RESTRICTED
WORLD TRADE WT/ACC/SAU/8
4November 1996
ORGANIZATION(96-4635)
Original: English
ACCESSION OFTHE KINGDOM OFSAUDI ARABIA
Additional Questions andReplies
TheMinistry ofCommerce oftheKingdom ofSaudi Arabia hassubmitted additional replies
toquestions raised afterthefirstmeeting oftheWorking Party heldon2-3May1996, withtherequest
thattheybecirculated totheMembers oftheWorking Party. Thequestions andreplies arereproduced
hereunder.
_______________
TABLE OFCONTENTS
Page
II. ECONOMY, ECONOMIC POLICIES AND FOREIGN TRADE
1. Economy
(b) Current economic situation 1
2. Economic Policies
(a) Main directions 2
(b) Monetary andfiscal policies
Taxation Régime 4
(d) Foreign anddomestic investment policies 4
III. FRAMEWORK FOR MAKING AND ENFORCING POLICIES AFFECTING
TRADE
3. Division ofAuthority 4
4. Laws andLegal Acts 5
IV. POLICIES AFFECTING TRADE INGOODS
1. Import Regulations
(b) Characteristics ofnational tariff 6
Tariff preferences
Arab League 6
GCC Customs Union 9
(e) Quantitatitve import restrictions 12
Non-tariff measures 13
(f) Import licensing procedures 15WT/ACC/SAU/8
Pageii
Page
(h) Customs valuation 20
(l) Rules oforigin 21
2. Export Regulations
(f) Export financing, subsidy andpromotion policies 23
3. Internal Policies Affecting Foreign Trade inGoods
(a) Industrial policies 24
(b) Technical regulations andstandards 25
International Conformity Certification Programme (ICCP) 30
(c) Sanitary andphytosanitary measures 32
(e) State-trading practices 32
(i) Government procurement 34
V. TRADE-RELATED INTELLECTUAL PROPERTY REGIME
Patents 37
Copyright andrelated rights 38
Database protection 40
VI. TRADE-RELATED SERVICES REGIME 40
Non-financial services andinsurance 41
Financial services (excluding insurance) 44WT/ACC/SAU/8
Page1
II. ECONOMY, ECONOMIC POLICIES AND FOREIGN TRADE
1. Economy
(b) Current economic situation
Q1.Please provide national income accounts datafor1994 andfiscal data(actual revenue
andexpenditure) for1995.
Reply
Saudi Arabian National Accounts Datafor1994: (preliminary estimates aspercent oftotal
incurrent prices)
BySector ofOrigin %GDP
OilSector 35.7
Non-oil Sector 64.3
ofwhich
Private Sector 38.1
Government Sector 26.2
Total 100.0
ByExpenditure %GDP
Gross Fixed Investment 22.2
Final Consumption 77.8
ofwhich
Private Sector 48.2
Government Sector 29.6
Total GDP 100.0
Note: Total GDP isSR441.7 billions for1994andactual fiscal datafor1995isnotavailable atthis
time.
Q2.Please update theresponse toquestion 43regarding theportion ofSaudi Arabia ’s
governmental revenues supplied byimport tariffs.
Reply
Themostrecent published dataonTariff revenues is1993; import tariffs represent 6.5percent
ofgovernment revenues.
Q3.Please indicate theportion ofgovernment revenue notrelated totheproduction andexport
ofpetroleum accounted forbyimport tariffs.
Reply
Themostrecent published dataisfor1993. Forthatyeartariffrevenues represented 26percent
ofnon-oil government revenues.WT/ACC/SAU/8
Page2
2. Economic Policies
(a) Main directions
Q4.Intheresponse toquestion 20(c) (L/7645/Add.1), itisstated that, “Oneofthespecific
objectives oftheFifth Development Plan wastomaximize thedomestic transformation of
domestically produced rawmaterials andintermediate products, particularly petroleum derivatives
andpetrochemicals ”.
Annex 2A,Decree No.142of19/11/1413(H), liststheStrategic Principles oftheSixth
Development Plan. Among the“General Objectives andStrategic Bases ”forthePlan,
items 7and8are,“Toreduce dependence ontheproduction andexport ofcrude oilas
themain source ofnational income; andtocontinue restructuring theKingdom ’seconomy
through continuing diversification oftheeconomic base, particularly through laying more
emphasis onindustry andagriculture. ”
Inthisregard, willSaudi Arabia state categorically thatitwillusemeasures consistent
withtheprovisionsoftheWTOtoimplementthesegoalsandobjectivesanditsDevelopment
Plans?
Reply
Yes.
Q5.Saudi Arabia notes intheresponses toquestion 13and21(L/7645/Add.1) thatitis“in
thepreliminary stages ofaprogramme toprivatize productive organizations through theflotation
ofshares ofthose companies deemed tobeready forprivatization ”.
Annex 2A,Decree No.142of19/11/1413 (H),liststheStrategic Principles oftheSixth
Development Plan. Inthesecond section, paragraph 2(d)states thatonepriority forthe
Plan is“Considering thefeasibility ofprivatizing some Government business-oriented
activities. ”Paragraph 2oftheThird Basic Principle andparagraph 1(c)oftheEleventh
Basic Principle contain similar references tothegoalofincreasing theroleoftheprivate
sector intheSaudi Economy through privatization, through theissuance ofshares.
What isthestatus oftheprivatization programme? What concrete steps havebeentaken
todateinthedirection ofoperationalizing theprivatization objectives referred tointhe
responses toquestions 13,21,and42? Please citedecrees, legislation, orother
governmental proclamations thatimplement theprivatization programme.
Reply
Thesixth Development Plancalls forconsideration ofpossibility ofprivatizing selected
government owned facilities attheappropriate timeprovided thatsuchprivatization willbeofreal
benefit tothenational economy. ThePlanprovides forthegradual saletotheprivate sector of
government shares injointstock companies, following in-depth studies ofeachindividual case, so
thatthesocial andeconomic costsandbenefits canbeproperly evaluated andtiming canbedetermined
when appropriate conditions prevail. Theprogramme ofprivatization isinitsinitial stages andthe
Ministerial committee hasasyettaken nospecific privatization decisions.
Q6.Please listthose firms, enterprises, institutions, andsectors being considered forthe
privatization process. Please indicate ifthethese include those listed inquestion 21ofWT/ACC/SAU/8
Page3
L/7645/Add.1, i.e.,thetelephone/telegraph system, thenational airline (SAUDIA) andSaudi Basic
Industries (SABIC), Build-Operate-Transfer (BOT), andExport Credit.
Reply
Inprinciple, entities tobeconsidered forprivatization willinclude Telecommunications, Saudia
andSABIC. There isnonational export credit agency tobeprivatized.
Q7.Please describe theprocess bywhich enterprises areselected forprivatization, including
theMinistriesinvolved,provisionsfortransparencyandgeneralparticipation,andotherprocedural
aspects oftheprogramme.
Reply
Theprocess ofselecting enterprises forprivatization involves casebycaseconsideration of
therelevant factors bytheMinisterial Committee.
Q8.Pleaseelaborateonhowfirmsandenterprisesselectedwillbevaluedandotherwiseprepared
forpublic purchase?
Reply
Market assessment willbetaken intoconsideration when valuing shares ofenterprises selected
forprivatization.
Q9.Please describe howthepublic willbegiven access tothisprocess andelaborate onthe
methods established orcontemplated tocarry outtheprivatization programme.
Reply
Extentofpublicitygiventodecisionstoprivatizedependoncircumstancessurroundingparticular
sale.
Q10.Inaddition toselling shares, areother methods ofprivatization contemplated?
Reply
Privatization maybeachieved through tender, direct negotiated saletoaselected buyer, or
saleofshares.
Q11.Willforeign firms bepermitted toparticipate intheprivatization programme onanequal
basis withSaudi citizens orestablishments? What differences arecontemplated?
Reply
Decisions onwhether toinclude foreign firms inprivatization projects aretaken case-by-case
andarebased onfactors suchastechnology needs andliquidity inSaudi equity market.WT/ACC/SAU/8
Page4
(b) Monetary andfiscal policies
Taxation régime (Paragraph 45,L/7489)
Q12.Thecorporate taxation system applies adifferent taxrégime fornon-Saudi businesses.
AstheZakat isapplied onlytoliquid assets andataratesharply below thatapplied totheincome
ofnon-Saudis, itwould appear thatnon-Saudis bearahigher taxburden thanSaudi citizens.
What portion ofnational taxrevenues areaccounted forby(a)theincome taxonforeign
entities and(b)theZakat applied totheliquid assets ofSaudi citizens?
Reply
Werefer toourreply toquestion 5inWT/ACC/SAU/6. Thetaxpaidfrom Zakat isnot
comparable toincome tax.TheZakat ispaidfromthetimeanassetisacquired anddoesnotdepend
oneconomic performance, while theincome taxispaidonlyafteratimeinterval ofupto10years
andthenispaidoutofprofits. Theresult mayimply anadvantage foreither one,acompany which
isnotprofitable isstillobligated fortheZakat butnotforincome tax.Thelarger theratioofcapital
orassets toproduction, thelarger theburden oftheZakat compared toincome tax.
(d) Foreign anddomestic investment policies
Q13.TheInvestment ofForeign Capital Regulation requires “foreign technical expertise ”as
anecessary condition ofinvestment.
What constitutes foreign technical expertise? What form must thisexpertise take? This
condition would appear tobeatechnology transfer requirement. What isthemanner
inwhich thisexpertise must beshared ortransferred?
Reply
Thecondition of“foreign technical expertise ”doesnotnecessarily mean atechnology transfer
requirement. The“foreign technical expertise ”termincludes technical know-how andmanagement
know-how, depending onproject/sector technical needs orrequirements.
III. FRAMEWORK FOR MAKING AND ENFORCING POLICIES AFFECTING TRADE
3. Division ofAuthority
Q14.InThereply toquestion No.44(L/7645/Add.1) states thatinternational agreements such
aresubmitted totheCouncil ofMinisters, then totheConsultative Council intheform of
resolutions. Upon approval oftheKing, agreements areenacted.
Isthisapproval enacted through aRoyal Decree?
Isthistheprocedure thatSaudi Arabia intends tofollow forapproval ofitsaccession to
theWTO? Please describe howSaudi Arabia willconsider andapprove theaccession
package ofprotocol andmarket access schedules.
Dosuch approved resolutions have theforce oflaw,andifso,towhat extent tothey
overrule previous laws?WT/ACC/SAU/8
Page5
Reply
Asforinternational agreements, when theKingdom ofSaudi Arabia signs aninternational
agreement itissubmitted totheCouncil ofMinisters forthefinalapproval tobesigned bytheCustodian
oftheTwoHolly Mosques, TheKing, asthePresident oftheCouncil ofMinisters.
Article 70oftheBasic RuleofLawstates that“laws, conventions, international agreements
andprivileges areissued andratified byRoyal Decree. Itisclearfrom thisarticle thatconventions
andinternational agreements areissued byRoyal Decree afterrevision byboththeConsultative Council
andthecouncil ofministers. Article 2oftheMinisters Council lawaffirms thisbystating that“...laws,
conventions, international agreements andprivileges areissued byRoyal Decrees afterrevision by
theMinisters ’Council. ”.Thisprocedure isacompulsory method forallagreements andinternational
conventions andthatisthemethod which would befollowed bySaudi Arabia foritsaccession toWTO.
Conventions andinternational agreements which areratified havetheforce ofthelawasnational laws.
Article 71ofTheBasic Rule ofLawstates thatlawsarepublished intheofficial gazette
(UmAl-Qura)andareimplementedfromthedateofpublishing.Thismeansthatpublishingisconsidered
amustcondition fortheenforcement ofthelawandforthepublic knowledge. There arenoexceptions
tothisrule.
4. Laws andLegal Acts
Q15.Under theCommercial Agencies Regulations, in-country commercial agents must be
registered withtheMinistry ofCommerce which isrestricted toSaudi nationals.
What istherationale forrestricting thisactivity toSaudi nationals? IsSaudi Arabia
considering onrelaxing thistrade barrier.
Inwhat manner aredomestic goods subject tosimilar restrictions fortheir domestic
distribution?
Reply
Thecommercial agencies lawdoesnotmake itmandatory forforeign suppliers toappoint
commercial agents inSaudi Arabia. TheLawonlystipulates thatifasupplier appoints acommercial
agent, itshould beaSaudi national.
TheCommercial Agencies Lawdoesnotdistinguish between imported products andproducts
ofnational origin andthereisnodiscrimination against imported goods. Ifdomestic producers appoint
commercial agents, theagents havetobeSaudi nationals.
According toourunderstanding ofGATT, there isnoviolation ofArticle IIIasthere isno
departure from theprinciple ofnational treatment.
Therationale forthesystem ofcommercial agents isalready provided inreply 264atpage95
ofdocument L/7645/Add.1.
Q16.Concerningthereplytoquestion265(L/7645/Add.1),wewouldappreciatemoreinformation
onentities other thanSaudi nationals andfirms andcommercial agents thatcanimport goods.WT/ACC/SAU/8
Page6
Reply
Allbusiness enterprises which areofficially licensed andregistered tooperate inSaudi Arabia
mayimport goods.
Q17.Please provide details andEnglish translations ofregulations requiring agent distributor
arrangements forexports toSaudi Arabia (e.g., Saudi Commercial Agency Regulations).
Reply
Please seetheEnglish textoftheCommercial Agencies Lawthatisalready submitted tothe
WTO Secretariat, Annex 14todocument L/7645/Add.1.
Q18.Arethereanylaws,regulations,decrees,decisions,Ministerialorders,oranyothermeasures
having similar effect concerning trade ingoods andservices thatcanbecome lawwithout being
published intheUmAl-Qura? Ifso,please listthem.
Reply
No.
IV. POLICIES AFFECTING TRADE INGOODS
1. Import regulations
(b) Characteristics ofnational tariff
Q19.Approximately what portion ofSaudi Arabia ’sgoods imports areexempted from tariffs?
Reply
Thepercentage oftheimports exempted from tariffs in1994 amounted to18.04 percentas
indicated intherevised memo (WT/ACC/SAU/4) para. 67.
Q20.Concerning reply No.60(L/7645/Add.1), isthere anydomestic production oftobacco
products? Ifso,please describe theindustry, e.g.,aremanufacturers State-owned orprivately
held, what portion ofdomestic consumption issupplied byimports, arethese products subject
tothesame charges asimports aslisted inArticle 63oftheCustoms Regulations, etc.?
Reply
There isnodomestic production oftobacco products.
Tariff preferences
Arab League
Q21.Saudi Arabia notes initsresponse toquestion 74(L/7645/Add.1) thatallArab League
members grant andreceive trade preferences from Saudi Arabia forproducts inanumber of
HSchapters, andthatthepreferences areconfined totariff relief.WT/ACC/SAU/8
Page7
Please provide acomplete listfrom Saudi Arabia ’stariff schedule ofthetariff linescovered
bytheArab League tariff preferences. Please listthese items bytariff lineitem, notHS
tariff chapter.
Reply
Article 6oftheAgreement onFacilitation andDevelopment ofTrade Exchange among the
ArabLeague Members provided, asapreliminary phase toward establishing aduty-free ArabMarket,
thatArab products shallbeexempted fromcustoms duties andtaxes andnon-customs restrictions on
imports tobegradually applied to:
(a) agricultural andanimal products intheirprimary form oraftereffecting changes tothem to
render them suitable forhuman consumption;
(b) rawmetallic andnon-metallic materials inprimary formorinappropriate formforprocessing;
(c) semi-manufactured goods listed inthelistapproved bytheCouncil tobeincorporated inthe
production ofindustrial articles;
(d) agreed manufactured goods.
Listofthecommodities included inArticle 6.1and6.2oftheAgreement onfacilitation and
Development ofTrade Exchange among Arab League Members:
I. Commodities covered under Article 6.1:
Agricultural andanimal products inprimary form oraftereffecting changes thereon torender them
suitable forhuman consumption:
1. Chapter 1(excluding heading 01.03, swine);
2. Chapter 2(excluding heading 02.05, meant ofswine);
3. Chapter 3;
4. Chapter 4(heading 04.01-04.06);
5. Chapter 5;
6. Chapter 6;
7. Chapter 7;
8. Chapter 8(headings 08.01-08.013);
9. Chapter 9Coffee andhusks, unroasted (heading 09.01);
10. Chapter 10;
11. Chapter 11(headings 11.01, 11.07, 11.9);
12. Chapter 12;
13. Chapter 13(heading 13.02);
14. Chapter 14;
15. Chapter 15(heading 15.02 fats,raw;heading 15.07 rawvegetable oils).
II. Commodities covered under Article 6.2:
Mineral andnon-mineral rawsubstances inprimary form orinaform appropriate forprocessing:
1. Chapter 23(headings 23.01-23.07 excluding prepared foodfordogs, catsandornamental fish
andbirds);WT/ACC/SAU/8
Page8
2. Chapter25salt(heading25.01),crudesulphur(heading25.03),graphite(heading25.04),natural
sands (heading 25.05), products ofheadings 25.06, 25.07, 25.08, 25.10, 25.11, 25.13, 25.14,
25.15 (rawmarble, inblocks), 25.16, 25.17, 25.18, 25.19, 25.20, 25.21, 25.22, 25.27, 25.28;
3. Chapter 26;
4. Chapter 27(products ofheadings 27.01, 27.02, 27.03, 27.04);
5. Chapter 40(products ofheadings 40,01, 40.04);
6. Chapter 41(products ofheadings 41.01, 41.09);
7. Chapter 43(products ofheading 43.03);
8. Chapter 44(products ofheadings 44.01, 44.02, 44.03, 44.04, 44.05, 44.12);
9. Chapter 45(products ofheading 45.01);
10. Chapter 47;
11. Chapter 50(products ofheadings 50.01, 50.02, 50.03);
12. Chapter 53(products ofheadings 53.01, 53.02, 53.04);
13. Chapter 54(products ofheadings 54.01, 54.02);
14. Chapter 55(products ofheadings 55.02, 55.03 55.44);
15. Chapter 57(products ofheadings 57.01, 57.02 (grape), 57.03 (jute));
16. Chapter 73(products ofheadings 73.01-73.05);
17. Chapter 74(products ofheadings 74.01, 74.02);
18. Chapter 75(heading 75.01);
19. Chapter 76(heading 76.01 “Aluminum, crude”);
20. Chapter 77(heading 77.01 “Magnesium, crude”);
21. Chapter 78(heading 78.01 “Lead, crude”);
22. Chapter 79(heading 79.01 “Zinc, crude”);
23. Chapter 80(heading 80.01 “Tin,crude”);
24. Chapter 81(crude products ofthechapter).
Q22.The response toquestion 74(L/7645/Add.1) states that thepreference excludes
“manufactured andsemi-manufactured products. ”Doesitmean thatnoimports ofmanufactures
orsemi-manufactures arecovered, other thanthose processed tomake them “suitable forhuman
consumption ”?Isthetariff preference granted onthese items afullexemption from thetariff,
orsomething less?
Isthelistofproducts covered bythepreferences granted bySaudi Arabia applied byall
Arab League members, i.e.,mandated under theagreement, orarethespecific preferences
granted negotiated bilaterally?
Reply
Thepreferential treatment among theArab countries under theAgreement ontheFacilitation
andDevelopment ofTrade Exchange (AFDTE) includes manufactured andsemi-manufactured, but
issubject tobilateral negotiations. Preferences taketheform offullexemptions.
Inaddition tothat,Article 3ofthe“AFDTE ”provides asfollows: “...every member country
hastheright togrant further benefits andpreferences toanyArab country(s) through bilateral or
multilateral agreements. ”
Therefore, thebilateral agreements among theArabcountries areanextension tothe“AFDTE ”
andtheschedules annexed tothose agreements include manufactured andsemi-manufactured goods.
Q23.Pleaseindicatehowtheselimitedpreferencesmeetthe“substantiallyalltrade”requirements
inArticle XXIV?WT/ACC/SAU/8
Page9
Reply
InSaudi Arabia ’sview, these preferences would becovered bytheEnabling Clause.
Q24.Inaddition tomanufactures andsemi-manufactures, arethere anytypes orcategories
ofproducts specifically excluded from inclusion inthepreference system atthepresent time?
Forthetariff items included, arethere anylimitations onthescope ofthepreferential access
offered, e.g.,amount oftrade orleveloftariff preference?
Reply
There arenotypes orcategories ofproducts specifically excluded fromthepreference system.
Forthetariff items included, there arenolimitations onthescope ofpreferential access bywayof
quantitative limits orleveloftariff preference.
Q25.Does Saudi Arabia maintain anytariff ratequotas onthepreferential trade conducted
withother Arab League members?
Reply
No.
Q26.What concrete steps havebeentaken within thelastfiveyears tomove towards theArab
Common Market contemplated bythispreferential system, e.g.,hasthelistofitems covered been
expanded, hasadatebeensetforconstruction ofaplantomove towards afreetrade agreement
asaninterim step? Does aplanexist withspecific timelimits toestablish theArab Common
Market?
Reply
During thelastfiveyears therehasbeennoexpansion ofthelistcovered bytheArabCommon
Market, butthere isaplan(without aspecific timelimit) tomove towards afreetrade agreement.
Q27.What connection isthere, institutionally orotherwise, between theGCC establishment
ofafreetrade area andefforts toestablish acommon external tariff andtheArab League
preferences?
Reply
There isnoconnection institutionally between theGCC freetradeareaandefforts toestablish
theArab Common Market.
GCC Customs Union
Q28.Please report onthesteps taken during thelasttwoyears within theGCC toestablish
acommon external tariff andelaborate onanytimetables orschedules forachieving this?
Reply
Please refertoreply 184ofWT/ACC/SAU/6.WT/ACC/SAU/8
Page10
Q29.ConcerningreplyNo.62(L/7645/Add.1),itwouldgreatlyfacilitatetheworkoftheWorking
Party ifSaudi Arabia could provide direct responses tothequestions, rather thanreferring the
Member toinformation intheAnnexes.
Reply
According totheCustoms Law, thefollowing warehouse duesshallbecollected (perkilogram
gross orpartofakilogram, regardless ofpacking, wrapping orfilling inmethod):
- 1halalla forevery dayduring thefirstmonth.
- 2halallas perdayduring thesecond month.
- 4halallas perdayforthirdandfollowing months.
- 50percentoftheabove shallbelevied ontransit goods.
- Containers andtrolleys containing goods willbetreated inthesame wayasthose intransit,
inrespect oftheperiod fromthedateofcompletion ofunloading thegoods untilthere-export
ofthecontainers andtrolleys, inasmuch asregards warehouse dues(charges).
Regarding porterage charges ordues:
- apackage weighing 1to5kgswillnotbeliable topayporterage dues;
- apackage weighing 5to25kgswillbecharged twopiastres (10halallas);
- apackage weighing 25to50kgswillbecharged fourpiastres (20halallas);
- apackage weighing more than50kgswillbecharged 8piastres (40halallas);
- apartofakiloisconsidered akilo.
Supervision charges:
Every operation which isrequested tobecarried outbyaninterested party andapproved by
theCustoms Authority shallbechargeable tosupervision duesfortheaccount ofthetreasury asfollows:
- special supervision oftheopening ofcrates containing motor carsandreadying them for
operation withtheCustoms area: SR4permotor vehicle;
- change ofcontainers, cladding sacks orother suchgoods incoming inbulkorinsacks with
theCustoms area: SR4perdayorpart;
- other operations, suchasweighing inspection orotherwise: SR2perhour.
Upon written application filedbyaninterested party, theCustoms authority willallow, in
consideration ofthecharge hereinafter prescribed, approval ofshipping orunshipping orbothsuch
operations oranyother operations tobecarried outoutside theformal hours ofwork:
- ships which aremoored atthedraftoftheshamadoura which work atnight outside business
hours willnotbesubject tolevying overtime work;
- dhows andbarges which aremoored onquays forunshipping thecargo ofashipoutside the
business hours; charges willbelevied withrespect toallsuchcraftwhich willbedeemed to
beoneunit:SR25perhourpership;
- ships perhourorpartwhich loadorunload orcarry outbothloading andunloading operations
onquays: acharge ofSR30perhour;
- ships carrying cattle andanimals: SR5pershipperhourorart;WT/ACC/SAU/8
Page11
- forsailships andother means oflandandmaritime transportation ereisacharge forevery
onehourorpartwithrespect toevery sailshipMaritime means oftransportation, motor vehicle
orother means transportation, which hasnotbeenmentioned inanyother place which carries
outanoperation ofloading orunloading; orbothsuchoperations: acharge ofSR5;
- forproviding shipwithfuelandotherwise, there isacharge peronehourorpartwithrespect
toevery shipbeing provided withliquid andother fuel.Thisconsideration shallnotbeexacted
iftheoperation ofsuchprovisioning iscarried outduring theshipping orunloading ofgoods
withrespect towhich overtime charges ofSR15havebeenextracted forevery hour;
- SR30shallbelevied inrespect oftheentire operation ofshipping petroleum during other
thantheformal hours ofbusiness;
- theopening ofstores perhourorpartinconsideration ofopening every storeforclearing or
shipping goods onrailway wagons ormotor vehicles, inclusive oftheopening ofthedoor:
SR30;
- theopening ofstores parhourorpartinconsideration ofopening every storeforcompletion
offormalities ofgoods inrespect ofwhich nodueshavebeenpaidandforwithdrawing them
either onrailway wagons oronmotor vehicles: SR30;
- theopening ofstores perhourorpart,forreceiving theincome oroutgoing goods: SR20
perstore;
- opening thecashier ’soffice forpayment ofduesaftertheprescribed timelimit: SR10;
- completion offormalities inrespect togoods theduesofwhich havenotbeenpaid, inclusive
ofthewithdrawal orexport operation ofthevarious kinds ofvegetables, fruit, meatandsuch
other perishable items, andanimals: SR30perhourorpart;
- embarking anddisembarking ofship’spassengers andeffects before orafterbusiness hours:
SR50perhourpership;
- embarking anddisembarking ofpassengers andtheireffects outside ofofficial hours: SR25
persailboatorother maritime means oftransport other thanships:
- inspection ofgoods exported from thedepot ofAramco. Dhahran, afternormal hours: SR
30peremployee;
- inspection ofthecompany ’sgoods incarriages destined tocarry frozen goods, inthedepots
ofthecompany inDhahran, outside business hours: SR20peremployee;
- disembarkation andtravel ofpassengers fromaircraft orthepassing ofandtravel ofpassengers
inmotor vehicles andother landmeans oftransport withtheireffects, outside business hours
willbeexempt from overtime charges;
- clearing ofgoods which arrive onaircraft orwhich areintended tobeshipped onaircraft
departing outside business hours: SR30;
- ships, aircraft ’s,andother means oftransport which move thepilgrims during thepilgrimage
season shallbeexempt from paying overtime charges.WT/ACC/SAU/8
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(e) Quantitative import restrictions
Q30.Please provide acomprehensive listofallcharges, fees,tariffs, taxes, andother border
charges onimports.
Reply
Theonlyborder charges arecustoms tariffs. Thetariff levels are0percent, 7percent,
12percent,20percent,50percent. Asforfeesandcharges forservices rendered, please seereply
29above.
Q31.Inthisregard, Article 57oftheCustoms Regulations indicate thatallimports paya
wharfage feeof3percentofcustoms duties, withcertain exemptions. Neither thewharfage fee
northeexemptions appear toberelated tothecostoflanding imports. Thefeeappears tobe
based onthevalue oftheduties collected, notonanycriteria related toimport processing.
Isthiscorrect? Isitalsocorrect thatwharfage feesarenotcollected onexports?
Arethese feesusedforanyparticular budgetary purpose related tocustoms processing
orstorage attheportofentry, ordotherevenues gotogeneral revenue?
If,asitappears, thisfeeisnotconsistent with theprovisions ofArticle VIII ofthe
GATT 1994 thatrequire thatitberelated totheapproximate costofservices rendered,
howdoesSaudi Arabia amend itslawtobring thefeeintoWTO conformity?
Reply
Article 57oftheImplementation Rules oftheCustoms Law(IRCL) hasbeencancelled. Now
there isnowharfage fee.
Q32.Articles 60and61oftheCustoms Regulations indicate thataMunicipal Feeof6percent
andaSpecial Contribution foral-Falah Schools of1percent, respectively, ofthetotalCustoms
duties iscollected onallimported goods.
What arethepurposes ofthese import fees?
Aretheybothapplied todomestic goods aswell? Ifso,atwhat point ofsale? Ifnot,
willSaudi Arabia explain howtheyareconsistent withthenational treatment provisions
ofArticle IIIoftheGATT 1994?
Reply
These customs regulations were cancelled. Now there isnomunicipal feeandnospecial
contributions forAl-Falah Schools, asmentioned inreply 27ofWT/ACC/SAU/6.
Q33.Regarding theduties onlicensing andcertification forautomobiles inArticle 62,Isthere
anyproduction orassembly ofautomobiles intheKingdom?
Arethese charges atallrelated toimport tariffs onautomobiles. Aretheyapplied only
toimports ofnewautomobiles, ortousedonesaswell?WT/ACC/SAU/8
Page13
Areusedautomobiles resold within theKingdom after importation subject tothese fees
when theyareregistered withtheir newowner?
Reply
There arenoproduction orassembly plants forautomobiles currently intheKingdom, there
doexisttruck andbusassembly plants, however.
There arenocharges related totheimport ofneworusedautomobiles except regular customs
duty. Article 62hasbeencancelled.
Non-Tariff Measures
Q34.Saudi Arabia states intheresponse toquestions 78and91ofL/7645/Add.1 thatitmaintains
nonon-tariff import restrictions. Information supplied bySaudi Arabia elsewhere inits
documentation indicates, however, thatnon-tariff measures, including import bans, areineffect
foravariety ofproducts.
Itislikely thatsome ofthese restrictions canbejustified under specific WTO provisions,
e.g.,theimport banonalcoholic beverages andporkproducts onreligious grounds. These
items arelisted inAnnex 7D.Weneed, however, amore precise ideaofthescope ofother
non-tariff import restrictions andrequirements andtheWTO provisions thatcover them.
Please provide acomprehensive listofnon-tariff measures notlisted inAnnex 7D,byHS
lineitem, withadescription ofthespecific measure inplace, andindicating thespecific
WTO provision which permits therestriction/requirement. Inthisregard, please include
onthelistallitems thatrequire standards inspection, sanitary registration, oranyother
form ofprior authorization orcertification bytheGovernment ofSaudi Arabia prior to
importation. (Note: theresponse tothisquestion should becoordinated withadditional
information provided inanexpanded submission ofAnnex 16,asrequested below.)
Reply
Non-tariff measures canbedivided intofivegroups asfollows:
- therearetherestrictions ondates(HS08041010-08041090) andlong-validity pasteurized milk
incontainers ofmorethanonelitre. There isnospecific HSeight-digit number forthisproduct,
butitwould fallintooneofthelineitems HS04011010-0429920. Itshould benoted, however,
thatthere isnoquantitative restriction onlong-validity pasteurized liquid milkincontainers
ofonelitreorless,noristhere anyrestriction onimports ofother types ofmilk, suchas
powdered milk. Imports ofdates arebanned except forsqu’idates which arepermitted to
beimported from 22November to21June. Saudi Arabia would consider converting the
quantitative restrictions onthetwoagricultural items, dates andliquid milk, intotariffs, in
accordance withtheprinciple of“tariffication";
- therearethespecific items which arebanned forreasons ofhealth, security, andpublic morality
which arepresented intheSaudi Arabian harmonized codesystem attheeight-digit level.
These arepresented intheAnnex onNon-tariff Requirements which includes prohibited and
restricted orlicensed goods;WT/ACC/SAU/8
Page14
- there areitems thatareprohibited duetotheintended illegal useoftheproduct, andwhich
cannot bedistinguished attheeight digitlevelalone. These include thefollowing:
- equipment intended tobeusedfordistillation ofliquors andsubstances solely used
forliquor distillation. Such equipment andsubstances could beinanyvariety of
eight-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. Such equipment andsubstances could
beinanyvariety ofeight-digit lineitems butprimarily those inChapters 47-49 (paper
products). Theappropriate WTO justification isGATT 1994 Article XX(b);
- nightbinoculars which enable vision inthedarkandbinoculars which takephotographs
inthedark. These would beincluded inHS90051000 -90059000. Theappropriate
WTO justification isGATT 1994 Article XXI;
- toolsandmachines designed forgambling excluding those forinnocent amusement.
These would beincluded inChapter 95. Theappropriate WTO justification is
GATT 1994 Article XX(a);
- three-dimensional pictures which contradict Shariah andpublic morality imported for
thepurpose ofsaleincommercial quantities. These would alsobeincluded in
Chapter 95.Theappropriate WTO justification isGATT 1994 Article XX(a).
- articles designed forfloor covering orforclothing bearing thewording ofAllah or
Quranic 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);
- crosses andcommodities bearing thecross andanypictures, inscriptions, drawings,
quotations, expressions, orpublications ofbooks andother printed matters, films and
tapesviolating theIslamic Shariah orIslamic morality ortheprinted matter regulation.
Such articles could beinanyvariety ofeight digitlineitems butprimarily those in
Chapters 47-49 (paper products). Theappropriate WTO justification isGATT 1994
Article XX(a);
- items thatfailtomeettheappropriate Saudi standards areexcluded inaccordance with
GATT Article XX(b);
There areitems subject tolicensing covered elsewhere.
Q35.InL/7489 andinresponse toquestion 86inL/7645/Add.1, Saudi Arabia indicates that
theimport bans ondates andlong-validity pasteurized milkcanbejustified under GATT 1994
Article XX(b) and(d).Theexplanation given intheresponse, however, would appear toindicate
thatthebans areprovided forthesolepurpose ofprotecting domestic production, inconsistent
withWTO provisions.
Please demonstrate precisely howArticle XX(b) and(d)apply.WT/ACC/SAU/8
Page15
Please describe themeasures andmethods Saudi Arabia intends tousetobring these
measures andothers ofasimilar nature intoconformity withWTO provisions.
Reply
Please seereply 28inWT/ACC/SAU/6.
Q36.Article7ofTheLawfortheProtectionandEncouragementofNationalIndustry(Annex3A)
requires thattheMinistry ofTrade andIndustry make recommendations toprotect localindustry
by,inter alia, “restricting orbanning [of]foreign imports which aresimilar tothelocal
production. ”Thisprovision doesnotseem entirely consistent withtheresponse toquestion 145
inL/7645/Add.1 which states thatthepolicy inthisLaw“isconsistent withtheGATT. ”
Does theprotection contemplated under Article 7gobeyond theconcessions involved in
market access negotiations (tariff andNTM)? Ifso,thenhowisthisprovision consistent
withWTOobligations(e.g.,impositionofimportbanstoprotectlocalindustryfromimport
competition)?
WillSaudi Arabia altertheprovisions ofthislawtoensure conformity withtheprovisions
oftheWTO?
Reply
TheLawfortheProtection andEncouragement ofNational Industry willbereviewed toensure
itsconsistency withWTO commitments ofSaudi Arabia.
Q37.Article 9ofTheLawfortheProtection andEncouragement ofNational Industry (Annex
3A)restricts thecoverage ofthisLawfrom industrial firms thathave “privileges andspecial
conditions ”except under certain circumstances.
PleaseexplainthemeaningofArticle9,andwhatarethe“privilegesandspecialconditions”
referred to?
Reply
Industrial firms established under other lawsareexcluded from thecoverage ofArticle 9of
theLawfortheProtection andEncouragement ofNational Industry. Examples arefirms operating
inthepetroleum andmining sectors. The“privileges andspecial conditions ”referred toarethose
itemized intheabove article.
(f) Import licensing procedures
Q38.(Qu. 5,L/7489) CanSaudi Arabia provide atranslated copy ofDecree No.77 dated
28/1/1395 AH,andNo.50 dated 17/3/1410, issued bytheCouncil ofMinisters?
Reply
Theunofficial translation isasfollows:
(a) Decision No:50dated 17/3/1410 A.H.WT/ACC/SAU/8
Page16
TheCouncil ofMinisters decides:
First: TheMinistry ofAgriculture (Agricultural andVeterinary Quarantine Branch) isfully
responsible forexamining andthenauthorizing Customs topermit entryofthose agricultural andanimal
shipmentsdescribedbelow.TheBranchhastheauthoritytodecidewhatcertificatesandotherdocuments
aretobeprovided withshipment, andtoreview, classify andaccept those documents according to
theSaudi standards.
Unless itcoordinates inadvance withtheMinistry ofFinance andNational Economy, where
thereisnoSaudi standard, theMinistry ofAgriculture shallnotimpose anyrestrictions uponimported
agricultural andanimal products orshipments.
A) Animal products andshipments:
Allkinds ofliveanimals (alledible kinds) thatareconsidered legally eatable.
Allferocious andundomesticated animals.
Allkinds oflivepoultry andrabbits.
Allkinds ofdecorative birds.
Allkinds ofdecorative fish.
Hatching eggs.
Sperms.
Unprocessed leather, hair,andwool ofanimal origin.
Concentrates ofanimal feeds andvitamins (animal feeds concentrates would betasted for
hormone residuals).
Veterinary vaccine.
Veterinarymedicine:shallnotbepermittedunlessitisapprovedthebytheauthorizedcommittee
attheMinistry ofHealth according totheRoyal Decree No:M/18 dated 18/3/1398.
B) Agricultural shipments:
Organic andbitmus fertilizers.
Agricultural plants.
Decorative plants.
Beespackages.
Fresh fruit, vegetable anddates.
Grain andothermaterials thatareusedasfeedforanimals suchasbarley, corn, millet, soybean,
etc.
Seeds andseedlings.
Agricultural pesticides anddryorliquid fertilizers.
TheMinistry ofAgriculture willundertake itsfunctions afterestablishing laboratories with
equipment needed toperform radiation examinations uponmaterials listed in(A,B)above andinforms
theMinistry ofCommerce andtheMinistry ofFinance (represented bytheCustoms Department) of
thestarting date.
Second:TheMinistryofFinanceshallallocatefundstoestablishTheAgriculturalandVeterinary
Quarantines Branch assoonaspossible inorder toenable TheMinistry ofAgriculture tocarry out
functions stated inthisdecision.
Third: Astoother products orshipments notlisted inprovision (A&B),theauthority of
examination belongs totheMinistry ofCommerce (Quality Control Laboratory).WT/ACC/SAU/8
Page17
With respect toallkinds ofcoldandfrozen meat:
- meatshallnotbeimported from countries inflected withanimal diseases according toSaudi
standards.
- theMinistryofAgricultureshallinformtheMinistryofCommerceofsuchcountriesandprovide
information andreports issued byinternational organizations specializing insuchmatters, for
example, International Epidemic Office inParis, World Health Organization, andFood and
Agricultural Organization.
- theMinistry ofCommerce shallthoroughly inspect meatinorder toensure thatitisnotinfected
withdiseases communicable tohumans andanimals. TheMinistry ofAgriculture shallprovide
TheMinistry ofCommerce withalistofsuchdiseases andcountries inwhich theyarepresent
andfrom which Saudi Arabia import.
Fourth: Astonutrients treated withhormones, growth inducers, antibiotics, andanycancerous
substances, thefollowing measures shallbetaken intoconsideration:
- allnecessary support should beprovided totheMinistry ofCommerce andtheMinistry of
Agriculture todetect anytraces ofhormones andgrowth inducers.
- theSaudi Arabian Standards Organization shallinclude inSaudi standards necessary conditions
tomonitor these products toensure thattheyarefreefromthese substances andprepare Saudi
standards todetect it.
Fifth: Thisregulation shallinvalidate other regulations thatcontradict withit.
(b) Council ofMinister ’sDecision No:77dated 28/1/1395 A.H.
Thisregulation supersedes decisions No.85dated 20/10/1373 A.H.anddecision No.85dated
23/7/1374 A.H., andreplace them withthefollowing regulation:
Article-1 Itisnotallowed toimport Agricultural machines including water pumps ortheirengines
which areusedinagriculture unless theyareofthekinds authorized bytheMinister ofAgriculture.
TheMinistry ofAgriculture shallreview requests forimport licences within amonth ofsubmitting
thedateofrequest.
Article-2 Thefollowingisconsideredamerchant:produceroftheagriculturemachine,itsimporter,
theirrepresentatives, andanyindividual considers selling themachine forprofit onhisownoranother ’s
account.
Article-3 Anyattachments totheagricultural machine mentioned inthefactory invoice shall
beconsidered partofthemachine andtheprice shallbeinclusive evenifthesalecontract doesnot
soindicate. Additionally, anyagreement inthecontrary ofthatshallbeheldinvalid.
Article-4 Allpersons mentioned inArticle No.2shallbeheldresponsible inproviding allspare
partsneeded torepair themachines. Thepurchaser hastherightofrecourse against anyoneofthem
fordamages caused bynonavailability ofspare parts. TheMinister ofAgriculture outlines thequantity
(orproportion) ofspare partsthatshould beimported withthemachine orthequantity ofsuchparts
thatshould bealways available inthemarket.WT/ACC/SAU/8
Page18
Article-5 Boththeimporter ofthemachine andhisagent intheareanearest where themachine
islocated shallbeheldresponsible forproviding maintenance regardless whether themachine was
bought fromthemornot.TheMinister ofAgriculture should issueadecision toimplement thisarticle.
Article-6 Thedirect seller isunder theobligation toinstall themachine forthepurchaser and
runitforatleast20hours continuously toensure itsperformance, inreturn for5percentofthe
machine price. Thepurchaser hastopayforanyinstallation materials andhehastherighttoexempt,
inwriting, thedirect seller from anyobligations from theinstallation.
Article-7 Anymanufacturing defect ordefect duetotheinstallation orafterreceiving themachine
bythepurchaser, istheresponsibility oftheseller andhehastorepair itfreeofcharge orreplace
themachine, orreturn itsprice, ifrepair orreplacement isnotpossible. Thispurchaser ’srightwill
beabated unless hereports thedefect within 15daystoboththedealer andtheMinistry ofAgriculture
(nearest office) andtheMinistry ofAgriculture hastheauthority toredress, investigate andsettle cases
related tothese matters.
Article-8 Inaddition toamaximum profit of20percentofc.i.f.ofthemachine price, thedealer
hastheright tocharge thepurchaser fordelivering andhandling. Theexpenses fordelivering and
handling shallbedetermined byacommittee consisting oftheMinistry ofAgriculture, Ministry of
Finance andNational Economy andMinistry ofCommerce. Ministry ofAgriculture supervises and
ensures thisprocess. Astothespare parts, thedealer isentitled toamaximum profit of25percent
ofthepartsprice. Alldocument related toorigin priceofthemachine, itsspare part,andotherexpenses
mentioned previously shallbeunder thesupervision andtheapproval oftheMinistry ofAgriculture.
Article-9 Taking intoconsideration other valid laws, ifthedealer raises theprice ofeither the
machine oritsspare partscontrary toArticle No.8,heshallbecompelled bytheMinister ofAgriculture
andWater, orhisagent, toreturn thedifference tothepurchaser. Inaddition, thedealer islevied
afinethatequals twice thedifference which shallbeconsidered asagovernmental revenue. Inthe
caseofrepetition, theMinister ofAgriculture hastherighttobanthedealer fromtrading inagricultural
machines andtheirspare parts. Thisbanshallnotexempt thedealer ofanyobligation toward the
purchaser ofthemachine orthespare parts soldpreviously.
Article-10 TheMinistry ofAgriculture hastheabsolute anddirect supervision overstores inwhich
agricultural machines aresoldorfixed. Inaddition, ithastheright toissue regulations related to
organizing thework inthese stores.
Article-11 Thisdecision shallinvalidate anyother previous decisions thatcontradict withit.
Article-12 TheMinistry ofAgriculture shallimplement thisdecision, andthisdecision shallbe
effective from thedateofitspublication intheofficial gazette.
Q39.Weseekanexpanded submission from Saudi Arabia addressing theadditional products
listed attheendofAnnex 16and,totheextent applicable, theissues raised bythese questions.
Inexpanding ontheinformation onSaudi Arabia ’slicensing system provided inAnnex 16,response
tothequestionnaire onimport licensing procedures, G/LIC/2, please address thefollowing:
Foreach licensing purpose, e.g., seeds andtheother products listed attheendofthe
Annex, listallproducts byHStariff linenumber inSaudi Arabia ’simport schedule (or
category orsub-category ifalllinesareincluded, thataresubject toanyform ofimport
licensing, permit, orauthorization.WT/ACC/SAU/8
Page19
Reply
Please seereply 34above.
Q40.Please include anquantitative restrictions maintained through licensing requirements on
anyproduct. Forallsuchproducts, please listtheproducts andthelevel ofimport permitted
orthenature ofthediscretionary limitation, e.g., when domestic production hasbeen fully
consumed.
Reply
There arenoquantitative restrictions onimports intotheKingdom, maintained through licensing
requirements.
Q41.Please listseparately anylicences granted onanautomatic basis, thecriteria usedtogrant
thelicence, andthereasons forthemeasure.
Reply
There isnoautomatic licensing.
Q42.Please describe insome detail theapproval process required forlicensed imports, including
seeds, foodproducts, livestock, books, periodicals, movies, chemicals, pharmaceuticals, etc.
Reply
Different ministries andagencies dealing withdifferent subjects havedifferent procedures for
approval.
Q43.Please provide information onthetimelimits involved (a)toapply foralicence prior to
export; (b)toreceive approval; and(c)toreceive thelicence.
Reply
There isnoexport licensing system inSaudi Arabia.
Q44.Please indicate thecriteria usedbytherelevant Ministry orinstitution togrant thelicence
foreachcategory listed. Arethese criteria published andavailable totraders?
Reply
Different ministries andagencies dealing withdifferent subjects havedifferent criteria.
Q45.Please supply WTO justification foreachform ofnon-automatic licensing.
Reply
Please seereply 31ofdocument WT/ACC/SAU/6, andAnnex 16todocument L/7645/Add.1.WT/ACC/SAU/8
Page20
Q46.Forexample, Saudi Arabia indicates inAnnex 16thatthepurpose ofitslicensing forseeds
istoensure thequality ofimported seeds andensure thatthe“quantity must beproportionate
tothequantity required forcultivation ”.
Thisrationale appears toeffectively restrict thequantity ofimported seeds. YetSaudi
Arabia indicates thatthequantities ofimported products arenotrestricted byitslicensing
requirements. Please explain theapparent inconsistency.
How isitdetermined thatthequantity ofseedimports isproportionate tothequantity
required forcultivation, whomakes thisdecision, andhowarequantities above thislevel
restricted?
Reply
There isnorestriction inthequantity ofimported seed, buttoensure thequality ofimported
seedandtomeetthegrain requirement.
Q47.With reference totheresponse toquestion 77(L/7645/Add.1), Saudi Arabia notes that
certain goods require anexamination bygovernment ministries.
Please provide amore detailed description oftheprocess andlegal andregulatory
framework forobtaining import authorizations orimport licences forchemicals,
pharmaceutical products, films, livestock, andbooks andperiodicals.
Please explain thereason forthereview ofthese items. What constitutes an“examination ”.
Isthisexamination procedure different from theprocedures usedforobtaining import
licence approval? Arethere published procedures forthese examinations?
Reply
Different ministries andagencies dealing withdifferent subjects havedifferent examination
procedures forapproval.
(h) Customs valuation
Q48.Thedocumentation presented appears toindicate thatSaudi customs valuation procedures
arenotfully inlinewiththeAgreement onImplementation ofArticle VIIoftheGATT 1994
(Customs Valuation Agreement).
Itisessential thatSaudi Arabia submit comprehensive information totheWorking Party
onitscustoms valuation practices. Theinformation requested insection B.2ofG/VAL/5
includes notification under Article 22oftheAgreement andtheChecklist ofIssues annexed
tothedocument. WeseekSaudi Arabia ’sresponse tothese questions prior tothenext
meeting oftheWorking Party.
Reply
Saudi Arabia ’sexisting laws, regulations andprocedures oncustoms valuation arenotinfull
conformity withtheprovisions oftheAgreement onCustoms Valuation. These willbebrought into
conformity attheappropriate timeaftertheKingdom becomes aWTO member. Please seeAnnex 4WT/ACC/SAU/8
Page21
(Information onImplementation andAdministration ofCustoms Valuation Agreement) todocument
WT/ACC/SAU/4.
Q49.Howaretheminimum prices forcarsandyeast determined? Please explain withreference
tospecific WTO provisions howthese minimum prices areconsistent with, e.g.,theValuation
Agreement.
Reply
There arenominimum prices forvehicles.
Astoyeast, thecustoms authority hassetaf.o.b. value (SR10perkilo)forthecalculation
ofcustoms duties. InSaudi Arabia ’sview, thisisjustified withreference topara. 2ofAnnex IIIto
theCustoms Valuation Agreement.
Q50.Does Saudi Arabia intend toeliminate thispractice, asithasforother products? Ifso,
please indicate within what timeperiod.
Reply
Please seereply 44ofWT/ACC/SAU/6.
(l) Rules oforigin (paragraph 54,L/7489)
Q51.Article 5(c)oftheSaudi Arabia-Jordan bilateral agreement andArticle 4oftheSaudi
Arabia-Tunisiabilateralagreementstatethatcertificatesoforigin“shouldbeissuedbyaresponsible
authority intheexporting country. ”
Please explain, along withexamples, what isaconsidered tobe“responsible authority. ”
Reply
TheresponsibleauthoritywouldbetherelevantMinistryorDepartmentoftheexportingcountry
ortheChamber ofCommerce andIndustry intheexporting country.
Q52.Annex II.3(d)oftheWTO Agreement onRule ofOrigin requires thatMembers areto
ensure thatexporters, importers, oranyperson withjustifiable cause willbeprovided upon request
assessments ofpreferential origin assoonaspossible butnolater than150daysafter arequest
forsuchanassessment ismade. Asimilar requirement exists inArticle 2(h)oftheWTO Agreement
forrules oforigin applicable tonon-preferential trade régimes.
Please describe indetail theprocess bywhich Saudi Arabia provides such assessments
incompliance withtheWTO Agreement onRules ofOrigin.
Please describe howsuch assessments arepublicly available, asalsorequired under
Article 2(h)oftheWTO Agreement.
Reply
These procedures arenotavailable atpresent. TheKingdom ofSaudi Arabia would fulfilits
obligations under these provisions upon joining theWTO.WT/ACC/SAU/8
Page22
Q53.Inresponse toQ104,itisstated that“astheKingdom extends MFN treatment toall
imports, there arenospecific rules oforigin forMFN trade. ”However, inresponse toQ102,
itisstated that“Saudi Arabia requires thatgoods soldorotherwise placed incommerce inSaudi
Arabia bemarked with respect tocountry oforigin. ”According toArticle I.2oftheWTO
Agreement onRules ofOrigin, non-preferential rules oforigin includes those rules usedfororigin
marking requirements. Inthisregard, Saudi Arabia doesenforce rules oforigin forMFN trade.
What rules oforigin areusedbySaudi Arabia todetermine ifagood ismarked withthe
correct country oforigin? Aretherules applicable toimported goods different from those
usedfordetermining ifgoods placed incommerce canbemarked with“Saudi Arabia ”?
Reply
There arenorulesoforigin fororigin marking requirements. Anorigin certificate issued by
aresponsible agency oftheexporting country isaccepted.
Q54.Inresponse 104,itisstated thatinallcases “themethod fordetermining theorigin of
thegood isexamination ofthecertificate oforigin. ”
Ifso,howdoesSaudi Arabia ensure compliance withArticle 2(d)oftheWTO Agreement
onRules ofOrigin, which states thatrules oforigin applied toimports andexports are
notmore stringent than therules oforigin applied fordetermining whether agood is
domestic?
Ifso,there arenorules oforigin applicable toMFN trade other thanreview ofacertificate
oforigin, howdoes Saudi Arabia ensure compliance with Article 2(e)oftheWTO
Agreement, which requires thatrules oforigin areadministered inauniform manner,
suchasinasituation whereby countries areissuing certificates oforigin using different
standards?
Reply
TheKingdom ofSaudi Arabia would review itsrulesoforigin toensure consistency withthe
Agreement onRules ofOrigin.
Q55.Please describe indetail theprocedures thatprovide prompt independent review of
administrative actions taken bySaudi Arabia inrelation todeterminations oforigin, asrequired
under Annex II.3(f)andArticle 2(j)oftheWTO Agreement onRules ofOrigin
Reply
Thefirstavenue forseeking review istoapproach aspecial committee oftheCustoms
Department. TheCommittee, consisting ofexperts, would review theadministrative action. Ifthe
importer isnotsatisfied withthedecision oftheCommittee, hecangoinappeal totheBoard of
Grievances.WT/ACC/SAU/8
Page23
2. Export Regulation
(f) Export financing, subsidy andpromotion policies
Q56.Saudi Arabia notes thatitprevents theexport ofgoods benefiting from domestic subsidies.
Please indicate specifically what products have exports restricted inthismanner. How
aresuchproducts restricted? What products areprohibited from export? What products
require governmental approval orspecial permit forexport?
How isthisstatement thatthegovernment prevents theexport ofsubsidized products
consistent withthegovernment ’sexport ofsubsidized grain through GSFMO?
Reply
TheSaudi Arabian government exercises some restrictions onexports toprevent goods that
arebenefiting from domestic subsidies from leaving theKingdom, thereby protecting theNational
Treasury. Prohibited exports include female livestock, babyformula, medicines, andanimal fodder.
Firms thatexport goods which havereceived asubsidy mustobtain inacertificate from the
MinistryofFinanceconfirmingthattheyhaverepaidtheamountofthesubsidycontainedintheirexports.
Q57.Please confirm thatalltheincentives discussed inthissection aregenerally available and
thatnone iscontingent upon export.
Reply
Weconfirm thatallincentives discussed under Section 2(f)aregenerally available andthat
noneiscontingent upon export.
Q58.Areanyofthesupports andprivileges granted under theLaw fortheProtection and
Encouragement ofNational Industry restricted tospecific industries orsectors oftheeconomy?
Reply
No,allsupports andprivileges granted under theLawfortheProtection andEncouragement
ofNational Industry aregenerally available forallsectors oftheindustry.
Q59.Article 5oftheLawfortheProtection andEncouragement ofNational Industry states
thatrawmaterials, semi-manufactures, andpackaging imported byeligible firms maybeexempted
from customs duties if“unavailable intheKingdom insufficient quantities. ”Thiswould appear
tomean thatfirms wishing tousethebenefits provided must firstseekanduselocal materials.
How isArticle 5administered? What istheroleoftheMinistry ofTrade andIndustry
andtheIndustrial Technical Office inenforcing thisprovision?
Reply
Thepurpose ofArticle 5istoprovide forsuspension ofimport duties onindustrial inputs in
circumstances inwhich thereisaninadequate supply ofdomestically produced inputs. Itisunderstood
thatthisisacommon international practice anddoesnotconflict withtheSubsidies Agreement orany
other WTO instrument.WT/ACC/SAU/8
Page24
3. Internal Policies Affecting Foreign Trade inGoods
(a) Industrial policies
Q60.Please supply export statistics forSaudi Arabia ’sinternational salesof(a)petroleum, (b)
refined petroleum and(c)downstream petrochemical products, byHSline-item, bycountry of
destination forthelast5years.
Reply
Below isthelatest available statistics:
N.
AmericaS.
AmericaW.
EuropeMiddle
EastAfrica Asia&
FarEastOceania Bunkers
1991
crude 663,885 72,351 623,095 78,796 61,446 861,780 20,752
product 36,374 8,021 67,822 46,390 16,077 255,133 15,716 2,701
1992
crude 614,844 67,668 636,236 78,195 35,484 958,196 18,357
product 46,015 18,206 65,048 44,077 18,919 264,538 13,473 2,610
1993
crude 487,753 61,507 628,368 74,686 33,962 986,397 24,246
product 47,540 45,516 76,277 60,142 17,369 246,875 12,070 10,257
1994
crude 521,408 60,356 601,769 81,518 35,153 957,365 17,695
product 36,645 35,100 64,223 56,634 18,415 281,418 3,960 1,785
1995
crude 504,017 53,300 598,370 80,540 34,967 1,006,308 18,631
product 24,105 17,294 33,537 53,186 14,877 323,922 15,461
* Note: Oilproduct includes LPG/LNG.
Q61.Please supply additional information oncurrent andproposed programmes designed to
stimulate exports ofdownstream petrochemical products.
Reply
Therearenospecificcurrentorproposedplanstostimulateexportsofdownstreampetrochemical
products.
Q62.Please indicate thelevel ofrefined andpetrochemical capacity proposed intheSixth
Development Plan.
Reply
There arenospecific capacity targets inthePlan.WT/ACC/SAU/8
Page25
Q63.Please provide information onthelevel ofproductive capacity thathasactually been
approved, built, orisintheprocess ofapproval orconstruction.
Reply
Actual crude petroleum capacity inSaudi Arabia stands at10.00 mbdandrefined capacity
isat1.7mbd, attheendof1995.
Q64.What specific means ofsupport (subsidies, dual energy pricing, etc.) have been
approved/sanctioned foractual projects involving thecreation ofproduction capacity forrefined
petroleum andpetrochemical products.
Reply
There arenoparticular means ofsupport available torefined products whether interms of
subsidies ordualpricing.
Q65.Response 144(b) (L/7645/Add.1) indicates that“feedstock pricing, particularly propane,
butane, andnaphtha isbased oninternational prices withnecessary adjustments fordomestic
users”.
Please explain thepolicy rationale forthissystem ofprice discrimination. Please elaborate
ontheusers ofthese lower-price feedstocks. Arethese feedstocks available toalldomestic
industries andsectors?
Reply
Kindlyseeparagraph5ofthestatementbyDeputyMinisterofPetroleumandMineralResources
atthefirstWorking Party contained inpage4ofWT/ACC/SAU/3.
Q66.Reply 144(b) (L/7645/Add.1) alsostates that“foreign partners haveaccess tofeedstocks
andenergy resources aswellasother facilities andadvantages. ”
Doforeign partners operating inSaudi Arabia haveaccess tofeedstocks atthesame prices
as“domestic users”?
Reply
Yes,foreign partners operating inSaudi Arabia haveaccess tofeedstock atthesame prices
as“domestic users”.
(b) Technical regulations andstandards (paragraphs 57-59, L/7489)
Q67.Saudi Arabia notes thatSASO develops standards thattake-into account the“harsh
environment ”ofthenation. Wewould appreciate amore detailed description ofSaudi standards
systems.
Iscompliance withSASO standards voluntary ormandatory? Which Ministries (other
thantheMinistry ofHealth) have authority toregulate products; oristheprotection of
human, animal andplant lifeandhealth, andtheenvironment exclusively theresponsibility
ofSASO andtheMinistry ofHealth?WT/ACC/SAU/8
Page26
Reply
Inregards tocompliance, some ofSASO ’sstandards arevoluntary andothers aremandatory.
TheMinistry ofFinance (Customs), Ministry ofCommerce, Ministry ofMunicipality, andMinistry
ofAgriculture &Water Resources areinvolved inenforcement asaretheMinistry ofHealth andSASO.
Q68.How dothestandards forsafety andsuitability thatSaudi Arabia hasimplemented for
autos andautoparts reflect theenvironmental conditions?.
Reply
Reflecting Saudi Arabia ’sharsh desert climate, exhaust emission standards, radiator standards,
cooling efficiency standards, andother testmethods forautos andautohave been established at
appropriate highlevels, e.g.,withrespect toevaporative emission standards andrequirement forlarge
sizeradiators. Forthisreason some Saudi standards differ from international standards.
Q69.Wenotethatinmany cases, Saudi Arabia hasadopted standards which differ from existing
international standards, andcontinues todevelop newnational standards.
Towhat extent doesSaudi Arabia useinternational standards? Isitamatter ofpolicy
orpractice forSASO andother Ministries (e.g., Health) toroutinely identify andconsider
international standards when developing new, orchanges to,standards andtechnical
regulations?
Reply
Saudi Arabia ’sSASO makes useofinternational standards veryextensively. Some international
standards areadopted astheyarewithout anymodification. Some ofthemareusedasmainreferences
andsome arenotusediffound unsuitable forSaudi environment duetothespecial requirements such
asreligion, climate, culture, etc.
Q70.How doesSaudi Arabia determine thatinternational standards areinsufficient tomeet
Saudi needs?
Reply
Please seereply 69above.
Q71.Aredomestic goods subject tothesame standards andinspection procedures?
Reply
Domesticgoodsaresubjecttothesamestandardsanddomesticinspectionproceduresasimports.
Preshipment inspection applies toimports regulated bytheICCP.
Q72.Replies 108and112(L/7645/Add.1) indicate thatSASO standards arecirculated indraft
toother standards organizations (presumably ISO/IEC member bodies) forcomment prior to
finalization.
AreSASO standards published indraft? Where? Aretechnical regulations proposed
bytheMinistry ofHealth orother Ministries alsopublished indraft forcomment by
interested parties intheworld market? (Reply 112indicates information onregulationsWT/ACC/SAU/8
Page27
canbefound inUmAl-Qura, butitisnotclear ifthisinformation includes thatondraft
technical regulations, orchanges toexisting ones).
Reply
Forstandards developed bySASO staff, there aretwodrafts (first draftandsecond draft).
Thefirstdraftiscirculated internally andinternationally toconcerned parties. IntheKingdom, they
arecirculated toembassies, manufacturers, importers, government bodies forcomments within three
months. Thesecond draftiscirculated forcomments within onemonth. When accepted, suggestion
received areincorporated inthefinalstandard.
Forstandards developed byatechnical committee, which include private sector experts, one
draftiscirculated forcomment.
Q73.Saudi Arabia requires inspection andprior approval foravariety ofproducts.
AretheSaudi conformity assessment procedures based oninternational standards? If
so,which ones?
Arecertification andother conformity assessment procedures published indraft form
andanopportunity forcomment byinterested parties (whether based intheKingdom
ornot)andpublicly available inadvance oftheir implementation?
Reply
TheSaudi conformity assessment procedures aremostly based ontheinternationally recognized
ISO/IEC Guides andother ISOguidelines. TheSaudi ISO9000 series ofstandards, theprocedures
too,therefore, arebased ontherequirements ofthese standards.
Yes,certification andconformity assessment procedures arepublished indraftform andan
opportunity isgiven toallconcerned tosubmit comments, which aredulytaken intoaccount before
finalizing andimplementing theprocedures. These arepublicly available inadvance oftheir
implementation.
Q74.Towhat extent does Saudi Arabia recognize certification, testing, inspection orother
conformity assessment procedures performed byentities located inother countries? How isthis
done?
Reply
Saudi Arabia recognizes many international quality ‘marks ’onimported products when such
marks areapproved bytherecognized foreign authority. Products bearing suchmarks enjoy areduced
leveloftesting thatmayberequired under theSaudi standards.
SASOaccreditationrequirementsarebasedonISOregulationsandguidessuchasISOGuide25.
Recognition oftesting laboratories andtheircertification isbased either onSASO ’sownassessment
oraccreditation byrecognized body withwhich SASO hasabilateral mutual recognition agreement.
Q75.Reply no.40states that the“Saudi Meteorology andEnvironmental Protection
Administration hasused some general standards ”indiscouraging import of“highly polluting
capital equipment ”andencouraging “imports ofnon-polluting equipment. ”WT/ACC/SAU/8
Page28
Isthissystem administered through import licensing? Ifso,please include information
onthispoint intherevised Annex 16.
Please specify thecriteria applied toimports tomeet theobjective, ifthese criteria are
published andavailable totraders andhowsimilar norms areenforced onsaleofdomestic
goods.
Reply
Answer willbeprovided later.
Q76.Concerning reply 108(L/7645/Add.1): Saudi Arabia states thatitisitspractice todistribute
draft standards toallinterested countries prior tofinalization.
Bywhat procedure would acountry receive thedocumentation? Isthere asettime-frame
between theopening ofthecomment period andissuance ofthefinal standard?
Ifacomment isrejected, what istheprocess ofnotifying acountry ofthatrejection?
Isitpolicy orpractice torespond inwriting tocomments received, ortopublish aresponse
tothem withthefinal rule?
Reply
Forprocedure, please seereply 72above.
Accepted suggestions areincorporated inthefinalstandard. There isnoformal procedure
foradvising countries when suggestions arerejected.
Q77.Concerning reply 111(L/7645/Add.1): TheU.S.would appreciate clarification astowhich
agencies within theGovernment ofSaudi Arabia have standards andcertification regulatory
responsibility forboth imported anddomestic goods, including butnotlimited toagricultural
products. What istheauthority andfunction ofeachregulating agency?
Reply
Inaddition toSASO andMOC, theMinistry ofMunicipality isresponsible forregulating
perishable foods inthemarket andtheMinistry ofHealth isresponsible forregulating drugs andmedical
devices, etc.andfollows upinthemarket. TheMinistry ofFinance (Customs) enforces standards
compliance attheborder.
Q78.Concerningreply112(L/7645/Add.1):BywhatprocedureandhowoftendoesSaudiArabia
disseminate updates onthelistofstandards andcertification procedures? Isthisacomprehensive
listing ofcurrent standards andconformity assessment procedures, which supplements publication
ofindividual proposals andnotices offinal rules?
Reply
TheSASO Information Centre prepares acomprehensive listing ofapproved standards (SASO
Standards Catalogue) anddistributes ittoallISOmembers andtoanyinterested parties periodically
depending ontheneedandtheamendments.WT/ACC/SAU/8
Page29
Q79.Inreply 113(L/7645/Add.1), Saudi Arabia states thatshould there beaproblem with
anexisting standard, there isaprocess bywhich toappeal thestandard.
Please explain theprocess bywhich atrading partner requests arevision/amendment to
anexisting standard?
Reply
Theprocess bywhich atrading partner may request arevision oramendment toanexisting
standard starts bythetrading partner sending arequest accompanied bycomments, latest evidences,
references, etc.toSASO ’sGeneral Directorate ofStandards ortotheMinistry ofCommerce forreview.
After internal examination andwhere appropriate consultation withother interested parties, SASO
approves anymodification toastandard.
Q80.What isthemechanism fordispute settlement relating tostandards inSaudi Arabia?
How isitdetermined which regulatory agency isincharge ofthedispute settlement process?
What isthetime-frame fortheresolution ofdisputes?
Reply
AppealsagainstparticularconformityassessmentsmayberaisedeitherwithSASOortheMinistry
ofCommerce.Appellantsshouldwritegivingthefullestdetails,reasoning,etc.Anappropriatetechnical
committee within SASO willreview theappeal andensure thatanappropriate response iscommunicated
totheparty thatappealed within areasonable timeframe depending upon complexity oftheappeal.
Q81Concerning reply 116(b) (L/7645/Add.1): WenotethatSaudi Arabia ’sshelf-life standards
forsome processed foodproducts (e.g., eggs, baby food) areforshorter timeperiods thanadopted
ininternational standards.
(a) What isthescientific basis forthese shorter Saudi shelf-life standards? How doesSaudi
Arabia determine thataninternational standard isnotsufficient toensure anadequate
levelofprotection?
(b) Please provide detailed information regarding howtheshelf-life offood products is
evaluated bytheSaudi Government, inparticular babyfood, processed cheese, andcanned
fruits andvegetables.
(c) Have scientifically-based shelf-life studies been conducted thatsupport theshelf-life
standards SASO hasestablished? Ifso,cancopies bemade available totheWorking Party?
Reply
(a&b) Thescientific basisforshorter ofSaudi shelf-life standard depends uponthefollowing:
- climatic conditions intheKingdom;
- storage, handling, andtransportation conditions;
- typeofpackaging;
- composition oftheproduct;
- methods ofpreservation used, ifany;
- scientific dataonthesubject, including international standards andcomments offoodandhealth
authorities inSaudi Arabia.WT/ACC/SAU/8
Page30
(c) Scientifically-based shelf-life studies havebeenconducted thatsupport theshelf-life SASO
standards suchas:
- product -lifeofDomestic andImported Chilled Shipments inSaudi Arabia;
- shelf-life ofLabna.
Yes,copies areavailable from SASO.
Q82.Please explain theprocess bywhich SASO revises itsshelf-life standards.
Reply
SASO revises itsshelf-life standards byreceiving newtechnical comments andinlightofany
problems arising during implementation. Allcomments received arereviewed byatechnical committee
inaddition tosome research orstudies carried outonthesubject.
Q83.Initsevaluations establishing shelf-life standards, how does theSASO take into
consideration changes intechnology, packaging, etc.,which could impact theselling lifeofa
product?
Reply
Byupdating thetechnical information andcarrying outresearch work.
International Conformity Certification Programme (ICCP)
Q84.Weunderstand thattheimplementing regulations fortheInternational Conformity
CertificationProgramme(ICCP),whichrequirespre-shipmentinspectionofmanyofSaudiArabia’s
imports, arecurrently under review, andhaveundergone atleastseven revisions todate. Based
onavailable information, wehave anumber ofquestions about theprogramme, andconcerns
about itsconsistency withanumber ofWTO provisions, e.g.,regarding transparency, due-process,
andWTO Agreements onTBT, SPS, Import Licensing, andPreshipment Inspection.
When doesSaudi Arabia anticipate releasing thefinaltextoftheICCP? WillSaudi Arabia
provide aperiod forcomments andreview prior tofinalrelease oftheProgramme? What
istheunderlying rationale fortheprogramme? Doesithavearelationship tointernational
standards, ifso,please identify.
Reply
TheSASO ’sICCP Programme hasbeenimplemented since8November 1995. TheProgramme
hasundergone major re-structuring sinceitsintroduction. These changes havebeenadopted asaresult
ofcomments andinputs from various parties.
Thecurrent version isnumber 7andatpresent wedonotanticipate anymajor changes tothe
Programme.
TheICCP wasintroduced toensure proper enforcement ofSASO ’sstandards inaccordance
withISO/IEC Guides.WT/ACC/SAU/8
Page31
Under theprevious system ofself-certification, withSASO issuing certificates ofconformity
valid foroneortwoyears, many abuses occurred andtheandthesystem failed toprovide adequate
protection oflocalconsumers.
Itwasdetermined thattoinsure proper enforcement ofstandards forproducts found tobe
particularly susceptible tosub-standard imports, itwould benecessary toobtain certification ofstandards
compliance forevery shipment.
However, Saudi Arabia ’sdomestic laboratory testing capacity was,andremains, inadequate
todealwiththisenhanced levelofstandards conformity assessment. Accordingly, itwasdecided to
move, withrespect toimports, toasystem ofpre-shipment certifications bySASO approved enterprises
incountry ofexport/manufacture.
Q85.Would Saudi please explain thesystem forassessing feestoimported shipments under
theproposed ICCP? Please describe therationale forassessing feesbased onthefobvalue of
theshipment, asopposed toestablishing fixed prices which istheinternational practice? This
doesnotappear tobeconsistent withArticle VIIIoftheGATT 1994.
Reply
Forreasonsofequityandadministrativeefficiency,theICCPfeestructureisbasedonadvalorem
percentage ofdeclared f.o.b. value. Feescharged under theICCP programme areequitable inrelation
tofeescharged forconformity assessments ofproducts ofnational origin. ICCP feesarelowby
international standards, andaretransparent, predictable, andnon-discriminatory.
Ontheotherhand, theinternational practice forlaboratory testing isfixedprices. Under ICCP,
when testing isapplicable, fixed prices apply atstandard competitive rates.
IntheviewofSaudi Arabia theICCP feestructure conforms toGATT Article VIII:1. The
ICCP rateof0.5percentadvalorem compares wellwiththe1percentnormally charged forPSI,
itapproximates thecostofservices rendered, doesnotafford indirect protection todomestic products,
anddoesnotconstitute taxation ofimports.
Q86.According totheproposed ICCP, theProgramme isdesigned tobenefit bothexporters
andimportersbyensuringa“streamlinedcustomsprocesswhichallowsgoodstoclearmorequickly
andwithout riskofrejection. ”
Since regulated products aresubject topre-inspection procedures, willsuch shipments
besubject toadditional inspections upon entry intoaSaudi port?
Reply
No.However, from timetotime, afewrandom samples maybetaken soastoinsure that
products match relevant certificates.
Q87.Willinspection andcertification conducted byforeign-based entities inlieuofthebody
designated bySaudi beaccepted? Please explain.
Reply
SASO willaccept inspection andcertification byforeign inspection andcertification agencies
approved bySASO, please alsoseereply 74above.WT/ACC/SAU/8
Page32
(c) Sanitary andphytosanitary measures
Q88.PleaseoutlinefortheWorkingPartytheprovisionsofSaudiArabia’sexistinglaws,decrees,
andregulations governing policy andimplementation ofsanitary andphytosanitary measures,
comparing them withtheprovisions oftheSPSagreement, andindicating what measures Saudi
Arabia intends totaketoensure conformity ofitsrégime withtheSPSAgreement.
Reply
Saudi Arabia applies theImplementation Code forAnimal andPlant Quarantine which was
issued bytheCouncil ofMinisters Resolutions No.207and208of1396 A.H. Thiscodehasnow
beenamended inaccordance withtherequirements oftheInternational Agreement forPlantProtection,
thenewQuarantine Principles issued bytheFAOandtheOIEcode, inaddition totheTBTAgreement.
Thenewsystem forAnimal andPlant Quarantine would appear tocomply withtheSPSAgreement.
Thiscodeisunder review bytheconcerned bodies. Thefinalversion willbemade available
afterapproval bytheCouncil ofMinisters.
Q89.Inthisregard, itwould behelpful ifSaudi Arabia provided information onitsSPSrégime
similar tothatrequired under theTBT Agreement, i.e.,asoutlined inG/TBT/1/Rev.2 forbasic
transparency, notification procedures, enquiry points, etc.
Reply
Please seereply 88above.
(e) State-trading practices
Q90.SaudiArabianotesthatAramcoandtheGrainSilosandFlourMillsOrganization(GSFMO)
areexamples ofState-trading enterprises directly involved intrade.
Werequest thatSaudi Arabia supply thebasic information required bythequestionnaire
onState-trading under Article XVII oftheGATT 1994 forSaudi Aramco andGSFMO.
Reply
Annex 6(Information onState Trading) oftheMemorandum onForeign Trade Regime
(WT/ACC/SAU/4) contains theneeded information.
Q91.Reply 215states thatimports ofgrains arecontrolled byState-trading mechanisms.
IsSaudi Arabia prepared toliberalize itsimport régime forwheat andother grains?
Explain howSaudi Arabia intends tomake theoperations oftheGSFMO more transparent
andconsistent withGATT Article XVII.
Reply
Wheat andother grain imports areliberalized inSaudi Arabia.WT/ACC/SAU/8
Page33
Q92.Saudi Arabia notes State-trading enterprises thatarewholly-owned bythegovernment.
Arethere anyentities thatarenotwholly-owned bythegovernment which benefit from
special rights orprivileges? DoestheSaudi import licensing andinspection system operate
inawaythatconfers special rights orState-trading arrangements upon select Saudi
enterprises?
Reply
No,there arenoother entities which benefit from special rights orprivileges.
Q93.Paragraph 90ofL/7489 implies thatother State-trading enterprises exist.
Please describe theactivities ofother such State-owned enterprises andthose not
wholly-owned referred tointheprevious question. Please review GATT Article XVII withthe
aimofproviding information intheformat oftherequired questionnaire/notification onthetrade
ofthese additional enterprises aswell.
Reply
Please seereply 92above.
Q94.With regard toreply 216, besides theGSFMO, arethere anyother wholly or
partially-owned State enterprises engaged inthetrade ofagricultural commodities/products?
Reply
None.
Q95.Does reply 220(a) mean theonlyproducts thatfallunder thecontrol oftheGSFMO are
grains, wheat flour andfodder?
Reply
Ouranswer to220(a) canbereadasfollows: There arenoproducts exclusively controlled
byGSFMO. Inaddition toitsinternational trading activities, GSFMO isinvolved inthedomestic
storage, purchase andsaleofwheat andbarley.
Q96.IstheGSFMO thesolemarketer ofgrains, wheat flour andfodder inSaudi Arabia?
Areproducers ofthese products required toselldirectly totheGSFMO?
Reply
No.ButGSFMO istheonlygovernment entity thatmarkets wheat andbarley. Theproducers
ofthese products arenotrequired tosaledirectly toGSFMO.
Q97.Please respond toquestion 218(b) concerning howState-traded products aredistributed
domestically andinternationally. Please indicate inwhat wayAramco andGSFMO should not
beconsidered State-trading entities within themeaning ofArticle XVII. Please listbyHSnumber
theproducts traded byState-trading enterprises. Please giveinformation onState-trading firms
andproducts intheformat ofthequestionnaire onState-trading.WT/ACC/SAU/8
Page34
Reply
Annex 6(State Trading) oftheMemorandum onForeign Trade Regime (WT/ACC/SAU/4)
contains theneeded information.
Q98.Inresponse 219,Saudi Arabia states thatitsellssurplus wheat ontheworld market, and
thatdomestic prices forwheat andbarley aregenerally higher thanworld prices.
Ifthisisthecase, howisSaudi Arabia abletosellontheworld market, i.e.,howisthe
difference between thedomestic price andtheinternational price maintained andwho
absorbs thecostofinternational sales made below thecostofproduction?
Reply
Saudi Arabia hasnowheat surplus toexport.
(i) Government procurement
Q99.Theresponse toquestion 87states thatqualified Saudi nationals andwholly Saudi-owned
firms aregiven priority forcontracts, followed bymixed Saudi-foreign establishments, andfinally,
wholly foreign-owned firms. Inaddition, products produced within theKingdom aregiven
preference overforeign goods insupply contracts.
What precisely does"priority" mean inthiscontext? Does itmean allother firms are
excluded ifonewholly Saudi owned firmplaces abid,oristhere some fixed scoring value
orlevelofpreference given toSaudi suppliers? What ismeant bythetermqualified Saudi
nationals?
Reply
Bidsareevaluated bytheBidExamination Committee forconsistency withrelevant conditions
andspecifications, forreasonableness andforqualifications. These things being equal, thenpreference
willbegiven toSaudi bidders; however, nobidder isprecluded automatically. Anybidder mustbe
licensed, classified andregistered withZakat andIncome TaxDepartment andwiththeChamber of
Commerce. These criteria andprocedures apply tobidders inthecasewhere bidsareadvertised in
theofficial gazette.
Q100. Thedocumentation supplied ongovernment procurement bySaudi Arabia seems
toapply onlytogoods contracts andconstruction.
What procurement rules apply toother kinds ofservice, i.e.,telecommunications services
orconsulting services etc.?
Reply
Please seeparagraphs 46to48ofWT/ACC/SAU/5.
Q101. Please provide adetailed description oftheservices procurement market.WT/ACC/SAU/8
Page35
Reply
Themarket oftheservices rendered togovernment bodies hasbeenprogressively growing.
After thedominance ofthemarket ofconstruction works since 1393 A.H., theperiod ofstarting the
construction oftheinfrastructures, andafterthissignificant period, someneedhasemerged forrendering
variousservicestomaintaininfrastructureprojectssuchascontractsofmaintenanceandcleaningservices,
andthose required according totheeconomic andsocial advancement intheKingdom such as
administrationandoperationofgovernmenthospitals,cateringservices,andvariousconstructiveservices
together withother services whereas themarket ofservices isnowrepresenting asignificant centre
inthedomestic economic activity. Thecontracts ofservices withgovernment bodies represent abig
proportion ifcompared tothecontracts ofprocurement ofgoods orthose ofconstruction.
Q102. TheGovernment Purchases Lawprovides fortheadvertisement oftender notices
except when letters inviting tender bidsaresentout.
Inwhat types ofinstances arespecific firms invited tosubmit abidonatender? In
general, areawards oftender published intheOfficial Gazette? Isthere abid-challenge
system intheSaudi procurement régime? Ifso,please describe theprocedures tochallenge
atender award.
Reply
Royal Directive No.9751 dated 26.4.1403 A.H. superseded Article IIIoftheGovernment
Purchases Law, andprovides fortheadvertisement ofpublic tender notices forallworks, purchases
andservices inlocalnewspapers including theofficial Um-Al-Qura.
Ifabidisexcluded ongrounds ofnonresponsiveness which arenotaccepted bythebidders,
thebidder shallbeentitled toresort totherelevant Minister tochallenge exclusion decision. Ifa
resolution ofthedispute issue isnotmade, thebidder shallhavetherighttoresort totheBoard of
Grievances, which adjudicates dispute towhich thegovernment isaparty.
Q103. What arethelicensing requirements mentioned inArticle 1(d)oftheGovernment
Purchases Law?
Reply
Allfirms whether wholly owned bynationals orjointventure companies mustberegistered
orlicensed tooperate intheKingdom.
Q104. Please provide anystatistics collected bytheSaudi government onitsgovernment
procurement market.
Reply
Nostatistics areavailable ongovernment procurement.
Q105. (Reply 179,L/7645/Add.1) Please describe indetail thepractice andneed for
production subsidies, inparticular payments forpoultry anddairy farm equipment, andinputs
suchasanimal feedandpotato seed. When were these policies implemented?
Does Saudi Arabia intend tocomplete thisreview inlight ofitsefforts toconclude
negotiations onanagricultural country schedule foraccession totheWTO?WT/ACC/SAU/8
Page36
Reply
Answer willbeprovided later.
Q106. Regarding Saudi Arabia ’ssystem ofguaranteed prices: Arewheat andbarley
theonlycommodities forwhich such prices areestablished? Please describe howtheprice
guarantee system operates?
Reply
PleaseseeAnnex6(InformationonStateTrading)oftheMemorandumonForeignTradeRegime
(WT/ACC/SAU/4).
Q107. What isGSFMO ’srationale forestablishing different purchase prices based on
thesizeoftheseller, suchasinthecaseofwheat purchases? Please describe indetail thepolicies
andpractice offixed guaranteed prices.
Reply
Nodifferent purchase price isbased onthesizeoftheseller.
Q108. Regarding reply 184(L/7645/Add.1), IsSaudi Arabia prepared toliberalize the
GSFMO upon accession totheWTO? How canGSFMO ’ssystem offixed guaranteed prices be
consistent withGATT Article XVII, which states thatState-trading enterprises must make sales
andpurchases “inaccordance withcommercial considerations ”?
Reply
GSFMO makes salesandpurchases inaccordance withcommercial consideration.
Q109. Reply 188states thatloans made bytheSaudi Agricultural Bank arenotsubject
tointerest payments. Thismethod ofgranting loans appears toconstitute adomestic subsidy.
Reply
Islamic Lawprohibits charging ofinterest. Service charges mayalsobeconstrued asdisguised
interest payments andtherefore areavoided bytheSaudi Arabian Agriculture Bank.
Q110. Please describe indetail thesystem offeescharged toloanrecipients, andexplain
howtheSAGintends toinclude thecostofproviding loans, including foregone interest payments,
initscalculation oftotaldomestic support?
Reply
Thecapital loans oftheSAAB aredesignated forlending. SAAB finances itsloans fromthe
instalments duewhich arecollected from former loans. Therefore, thebankcapital istuned overby
re-lending whathasbeencollected from borrowers.
Q111. Please provide information onthepayback history ofthese loans.WT/ACC/SAU/8
Page37
Reply
Answer willbeprovided later.
V. TRADE-RELATED INTELLECTUAL PROPERTY REGIME
Patents
Q112. Itappears thatSaudi Arabian patent lawdoesnotpresently grant apatent owner
theright toprevent others from using theinvention.
What changes willSaudi Arabia make initspatent lawtomeet TRIPS obligations inthis
regard?
What other exceptions andlimitations arethere ontherights conferred onapatent owner
under current law?
Reply
No,Saudi Arabian Patent Law(Article 22)doesgrant apatent owner therighttoprevent others
from “using”theinvention. There arenoother exemptions andlimitations
Q113. What istheterm ofpatent protection granted under theSaudi patent law?
Reply
Term ofpatent protection granted isfifteen yearsfromgrant; itisextendable foranother 5years.
Please refertoArticle 27ofthePatent Law.
Q114. Doesaninvention havetobeworked ormaintenance feespaidforpatent protection
toextend fortheentire term ofprotection?
Reply
Yes,theinvention must beindustrially worked inSaudi Arabia andmaintenance feesmust
bepaidtoenjoy theprotection.
Q115. Isthere aprovision forreversal oftheburden ofproof inpatent cases where the
patent infringed isapatented process? Ifso,howdoesthisprocess work?
Reply
There isnoprovision inthePatents Lawforreversal oftheburden ofproof.
Q116. Ifanassignment ortransfer ofapatent isnotregistered orthefeeisnotpaidwhat
isthepenalty? Inthiscircumstance, istheassignment ortransfer void?
Reply
Assignments ofpatents areconsidered validwithout registration inthePatent Register. There
isnopenalty fornon-registration oftheassignment anditdoesnotbecome void.WT/ACC/SAU/8
Page38
However, iftheassignee laterapproaches theKingAbdulaziz CityforScience andTechnology
(KACST), e.g., forextension ofthetermorforanyother purpose, thenKACST willrequire the
assignment toberegistered, andfeetobepaid, before thecaseoftheassignee isentertained.
Q117. What subject matter isconsidered tobenotpatentable under thecurrent Saudi
patent law?
Reply
Articles 8and9ofthePatent Lawcover thesubject matters which areconsidered notpatentable.
Copyright andrelated rights
Q118. Arethere anyformalities thatmust bemetbefore aperson isgranted copyright
protection inSaudi Arabia? Forinstance, doesaperson havetodeposit thework withanational
library orregister thework withagovernment agency before copyright protection isgranted
tothatwork?
Reply
Before granting thecopyright protection, aperson must prove theproperty ofhiswork and
thathedidnotassign hisrights related tohiswork toothers.
Saudi authors orthose wishing topublish theirworks inSaudi Arabia arerequired todeposit
onecopyofthewritten classified works atKingFahad National Library inRiyadh. Non-Saudi authors
publishing theirworks outside theKingdom arenotrequired todoso.
Q119. What isthetermofprotection forcopyright works andsound recordings inSaudi
Arabia?
Reply
Thetermofprotection granted toanauthor fortheclassified works shallcontinue during his
lifetime andforaperiod offiftyyears afterhisdeath.
Inregard tosound recording, theperiod shall befortwenty-five years from thedateof
publication (Article 24oftheCopyrights Law).
Q120. L/7645/Add.1 stated thatittakes anaverage ofthree tosixmonths tolitigate a
copyright infringement case.
Isthistimeperiod measured from thetimetheaction isfiledwithacourt tothetimea
decision isrendered byacourt? Ifnot,what isthetimeperiod?
Canyouexplain howtheprocedure forbringing acopyright infringement caseandhow
longeachstepintheprocess takes?
Reply
Thetimeperiod tolitigate acopyright infringement casewould notnecessarily takethree to
sixmonths. Some cases takeashorter period oftime. More complicated cases which require
documentation andclarification takesixmonths ormore. Suchcases areinfrequent inSaudi Arabia.WT/ACC/SAU/8
Page39
Theprocedure forbringing acopyright infringement caseisasfollows. Itisdifficult togive
timeframe foreachstep,asitvaries from casetocase.
Therightholder should present anallegation ofinfringement stating thename ofinfringer.
Heshould alsoprove theownership oftheinfringed work.
Thecompetent authority review andfollow-up theallegation andtakeallthenecessary measures
toverify thealleged infringement andsubmit areport inthisregard.
Ifinfringement isproved, theinfringer states hisdefense andpresents hisdocuments, then,
theinfringed work could beseized bytheheadofthecommittee.
TheDepartment ofCopyrights offers conciliation toparties involved. Iftheyfailtodothat,
theallegation goesonthecommittee issues adecision ofpunishment andremedy besides confiscating,
destroying orselling theinfringing work forthebenefit oftherightholder. After theratification of
theMinister ofInformation, these decisions become effective.
Thetwodisputed parties havetherighttoappeal atBoard ofGrievances within 60days. The
seizure measures taken bytheMinistry remain ineffect untilafinaldecision isreached bytheBoard
ofGrievances, either confirming, refusing, ormodifying thedecision oftheMinistry.
Q121. Please indicate what subject matter isnotprotectable under theSaudi Arabia ’s
copyright law. Arecomputer programs protected asliterary works orasseparate works?
Reply
Theworks notcovered bytheCopyrights Lawarealltheintellectual works thatlosttheir
protection duetotheexpiration oftheperiod ofprotection, inaddition totheunpublished works as
theprotection isbasically provided forthepublished works. Computer programs areprotected as
intellectual works.
Q122. WeunderstandthatSaudiArabiaisnotcurrentlyamemberoftheBerneconvention.
Does Saudi Arabia intend tojointheBerne Convention? Ifso,when willSaudi Arabia join?
Ifnot,what areSaudi Arabia ’sobjections todoing so?
IfSaudi Arabia doesnotjointheBerne Convention, howwillSaudi Arabia meet the
obligations ofArticles 1-21oftheBerne Convention asrequired byTRIPS?
Without membership intheBerne Convention, howdoesSaudi Arabia extend protection
forforeign works ofnon-GCC Member nationals?
Reply
Allforeign works oftheUniversal Copyrights Convention member nationals aregranted the
protection required bytheConvention which means thatSaudi Arabia provides nowthesame degree
ofprotection toforeign authors astoSaudi authors. However, theaccession ofSaudi Arabia tothe
TRIPS Agreement willengage Saudi Arabia tomeettherequirements ofthisAgreement.
Q123. Saudi Arabia doesnotcurrently provide protection forperformers andproducers
ofphonograms.WT/ACC/SAU/8
Page40
Reply
Saudi Arabia applies theprotection forperformers andproducers ofphonograms according
totheprovisionsoftheUniversalCopyrightConvention.SaudiArabiawillmeettheobligationsrequired
bytheTRIPS Agreement.
Q124. How willSaudi Arabia meet these obligations, which arerequired bytheTRIPS
Agreement?
Reply
Byreviewing itslawsandensuring theirconformity withtheTRIPS Agreement.
Database protection
Q125. What isrequired foradatabasetobeprotected under theSaudi copyright law?
Reply
Applicant hastoshow thatthedatabaseisanoriginal one.
Q126. Aredatabases protectable when theyarebased oninformation thatisinthepublic
domain orotherwise notprotectable?
Reply
Databases andinformation included areprotected.
Q127. What rights arethecopyright owners granted? What aretheexceptions and
limitations onthese rights?
Reply
Therights ofthecopyright owners arestipulated under Article 7ofCopyrights Law. Asfor
thelimitations, therearenoexceptions orlimitations resulted fromtheauthor ’sresponsibility towards
others.
Q128. Isthecopyright owner granted arighttoprevent others from renting thecopyright
work? Ifso,forwhat works doesthisrental right apply (e.g., tocomputer programs? sound
recordings? audiovisual works?)
Reply
Yes,forallcategories falling under copyright protection. Please seepara.10ofSaudi Arabia ’s
Memorandum, WTO/ACC/SAU/5.
VI. TRADE-RELATED SERVICES REGIME
Q129. Please indicate indetail thejustification foramandatory import agent system in
lightoftheprovisions ofArticle IIIoftheGATT.WT/ACC/SAU/8
Page41
IsSaudi Arabia prepared toallow foreign individuals andfirms thisability ona
non-discriminatory basis inthecontext ofitsaccession totheWTO?
Reply
Please seereply 15above.
Non-financial services andinsurance
Q130. Regarding restrictions onthecross-border provision ofservices (reply 26,
L/7645/Add.1), wenoteSaudi Arabia ’sstatements thatitdoes notplace anyrestrictions on
cross-border delivery ofservices, except forcallback services, andthatforeign service suppliers
areallowed tosellservices toState-trading enterprises inthesame manner thattheyareallowed
tosellservices tonon-State-trading enterprises.
(a) Does Saudi Arabia recognize Foreign Legal Consultants, whoarepermitted topractice
thelawoftheir home country, andinsome cases, international law?
(b) Does Saudi Arabia apply an“economic needs test”totheapproval offoreign investment
applications? Ifthisisthecase, arethestandards forapplying theneeds testpublished
oraretheylefttothediscretion ofaninvestment review agency?
Reply
(a) Reply 25tothedocument WT/ACC/SAU/6/Add.3 states:
Council ofMinisters decision No.116dated 12/7/1400 A.H. states that“licence topractice
lawandlegalconsultation isrestricted tothose whoareSaudi nationals. ”
Article(2)oftheMinisterialdecisionNo.1190dated16/2/1402A.H.statesthat“Theconditions
togrant alicence toofferlegalconsultations areasfollows: Theapplicant mustbe(1)ASaudi national,
...(4)Resides intheKingdom continuously.
Article (6)ofthesame decision states thatitisprohibited fornon-Saudis, individuals or
companies toofferlegalconsultation intheKingdom either individually orinassociation withaSaudi
individual oroffice.
Itisclear from these articles thatoffering legal consultation isrestricted toSaudi nationals
andisprohibited fornon-Saudis tooffer suchconsultation.
However,Saudilegalconsultantsmaythemselvesprocuretheservicesofforeignlegalconsultants
toobtain advice onmatters pertaining toforeign country orinternational law.
(b) Allforeign projects havetosatisfy theconditions ofbeing adevelopment ”project asdefined
inReply (313), andofhaving foreign technical expertise.
Withrespect tocross-border services, the“economic needs test”mayormaynotbeapplied,
depending ontheservice sector concerned. Thestandards aresector-specific, andtherefore varyfrom
onesector toanother.
Q131. TheLaw onCertified Accountants stipulates thatonlySaudi nationals canbe
registered ascertified accountants within Saudi Arabia. Atthesame time, many foreign investorsWT/ACC/SAU/8
Page42
areinterested inaccountants familiar withaccounting forinternational transactions, bothinter-and
intra-firm. Thenumber ofSaudi accountants withthiskind ofexperience, however, maybe
limited.
Canforeign accounting firms establish partnerships/corporations toprovide accounting
services iftheyhireSaudi CPAs?
Saudi lawpermits theissuance ofwork permits forforeign personnel thatfillpositions
forwhich noSaudi worker isavailable. Does Saudi Arabia plan toliberalize the
implementing regulations fortheAccounting Law toallow employment offoreign
accountants under these conditions?
Reply
Certified Saudi professionals areallowed toenter intopartnership withforeign professional
companies according totheterms andconditions setforthbytheMinistry ofCommerce (Professional
Companies Law). These conditions arespecified inArticle 2oftheImplementing Rules forProfessional
Companies.
Thelicence forestablishing aprofessional company between aSaudi national andanon-Saudi
isobtained byaresolution from theMinster ofCommerce andisasfollows:
- theforeign company should bereputable andwellrecognized inthefieldofitsprofession.
- theforeign company should beestablished andregistered foratleasttenyears andpractising
inthefieldsuccessfully.
- theforeign company should participate intraining andbuilding Saudi nationals ’experience
aswellasintroducing itstechnical technology.
ThisArticle hasbeenamended byMinisterial Resolution No.929of29.8.1416 A.H. tobecome
asfollows:
- theforeign company should employ orhave atleastoneprominent representative inthe
Kingdom, thisrepresentative should:
- stayintheKingdom foraperiod notlessthan9months peryear;
- haveatleastauniversity degree inthefieldofthecompany specialization;
- haveanexperience notlessthan10years successfully.
- inorder topractice itsprofession intheKingdom, theforeign company should adjust itself
withtheseconditions, maximally, within oneyearfromthedateofimplementing thisresolution;
- theforeign company should provide anattested andtranslated copyofitsregistration contract;
- thetransference ofaSaudi share tonon-Saudi share should notresult inreducing theshares
ofSaudi shareholders, lessthan25percentofthetotalcapital.
Q132. Saudi lawandregulation concerning legal services appears tomirror thatfor
accounting.
DoesSaudiArabiaplantoliberalizetheimplementingregulationsfortheLegalConsultancy
Lawtoallow limited foreign investment inlawpartnerships andpractice byforeign law
partnerships andpractice byforeign lawyers?WT/ACC/SAU/8
Page43
Reply
No.Please alsorefertoreply 130(a) above.
Q133. Concerning thesupply ofservices forenvironmental protection andconservation,
theresponse toquestion 40indicates thatthese are“subject totheProcurement ofGovernment
Purchases Law...or theStandard Rules forGovernment Purchases. ”
Does thismean thatthere isnopossibility fortheprivate purchase ofenvironmental
services? Please explain.
Reply
Trade-related environmental policies areofthreetypes. First, theimport andexport ofwildlife
islicensed bytheNational Commission forWildlife Conservation andDevelopment. Second, theSaudi
Meteorology andEnvironmental Protection Administration hasusedsome general standards toprovide
appropriate bases fortheevaluation andregulation ofindustrial andurban activities thatcurrently exist
intheKingdom inorder to,among other things, helpprotect theKingdom ’senvironment. Asaresult
ofthesestandards,importsofhighlypollutingcapitalequipmentareimplicitlydiscouragedwhileimports
ofmorebenign equipment areencouraged. Third, theSaudi Arabian Standards Organization considers
environmental issues when formulating standards which maysubsequently beenforced attheborder.
Within thecontext ofthese observations, there isnooutright prohibition ofprivate purchases
ofenvironmental services.
Q134. Pleasesupplyadditionalinformationonservicespreferencesinthefollowingbilateral
andregional agreements:
Jordan andEgypt -trucking andpublic transportation
Tunisia andEgypt -transport
Syria, Turkey, andLebanon -transport
Morocco -airtransport
GCC -unspecified preferences, including movement ofcapital andlabour
Arab League -bilateral agreements with unspecified countries offering unspecified
preferences
Reply
Land andMarine Transportation Agreements between theKingdom ofSaudi Arabia andEgypt.
These agreements aimatorganizing andcoordinating Land andMarine transport activities
between theKingdom ofSaudi Arabia andEgypt. ThetwoAgreements wereratified byRoyal Decrees
Nos.M/10 dated 19/8/1411 H.andM/11 dated 19/8/1411 H.These Agreements wereinitiated within
thecontext oftheEconomic Cooperation Agreement between thetwocountries which wasratified
byRoyal Decree No.M/4dated 9/4/1411H.
Regarding Land Transport, theAgreement tookintoconsideration theprotection ofNational
Carriers, thedesignation ofloading, unloading andaccess points inbothcountries based onpublic
interest. TheAgreement alsoobligated thecarriers ofeachcountry toabide bytherules, regulations
andvehicle specifications inforce ineachcountry regarding allowable truck weights andsizesand
torefrain fromengaging indomestic transport activities ineachother’sterritory ortransport toathird
country.WT/ACC/SAU/8
Page44
Regarding Marine Transport, theAgreement aimsatstrengthening thecooperation between
thetwocountries inthemerchant marine fieldaccording tomutual sovereignty, benefit andprinciples
ofmarine safety onthehighseas. ThisAgreement alsoaimsatincreasing themarket share ofnational
merchant marine fleets intransporting goods among theportsofbothcountries suchthateachcountry ’s
share would notbelessthan40percentofalltrade volumes transported byseabetween thetwo
countries. Each party reserved therighttotransport itsexports totheother country onitsnational
fleet, andtoprovide necessary facilities andassistance totheships oftheother side.
Economic Agreement between theKingdom ofSaudi Arabia andJordan
ThisAgreement aims atimproving andstrengthening Economic cooperation between The
Kingdom ofSaudi Arabia andJordan. TheEconomic Agreement wassigned in1382H.andratified
byRoyal Decree No.42dated 11/9/1382H. Article 9organized transport operations bytrucks and
common passenger carriers foreachcountry andthereciprocal exemption fromfeesandcustoms duty
forcarriers operating between thetwocountries.
Transport Agreements withTurkey, Lebanon, Tunisia andSyria
There isnoratified transport agreement between theKingdom ofSaudi Arabia ontheonehand
andTurkey, Lebanon andTunisia ontheother. Butthereexists aproposed draftfortwoAgreements
forLand andMarine transport between theKingdom ofSaudi Arabia andTurkey. These arethe
subject ofcontinuing study andreview.
Concerning Syria, cooperation inthefieldoftransport isgoverned bytheCommercial and
Economic Agreement between thetwocountries which wasratified in1392H., andwithin thecontext
oftheArab Transit Agreement. Article (7)oftheCommercial andEconomic Agreement obligates
thetwoparties towork towards facilitating Transit operations through theirrespective countries and
exempting carriers crossing eachother’sterritories, whether fullorpartially full,fromallrestrictions,
transit feesandcustoms duty.
Transport Between theKingdom ofSaudi Arabia andtheGCC Countries.
Article (18)oftheEconomic Agreement among theGCC countries which hasbeenratified
byRoyal Decree M/12 dated 21/3/1402H states ineffect thatmember States shalltreatpassenger and
freight transportation vehicles owned bycitizens ofonemember Stateandpassing through theterritories
ofanother ordestined toit,thesame treatment aspassenger andfreight transportation vehicles owned
byitsowncitizens, including exemption fromallfeesandtaxes, provided thatsuchvehicles donot
engage indomestic passenger orfreight transport intheother State.
Transport Within theContext oftheArab League Agreements.
TheTransit Agreement, which regulates transit operations among theArab League member
States andwhich wasratified bytheKingdom ofSaudi Arabia, includes many articles concerned with
transport among themember States which facilitates thetransit movement oftransport vehicles over
theroads ofthese countries.
Financial services (excluding insurance)
Q135. Weappreciate Saudi Arabia ’sreplies toquestions regarding itsrégime inservices.
While many oftheissues raised inthefollowing questions have been addressed tosome extent,
weseekconfirmation ofthemeasures thatapply tofinancial services (excluding insurance) andWT/ACC/SAU/8
Page45
anelaboration oflicensing conditions thatmaybeinconsistent withtheobligations oftheGATS,
including theUnderstanding onCommitments inFinancial Services.
Forexample, where licensing ofabank branch orjoint venture isdetermined bythe
Council ofMinisters upon therecommendation oftheMinister ofFinance andNational
Economy, weseekanelaboration ofthecriteria thatapply tothose determinations and
thescope fordiscretion thatisavailable totheMinister orCouncil todenyalicence (i.e.,
where criteria forapproval arebroad, non-prudential innature orundefined).
Reply
TheCouncil ofMinisters hasnothadtheoccasion toconsider approval ofanewlicence for
thelastmany years asnorecommendation wasmade bySAMA andtheMinster ofFinance andNational
Economy. Inthepast,themain factor indeciding onsuchapplications were therecommendations
oftheMinister ofFinance andNational Economy which inturnwerebased onrecommendations of
SAMA.
Q136. With respect tobanking, securities andother financial services, arethere any
measures ofahorizontal nature (affecting allormany sectors) thatlimitmarket access ornational
treatment inthefinancial services sector, such asforinvestment authorizations, reciprocity
measures,orotherdiscriminatorypractices,includingthoseinvolvedinprivatizationofState-owned
enterprises? Ifso,please describe thecontent ofanyhorizontal measures thatcurrently would
limit, orthatyouanticipate would limit, foreign participation inSaudi Arabia infinancial services
(asdefined inpara. 5(a)(v) through (xvi)oftheAnnex onFinancial Services).
Reply
There isalimitation onthetypeoflegalentity: onlyjointstock companies incorporated in
Saudi Arabia canbelicensed asfinancial entities. There isalsoalimitation onparticipation offoreign
capital: theshare offoreign nationals andforeign juridical persons islimited to40percentoftheequity.
However, inSaudi Arabia, theauthorities haveencouraged banks tousetheuniversal banking
model under which theyprovide various financial services totheircustomers. Consequently, most
financial services asdefined inpara. (a)(v) to(xvi)oftheAnnex areprovided onlybylicensed banks
ormoney changers intheKingdom. Thispolicy protects theinterest ofinvestors anddepositors and
takes intoconsideration thefactthatbanks havehighlevels ofcapital, reputable directors andofficers,
largepoolsoffinancialexpertise,andtheabilitytoinvestintechnologytosupportandcontroloperations.
Thegovernmentalsodidnotwishtoencourageproliferationofweak,inefficient,inadequatelycapitalized
institutions without sufficient human andtechnical resources. Thisprudent policy hasensured that
while themarket hasbeenwell-served, nofinancial disaster hasoccurred.
Q137.(a) Arethere anyfinancial services asdefined inpara. 5(a)(v) through (xvi) ofthe
Annex onFinancial Services thatarenotcurrently provided bytheprivate sector inSaudi Arabia?
(b) Areanysuchservices provided byState-owned institutions alone orincompetition with
privately-owned financial institutions inSaudi Arabia?
(c) Arethere anymonopoly suppliers offinancial services?
(d) Inaddition tosecurities underwriting andcurrency exchange operations arethere any
other financial services inwhich foreign investment isprohibited?WT/ACC/SAU/8
Page46
Reply
(a) Theprivate sector isallowed toprovide allservices listed in5(a)(v) through (xvi)oftheAnnex
onFinancial Services. TheSaudi authorities encourage theprivate sector todevelop newfinancial
products andservices fortheircustomers.
(b) Under thelaw,private sector canprovide allfinancial services. However, duetopractical
reasons related tolargeinitial investment, riskmanagement, credibility ofthefinancial system, equitable
treatment, etc.,theclearing andsettlement services forchecks, securities andATMs arecurrently
provided bytheSaudi Arabian Monetary Agency.
(c) There arenomonopoly suppliers offinancial services.
(d) Foreign investment inthefinancial services industry arenotprohibited including underwriting
andcurrency exchange operations. However, aforeign entity, wishing toprovide suchservices, must
obtain permission from theauthorities.
Q138. Please describe thespecific content ofanylaws, regulations, orpractices which
limit inanyway:
(a) theability ofanon-resident financial service provider toprovide cross-border intothe
territory ofyour country advisory andother auxiliary financial services, theprovision
andtransfer offinancial information, andfinancial dataprocessing (asdefined inpara.
5oftheAnnex onFinancial Services);
(b) theability ofresidents ofyour country topurchase financial services intheterritory of
another party.
Reply
(a) Financial advisory andauxiliary financial services areconsidered asbanking business andare
covered under theprovisions oftheBanking Control Law.
Consequently, suchservices mayonlybeprovided byabanking institution licensed toprovide
suchservices intheKingdom. Asfarasprovision oftransfer offinancial information andfinancial
dataprocessing, there arenospecific lawsorregulations preventing supply ofthese services ona
cross-border basis, andcurrently foreign companies doprovide suchservices.
(b) There arenolaws, regulations andpractices preventing residents ofSaudi Arabia topurchase
suchservices inother jurisdictions. Saudi resident andcorporations arefreetoaccess suchservices
intheinternational markets.
Q139. With respect tofinancial services (asdefined inpara. 5(a)(v) through (xvi)ofthe
Annex onFinancial Services), please describe thecriteria forlicensing orapprovals orthespecific
content ofanymeasures thatwould limit inanyway:
(a) theability ofanon-resident financial service provider toestablish andexpand acommercial
presence inyour country asabranch, anagency, arepresentative office, andasa
wholly-owned subsidiary, either through denovo investment orthrough acquisition of
existing enterprises;WT/ACC/SAU/8
Page47
(b) ordeny national treatment toforeign financial institutions thatseektoestablish, expand
oracquire anexisting financial institution inSaudi Arabia; or
(c) theability ofaforeign-owned financial service provider established inyour country to
compete tosupply financial services onterms andconditions thatarenolessfavourable
thanthose applied tofinancial service providers ofyour country inlikecircumstances
(including theopportunity toparticipate inanyself-regulatory body, securities orfutures
exchange ormarket, clearing agency orother organization orassociation).
Reply
(a) Under Article 3oftheBanking Control Law, licences aregranted byMinister ofFinance and
National Economy ontherecommendation ofSAMA. National banks arerequired tobeSaudi
Arabian jointstock companies andtheirdirectors mustbeofgood reputation. Thelicensing
offoreign bankbranches bytheMinister mustbeapproved bytheCouncil ofMinisters. Since
1976, SAMA policy hasbeennottoissue newbanklicences astheAgency considered the
localmarket tobewellserved by11banks. However, in1988, alocalmoney changer was
given banking licence toconvert hisbusiness intoabank. Since then, thelimitonthenumber
ofbanks at12hasbeenmaintained.
(b) There arenodiscriminatory laws, rules orregulations aimed atforeign participants, except
forlimitations mentioned inreply 136above.
(c) Following thelicensing ofabankwithforeign participant bySaudi authority, thereisnolimit
oncompetition bysuchbankwithother financial service providers. Theterms andconditions
under which theyoperate arenolessfavourable thanthose applied toother banks andfinancial
institutions.
Q140. Areanyofthefinancial services asdefined inpara. 5(a)(v) through (xvi)ofthe
Annex onFinancial Services notconsidered “development enterprises ”forthepurposes ofthe
Investment ofForeign Capital Regulation?
Reply
Allfinancial services areconsidered as“development enterprises ”.
Q141. What must aforeign investor infinancial services dotosatisfy thecriterion that
theinvestment isaccompanied byforeign technical expertise?
Reply
Thecriterion would besatisfied iftheforeign investor provides technical know-how and
management know-how.
Q142. Please describe thecontent ofanyrestrictions onthetemporary entry ofthe
personnel, particularly managers executives orspecialists, ofafinancial services provider that
isestablishing orhasestablished acommercial presence inyour country.
Reply
There arenospecial rules forfinancial services. Asforgeneral regulations, please see
paragraphs 54to56ofSaudi Arabia ’sSupplementary Memorandum, WT/ACC/SAU/5.