RESTRICTED
WORLD TRADE WT/ACC/SAU/13
20March 1997
ORGANIZATION(97-1153)
Original: English
ACCESSION OFTHE KINGDOM OFSAUDI ARABIA
Additional Questions andReplies
TheMinistry ofCommerce oftheKingdom ofSaudi Arabia hassubmitted additional replies
toquestions raised afterthesecond meeting oftheWorking Party heldon6and8November 1996,
withtherequest thattheybecirculated tomembers oftheWorking Party. Thequestions andreplies
arereproduced hereunder.
_______________WT/ACC/SAU/13
Pageii
TABLE OFCONTENTS
Page
No.Question
No.
III. FRAMEWORK FOR MAKING AND ENFORCING POLICIES
AFFECTING TRADE
4. Laws andLegal Acts 1 1
IV. POLICIES AFFECTING TRADE INGOODS
1. Import Regulations
(m) Anti-dumping régime 1 2
(o) Safeguard régime 1 3
3. Internal Policies Affecting Foreign Trade inGoods
(a) Industrial policies 1 4-6
(b) Technical regulations andstandards 5 7-33
(c) Sanitary andphytosanitary measures 14 34
(l) Government procurement 14 35-37
4. Policies Affecting Foreign Trade inAgricultural Products 15 38-50
VI. TRADE-RELATED SERVICES REGIME 18 51-52
Financial Services 19 53-64
Telecommunications 22 65-69
VII. INSTITUTIONAL BASE FOR TRADE AND ECONOMIC
RELATIONS WITH THIRD COUNTRIES
1. Bilateral orPlurilateral Agreements Relating toForeign Trade 23 70-72
3. Labour Markets Integration Agreements 24 73-77WT/ACC/SAU/13
Page1
III. FRAMEWORK FOR MAKING AND ENFORCING POLICIES AFFECTING
TRADE
4. Laws andLegal Acts
Question 1.
Dothelawsandregulations cited inreply 14inWT/ACC/SAU/6 apply toagriculture?
Reply
No,thelawsandregulation citedinreply 14inWT/ACC/SAU/6 arenotapplied toagriculture
because these regulations arerelated tosystem ofNational Industry Protection andEncouragement.
IV. POLICIES AFFECTING TRADE INGOODS
1. Import Regulations
(m) Anti-dumping regime
Question 2.
With reference toWT/ACC/SAU/6, Reply 55,andintheabsence ofanyspecial legislation, could
Saudi Arabia takeanti-dumping, countervail orsafeguards action under anyexisting legislation
ofmore general nature?
Reply
Saudi Arabia doesnotconsider thatArticle 7powers areappropriate forthetypes ofaction
contemplated inGATT Articles VIorXIX. WTO Membership doesnotimpose arequirement to
introduce traderemedy legislation butthatifsuchlegislation isintroduced itshould conform toagreed
norms. Should Saudi Arabia introduce legislation onsafeguards, antidumping, andcountervail itwill
conform toWTO obligations.
(o) Safeguard regime
Question 3.
Saudi Arabia hasnolegislation onsafeguards, anti-dumping andcountervailing duties. How
willittakeaction, withorwithout legislation?
Reply
Trade remedies legislation isbeing considered, andwillbeconsistent withWTO rules. Please
alsoseereply 2above.
3. Internal Policies Affecting Foreign Trade inGoods
(a) Industrial Policies
Question 4.
(a) ReplytoQuestion26indocumentWT/ACC/SAU/6/Add.3explains“DevelopmentProjects”.
Weneed more information onthis.
(b) What aretheconditions andcriteria forapproval?WT/ACC/SAU/13
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(c) Arethere specific criteria forapproval ofinvestment inservices?
Reply
(a) Thetwogeneral criteria listed intheInvestment ofForeign Capital Regulation are:
- thecapital beinvested indevelopment enterprises other thanextraction ofpetroleum
andmining;
- theforeign capital beaccompanied byforeign technical expertise.
Thedecision toprovide alicence forinvestment offoreign capital ismade onthebasisofthe
factsappropriate tothatparticular case, i.e.theforeign Capital Investment Committee hastoinsure
thattheproject isfinancially andeconomically feasible andthemarket fortheproduct orservice is
notsaturated.
(b) The“foreign technical expertise ”termincludes thefollowing:
- technical know-how,
- management know-how,
depending onproject/sector needs orrequirements.
(c) Developmentprojects,forpurposesundertheForeignCapitalInvestmentLawandtheMinisterial
Resolution implementing thisLaw, aredefined asfollows:
Thefollowing projects shallbeconsidered asDevelopment Projects forpurposes under the
Foreign Capital Investment Law:
(i) projects fortheDevelopment ofManufacturing Industry;
(ii) projects fortheDevelopment ofAgriculture Production;
(iii) projects fortheDevelopment ofHealth Services;
(iv) projects fortheProvision ofServices;
(v) projects forUndertaking ofContracts.
Each oftheabove mentioned projects aredetailed below:
(i) Projects forthedevelopment ofmanufacturing industry shallmean projects which convert raw
materialsintosemi-finishedorfinishedgoods;orsemi-finishedgoodsintofinishedgoods.Manufacturing
industry mayalsomean processing, packing andwrapping offinished products.
(ii) Projects forthedevelopment ofagricultural production shallmean those projects undertaken
forthedevelopment of:
- agricultural resources: Suchastheproduction offruits, vegetables, cereals, grains (excluding
wheat andbarely), cropseeds, green fodder, development ofnurseries andgreenhouses.
- animal andlivestock resources: Animal husbandry andlivestock production ofcattle, orrabbits
andproduction ofhoney, milkanddairy products.
- fisheries resources: Suchasfishing orconstruction ofartificial tanks andtakes forfishfarms.
(iii) Projects forthedevelopment ofHealth Services shallmean those projects undertaken forthe
establishment, maintenance, management andoperation ofhospitals, dispensaries, andmedical centres.WT/ACC/SAU/13
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(iv) Projects forprovision ofservices shallinclude, butnotnecessarily belimited to,thefollowing:
banking services; hotel andtourist services; training services; operation andmaintenance services;
environmental maintenance andconservation services; marine transport services; computer services;
establishment ofmodern technology workshops; coldstorage; andwellknown restaurants.
(v) Projects forundertaking contracts include, butarenotnecessarily limited tothefollowing:
Contracts forCivil Construction Projects:
- Distinguished buildings andmedical installations suchas(hospitals, dispensaries, laboratories
andmedical Research Centres);
- Airport buildings suchas(Passenger Terminals, AirPlane, Hangers, Maintenance Workshops,
Control Towers, Offices andWarehouses);
- Airport runways andairplane parks;
- Tunnels;
- Water andSanitary Drainage Works:
(a) Water networks: Such aspipelaying andconstruction oftanks, valves andpumping
plants related tonwater networks andfirefighting systems, etc.;
(b) Sanitary drainage networks: suchaspipelaying, building ofcollection rooms and
manholes andre-asphalting works.
(c) Water purification plants: suchaspurification, treatment andsterilization stages plants
andrelated auxiliary works.
(d) Sanitary drainage purification plants: suchastreatment andsterilization stages plants
andrelated auxiliary works.
(e) Sanitary drainage purification plants: suchastreatment andsterilization stages plants
andrelated auxiliary works.
(f) Irrigation andsanitary drainage projects: They include irrigation systems, land
reclamation andfarmdevelopment.
- Railways: They include railways, underground trains, tramlines, express transport systems
andmonorail trains;
Contracts forElectrical Projects:
- Electrical works:
(a) Power generation (power generation stations ofallkinds).
(b) Power transmission anddistribution networks (airandunderground cables laying,
building ofsubstations andtransformers andother related works).
- Communication systems: Such as:telecommunication systems andradio andtelevision
transmission stations.WT/ACC/SAU/13
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- Electronic installations: Suchas:Radio andtelevision studio equipment, central andcomputer
equipment andsatellite stations andrelated installations.
Contracts forMechanical Projects:
- Air-conditioning andrefrigeration works: They include airconditioning works forbuildings,
coldstorage andfreezing units.
- Pumping andfiltration stations: They include construction ofpumping andfiltration stations
andalltheirtechnical accessories.
Contracts forIndustrial Projects:
- Construction offactories: suchasbuilding offactories ofallkinds.
- Refining andpetrochemical works: They include construction ofrefineries andbuilding of
tanks andallworks related totheconstruction ofpetrochemical installations.
- Oilandgaspipelaying: suchaslaying works related topetrochemical installation.
- Water desalination: Itincludes theconstruction ofwater desalination plants andallrelated
mechanical installation andtechnical accessories.
Other development projects notelsewhere specified inthisresolution maybeconsidered on
therecommendation oftheForeign Capital Investment Committee.
There arenospecific criteria ofapproval ofInvestment inServices. Investment inServices
iscovered byForeign Capital Investment Law.
Question 5.
(a) Istheforeign investment regime forservices based onageneral lawoninvestment policies,
orarethese sector specific laws?
(b) Whether investors canknow inadvance howtheir application would bedealt with?
(c) Ifthedecision isonanad-hoc basis, howdiscretion isapplied?
(d) Please givetheexperience oflastfiveyears indealing withinvestment decisions. (How
many applications, number approved, number notapproved, howmany cases ofjudicial
review, howmany ofthese inwhich review granted relief totheapplicant, etc.).
Reply
(a) Foreign investment inservices iscovered byForeign Capital Investment Law. Please also
seereply 4above.
(b) Licensing procedures forforeign investment projects arepublished andpublicly available.
(c) Thedecision isnotmade onanad-hoc basis.
(d) Please seereply 163ofL/7645/Add.1.WT/ACC/SAU/13
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Question 6.
Howispermission given foracquisition ofrealstatebyforeign investors. Isitgiven atthesame
timewhen approval forforeign capital investment isgiven oristhere aseparate approval procedure
forrealestate?
Reply
Permissionforacquisitionofrealestateforbusinesspurposesconnecteddirectlywiththeforeign
investment isgiven automatically atthesame time.
Acquisition ofrealestate forother purposes, suchaslodging, requires separate approval.
(b) Technical Regulations andStandards
Question 7.
Could Saudi Arabia clarify theresponse that "certification isrequired forevery
consignment". Does itmean thateachconsignment isrequired tobeaccompanied byacopy of
certificate obtained originally bythemanufacturer through thetypetesting procedures ordoes
itmean thewhole certification procedure hastoberepeated foreachconsignment?
Reply
Inorder fortheICCP programme tohave"adequate confidence thatproducts conform with
theapplicable technical regulations …"(TBT Article 5.1.2),
(a) Products which havebeentypeapproved under theICCP, andforwhich standards adopted
formanufacturingofthesameproductforthedomesticmarketoftheexportingcountryareincompliance
withSaudi standards willnotbesubject totherequirement ofpre-shipment inspection ofevery
consignment. AnAutomatic Certificate ofConformity (CoC) willbeissued bytheProgramme Manager
basedonverificationofrequireddocumentsatnocharge.TheCoCwillserveasaconfirmationdocument
recognizable bySaudi authorities.
(b) Other ICCP typeapproved products, forwhich standards adopted formanufacturing ofthe
same product forthedomestic market oftheexporting country arenotinfullcompliance withSaudi
standards, andforwhich theportion ofannual production output manufactured according toSaudi
standards represents onlyaminority oftotalannual production output ofthisproduct, willbesubject
topreshipment inspection ofevery consignment limited inscope toverification thattheSaudi standard
version oftheproduct isbeing shipped.
Alltypeapproved products mustdemonstrate continued fullcompliance withSaudi standards,
throughregularreviewassessmentsandpre-shipmentinspectionsatrandomintervalsinordertomaintain
theirclassification.
(c) Forregistered products aswellasother products ofunknown background, every consignment
mustbeinspected forcompliance verification prior toshipment, andaCoCissued uponcompliance.
Question 8.
Which partoftheICCP Guidelines relate toPSIandwhich parts toConformity Assessment?
Istheeight version oftheGuidelines stillvalid? Isafurther version being worked on?WT/ACC/SAU/13
Page6
Reply
TheCurrent Procedure Guidelines -Version 8-isvalid. Wearecurrently intheprocess of
preparing amore detailed andcomprehensive Guidelines which willclearly identify thepartsrelating
tobothinspection forcompliance verification (PSI) andconformity assessment.
Question 9.
Please explain whyeachproduct category needs tobeincluded intheICCP?
Reply
TheTBTAgreement recognizes thefollowing objectives aslegitimate forpreparation, adoption
andapplication oftechnical regulations:
"national security requirements; theprevention ofdeceptive practices; protection of
human health orsafety, animal orplant lifeorhealth, ortheenvironment" (TBT
Article 2.2) aswellas;quality (TBT Recitals).
Group I-FoodProducts areincluded intheregulated product listforthepurpose ofproviding protection
totheconsumer from:
- sanitary/phytosanitary classified risks;
- health risksandquality ofhealth criteria;
- deceptive practices risks.
Group II-Electrical andElectronic Products: areregulated toprotect against:
- safety hazards;
- deceptive practices.
Some standards maybeclassified asrelevant tothe"classification, grading ormarketing of
commodities" covered under GATT Article XIparagraph 2(b).
Additional standards relevant tolegitimate national security objectives areapplied on:
- radios withrespect toallowable frequency ranges;
- faxmachines andtelexes withrespect tononexistence ofscrambling technology.
Group III-Automotive Products: regulated primarily forconsiderations of:
- safety hazards;
- protection oftheenvironment.
Group IV-Chemical Products:
- safety hazards;
- health risks;
- deceptive practices risks;
- protection oftheenvironment.
Allother products arecovered byoneormore ofthelegitimate objectives withvarying priority.WT/ACC/SAU/13
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Question 10.
Please listtheproducts forwhich sample testing isrequired? Why?
Reply
Sample testing isrequired mainly forthose products ofunknown backgrounds thatcannot
demonstrate compliance withstandards developed byorapproved bySaudi Arabia. Products thatmay
present asecurity risk,suchastelephones andradios areamongst those thataretested.
Question 11.
Where sample testing isnotrequired, what doesthe"inspection" consist of?
Reply
Where sample testing isnotrequired, athorough physical inspection isperformed ontheproduct
toverify compliance withthesafety/deceptive practices motivated standards. Forexample, parts in
anelectric appliance thatconstitute anaccident hazard (electrically), arevisually inspected tomake
surethattheyareeffectively guarded. TheSASO standards applicable toeachproduct provide
information ontherelevant methods oftesting andinspection.
Question 12.
Why isthere counter-checking ofthecertification onarrival inSaudi Arabia? What exactly does
thecounter-checking consist of?
Reply
Counter Checking: Theprocess involves thetranslation intoArabic ofinformation contained
ontheCertificate ofConformity ontoaletter tocomply withcustoms requirements.
Question 13.
Areyouseeking suggestions foradditional certification bodies, which would carry outthe
programme aswellasITSandwhich exporters could gotoinstead ofITS?
Reply
TBTArticle 6.1setsoutthecriteria foracceptance oftheresults ofconformity assessment
procedures intheexporting Member ’scountry asbeing thesatisfaction thatthose procedures offer
asassurance ofconformity withapplicable standards. Except whenever there isvalid reason tothe
contrary, accreditation ofconformity assessment bodies byinternational standardizing institutions would
beconsidered asadequate tosatisfy theassurance criteria. Conformity assessment bodies which are
notaccredited byinternational standardizing bodies mustmeettheassurance satisfaction criteria through
evaluation andapproval byITSandSASO. Products certified byinternationally accredited orSASO
approvedconformityassessmentbodieswillrequireaCertificateofConformityissuedbytheProgramme
Manager toverify theaccreditation status ofthebodyissuing theoriginal certificate andasadocument
recognizable bytheSaudi authorities. Thisdoesnotpreclude ITSfromcarrying outrandom testsand
inspections inorder tosatisfy itself ofthecontinued andenduring assurance ofconformity.WT/ACC/SAU/13
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Question 14.
Regarding theletter of7October 1996 which hasbeen senttoEmbassies inRiyadh: Areyou
seeking suggestions foradditional certification bodies, which would carry outtheprogramme
aswellasITSandtowhich exporters could goinstead ofITS?
What doesthesentence "Intheevent ofnon-compliance bythose laboratories withtherules agreed
upon, thecompetent authorities which have proposed those laboratories shall bear allthe
responsibilities thereof" mean?
Reply
TBTArticle 6.1setsoutthecriteria foracceptance oftheresults ofconformity assessment
procedures intheexporting Member ’scountry asbeing thesatisfaction thatthose procedures offer
anassurance ofconformity withapplicable standards. Except whenever there isvalid reason tothe
contrary, accreditation ofconformity assessment bodies byinternational standardizing institutions would
berecognized asadequate tosatisfy theassurance criteria. Conformity assessment bodies which are
notaccredited byinternational standardizing bodies mustmeettheassurance satisfaction criteria through
evaluation andapproval bySASO based onISOguide 25.
Should Government authorities intheexporting Member ’scountry nominate laboratories, Saudi
Arabia willaccept thenomination provided thattheauthorities which haveproposed those laboratories
areheld responsible fortheresults oftheir conformity assessment procedures andforany
misrepresentation ornegligence inthecourse ofevaluating andrecognizing those laboratories and
insuring theirtechnical competence andintegrity.
Question 15.
Arethere additional laws orregulations which govern, forallagencies, thedevelopment and
application ofstandards, technical regulations andconformity assessment procedures?
Reply
There arenoadditional lawsorregulations.
Question 16.
Arethere other mechanisms which provide forcoordination among agencies inimplementing
Saudi Arabia 'sstandardization andregulatory policies? Forexample, isthere aregulation or
administrative guidance which instructs SASO orother agencies, suchastheMinistry ofHealth,
topublish anotice thatadraft technical regulation isavailable forpublic comment? Isthere
guidance forallagencies withtheauthority todevelop technical regulations onarecommended
period toallow forpublic comment? Isthere guidance forallagencies toconsider theuseof
appropriate international standards?
Reply
(a) Continuous coordination among Ministries andgovernment agencies involved inimplementing
Saudi Arabia ’sstandardization policies isinsured under theinherent structure ofSASO ’sBoard of
Directors; theBoard members include representatives from allconcerned Ministries, (inaddition to
theChambers ofCommerce andIndustry). TheBoard approves theadoption ofnewstandards, and
individual members oversee harmonization initsimplementation among theirrespective Ministries.WT/ACC/SAU/13
Page9
(b) Administrative procedures areinforce atSASO requiring:
- publication ofnotice inseveral localnewspapers announcing thatadrafttechnical regulation
isavailable forcomment within 3months;
- distribution ofcopies ofthedrafttoallconcerned Ministries, alllocalChambers ofCommerce,
foreign embassies, major localmanufacturers andmajor Saudi importers whose products are
affected bytheproposed regulation.
Afterthe3monthsperiod,aseconddraftincorporatingacceptablecommentsislikewisepublished
anddistributed forfinalcomments within onemonth.
(c) SASO ’spolicies andadministrative procedures carry specific instructions touseinternational
standards wherever applicable, orusethem asthebasis fordevelopment ofSASO ’sownstandards
insituations where thespecific climatic andgeographic conditions warrant that.Forelaboration, refer
toSection I“Background ”ofWT/ACC/SAU/9
Question 17.
Which agency hasresponsibility forensuring domestic production complies withrelevant standards
andtechnical regulation? [Reply toQ.77 indicates thatinaddition toSASO/MOC, theMinistry
ofMunicipality isresponsible forregulating perishable foods intheSaudi market andtheMinistry
ofHealth fordrugs andmedical devices.]
Reply
Section VIII "Standards Compliance ofNational Products" ofWT/ACC/SAU/9 dated
6November 1996explains theprocess bywhich domestic production complies withrelevant standards.
Likewise, reply 98ofWT/ACC/SAU/6 liststheMinistries monitoring andcontrolling domestic
producers.
Question 18.
What mechanisms, ifany,areinplace toensure thatCustoms, Commerce andother relevant
agencies treat imported anddomestic product onanon-discriminatory basis?
Reply
SASO istheonlyagency responsible forpreparation ofstandards, which areadopted andapplied
byseveral concerned agencies. Imported aswellasdomestic products mustcomply withtherelevant
standards; there arenoprovisions, administrative guidance thatcould leadtotreatment ofimports on
alessfavourable basisthanisaccorded todomestic products. Moreover, ICCP conformity assessment
procedures applied toimports withitstypeapproval andinspection processes areparallel tothestandards
compliance ofnational products.
Question 19.
DoesUmAl-Qura include anannouncement when aspecific draft ofaneworproposed amendment
tostandard (voluntary) isavailable forpublic comment? Or,doesSASO haveitsownpublication
inwhich itpublishes proposed standards (forexample, aredrafts included intheSASO Standards
Catalogue)?WT/ACC/SAU/13
Page10
Reply
AdoptedstandardsinitsfinalformarepublishedinUm-Al-QuraandSASOStandardsCatalogue.
Draft standards arepublished inthelocalnewspapers. Please also,reply 16(b) above.
Question 20.
Areannouncements published inUmAl-Qura thatdrafts ofneworproposed amendments to
existing technical regulations (mandatory)? ofneworproposed amendments toconformity
assessment procedures (inaddition tocertification)? Would thisinclude technical regulations
promulgated bySASO? theMinistry ofAgriculture andWater Resources? theMinistry ofHealth?
andanyother Ministry thatmayhave responsibilities fordeveloping andapplying technical
regulations?
Reply
TheMinistry ofAgriculture andWater Resources andTheMinistry ofHealth donotpublish
neworamended regulations orassessment procedures inUmAl-Qura. AsforSASO, please see
reply 16(b) above.
Question 21.
Isthedistribution ofstandards made inaddition toapublication thatadraft isavailable for
comment?
Reply
Yes,please seereply 16(b) above.
Question 22.
Isaperiod ofthree months allowed forcomments onproposed technical regulations? onconformity
assessment procedures -whether voluntary ormandatory?
Reply
Athree months period isallowed forcomments ondraftstandards. Theperiod allowed for
comments onConformity assessment procedures (such asICCP) istwomonths. Bothmeetorexceed
the60daysperiod afforded under the"Code ofGood Practice forthePreparation Adoption and
Application ofStandards" (TBT Annex 3ParaL).
Question 23.
Bywhatprocedure andhowoften doestheGovernment disseminate updates ofthelistofstandards
andcertification procedures? Where isinformation found onapplicable technical regulations and
conformity assessment procedures (i.e.those currently applicable andnotindraft form)?
Reply
Please seereply 93ofWT/ACC/SAU/6 andSection VI(c) "Advice toExporters" of
WT/ACC/SAU/9, outlining theroleoftheSASO Information Centre, Embassies, theProgramme
Manager andtheInternet inproviding information anddisseminating updates.WT/ACC/SAU/13
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Question 24.
Please explain theprocess bywhich atrading partner requests arevision/amendment toanexisting
Saudi Arabian standard ortechnical regulation? What isthemechanism fordispute settlement
relating toSaudi Arabian standards? Howisitdetermined which regulatory agency isincharge
ofthedispute settlement process? What isthetime-frame fortheresolution ofdisputes?
Reply
Please seereplies 124ofL/7645/Add.1 and79&80ofWT/ACC/SAU/8.
Question 25.
Wewould appreciate adetailed explanation oftheprocess usedindetermining theproper shelf
lifeperiod foraparticular product. What factors areconsidered? Does Saudi Arabia perform
scientifically-based shelflifestudies prior toissuing aproduct shelflifestandard? Ifso,cancopies
ofthestudies bemade available totheWorking Party?
Reply
Alldeterminations ofSaudi shelf lifestandards arescientifically based. Replies 116of
L/7645/Add.1 and81ofWT/ACC/SAU/8 outline thefactors considered andthespecific studies
conducted.
Examples ofshelf-life studies arebeing forwarded totheWTO Secretariat.
Question 26.
Inexplaining thedevelopment ofitsshelf-life requirements, Saudi Arabia hasstated that, after
acertain timeperiod, food products "become unacceptable totheconsumer" (L/7645/Add.1).
Could Saudi Arabia describe howitdetermines whether aproduct is"unacceptable tothe
consumer", ifthatdetermination isnotmade inthemarket. Inadopting shelf-life requirements,
areconsiderations other than"acceptability totheconsumer" taken intoaccount (e.g., scientific
assessmentofhealthrisks)?CouldSaudiArabiaprovideexamplesofanyrelevantriskassessments?
Reply
Thephrase "unacceptable totheconsumer" isunderstandably misinterpreted. Theintended
meaning isthatfoodproducts become "unfit forhuman consumption" afteracertain timeperiod, based
onscientific assessment ofhealth risks(notmarket determination) suchas:
- chemicalrequirements(rancidity,moisturecontent,heavymetals,permittedfoodadditives,etc.);
- microbiological requirements (salmonella, E.Coli, etc.according tothenature ofproducts).
Question 27.
Howareneworrevised shelflifestandards notified? Isthere anopportunity forcomment and/or
appeal prior toimplementation?WT/ACC/SAU/13
Page12
Reply
Shelf lifestandards aresubject tothesame notification procedures asother Saudi Standards,
whether indraftorfinalform.
Question 28.
Does Saudi Arabia consider shelf lifestandards tobeaquality orsanitary andphytosanitary
measure?
Reply
Bothcriteria overlap. While thechemical andmicrobiological stability requirements during
theshelflifeareforthepurpose ofprotecting human lifeandhealth from"risks arising fromadditives,
contaminants, toxins ordisease-causing organisms infoods..." andaretherefor classified asSPS
measures,retentionofthenutritionalvalueandfunctionalpropertiesarequalityofhealthissuesapplicable
under TBTAgreement.
Question 29.
Could Saudi Arabia please explain howshelf lifedatemarking isemployed toensure product
safety and/or quality during processing, handling, storage anddistribution? Ifnot,what isthe
basis fortherequirement thathalfoftheshelf liferemain ontheproduct atthetimeofentry?
Reply
Shelf lifedetermined bySaudi Arabia expresses thedurability ofafoodproduct under normal
Saudi storage, transportation andhandling conditions, aswould typically beapplicable todomestically
produced foodproducts. Imported foodproducts losefromtheiruseful shelflife,theperiod elapsing
between themoment itleaves themanufacturer tothemoment itiscleared fromSaudi Ports. Assessment
oftherisksofencountering distant countries oforigin offoodproducts, resulted inconsideration of
onemonth asareasonable allowance forsuchperiod. Consequently, therequirement thathalfofthe
shelfliferemain ontheproduct attimeofentry isnecessary tocompensate forthislostshelflife,so
astobring itonaparbasis withequivalent domestically produced foodproducts.
Question 30.
Many foodproducts arenowpackaged utilizing improved packaging technology (hermetically
sealed, etc.)thatgreatly impact theshelf lifeoftheproduct. How doesSaudi Arabia determine
theappropriate shelflifeforsuchproducts? Aretheshelflifestandards usedthesame thatapply
tolike-products intraditional packaging? Arestorage stability studies performed ontheproducts
todetermine ifexisting shelf lifestandards areappropriate?
Reply
Shelf lifestandards inSaudi Arabia takeintoconsideration improved packaging technology
(hermetic sealing, etc.)which greatly impacts theshelflifeofproducts; forexample:
Item Product Packaging Shelf Life
1 Skimmed dried milk moisture -tightcontainer 12monthsWT/ACC/SAU/13
Page13
Item Product Packaging Shelf Life
metallic containers under inertgas
orunder vacuum18months
2 Fried Potato chips Plastic bags 6months
Aluminum foilbagsornitrogen
atmosphere incarton lined with
tinfoil containers orinmetallic
containers9months
3 a)BeefandBuffalo
meatSuitable containers andstorage
conditions under temp from 0cto
(-2c)21days
from slaughtering date
a)Mutton andgoat
meatSuitable containers andstorage
conditions under temp. from 0cto
(-2c)14days
from slaughtering date
c)Chilled meat Suitable plastic container under
carbon dioxide atmosphere to
eliminate gasexchanges under
temp. from (-1.5c to0.5c)90days
from slaughtering date
Question 31.
TheCODEX Alimentarius recommends theuseofmanufacturer-base "BEST IFUSED BY"date
marking (date ofminimum durability). CODEX defines "BEST IFUSED BY"as"thedatewhich
signifies theendoftheperiod under anystated storage conditions during which theproduct will
remain fully marketable andwillretain anyspecific qualities forwhich tacitorexpress claims
aremade". DoesSaudi Arabia intend toadopt theinternationally recognized CODEX standard?
Reply
Please seereply 125ofL7645/Add.1.
Question 32.
Could Saudi Arabia provide detailed information onanyriskassessments performed inrelationship
tostandards established fortheimport ofbabyformula? Would Saudi Arabia confirm, asisstated
inGATT document L/7645/Add.1, thatthese standards wereimposed forthepurpose ofprotecting
human health?
Reply
SASO 'sapproved standards concerning babyformula areasfollows:
SSA136:1979 Plant Baby Foods (Cereal-Legume-Based Food powder forInfants andChildren)
SSA675:1992 Infant Foods Based OnMilk
SSA676:1992 Canned Baby Foods
SSA134:1979 Methods ofSampling forPlant Baby Foods
SSA135:1979 Chemical Methods ofTestforPlant Baby Foods
SSA387:1983 Methods forDetermination ofVitamins inPlant Baby Foods
SSA388:1983 Methods ofMicrobiological Testing ofPlant Baby FoodWT/ACC/SAU/13
Page14
Theabove standards include thechemical andmicrobiological requirements, nutritional value,
SPSmeasures andmethods oftesting, allforthepurpose ofprotecting human life. TheStandards
arebased ontheCodex Code which isdeemed tobebased onriskassessment incompliance withSPS
Agreement.
Question 33.
Intheresponse toquestion 103inWT/ACC/SAU/6/Add.1, Saudi Arabia states thatitdoesnot
consider theprovisions oftheICCP relating totheinspection offood, other agricultural products,
andpesticides assanitary orphytosanitary measures. Atthesame time, theICCP isdefended
because itassures thattheSaudi consumer ofproducts thatare"free ofhealth orsafety hazards".
Intheresponse toquestion 83,inWT/ACC/SAU/6, Saudi Arabia notes thataHealth Certificate
isrequired forimports of"some products, suchasfresh, chilled andfrozen meat," which are
covered bytheICCP.
Inviewofthese statements andAnnex AoftheWTO Agreement ontheApplication ofSanitary
andPhytosanitaryMeasures,whydoesSaudiArabiabelievethattheprovisionsoftheICCPrelating
totheinspection offood, other agricultural products, andpesticides arenotsanitary or
phytosanitary measures?
Reply
ICCP regulated product listpresently does notextend toother agricultural products and
agricultural pesticides. Asforfoodproduct categories included within theprogramme, importers have
achoice tobypass theICCP andhavetheirproducts tested instead upon arrival atSaudi Ports, the
procedure ofwhich isbeing followed predominantly. Under GATT definition ofSPSmeasures, the
provisions ofICCP relating totheinspection offoodisconsidered asanSPSmeasure.
(c) Sanitary andPhytosanitary Measures
Question 34.
Please explain what specific actions Saudi Arabia hasundertaken tobring itsSPSregime into
conformity withWTO rules? What rules andregulations govern Saudi Arabia ’sSPSregime?
Reply
Upon becoming aWTO member, Saudi Arabia willreview itsSPSmeasures withtheobjective
ofharmonizing itwithinternational standards onaswideabasisasapplicable under Saudi conditions,
using riskassessment techniques developed bytherelevant international organizations andguided by
scientific evidence (thisisnottobeconstrued asanyindication thatSaudi Arabia ’spresent SPSmeasures
arenotconsistent withGATT provisions). Should itbefound necessary, Saudi Arabia reserves the
rightto"specified time-limited exception" fromobligations under theSPSAgreement inaccordance
withArticle 10.3ofthatAgreement.
(l) Government Procurement
Question 35.
Governmentprocurementofservicesshouldbenon-discriminatory.Thereshouldbenopreferential
treatment fordomestic suppliers.WT/ACC/SAU/13
Page15
Reply
Weunderstand thatArticle XIIIofGATS excludes government procurement fromthepurview
ofGATS, ifservices areprocured forgovernmental use.
Question 36.
What istheshare ofgovernment procurement ofservices?
Reply
Nostatistics areavailable.
Question 37.
Ingovernmental procurement ofservices, could Saudi Arabia indicate whatpercentage ofcontracts
isobtained bywholly foreign owned firms?
Reply
Noinformation isavailable onthisregard.
4. Policies Affecting Foreign Trade inAgricultural Products
Question 38.
InGATT document L/7489, Saudi Arabia indicated thatimports oflivestock, poultry, hatching
eggs, hides, hair, furs,wool, fresh fruits, vegetables, seeds, rains, materials usedasanimal fodder
suchasbarley, sorghum andhay,organic fertilizers andagricultural pesticides aresubject to
Ministry ofAgriculture andWater inspection andquarantine.
Could Saudi Arabia confirm, asisstated inparagraph 60ofL/7489 andintheresponse to
question 77inL/7645, thatthese measures areimplemented inorder toprotect human, animal
orplant health?
Reply
Saudi Arabia confirms, asisstated inpara. 60ofL/7489 andinthereply 77inL/7645, that
thesemeasures (inspection andquarantine) areimplemented inorder toprotect human, animal orplant
health.
Question 39.
Initsresponse toquestion 145(WT/ACC/SAU/6), Saudi Arabia maintains thatitdoesnotgrant
export subsidy onwheat. However, itremains unclear howtheGSFMO isabletosellwheat
ontheinternational market, when thedomestic support prices offered tofarmers fortheir crops
ofwheat andbarley aregenerally bigger than those witnessed ontheworld market. Further
clarification isrequired withregard toSaudi Arabia ’sdomestic andexport programme forwheat.WT/ACC/SAU/13
Page16
Reply
GSFMO nolonger exports wheat andhasbeeninstructed bytheSAGtoavoid further export
sales. Quantities exported in1992-1994 arecombined withquantities soldinthedomestic market and
included intheoverall AMS asrecorded intherevised response totheQuestionnaire WT/ACC/4.
Because Saudi Arabia doesnotconsider thatitsgrain marketing system confers anexport subsidy it
isnotrecorded asexport subsidy amount initsresponse toWT/ACC/4.
Question 40.
Aretheactual levels ofsubsidies provided under thegovernment ’ssystem ofsupport forthe
agriculture sector stillinexcess ofbudgeted levels?
Reply
Please seereply 68ofWT/ACC/SAU/6.
Question 41.
Saudi Arabia states thatloans made bytheSaudi Agricultural bank arenotsubject tointerest
payments. Thismethod ofgranting loans appears toconstitute adomestic subsidy.
Reply
Loans granted bytheSaudi Agricultural Bank constitute domestic subsidies because these are
notsubject tointerest payments. Forthisreason wecomputed theopportunity costforthemedium
termloans asaniteminthetotalAggregate Measurement ofSupport intherevised responses tothe
Questionnaire WT/ACC/4.
Question 42.
Saudi Arabia notes intheresponse toquestion 61(SAU/6) thatcertain products areprohibited
from export -including livestock, horses, baby milk, medicines, datepalm saplings, barley, corn,
maize, andsoybeans.
Reply
Thereisnosignificantlocalproductionofcorn,maize,andsoybean.Allthesethreecommodities
areimported. Regarding barley, there arenorestrictions onitsexport bytheprivate sector.
Question 43.
Isexport ofwheat prohibited (reference table atpage 18ifSAU/6, where wheat isnotlisted).
Reply
Private traders areallowed toexport wheat which hasnotbeensubsidized. Please seereply 137
ofWT/ACC/SAU/6.WT/ACC/SAU/13
Page17
Question 44.
Does Saudi Arabia maintain export controls onbarley, wheat andwheat flour?
Reply
No,except forsubsidized wheat andbarley.
Question 45.
Itwould behelpful ifSaudi Arabia could specify fortheWorking Party thetimeframe under
which theMinisterial Committee examining agricultural issues inlight ofWTO obligations is
working, andwhen thereview would becompleted.
Reply
TheMinisterial Committee hasnotime-table forthecompletion ofitsreview. Anyconclusions
reached willbereleased following completion ofitswork.
Question 46.
Initsreply toquestion 111(WT/ACC/SAU/6), Saudi Arabia states thattheGSFMO isa
State-trading enterprise withby-laws allowing foritsprivatization.
Could Saudi Arabia elaborate inthisstatement? Does theSaudi Government intend toprivatize
theGSFMO?
Reply
TheSaudi government willstudy theprivatization ofGSFMO.
Question 47.
Inaddition, further clarifications isrequired withrespect totheoperation oftheGSFMO. It
isnotclear howtheGSFMO goesabout creating market stability forgrains inorder tosafeguard
farmers from price fluctuations. (WT/ACC/SAU/4). Could theSaudi Arabia delegation explain
howthisisaccomplished thisinmore detail.
Reply
Please seereply 138ofWT/ACC/SAU/6 andreply 131ofL/7645/Add.1.
Question 48.
Regarding Saudi Arabia 'sGrain Silos andFlour Mills Organization (GSFMO) andsubsidies,
further clarification isneeded ontheSaudi Arabia domestic programme fortheproduction and
export ofwheat andbarley. While GSFMO exports these products, itisnotclear howtheyare
abletosellthem onthewould market without subsidies when theinternal support price generally
exceeds theworld price.WT/ACC/SAU/13
Page18
Reply
GSFMO doesnotexport wheat andbarley. Please seereply 136ofWT/ACC/SAU/6.
Question 49.
Further clarification isrequired withrespect totheoperation otheGSFMO asState trading
enterprise, andastohowitgoesabout creating stable market forgrains inorder tosafeguard
farmers from price fluctuations.
Reply
Please seereply 131ofL/7645/Add.1.
Question 50.
Could Saudi Arabia clarify howitadministers themarket price support forimported barley?
Wewould alsoappreciate detailed information oneligibility requirements forparticipating in
theprogramme.
Reply
There-sale prices ofimported barley areequal totheconsumer prices ofdomestic barley.
Please seereply 220(c) ofL/7645/Add.1.
VI. TRADE-RELATED SERVICES REGIME
Question 51.
Must allservice providers inSaudi Arabia, whether Saudi Arabian, foreign, orjoint-venture,
conform tooneoftheeight forms ofcommercial organization provided forintheCompany Law,
ormayindividuals orother entities, whether foreign ornational, provide services forpayment
without reference tothese requirements?
Reply
Saudi Arabian nationals canprovide certain services asindividuals without adhering toone
oftheeight forms ofcommercial organizations spelled outintheCompanies Law.
Question 52.
Arethere anyother sectors, industries orenterprises inSaudi Arabia, whether ornotState-owned,
thataregranted monopoly supplier rights bytheGovernment intheservices sector, other than
television andradio transmission, basic telecommunications, public utilities, andrailroad services.
Forexample, areairservices apublic orprivate monopoly?
Reply
Yes,airtransport services isapublic monopoly.WT/ACC/SAU/13
Page19
Financial Services
Question 53.
Isitpossible togetacopy totheBanking Control Law?
Reply
AcopyoftheLawhasbeenprovidedtotheWTOSecretariat(seedocumentWT/ACC/SAU/14).
Question 54.
Isthetradition ofuniversal banking backed bylaw?
Reply
Yes. Thedefinition of"Banks" and"Banking Business" contained inArticle 1oftheBanking
Control Lawgives widediscretion totheregulatory authority todetermine andhelpbroaden thescope
andcoverage ofbankoperations. Ithasaccordingly beenencouraging theadoption oftheuniversal
banking model.
Question 55.
Could wehave more detail ofthecriteria forgranting alicence toaforeign bank?
Reply
Under Article 3oftheBanking Control Law, ontherecommendation ofSAMA, licences to
carry onbanking business intheKingdom areissued bytheMinister ofFinance andNational Economy
aftertheapproval oftheCouncil ofMinisters. Itisalicensing condition ofthisprovision thatanational
bankmust beaSaudi Arabian jointstock company.
Criteria usedbySAMA andtheMinister ofFinance andNational Economy include prudential
considerations suchasthecapital adequacy requirements, aswellastherequirement thatthefounders
anddirectors arefitandproper topractice banking intheKingdom.
Question 56.
(a) Regarding licensing ofabank branch orjoint venture bank, please explain those
considerations inconsistent withArticles XVIandXVII oftheGATS thataretaken into
account bySAMA when initrecommends approval ofanewlicence.
(b) WhatfactorswouldtheMinisterofFinanceandNationalEconomyandCouncilofMinisters
consider toapprove ordeny anewlicence recommended bySAMA?
Reply
(a) Currently, there arenoconsiderations inconsistent withArticles XVIandXVII oftheGATS
thataretaken intoaccount bySAMA when itrecommends approval ofanewlicence.WT/ACC/SAU/13
Page20
(b) Upon therecommendation ofSAMA togrant alicence, theMinister ofFinance andNational
Economy andtheCouncil ofMinisters would evaluate therecommendation taking intoaccount the
following objective consideration;
- themacroeconomic needs ofthefinancial andbanking system;
- thedevelopment ofnewproducts andservices;
- thelevelofexisting competition inthemarket;
- thebenefits totheconsumer;
- theintroduction ofnewtechnologies;
- impact onthefinancial stability andsoundness ofthebanking system;
- theprofessional andbusiness standing ofthefounders andmembers oftheBoard ofDirectors;
- capital adequacy.
Allorsome ofthese factors would influence thedecisions.
Question 57.
(a) Under what circumstances would anewbank licence begiven?
(b) Isthere amoratorium onnewbank licences beyond the12already approved?
(c) Isanewlicence required toexpand byopening additional branches?
(d) Aresuch licences given toforeign-owned banks onthesame terms andconditions as
domestic banks?
Reply
(a) Thedecision togrant newbanklicences would emanate fromareview oftheexisting policy
andwould encompass suchconsideration astheoverall development ofthefinancial andbanking system,
enhanced competition, promotion ofservices tothecustomer, needfornewtechnology andensuring
thestability andthesafety andsoundness ofthefinancial system.
(b) No,there isnomoratorium onnewbanklicences.
(c) Yes. Banks inSaudi Arabia arerequired toobtain alicence forevery newbranch theywish
toopenbutthisisarelatively easyandswift process.
(d) There arenowholly-owned foreign banks intheKingdom. However, banks withforeign
participation aretreated inthesame wayaswholly domestic banks.
Question 58.
Regarding foreign participation, isitcorrect thatthere areonlytwoforms inwhich aforeign
financial institution could belicensed tooperate inSaudi Arabia: (a)asawholly-owned branch,
or(b)inajointstock company inwhich itholds amaximum 40percentshare? (c)Could aforeign
bank wholly ownabank subsidiary?
Reply
(a) Yes,aforeign financial institution could belicensed tooperate aswholly-owned branch.WT/ACC/SAU/13
Page21
(b) Yes,aforeign financial institution could belicensed tooperate injointstock company inwhich
itcould holdamaximum of40percentshare.
(c) No,aforeign bankcannot belicensed tooperate withawholly-owned banking subsidiary.
Question 59.
Isthere anabsolute requirement for40/60 joint ventures forforeign banks?
Reply
There isalegalrequirement fortheshare oftheforeign partner inajointventure banknot
toexceed 40percent. TheCouncil ofMinisters being thelegislative aswellasthefinaldecision-making
body(subject ofcourse totheendorsement oftheKing) having applied thesaidratio(ofupto40percent
foreign participation) toalljointventure banks, hasestablished aprecedent thathasassumed thesanctity
oflaw.
Question 60.
(a) Douniversal banks inSaudi Arabia engage insecurity underwriting, commodity brokerage
services, orcurrency exchange operations, orinoptions andfutures onsecurities,
commodities orcurrencies?
(b) What other institutions engage inthese activities?
(c) What isthemaximum foreign ownership thatispermitted inentities thatengage inthese
activities?
(d) What arethecriteria forpermission toengage, andwhat agency grants permission?
Reply
(a) Yes,banks intheKingdom arepermitted toengage inalltheactivities noted.
(b) There arenoother financial institutions which engage insuchactivities intheKingdom.
(c) Notapplicable.
(d) Notapplicable.
Question 61.
Does theuniversal banking inSaudi Arabia include insurance?
Reply
Atthepresent time, universal banking inSaudi Arabia permits Saudi Banks todistribute and
market insurance products through theirbranch network. However, Saudi Banks arenotpermitted
totakepureinsurance risks.WT/ACC/SAU/13
Page22
Question 62.
Canaforeign securities firmownabank licensed tocarry onuniversal banking operations in
Saudi Arabia?
Reply
Yes,aforeign securities firmcanbepermitted toinvest inajoint-stock company which is
abanking institution intheKingdom under therules applicable toforeign investors.
Question 63.
Canaforeign bank branch belicensed toengage inuniversal banking operations inSaudi Arabia?
Reply
Yes,when aforeign bankispermitted tooperate abranch intheKingdom, itwould bepermitted
tocarry outuniversal banking business intheKingdom.
Question 64.
Indocument WT/ACC/SAU/5, para. 60,youmention limitation toSaudi intheareas ofsecurities
underwriting andcurrency exchange operations, arethere anyother financial services inwhich
foreign investment isprohibited?
Reply
Foreign investment bycompanies inthefinancial services, including underwriting andcurrency
exchange operations, isnotprohibited. However, aforeign entity, wishing toprovide suchservices,
must obtain therequired licence from theauthorities.
Telecommunications
Question 65.
Whether basic telecommunication isagovernment monopoly orwhether there iscompetition.
Areforeigners allowed toprovide value-added telecommunication services?
Reply
Bothbasic telecommunication andvalue-added services areagovernment monopoly. Private
sector including foreigners areengaged inallstages oftelecommunication development.
Question 66.
Willthebasic telecommunication monopoly bedismantled? Willitbeprivatized? Andwhen?WT/ACC/SAU/13
Page23
Reply
Consideration isbeing given toliberalize basic andvalue added telecommunication services
through commercialization orother forms ofprivatization. However, notimeframe canbegiven for
this.
Question 67.
Does Saudi Arabia permit cross-border supply ofvalue added telecommunication services?
Reply
Except forcallback services, residents ofSaudi Arabia arenotprecluded fromaccessing services
originating outside theKingdom.
Question 68.
Could Saudi Arabia confirm, withreference toWT/ACC/SAU/5, paragraph 42,thatthedelivery
ofvalue-added telecommunications does notfallunder thepublic basic telecommunication
monopoly?
Does Saudi Arabia intend toremove thepublic monopoly ofbasic telecommunications and. If
so,when? Willforeigners beallowed toparticipate inanyprivatization ofthemonopoly?
Reply
Please seereplies 65and66above.
Question 69.
Arethere anylimitations onforeign equity participation inenterprises establishing inSaudi Arabia
todeliver value added telecommunications services?
Reply
Thedelivery ofvalue added services ispartoftheGovernment ’stelecommunications monopoly.
VII. INSTITUTIONAL BASE FOR TRADE AND ECONOMIC RELATIONS WITH THIRD
COUNTRIES
1. Bilateral orPlurilateral Agreements Relating toForeign Trade
Question 70.
Article 8oftheG.C.C. Unified Economic Agreement provides national treatment inallG.C.C.
countries tofreedom ofmovement ofcapital andlabour. Arethere significant differences between
treatment offoreigners ascompared withG.C.C. nationals? Areanyservices sectors excluded
from theUnified Agreement?WT/ACC/SAU/13
Page24
Reply
Noservice sectors areexcluded fromthescope oftheUnified Agreement, except localtransport
within eachG.C.C. member state.
G.C.C. nationals getfullnational treatment, whereas therearecertain limitations onforeigners
asexplained inWT/ACC/SAU/5.
Question 71.
Whether theG.C.C. Unified Agreement willbenotified under Article VofGATS.
Reply
Thisquestion involves allGCC partners, fourofwhich arealready WTO Members.
Question 72.
What specific commitments willSaudi Arabia make?
Reply
Thisisasubject fornegotiations.
3. Labour Markets Integration Agreements
Question 73.
Could Saudi explain inmore detail rules concerning temporary residence andwork permits?
Isthere more thanonekindofpermit required forforeign workers.
Reply
Under Article 49oftheLabour Lawallforeign workers arerequired tohavework permits.
Obtaining aworkpermit isasimple procedure. Foreign workers areissued entryvisasondemonstration
ofavalid contract. When theworker hasentered theKingdom, theemploying enterprise submits
anapplication forawork permit.
Foreign workers alsorequire aresidence permit fromtheMinistry ofInterior which isdifferent
from thework permits.
Question 74.
Arethere sectoral differences intheeligibility offoreigners towork inSaudi Arabia?
Reply
No.Thelawsapply inthesame manner toallservices sectors. However, there aresome
activities which arerestricted toSaudis only. Please seepara. 60ofdocument WT/ACC/SAU/5.WT/ACC/SAU/13
Page25
Question 75.
How doyouallocate the25percent"foreign component" among different categories oflabour.
Reply
The25percentceiling isanoverall ceiling foralltypes ofworkers. There isnoallocation
among different categories ofworkers. Under Article 45oftheLabour Law, theMinister ofLabour
hasthediscretion toadjust theoverall 25percentmaximum iftherearenoqualified Saudis available.
Question 76.
Arethere special provisions formanagers, directors, specialists, professionals?
Reply
No,there isnodifferentiation among different categories oflabour.
Question 77.
What istheperiod ofvalidity ofwork permits.
Reply
Thisdepends ontheduration ofthework contract. There isawork permit foraninitial period
oftwoyears, andrenewable forfurther maximum twoyearperiods.