That the Kingdom is on the threshold of full membership in the World Trade Organization demands a look at what it would mean for country and our economy. The conclusion Friday of 12 years of long and complex negotiations will lead to formal acceptance of the Kingdom’s membership application by the WTO General Council when it meets on Nov. 11.
It has been a long haul in which the negotiators have concerned themselves with both the minutiae of trade such as quails eggs and major issues such as capital markets liberalization. Although it has taken a long time, all those involved, both in the WTO and the Kingdom, deserve warm congratulations for sticking doggedly and successfully to their task. Even while the process was taking place, the notion of globalization in world trade became central. Though the rising industrial nations such as China and India are building their own new technology and expertise, they are largely producing on behalf of companies from other countries — generally, though not exclusively in Europe and North America.
Globalization effectively means that it is no longer countries which are trading with each other but the world that is trading with itself. For the Kingdom, WTO membership was essential if it wished to become part of this new globalized economy. Among the 148 existing WTO members, there were those long convinced that the absence of the world’s largest oil exporter was an absurdity and that its voice should be heard.
However, for the Kingdom itself, membership poses considerable challenges, both commercial and psychological. Saudi business is going to have to learn two hard lessons virtually simultaneously. First it must figure out how to survive without captive markets. At the very same time, it has to find out how to face competition from international companies which themselves long ago learned how to survive in highly competitive markets. During the transitional period of WTO membership, some Saudi companies will have no difficulty in transforming themselves into world-class businesses, if they are not so already. Others will take foreign partners. Still others will merge to strengthen their capital and operational bases. There will however be many who will simply not manage the transformation. Part of their problem may be that they will not persuade middle management and other employees to review the way they work, tighten their discipline and look always to the best way to increase efficiency and profitability. With an increasing flow of graduates coming into the job market, existing workers will also begin to realize that if they fail to deliver, there will be others eager to take their places.
It is understandable that a few Saudis still regret the need to embrace the changes inherent in WTO membership and point to the considerable achievements the Kingdom has made by itself in the last 30 years. They ignore the fact that the world moves on. Indeed, it is because of the astonishing achievements of the last three decades that we are now ready to take our place in the WTO and face up to the challenges that membership will bring.
