GENEVA, 16 November 2005 — At last the dream has come true and Saudi Arabia has become a member of the Word Trade Organization (WTO). Not only that but according to many WTO officials — including Amina Mohammed, chairperson of the General Council of the WTO — the Kingdom will become a key player in the organization.
Saleh Al-Husaini, a member of the Saudi Shoura Council and a member of the negotiating team, said that the Kingdom represented the biggest economy in the Middle East. “Saudi Arabia is in 13th place among the biggest exporting countries, and the size of its economy is 28th in the world,” said Al-Husaini. Saudi Minister of Commerce and Industry, Dr. Hashem Yamani, said in his speech at the council’s meeting that Saudi Arabia was familiar with the multilateral trading system. “It has for a long time been following autonomously the principles and rules of this system in the formulation and conduct of its trade policies. We reaffirm our commitment to the rule-based system implemented by the WTO,” said the minister.
Saudi Arabia has been negotiating for membership since July 1993. It has completed its package of documents presenting the Kingdom’s terms of accession at the Working Party meeting on Oct. 28, 2005. The legal texts, which run to some 600 pages, were formally accepted by the 148-member governments of the WTO at last week’s special session of the General Council. Dr. Yamani signed the Protocol of Accession with full powers, thus accepting the protocol on behalf of the Kingdom. Saudi Arabia will become the 149th Member of the WTO in thirty days on Dec. 11, 2005. Al-Husaini said that the achievement had come about after the great efforts that the Custodian of the Two Holy Mosques King Abdullah had made. “The king helped by pushing the process on two parallel tracks. One was the heavy diplomatic effort which began at the Texas Summit which was followed by letters to leaders of many countries. The other track was the king’s success in reforming the economy which gave the world a signal that the Kingdom was genuinely interested in reform,” said Al-Husaini.
Dr. Yamani stressed that there would be more transparency for consumers. “We will make sure to implement transparency in the country’s economy,” said Dr. Yamani.
Al-Husaini said that citizens, both investor and consumer, will make use of the new transparency as well as the new customs tariff. Furthermore, Al-Husaini stressed that citizens will make use of the protection of intellectual property rights.
As a result of the negotiations, Saudi Arabia has agreed to undertake a series of important commitments to further liberalize its trade regime and accelerate its integration into the world economy while offering a transparent and predictable environment for trade and foreign investment in accordance with WTO rules. Among the important commitments undertaken by Saudi Arabia which were mentioned in the council’s statement are the following:
• The WTO agreement will be applied uniformly throughout Saudi Arabia’s customs territory.
• Saudi Arabia agreed to review a fee charged for the authentication of trade documents and to bring it into conformity with WTO rules within two years of accession.
• Saudi Arabia will eliminate any non-tariff measures that cannot be justified under WTO rules while maintaining the right to restrict the importation and exportation of a certain number of goods and services in order to protect public morals, the life and health of the population, national security interests, etc.
• Saudi Arabia will not maintain any export subsidies on agricultural products.
• Saudi Arabia will ensure that its producers and distributors of natural gas liquids (NGLs) will operate on the basis of normal commercial considerations, based on the full recovery of costs and a reasonable profit.
• In areas such as the protection of intellectual property rights, the application of technical regulations and standards, as well as the protection of food safety and human, animal and plant life and health, Saudi Arabia will implement the relevant WTO agreements in full from the date of accession.
The negotiations also touched on issues such as:
Goods
Saudi Arabia is committed to gradually lowering trade barriers and expanding market access for foreign goods. Saudi Arabia has bound all tariffs levied on imports. At the end of the ten-year implementation period, the average bound tariff levels will decrease to 12.4 and 10.5 percent for agricultural and non-agricultural products respectively. The individual tariff rates for agricultural products will range from 5 to 200 percent, with the highest rates being applied to tobacco products and dates. Some 11 percent of non-agricultural products will be imported duty-free whereas the highest tariff rate will affect wood, as well as iron and steel products. Most tariffs (92.6 percent) will be set at their final bound rates at the date of accession. The remainder will be implemented in 2008 and 2010, but in no case later than 2015.
Insurance
Foreign insurance companies will be permitted to open and operate direct branches in Saudi Arabia. Commercial presence will also be permitted for insurers that establish a locally incorporated cooperative insurance joint-stock company, in which foreign participation is limited to 60 percent. A three-year transition period will be given to existing foreign insurance providers to convert to either a Saudi cooperative insurance company or to a direct branch of a foreign insurance company. During this transition period, existing foreign insurance providers will be able to continue existing business operations, as well as offer new products and service new clients.
Banking
Commercial presence of banks will be permitted in the form of a locally incorporated joint-stock company or as a branch of an international bank. Upon Saudi Arabia’s accession, the foreign equity cap for joint ventures in banking will be increased to 60 percent. While financial services can only be provided by commercial banks, asset management and advisory services may also be provided by non-commercial banking financial institutions.
Telecoms
Within three years from accession, Saudi Arabia’s commitments will allow up to 70 percent foreign equity ownership in the telecommunications sector. These commitments apply to both basic telecommunication services and value-added telecoms services. Public telecommunications services will have to be provided by a joint stock company.
Distribution
While Saudi Arabia will maintain some restrictions on the distribution of goods inside the country, these restrictions will be phased out over a three-year transition period.
