Saudi Arabia prepares to join WTO

Joining the WTO would further globalise Saudi Arabia, opening up its market to competition in the retail sale of petrol.

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By  Nicholas Wilson Published  October 4, 2005

As Saudi Arabia cleared a major obstacle to its joining the World Trade Organization (WTO) last month, the European Union highlighted what it wants the oil giant to do before it receives its blessing: stop feeding its petrochemcial industry subsidised gas. The kingdom’s market access deal with Washington smoothed out trade deal rumbles that impeded its joining the WTO, with which it holds talks early this month. Riyadh’s entry would give transnational companies access to its downstream markets, including retail petrol. The move is part of the kingdom’s liberalisation of its economy, as it also experiments with privatising non-oil companies. And in a historic first, it also allowed women a greater role in its businesses; the government forced a chamber of commerce to allow women candidates to stand for its elections. While the EU may be pleased with progress in women’s rights, it is not, however, happy about what it says is unfair competition from Saudi Arabia’s petrochemical firms, which receive natural gas at below market price from state-owned firms. EU Delegation Head in Saudi Arabia Bernard Savage said, “We have been having discussions with the Saudis about this,” adding that he did not see it as a permanent blockage to the country joining the WTO. “The objective is for Saudi Arabia to join the WTO formally at the Hong Kong ministerial meeting (in December). That is our objective and that is the Saudi objective,” he said. In the Washington deal the kingdom opens its markets to more US products and services, and in return expects greater investment as foreign firms feel more confident operating in its commercial and legal framework. The US is also in free trade talks with Bahrain, Oman, and the UAE. The US Trade Representative’s Office said, “The deal with also mean greater openness, further development of the rule of law, and political and economic reform in Saudi Arabia.”

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