WORLD  TRADE  
ORGANIZATION  RESTRICTED 
WT/TPR/S/256 
14 December 2011  
 
(11-6341) 
Trade Policy Review Body  
   
 
  
 
TRADE POLICY REVIEW 
 
Report by the Secretariat 
 
THE KINGDOM OF SAUDI ARABIA 
 
  
 
This report, prepared for the first Trade Policy Review of The Kingdom of 
Saudi Arabia, has been drawn up by the WTO Secretariat on its own 
responsibility.  The Secretariat has, as required by the Agreement establishing 
the Trade Policy Review Mechanism (A nnex 3 of the Marrakesh Agreement 
Establishing the World Trade Organization), sought clarification from 
The Kingdom of Saudi Arabia on its trade policies and practices. 
 
Any technical questions arising from this report may be addressed to 
Mr. Ricardo Barba (tel: 022 739 5088) and Mr. Peter Milthorp (tel: 022 739 
5016). 
 
Document WT/TPR/G/256 contains the policy statement submitted by 
The Kingdom of Saudi Arabia. 
 
 
 
Note: This report is subject to restricted circ ulation and press embargo until the end of the first 
session of the meeting of the Trade Policy Review Body on The Kingdom of Saudi Arabia. The Kingdom of Saudi Arabia WT/TPR/S/256 
 Page iii 
 
 
CONTENTS 
 
    Page 
SUMMARY   vii 
 (1)   THE ECONOMIC ENVIRONMENT  vii  
 (2)   INSTITUTIONAL FRAMEWORK  viii  
 (3)   TRADE POLICY INSTRUMENTS  viii  
 (4)   SECTORAL POLICIES  x  
I.  ECONOMIC ENVIRONMENT 1  
 (1)   MAJOR FEATURES OF THE ECONOMY  1  
 (2)   RECENT ECONOMIC DEVELOPMENTS  2  
 (3)   TRADE PERFORMANCE AND INVESTMENT  4  
 (i)   Trade in goods and services 4  
 (ii)   Foreign direct investment 8  
 (4)   OUTLOOK  10  
II.  TRADE AND INVESTMENT REGIME 12  
 (1)   THE INSTITUTIONAL FRAMEWORK  12  
 (2)   TRADE POLICY FORMULATION AND IMPLEMENTATION  13  
 (3)   POLICY OBJECTIVES  14  
 (4)   TRADE AGREEMENTS  15  
 (i)   WTO 15  
 (ii)   Regional agreements 16  
 (iii)   Other preferential arrangements 18  
 (5)   INVESTMENT FRAMEWORK  18  
III.  TRADE POLICIES AND PRACTICES BY MEASURE 21  
 (1)   MEASURES DIRECTLY AFFECTING IMPORTS  21  
 (i) Customs registration, documentation, procedures, and valuation 21  
 (ii) Rules of origin 23  
 (iii) Tariffs, other duties, and taxes 23  
 (iv) Import prohibitions, restrictions and licensing 28  
 (v) Contingency trade remedies 31  
 (vi) Standards and other technical requirements 32  
 (vii) Government procurement 36  
 (viii) Local-content requirements 37  
 (ix) Other measures 37  
 (2)   MEASURES DIRECTLY AFFECTING EXPORTS  38  
 (i) Registration and documentation 38  
 (ii) Export duties and taxes 38  
 (iii) Export prohibitions, restrictions and licensing 38  
 (iv) Export subsidies, finance, insurance, and assistance 40  
 (v) Free zones 42  
 (vi) Other measures 42  WT/TPR/S/256 Trade Policy Review 
Page iv 
  
    Page 
 (3)   M
EASURES AFFECTING PRODUCTION AND TRADE  42  
   (i) Incentives 42  
  (ii) Competition policy and price controls 43  
 (iii) State trading, state-owned enterprises, and privatization 46  
 (iv) Intellectual property rights 48  
 (v) Other measures 52  
IV.  TRADE POLICIES BY SECTOR 53  
 (1)   AGRICULTURE AND RELATED ACTIVITIES  53  
 (i)   Main features 53  
 (ii)   Agricultural policy 54  
 (iii)   Fisheries 57  
 (2)   MINING AND ENERGY  59  
 (i)   Overview 59  
 (ii)   Mining and quarrying 59  
 (iii)   Petroleum 61  
 (iv)   Natural gas 65  
 (v)   Electricity 67  
 (vi)   Water 68  
 (3)   MANUFACTURING  69  
 (i)   Overview 69  
 (4)   SERVICES  73  
 (i)   Overview 73  
 (ii)   Financial services 74  
 (iii)   Telecommunications and postal services 80  
 (iv)   Transport 83  
 (v)   Tourism 86 
 
REFERENCES    87 
APPENDIX TABLES  89 
 The Kingdom of Saudi Arabia WT/TPR/S/256 
 Page v 
 
 
CHARTS 
    P a g e  
I. ECONOMIC ENVIRONMENT  
I.1 Structure of merchandise trade, 2005 and 2010 5 
I.2 Direction of merchandise trade, 2005 and 2010  6 
III. TRADE POLICIES AND PRACTICES BY MEASURE 
III.1 Breakdown of applied MFN tariff rates, 2011 25 
III.2 Tariff escalation by ISIC 2-digit industry, 2011 27 
IV. TRADE POLICIES BY SECTOR  
IV.1 Mobile telephony, 2001-10 81 
IV.2 Internet market evolution, 2001-10 82 
TABLES 
I. ECONOMIC ENVIRONMENT  
I.1 Saudi Arabia at a glance, 2010 1 
I.2 Selected economic indicators, 2005-10 3 
I.3 Balance of payments, 2005-10 7 I.4 Foreign direct investment, 2005-09 9 
II. TRADE AND INVESTMENT REGIMES  
II.1 Selected notifications to the WTO, 2011 15 
II.2 Economic activities in which foreign investment is not permitted, 2011 19 
III. TRADE POLICIES AND PRACTICES BY MEASURE III.1 Trading across borders indicators in GCC countries, 2011 22 
III.2 Structure of MFN tariffs, 2011 24 
III.3 Summary analysis of MFN tariffs, 2011 25 III.4 Seasonal tariff binding commitments, 2011 27 
III.5 Prohibited imports, 2011 29 
III.6 Prohibited exports, 2011 38 III.7 Export subject to authorization/licensing, 2011  39 
III.8 Export finance and guarantee, 2007-2009 41 
III.9 Price regulation, 2011 44 III.10 Selected state-owned enterprises, 2011 46 
IV. TRADE POLICIES BY SECTOR  
IV.1 Cultivated land area and production, 2008-09 53 
IV.2 Projects specialized in an imal production, 2008-09 54 
IV.3 Output of animal products, 2008-09 54 
IV.4 Value of some main agricultural products, 2006-09 54 IV.5 Fish production, 2007-08 58 
IV.6 Production of selected minerals, 2005-10 59 WT/TPR/S/256 Trade Policy Review 
Page vi 
  
    P a g e  
 
IV.7 Number of licences, 2005-10 60 
IV.8 Daily crude oil production, 2006-10 61 IV.9  Domestic consumption of refined products, crude oil, and natural gas, 2005-09 62 
IV.10 Exports of crude oil and refined products (by region), 2007-09 63 
IV.11 Output of refined products, 2005-09 64 IV.12 Regulated prices of refined petroleum and gas products, 2011 65 
IV.13 Industrial units by activity, 2009 69 
IV.14 Cement production, 2007-09 71 IV.15 Saudi share market indicators, 2005-10 77 
IV.16 Licensed insurance and reinsurance companies, 2011 78 
IV.17 Passengers and cargo transport operations, 2008-09 83 
APPENDIX TABLES 
I. ECONOMIC ENVIRONMENT  
AI.1 Structure of exports, including re-exports, 2005-10 91 
AI.2 Structure of imports, 2005-10 93 
AI.3 Destination of exports, including re-exports, 2005-10 95 
AI.4 Origin of imports, 2005-10 96 
II. TRADE AND INVESTMENT REGIMES  
AII.1 Main trade-related legislation, 2011 97 III. TRADE POLICIES AND PRACTICES BY MEASURE 
AIII.1 Applied MFN tariff averages by HS2, 2011 100 
AIII.2 Import licensing, 2011 103 AIII.3 Products subject to mandatory standards, 2011 106 
AIII.4 SPS measures, 2011 108 
IV. TRADE POLICIES BY SECTOR  AIV.1 Applied MFN tariffs by ISIC Rev.2 category, 2011 111 
 
  The Kingdom of Saudi Arabia WT/TPR/S/256 
 Page vii 
 
 
SUMMARY  
 
(1) T HE ECONOMIC ENVIRONMENT  
1. Since its accession to the WTO in Decemb er 2005, the Kingdom of Saudi Arabia has 
continued a development strategy aimed at, inter alia , diversifying its economy away from crude oil 
and natural gas (23% of real GDP, 91% of governme nt income and 86% of export earnings in 2010).  
This is being done by promoting downstream industries, improving education and health services, and 
modernizing infrastructure.  The development strate gy has been centred on a liberal trade regime and 
has been accompanied by structural  reforms that have created a more business-friendly environment. 
2. Saudi Arabia's development strategy has resulted in a positive economic performance during 
2005-10:  real GDP grew at an annual average rate of 3.2%;  the inflation rate averaged 4.6% per 
year;  and there were surpluses in both its overall fi scal position (except for 2009) and external current 
account.  However, the global economic crisis cause d a sharp deterioration of those macroeconomic 
indicators in 2009.  Saudi Arabia responded with a countercyclical policy, mainly through a sizeable 
fiscal stimulus (US$400 billion investment and de velopment programme during 2009-13) that limited 
the impact of the crisis and supported solid growth  of the non-oil sector.  As a member of the G20, 
Saudi Arabia has exercised restraint over the impos ition of new trade restrictions despite the global 
downturn. 
3. With a population of around 27 million (31% e xpatriates, i.e. 80% of the labour force), given 
that the oil sector is not labour-intensive and that increasing public-sector employment is not 
sustainable in the long-run, Saudi Arabia's main  economic and social challenge, according to the 
authorities, is to provide more employment opportun ities for its citizens.  Thus, the "Saudization" 
programme is being implemented to match Saudis' qualifications and private sector needs.  Other 
important challenges include scaling back reliance on  the public sector to absorb domestic labour, and 
gradually reforming domestic energy pricing to create a more energy-efficient economy. 
4. The Saudi Arabian riyal (SAR) has been pegge d to the U.S. dollar (SAR 3.75 per US$) since 
1986.  In December 2009, Bahrain, Kuwait, Qatar, a nd Saudi Arabia ratified an agreement to establish 
a monetary union; Oman and the United Arab Emir ates, the other Gulf Cooperation Council (GCC) 
members, are not joining the monetary union.  Tec hnical details of the monetary union are currently 
under discussion in the Gulf Monetary Council.  The da te for introducing a single currency is yet to be 
determined. 
5. Saudi Arabia's economy is increasingly dependent on intern ational trade: the ratio of 
merchandise and services trade (exports and imports ) to GDP rose from 89% in 2005 to 97% in 2010, 
with a peak of 105% in 2008.  In 2010, Saudi Arabia ranked 12th among world merchandise exporters 
and 21st among importers (considering the EU countries t ogether and excluding intra-EU trade).  In 
services trade, Saudi Arabia ranked 33rd among exporters and 11th among importers.  Saudi Arabia is, 
increasingly, a net importer of services, with a deficit averaging around US$50,000 million per year 
during 2005-10. 
6. Saudi Arabia has become the eighth biggest recipient of FDI in the world, with an annual 
average of about US$25,000 million over 2005-10.  This  has been the result of steps taken to open up 
certain key economic activities to foreign invest ment (e.g. mining, petrochemicals, gas, and 
telecommunications), as well as to develop four  economic cities and special economic zones.  
Nevertheless, foreign companies still face investment r estrictions in certain activities such as fisheries, 
and oil exploration/drilling/production. WT/TPR/S/256 Trade Policy Review 
Page viii 
  
(2) I NSTITUTIONAL FRAMEWORK  
7. Formulation and implementati on of Saudi Arabia's trade policy is the responsibility of the 
Ministry of Commerce and Industry (MCI), in coordination with other ministries, such as the Supreme Economic Council (headed by the King), a nd the Saudi Negotiating Team in charge of 
discussing and assessing WTO-related issues.  The pr ivate sector provides inputs to trade policy 
formulation by communicating its views either di rectly to the MCI or through the chambers of 
commerce and industry on an ad hoc  basis. Saudi Arabia is taking st eps to boost its participation in 
the multilateral trading system, commensurate with its growing importance worldwide, including through the establishment of its WTO mission in June 2010. 
8. The WTO Agreements and the GCC Treaty are the main factors underlying Saudi Arabia's 
trade policy.  As part of its WTO accession nego tiations, Saudi Arabia bound 100% of its tariff lines; 
made extensive commitments under the GATS; a nd became a signatory to the Information 
Technology Agreement (ITA).  Saudi Arabia has not been involved in any dispute under the WTO 
Dispute Settlement Mechanism directly, but has partic ipated as a third party in six cases. Up to March 
2011, Saudi Arabia had 15 notifications outstanding. 
9. Saudi Arabia participates in two overlappi ng regional trade agreements, the GCC and the 
Pan-Arab Free Trade Area (PAFTA).  As a group, the GCC has concluded free-trade agreements with 
EFTA States and Singapore, which are in the process of ratification.  The GCC is also involved in 
trade negotiations with Australia, China, EU, India, Japan, Korea, MERCOSUR, New Zealand, 
Pakistan, and Turkey. GCC Heads of States have  agreed that any new preferential agreement 
concluded by a member would apply pari passu  to all members, except for agreements with the 
United States.  
(3) T
RADE POLICY INSTRUMENTS  
10. Since 2003, Saudi Arabia has been aligning its tariff to the GCC common external tariff 
(CET).  Initially, a transition period of three years (31 December 2005) was envisaged to complete the 
CET alignment, but this was extended until the end of 2011.  Saudi Arabia has a relatively simple 
MFN tariff;  98.6% of all rates are ad valorem , 19 tariff lines have mixed rates (on tobacco and 
tobacco-related products), and 81 lines correspond to  products prohibited for religious reasons e.g. 
alcoholic beverages, live swine and swine products .  There are no tariff quotas, no applied seasonal 
tariffs, and no other duties and charges on imports.  Saudi Arabia does not impose VAT, excise duties or any other internal tax or charges on do mestically produced or imported products.  
11. Saudi Arabia's average MFN applied tariff is  5.2%.  On the basis of the WTO definition, 
tariffs average 6.1% on agricultural products , and 5% on non-agricultural products. Upon its 
accession to the WTO, Saudi Arabia bound its tari ff at rates ranging up to 200% (on tobacco and 
tobacco-related products) and averaging 10.9%, i. e. average bound rates of 15.4% on agricultural 
products, and 10.1% on non-agricultural goods.  The overall average MFN applied tariff, at 5.7 
percentage points lower than the bound rate, pr esents an element of uncertainty as it gives the 
authorities some margin for increasing applied MFN tariffs.  Saudi Arabia also made seasonal tariff binding commitments on some fruits and vegetables. 
12. On aggregate, Saudi Arabia's tariff displa ys positive escalation, from first-stage processed 
products, with an average tariff of 4.2%, to semi-fini shed goods, with an average rate of 5%, and fully 
processed products, on which tariffs average 5.5%.  At a more disaggregate level, there are mixed 
results:  tariff escalation is positive from the first to  the final stage of processing in some industries 
(e.g. textiles and apparel, and wood  products), thereby providing highe r levels of effective protection The Kingdom of Saudi Arabia WT/TPR/S/256 
 Page ix 
 
 
to those industries than that reflected by the nomin al rates;  mixed (negative from the first to the 
second stage, and then positive) in the food, beverag es, and tobacco industry (reflecting the high rates 
on tobacco) and non-metallic mineral products;  and negative from the first to the final stage of 
processing in chemicals and plastics, partly becau se of duty-free imports of pharmaceuticals.  
13. On the basis of commitments undertaken  during its WTO accession negotiations, Saudi 
Arabia eliminated the requirement to authenticate import documentation, as of 31 December 2007.  The use of a Saudi commercial agent is required only to import or export agricultural machinery. 
Import and export prohibitions and restrictions are maintained on a number of products, mainly for 
health, security, moral, and religious reasons, but al so on SPS grounds.  Saudi Arabia is harmonizing 
its regime on standards and technical regulations at the GCC level, and accepted the TBT Code of 
Good Practice in 2006. 
14. Saudi Arabia has adopted the GCC Treaty pr ovisions on contingency trade remedies, but has 
never imposed any anti-dumping, countervailing or  safeguard measures.  The GCC Ministerial 
Committee has not applied any trade remedy me asures, although it in itiated two safeguard 
investigations, both of which were terminated due to lack of injury.   
15. Saudi Arabia applies only one export duty, to untanned hides and skins, which will be 
eliminated on 10 September 2013.  It maintains e xport bans on 11 categories of products, including 
Arabian breeding horses and wood.  Saudi Arabia con tinues its efforts to diversify its export base, 
including through various finance and credit insurance operations on exports.  
16. In addition to import duty co ncessions, other general incentives available to all investors, 
include:  no personal income tax;  20% tax on profits while losses ma y be transferred indefinitely; 
medium- or long-term loans from the Saudi Industria l Development Fund of up to 50% of the project 
cost with competitive interest rates;  land at compe titive rates;  supply of electricity, fuel, water, and 
natural gas at competitive industrial prices;  s upport activities related to qualifying, training, and 
recruitment of Saudi workforce under the Huma n Resources Development Fund;  and large R&D 
endowments. 
17. Saudi Arabia notified the WTO that it does not maintain any state-trading enterprises.  
Despite some privatizations, state ownership re mains significant throughout the economy, with the 
public sector being one of the largest employers.   
18. Saudi Arabia's government procurement regi me does not apply to certain procurements, 
including weapons and military equipment; consultancy;  and goods and services available only 
through one supplier.  It also provides for price preferences of 10% and 5% for local and GCC 
products, respectively. Saudi Arabia has been an obs erver to the plurilateral Government Procurement 
Agreement (GPA) since December 2007;  it has ye t to begin negotiations for GPA membership. 
19. Saudi Arabia's competition legislation appli es to all establishments, with the exception of 
public and wholly state-owned corporations.  It  addresses agreements between Saudi and foreign 
companies or between foreign companies, even wh en the agreements are concluded outside Saudi 
Arabia.  There are no free zones or free economic zo nes. Some goods and services are subject to price 
regulation, e.g. wheat flour, fuel, gas, electricity, energy transportation services, and pharmaceuticals (subject to profit regulation). During the last few years, Saudi Arabia has made significant progress in enforcing IPR protection. WT/TPR/S/256 Trade Policy Review 
Page x 
  
(4) S ECTORAL POLICIES  
20. The mining and energy sector has underpinned Saudi Arabia's economic development.  The 
simple average applied MFN tariff on mining and qua rrying (major division 2 of ISIC, Revision 2) is 
5%. Saudi Arabia is the world's largest exporter of  oil and one of the biggest producers of oil and 
natural gas.  It retains the largest additional oil production capacity within OPEC, and has invested to 
increase its total production capacity to 12.5 million barrels per day (mbpd) (c urrent production is 
around 8.5 mbpd).  Recent years have seen a substan tial increase in domestic and foreign investment 
in gas.  Saudi Arabia is also encouraging a re duction in the domestic consumption of oil through gas 
replacement, and is trialling solar thermal and othe r sustainable electricity generation methods.  The 
fully state-owned Saudi Arabian Oil Company (Sa udi Aramco) benefits from certain concessionary 
rights and privileges with respect to the productio n of crude oil, for example on (upstream) oil 
extraction, and certain exclusive rights and privileges in gas.   
21. Services constitute a crucial component in  Saudi Arabia's overall policy of economic 
diversification.  In 2010, the sector accounted for 50.6% of real GDP and employed about three 
quarters of the workforce.  Several state-owned en terprises participate in the sector on the basis of 
commercial considerations, according to the aut horities.  These include the National Commercial 
Bank, Tawuniya, Saudi Arabian Airlines Company, and Saudi Telecom Company.  Financial services, 
notably banking and cooperative insurance, have  expanded substantially since Saudi Arabia's 
accession to the WTO. 
22. Manufacturing contributed 12.6% to Saudi Arab ia's real GDP in 2010.  The sector benefits 
from its relatively large endowment of hydrocar bons, which are used as inputs by industries 
producing cement, petrochemicals, me tals, and fertilizers.  The simp le average applied MFN tariff on 
manufacturing (major division 3 of ISIC, Revision 2)  is 5.3%.  The Govern ment is an important 
shareholder in key manufacturing companies, e.g. Saudi Arabian Basic Industries Corporation (SABIC).  Four economic cities are being constr ucted, focusing mainly on heavy industries, 
comprising petrochemical, copper refinery and smelter, and aluminium complexes. 
23. Despite its relatively small share of total r eal GDP (4.6% in 2010), agriculture is of key 
importance in the economy because of Saudi Arabia's food security objective.  This is to be achieved 
mainly through relatively low customs tariffs (3.5%,  major division 1 of ISIC, Revision 2).  In order 
to increase food security, Saudi Arabia has encouraged  private companies to invest in farm projects 
abroad.  The private sector has played a major role  in the development of Saudi agriculture, mostly 
due to government programmes that offer, inter alia , long-term, interest-free loans;  low-cost water, 
fuel and electricity;  and reduced duties on imports of raw materials and machinery.