Magazine article The Middle East

Saudi Arabia Joins WTO: After Years of Negotiations, Saudi Arabia Has, at Last, Reached an Agreement to Become a Member of the World Trade Organisation. Stephen Williams Looks at the Implications

Magazine article The Middle East

Saudi Arabia Joins WTO: After Years of Negotiations, Saudi Arabia Has, at Last, Reached an Agreement to Become a Member of the World Trade Organisation. Stephen Williams Looks at the Implications

Article excerpt

In october a world trade Organisation (WTO) working party declared its approval for Saudi Arabia to become a member of the world trade body. WTO director-general Pascal Lamy welcomed the conclusion of the lengthy negotiations and noted: "This is a very important step in Saudi Arabia's accession to the WTO. I am glad to see that the tremendous amount of work done by the kingdom has now brought it closer to WTO entry. We look forward to confirmation by the WTO's general council in the days to come."

Commerce and industry minister, Hashem Yamani, who led the Saudi negotiating team, called it "a victory for the principles and objectives of the multilateral trading system". One senior Saudi economist described the WTO accession as "an important milestone" in the kingdom's history.

There is general agreement that WTO membership will help the Saudi economy diversify more rapidly from an overreliance on oil exports and that will in turn boost employment opportunities. The kingdom is expected to record a budget surplus of over $53bn this year, thanks to record world prices for crude oil, but it is trying to ease dependence on oil and create jobs for its fast-growing population.

Saudi Arabia's council of ministers authorised Yamani to sign the WTO accession documents, which included 38 bilateral agreements with member states, accession protocol and the final report of the working team. Confirmation of the success of the application was ratified by the WTO's ruling general council on 11 November and membership was achieved this month, allowing Saudi Arabia to participate in the all-important Doha round WTO ministerial meeting being held between 13 and 18 December in Hong Kong.

Saudi Arabia first applied to join the WTO's predecessor, the General Agreement on Tariffs and Trade, in 1993. Two years later, that became an application to join the WTO. The fact that Saudi Arabia did not immediately become a WTO member in 1995, when the world trade body was first formed, meant that the kingdom was required to participate in a prolonged round of bilateral negotiations with the 148 WTO members.

Those negotiations were often fraught with difficulties, and domestic fears that WTO free trade rules would limit Saudi Arabia's right to restrict imports of goods prohibited under Islam, including pork and alcohol, had to be addressed. However, Saudi Arabia had an important ally in the US which, over the last decade, has managed to push through a number of crucial WTO reforms--although the US was the last WTO member to formally conclude a bilateral market access agreement with Saudi Arabia.

Well informed observers of the US-Saudi Arabia negotiations say that Saudi Arabia took important steps to reform its trade regime, revising legislation in the areas of intellectual property protection, import licensing, customs valuation and fees, and standards and technical regulations.

In terms of specific market opening commitments, Saudi Arabia has agreed to revise its phytosanitary (scientific quality control) measures applied to agricultural imports, including shelf-life restrictions and other non-tariff measures that have long hindered US agricultural exports to the kingdom. Almost all agricultural tariffs will be lowered to 15% or less.

Non-tariff measures and inspection requirements have also been lifted and replaced with WTO-approved systems of inspection for health and safety. Tariff commitments include duty-free entry of aircraft and information technology products and the harmonisation of tariffs on chemical imports at very low rates of duty. …

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