GENEVA, 12 November 2005 — The World Trade Organization yesterday approved Saudi Arabia’s bid to become the 149th member of the global group after its Executive General Council endorsed that the Kingdom had met its conditions. The trade body’s executive rubber-stamped the Kingdom’s entry after 12 years of tough, on-off negotiations.
Acceptance by all WTO members is necessary before a new member is admitted, and the Kingdom made a number of agreements with different countries to open its markets.
Council approval cleared the way for Saudi representatives next month to attend a WTO ministerial meeting as a full member in Hong Kong.
The Kingdom’s entry, which becomes effective within 30 days, is seen as a move that will help open its protected, but growing economy to the outside world. Stock prices on the Saudi market, the Arab world’s largest, have soared to all-time highs on optimism about the economy since the Oct. 28 announcement that entry negotiations concluded successfully.
“It’s good for Saudi Arabia; it’s good for the trading partners of Saudi Arabia, and it’s good for the organization,” said Pascal Lamy, WTO director-general.
“WTO truly becomes a World Trade Organization,” Lamy said of the Kingdom’s entry. “It’s the world’s 13th largest merchandise exporter and the 23rd largest importer. One more heavyweight around the table (is) good news.”
WTO entry should boost foreign investment, providing funds for diversification of the largely oil-based economy and bringing new export opportunities for Saudi firms, especially in the its growing petrochemical industry.
“The accession will enhance the business environment in Saudi Arabia by adding more transparency and predictability,” Minister of Commerce Hashim A. Yamani told reporters at the WTO headquarters in Geneva.
“Saudi Arabia has always believed in a free economy and liberal market operations. The accession will further integrate Saudi Arabia’s economy into the world economy,” he said.
“This we expect to lead to more investment and job creation,” Yamani said, adding that it will enhance the Kingdom’s stabilizing influence on the global economy.
The talks dragged on in part partly because of domestic fears that WTO free-trade rules would limit the Kingdom’s right to restrict the import of goods prohibited under Islam including pork, alcohol and pornography.
Some countries, including the United States, also took time to accept that the Kingdom’s economy was sufficiently open for membership.
There were fears among small Saudi firms that the WTO accession would trigger international competition. Petrochemical producers in Europe were equally worried that cheap oil and gas would give Saudi firms an unfair advantage.
The Kingdom first applied in 1993 to join the GATT (General Agreement on Tariffs and Trade), predecessor to the WTO. The pace of negotiations sped up in the last two years, in part to avoid being left out in the cold as Washington began free-trade negotiations with Bahrain, Oman and the United Arab Emirates.
“This is a historical moment that we were all waiting for,” said Prince Abdul Aziz ibn Salman, assistant minister of petroleum and a negotiating member of the Saudi delegation.
He said the membership wouldn’t affect oil prices and would bolster energy security. “This is good for the oil economy because we’ll be able to carry on what we’re doing, especially to the relevant issue to the world, which is providing energy,” he said.
Indian WTO Ambassador Ujal Singh Bhatia said the move imparts greater predictability in terms of oil and gas.
Saudi Arabia is “a very important country, which has one-fourth of the world’s oil reserves,” the ambassador said. “You can’t keep it out of the multilateral system.”
Saudi Arabia got Washington’s approval for its membership in September. US Trade Representative Rob Portman said then that the United States agreed based on negotiations that included in part the “the Kingdom’s agreement to have trade relations with all WTO members.”
Representatives of WTO-member countries congratulated the Saudi delegation for its achievement and patience throughout a long process.
“Saudi Arabia patiently waited for 12 years for this moment,” said WTO Ambassador Amina Mohamed of Kenya, the General Council chairperson who presided over the ceremony. “I would like to congratulate them; for they have been second after China in displaying their long patience. China waited for 14 years to join the WTO.”
