RESTRICTED
WORLD TRADE WT/ACC/SAU/6
30September 1996
ORGANIZATION(96-3872)
Original: English
WORKING PARTY ONTHE ACCESSION OFTHE KINGDOM OFSAUDI ARABIA
Questions andReplies
ThePermanent Mission oftheKingdom ofSaudi Arabia hassubmitted thereplies reproduced
hereunder tothequestions submitted bydelegations following themeeting oftheWorking Party on
2-3May1996. Replies totheadditional questions submitted byMembers willbecirculated assoon
asreceived.
Information onDomestic Support andExport Subsidies inagriculture intheformat setout
indocument WT/ACC/4 isreproduced inAnnex A.TheProcedures andGuidelines oftheInternational
ConformityCertificationProgramwillbereproducedindocumentWT/ACC/SAU/6/Add.1.TheUnified
Economic Agreement oftheCooperation Council fortheArab States oftheGulfwillbereproduced
indocument WT/ACC/SAU/6/Add.2
_______________
Table ofContents
Section Page Question
Number Number
II.ECONOMY, ECONOMIC POLICIES AND
FOREIGN TRADE
1.Economy
(b)Current Economic Situation 3 1
2.Economic Policies
(a)Main Directions 3 2-4
(b)Monetary AndFiscal Policies 4 5-7
(c)Foreign Exchange AndPayments System 5 8
(d)Foreign AndDomestic Investment Policies 5 9-13
IV.POLICIES AFFECTING TRADE INGOODS
1.Import Regulations 6 14-15
(b)Characteristics ofnational tariff 8 16-30
(f)Import Licensing Procedures 12 31-43
(h)Customs Valuation 15 44-50
(i)Rules OfOrigin 16 51-53
(o)Safeguard Regime 17 54-57
2.Export Regulations
(b)Customs Tariff Nomenclature 18 58-59WT/ACC/SAU/6
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(c)Quantitative Export Restrictions 18 60-64
(f)Export Financing 19 65-66
3.Internal Policies Affecting Foreign Trade inGoods:
(a)Industrial Policy 20 67-79
(b)Technical Regulations AndStandards 22 80-102
(c)Sanitary andPhytosanitary Measures 27 103-107
(d)Trade-related Investment Measures 27 108-114
(i)Government Procurement 29 115-127
4.POLICIES AFFECTING FOREIGN TRADE IN
AGRICULTURAL PRODUCTS 31 128-143
(b)Export Subsidies 33 144-155
(c)Export Prohibitions andRestrictions 36 156
V.TRADE-RELATED INTELLECTUAL
PROPERTY REGIME 36 157-175
IV.TRADE-RELATED SERVICES REGIME 36 176-182
VII.INSTITUTIONAL BASE FOR TRADE AND
ECONOMIC RELATIONS WITH THIRD
COUNTRIES 36 183-186
ANNEX A
Information OnDomestic Support andExport Subsidies
InAgriculture 40WT/ACC/SAU/6
Page3
Allparagraph references concern document L/7489. Reply references concern document L/7645/Add.1
unless otherwise indicated.
II. ECONOMY, ECONOMIC POLICIES AND FOREIGN TRADE
1. Economy
(b) Current Economic Situation
Q1. What was thetotal amount oftariff revenues collected from agricultural and
non-agricultural products in1995?
R1. Thetotaltariff revenue for1995 wasSR7.659 billion. Tariff revenues collected from the
imported agricultural products in1994, according totheGATT classification, wasSR859million.
2. Economic Policies
(a) Main Directions
Q2 (a)Intheresponse toquestion 20(c)inL/7645/Add.1, itisstated that,“Oneofthespecific
objectives oftheFifth Development Plan wastomaximize thetransformation ofdomestically
produced rawmaterials andintermediate products, particularly petroleum derivatives and
petrochemicals." Inthisregard, could Saudi Arabia indicate howitintends toproceed in
maximizing "thedomestic transformation ofdomestically produced rawproducts").
(b)CanSaudi Arabia statecategorically thatitwillnotusemeasures, suchaslocalcontent
restrictions, dualpricing ofrawmaterials orother inputs, trade balancing, non-tariff import
measures, export performance requirements orother import substitution andexport promotion
measures thateither violate WTO provisions, orthatareproblematic forconcessions granted
inMarket Access negotiations?
R2. (a)ThegovernmentofSaudiArabiawillencouragefurtherprocessingofdomesticrawmaterials
bysupporting commercially viable, costcompetitive, projects through itsgenerally available industrial
support systems, i.e.,theSaudi Industrial Development Fund andother programs listed inReply 20b
ofL/7645/Add.1.
(b)Saudi Arabia doesnotmaintain measures inmostofthecategories listed inthequestion.
Without prejudice toitspositions onwhether particular measures currently maintained conflict with
itspotential WTO obligations, Saudi Arabia, asaWTO Member, willhonor itsWTO commitments.
Q3. “Theoverall objective oftheFifth Development Plan(1990-1995) ...were tocontinue
withrealstructural changes intheKingdom ’seconomy toestablish adiversified economic base
-withdueemphasis onindustry andagriculture. ”(Qu11,L/7489). Which specific measures
were enacted topromote theagriculture andfoodsectors? Could Saudi Arabia provide more
details(budgets,sectors/commoditiesaffected,etc.)onmeasurestakenbythegovernmenttoachieve
thisgoalintheagricultural andindustrial sectors?
R3. Planning inSaudi Arabia isindicative whereby theplansetstheaimsandtheimplementation
islefttotheworking ofthemarket forces.WT/ACC/SAU/6
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Q4. IstheUmAl-Qura theonlyperiodical where trade lawsandother measures arepublished
prior toimplementation ?Ifnotplease name theothers.
R4. TheUmAl-Qura istheonlyofficial publication forthenotification oflaws, regulations and
decrees.
(b) Monetary AndFiscal Policies
Q5. Asnoted during theWorking Party meeting, Saudi Arabia ’scorporate taxation system
applies adifferent taxregime tobusinesses owned bycitizens ofSaudi Arabia andtoforeign-owned
orjoint-venture businesses. AstheZakat isapplied onlytoliquid assets andataratesharply
below thatapplied totheincome ofnon-Saudis, itwould appear thatnon-Saudis bearahigher
taxburden thanSaudi citizens.
(a)Isitcorrect tostatethatcitizens ofSaudi Arabia never paytheincome tax? Ifnot,
what israteofincome taxapplied totheearnings ofcitizens ofSaudi Arabia?
(b)Isitcorrect tostatethatforeign-owned firms thatimport goods aresubject toahigher
leveloftaxation ontheir earnings from thisactivity thanimporting ormanufacturing
firms owned bycitizens ofSaudi Arabia?
(c)Would Saudi Arabia please statefortherecord itsposition ontheWTO consistency
ofthistaxation system inlightofArticle IIIoftheGATT 1994 andwhether itbelieves
thatthereareimplicationsfornationaltreatmentandnon-discriminationintheapplication
ofsuchasystem?
R5. (a) Saudi citizens arenotsubject totheincome tax.However, theypayZakat atanannual
rateof2.5% oftheassessable amount. Unlike theincome tax,which ispayable onannual profits
only, theZakat isimposed onvarious components. TheZakat baseforSaudi companies andtheSaudi
partner ’sshare injointventures includes thefollowing components:
- Capital
- Various kinds ofreserves.
- Transferred profits.
- Revised annual profits.
- Balances ofvarious provisions.
- Partner ’screditor current accounts.
- Loans provided bypartners.
- Long-term loans obtained from other sources forcapital baseexpansion.
Thefollowing items aresubtracted:
- Netfixed assets.
- Investments inother domestic companies.
- Projects under execution.
- Revised annual losses.
- Transferred losses.
- Book value ofestablishing fees.
Zakat BaseforSaudi companies:
Zakat ispayable ataflatrateor2.5% annually. Itisclearform theabove thatSaudi companies, in
some cases, maypayintheform ofZakat more thanthetaxpayable bytheforeign partner.
(b) There aremany cases where foreign partners would notpayataxwhereas Saudi partners
areobliged topayZakat:WT/ACC/SAU/6
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(1) Companies intheprocess ofbeing established. Saudi companies havetopayZakat
ontheircapital while thecapital share oftheforeign partner isnotsubject toanytax
aslongasthecompany isintheprocess ofestablishment anddidnotyetearnany
taxable profits.
(2) Theforeign partner ’sshare inacompany incurring alossinnottaxable whereas the
Saudi partner hastopayZakat onthevarious components mentioned above.
(3) Industrial andagricultural companies formed under theprovisions ofthe“Foreign
CapitalInvestmentLaw”areexemptfromincometaxforaperiodoftenyearsbeginning
fromthedateofproduction, andforaperiod offiveyears forother companies. The
foreign partner ’sshare istaxexempt during these periods, while theSaudi partner
must payZakat onhisshare.
Though foreign companies aresubject toahigher taxrate,thistax,however, isnotnecessarily bigger
thanZakat payable bySaudi citizens. Only theshare oftheforeign partner oftheannual profits is
taxable, whereas theSaudi partner would payZakat onallhismoney inthecompany including net
profit, which isonlyoneoftheaforementioned components.
(c) Non-Saudi business entities aresubject toIncome Taxwhile Saudi entities aresubject toZakat.
Theformer isincome-based while thelatter isawealth-based. Thus, there isnoautomatic preference
given todomestic interests intheareaoftaxation.
Q6. What istheleveloftheincome tax?
R6. Theincome taxrateisasfollows:
NetIncome (Saudi Riyals) TaxRate
0-100,000 25percent
100,001 -500,000 35percent
500,001 -1,000,000 40percent
More than1,000,000 45percent
Q7. What istheincome taxpayable on?
R7. Theincome taxispayable ontheforeigner ’sshare ofprofits.
(c) Foreign Exchange AndPayments System
Q8. Thelastsentence ofthereply toquestion 20(WT/ACC/SAU/3) indicates thatnoexchange
control requirement areimposed oncapital receipts orpayments byresidents ornon-residents.
Please specify theterm ‘capital receipts orpayments ’inthiscontext. Does thismean thatany
capital transactions arepermitted under exchange legislation?
R8. Itseems thatthereference isincorrect. However, theanswer isasfollows. There areno
restrictions onfinancial transfer outside Saudi Arabia either bynational persons orbyanother entities,
except forfraud money (money laundering, etc..).
(d) Foreign AndDomestic Investment Policies
Q9. Para. 15:Reply 17states that"Non-GCC investors are,forallpractical purposes,
prohibitedfrominvestingintheSaudistockmarket".Pleaseexplainthereasonsforthisprohibition
andindicate what plans there aretoopen upthestock market toforeign investors.WT/ACC/SAU/6
Page6
R9. TheSaudi stock market issmall withonly89Saudi companies listed. Shares dealing islimited
toSaudi companies andSaudi citizens. There areexceptional cases where GCC investors areallowed
topurchase specific amounts ofsuchshares. Currently, therearenoplans toopenupthestock market
toforeign investors. However, foreign dealing under specific rules might bestudied.
Q10. Please provide acomplete listofsectors where noforeign participation ispossible, and
those sectors where foreign participation islimited tolessthan50%.
R10. Except forpetroleum extraction, allother developmental projects suchasindustrial and
agricultural projects areopentoforeign participation without anylimitations onthelevelofownership.
Q11. Thereply toquestion 31(WT/ACC/SAU/3) states thatnational treatment isgranted for
foreign investment within thecontext oftheInvestment ofForeign Capital Regulation. Arethere
anyfields where national treatment isnotgranted toforeign investment?
R11. Inthecontext oftheInvestment ofForeign Capital Regulation, national treatment isgranted
forforeign investment withtwoexceptions: loans from theSaudi Industrial Development Fund and
taxholiday. Tobeeligible forboth, theforeign investment must beajoint venture withSaudi
participation initsequity of25%ormore.
Q12. Taxholidays andinvestment incentives aremodulated according tothelevelofdomestic
participation. Please provide concise information ontheabove (e.g., weunderstand thattoqualify
forpreferential loans andtaxholidays aminimum 25%Saudi participation isrequested).
R12. (a)Licensedforeigninvestmentprojectsareeligibleforincentivesavailabletonationalprojects
intheindustrial field, withthefollowing exceptions:
- foreign investment projects inindustry andagriculture areeligible fortaxholiday foraperiod
oftenyears.
Other foreign projects areeligible fortaxholiday foraperiod offiveyears.
However, eligibility fortaxholiday requires, inaddition toabove, thatthere beanational
participation ofnolessthan25%oftheproject equity.
(b)Companies withforeign shareholders areeligible forloanupto50%oftheproject cost
iftheSaudi participation is50%. Ifthispercentage islessthan50%, thenfinancing isgranted ata
proportionately reduced level.
Q13. Inrelation tothereply no.73,please confirm thatthere arenoownership limitations
toqualify forGCC certificates oforigin which willpermit goods tobeimported dutyfreeinto
other GCC countries (inastudy oninvestment intheGCC produced byClifford Chance itis
saidthatGCC certificates oforigin arelimited togoods produced bycompanies withatleast51%
GCC ownership).
R13. Toqualify forGCC tariff treatment, goods must becertified ashaving atleast40%GCC
content andasbeing produced byfirms withatleast51%GCC ownership.
IV. POLICIES AFFECTING TRADE INGOODS
1. Import Regulations
Q14. Please citeanddescribe lawsandregulations currently inplace thatprovide fortariff
ornontariff protective measures forthespecific protection ofdomestic output from import
competition.WT/ACC/SAU/6
Page7
R14. Customs Tariff .Acompetent technical committee attheMinistry ofFinance &National
Economy examines, whenever required, thepieces, kinds andquality ofthegoods imported toSaudi
Arabia, inorder toidentify thefollowing:
- effect oftheCustoms Tariff applicable inSaudi Arabia ontheratesinthelocalmarkets.
Sizeofthecompetition between thegoods domestically produced andthose imported, aswell
astheeffect oflower prices specified intheinvoices oftheitems invoices oftheitems imported to
Saudi Arabia, onthecompetition.
Sizeofthelocalproduction oftheprotected items andtheimported items thathavesimilar
localproduction, andextent ofitscoverage tothelocaldemand.
Prior tosubmission ofitsrecommendations, thecommittee takes intoaccount thefollowing:
Commercial aspects, Financial aspects, andIndustrial aspects.
System ofNational Industry Protection andEncouragement. Thissystem provided forformation
ofacompetent committee thatmayassume examination oftherequests submitted bytheindustrialists
regarding protection oftheirproductions from anunjust foreign competition duetothelower prices
oftheforeign products which aresoldinSaudi Arabia asaresult ofthelower prices mentioned in
theinvoices.
Thecommittee thenconsiders possibility ofproviding thecustoms protection thatreaches
asmaximum to20%which isrelatively reasonable incomparison toother countries.
Inproviding thecustoms protection, following aspects aretaken intoaccount:
- availability oftherawmaterial required forproduction;
- sizeofthetotalproduction ofsame itembytheexisting factories, itsmatch uptothelocal
demand.
Further itisworth mentioning thatthecustoms protection isnotprovided toalllocalproducts
because there isahostofimported items thathaveidentical localproducts, however adutyofonly
12%isapplicable.
Q15. Please provide alistofanon-tariff measures maintained bytheKingdom ofSaudi
Arabia. This listshould include thetariff heading toHS6-digits, aproduct description, an
indication ofthetypeofrestriction maintained, andthejustification forthemaintenance ofthe
restriction.
R15. Non-tariff import restrictions canbebroken down intobasically fivegroups asfollows:
- There aretherestrictions ondates (HS08041010-08041090) andlong-validity pasteurized
milkincontainers ofmore thanonelitre. There isnospecific HSeightdigitnumber forthisproduct
butitwould fallintooneofthelineitems HS04011010-0429920. Explanation ofthereasons forthese
restrictions aretobefound inthereply toQuestions 86,87and88intheoriginal document.
- Therearethespecificitemswhicharebannedforreasonsofhealth,securityandpublicmorality
andwhich arepresented intheSaudi Arabian harmonized codesystem attheeight digitlevel. They
arepresented intheAnnex 7/Donnontariff requirements which include prohibited andrestricted or
licensed goods.
- There areitems thatareprohibited duetotheintended illegal useoftheproduct, andwhich
cannot bedistinguished attheeight digitlevelalone. These include thefollowing:WT/ACC/SAU/6
Page8
Equipment intended tobeusedfordistillation ofliquors andsubstances solely usedforliquor
distillation. Suchequipment andsubstances could beinanyvariety ofeight-digit lineitems
butprimarily those inChapters 39-40 (plastics/rubber), 44-46 (wood products), 70(glass),
73-83 (metals), 84-85 (equipment), and90(instruments). Theappropriate WTO justification
isGATT 1994 Article XX(a).
Publicity material forallkinds ofcigarettes. Suchequipment andsubstances could beinany
variety ofeight-digit lineitems butprimarily those inChapters 47-49 (paper products). The
appropriate WTO justification isGATT 1994 Article XX(b).
- Night binoculars which enable vision inthedarkandbinoculars which takephotographs in
thedark. These would beincluded inHS90051000 -90059000. Theappropriate WTO justification
isGATT 1994 Article XXI.
- Tools andmachines designed forgambling excluding those forinnocent amusement. These
would beincluded inChapter 95.Theappropriate WTO justification isGATT 1994 Article XX(a).
Three-dimensional pictures which contradict Shariah andpublic morality imported forthe
purpose ofsaleincommercial quantities. These would alsobeincluded inChapter 95.Theappropriate
WTO justification isGATT 1994 Article XX(a).
- Articles designed forfloorcovering orforwearing bearing thewording ofAllah orQuranic
verses orprophet ’ssayings. Sucharticles could beinanyvariety ofeight-digit lineitems butprimarily
those inChapters 50-63 (textiles andtextile products), 64-67 (clothing accessories), and68-70 (stone
andglass products). Theappropriate WTO justification isGATT 1994 Article XX(a).
- Cross andcommodities bearing thecross andanypictures, inscriptions, drawings, quotations
orexpressions orpublications ofbooks andother printed matters, films andtapesviolating theIslamic
Shariah orIslamic morality ortheprinted matter regulation. Such articles could beinanyvariety of
eight digitlineitems butprimarily those inChapters 47-49 (paper products). Theappropriate WTO
justification isGATT 1994 Article XX(a).
Items thatfailtomeettheappropriate Saudi standards areexcluded inaccordance withGATT
Article XX(b).
There areitems subject tolicensing.
(b) Characteristics ofnational tariff
Q16. Please provide comprehensive andup-to-date details ofthe(a)Customs Tariff and(b)
import datainaWTO language andondiskette.
R16. For(a),acopy ofthecustoms tariff hasbeensubmitted totheWTO Secretariat. Asfor
(b),please refer totheKingdom ofSaudi Arabia ’sImport Statistics which details therequested
information. WTO Secretariat hasthelatest edition.
Q17. HasSaudi Arabia moved totheHS1996 system?
R17. TheKingdom hasnotyetmoved totheHS96system. However, weexpect tomove tothe
HS96system within twoyears.
Q18. Wearepleased tonotethatSaudi Arabia isprepared tobinditstariffs. However, we
alsonotethattariff protection toassist domestic industries wasinstituted in1988. Does SaudiWT/ACC/SAU/6
Page9
Arabia intend toprovide further protection todomestic industries and, ifso,which industries
aretobeaffected andatwhat leveloftariff?
R18. Asadevelopingcountryinitsearlystagesofdevelopment,theKingdommightfinditnecessary
toinstitute further tariff protection ofitsinfant industry consistent withitsWTO obligations.
Q19. Inview ofSaudi Arabia ’spreparedness tobind itstariffs, wewould appreciate an
indication ofthelevel andextent towhich Saudi Arabia willbeprepared tobind itstariffs in
keysectors. Arethere anysectors where Saudi Arabia willnotbeprepared tobindtariffs?
R19. Thisissue willbeaddressed during negotiations.
Q20. Wenotethatpara. 42oftheForeign Trade Memorandum (L/7489) states that“there
are6,252 items subject toadutyof12percent which could berevised upward depending onfiscal
conditions. ”Have anysuchupward revisions taken place since theMemorandum wasprepared?
Ifso,wewould appreciate details ofthetariff lines which have been affected andtheupward
revision thathasbeenapplied? Willthepossibility ofupward revision affect theextent towhich
Saudi Arabia ’stariffs becomes bound?
R20. Theonlychange hasbeentheincrease intariff ratesfortobacco andtobacco products. The
tariff rateforthese products rosefrom 30percent to50percent. Thepossibility ofrevision forthe
purpose ofincreasing theCustoms duties isnotexpected toaffect theextent onwhich some tariffs
ofSaudi Arabia shallbebound.
Q21. Itwould assist theprocess ofevaluation andnegotiation ifSaudi Arabia could provide
theadvalorem equivalent rateofdutycorresponding tothespecific dutyapplying toeachtariff
lineinthemost recent year.
R21. There areonlytwosubheadings onwhich aspecific dutyiscollected:
25201010 --gypsum SR21.00 pergross ton
25201020 --anhydrite SR21.00 pergross ton
Regarding other headings, thespecific dutyiscollected asaminimum Customs dutymentioned beside
eachheading.
Q22. WenoteSaudiArabia’s12percenttariffonlupinshasmadethatcommodityuncompetitive
withsoybean fodder asastock feed. Isitstillthecase? HasSaudi Arabia addressed thedifference
between itstariff onlupins andsoybean fodder where bothproducts aremarketed asstock feeds?
R22. Thesituationstandsasis.Therecommendationshallbesubmittedbyanappropriatecommittee.
Q23. (Qu.47,51,53,and54,L/7489). Areallofthetariff rates provided intheTariff Rate
Schedule 1994 stillcurrently applied? Ifnot,could Saudi Arabia provide anupdate version of
itscustomstariffschedule,withdetailsontheirgeneraltariffs,protectiveratesandproductssubject
toduty-free imports (update ofAnnex 7)?Please provide, for1995, theaverage weighted tariff
forbothagricultural andindustrial products.
R23. Theonlychange hasbeentheincrease intariff ratesfortobacco andtobacco products. The
tariff rateforthese products rosefrom 30percent to50percent. The1995 dataarenotavailable at
thetimeofthepreparation ofthisresponse.WT/ACC/SAU/6
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Q24. “Animals, agricultural products andnatural resources areconsidered domestic products
iftheyareproduced locally. ”(Qu. 73,74,75).Please provide alistbyHScode(6-digit) ofall
items thatareconsidered “Domestic Products ”forthepurposes oftheGCC tariff treatment?
R24. Almost allproducts which meettheconditions of40percent localvalue added and51percent
GCC ownership areconsidered domestic products.
Q25. “Preferential treatment covers Chapters 1,2,3,(....) provided thatthese commodity
groups areintheir primary form orhave been modified tomake them suitable forhuman
consumption, excluding manufactured orsemi-manufactured products ”.Could Saudi Arabia
provide comprehensive list(byHScode6-digit) ofagricultural andindustrial products forwhich
preferential treatment isineffect? What ismeant by“Primary Form ”and“Semi-manufactured ”?
Please explain.
R25. (a)Article 2.1oftheUnified Economic Agreement oftheGCC provides forfullexemption
fromcustoms duties andrelevant feesonallgoods originating intheGCC countries; (b)fortheArab
League preferences please seereply 74(b) ofdocument no.L/7645/Add.1.
Q26. “Atthecurrent time, officials ofthesixGulf Cooperation Council States areworking
onthecompletion ofacommon tariff schedule. ”Isitready? Ifso,please provide acopy. Would
thiscause increases ordecreases intheapplied tariffs onagricultural?
R26. Regarding theGCC’scommon tariffschedule, itisstilladraftunder discussion, andlimited
onlytoanomenclature forclassification ofthegoods without proposing certain Customs dutyrates.
Q27. Wewelcome thestatement intheWorking Party thatSaudi Arabia haseliminated the
additional import feesandcharges indicated inArticles 60and61oftheCustoms Law(namely,
thewharfage fee,municipal fee,special contribution toAl-Falah schools, dutyonlicensing and
certification ofcars, "Banderole" stamp dutyontobacco andtobacco-related products). Please
indicate when these charges were abolished andprovide acopy oftherelevant legislation tothe
Working Party.
R27. There isnobanderole dutyonunmanufactured tobacco ortobacco refuse. Regarding the
tobacco products suchascigarettes, cigars andother items inpackets forretail sale,abanderole duty
stamp for3halalas isaffixed onimmediate packing.
TheMinister ofFinance &National Economy issued adecree under No.N/7524/4/1086 dated
12/6/1392 Hwhich provided thattheCustoms Offices throughout theKingdom should suspend using
banderole stamps andcollect thedutyprescribed forsuchstamps incashbyadding ittothecustoms
dutydueforcollection asperthecustoms import declaration. Thisshallcome intoeffect on10Rajab
1395/96 H.However, thevalue ofthebanderole stamps thathavealready beenpurchased bythetraders
andbeing affixed untilthequantity isexhausted, shallnotbecharged.
Thedutyonlicensing andcertification ofautomobiles wasabrogated under theRoyal Decree
No.M/9dated 6/4/1393 H.issued regarding implementation oftheprovisions ofthenewCustoms
Tariff thecame intoeffect on22/8/1395 H.
Q28. WenotetheGATT Article XXjustifications claimed bySaudi Arabia forimport bans
onlong-validity pasteurized milkincontainers ofmore thanonelitreandalldates except Squ’i
dates from 22November to21June.
What isthebasis forthejustifications under Article XX(b) and(d)forthese import
prohibitions?WT/ACC/SAU/6
Page11
Does Saudi Arabia accept Article XXjustifications which maybeoffered insupport of
suchbans properly relate tothenature ofthegoods inquestion and/or their use,andthatsuch
justifications would appear tobeinconsistent withtheconditions attached totheentry ofbanned
goods intothedomestic market, namely entry conditional ontheamount oftheproduct inthe
unitmarketed andthetimeoftheyear?
WillSaudiArabiaunconditionallyremoveallofitsimportbansonlong-validitypasteurized
milkanddates?
R28. Thereason forprohibiting theimportation oflong-term milkinpackages exceeding (1)litre
isthatsome importers usedtomixitwiththelocally produced milkandre-pack itinsmaller packages
andsellitinthelocalmarket asanational product which mislead theconsumer andaffect itsvalidity
forhuman consumption. Asfordates, when theKingdom prohibited importation ofdates, theaim
wastoencourage local production. Aspreviously explained, these restrictions willbereplaced by
negotiated tariff rateswhen Saudi Arabia accedes totheWTO.
Q29. Theimport restrictions ondates andlong-validity pasteurized milkareWTO incompatible
(andnotjustifiable under Article XX)andwewelcome Saudi Arabia ’sstatement inreply 88that
theywillbetariffied. Please indicate when thistariffication willtakeplace.
R29. These restrictions willbereplaced bynegotiated tariff rateswhen Saudi Arabia accedes to
theWTO
Q30. “Imports oflong-validity pasteurized milk incontainers ofmore than onelitreare
prohibited ...imports ofdates arebanned. ”(Qu. 86,87,88).
Could Saudi Arabia clarify thisstatement? Ifimports ofdates arebanned, please explain
whyHS0804.10 doesnotappear inAnnex 7D,which provides alistofproducts banned from
being imported. What isthedifference between “banned ”goods and“prohibited ”?Ifthere
isadifference, please provide acurrent listofagricultural products) 6-digit level) prohibited with
ajustification. Ifthere isnodifference between thetwoconcepts, thenlong-life pasteurized milk
should beadded toAnnex 7D.
R30. Regarding long-validity pasteurized milkanddates, Saudi Arabia hasalready explained in
replies 86,87and88(Doc. L/7645/Add.1) andreply28above thatmilkisbanned ifimported inpacking
ofmore thanonelitre. Aparticular typeofthedateisallowed tobeimported foraspecific period.
Noagricultural product other thandateandmilkinpacking ofmore thanonelitre, isbanned tobe
imported.
Regarding theAnnex 7/D,itshould benoted thatitpertains totheitems banned tobeimported
inviewthattheyareprohibited inIslamic Law. (With reference tothequery from aWTO member
regarding theproducts banned tobeimported duetoreligious reasons).
Yes,there isadifference between items banned andprohibited. Abanmaybeimposed due
toreligious reasons andsuchitemmaynotbeallowed toenter, while theimportation oftheprohibited
itemmayberestricted tocertain agencies.WT/ACC/SAU/6
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(f) Import Licensing Procedures
Q31. Weappreciate theefforts bySaudi Arabia torespond totherequest forinformation on
itsimport licensing system withtheprovision oftheinformation inAnnex 16.Theinformation
provided inL/7645/Add.1 andAnnex 16,unfortunately, isnotcomplete anddoesnotfullyexplain
thepurposes forwhich Saudi Arabia applies import licenses orthescope ornature ofthesystem.
Wewould verymuch appreciates review ofAnnex 16withaviewtoexpanding andrevising it.
R31. Wewould liketoindicate thattherearenoimport licenses which stipulate thatacertain quantity
orcountry mustbespecified. Instead, theyareregulatory procedures which donotaffect importation
andensure thequality oftheimports andmaintain certain items suchastheArabian breed horses.
Also, kindly refertoparagraph 77ofDocument WT/ACC/SAU/4.
Inaddition, thefollowing aretheimport licensing requirements:
- cutting/seedlings andseeds (Chapter 6)-forquality reasons;
- medicaments, medical andalcoholic preparation (Chapter 30)-forhealth reasons;
- alcoholic preparation nottobeused fornon-medical purposes except asasolvent for
concentrated flavors andperfumes (according tocodex list):
(Chapters: 220710,220720,220790);
- radioactive andchemicals (Chapters 28and29)-forprotection oftheenvironment fromthe
wastes ofthese products andforsecurity, andhealth reasons;
- explosives (Chapter 36-360100,360200,360410,360490)-forsafety reasons;
- petroleum andnatural asphalt (Chapters 27-271490,271320,271500)-for
standards reasons because oftheclimate circumstances inSaudi Arabia;
- agricultural pesticides (Chapter 3808)-forenvironmental andhealth reasons;
- agricultural equipment andmachinery (Chapter 8432,8433)because thegovernment
provides subsidies andoneitis(re)exported, theexporter nottoaskforsubsidies tobepaid
backtothegovernment;
- distilling plants (Chapter 8419)-formoral reasons nottobeusedtoproduce ormake
alcoholic beverages;
- radio communication apparatus (Chapter 85250000)-forsecurity reasons;
- computer screening equipment forfakedollars (Chapter 902200)-foreconomic reasons
toprotect against piracy;
- allkinds ofarms andammunition (Chapter 93)-forsecurity reasons;
- antiques (Chapter 9706)-forinternational obligations andtraditional items;
- livehorses (Chapter 0101)-formaintaining Arabian pure-bred species.
Q32. Could Saudi Arabia please expand onthecriteria forgranting licenses fortheproducts
listed inpara. 77oftherevised Foreign Trade Memorandum (WT/ACC/SAU/4)? Iflicensing
isdiscretionary, when doesSaudi Arabia plantorepeal thissystem?
R32. Thecriterion forlicensing import oftheproducts mentioned inpara. (77), suchashorses,
istocount thenumbers andspecies ofthehorses imported intothecountry formaintaining theArabian
breed horses.
Asregards theother items mentioned inpara. 77,therelease ofsuchitems requires the
presentationofasamplethereoforexaminationbytheagriculturalquarantineforconformitytostandards.
Other items mentioned inthislistsuchashorses, chemicals, pharmaceuticals andarchaeological items,
licensing andadmission requirements thereof arementioned inAnnex No.3ofWT/ACC/SAU/4.WT/ACC/SAU/6
Page13
Q33. “Imports thatrequire authorization orimport licensing ...horses, livestock, sowings,
foodstuffs ...”(Qu77,78,79).Could Saudi Arabia provide acomprehensive listing ofagricultural
products byHSCode 6digitwhich fallinthatcategory ofproducts? Also, more details onthe
process ofissuance oflicenses would beappreciated. Arethese import licenses provided
automatically oraretheyusedtolimit orcontrol imports? AretheChapter numbers referred
tointhisresponse based ontheHarmonized System oraretheySaudi Arabia ’sownclassifications?
IftheyareHSCodes, could Saudi Arabia clarify theinclusion ofChapters 6and2under
“antiques ”?
R33. Hereisalistoftheagricultural products which importation requires approval orpermission
from thecompetent authority:
H.S. No. Commodity Authority
10.01 Wheat Grain Silos &Flour Mills Organization
01.01 Livehorses Chivalry Club
Chap. 6 Agricultural seeds Ministry ofAgriculture
Thepermission forimporting agricultural products isautomatically issued.
TheKingdomappliedtheHarmonizedSystemsince1991,thereforeallheadingsareconforming
totheHarmonized System.
Asregards antiques, these areincluded inChapter 97asindicated correctly inAnnex No.
3oftheupdated Memo onForeign Trade Regime (WT/ACC/SAU/4) andwasamisprint inreply to
Q77(L/7645/Add.1).
Q34. (Qu5).CanSaudi Arabia provide atranslated copy ofDecree No.77dated 28/1/1395
AH,andNo.50dated 17/3/1410, issued bytheCouncil ofMinisters?
R34. Thetwodecrees arebeing translated intoEnglish andwillsubmitted later.
Q35. (Qu7a).Saudi Arabia replied that“theimport license isobtained within averyshort
period. ”How much isa“veryshort period ”?How farinadvance ofimportation must an
application foralicense bemade?
R35. Time frame isdependent upon product type.
Q36. (Qu8).Saudi Arabia replied thatthere arenocircumstances where alicense maybe
refused. Does thismean thatapplication forimport licenses arenever refused? Arethere any
circumstances when import licenses arenotissued? Ifso,please provide details.
R36. Iftheproduct satisfy thestandards andrequirements, theimport license (permission) will
notberefused.
Q37. (Qu10). Saudi Arabia replied that“theinformation required from theimporter are
usual personal data, i.e.name, address, etc.There isnoparticular form forthispurpose. ”Can
Saudi Arabia provide acomplete listofthepersonal datarequired?
R37. Required details arethefollowing:
- name oftheimporter andaddress;
- commercial Registration No.(C.R.) andplace ofissue;
- license No.,place ofissue, andvalidity date;
- shipping country andshipping port;
- nationality andname ofmode oftransport.WT/ACC/SAU/6
Page14
Q38. Would Saudi Arabia confirm thatsecondary andtertiary boycott ofproduct originating
inIsrael orcommercially associated withIsrael have been removed.
R38. TheCooperation Council oftheArab States oftheGulf(GCC) adopted twodecisions onthe
subject, namely thedecision oftheSupreme Council (TheSummit) atits14thsession heldinDecember
1993 andtheMinisterial Council atits53rd(preparatory) session heldinNovember 1994. These
decisions were dulyratified bytheGovernment ofSaudi Arabia.
Q39. Would Saudi Arabia provide therelevant legal instruments ordocuments removing the
secondary andtertiary boycott mentioned above.
R39. Therelevant legalinstrument isCouncil ofMinisters decision No.5dated 14.1.1416 AH.
Inaccordance withwhich Saudi Arabia agreed toimplement thedecision oftheSupreme Council of
theGCC adopted atits14thsession heldinDecember 1993andthedecision oftheMinisterial Council
oftheGCC adopted atits53rd(preparatory) session heldinNovember 1994suspending thesecondary
andtertiary aspects oftheArab boycott ofIsrael.
Q40. Paragraph 46.Please provide information onimport restrictions andlimitations which
Saudi Arabia seeks tomaintain onthebasis ofArticle XXIoftheGATT.
R40. Saudi Arabia seeks tomaintain restrictions onimport ofallbanned products onthebasis
ofArticle XXIofGATT, forthefollowing products:
- military badges ofranks; uniforms andinsignia;
- armsofalltypes, andtheirpartsandammunition, including military gearexcept concerned
governmental sectors andbyanofficial letter from theimporting sector defining thetype
andquantity ofeachconsignment separately;
- night binoculars which enable vision inthedark, andbinoculars which takephotographs
inthedarkunder heading: 90131000;
- chemicals ofalltypes, including explosives, radioactive anddetonating materials, shallnot
becleared except afterobtaining permission fromtheconcerned authority inadvance, except
those chemicals inthename ofconcerned governmental departments. These items fallunder
theChapters 28and29,andheadings 3601,360410and360490;
- wireless equipment ofalltypes (85.28, 19,20,30);
- preparations andcharges offireextinguishers; charged fireextinguishing grenades (38.13);
- cellulose nitrates (including collodions) (391220);
- printing types andblocks (844250);
- firealarms (853110);
- warships ofallkinds andlifeboats (89060010);
- floating structures (89.07).
Q41. Could Saudi Arabia please confirm thatthere isnodomestic production ofanyofthe
goods which aresubject toimport restrictions onhealth andpublic morality grounds?
R41. Yes,Saudi Arabia confirms thatthereisnodomestic production ofanyofthegoods onhealth
andpublic morality ground which aresubject toimport restrictions.
Q42. Inreply toQ85Saudi Arabia states thatallcommodities subject torestrictions canbe
released upon approval from authorities departments. Could Saudi Arabia please explain whether
thisapplies toallgrounds forrestrictions andprovide some details about thereasons accepted
forrelease?
R42. Yes,allcommodities subject torestrictions canbereleased uponapproval fromtheauthorities
ofconcerned departments. Suchmeasures areapplied forthereasons ofsecurity, health andstandards.WT/ACC/SAU/6
Page15
Samples oftheperishable goods aresenttothequality control labsortothequarantine areas
atthepoint ofimport. Iflabresults confirm thesafety andsuitability ofsuchgoods, theyarecleared
atonce.
Q43. Ifthese goods aretoanyextent marketed onSaudi Arabian soil(e.g.inshops reserved
toforeigners) what istheapplicable regime, and,inparticulate, arethere anyspecial importing
channels, ordifferentiation between sources ofimports?
R43. Nogoods aremarketed exclusively toforeigners.
(h) Customs Valuation
Q44. WouldSaudiArabiaapplytheprovisionsoftheCustomsValuationAgreementonaccession
totheWTO, ordoesitwant tomake useofArticle 20andAnnex IIItodefer suchapplication?
R44. Saudi Arabia upon accession totheWTO, cannotimplement immediately theAgreement
onImplementation ofArticle VIIofGATT, inviewoftheneedfortechnical assistance intheinitial
phase ofimplementation ofthisAgreement. Italsoneeds enactment oflegalprocedures andarrangement
oftechnical/administrative preparations. Therefore, itrequires postponement oftheAgreement
implementation inaccordance withArticle 20,paragraphs 1and2,andparagraphs 2,4ofAnnex 3
oftheValuation Agreement.
Q45. Saudi Arabia states thatindetermining freight charges, when afreight invoice isnot
submitted a“listoffreight charges similar tointernational freight charges ”isused(reply 94on
page 36ofL/7645/Add.1). Isthislistusedfortheestimation ofactual freight charges oronly
thebasis fordetermining thefreight onthebasis ofFOB value, which would often notbe
representative oftheactual freight charge?
R45. There isnopractice ofcalculating freight charges asapercentage ofvalue. Freight charges
arebased ontheamount stated inthebilloflading which isattached totheimport declaration. Such
freight charges areincluded inthevalue forcustoms purposes. Calculation offreight charges differs
according tothenature offreight carrier, sea,airorland.
Airfreight cargo: iscalculated atSR0.5pergross kilosorfractions ofkilos; actual freight
charges areexcluded because theyarehighcompared toother freight charges;
Seafreight: freight charges asshown onthebilloflading;
Land freight: freight charges asshown onthebilloflading.
Anexample ofhowCIFvalue iscalculated: FOBvalue +actual freight charged +1% of
FOB+Freight forinsurance.
Thismethod isusedforallgoods from allcountries.
Q46. Regarding thedescription ofthemethod ofcalculating customs value inSaudi Arabia
(replies 98(a) and98(d) onpage37ofL/7645/Add.1), doesthereference to“localmarkets ”refer
onlytoimported goods orcould italsoinclude theselling price ofdomestically produced goods
inSaudi Arabia?
R46. Thereference ofthepriceofsimilar andidentical goods inthelocalmarket incaseofsuspicion
bytheCustoms intheprices submitted intheinvoices, covers onlythesalepriceoftheimported goods.WT/ACC/SAU/6
Page16
Q47. Saudi Arabia hasabolished many minimum prices, buthasretained minimum prices
forcarsandyeast (reply 98onpage 37ofL/7645/Add.1). Since minimum customs values are
notpermitted under Article 7oftheCustoms Valuation Agreement, would Saudi Arabia cease
tousesuchanapproach onaccession?
Could Saudi Arabia please clarify thenature andpurpose oftheminimum prices which
apply toyeast? Isitcorrect tosaythatsuchprices arereference prices forcustoms valuation
purposes, andnotprices applied toimports toafford protection todomestic agriculture inamanner
thatwould beinconsistent withArticle 4oftheAgriculture Agreement?
R47. Upon accession toTheWTO, Saudi Arabia would follow theprovisions ontheagreement
oncustoms valuation, including itsAnnex 3.
Q48. Please indicate when theminimum prices forcalculating import value forusedcars,some
ceramic items, andyeast willbeeliminated.
R48. Kindly refertoreply 47.
Q49. Please describe more fully thepractice ofcalculating thefreight charges onanimport
anapercentage oftheFOB value ofthegoods. Could Saudi Arabia provide anexample ofhow
freight rateareaccurately calculated? Does thisapply toalltypes ofgoods imported from all
countries? Orarethere anyexceptions?
R49. Kindly refertoreply 45.
Q50. (Qu. 98d). Besides yeast, what other products aresubject tominimum prices inSaudi
Arabia? Please provide detailed descriptions ofallproducts affected providing HScodes.
R50. Products affected are:yeast (2101), cars(7802), certain ceramic items (69).
(i) Rules OfOrigin
Q51. Isacertificate oforigin compulsory forallimport? Ifso,please explain howthisis
consistent withArticle VIIIoftheGATT.
R51. Yesacertificate oforigin isrequired forallimports. Thisrequirement isconsistent withArticle
VIIIasitisconsider bySaudi Arabian authorities tobe“indispensable ”.Forpartial shipments, Customs
accepts theoriginal certificate oforigin forthefirstshipment which arrives andwillaccept copies for
theremaining shipments.
Q52. According toinformation received from ourindustries, itisnearly impossible tocomply
withtheexisting requirements oncertification oforigin. Does theSaudi Government planto
keep itsregulation requiring theexporter toprovide toCustoms acertificate ofthenationality
ofeachsingle imported item?
R52. Yes.However theKingdom ’scustoms procedures areflexible. Forexample, theimporter
maysubmit thecertificate oforigin orcertificate ofnationality afterthree months oftherelease of
hisgoods. Incertain cases acertificate ofnationality isnotrequired duetothelowvalue ofthegoods
ortothefactthatthegoods areimported innon-commercial quantities (e.g., postal parcels containing
giftsorsamples ofavalue notexceeding SR1,000; human blood; commercial samples; personal effects;
newspapers andmagazines).WT/ACC/SAU/6
Page17
Q53. Inreply No.102,Saudi Arabia states thatitrequires marks oforigin onimported goods.
Inthepast, theGCC authorities haveissued provisions onmarks oforigin inwhich itexplicitly
required thecountry oforigin tobemarked rejecting marks oforigin with theexpression
“European Community ”or“European Union ”.Please provide clarification onthispoint, since
arecent letter from theAssociate Secretary General forEconomic Affairs oftheGCC informs
theCommission thatadecision hadbeentaken bytheGCC authorities tomark “theEUproducts
withthecountry oforigin, andthatatthesame timeitcould bemarked asanEUproduct ”.
Does thismean thattheindications expression “European Community ”or“European Union ”
areaccepted onlyifaccompanied bytheindication ofcountry oforigin? Orarethemarks
“European Community ”or“European Union ”accepted asthesolemark oforigin ofproducts
originating intheCommunity.
R53. TheCommercial Cooperation Committee atits22nd meeting (October 1995) decided that
thename ofthecountry oforigin bemarked onthegoods imported fromtheEUintotheGCC countries.
Theterm“EU”maybewritten nexttothecountry oforigin. Saudi Arabia, being amember ofthe
GCC isbound bythisdecision andthename ofthecountry oforigin beside themarking “EU”is
necessary. Forstatistical purposes, itisimportant toestablish thespecific country oforigin.
(o) Safeguard Regime
Q54. Saudi Arabia hasstated thatithasnolegislation relating totrade remedies (regarding
anti-dumping andcountervailing duties, andemergency relief) (reply 68onpage 27of
L/7645/Add.1), butalsohassaidthattheLawfortheProtection andEncouragement ofNational
Industry contains aprovision (Article 7)which empowers Ministers totakeaction totakesafeguard
action inaccordance withthestipulations ofthatlawandother laws(reply 262onpage 93of
L/7645/Add.1).
R54. Thisisjustastatement.
Q55. Could Saudi Arabia please indicate whether theprovisions fortrade remedies intheLaw
fortheProtection andEncouragement ofNational Industry andinother lawsareinconformity
withtheprovisions oftheWTO relating totrade remedies? Ifso,inwhat respect dothose
provisions conform withtheprovisions oftheWTO relating totrade remedies? Ifnot,Could
Saudi Arabia please indicate howitproposes tobring theexisting provisions fortrade remedies
initslawsintofullconformity withtheWTO?
R55. Saudi Arabia atpresent doesnothave anylegislation/regulations specifically relating to
anti-dumping countervailing orsafeguard measures. TheLawfortheProtection andEncouragement
ofNational Industry willbereviewed toinsure itsconsistency withWTO commitment ofSaudi Arabia.
Q56. Could Saudi Arabia please provide details oftheaction taken toprovide trade remedies
fordomestic producers under theLawfortheProtection andEncouragement ofNational Industry
andother laws?
R56. Kindly refertoreply 55.
Q57. Could Saudi Arabia please expand onArticle 7oftheLaw fortheProtection and
Encouragement ofNational Industry andonother provisions relating tosafeguard measures?
Inparticular, what arethestandards andtheprocedures forimposing safeguard measures? (p.
16,para. 94,WT/ACC/SAU/4).
R57. Kindly refertoreply 55.WT/ACC/SAU/6
Page18
2. Export Regulations
(b) Customs Tariff Nomenclature
Q58. Werefer totheexport dutyonuntanned hides andskins designed toensure thatsuch
rawmaterials areavailable fordomestic processing (reply 127onpage 46ofL/7645/Add.1).
Does Saudi Arabia have anyplans toabolish theexport dutyonuntanned hides andskins?
R58. Reply3onpage3ofWT/ACC/SAU/3statesthat“Thisexportdutyispresentlyunderreview”.
Q59. (Qu.127,128,L/7489). Please provide, foreachoftheagricultural products (asdefined
inAnnex 1oftheAgreement onAgriculture) currently subject toanexport duty, thelevel of
dutyonanadvalorem basis.
R59. There isnoCustoms dutyontheexportation ofagricultural products except untanned raw
skins andhides (headings: 41.1, 41.2, and41.3) which aresubject toanexport dutyofSR2000 per
ton.
(c) Quantitative Export Restrictions
Q60. Reply 132doesnotanswer thequestion: What criteria doestheMinistry ofPetroleum
andtheSaudi Agricultural Bank apply when approving export ?
R60. TheMinistry ofPetroleum doesnotapprove exports ofcrude oilandproducts. Exports are
made through thecompanies concerned andisconducted along commercial considerations. Also, Saudi
Agricultural Bank doesnotapprove agricultural exports. However, itisrequired thatsubsidies on
imported agricultural tools andequipment bere-paid prior totheir(re)export.
Q61. Reply 133(L/7645/Add.1). Please provide thetariff headings toHS8-digits ofallgoods
subject toexport restriction.
R61. Thefollowing tableliststhese goods.
(a)Commodities whose exportation isprohibited:
Serial Heading No. Description
1 01.06 -01.02 -01.03 Livestock, females
2 0101.11.10 Horses, females
3 1901.10.10 Baby milkofallkinds
4 Chapter 30 Medicines ofallkinds
5 0602.20.10 Datepalm saplings
6 10.03 Barley
7 10.05 Corn
8 10.05 Maize
9 23.04 Soya bean
(b)Commodities whose exportation isrestricted:
1 2302.30.00 Allnatural fauna, subject totheapproval of
Wildlife Protection Commission
2 27.10 Petroleum Products (except lubricating oils&
asphalt), subject toapproval ofthePetroleum &
Minerals Corporation (PETROMIN)WT/ACC/SAU/6
Page19
3 41.01 -41.02 -41.03 Untanned leather shallbecharged attherateof
SR2,000 perton
4 Chapter 84 Agricultural plant &machinery
Q62. (Qu. 133,L/7645/add.1). Could Saudi Arabia provide acomplete list(HS’966-digit
level) ofproducts prohibited from being exported, andthereasons forthispolicy?
R62. Kindly refertoreply 61.
Q63. Could Saudi Arabia please explain thecriteria forgranting export licenses, including
onpetroleum derivatives? Iflicensing isdiscretionary, could itplease specify when itplans to
bring itslegislation intoconformity withWTO? (p.17,para. 94ofWT/ACC/SAU/4).
R63. Saudi Arabia doesnotrequire export licenses forpetroleum products. Some refineries are
jointventures withforeign partners andareallowed toexport along commercial criteria. Allproducers
forexporting petroleum derivatives areinconformity withWTO rules.
Q64. Please provide amore precise breakdown ofproduction andexport toclarify therespective
shares ofprimary (agriculture, mining) andindustrial production andexports (including refined
products). (p.17,para. 94ofWT/ACC/SAU/4).
R64. Kindly refertoAnnex 6ofMemorandum onForeign Trade Regime (WT/ACC/SAU/4) on
theInformation onStateTrading. Themostrecent statistics onoilexports byvalue andvolume are:
CRUDE PRODUCTS* TOTAL
Value
$BnVolume
mbdValue
$BnVolume
mbdValue
$BnVolume
mbd
1994 35.2 6.552 4.6 1.037 39.8 7.588
1995 38.3 6.482 6.2 1.090 44.5 7.572
*Including NGLs, JetFuelandBunkers.
(f) Export Financing
Q65. Would Saudi Arabia please provide ananswer tothequestion astowhether domestic
subsidies must bepaidback ifgoods benefiting therefrom obtain anexport authorization and
areexported?
R65. Agricultural firms mustobtain acertificate fromtheMinistry ofFinance confirming thatthey
haverepaid theamount ofthesubsidy contained intheirexports. With respect toindustrial exports,
nosubsidies areprovided.
Q66. Would Saudi Arabia please provide ananswer tothequestion astotheamount ofbenefit
forexported products oftheexport credit facilities described inparagraphs 67-70?
R66. SaudiArabiahasnonationalexportcreditagency.However,thereareregionalandmulti-lateral
export credit facilities available toSaudi exporters.WT/ACC/SAU/6
Page20
3. Internal Policies Affecting Foreign Trade inGoods:
(a) Industrial Policy
Q67. Could Saudi Arabia provide details ofthesupport measures currently inplace forbasic
petrochemical industries anddownstream petrochemical industries andplans forthefuture?
Willallsuchsupport beconsistent withthebinding ofitstariffs inthese andother related areas
ofitstrade andWTO rules?
R67. Petrochemical anddownstream petrochemicals arenotspecifically supported. Allmeans of
support andincentives aregenerally available toallindustries including petrochemical anddownstream
petrochemicals. Allsupport provided willbeconsistent withSaudi Arabia ’sWTO commitments.
Q68. WouldSaudiArabiapleaseprovideananswertothequestionastotheintensityofdomestic
subsidies andtotherelevant annual charge ontheState budget?
R68. SaudiArabiadoesnothaveaspecificandseparatesectiononitsgovernmentbudgetfordomestic
subsidies andannual charges, therefore there arenoreliable records available.
Butane Pricing Policy (Para. 73,L/7489)
Q69. Please provide awritten version ofthestatement made atthefirstWorking Party by
theDeputy Minister ofPetroleum andMineral Resources forPetroleum Affairs ontheissue for
pricing forpetroleum products.
R69. Thestatement iscontained indocument, WT/ACC/SAU/3, pages 4-5.
Q70. Reply -144b raises anumber ofquestions. Why arethere necessary adjustments for
domestic users forpropane, butane, andnaphtha? Why candomestic users notpaynormal
international prices? What arethe“costs exclusively associated with gasexports toworld
markets ”?
R70. Thecostsassociated withNGLexports tointernational markets include refrigerating, storage,
mooring andmarketing. Thisinaddition tothecosts associated withsecuring longer termdemand
commitmentfromdomesticusersratherbeingsubjecttoworldmarketvolatility.Thesecostsexclusively
associated withgasexports toworld markets aretaken intoaccount when making thepriceadjustment
todomestic users (whether Saudi ornon-Saudi) ofNGL’s.
Q71. Please provide acopy ofthe6December 1992 Resolution intranslation.
R71. Atranslated version oftheCouncil ofMinisters ’Resolution ofDecember 6,1992, isstated
here:
[Decision No.68,dated 29/5/1413 A.H. (23/11/1992).
TheCouncil ofMinisters,
Having reviewed thecasefileattached hereto, containing Cable No.3/2395, dated 23Rabi’I,
1413(21August 1992), ofHEtheMinister ofFinance andNational Economy, which states thatpursuant
toHighOrder No.3/B/8949, dated 30Jumada II,1407(28February 1987), constituting acommittee
representing theMinister ofFinance andNational Economy, theMinistry ofPetroleum andMineral
Resources, theMinistry ofPlanning, theMinistry ofIndustry andElectricity, andtheBureau ofthe
Controller General, tostudy anumber ofsubjects, including suggesting thesaleprice ofpetroleum
products marketed inside theKingdom,WT/ACC/SAU/6
Page21
ThesaidCommittee adopted theminutes attached tothecable ofHisExcellency which
recommended fixing thepriceofliquified gases soldtonational industries thatusesuchliquified gases
onthebasisofgranting thema30%discount offthelowest international priceobtained bytheexporting
agency inanyquarter ofayearfrom anyexternal consumer.
DECIDES
Approval ishereby given togrant thenational industry which usesliquified gases (butane,
propane, natural gas)adiscount amounting to30%offthelowest international price obtained bythe
exporting agency inanyquarter ofayearfrom anyexternal consumer.
Signed: President oftheCouncil ofMinisters. ]
Q72. What isthejustification forspecial pricing ofliquid gas,butane andpropane fornational
industries ?
R72. Kindlyseeparagraph5ofthestatementbyDeputyMinisterofPetroleumandMineralResources
atthefirstWorking Party contained inpage4ofWT/ACC/SAU/3.
Q73. Would Saudi Arabia please provide ananswer tothequestion astowhether foreign and
domestic purchasers ofliquid gases forproduction ofMTBE arecharged thesame ordifferent
prices? Reply 144(e) (L/7645/Add.1) didnotanswer thisquestion clearly.
R73. AlldomesticpurchasersofliquidgaseswhetherforMTBEproductionorotherusesarecharged
inaccordance withthereferred resolution ofDecember 6,1992.
Q74. (a)WhosetsthepricesforrawmaterialsusedintheSaudiArabianpetrochemicalindustry
andwhat pricing system isapplied forEthane, lpgs, naphtha, andgasoil?
(b)Arediscounts granted forthose products incertain cases ?
(c)Aretheprices fortheethane, lpgs,etc.,applied equally toallmanufacturers operating
inSA? Have thesame prices beenquoted tocompanies investing orintending toinvest,
inpetrochemical manufacturing plants inSaudi Arabia?
R74. (a)Prices ofEthane andMethane aresetat$0.5perMBTU. Prices ofbutane, propane and
natural gasoline arepriced according totheCouncil ofMinisters ’resolution ofDecember 6,1992.
Allother products including naphtha arepriced atparity tointernational prices.
(b)Kindly seeparagraph 6ofthestatement bytheDeputy Minister ofPetroleum andMineral
Resources atthefirstWorking Party contained inpage4ofWT/ACC/SAU/3.
(c)Astotheavailability andprices ofhydrocarbons, thereisnodiscrimination between wholly
owned orpartly owned Saudi users ortotally owned foreign enterprise. Once theproject islicensed
inSaudi Arabia itisentitled tothelocaltreatment awarded toallusers whatever thecomposition of
ownership.
Q75. Arecompanies manufacturing petrochemicals inSaudi Arabia abletonegotiate for
purchases ofethane, lpgs,etc.freely withthesupplier oftheirchoice, from either within oroutside
Saudi Arabia ?Arethere anyrestrictions ontheimport ofsuchproducts from sources outside
Saudi Arabia?WT/ACC/SAU/6
Page22
R75. Allcompanies manufacturing petrochemicals andother manufactures havethefreedom to
negotiate thesupplies oftheirchoice. There arenorestrictions touseanysupply source fromwithin
oroutside Saudi Arabia.
Q76. Cancompanies operating petrochemical plants outside Saudi Arabia obtain ethane, lpgs,
etc.atthesame netprices andonthesame terms asareoffered tocompanies manufacturing
within Saudi Arabia?
R76. Companies operating outside Saudi Arabia whether Saudi owned ornon-Saudi arenotincluded
intheCouncil ofMinister ’resolutions referred toabove. Suchcompanies whether inthepetrochemical
orother lineofmanufacturing cannegotiate thepricing terms withtheproducing oilcompanies in
Saudi Arabia.
Q77. InSaudi Arabia, areforeign companies enabled toinvest in,andtooperate wholly owned
petrochemical plants onthesame conditions andterms asareapplied either to100% owned Saudi
Arabian ortojoint ventures operating intheKingdom?
R77. Yes,foreign companies, whether jointventure or100% percent owned, areenable toinvest
in,andtooperate wholly-owned petrochemical plants atthesame conditions andterms asapplied to
100% Saudi-owned ortojointventures, withtheexceptions oftaxholiday andloans from Saudi
IndustrialDevelopmentFundwhichrequiresaminimumof25%Saudiparticipationintheprojectequity.
Q78. Areforeign companies given equal access torawmaterial asgranted towholly owned
Saudi Arabia orjoint venture plants operating intheKingdom ?
R78. Thesame question wasraised intheFirst Working Party Meeting andcontained in
WT/ACC/SAU/3 reply 5page3which says“Yes,theyhaveequal access torawmaterials ”.
Q79. Clarification onFeedstock Pricing (page 4-5,WT/ACC/SAU/3). Inparagraph 5of
Clarification onfeedstock pricing itisstated that“therationale forpricing (domestically) lower
than export price istoaccount forthecosts associated withLPG exports toworld markets ”.
CanSaudi Arabia please confirm thatthesaleprice netofthese additional costs isthan the
domestic ones?
R79. Kindly refertothestatement bytheDeputy Minister ofPetroleum andMineral Resources
atthefirstWTO Working Party Meeting andincluded inWT/ACC/SAU/3, pages 4-5.
(b) Technical Regulations AndStandards
Q80. Saudi Arabia isrequested tocomplete theTBT questionnaire, which willform thebasis
ofdiscussion onthisissue.
R80. Annex 5(Information onTechnical Barriers toTrade) oftheMemorandum onForeign Trade
Regime (WT/ACC/SAU/4) contains theneeded information.
Q81. Saudi Arabia hasstated thatitsstandards regime isconsistent withtheWTO Agreement
onTechnical Barriers toTrade. Werequest thatSaudi Arabia provide theinformation requested
intheStatement ofImplementation andAdministration oftheAgreement Notification Procedures,
andProcedures forInformation Exchange included inG/TBT/l/rev.2. Thisinformation, will
assist theWorking Party initsefforts todetermine theconsistency ofSaudi Arabia ’scurrent regime
withtheAgreement.
R81. Kindly refertoreply 80.WT/ACC/SAU/6
Page23
Q82. Theresponse toquestion 108inL/7645/Add.1 states thatthere isaconsultation period
of3months forallnewstandards. Inpractice, thegeneral period ofcomment forforeign countries
seems tobebetween 45and90days(usually towards theshorter end). When doesSaudi Arabia
intend toincrease theconsultation period?
R82. The90dayconsultation period inplace fornewstandards would seemtoallow adequate time
forcomment.
Q83. According toinformation received from ourindustries, authentication procedures can
takeuptotwoweeks (Chambers ofCommerce -Consulate -Exporter) andtheir costistobe
added totheprice oftheexported item.
(a) Onwhat documents isauthentication required ?
(b) Doauthentication procedures apply similarly toallcountries ?
(c) According towhat criteria isthecostofthose procedures fixed ?
R83. (a)According totheSaudi Standards, some products (such asfresh meat, chilled orfrozen
meat) should beaccompanied by:
- Halal Certificate.
- Health Certificate.
- Certificate ofOrigin.
Allthese certificates should beauthenticated bytheofficial departments inthecountry of
origin andalsolegalized bytheSaudi Embassy oritsrepresentative.
(b)Yes,authentication procedures apply similarly toallcountries.
(c)Thecostprocedures arefixed according totheattestation andauthentication standards
inthecountry oforigin.
Q84. Saudi Arabia hasrecently implemented an“International Conformity Certification
Program ”(under contract withInchcape Testing Services) foralistof“Regulated Products ”.
TheWTO TBT requires national treatment forimported products. Does Saudi Arabia apply
thesame certification requirements foritslocally manufactured products suchasmotor oilwhich
isincluded inthelistofRegulated Products?
R84. Incommon withallpre-shipment certification arrangements, theICCP doesnotapply to
domestic suppliers. However, allimported anddomestic products mustcomply withthesamestandards
andrequirements approved ordeveloped bySASO.
Q85. Arethere anydetails available ontheconformity assessment procedures suchaswhat
standards arebeing usedtodetermine conformity? Cananexporter obtain copies ofrelevant
standards prior tosubmitting itsrequest frocertification orprior todeciding toexport toSaudi
Arabia?
R85. Details andcopies ofallstandards usedcanbeobtained fromSASO ’sheadoffice inRiyadh
orfrom theexporter ’snational standards organization.
Q86. Isthere anyprovisions within theconformity assessment procedures fortypetesting as
defined byISOCASCO Guide 28?Isthecertification granted onaproduct typebasis oronly
onaconsignment?WT/ACC/SAU/6
Page24
R86. Yes,thereisaprovisionwithintheICCPprocedures,GuidelinesRev.8,Clause5,Certification
Process, according toandmaylessmandatory thanISO/IEC Guide 28.
Certification isrequired forevery consignment ofaregulated product.
Q87. Could Saudi Arabia please provide (inaWTO language) acopy ofthecurrent version
ofitsInternational Conformity Certification Program (ICCP) andofitsenvisaged amendments,
ifany? Could itplease confirm thatthere isamoratorium onitsapplication?
R87. Theprogram hasbeenlegislated andimplemented andanyreference toa‘moratorium ’is
incorrect. Thecurrent version oftheICCP Operating Guidelines (version 8)issubmitted totheWTO
Secretariat.
Q88. Wehavenoted thatcontrary tothestatements made atthefirstWorking Party, theICCP
hasnotbeen suspended, andthataseventh revision ofthesystem isabout tobeembarked on.
Please comment.
R88. Kindly refertoreply 87.
Q89. Pleaseprovideacopyofthelegislationoradministrativenoticeintroducingthemoratorium
ontheICCP.
R89. Kindly refertoreply 87.
Q90. Wewelcome thestatement made inthefirstWorking Party thatSaudi Arabia has
introduced amoratorium ontheInternational Conformity Certification Programme. Nevertheless,
Saudi Arabia iskindly requested torespond tothefollowing technical questions regarding the
moratorium, which willassist usincontributing inaconstructive manner totheconsultation
exercise underway withaviewtofinding asuitable alternative totheICCP.
R90. Kindly refertoreply 87.
Q91. Swiss manufacturers viewtheInternational Conformity Certificate Program (ICCP) as
leading toincreased costs andimpeding trade, particularly inthefollowing respect: Itgrants
asingle accreditation company (theProgram Manager) adefacto monopoly inthecertification
ofexports totheKingdom, thusenabling thecompany torequire feesthatbear nojustifiable
relevance tothework thatitperforms. Instead these feesareadvalorem based ontheFOB value
ofexports. What doestheSaudi Government intend todoinorder toimprove thissituation ?
R91. Forreasons ofcosteffectiveness, itwasdetermined thatathirdparty should assist theSASO
inimplementing theICCP. Thecompany inquestion wasselected because ithasapresence inall
regions andhasextensive experience ininternational standards work.
Asforfees,theinternational practice andtradition forglobal pre-shipment inspection (PSI)
services aresuchthatfeesareapercentage ofthef.o.b. value ofgoods inspected. Traditionally, for
many years, thisfeeratehasbeenapproximately onepercent ofvalue suchglobal PSIservices and
feesarecurrently implemented byover30countries whoareWTO members. AWorld BankDiscussion
Paper #278published in1995recognized theaverage PSIfeerateof(1%) ofthef.o.b. value. Thus,
fortheglobal PSIservices required under SASO, ICCP feescales of(0.15% -0.5%) off.o.b. value
isreasonable.
Itisagreed thattheinternational practice forlaboratory testing isfixed prices. Under ICCP,
when testing isapplicable, fixed prices applies atstandard competitive ratesorlower. Thus, again,
theICCP feesystem isrational.WT/ACC/SAU/6
Page25
Q92. What isthepurpose ofthelisting/registration requirement formanufactures under the
proposed ICCP?
R92. Theregistration/listingprogramhasbeencreatedtohelpexportersworldwideinsuretheproducts
imported intotheKingdom demonstrate continued compliance withthestandards developed byor
approved bySASO.
Q93. Please provide fulldetails ofthelegislation relating toproduct safety, especially:
(a)details ofthemandatory technical requirements applicable toeachofthe76product
categories;
(b)listofthestandards (international, European, Saudi, other) which areaccepted as
means ofdemonstrating compliance withthetechnical regulations;
(c)thetypes ofconformity assessment procedure applicable.
R93. (a)Technical requirements arecontained inSASO standards. SASO ’sInformation Center
willsupply English language details ofallitsstandards including the76covered byICCP, onrequest,
toimporters andforeign governments, including theirembassies; Requests should beforwarded to
SASO Information Center atthefollowing address: P.O.Box3437, Riyadh 11471, Saudi Arabia.
(b)SASO Information Center prepares acomprehensive listing ofapproved standards (SASO
Standards Catalogue) anddistributes ittoallISOmembers andtoanyinterested parties periodically
depending ontheneedandtheamendments.
(c)There aretworelated butseparate conformity assessment procedures: Pre-Shipment
compliance verification andproduct registration. Guidelines areavailable toallinterested parties.
Q94. Arethepreshipment activities performed inthecustoms territory from which thegoods
areexported, orthecustoms territory inwhich thegoods aremanufactured?
R94. Bothterritories arepossible, astheinspection location isthedecision oftheexporter.
Q95. Areinspections related onlytotheverification ofquality, quantity andprice? Ifnot,
please indicate what other specifications areconsidered inaninspection.
R95. Thescope ofinspection forcompliance verification includes quality andquantity compliance
(including sampling andtesting, ifapplicable) butexcludes price verification.
Q96. Aretheprocedures andcriteria usedintheconduct ofthepreshipment activities applied
onanequal basis toallexporters affected bysuchactivities andperformed inanuniform manner
byalltheinspectors? Please detail anydifferences which mayexist.
R96. Yes,pre-shipment activities areapplied onequal basis toallexporters.
Q97. What aretheadditional functions andresponsibilities which areperformed bycertain
Programme Country Offices?
R97. Allstandard pre-shipment inspections required under ICCP.
Q98. Please explain thedifferences between theproposed ICCP procedures andthecertification
procedures applied todomestic products.WT/ACC/SAU/6
Page26
R98. Thedomestic producers aremonitored andcontrolled bydifferent government agencies such
asMinistry ofCommerce, Ministry ofMunicipality, Ministry ofIndustry andElectricity, Ministry
ofAgriculture andWater, andSASO toinsure compliance withSASO standards.
Q99. Please provide details ofwhich overseas certifications/tests areregarded asequivalent
toSaudi requirements, allowing partoralloftheconformity assessment procedures tobewaived.
Which overseas testing laboratories andcertification bodies arerecognized ascompetent toassess
toSaudi Arabian requirements? What arethestandards/criteria forthese bodies tobeso
recognized?
R99. Saudi Arabia recognizes international quality ‘marks ’onimported products accredited by
relevant entities inother countries. Thisisreflected inthereduced leveloftesting thatmayberequired
under theSaudi standards incomparison tothegreater level oftesting required iftheproduct does
nothavesuchinternational marks. SASO accreditation requirements arebased onISOregulations
andguides suchasISOGuide 25.Recognition oftesting laboratories andthecertification isbased
onSASO assessment oraccreditation byrecognized body through mutual recognition orbilateral
agreement. Thecriteria areSASO Quality Mark, Certificate ofConformity, andAccreditation of
Services Regulation.
Q100. Whatisthejustificationforchargingacertificationfeebasedonthevalueofaconsignment
rather thanonthecostoftheconformity assessment procedure?
R100. Kindly refertoreply 91.
Q101. InthelightofTBTAgreementArticle2.2,whatisthejustificationforimposingmandatory
technical requirements andthird party certification onproducts which areinmostcountries subject
tofarlessburdensome requirements onaccount ofthelow/non-existent riskstheypose. Examples:
headwear (noneed formandatory requirements); processed foods (notnormally subject to
pre-market certification).
R101. TheICCP wasintroduced toensure proper enforcement ofSASO ’sstandards inaccordance
withISO/IEC Guides.
Under theprevious system ofself-certification, many abuses occurred andthesystem failed
toprovide adequate protection oflocalconsumers. Itwasdetermined thattoensure proper enforcement
ofstandards forproducts found tobeparticularly susceptible tosub-standard imports, itwould be
necessary toobtain certification ofstandards compliance.
However, Saudi Arabia ’sdomestic laboratory testing capacity was,andremains, inadequate
todealwiththisenhanced levelofstandards enforcement. Accordingly, itwasdecided tomove, with
respect toimports, toasystem ofpre-shipment certifications bySASO approved thirdparty enterprises
incountry ofexport/manufacture.
Q102. Inthelight ofTBT Agreement Article 5.1.2., what isthejustification fordemanding
thateachconsignment ofaproduct beassessed forconformity ?Formostoftheproducts covered
byICCP which arenormally subject topre-market certification, standard international practice
istodemand onlytypeapproval oftheproduct (orcertification ofthemanufacturer ’squality
system), following which therelevant certificate ofcompliance isgood forallshipments andall
exporters/importers.
R102. Kindly refertoreplies 86and101.WT/ACC/SAU/6
Page27
(c) Sanitary andPhytosanitary Measures
Q103. Does Saudi Arabia consider theprovisions oftheICCP relating totheinspection offood
andagricultural products tobeasanitary andphytosanitary measure? Ifso,onwhat scientific
basis isthismeasure based, andwhat isthescientific evidence foritsmaintenance?
R103. No,Saudi Arabia doesnotconsider theprovisions oftheICCP relating totheinspection of
foodandagricultural products tobeasanitary andphytosanitary measure.
Q104. Does Saudi Arabia consider theprovisions oftheICCP relating totheinspection of
products other thanfoodandagricultural products tobeatechnical barrier totrade? Ifso,what
justification isthere forsuchprovisions interms oftheWTO Agreement onTechnical Barriers
toTrade?
R104. TheICCP complies withWTO TBTAgreement. Andtherefore, isnotatechnical barrier
totrade.
Q105. Could Saudi Arabia please confirm that, under theICCP, theSaudi Arabian Standards
Organization (SASO) hasengaged acompany known asInchcape Testing Services tocarry out
theinspection, certification andpossibly testing ofcertain foodproduct imports, andthatfees
willbecharges forthese services?
R105. Yes,Inchcape Testing Services (ITS) isassigned tomanage theprogram forSASO. ITS
willcarry outPSIservices. Also, various SASO approved laboratories willberesponsible forany
required testing. Appropriate feedoesapply.
Q106. Could Saudi Arabia confirm that, under theICCP:
(a)theprogram would bemandatory
(b)there would benoexemptions forproducts already listed asregulated products; and
(c)theprogram would beeventually beextended tocover allimports?
R106. (a)Yes,ICCP ismandatory forallregulated products.
(b)No,there willbenoexceptions. Inthecaseoffoodproducts, theycould betested and
certified atarrival inSaudi Arabia ifPSIwasnotcarried before shipment.
(c)Anysuchintention willbecommunicated toallconcerned parties inadvance.
Q107. Could Saudi Arabia please provide details oftheaction itintends totaketobring its
standards regime intofullconformity withtheWTO Agreement onSanitary andPhytosanitary
Measures andTechnical Barriers toTrade?
R107. Saudi Arabia willcomply withrelevant agreements according toitsWTO commitments.
(d) Trade-related Investment Measures
Q108. (Qu.7,p.3,WT/ACC/SAU/3). Could Saudi Arabia please confirm thatthetaxholidays
andinvestment incentives forindustrial projects, which areadmittedly modulated according to
thelevel ofdomestic participation, arenotalsomodulated according totheuseofproducts of
domestic origin.
R108. Wecanconfirm thattaxholidays andinvestment incentives arenotmodulated according to
theuseofproducts ofdomestic origin.WT/ACC/SAU/6
Page28
Q109. Sales ofwheat bytheGrain SilosandFlour Mills Organization (GSFMO) andpetroleum
products bySaudi Aramco areconducted inconjunction withpricing policies which often ensure
thatdomestic prices arelower thanforeign prices (reply 224,page 80,L/7645/Add.1).
R109. Thisisonlyastatement.
Q110. Could Saudi Arabia please provide details ofanyplans itmayhave toimprove the
allocative efficiency ofitseconomy inthefollowing respects:
(a) byallowing domestic prices tomore closely reflect international prices inrelation
totheproducts ofitsagricultural andoilandgasmining andrefining sectors, and
(b) byallowingdomesticpricespaidbyconsumerstomorecloselyreflectpricesreceived
byproducers inrelation totheproducts ofthose sectors?
R110. Nonewplans havebeentaken inthisrespect.
Q111. GSFMO would appear tobestate-trading enterprise coming under Article XVII. Does
Saudi Arabia intend tonotify itassuch?
R111. Asofnow, GSFMO isastate-trading enterprise, although itsbasic by-laws allows ittobe
privatized.
Q112. WithreferencetoSaudiArabia’sreplytoquestion224(L/7645/Add.1),couldSaudiArabia
confirm thatdomestic prices aregovernmentally setanddonotfollow international quotations.
Does thissystem ofdomestic pricing extend alsotoliquid gases?
R112. Notalldomestic prices aregovernmentally set.Methane andEthane prices aresetat$0.5
MBTU while butane, propane andnatural gasoline prices areset30%offtheexport price according
totheprovisions oftheCouncil ofMinisters ’resolution ofDecember 6,1992. Allother energy
products arepriced atarms length.
Q113. Wethank youfortheinformation onState-trading inSaudi Arabia, ascontained in
answers 213-223 indocument L/7645/Add.1. Inorder tohave abetter picture oftheactivities
oftheState-trading enterprises inSaudi Arabia, please provide replies tothequestionnaire on
State-trading (document G/STR/N/1).
R113. TheQuestionnaire isalready doneandcontained inAnnex 6oftherevised Foreign Trade
Regime memorandum, WT/ACC/SAU/4.
Q114. (Qu. 216,219,220,221,L/7489). Saudi Arabia indicates thattheywillmeet GATT
Article XVII (STE’s)notification requirements upon becoming aMember, yetitisstated that
STE’sinquestion donotmaintain import statistics. What solution isenvisaged toaddress this
issue? Under theinformation requirements spelled outinAnnex 6ofWT/ACC/1, would Saudi
Arabia agree tocomplete the1960 Questionnaire onState Trading Enterprises fortheWorking
Party?
R114. TheQuestionnaire isalready doneandcontained inAnnex 6oftherevised Foreign Trade
Regime memorandum, WT/ACC/SAU/4.WT/ACC/SAU/6
Page29
(i) Government Procurement
Q115. Atthemoment foreign suppliers arediscriminated against under thepresent procurement
legislation (Article l(d)oftheGovernment Purchase LawandArticle l(b)oftheImplementing
Regulations), under thestipulations oftheResolution No.124dated 29.5.1403 (March 14,1983).
DoestheSaudi Arabian government collect statistics onprocurement? What istheoverall
value ofpublic sector purchasing inSaudi Arabia? Could theSaudi Arabian government provide
abreakdown ofthepublic procurement market bothbycontracting entity andproduct type?
R115. No.Saudi Arabian government doesnotcollect statistics onprocurement.
Q116. How arebidsevaluated bytheExamination Committee? Isprice theonlycriterion or
arecontracts alsoevaluated byreference toan"economically mostadvantageous offer" approach?
Ifso,under what conditions arethedifferent evaluation methods used?
R116. Bidsareevaluated bytheBidExamination Committee inlightofthefollowing criteria:
(a)Theextent ofconsistency ofbidssubmitted withrelevant conditions andspecifications.
Thisscrutiny requires ensuring thebidders havecomplied withthegeneral conditions thatarestipulated,
inmostcases, intheLawforGovernment Purchases. These obligations include acommercial register,
membership intheChamber ofCommerce, registration withtheZakat andIncome TaxDepartment,
classification, ortheForeign Capital Investment Lawinthecaseofforeign firms. Bidders arealso
required tocomply withprojects ’specific conditions asstressed inArticle 1GoftheLaw.
(b)Ensuring thebids’prices aremoderate anddonotexceed theprevailing prices. Article 1F
andArticle (5/D/1) oftheLaw.
(c)Ensuring thatbidssubmitted arenotaccompanied withqualifications regarding conditions
andspecifications asthese qualifications willmake bidsunacceptable. Article (5/D/2) oftheLaw.
Q117. Isthere acentral agency which controls theapplication ofthelegal system, supervises
thedecisions oftheCommittees andmonitors infringement ofpublic law?
R117. There isnocentral agency controlling theapplication ofthelegalsystem, orsupervising the
decisions ofCommittees ormonitoring infringement ofthepublic law.These functions areexercised
bythecompetent minister oragency headincaseacomplaint issubmitted byoneofthebidders.
Q118. Cansuppliers whodispute theaward ofacontract seekredress through national courts
oratribunal system? What remedies areavailable?
R118. Yes,suppliers whodispute theaward ofacontract mayseekredress through national courts
(Board ofGrievances) tochallenge thedecision.
Q119. Howoften areoffset arrangements negotiated onacase-by-case basis (referred toinreply
204of(L/7645) used?
R119. Offset arrangements arethejurisdiction oftheBoard ofGrievances. TheBoard examines
these requests byconcerned parties onacase-by-case basis.
Q120. Arethelistsofproducts reserved forlocalindustry (referred toinquestion 206ofL/7645)
available?
R120. Nosuchlistsareprepared, butallproducts procured locally arechosen according tothesame
setofcriteria, namely, availability, quality, andthesuitability oftheirprices.WT/ACC/SAU/6
Page30
Q121. What aretheprocedures andthecriteria toshort-list candidates inthecases oflimited
tendering (referred toinArticle 2boftheGovernment Purchase Law)?
R121. Thisapproached referred toinArticle (2B)oftheLawhasbeendiscontinued forallbids
exceeding onemillion Riyals. However, criteria andprocedures relative tothelistofcandidates are
based uponArticle (1C)oftheLaw. ThisArticle stipulates thatanybidder willing toundertake such
activities orpurchases hastobelicensed, classified andregistered withtheZakat andIncome Tax
Department andwiththeCamber ofCommerce. These criteria andprocedures apply tobidders in
thecases where bidsareadvertised intheofficial gazette asstipulated inArticle (2A)oftheLaw.
Q122. Arethe"proformas" (referred toinarticle 10oftheGovernment Purchases Law) available
inEnglish?
R122. Only thepublic Works Contract isavailable. Other contracts havenotbeenissued yet.
Currently, proformas delivered togovernment agencies arecommonly used.
Q123. DoArticles 8-10, which aremissing inthe(unofficial) English Translation ofthe
Government Purchases Law, exist?Ifso,what dotheyregulate? Please provide atranslation?
R123. Yes,theyarestillinforce. Article (8)regulates themethod ofpaying entitlements tothe
contractor withgovernment agencies (thepartythathasacontract withagovernment agency). Paragraph
(a)allows theadministrative agency tomake anadvance payment of10%ofthecontract value. This
payment ismade inexchange ofabankguarantee issued inanequivalent amount. Advance payment
shallbededucted fromtheperformance bondpaidtothecontractor. Paragraph (b)indicates themethod
ofpayment ofremaining entitlements; these shallbeintheformofinstalments, thenumber ofwhich
istobespecified inthecontract oftwoconditions. First, theamount paidshould correspond tothe
amount ofwork accomplished. Second, acertificate issued bytheZakat andIncome TaxDepartment
must bysubmitted asevidence ofpayment ofZakat entitlements before thefinalinstalment canbe
made. Thisfinalinstalment shallnotbelessthan10%ofthecontract amount.
Article (9).Paragraph (a)ofthisArticle Determines themaximum penalty thatmaybelevied
onthecontractor incaseofdelay. Thismaximum isequivalent to4%oftheamount ofsupply contracts
and10%oftheamount ofpublic works, operation andmaintenance, orconsultancy contracts. Details
relative tosuchpenalties aretobespecified intherelevant by-laws andinthecontract. Article (34),
(35),(36)and(37)oftheby-laws forgovernment purchases discuss themethods ofenforcing penalties
incaseofdelay ordefault. Paragraph (b)ofthisArticle specifies thecases where theMinister ofHead
oftheindependent agency mayextend thecontract. These cases areasfollows: (i)Thecontractor
hasbeenassigned additional works andtheorder toimplement suchworks wasissued inatimeframe
thatdoesnotallow forsuchimplementation during theremaining contract period asagreed upon; (ii)
Theconcerned agency hasordered theinterruption ofworks forreasons thatarebeyond thecontrol
ofthecontractor withthegovernment. Paragraph (c)ofthisArticle discusses themethods ofextension
inother cases notstipulated inparagraph (b)andmakes suchextension conditional upon agreement
withtheMinistry ofFinance.
Article (10). Thisarticle explains theways offilling outproformas forpublic works, supply
andother administrative contracts. Italsoassigns thisresponsibility totheMinistry ofFinance and
National Economy. Authority toissue suchforms isvested intheCouncil ofMinisters. Asfor
translation, itmaybeprovided bytheEconomic Affairs Department.
Q124. Does Saudi Arabia have anypurchasing agreements withcountries other than GCC
countries? Ifso,withwhich countries?
R124. No,Saudi Arabia doesnothaveanypurchasing agreements withcountries other thanGCC
countries.WT/ACC/SAU/6
Page31
Q125. Wenoted Saudi Arabia ’sstatement regarding government procurement asdescribed
inresponses toquestions 201-211 (L/7645/Add.1). Inthereview oftherelevant legislation, there
doesnotappear tobeanyprocedures forappeal orbidchallenge. Doanyprocedures existand,
ifso,please provide further information.
R125. Kindly refertoreply 118.
Q126. Itisnoted intheGovernment Purchase Law, Article 2(a),thatcallsfortender areeither
published intheOfficial Gazette orbyofficial letter tothose whoareinvited totender. What
isthepercentage ofcontract value forpublished callsfortender vis-a-vis invitation letters?
R126. Kindly refertoreply 115.
Q127. Article 3ofthesame lawlistsfourteen types ofpurchases, tenofwhich involve “invitation
totender ”byspecial agents orcontractors. Does Saudi Government maintain source listsand,
ifso,howarethese updated andwhat istheprocedure forbeing placed onthelist?
R127. Thelimited tendering method asprovided forinArticle IIIofthesame lawceased tobe
effective following theissuance oftheRoyal order No.9751 dated 26/4/1403 A.H., which enforces
invitation fortenders covering allworks, services andpurchases through apublic tender ’sinvitation
announced inallNewspapers.
4. POLICIES AFFECTING FOREIGN TRADE INAGRICULTURAL PRODUCTS
Q128. Duringitspresentationonagriculturalpolicy,SaudiArabiastatedthatitscurrentdomestic
agricultural policies areunder review byMinisterial Council. Weseekmore detailed information,
asfollows:
(a)Please supply adetailed listofcurrently subsidized agricultural products, andan
explanation ofhoweachsubsidy program operates, including adescription ofthepolicy
mechanisms inplace.
(b)Inorder tobetter understand Saudi Arabia 'sagricultural policies, welookforward
totheinformation tobeprovided bySaudi Arabia inresponse tothequestionnaires
provided bytheAgreements onTechnical Barriers toTrade; Sanitary andPhytosanitary
Measures; andImport Licensing Procedures; bytheUnderstanding onState Trading;
andinWT/ACC/4, theSecretariat noteonagricultural subsidies .
R128. Allabove requested information arepartofprevious Saudi Arabia ’sWTO documents.
Q129. Please provide information onvarious forms ofsupport foragriculture inSaudi Arabia
inconformity withtheoutline setoutindocument WT/ACC/4.
R129. WT/ACC/4 andsupporting tables areattached asAnnex (A)tothisdocument.
Q130. With regard toresponse 180,hastheMinisterial Committee completed itswork? Ifso,
please provide details oftheconclusions ofthecommittee. Ifnot,please provide anindicative
timetable forthecompletion ofthereview.
R130. TheMinisterial Committee hasnotimetable forthecompletion ofitsreview. Anyconclusions
reached willbereleased following thecompletion ofitswork.WT/ACC/SAU/6
Page32
Q131. What isthevalue ofAgriculture domestic support compared tothetotal value of
agricultural production.
R131. Kindly refertoTable 1ofACC/4 contained inAnnex (A).
Q132. (Qu.132,188,190,L/7645/Add.1).“SaudiAgricultureBankdoesnotapproveagricultural
exports ”.What istherole/mandate oftheSaudi Agricultural Bank? Please provide most recent
figures regarding theamount, theterms andvalue ofloans, aswellasthetypeofsubsidies
disbursed.
R132. Answer willbegiven later.
Q133. “TheSaudiAgricultureBankdoesnotchargeinterestonloans.Minimumfeesarecharged
toensure theseriousness ofapplicants. Theloanprogram isoperated outofarevolving fund... ”.
Please provide more information onthatrevolving fund: budget, loans, grants, etc.What were
thecapital andinterest subscriptions from theMinistry ofFinance in1994 and1995?
R133. Answer willbegiven later.
Q134. What proportion ofdomestic consumption forwheat andbarley issupplied byGSFMO?
R134. Domestic consumption forwheat andbarley aresupplied byGSFMO withfewexception
regarding some limited varieties.
Q135. Please clarify thatsystem ofimport control applied byGSFMO toavoid abuse ofthe
guaranteed price?
R135. There arenoquantitative import restrictions onwheat, barley, andwheat flour which may
beimported freely bytheprivate sector aswellastheGSFMO. However, imports ofwheat andbarley
arerequired tobecolored toavoid abuse ofguaranteed producer prices fordomestic grain.
Q136. Does Saudi Arabia alsoexport barley?
R136. Saudi Arabia doesnotexport barley.
Q137. (Qu. 131,184,204,215,216,220,221,225,L/7645/Add.1). Please explain howthe
GSFMO doesnot“exclusively ”control anyproducts, yetitistheonlyentity which isallowed
toimport andexport wheat?.
R137. Private traders areallowed toimport andexport products which havenotreceived consumers
subsidies.
Q138. Please explain howfixed orguaranteed purchase prices byGSFMO (Grain Silos and
Flour Mills Organization) areestablished, using anexample?
R138. GSFMO, purchases thewheat directly fromfarmers anditdoesnotsellittoconsumers as
grain butasflour, withreduced price forbread, which isconsidered abasic foodcommodity forthe
population.
Thedifference between thepurchase andsaleprice isintended tobeaconsumer subsidy.
Thedomestic priceofbakery wheat flourof75%extraction rateis$130pertonwhich iscomparatively
lower thantheworld wheat flour price during theperiod 1992-1994.WT/ACC/SAU/6
Page33
Q139. What isthevalue ofthepayments thathave been made since 1992, andforwhat
commodities have theybeen made?
R139. Kindly refertoACC/4 inAnnex (A)ofthisdocument.
Q140. Oneofthegoals oftheGSFMO is“tomeetthegoals oftheapproved agriculture policy ”.
What arethose goals inthecontext oftheGSFMO.
R140. TheGrain Silos&Flour Mills Organization wasestablished byRoyal Decree No.M/14 issued
on25/3/1392 H.(Corresponding toFeb.1972) atatimewhen agricultural development intheKingdom
ofSaudi Arabia wasliving itsearly stages ofdevelopment. Theestablishment oftheOrganization
reflected thedetermination ofthose incharge totransform thetraditional agricultural system ofSaudi
Arabia intoamodern mechanized system andtoincrease thecultivated areasbyusing modern irrigation
methods, andmaking useofagricultural research andfieldexperiments inthelightofgovernment
policy, adopted inallfields. GSFMO maybeprivatized inaccordance withArticle No.1B,inthe
basic by-laws oftheOrganization.
Theobjectives oftheOrganization stipulated initsstatute areasfollows:
1. toformanintegrated industry ofgrain storage, flourproduction, processing animal feedand
providing localmarket withimported barley;
2. toestablish anyother relevant nutrition industries;
3. tomarket itsproducts inside andoutside theKingdom;
4. topurchase grains andcreate aconvenient reserve stock tofaceemergency circumstances;
5. tomeetthegoals oftheapproved agricultural policy.
Q141. “...theGSFMO sellsimproved wheat andbarely seedforabout SR1800-1900 prton.”
(during the1990-1995 Development Plan). Arethese prices currently paid?
R141. GSFMO doesnotsellimproved wheat andbarley seeds.
Q142. “Purchase price forwheat arecurrently fixed atSR.5prkgforlarge agricultural
companies, andSR2perkgforother producers ”.Arethese prices currently paidbytheGSFMO
topurchase these products?
R142. GSFMO iscurrently purchasing wheat from producers atSR1.5perkg.
Q143. “Government payments toGSFMO tocover thegeneral shortfall between GSFMO sales
realizations andpayments tofarmers arenotrelated toexport volume ”.What wasthevalue
ofgovernment payments made ineachofthelastthree years?
R143 Kindly refertoSupporting Tables DS:4andDS:5inACC/4 which isAnnex (A)ofthis
document.
(b) Export Subsidies
Q144. Wewould appreciate itifSaudi Arabia could complete thequestionnaire onagricultural
export support subsidies anddomestic support (document WT/ACC/4).
R144. Thisisalready completed andsubmitted totheWTO Secretariat.WT/ACC/SAU/6
Page34
Q145. Wewelcome thestatement made inthefirstworking party thatSaudi Arabia doesnot
maintain anyexport subsidies. Please explain howtheexport ofwheat ispossible without granting
export subsidies, given thattheGSFMO offers auniform guaranteed price toproducers andthat
theprices offered tothefarmers forwheat andbarley aregenerally higher thanworld market
prices.
R145. Saudi Arabia doesnotconfer anexport subsidy onwheat. Interms ofArticle No.9ofthe
Agreement onAgriculture, theGSFMO operations andfinancing arethussimilar tothose oftypically
agricultural marketing boards indeveloped countries.
Q146. WenotethatSaudiArabiahasnoagriculturalexportsubsidies.CanSaudiArabiaprovide
anassurance thatitwillnotintroduce export subsidies?
R146. Saudi Arabia cangiveassurance thatitsagricultural incentives andsupport policies willbe
consistent withitsWTO commitment.
Q147. HastheMinisterial Committee tasked toreview thesystem ofsupport fortheagricultural
sector completed itsdeliberations? Ifso,could Saudi Arabia provide details ofitsfindings? If
thereview hasnotbeen completed, wewould appreciate anindication ofwhen itisexpected to
becompleted?
R147. Kindly refertoreply 130.
Q148. Aretheactual levels ofsubsidies provided under theGovernment ’ssystem ofsupport
fortheagriculture sector stillinexcess ofbudgeted levels?
R148. Kindly refertoreply 68.
Q149. What willbedone toensure thatoutlays onsubsidies areconfined tobudgeted levels
when Saudi Arabia accedes totheWTO?
R149. Itwould bepremature tocomment onthisquestion sincethegovernment support toagriculture
sector isunder review.
Q150. What factors aretaken intoaccount andwhat objectives aretobesetindetermining
future budgeted levels ofoutlays onsubsidies?
R150. Kindly refertotheobjectives section ofreply 154.
Q151. Willthesetting offuture budgeted levels ofoutlays onsubsidies takeaccount ofthe
implications ofsuchoutlays fortheconduct offiscal policy, thefiscal burden onthecommunity,
allocative efficiency intheeconomy andenvironmental degradation?
R151. Asmentioned intheMemorandum onForeign Trade Regime (L/7489), thesystem ofsupport
isunder review andthisexercise willtakeaccount oftheimplications ofsuchoutlays fortheconduct
offiscal policy, burden oncommunity, allocative efficiency, intheeconomy andenvironmental
degradation.
Q152. How istheexport ofwheat possible without granting export subsidies (with domestic
granted prices higher thanworld prices)?
R152. Kindly refertoreply 145.WT/ACC/SAU/6
Page35
Q153. (Qu. 179-190, L/7645/Add.1). “Agricultural subsidies areprovided forthefollowing
types ofprojects: irrigation, acquisition offarm machinery, poultry anddairy farm equipment,
imports ofcows, animal feed, andpotato seed.”
Please provide afulllistofsubsidy measures currently inplace, with, foreachtypeof
subsidy program, totalvalue ofsubsidies, withvolumes ofquantities subsidized, forthelastthree
years, byHSCode. Does theoperation ofthese programs require therestriction orlimitation
ofimports ofcertain agricultural products?
R153. Kindly refertoACC/4 contained inAnnex (A).
Q154. “TheKingdom ’sagricultural policy isimplemented onthebasis ofseveral objectives,
including diversification oftheeconomy, theachievement ofhigher growth rates inother sectors
oftheeconomy,combatingdesertification,raisingtheincomelevelandwelfareofruralinhabitants,
andcontributing tothesecurity ofthenation ’sfoodsupply?
What measures aretaken tomeet those objectives?
R154. Planning inSaudi Arabia isindicative whereby theplansetstheaimsandtheimplementation
islefttotheworking ofthemarket forces. The6thdevelopment planprojects theannual rateofgrowth
oftheadded value intheagricultural sector at3.1%. Soitisexpected thattheagriculture ’scontribution
tonon-oil GDP tobe9.9% attheendoftheplan.
Development Strategy: Thedevelopment oftheagricultural sector shallbeachieved byadopting the
following objectives andpolicies.
Objectives: ThePlansetsthefollowing overall objectives fortheagricultural sector:
- toachieve foodsecurity intheKingdom;
- toincrease anddiversify agricultural products;
- toachieve satisfactory rateofgrowth inproducing mainagricultural crops, animal products
andfish,atleastcostandlowrateofwater use;
- tocontribution tothecreation ofjobsandimprove theirstandard ofliving;
- toachieve areasonable rateofgrowth intheagricultural labor productivity andrealize high
Saudization ratesinAgriculture;
- toraiseeconomic efficiency intheagricultural sector ingeneral.
Policies: Toachieve these major objectives foragricultural development, thefollowing policies are
tobeimplemented:
1. Encouraging large-scale agricultural feasible projects which depend onrenewable water
resources andwhich useadvanced irrigation technology.
2. Diversify agricultural lands use,especially inareas withhighpotential renewable water
resources.
3. Supportprogramsforagriculturalinputsandserviceswillbecontinued,includingthoserelating
tothedistribution ofseeds, seedlings andextension services.
4. Marketing channels willbeimproved bytheprovision ofstorage facilities forsmall farmers.
5. Training ofSaudi agricultural manpower willbeintensified atalllevels.
6. Encouragethediversityofagriculturalproductionthroughutilizationofcomparativeadvantage.
7. Research support willbeprovided forstudies onproblems specific totheKingdom ’s
agriculture.
8. Improve thebasic dataandinformation base.
9. Encourage theprivate sector toestablish feed-mills using imported rawmaterials.
10. Joint studies willbeconducted withGCC member countries topromote inter-regional
cooperation.WT/ACC/SAU/6
Page36
11. Thecontinuity ofprotecting andsafeguarding different kinds ofanimal, plants andmaintaining
theecological balance through combating desertification.
Q155. “...thesystem ofsupport iscurrently under review byaMinisterial Committee ...there
isnotimetable setforthecompletion ofthereview. ”Could Saudi Arabia provide anyindication
ofthereview findings andrecommendations todate?
R155. Kindly refertoreply 130.
(c) Export Prohibitions andRestrictions
Q156. WenotethatSaudi Arabia applies restrictions ontheexport ofsome products (reply
129,L/7645/Add.1). These restrictions would appear tobeinconsistent withGATT Article XI:1.
DoesSaudiArabiaintendtobringingitsexportlicensingregimeintoconformitywithGATTArticle
XI:1onaccession toWTO?
R156. TheKingdom doesnotapply theexport licensing regulation effective inother countries which
isdifferent fromtheconcept contained inpara.1 ofarticle 11asthereason forrequiring anapproval
oranexport permission isthatsome commodities aresubsidized bythegovernment orexempted from
customs duties. Sothisdoesnotmean prohibition orrestriction oftrade. AdutyofSR2000/ton is
levied onuntanned skins which isinlinewitharticle 11oftheGATT.
V. TRADE-RELATED INTELLECTUAL PROPERTY REGIME
Q157-175.
R157-175. Replies willbeprovided inthenextconsolidated answers.
IV. TRADE-RELATED SERVICES REGIME
Q176-182.
R176-182. Replies willbeprovided inthenextconsolidated answers.
VII. INSTITUTIONALBASEFORTRADEANDECONOMICRELATIONSWITHTHIRD
COUNTRIES
Preferential Regional Trading Agreement
Q183. Wewouldappreciateresponsestothefollowingquestionsonthetradepreferencesextended
bySaudi Arabia toother Arab League countries under theAgreement Facilitating andDeveloping
Trade among Arab Countries.
Could Saudi Arabia please explain thediscrepancy thatseems toexitinrelation to
statements concerning thepresence ofnon-tariff concessions intrade preferences under the
Agreement Facilitating andDeveloping Trade Among Arab Countries? Werefer totheapparent
inconsistency onthispoint inresponse 74(c) onpage 29ofL/7645/Add.1 andresponse 260on
page 92.
Could Saudi Arabia provide details ofallnon-tariff concessions intrade preferences under
theAgreement Facilitating andDeveloping Trade Among Arab Countries? Wewould appreciateWT/ACC/SAU/6
Page37
details inrelation toeach country regarding thetypeofpreferential non-tariff concession and
thetariff linestowhich eachtypeofnon-tariff concession applies.
Could Saudi Arabia provide anassurance thatitwillabolish allofthepreferential
non-tariff concessions provided under thePreferential trading arrangements inwhich itisinvolved
upon concession intotheWTO, orotherwise explain howthese non-tariff concessions would be
consistent withtheWTO Agreement?
R183. Inreply toQ.74, para(c),itwasmeant thereciprocal preferential treatment between the
Kingdom andsome Arab countries within theframework oftheArab league. Reply toQ260 was
referringtotheCommercialExchangeFacilitationandDevelopmentAgreementamongtheArabcountries
andthereciprocal preferential treatment granted under thatagreement inthefieldoftrade ingoods
andservices.
Q184. Saudi Arabia hasbeen involved intheprocess offorming afreetrade areaunder the
auspices oftheUnified Economic Agreement oftheCooperation Council oftheStates oftheArab
Gulf.
(a)Could Saudi Arabia please report ontheprogress thatithasmade ontheformation
ofafreetrade area under theauspices oftheUnified Economic Agreement ofthe
Cooperation Council oftheStates oftheArab Gulf. When willthearrangement for
thisfreetrade areabecomplete?
(b)Could Saudi Arabia indicate which tariff lines willbedutyfreewhen thecurrent
stage oftheformation ofthefreetrade iscomplete? What percentages ofSaudi Arabia ’s
current exports toandimports from itsGulfCooperation Council partners arecovered
bysuchdutyfreeaccess?
(c)Wewould appreciate clarification oftheprecise sense inwhich thecustoms tariff
under Unified Economic Agreement oftheCooperation Council oftheStates oftheArab
Gulf isbeing unified, anddetails oftheunification.
(d)Does“unification ofthecustoms tariff”mean thatSaudi Arabia ’simports from other
members oftheagreement intariff lines affected byunification areduty free, while
imports from third countries inthesame tariff linesarenotdutyfreeandenter subject
totheunified tariff? Ordoes“unification ofthecustoms tariff”mean thatduties are
applied toSaudi Arabia ’simports from other members oftheAgreement intariff lines
which areexempt from dutyfreeaccess? Ifso,which tariff lines areaffected andat
what unified rates?
R184. (a)TheGCC member states havebeenabletoreach theagreement onafreetrade areain
anearly stage oftheimplementation oftheUnified Economic Agreement which represents thework
planoftheGCC intheeconomic arena. Themostimportant achievements inthisfieldareasfollows:
Liberalization oftheGCC member states’inter-trade inagricultural, animal andindustrial products
ofthenational origin from allduties asofMarch 1983.
Agreement onenforcing afloorandaceiling ofcustoms dutyforimported goods fromthirdcountries
(i.e.4%-20%)asafirststeptowardstheunificationofcustoms’tariffsvis-a-vistheNon-GCCcountries.
Giving theGCC nationals theright tomove, work andreside inanyoftheGCC member
states while enjoying equal rights asregards proprietorship; inheritance; themovement ofcapital as
wellasthefreepractising oftheeconomic orcommercial activities theychoose (except forsome limited
fields suchasbanking andinsurance). Inaddition, theyareallowed toownsecurities andrealestate
according tocertain rules while enjoying thesame taxtreatment.WT/ACC/SAU/6
Page38
There areother achievements which surpass thestage ofthefreetrade areasuchasestablishing joint
ventures andmaking efforts fortheunification andconvergence oflawsandpolicies inallfields.
(b&c)TheGCC member states haveaccomplished some results intheirtalks, many studies
havebeenmade inthefieldofunification ofcustoms tariffs vis-a-vis third countries. Discussions
covering dividing goods tothreecategories according theharmonized system areexpected tobefinalized
shortly. Thecategories ofgoods are:
- exempted goods: notsubject toduties.
- primary goods: subject toduties greater thanthatapplied toprimary goods.
- other goods: subject toduties greater thanthatapplied toprimary goods.
- goods ofspecial nature: suchasTobacco anditsproducts which aresubject tohighcustoms ’
duties.
TalksareheldamongtheGCCmemberstatestodeterminetheratesofcustoms’dutiesimposed
onsuchgoods. Itisexpected thatanagreement willbereached inthisregard soonduetothecompletion
ofallrequirements necessary forthisachievement. There areother procedures andpolicies relating
totheunification oftariffs suchas:
Theoneentry postsystem which allows thefreemovement ofgoods afterentering, andthe
application ofajointsystem tocollect customs ’revenues inorder tobeallocated among member states.
Thedraw backsystem applied tore-exports among member states.
Theagreement onaunified custom ’system.
Astothesecond partofpara. (b)which asksabout theSaudi toother GCC member states
exports toimports ratios, theaverage ratioduring thelastsixyears (1990-1995) wasabout 175% of
national goods. Thisisattributed tothelarge industrial baseoftheKingdom compared withother
GCC member states.
(d)Theintended meaning ofthequestion conveyed inpara. (d)isnotclear. However, it
canbesaidthatalltradeexchange ofgoods ofnational origin among theGCC member states arefully
exempt fromcustoms duties. Asregards toimports fromcountries other thantheGCC countries, they
aresubject todifferent ratesofcustoms duties. Should suchimported goods move from onetoother
GCC member state(s), theyshould besubject tocustoms ’duties more thanonce. Incaseofapplying
theunified tariffs, suchgoods willcounter onetariff only.
Q185. ForeachofthebilateralagreementswhichSaudiArabiahasindicatedthatithasconcluded
withother Arab League nations, please provide acomplete list-toHS6-digits -ofproducts subject
totariff preferences (indicating thenature ofthepreference).
R185. FortheGCC, Article 2.1oftheUnified Economic Agreement oftheGCC provides forfull
exemption fromcustoms duties andrelevant feesonallgoods originating intheGCC countries. As
fortheArab League preferences please seereply 74(b)ofdocument no.L/7645/Add.1. Additional
information willbeprovided later.
Q186. (a) Please provide acopy inaWTO language ofthetextoftheGCC Free-Trade
Agreement. When wasthisAgreement signed? Ratified?
(b)HastheGCC FTAbeennotified totheWTO under Article XXIV bythose participants
which areWTO members? Ifnot,whynot?
(c)Please provide details oftheplanandschedule provided forintheAgreement as
required byArticle XXIV.5.(c) oftheGATT 1994.
(d)Please provide awritten up-date onthedevelopment oftheGCC Customs Union.WT/ACC/SAU/6
Page39
R186. (a)Please findenclosed acopy(inEnglish) oftheUnified Economic Agreement dulysigned
on11/11/1981, which came intoeffect after4months from signing, aspertheArticle 26ofthe
Agreement enclosed acopythereof.
(b)Yes,theGATT Secretariat wasnotified byKuwait in1982.
(c)Article 24,para. 5.cdoesnotcurrently apply totheGCC member countries since all
ofthem, atpresent, arenotmembers attheWTO.
(d)Thetechnical committee formed forthispurpose isstillpursuing thetaskofpreparing
adraftagreement forclassification ofgoods, tobeagreed laterthereon, among theGCC countries.
ThefactthattheGCC countries areapplying theHSbased Tariff shallfoster thetaskofagreement
ontheunified nomenclature ofthegoods.WT/ACC/SAU/6
Page40
ANNEX (A)
Information OnDomestic Support AndExport Subsidies InAgriculture
TABLE 1
DOMESTIC SUPPORT
TOTAL AGGREGATE MEASUREMENT OFSUPPORT
Million (US$)
Year local
wheatlocal
barleyimported
barleyfeed
(forcorn
andsoya
bean)Agri.
subopp.
cost
(loans)subtotalagricultural
domestic
productsubto
A.D.P
%
1986 820.19 - 522.75 46.08 158.40 21.23 1568.65 4229.60 37.10
1987 972.21 12.67 648.19 63.49 89.17 17.89 1803.62 4883.20 36.90
1988 1162.67 15.36 425.04 177.60 81.12 16.32 1878.11 5572.00 33.70
Sources: 1. Saudi Arabian Monetary Agency
2. Ministry ofAgriculture andWater
3. Ministry ofPlanning
4. Saudi Arabian Agriculture Bank
5. Grain Silos &Flour Mills Organization.
Note: Allrelated SR.figures havebeentranslated toUSdollars attheexchange rateof1US$
=SR3.75.
Difference intotals areduetorounding figures tothenearest twodecimal points.
TABLE 2
THE OPPORTUNITY COST FOR THE MEDIUM TERM LOANS
GRANTED BYTHE SAUDI AGRICULTURAL BANK
Year Amount ofMedium
Term Loans
Million US$Average
Interest RateOpportunity Cost
Value
Million US$
1986 270.67 7.84% 21.23
1987 223.65 8.00% 17.89
1988 200.83 8.13% 16.32WT/ACC/SAU/6
Page41SUPPORTING TABLE DS:1
DOMESTIC SUPPORT :
REPORTING PERIOD :calendar year, marketing year, etc.
Measures exempt from thereduction commitment -“Green Box“
Thousand (US$)
Measure typeName anddescription ofmeasure
withreference tocriteria annex 2
oftheAgreement onAgricultureMonetary value ofmeasure inyear
inquestionDatasources
1 2 3 4
(a)General Services: Research, pestanddisease control,
training, extension, inspection
services, andinfrastructural
services
1986 69,410 Ministry ofAgriculture
1987 79,920 &Water
1988 55,431
Storage andOverhead Costs
(b)Public stockholding for:
foodsecurity purposes:
1986 8,094 Grain Silos &Flour Mills
Organization
(GSFMO)1987 9,553
1988 11,902
(C) to(L) NIL NILWT/ACC/SAU/6
Page42SUPPORTING TABLE DS:2
DOMESTIC SUPPORT :
REPORTING PERIOD :calendar year,marketing year,etc.
Measures exempt from thereduction commitment Special andDifferential Treatment -Development Programs
Million (US$)
Measure typeName anddescription ofmeasure
withreference tocriteria annex 2
oftheAgreement onAgricultureMonetary value ofmeasure inyear
inquestionDatasources
1 2 3 4
(a)“Investment subsidies
generally available toagriculture ”
a.1 Opportunity costfor
Agric. Loans
1986
1987
1988
a.2 BadDebts forAgric.
Loans
1986
1987
1988
(b)“Input subsidies generally
available tolow-income or
resource-poor producers ”
(c)“Support toencourage
diversification from growing illicit
narcotic crops.21.23
17.89
16.32
106.67
106.67
106.67
NIL
NILSaudi Arabian Agricultural Bank
Saudi Arabian Agricultural BankWT/ACC/SAU/6
Page43SUPPORTING TABLE DS:3
DOMESTIC SUPPORT :
REPORTING PERIOD :calendar year, marketing year, etc.
Measures exempt from thereduction commitment -Direct Payments under Production -Limiting Programs -“Exempt Direct Payments
Measure typeName anddescription ofmeasure
withreference tocriteria annex 2
oftheAgreement onAgricultureMonetary value ofmeasure inyear
inquestionDatasources
1 2 3 4
“Payments based onfixed areaand
yields ”
“Payments based on85percent or
lessofthebaselevelof
production ”
“Livestock payments made ona
fixed number ofhead”NIL
NIL
NILNIL
NIL
NILWT/ACC/SAU/6
Page44SUPPORTING TABLE DS:4
DOMESTIC SUPPORT :
REPORTING PERIOD :calendar year, marketing year, etc.
Calculation oftheTotal Aggregate Measurement ofSupport
Million US$
Description ofbasic product
(including non-product
specific AMS)Product-specific AMS
(from Supporting Tables
DS-5 toDS-7 below)Product-specific
measurement ofsupport
(from Supporting Table
DS-8below)Current Total AMS (aggregate)
1 2 3 4 1986 1987 1988
Product AWheat (Local) 820.19 972.21 1162.67
Product BBarley (Local) --- 12.67 15.36
Product CBarley, (Imported) 522.75 648.19 425.04
Feed (corn andsoyabean) 46.08 63.49 177.60
Other Product 89.31 42.40 33.92
Non-product-specific AMS 69.09 46.77 47.20
Opp. Costforloans 21.23 17.89 16.32WT/ACC/SAU/6
Page45SUPPORTING TABLE DS:5
DOMESTIC SUPPORT :
REPORTING PERIOD :calendar year,marketing year, etc.
Product-Specific Aggregate Measurements ofSupport: Market Price Support
Description
of
basic productsCalendar/
marketing
year
beginning.Measure type
(s)Applied
administered
price (U.S.$)External
reference
price (U.S.$)Eligible
production
(Ton)Associated
fees/leviesTotal market
price support
Million
(U.S.$)Datasources
1 2 3 4 5 6 7 8 9
Wheat
Barley1986
1987
1988
1986
1987
1988Market p.s 533.33
533.33
533.33
--
266.67
266.67128.00
110.00
124.00
--
121.00
147.002,023,484
2,296,587
2,840,453
--
87004
128294820.19
972.21
1162.67
--
12.67
15.36Grain Silos &
Flour Mills
Organization
Grain Silos &
Flour Mills
Organization
Barley
(imported)1986
1987
1988Market p.s 80*
80
806534.442
8102.467
5312.953522.75
648.19
425.04Grain Silos &
Flour Mills
Organization
*Theamount ofthesubsidy wasfixed atUS$80.0 pertonduring theperiod 1986-1988.WT/ACC/SAU/6
Page46SUPPORTING TABLE DS:6
DOMESTIC SUPPORT :
REPORTING PERIOD :calendar year, marketing year, etc.
Product-Specific Aggregate Measurements ofSupport: Non-Exempt Direct Payments
(1000 US$)
Description
ofbasic
productCalendar /
marketing
year
beginningMeasure
type(s)Applied
administ-
eredpriceExternal
reference
priceEligible
productionTotal
price
related
direct
paymentsOther
non-exempt
direct
paymentAssociated
feesleviesTotal
direct
paymentsData
sources
1 2 3 4 5 6 7 8 9 10 11
Dairy
Prod.1986
1987
1988Total
payment
””
””23,486
14,919
14,102Saudi Arabian
Agri. Bank,
Ministry of
Agri.& Water
andMinistry
ofPlanning
Poultry
Prod.1986
1987
1988””
””
””53,600
67,787
181,627Saudi Arabian
Agri. Bank,
Ministry of
Agri.& Water
andMinistry
ofPlanningWT/ACC/SAU/6
Page47SUPPORTING TABLE DS:7
DOMESTIC SUPPORT :
REPORTING PERIOD :calendar year, marketing year, etc.
Product-Specific Aggregate Measurements ofSupport: Other Product Specific Support andTotal Product-Specific AMS
Description
ofbasic
productCalendar /
marketing
year
beginningMeasure
type(s)Other
product
specific
budgetary
outlaysOther
product
specific
support
include
calculation
details)Associated
fees/
leviesTotal other
product
specific
supportMarket
price
support
(supporting
Table
DS-5)Non-exempt
direct
payments
(supporting
Table DS-6)Total AMSData
sources
1 2 3 4 5 6 7
(4+16)8 9 10
(7+8+9)11
NILWT/ACC/SAU/6
Page48SUPPORTING TABLE DS:8
DOMESTIC SUPPORT :
REPORTING PERIOD :calendar year, marketing year, etc.
Product-Specific Equivalent Measurements ofSupport
Descrip-
tionof
basic
productsCalendar/
marketing
year
beginningMeasure
type(s)Applied
administ-
ered priceProduction
eligible to
receive the
applied
administ-
eredpricemarket
price
support
budgetary
outlaysEquivalent
measure-
ment of
support
(include
calculation
details)Non-
exempt
direct
paymentsOther
product
-
specific
supportAssociated
fees/
leviesTotal
monetary
value of
equivalent
commit-
mentData
sources
1 2 3 4 5 6 7 8 9 10 11
(7+8+9+10)12
NILWT/ACC/SAU/6
Page49SUPPORTING TABLE DS:9
DOMESTIC SUPPORT :
REPORTING PERIOD :calendar year, marketing year, etc.
Product-Specific Aggregate Measurements ofSupport: Non-Exempt Direct Payments
Measure Type(s)Calendar /
Marketing year
beginningNon-Product
specific support
(include calculation
details)Other non-product-
specific support
(include calculation
details)Associated fees
/leviesTotal
non-product-specific
support
Million (US$)Data
sources
1 2 3 4 6 7
Engines, pumps
andAgric.
machinery1986
1987
198869.09
46.77
47.20Saudi Arabian
Agricultural Bank