international property rights has improved and the liberalization of the insurance market is improving,” he said. Insurance was the focus of long bargaining by Saudi envoys with the European Union and the United States.
The talks have dragged on partly because of domestic fears that WTO free trading rules would limit Saudi Arabia’s right to restrict imports of goods prohibited under Islam, including pork, alcohol and pornography.
Further, it took years for the United States and some others to accept that Saudi Arabia was sufficiently open economically to join. On the insurance issue, EU and Saudi officials held eleventh hour talks this week to finalize an accord.
A country wishing to join must first offer market opening concessions to its main trading partners, including cutting customs duties. The accords it reaches in bilateral talks are subsequently widened to all other WTO members.
The candidate must then make a commitment to ensure its trade legislation complies with all WTO rules as the last step before actually becoming a member.
Saudi Arabia first applied to join the WTO’s predecessor, the General Agreement on Tariffs and Trade (GATT), in 1993. Two years later, that became an application to join the WTO.
Following an accord with the Saudis, the European Union gave them a thumbs up in 2003. Last month, Saudi Arabia signed a trade agreement with the United States, seen as the final, decisive step in its drive to join the WTO. It took 12 years for Saudi Arabia, the world’s largest oil producer, to complete negotiations to join the WTO — the second-longest accession period after China, which negotiated for 14 years before becoming a member.
Ehsan Bu-Hulaiga, an economist and member of the Shoura Council, told Arab News that this was an important milestone the Kingdom had achieved after several years of rigorous and very difficult negotiations with major trading partners.
“Now the major question is what is going to happen after Saudi Arabia joins the WTO?” Bu-Hulaiga said. “Government organizations worked very hard rewriting laws, bylaws and getting market access to Saudi products which is going to benefit Saudi economy many ways. “Now we also have to look for whether our private sector is ready for competition coming from 148 nations in various sectors,” he said.
He said many small and medium enterprises in the Kingdom were not yet prepared to join the WTO. He urged Saudi chambers of commerce and businessmen and concerned bodies in government and private sector to work together to organize lectures and seminars on WTO regulations.
He emphasized the need for restructurings by companies to meet outside competition and get access for Saudi goods and services in member countries. Bu-Hulaiga described WTO accession as a “plate of silver” for private sector, adding that it would open credit lines to finance Saudi exports.
Chairman of Jeddah Chamber of Commerce and Industry Ghassan Al-Sulaiman said all Saudi chambers of commerce had supported Riyadh’s WTO membership for many reasons. “First, we don’t want to be among the few countries excluded from the global alliance and from enjoying its benefits,” he told Arab News. Another reason is the lifting of barriers to Saudi exports especially with the current emphasis on developing the petrochemical sector and improving our world position. He said the Kingdom’s bid for WTO membership had brought about economic reforms in the country.
There has been some concern by economic experts and small and medium enterprises about the preparedness and the effect of joining the WTO on Saudi economy. “I think the hype of WTO effect on SMEs is exaggerated,” said Al-Sulaiman. “JCCI and other Saudi chambers had started organizing symposiums and forums on the impact of WTO on Saudi economy and how to face it,” he added.
Within the next two months, there will be two forums on WTO, according to the JCCI chief, and several chambers have taken initiatives in support of small and medium establishments to alleviate the impact of foreign competitions.
“The Council of Saudi Chambers is establishing a WTO center and a study is being conducted to identify the services that need to be provided to the private sector by this center,” said Al-Sulaiman.