JEDDAH, 12 September 2005 — Saudi Arabia’s forthcoming accession to the World Trade Organization (WTO) following Friday’s landmark trade agreement with the United States has brought mixed reactions from Saudi officials and businessmen while press reports said Saudi Arabia would continue its boycott of Israeli products.
Fawaz Al-Tuwaijeri, who has investments in agriculture, said WTO accession would have negative effect on the Kingdom’s industrial and agricultural sectors. “Farmers will not receive most of the incentives they receive now,” he said.
He said he feared that Saudi Arabia and other developing countries would become dumping grounds for major producers like the US and European countries. “This will threaten the existence of many of our agricultural projects,” Al-Madinah Arabic daily quoted him as saying.
Announcing the accord with Washington, Commerce and Industry Minister Hashem Yamani said Saudi Arabia would now be able to attend a WTO ministerial gathering in Hong Kong in December “as the 149th member” of the organization.
Economists said the accession to the WTO would encourage foreign investment. It will also benefit US manufacturing and service industries, agriculture and American workers by providing increased access to the Kingdom’s growing markets.
The bilateral pact requires Saudi Arabia to open its markets to imports of more US farm and manufactured goods, as well as service companies in sectors including banking, telecommunications, energy, express delivery, transportation and hotel and restaurant management.
Abdul Nasser Al-Nahdi, a businessman, said investments in agriculture and industry would suffer as a result of WTO accession. “At least 60 percent agricultural and industrial projects, especially the smaller ones, face bankruptcy following WTO accession as they will not be able to compete with international firms,” he pointed out.
Nabigh Al-Dubyani, a financial consultant, has the opinion that the WTO entry would bring more demerits to the Kingdom than merits. He called upon smaller companies either to merge with one another or forge alliance in order to face foreign competition.
But Agriculture Minister Dr. Fahd Balghunaim described the WTO deal with the US as a major achievement, adding that the world trade body did not pose any threat to Saudi interests. “Saudi Arabia does not put any restrictions on trade. So, the joining of WTO will not cause any harm to any sectors,” he explained.
On the other hand, Balghunaim said, WTO entry would improve services and products. “Increasing competition is good for the national economy and consumers,” he added. “We are looking forward to WTO accession with a positive outlook,” he stressed.
The minister also emphasized the WTO accession would not affect the government’s support to farmers. “The government aid received by the agricultural sector now is much less than what is allowed by WTO regulations,” he pointed out. He said the government would continue to support the agricultural sector.
Asked about Saudi-Israeli relations following WTO accession, Balghunaim said Custodian of the Two Holy Mosques King Abdullah has already stated the Kingdom’s stand with Israel. He was referring to the Arab peace plan initiated by King Abdullah while he was crown prince. The plan, which offers normal Arab relations with Israel in return for its withdrawal from all occupied Arab territories, has been endorsed by the Arab League summit in Beirut two years ago.
According to Al-Watan Arabic daily, the WTO agreement signed by Saudi Arabia and the US in Washington includes a paragraph stating that the Kingdom would not implement economic boycott on second and third parties having economic and trade relations with Israel without pointing to the first party. “This means the Kingdom’s boycott of Israel will continue,” the newspaper said.
Secondary boycott means keeping away from concluding any trade deals with foreign companies that deal with Israel or contribute to its economic and military development. Tertiary boycott means making no trade deals with foreign companies which establish relations with other firms having trade relations with Israel. The GCC countries including Saudi Arabia have already agreed in 1994 to avoid secondary and tertiary boycotts, the paper pointed out. Saudi Arabia has continued its rejection of lifting Israeli boycott since the beginning of WTO talks.
Many Saudi businessmen have stated that WTO entry would have positive effect on the Kingdom’s economy. Dr. Muhammad Al-Mutlaq, executive director of Al-Mutlaq group, described the Kingdom’s efforts to join the world body as “a courageous move.” It would facilitate commercial and industrial ties with other countries, he said.
