The European Union has taken Saudi Arabia off its list of developing countries with customs preferences and will award it treatment of a high-income economy as of January.

From then on, only the poorest nations, like Yemen, will receive aid from the EU in the form of reduced customs duties.

European Union Ambassador Adam Kulach recently explained the upcoming changes of the EU’s Generalized Scheme of Preferences to leading Saudi industry representatives in Riyadh.

During the event hosted at the premises of the Delegation of the German Industry, he also promoted the conclusion of an EU-GCC Free Trade Agreement as the best solution for Saudi exporters.

The event was part of the EU-GCC Invest project which was initiated and co-funded by the European Union, Eurochambres, the Delegation of German Industry and Commerce in Saudi Arabia and Yemen (AHK Saudi Arabia), the German Emirati Joint Council for Industry and Commerce (AHK UAE), and the Federation of GCC Chambers (FGCCC).

It was held at the office of AHK Saudi Arabia.

The aim of the project is to promote mutual investment opportunities and the initiation of a constructive investment dialogue between the EU and the GCC.

“The EU decision to take Saudi Arabia off the list of developing countries is, in effect, an acknowledgement of the Kingdom’s impressive economic progress,” Ambassador Kulach stated.

“Forty years ago, when the EU started its program of aid to poor nations by means of customs preferences, Saudi Arabia was a completely different country and its industry was in need of support. Today, it is a G-20 member with a per capita income of over 25,000 US-Dollars which is more than many EU-countries. We have therefore been able now to take the Kingdom off our list, together with 19 other high- and upper-middle income countries around the world.”

Since 1971 the EU has been granting exceptionally low customs rates to various countries, including Saudi Arabia.

Next year’s update of this EU customs regime, known as Generalized Scheme of Preferences, is supposed to give the poorest nations better access to the European markets by facilitating their exports.

On the other hand, exporters from richer countries, like the USA or Saudi Arabia, are to pay the EU’s usual customs rates.

“Most countries in the world, including the USA, Canada and Japan, have already been applying their normal rates to Saudi exports for many years,” Ambassador Kulach said.

“After four decades, the EU is now following suit.” The EU envoy emphasised, however, that he was taking the concerns of Saudi businesses seriously: “The best solution for Saudi exporters would be the conclusion of the EU-GCC Free Trade Agreement.”

He added: “Through such an agreement, Saudi industry could benefit from even lower EU duties than those applied during the past 40 years. That would further facilitate Saudi exports, give the development of the economy an additional boost and create many jobs for young Saudi natonals.”

The Ambassador also expressed his strong belief that the EU-Saudi trade and investment partnership will continue to develop further to the benefit of Saudi and European economies.