RESTRICTEDWORLD TRADE
ORGANIZATIONWT/ACC/SPEC/SAU/4
11 January 2000
(00-0106)
Working Party on the Accession
of the Kingdom of Saudi Arabia
DRAFT REPORT OF THE WORKING PARTY ON
THE ACCESSION OF THE KINGDOM OF SAUDI ARABIA
TO THE WORLD TRADE ORGANIZATION
INTRODUCTION
1. On 13 June 1993, the Government the Kingdom of Saudi Arabia (hereinafter referred to as
Saudi Arabia) requested accession to the General Agreement on Tariffs and Trade (GATT 1947).  Atits meeting on 21 July 1993, the GATT 1947 Council of Representatives established a Working Partyto examine the application of the Government of Saudi Arabia to accede to the General Agreementunder Article XXXIII, and to submit to the Council recommendations which may include a draft
Protocol of Accession.  Membership of the Working Party was open to all contracting parties
indicating the wish to serve on it.  In pursuance of the decision of the General Council of the WorldTrade Organization (WTO) of 31 January 1995, the GATT 1947 Accession Working Party wastransformed into a WTO Accession Working Party.  The terms of reference and the membership ofthe Working Party were reproduced in document WT/ACC/SAU/2/Rev.6.
2. The Working Party met on 2 and 3 May, 6 and 8 November 1996, 29-30 May, 2 and
4 December 1997, 17 and 19 November 1998, 22 September 1999 and ... under the Chairmanship ofMr. J. Weekes (Canada).
DOCUMENTATION
3. The Working Party had before it, to serve as a basis for its discussions, a Memorandum on the
Foreign Trade Régime of Saudi Arabia (L/7489) and the questions submitted by members on theforeign trade régime of Saudi Arabia, together with the replies thereto, (L/7645 and Add.1;WT/ACC/SAU/3;  WT/ACC/SAU/ 6, Add.1-3 and Add.3/Corr.1;  WT/ACC/SAU/8 and Corr.1;
WT/ACC/SAU/10;  WT/ACC/SAU/13, Add.1, Add.1/ Corr.1 and Rev.1;   WT/ACC/SAU/29,
Add.1-4, and Corr.1 and 2;  and, WT/ACC/SAU/35 a nd Corr.1).  The Government of Saudi Arabia
also provided the Working Party with the following information:
- Customs Law and Implementing Regulations;
- Customs Tariff;- Guide to the Licensing of Fore ign Investment in Saudi Arabia;WT/ACC/SPEC/SAU/4
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- Law for the Protection and Encouragement of National Industries;
- Trade Marks Law and Regulations;
- The Patents Law;
- The Law for the Protection of Copyrights;
- Law and Regulations for Commercial Agencies;- Import Statistics, 1993;
- Information on Non-Oil Exports To  Gulf Cooperation Council States;
- Decree No. 142 of 199/11/1413:  General Objectives  and Strategic Principles of the Sixth
Development Plan;
- Law for the Protection and Enc ouragement of National Industry;
- Saudi Industrial Development Fund Law;
- Investment of Foreign Capital Regulation;- Rules for the Coordination of Industrial Establ ishments in the Gulf Cooperation Council States;
- Banks Control Law (Articles 1-4);
- Ministerial Resolution by the Ministry of Communications concerni ng Applications for
Licences by Maritime Companies and Firms for Carrying on Maritime Carriage (Articles 1-7);
- Ministerial Resolution No. 4104/20/M date d 4.11.1408 (H) concerning the Implementing
Regulations to the Private Medical Establishments Law (Articles 1-2);
- Implementing Regulations to Regulation of Technical Institutes and National Occupational
Centres (Articles 1-9);
- Resolution from His Royal Highness the Minist er of Defence and Aviation concerning the --
Regulation of Tourism and Travel Agencies  and Companies engaged in Air Transport
(Articles 1-4 and 13);
- Ministerial Order No. 264 of 16.9.1402(H):  Organi zation of the Practice of the Profession of
Engineering Consultancy (Party I and III);
- Law of Certified Accountants (Articles 1-2) and Ministerial Order No. 595 of 13.11.1395
Enacting the Implementing Regulations of the Accountants Law;
- Ministerial Order No. 1190 of 16.2.1402 Pertaini ng to the Regulation of Carrying on the
Profession of Legal Consultancy (Articles 1-2. 4-7);
- Law concerning the Carrying on of the Profe ssion of Pharmacy and Trading in Medicaments
and Medical Preparations (Articles 1.5);
- List of banned items;
- Rules and Procedures before  the Board of Grievances;
- Royal Decree M/10 of 3.3.92(H) and Council of Ministers Re solution No. l 172 of 25.2.92(H);
- SASO Standards No. 457 and No. 702;
- List of Saudi Standards (1-802);
- Regulated Product Categories Applicable Standards;
- Catalogue of Saudi Standards (1997);
- Government Purchases Law and Implementing Regulations;- Council of Ministers Resolution No. 124 of 29.5.1403;
- Standard Rules for Giving Priority in Government Purchases to National Products and Products
of National Origin of Gulf  Cooperation Council States;
- Companies Law;
- Law of Arbitration and Implementing Re gulations to the Law of Arbitration;
- Response to Questionnaire on Im port Licensing Procedures;
- Information on Foreign Investment by Sectors;
- Information on Recent Foreign Investments Granted Licences;
- Information on Saudi Industrial Development Fund Loans;
- Information on Saudi Agriculture Bank Loans;- Information on Agricultural Subsidies Di sbursed through the Agriculture Bank;
- Information on Agricultural Domestic Support;
- Information on the Applica tion of Import Licensing;
- Information on the Technical Barriers to Trade;WT/ACC/SPEC/SAU/4
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- Information on Sanitary and Phytosanitary Measures;
- Information on Preferential Trading Arrangements;
- ICCP - Comprehensive Procedures and Guidelines.
INTRODUCTORY STATEMENTS
4. The representative of Saudi Arabia stated that over the last 25 years, Saudi Arabia had
become a modern State with a strong economy increasingly based on the private sector with a
sophisticated infrastructure.  At the same time, government initiatives had been used to influenceeconomic activity when necessary, in order to ensure the protection of the Islamic values of SaudiArabian society.  Economic development of Saudi Arabia had largely depended on the utilisation ofits large oil and gas reserves.  Saudi Arabia was the largest producer of oil in the world and one of theworld's largest producers of natural gas.  The availability of these resources had given rise to aneconomy typical of oil-rich developing countries - characterized by a major concentration of exportson a single product and a high propensity to import.
5. The representative of Saudi Arabia informed members of the Working Party that within its
traditional market economy system, Saudi Arabia had established indicative planning for economic
and social development, based upon Islamic values and principles, to guide development in acoordinated and balanced direction.  The first and second plans stressed the construction of a moderninfrastructure, the improvement of government services, and the development of human resources.The third and fourth plans emphasized the diversification of the economy and improvement in health,education, training and other social services.  Over the past two decades non-oil GDP had increasedfive-fold and private investment had increased seven- fold.  Infant mortality rates had dropped by over
75 per cent and the ratio of physicians per person had improved by more than 90 per cent.  School
enrolment had risen from a little over 500,000 to more than 3 million and Saudi Arabia had among the
lowest pupil-teacher ratios in the world.
6. He further added that Saudi Arabia had also improved its trade with other nations of the
world.  Amongst  developing countries, it ranked sixth in the world in the value of traded goods, ofwhich a large proportion was petroleum exports.  Of  the top 40 trading countries in the world, Saudi
Arabia ranked sixth in the growth of trade over the period 1977-1992.  Saudi Arabia maintained oneof the least restrictive exchange and trade systems in the world - there were no exchange restrictionsand did not impose trade restrictions for balance-of-payments reasons.  Trade restrictions were onlyimposed for religious, health, and security reasons.  In addition to the underlying objectives of the
preservation of Islamic values and the provision of national security, there were a number of other
broad goals that the five-year plans aspire to achieve.  These include diversification of the economy,improvement of living standards, regional developmen t within Saudi Arabia, strengthening of the roleWT/ACC/SPEC/SAU/4
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of the private sector, broadening the linkages between Saudi Arabia and other nations, development
and sustenance of the physical infrastructure, protection of the environment and development ofhuman resources.  The main focus of the current five-year plan was the acceleration of the process ofeconomic diversification with the ultimate goal of having a fully developed economy.  While oil was
a vital part of the Saudi economy, the goal was to use petroleum as a resource for diversified
industrial growth and reducing the country's dependence on the world oil market.  The rapid growth ofthe Saudi population also necessitated the establishment of a diversified economy capable of creatingthe necessary employment opportunities and sustaining a relatively high standard of living for apopulation which was projected to more than double in the next 20 years.
7. The representative of Saudi Arabia stated that the diversification of the economy could only
be achieved through much broader private sector participation in the economy.  The private sector hadalready begun to pursue a wide range of business opportunities unrelated to government expendituresand this trend was expected to accelerate as private sector management, production and marketing
capabilities strengthened and the competitive atmosphere improved.  Institutional support for private
sector-led growth and diversification would be provided by the Government, through liberalisationand facilitation of investment, rapid development of the Saudi Arabia's banking and financial sectorand financial markets, as well as a widening range of business services.  Saudi Arabia also recognizedthe need to build a technology base.  Whilst Saudi Arabia had kept up to date with global scientificand technological developments, this had largely been through the import of sophisticated technologyowned by foreign partners.  Saudi Arabia still needed to improve its indigenous technologicalcapabilities to the level of that existing in devel oped countries.  The Government planned to assist
through the expansion and improvement of educational courses and facilities related to science and
technology at all levels, as well as improvement of the overall structural support for private sectorinitiatives.  In addition, Saudi Arabia was aware of  the need to impart to its citizens the knowledge
and skills that would enable them to participat e effectively in all social, economic and cultural
activities, as well as to further develop vocational and technical education so that the country's skilledmanpower needs could be met.
8. In their opening remarks, members of the Working Party welcomed Saudi Arabia's decision
to accede to the WTO and to implement the WTO Agreements expeditiously through the
establishment of institutional arrangements and the amendment and adoption of the required
legislation and regulations.  It was noted that Saudi Arabia had played and was expected to continue
to play a significant role in contributing to main tain economic and financial stability and growth, both
in the region and globally.  Saudi Arabia's accession would reinforce the universality of the WTO andstrengthen the multilateral trading system.  Noting th at Saudi Arabia wished to avail itself of certainWT/ACC/SPEC/SAU/4
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transitional arrangements, some Members supported this request while other Members stated that such
requests would have to be considered and decided case by case on the basis of substantiated needs.
9.   The Working Party reviewed the economic policies and foreign trade regime of Saudi
Arabia and the possible terms of a draft Protocol of Accession.  The views expressed by members of
the Working Party and the various aspects of Saudi Arabia's foreign trade regime, and on the terms
and conditions of Saudi Arabia's accession to the WTO, are summarised below in paragraphs 10 to144.
ECONOMIC POLICIES
Privatization
10. Some members of the Working Party requested that Saudi Arabia explain how foreign
companies were permitted to participate in the privatization of Saudi industries.  In response, the
representative of Saudi Arabia stated that according to the Council of Minister’s Resolution No.60dated 1/4/1418 H, regarding the Government’s objectives of privatization, one of those objectives was"the encouragement of national and foreign capital to undertake domestic investment".  TheMinisterial Committee on Privatization formed by the above Resolution was required to approve theimplementation programme for each project planned for privatization by the Government.  Theprogramme included a study on the participation of foreign investment according to the circumstancesand nature of each project.
Investment Regime
11. Some members of the Working Party requested clarification whether there were any formal
requirements setting a minimum level of Saudi Arab ian participation in any business venture.  The
representative of Saudi Arabia stated that there wa s no law that specifically dealt with the topic of
foreign joint ventures.  The Investment of Foreign Capital Regulation covered foreign investment ingeneral, including foreign capital in joint ventures.  Although Saudi regulations did not require localparticipation, under the Investment of Foreign Capital Regulation, at least 25 per cent Saudi
participation was required in order to qualify for tax exemptions.  Some sectors were open to
foreigners only if they formed a joint venture with Saudi Arabian companies, such as foreign
participation in the maritime transport sector.  The only conditions in the Investment of ForeignCapital Regulation were that the capital be invested in development enterprises, other than extractionof petroleum and mining, and that the foreign capital be accompanied by foreign technical expertise.Foreigners could not participate in the provision of certain services like security guarding, commercial
agencies, customs clearing agencies, transaction follow-up clerks to government departments, and realWT/ACC/SPEC/SAU/4
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estate agencies. In addition, foreign investment was prohibited in security underwriting and
commodity brokerage services, including currency exchange operations, as well as in technicalinstitutes.  Foreign accountants, lawyers or pharmacists were required to work out of the office of aSaudi licensed accountant, lawyer, or pharmacist, respectively.  Other professional service suppliers
were required to have a contract with a Saudi service provider before being allowed to establish a
commercial presence.  In addition, various sectors were reserved to the State:  such as basic
telecommunications, railways, mass transit, postal service, public administration,  and publicbroadcasting.  Investors in a Saudi Arabian busi ness would only be granted a licence to commence  a
second business once the first project was successfully established.
12. Some members of the Working Party requested clarification of the encouragements offered
by Saudi Arabia to foreign investors to invest in  Saudi Arabia in order to support the inflow of
technology and expertise, in particular whether technology transfer was in any way a condition forinvestment approval in all or certain cases.  The representative of Saudi Arabia replied that the
Investment of Foreign Capital Regulation provided that any investment of foreign capital required a
licence issued by the Ministry of Industry and Electricity upon the recommendation of an inter-agencyCommittee.  If the Committee rejected the licence application for an investment of foreign capital, theconcerned foreign investor could appeal the decision to the Minister of Industry and Electricity.There were two requirements for grant of a licence.  The first was that the proposed investment bemade in "development enterprises" (not includin g enterprises for the extraction of petroleum and
minerals).  The Ministry of Industry and Electricity, upon the motion of the inter-MinisterialInvestments Committee, had issued a Ministerial Order (Number 952 of 1400) which determined that
the following groups of enterprises were considered  development enterprises for the purposes of the
Investment of Foreign Capital Regulation:
- Productive industrial development projects,
- Productive agricultural development projects,- Health development projects,- Services and- Contracting.
The second requirement for grant of a licence was that the investment be accompanied by foreign
technical expertise.  The conditions that foreign capital be accompanied by foreign technical expertise
aims at encouraging technology transfer to Saudi Arabia.  Accordingly, the provision of technology
did not in and of itself guarantee approval under the Investment of Foreign Capital Regulation.Technology transfer was not a restriction on foreign investment.  In fact,  Saudi Arabia encouragedthe inflow of foreign capital by all means.WT/ACC/SPEC/SAU/4
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13. Some members of the Working Party asked whether the government had awarded licences to
100 per cent foreign-owned operations.   In response the representative of Saudi Arabia stated thatthere was no level of foreign ownership required for a licence to be granted under the Investment ofForeign Capital Regulation.  Moreover, even if there was such a requirement, neither the GATT 1994
nor the Uruguay Round Agreement on Trade-Relate d Investment Measures prohibit requirements
regarding the level of foreign ownership.  He noted that of the 1,354 licences issued for foreign capital
investment in Saudi Arabia, 137 had been for enterprises wholly owned by foreign entities.  Inresponse to further questions, he noted that “national treatment” was given to foreign investors withinthe context of the Investment of Foreign Capital Regulation.  He noted, however, that under theGovernment Procurement Law, wholly foreign-ow ned firms were given the lowest priority for
contracts.  He further stated that the Investment of Foreign Capital Regulation was fully consistentwith the GATT 1994 and with the WTO Agreement on Trade-Related Investment Measures, andreiterated that Saudi Arabia did not apply any TRIMs prohibited by the WTO Agreement on
Trade-Related Investment Measures.
14. In response to questions from some members of the Working Party concerning whether the
Government of Saudi Arabia planned to liberalize its stock market and open it to non-Saudi investors,
the representative of Saudi Arabia stated that Saudi Arabia had no plans to change its regulationsconcerning participation of foreigners in the securities market.  Direct share trading in Saudi Arabiawas restricted to Saudi nationals.  Non-Saudi Gulf Cooperation Council (GCC) nationals wereallowed to participate in the share market but only to the extent to which the original allocation ofshares was subscribed by non-Saudi GCC nationals.  There were non-GCC nationals that held shares
of joint stock companies which were traded in the share market but those non-GCC nationals were
required to receive permission from concerned authorities, such as the Saudi Arabian MonetaryAgency and the Ministry of Commerce, prior to selling their shares.  In its continuous review of thedevelopment of the financial market, the Kingdom of Saudi Arabia had allowed the establishment of aclose-ended fund (SAIF) listed on the London Stock Exchange.  Through that fund internationalinvestors could participate in the Saudi Stock Exchange.
15. Some members of the Working Party asked whether Saudi Arabia planned to remove its
restrictions on foreign investment in exploration and extraction of hydrocarbons. The representative ofSaudi Arabia replied that there were no plans to eliminate restrictions on foreign investment in the
petroleum sector.WT/ACC/SPEC/SAU/4
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FRAMEWORK FOR MAKING AND ENFORCING POLICIES
16. The representative of Saudi Arabia explained that the Basic Law of Rule, instituted by Royal
Decree No. A/90 dated 27 Shaaban 1412 AH, set down the law concerning political authority within
Saudi Arabia.  Article 56 of the Basic Law of Rule stated that the King was the Chairman of the
Council of Ministers and was assisted by Ministers in the performance of his duties.  The Basic Law
also stated that the Law of the Council of Minist ers laid down the powers of the Council regarding
internal and external policies, the organization and coordination of the various Governmentauthorities; and the conditions to be satisfied by, the powers of, the method of responsibility and allaffairs of the Ministers.  Resolutions passed by  the Consultative Council were forwarded to the
Chairman of the Council of Ministers, who passed them to the Council of Ministers for consideration.When the points of view of both Councils were in agreement they were enacted after being approvedby the King.  In case of a difference of opinion, the King approved what he considered appropriate.Laws, treaties and international agreements and concessions were enacted and amended by Royal
Decrees after having been considered by the Cons ultative Council.  In general, no initials could be
affected on any agreement or obligation until approved by the Council of Ministers.  In conclusion, headded that the Kingdom of Saudi Arabia would do whatever was required, whether through RoyalDecree, Council of Ministers Decree or Ministerial Orders to bring its trade regime into conformity
with its WTO obligations in those cases  where conformity did not already exist.
17. In response to further questions, the representative of Saudi Arabia stated that Article 70 of
the Basic Rule of Law provided that international agreements entered into force as domestic lawsfollowing their ratification by Royal Decree and enactment by the Consultative Council and Council
of Ministers.
18. [The representative of Saudi Arabia stated that if Saudi Arabia's laws or other acts should be
found to contradict international treaties or agreements, the provisions of the international treaty oragreement, such as the WTO, would apply.  The representative of Saudi Arabia confirmed that sub-central entities had no autonomous authority over issues of subsidies, taxation, trade policy or anyother measures covered by WTO provisions.  He confirmed that the provisions of the WTOAgreement, including Saudi Arabia's Protocol, wo uld be applied uniformly throughout its customs
territory and other territories under Saudi Arabia's control, including in regions engaging in bordertrade or frontier traffic, special economic zones, and other areas where special regimes for tariffs,
taxes and regulations are established.  He added that when apprised of a situation where WTO
provisions were not being applied or were applied in a non-uniform manner, central authorities wouldWT/ACC/SPEC/SAU/4
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act to enforce WTO provisions without requiring affected parties to petition through the courts.  The
Working Party took note of these commitments.]
POLICIES AFFECTING TRADE IN GOODSApplication of Internal Taxes
19.  In response to questions from members of the Working Party, the representative of Saudi
Arabia stated that Saudi Arabia did not impose a value added tax nor an excise tax upon importedproducts.
20. In response to further questions he noted that Saudi Arabia applied an income tax to the
income of foreign residents.  Saudi nationals paid a "Zakat" tax on the value of assets. Some membersof the Working Party requested further information on the "Zakat" tax applied to Saudi Arabiancitizens in lieu of the income tax applied to foreigners.  These members noted that it appeared that the"Zakat" and income taxes were applied in such a manner that foreign investors typically carried ahigher total tax burden than Saudi Arabian citizens.  The representative of Saudi Arabia stated that the
base for the collection of the Zakat was broader than the base for collection of income tax from
foreign partners.  The Zakat base included capital, statutory reserves, circulated profits, adjustedprofit, partners credit accounts of one year or longer (treated as capital), loans from partners (treatedas capital and additional financing for the company) and long term loans from other sources for thepurpose of capital base expansion.  Since it was a religious tax, no exemptions were possible.  Zakatwas applied at a flat rate of 2.5 per cent.  Thus the Zakatable amount included other items over andabove a share of profits, such as a share of capital, reserves and provisions, circulated profits andcredit current account reduced by the share in the amount paid to acquire fixed assets.  In contrast,
foreigners were not liable to tax until the capital invested started to earn a profit.  Foreign investors
also enjoyed a tax holiday of ten years for industrial and agricultural projects and five years for otherprojects.
Import Regime
21. In response to questions, the representative of Saudi Arabia stated that the secondary and
tertiary boycotts on products of Israeli origin had been removed in law and in practice.
Customs Tariff
22. The representative of Saudi Arabia provided members of the Working Party with information
on the Customs Tariff applied in Saudi Arabia.WT/ACC/SPEC/SAU/4
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23. The representative of Saudi Arabia stated that taking into account its own needs and the
interests of members of the Working Party, his Government had offered substantial bindings in itstariff.  [Following the completion of bilateral negotiations with WTO Members, the schedule ofconcessions and commitments on market access for goods of Saudi Arabia will be reproduced in
Part I of the Annex to the Protoc ol of Accession of Saudi Arabia.]
24. [The representative of Saudi Arabia confirmed that from the date of accession Saudi Arabia
would levy no duties and charges on imports other than ordinary customs duties and fees and chargesfor services rendered.  Any such charges applied to imports after accession would be in accordancewith WTO provisions.  The Working Party took note of this commitment.]
25. [The representative of Saudi Arabia further confirmed that Saudi Arabia would not list any
other charges in its Goods Market Access Schedul e under Article II:1(b) of the GATT 1994, binding
such charges at "zero".]
Import Licensing
26. In addition to information contained in the Memorandum on the Foreign Trade Regime, the
representative of Saudi Arabia provided a detailed description of the import licensing proceduresprevailing in Saudi Arabia in document WT/A CC/SAU/30, and a list of restricted (banned and
controlled) items in Saudi Arabia, together with the justification for the measures in documentWT/ACC/SAU/29/Add.3.  He also noted that additi onal information could be obtained from the
concerned department or division of the respective Ministry or from the Information Centre of theMinistry.  The information could also be obtained from the Chamber of Commerce and Industry.  Healso noted that any person with a Commercial Regist ration (i.e. registration to do business), whether
an individual or an entity, could apply for import licence.
27. Some members of the Working Party requested information on the proportion of Saudi
imports subject to licensing.  In response, the representative of Saudi Arabia stated that no statisticswere available to answer that question.
28. In response to further requests for information, the representative of Saudi Arabia noted that
decisions to not grant an import licence could first be appealed to the Minister of the concernedMinistry or to the head of the Agency concerned.  Any subsequent appeal would be to the Board ofGrievances.  The Board of Grievances was composed of a President, Vice-Presidents and Members.The President was appointed by and reported to the King.  The Vice-Presidents and Members were
appointed by Royal Decree on the recommendation of the President.  There were no time frames fixedWT/ACC/SPEC/SAU/4
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for the hearing of appeals or handing down of decisi ons.  The Board of Grievances did supply written
judgements to all parties to any appeal.  Those judgements included the reasons for the decision.
29. The representative of Saudi Arabia confirmed that in addition to the Ministry of Agriculture,
Ministry of Commerce, Chivalry Club, Ministry of  Health, Ministry of Information, Ministry of
Interior, Ministry of Industry and Electricity, and Ministry of Petroleum and Natural Resources, the
Ministry of Education (Department of Museums and Archaeology), the Ministry of Post, Telegraphand Telephone (PTT), and the National Commission for Wild Life Conservation and Development
(NCWCD) all had responsibilities concerning the approval of import licences.  He also confirmed thatthere were no substantive requirements to register with the Ministry of Commerce in order to import,although there was a requirement to obtain Commercial Registration for the carrying on of business,whether manufacturing, retailing, trading, or professional.   Any company, whether Saudi or foreign,which was commercially registered in the field of import trade could import goods without the need toget any further permission or authorization, except for items which require an import licence.
30. In response to further questions, he noted that the Chivalry Club would automatically grant an
import licence for the importation of non-Arabian horses, within 30 days of receipt of a completeapplication.  In this connection, some members of the Working Party requested additional informationon the time limits for grant of other import licences.  These members noted, in particular, that Article3.5(f) of the Agreement on Import Licensing provided that ordinarily an import licence must begranted within 30 days of receipt of a complete application.  These members noted that for somecategories of goods, import licences took longer th an 30 days, in particular, radio communication
apparatus (one to two months) and  network equipm ent (six to twelve months).  These members noted
that the importation of such products was also subject to approval by the Frequency Department of the
Department of Post, Telegraph and Telephone.  In response, the representative of Saudi Arabia statedthat the Frequency Department ordinarily completed its review in one week.  If a product met thefrequency and necessary technical specifications, the Licensing Committee would ordinarily decidewhether to grant an import licence within 30 days.
31. In response to requests for information concerning the fees payable for obtaining an import
licence, the representative of Saudi Arabia stated that there were no fees payable for the obtaining ofan import licence.  Companies or persons wishing to import merchandise for display at a trade fairwere granted import licences that permitted the importation of all necessary samples, subject to the
condition that the samples not be offered for direct sale.
32. Some members of the Working Party requested information on the precise laws and
regulations governing the time limits for issuing an import licence.  In response, the representative ofWT/ACC/SPEC/SAU/4
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Saudi Arabia stated that there were no laws or administrative orders governing the issuing of import
licences.  Average time periods for the issuing of import licences were around 30 days.  In the eventof an unsuccessful application for an import licence, the person requesting the licence could appealthe refusal to the Board of Grievances.
33. Some members of the Working Party asked whether petroleum and natural asphalt were
subject to import licensing and requested that Saudi Arabia provide the justification pursuant to the
relevant provisions of the WTO Agreement for the maintenance of import licensing on those products.In response, the representative of Saudi Arabia stated that petroleum and asphalt were subject toimport licensing.  The need for those controls was under review.   He stated that Saudi Arabia wouldensure that by the time of accession, the regime relating to those products was in conformity withWTO obligations.
34. In response to questions from some members of the Working Party, the representative of
Saudi Arabia stated that the import of fire extinguishers required a licence from the Ministry of
Interior.  He also noted that high quality photocopiers required an import licence from the Public
Security Department of Forgery.  This was beca use such photocopiers could produce extremely high
quality reproductions of documents, making it hard  to differentiate between the original and the
photocopies of paper currency and official documents, certificates, passports, maps and stamps.  Healso noted that burglar or fire alarms required an import licence to prevent misuse by criminals orterrorists. For this reason import licences were only issued to government enterprises, publicenterprises and firms or individuals who had a contract with the government to supply such securitydevices from inside the Kingdom or abroad.  Some members of the Working Party requested
additional information on the justification for the import licensing requirements for security reasons.
The representative of Saudi Arabia stated that those goods were subject to import licensingrequirements for security reasons.  The measures were necessary in order to prevent import and themisuse of the items by persons who could pose a security risk.  The Ministry of the Interior was theagency that determined whether the importer posed a security risk or not.  The list of items subject toimport licensing was under review, and in this context he noted that the requirement for importlicensing of fire fighting equipment had recently been lifted.  That equipment could now be importedwithout a licence, following a customs examin ation to determine compliance with Saudi or
international standards.
35. Some members of the Working Party requested information on the system for licensing the
importation of agricultural machinery.  The representative of Saudi Arabia stated that the importlicensing system for import of agricultural equipment was operated in order to administer a system ofWT/ACC/SPEC/SAU/4
Page 13
subsidies paid to importers of such equipment.  The import licence was required even if the importer
did not intend to apply for a subsidy payment.
36. Some members of the Working Party requested further details of import restrictions on long
life pasteurized milk in packing exceeding 1 litre, (tariff item 0401.00.00).  In response, the
representative of Saudi Arabia stated that the Kingdom of Saudi Arabia would remove the ban on
long life pasteurized milk upon its accession to the WTO, and the ban would be replaced by tariffs.He stated that the import ban on dates would be removed and converted to tariffs.
37. In response to questions from some members of the Working Party, the representative of
Saudi Arabia provided an Action Plan for the Implementation of the Import Licensing Agreement indocument WT/ACC/SAU/40.
38.  [The representative of Saudi Arabia confirmed that Saudi Arabia would, from the date of
accession, eliminate and shall not introduce, re-introduce or apply quantitative restrictions on imports,or other non-tariff measures such as licensing, quotas, bans, permits, prior authorization requirements,
licensing requirements and other restrictions having equivalent effect that cannot be justified under
the provisions of the WTO Agreement.  Any further amendments to the import licensing regime afteraccession would be fully in accordance with all relevant provisions of the WTO, including theAgreement on Import Licensing Procedures.  Saudi Arabia would replace non-automatic importlicensing with automatic import licensing for "milk fo r industrial use" within three years from the date
of accession.  He further confirmed that any discretionary authority permitting officials of theKingdom of Saudi Arabia to suspend imports and exports or licensing requirements that couldsuspend, ban, or otherwise restrict the quantity of trade would be applied from the date of accession in
conformity with the requirements of the WTO, in particular Articles XI, XII, XIII, XVIII, XIX, XX
and XXI of the GATT 1994, and the Agreements on Agriculture, Application of Sanitary andPhytosanitary Measures, Import Licensing Procedures, Safeguards and Technical Barriers to Trade.The Working Party took note of these commitments.]
Customs Valuation
39. Some members of the Working Party stated that the system of valuation described in the
Memorandum on the Foreign Trade Regime, in Annex 4 to document WT/ACC/SAU/4 and indocument WT/ACC/SAU/18 did not appear to fully comply with certain requirements of the CustomsValuation Agreement.  Some members requested that a number of areas of the customs valuation
regime receive further elaboration so that they  were in conformity with the WTO Agreement on
Implementation of Article VII of the GATT 1994, its Interpretive Notes, and relevant decisions andWT/ACC/SPEC/SAU/4
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declarations.  In particular, members noted that in addition to problems related to  transparency or
predictability, Saudi Arabia’s valuation system relied on the "nearest equivalent value" as analternative to transaction value.  This could give customs officials excessively wide discretion in theirdetermination of customs value of the imported goods.   In response, the representative of Saudi
Arabia stated that although there were currently some shortcomings in the system of customs
valuation prevailing in Saudi Arabia, steps were being taken to bring the regime into conformity assoon as possible.
40. Some members of the Working Party requested information on how Articles 1:1(a)-(d) and
Article 1:2 of the Customs Valuation Agreement concerning the use of transaction value, and relatedparty transactions were applied in Saudi Arabia.  In response, the representative of Saudi Arabiastated that the present system did not contain provisions giving effect to those provisions of theCustoms Valuation Agreement.  In response to further questions, concerning Articles 2-7 of theCustoms Valuation Agreement dealing with methods of valuation alternative to transaction value etc.
he noted that in general there were no similar provisions in current Saudi Customs valuation law.
There existed a valuation alternative to transaction value, e.g. the use of price lists for automobileimports.  To determine the customs value for new vehicles, the Customs authorities used the pricepaid or payable as shown on the invoices.  However, the customs value of used vehicles was derivedfrom applying a schedule of depreciation to the original new price.  He noted in this connection thatcertain members of the WTO were using the Price Lists for certain agricultural products.
41. In response to further requests for information concerning the valuation of imported products,
the representative of Saudi Arabia stated that when the value declared in the invoice was not
acceptable to the Customs Department, such as when the declared value was considered to be too low,
the Customs Department referred to the values of identical or similar goods imported previously.Although Saudi Arabia currently did not use the values of the identical or similar goods in the sameorder specified in the Customs Valuation Agreement, this did not mean that the price was selectedarbitrarily.  Although the valuation system currently in use did not provide to the importer certainknowledge of how the valuation of his goods was determined, in most instances the system relies onthe transaction value mentioned in the invoice.  He further noted that as far as other valuation methodswere concerned, the importer may not have precisely knowledge of how the valuation of the goodswas determined.
42. In connection with Articles 8 (specifications of permissible additions to the price paid or
payable) and 14 (incorporation of the Interpretative Notes of the Agreement in domestic legislation)of the Customs Valuation Agreement and Decision 3.1 (concerning the treatment of interest charges)WT/ACC/SPEC/SAU/4
Page 15
and Decision 4.1 (concerning the valuation of carrier media bearing software), the representative of
Saudi Arabia stated that Saudi Arabia’s valuation system did not have provisions similar to theAgreement.  Concerning Article 10:  confidential treatment of information;  although the CustomsRegulations and Rules of Implementation did not contain a specific provision regarding maintaining
confidentiality of information, a comparable provision was contained in 12/H of Chapter 2 of the
Civil Service Law issued by Royal Decree 49 dated 10/7/1397H.  This required a governmentemployee, who learnt  of confidential information in his job, not to disclose that information, even
after he left  government service.  This, of  course, included Customs Department employees.
43. Concerning Article 11 of the Customs Valuation Agreement and the right of appeal to a
judicial authority;  the representative of Saudi Arabia stated that appeal rights for a relevant personbefore an independent judicial body (i.e the Board of Grievances) was guaranteed by Royal Decree190 dated 16 Dhu Al-Hujah 1409H.  This  applied to the Customs Department.   The requirements ofArticle 12 concerning publication of laws, regulations , and decisions were satisfied by provision 65 of
Royal Decree No. 425 dated 5/3/1372H, which required  that such information be published in the
official newspaper Um Al -Qura along with all other government notices such as changes in rates of
duty.  The representative of Saudi Arabia also noted that as Saudi Arabia was not presently applyingthe Agreement on Customs Valuation, it had no pr ovisions corresponding to Article 14 and to
Decisions 3.1 and 4.1.  These would be incorporated  in Saudi law on customs valuation when Saudi
Arabia would  implement the Agreement.
44. Some members of the Working Party thanked the representative of Saudi Arabia for this
information, and asked when Saudi Arabia would bring its valuation system into line with the
Agreement on Customs Valuation.  In response the representative of Saudi Arabia stated that Saudi
Arabia had begun the process of adopting the provisions of the Agreement on Customs Valuation andthe incorporation of them into the Customs Rules and Regulations.  Although Saudi Arabia wished toadopt the provisions of the Agreement on Customs Valuation as swiftly as possible, it would not bepossible to implement the Agreement from the date of Accession.  Saudi Arabia would need atransition period.
45. In document WT/ACC/SAU/28, the representative of Saudi Arabia proposed that the
provisions of paragraphs 1 and 2 of Article 20 of the Agreement on Customs Valuation should beavailable to the Kingdom of Saudi Arabia.  In response to requests that any requests for a transitional
period be accompanied by a justification, the representative of Saudi Arabia stated that a transitional
period would be needed to allow adequate time to prepare new laws, new regulations, new guidelinesand administrative procedures for implementing the complex provisions of the Customs ValuationWT/ACC/SPEC/SAU/4
Page 16
Agreement.  Saudi Arabia would also need adequate time to train the Customs staff, the importers and
the customs clearing agents in the implications and application of the new laws, regulations andprocedures made in accordance with the Customs Valuation Agreement.
46. Concerning the use of minimum values for customs purposes, the representative of Saudi
Arabia stated that Saudi Arabia would wish to make a reservation under paragraph 2 of Annex III to
the Agreement on Customs Valuation to continue  the use of minimum values for a handful of
products now under this system.  This would be necessary, because although Saudi Arabia wouldultimately discontinue the system, it would need a transitional time for this purpose as it would haveto study carefully the implications of the change, and to devise procedures for checking practiceswhich necessitate the use of minimum values.  The flexibility required would be needed for two yearsfrom the date Saudi Arabia starts applying the provisions of the Customs Valuation Agreement.  Inthe interim, Saudi Arabia would undertake a careful study in the first year of implementation to deviseprocedures for discontinuing the minimum values.
47. The representative of Saudi Arabia also noted that Saudi Arabia would seek a reservation
under paragraphs 3 and 4 of Annex III to the Customs Valuation Agreement.  The justification for thatrequest was that because the Customs Administration of Saudi Arabia had not reached the level ofsophistication and expertise of developed countries, it would not be possible for it to apply therelevant provisions of the Customs Valuation Agreement before that date.  The reservation wouldcontinue to be applicable for an indefinite period.  In the interim, once Saudi Arabia started to applythe Customs Valuation Agreement, it would undertake studies to consider if it was feasible to lift thereservations.
48. In response to requests for a precise indication of the transition periods needed by Saudi
Arabia to ensure full conformity with the requir ements of the WTO Agreement, the representative of
Saudi Arabia stated that Saudi Arabia would need a transition period to implement the provisions ofthe Agreement on Customs Valuation. In documen t WT/ACC/SAU/38, the representative of Saudi
Arabia provided members of the Working Party with a detailed plan on the work programmeunderway in the Kingdom designed to achieve full compliance with the WTO Agreement onImplementation of Article VII of the GATT 1994 within five years from the date of its accession tothe WTO.  At a later stage, and in document  WT/ACC/SAU/38/Rev.1, the representative of the
Kingdom of Saudi Arabia presented a revised document describing the steps taken so far and the work
planned to bring the Kingdom into full conformity with the Customs Valuation Agreement.  He noted
that work was progressing smoothly and that th e Kingdom would only require a small transitionWT/ACC/SPEC/SAU/4
Page 17
period of approximately two years, i.e. the Agreement would be implemented in full from
1 January 2002.
49. [The representative of Saudi Arabia stated that the Kingdom of Saudi Arabia would
implement the provisions of the WTO Agreement concerning customs valuation in full from
[1 January 2002] [the date of accession to the WTO without recourse to any transition period,]
including the Agreement on the Implementation of Article VII of the GATT 1994.  In this regard, theCustoms Law and implementing regulations would fu lly reflect the requirements of Annex I of the
Interpretative Notes of the Agreement on the Implementation of Article VII of the GATT 1994 andDecision 4.1 on the Valuation of Carrier Media Bearing Software for Data Processing Equipment.The Working Party took note of this commitment.]
Rules of Origin
50. In response to requests for information, the representative of the Kingdom of Saudi Arabia
stated that from 1996 all imports of expensive textile products had been required to have the origin of
the goods printed or stamped thereon with indelible print.  This requirement was introduced to protect
consumers against misleading or deceptive practices.  A textile product was deemed to be "expensive"depending on an analysis of factors such as the quality the brand name, texture, design and the pricerelative to other fabrics.
51. [The representative of Saudi Arabia stated that, from the date of accession, Saudi Arabia's
preferential and non-preferential rules of origin would comply fully with the WTO Agreement onRules of Origin.  The requirements of Article 2(h) and Annex II, Paragraph 3(d) of the Agreementwould also be fully implemented prior to accession.  He  also stated that in any event, from the date of
accession, the Customs authorities would provide an assessment of the origin of the import upon the
request of an exporter, importer or any person with a justifiable cause.  Any request for such anassessment would be accepted even before trade in the goods concerned began.  Any such assessmentwould be binding for three years.  The Working Party took note of these commitments.]
Anti-dumping, Countervailing and Safeguards
52. Some members of the Working Party noted that Saudi Arabia did not currently have any trade
remedies legislation permitting the imposition of anti-dumping or countervailing duty nor theimposition of safeguard measures.  Those members requested that Saudi Arabia undertake to notimpose such measures until appropriate WTO consistent legislation had been enacted.  The
representative of Saudi Arabia stated that after its accession to the WTO, Saudi Arabia would notWT/ACC/SPEC/SAU/4
Page 18
impose anti-dumping, countervailing or safeguard measures until appropriate WTO consistent
legislation had been enacted.
53. [The representative of Saudi Arabia said that Saudi Arabia would not apply any anti-
dumping, countervailing or safeguard measure to imports from WTO Members until it had notified
and implemented appropriate laws in conformity with the provisions of the WTO Agreements on the
Implementation of Article VI, on Subsidies and Countervailing Measures and on Safeguards.  Heconfirmed that Saudi Arabia would ensure that such legislation would be in full conformity with therelevant WTO provisions, including Articles VI  and XIX of the GATT 1994 and the Agreement on
the Implementation of Article VI, the Agreement on Subsidies and Countervailing Measures and theAgreement on Safeguards.  After such legislation was implemented, Saudi Arabia would only apply
any antidumping duties, countervailing duties and safeguard measures in full conformity with therelevant WTO provisions.  The Working Party took note of these commitments.]
Export Regulations
54. Some members of the Working Party  enqui red whether the Kingdom of Saudi Arabia
maintained any export controls.  In response, the representative of Saudi Arabia stated that SaudiArabia maintained export bans on the exports of date seedlings, breeding horses, wheat and wheatflour.  Some members of the Working Party asked whether Saudi Arabia intended to remove thosebans prior to its accession to the WTO. In response, the representative of Saudi Arabia stated thatthere were no bans on the export of wheat and wheat flour, unless the wheat and wheat flour had beensubsidized.  He further added that Saudi Arabia banned the export of date seedlings and breedinghorses because the local breeds and varieties of these two items were pure and rare. He added that
upon accession to the WTO, Saudi Arabia would do whatever was required under applicable WTO
rules.
55. [The representative of Saudi Arabia confirmed that from the date of accession Saudi Arabia
would ensure that its laws, regulations and requirements relating to the right to export and all fees,charges or taxes levied on such rights would be in full conformity with its WTO obligations, includingArticles VIII:1(a), XI:1 and III:2 and 4 of the GA TT 1994 and that it would also implement such laws
and regulations in full conformity with these obligations.  The Working Party took note of thiscommitment.]
56. [The representative of Saudi Arabia also confirmed that any export control requirements
remaining in place on the date of accession would be fully consistent with WTO provisions, includingWT/ACC/SPEC/SAU/4
Page 19
those contained in Articles XI, XVII, XX and XXI of the GATT 1994.  The Working Party took note
of this commitment.]
Export Duties
57. Some members of the Working Party requested information on export duties applied by Saudi
Arabia.  Those members noted that the export duties applied by Saudi Arabia appeared to be imposed
only for revenue purposes and would have trade distorting effects.  In response, the representative ofSaudi Arabia stated that Article XI of the GATT 1994 expressly permitted the imposition of exportduties, and did not restrict the right to impose such duties.
INTERNAL POLICIES AFFECTING TRADE IN GOODS
Industrial Policy, Including Subsidies
58. In response to requests for information concerning interest free loans provided by the Saudi
Industrial Development Fund, the representative of Saudi Arabia stated that companies with foreignshareholders were eligible for a loan of up to 50 per cent of the project cost if Saudi nationals held50 per cent of the shares.  If the Saudi share was less than 50 per cent, then financing would begranted at a proportionally reduced level.  The representative of Saudi Arabia stated that the loanprogramme conducted by the Saudi Industrial Development Fund was entirely consistent with theGATT 1994 and the WTO Agreement on Subsidies and Countervailing Measures.  The loans werenot contingent upon export performance nor were they contingent upon the use of domestic overimported goods.  The decision to provide a loan was made on the basis of the facts appropriate to that
particular case within the parameters of the Saudi Industrial Development Fund Law.  Article 2 of the
Law provided that the Fund could provide medium or long term loans to (1) new industrial enterprisesestablished in Saudi Arabia, and (2) existing private industrial enterprises for the extension of theiractivities or the replacement of their equipment and introduction of modern methods thereto.Article 4 of the Law stated that the Fund should carry out a full evaluation of the economic benefits ofthe enterprise required to be financed, taking into consideration the soundness of its management inorder to ascertain the benefit of the industrial enterprise from economic, financial and technicalaspects.  In addition, the Fund was required to examine whether the financing required for the wholeof the enterprise had been reasonably obtained and whether the volume of the Fund’s aid represented
a reasonable percentage of the total financing needs of the enterprise, and the Fund was required to
obtain sufficient financial guarantees for the financing given by the Fund.
59. Some members of the Working Party requested information on the pricing of certain
feedstock, in particular, methane, ethane, butane, propane and natural gas or liquified petroleum gas.WT/ACC/SPEC/SAU/4
Page 20
In response, the representative of the Kingdom of Saudi Arabia noted that pricing for methane and
ethane was quite different to the pricing of butane and propane and natural gasoline.  Methane andethane in the Gulf region had no international reference price.  There were no exports of methane andethane from Saudi Arabia, due to the costs of liquefying, transporting and regasifying such gases.
Previously, methane and ethane had been burnt as waste products.  Recently, it had been decided to
make methane and ethane available to all interested users (whether Saudi or non Saudi) at a price ofUS$0.5 per million BTU.  Methane and ethane were used by many industries and sectors, includingpower companies, desalination plants, cement manufactures and petrochemical plants.
60. He further noted that for butane, propane, natural gas or LPG, the Council of Ministers
Resolution of December 1992 set the price of those gases lower than the export price.  This was doneto take account of the costs associated with LPG exports to world markets including refrigerating,
storage, mooring and marketing.  The gases were available to all industries and all users within theKingdom whether Saudi or non-Saudi enterprises.  All other energy prices including naphta were
priced at arms length.  There were no specific discounts. Butane, propane and natural gas was made
available to industrial consumers in Saudi Arabia at a price 30 per cent lower than the lowest exportprice charged for those product.  He noted that naphta was not subject to any discount and was pricedat the prevailing international price.
61. He further noted that there was no discrimi nation between wholly ow ned or partly owned
Saudi or totally foreign owned enterprise in terms of access to those gases.  Once a project had beenlicensed in Saudi Arabia, whatever the composition of its ownership, it was entitled to availablesupplies of those raw materials at the prices indicated.  Users were free to use those domestically
available materials or resort to other materials if they so decided.
62. In response to questions from some members of the Working Party, the representative of
Saudi Arabia noted that the discounted prices for certain feedstocks were only available to usersresident in the Kingdom.  He added that no other support, subsidies or pricing had been approved orsanctioned for actual projects involving the creation of production capacity for refined petroleum andpetrochemical products.
Technical Barriers to Trade
63. The representative of Saudi Arabia provided the Working Party with information on technical
standards and its International Conformity Certification Programme (ICCP) in documentsWT/ACC/SAU/21, 26, 29, 34, 36, 37 (Revised Comprehe nsive Procedures and Guidelines concerning
the ICCP) and WT/ACC/SAU/41 (Action Plan for the Implementation of the TBT Agreement).WT/ACC/SPEC/SAU/4
Page 21
64. In response to questions from some members of the Working Party, the representative of
Saudi Arabia stated that importers in Saudi Arabia were required to comply with Saudi law whichrequired all products, imported as well as domestic, to be in conformity with Saudi standards.  Unlessspecified otherwise, compliance with Saudi standards was an implied condition of any contract
between buyer and seller.  Saudi Arabia's standards were internationally harmonized to the most
feasible degree possible, and Saudi specific standards were only adopted in cases where theinternational standards would be an ineffective or  inappropriate means for the fulfilment of the
legitimate objectives pursued because of Saudi Arabia's fundamental climatic, geographical ortechnological problems, as allowed under TBT Agreement Article 2.4.  Consequently, Saudi Arabiaconsidered that the use of a preshipment inspection scheme to verify conformity to Saudi standardsmet the criteria of the PSI Agreement Article 2.4 and footnote 2.
65. In response to questions concerning the conformity of Saudi technical standards with the
international norms, the representative of Saudi Arabia stated that deviation of Saudi requirements
from other national standards due to Saudi Arabia’s fundamental climatic, cultural and national
security specific conditions rendered ISO 9001 alone inadequate to provide sufficient confidence inthe quality, safety and conformity of goods.  In this connection, he noted that Saudi Arabia was amember of ISO, IEC, OIML and CAC.  All Saudi standards were notified to all other members of
those international organisations.  A high percentage of Saudi standards used international standardsand other widely accepted national standards as references.  He provided members of the WorkingParty with a list of SASO standards that had be en based upon CODEX standards, together with a
complete list of the 1,323 Saudi standards including a cross-reference to the international standards
adopted in their entirety as SASO standards (in document WT/ACC/SAU/34).
66. In response to further questions he noted that type testing was the ideal additional assuring
factor, particularly when it was the most widely used and accepted method to verify the conformity ofthe design as required under Module H.  Neverthele ss, in lieu of type testing, the ICCP would accept
Module H plus additional documentation which demonstrated that the Saudi requirements weretypically known, understood and taken into account by the manufacturer in all phases within thissystem, from contract review through design, production, inspection, testing and acceptance.
67. Some members of the Working Party stated that the recent exemption of GCC members from
the ICCP and its implied recognition of equivale ncy of all GCC members' inspection, enforcement,
and compliance to relevant elements of GCC and/or SASO standards raised questions under Article 4
of the SPS Agreement and the transparency provisions of the WTO.  Those members asked whetherGCC member states were obliged to adopt the GCC standards in full or in part.  In response, theWT/ACC/SPEC/SAU/4
Page 22
representative of Saudi Arabia stated that GCC Members were not exempted from the ICCP.  He
added that Article 5.4 of the Regulations of the "Standardization & Metrology Organization for GCCCountries" stipulated that mandatory Gulf Standa rds were adopted by consensus of all members,
while voluntary or guideline standards were adopted by majority.  Some members of the Working
Party also requested a list of GCC member countries that had officially adopted and incorporated
SASO developed standards, by product category, (in fu ll or in part) into their national standards.  In
response, the representative of Saudi Arabia provided a list of SASO standards which had beenadopted as GCC Standards and thereby incorporated  as national standards in other GCC Countries in
Annex III to WT/ACC/SAU/29.
68. Some members of the Working Party requested a list of the standards deemed to be equivalent
to Saudi standards.  In response, the representative of Saudi Arabia stated that the Saudi ArabianStandards Organization had published the list of st andards, and in this connection referred to the
information in document WT/ACC/SAU/15.  He furt her noted that Saudi Arabia's standards were
internationally harmonized as far as possible.  Certain Saudi standards had a corresponding ISO or
IEC equivalent which was indicated in the published list of SASO standards.  Other Saudi standardsused international standards or other recognized national standards as a reference.  He noted that apredetermination of the equivalency of such standards was not feasible, due to the diversity andincorporation of the national requirements and deviations of various countries.  The registrationprocess under ICCP provided a mechanism for the case by case evaluation and determination ofequivalency of the standards to which compliance was declared by exporters, or recognition of therelevant elements in the standards that partially satisfy the requirements of the Saudi standards.  As
additional standards were evaluated progressively, a data base was established and referred to in any
successive assessment of equivalency.
69. Some members of the Working Party requested that the Government of Saudi Arabia publish
draft standards in a single official journal or other publication that available to the general public, andother interested parties.  In response, the representative of Saudi Arabia stated that this would be done.Some members also requested further information on the manner in which SASO developed technicalstandards.  In response, the representative of Saudi Arabia stated that standards considered to be vital
for the legitimate objectives of safety, health, … etc. and which were of concern to a wide spectrum of
interested parties and economic sectors were referred to "technical committees".  However, recent
policy within SASO had been to refer most standards to technical committees irrespectively.  Allparties concerned with the subject matter of the draft standard were normally represented on therelevant "technical committees" as active members; they include pertinent governmental, academic,industry and trade sectors.  For this reason, only one draft circulation period was necessary to provideWT/ACC/SPEC/SAU/4
Page 23
adequate opportunity for comments by other interested parties.  In case of development of draft
standards by SASO’s technical staff, the first dr aft circulation period provides the opportunity for
comments raised by all concerned parties to be taken into consideration in the preparation of thesecond draft.  He also provided the Working Party with a copy of the procedures for the development
of SASO standards in Annex IV to document WT/ACC/SAU/29.
70. Following further comments on the draft Comprehensive Guidelines and Procedures
concerning the ICCP, some members of the Working Party asked whether Saudi Arabia envisagedmaking further changes to the ICCP prior to WTO accession.  In response, the representative of SaudiArabia stated that after careful analysis and consideration of the comments made by WTO Members,further revisions were made, as set out in documents WT/ACC/SAU/34, 36, and 37.  Saudi Arabia didnot foresee the need for any exemption or transition periods in relation to any WTO provisions inconnection with the ICCP.  Nevertheless, Saudi Arabia reserved the right to seek such exception atany time during its accession negotiations, should the need arise.
71. In response to further questions, the representative of Saudi Arabia stated that customs
valuation was not assessed under the ICCP.  He noted  also that appeals procedures were included as
an Appendix to the ICCP Guidelines and foll owing the suggestions of WTO Members had been
revised to include recourse to independent review procedures in accordance with Article 4 of the PSIAgreement.
72. Some members of the Working Party asked whether testing laboratories and conformity
assessment bodies could be accredited by the authorities administering the ICCP.  In response, therepresentative of Saudi Arabia stated that Saudi Arabia recognized conformity assessment bodies in
other countries via acceptance of accreditation as an indication of adequate competence, and hence as
an eligibility criteria for approval. In other countries that did not have accreditation bodies,recognition of conformity assessment bodies was achieved by extending invitations to all tradingpartner countries to nominate their own laboratories for approval under their governments'responsibility.  Any required formalities were kept to the minimum level necessary to achieve theobjectives of the Programme. In fact, the procedures were fully streamlined as evidenced by thevirtual non-existence of delays or complaints by exporters.
73. He later added that the approval procedure was very simple and straight forward.
Laboratories seeking SASO approval were required to complete the "SASO/ICCP Laboratory
Application Form" (which was supplied to me mbers of the Working Party  in document
WT/ACC/SAU/34).  He noted that the form provid ed SASO with in formation about the accreditation
that the laboratory already had and the type of ICCP Regulated Products that it had the capabilities toWT/ACC/SPEC/SAU/4
Page 24
test in whole or in part.  The information was evaluated and verified and the laboratory was approved
accordingly.  In countries that did not have Nationally Recognized Laboratory Accreditation Bodiesthat accredited laboratories in accordance with ISO Guide 25, a higher degree of scrutinizing wasconducted in order to gain assurance at the laboratory's competence.  There were no costs involved for
laboratories seeking SASO approval.
74. Some members of the Working Party requested additional information on the possible
cancellation of certificates of conformity in the event that products enjoying the benefit of a certificateof compliance were found to be non-compliant.  The representative of Saudi Arabia stated that in sucha case Saudi Customs would withhold the certificate of compliance number, and suspend thecertificate of compliance.  Thereafter, Custom s would notify SASO and the manufacturer.  An
expedient investigation was then carried out and appropriate action taken on the basis of the findings.Depending on the severity, frequency, and cause of the discrepancy, appropriate action could includesuspension or withdrawal of the Type Approval Licence.  The action taken was always proportionate
to the seriousness of the facts at hand on a case by case basis.  Suspension (which may be temporary)
or withdrawal of the Licence was only a possibility in extreme cases, such as fraud or materialinaccuracy.
75. Some members of the Working Party asked whether certificates granted by other national or
international certification bodies were taken into consideration by the ICCP Regional LicensingCenters.  In response, the representative of Saudi Arabia stated that test reports or certificates issuedby accredited bodies for the regulated product under another national or international conformityassessment or certification scheme could be submitted by exporters as documents substantiating their
compliance.  Full recognition was duly given to those reports/certificates in so far as they satisfy the
Saudi requirements.  Where the full Saudi requirements were met, the role of the ICCP RegionalLicensing Center would be limited to evaluation, verification, administration, issuance and validationof the confirming Statement of Registration or Type Approval Licence.  The SASO Country Office
would still carry out the required PSI associated with Registration and issue the final Certificates ofConformity.  For products holding SASO Type Approv al Licence, certificates of conformity could be
issued by the manufacturers themselves.  This applied to all products and countries.
76. In response to the above explanations and clarifications provided by the representative of
Saudi Arabia, members of the Working Party requested that Saudi Arabia provide a description of the
steps being taken to ensure full implementation of the Agreement on Technical Barriers to Trade.  In
response, in document WT/ACC/SAU/41, the represen tative of Saudi Arabia provided the Working
Party  with a comprehensive Action Plan for the Implementation of the WTO Agreement.  TheWT/ACC/SPEC/SAU/4
Page 25
representative of Saudi Arabia noted that the Action Plan cross-referenced the various requirements of
the TBT Agreement, and described the existing provisions or practices in Saudi Arabia and alsodescribed any planned improvements, including the enactment of implementing legislation.  TheAction Plan also made clear that any remaining gaps in legislation and practice would be addressed
through the issuing of a Comprehensive Directive by  the SASO Board of Directors (chaired by the
Minister of Commerce).  That Comprehensive Directive would be issued sufficiently in advance ofthe accession of Saudi Arabia so that it would be in full conformity with the requirements of the TBTAgreement upon accession (if not earlier).
77. [The representative of Saudi Arabia stated that Saudi Arabia would comply with all
obligations under the WTO Agreement on Technical Barriers to Trade from the date of accessionwithout recourse to any transition period.  Th e Working Party took note of this commitment.]
Preshipment Inspection
78. Some members of the Working Party stated that the ICCP program mentioned above operated
as a PSI scheme.  They noted that although most of the requirements of the Agreement onPreshipment Inspection appeared to have been complied with, some elements of the ICCP continuedto raise concerns.  Some members  of the Working Party expressed concern that the ad valorem  fee
charged for conformity assessment was not consistent with the requirements of Article VIII of theGATT 1994.  In response, the representative of Saudi Arabia stated that Article VIII of GATT 1994aimed to ensure that fees did not include incremental charges imposed by Governments on top of the
cost of services rendered.  The ICCP fees were paid in their entirety by exporters directly to the
entities contracted by SASO to cover actual inspection, registration licensing and certification servicesrendered only. No part of the fees was paid or al located to SASO or any other Government Body, and
thus no protection to domestic industry was afforded nor taxation levied.   He added that the feescharged were not required to equate exactly with the exact cost of services rendered; a degree ofreasonable approximation  was allowed. Global PSI Programmes were utilised by 33 WTO Members,
and ad valorem  was the consistently predominant fee scheme  prior to the PSI Agreement.  Since the
PSI Agreement did not specifically address the issue of fees, this implied the acceptance, versatilityand legitimacy of the prevailing ad valorem  method, and affirmed its consistency with the original
GATT 1994 Article. Otherwise, the 33 WTO Members would be in direct violation of the WTO
Agreement.
79. He further added that the application of ad valorem  PSI fees by WTO user Members of PSI
Programmes has not been raised as the subject of dispute at the WTO to date.  He added that the PSIAgreement further acknowledged that Governments normally contracted PSI Programmes to PSIWT/ACC/SPEC/SAU/4
Page 26
Entities as Saudi Arabia had. Fees required by all reputable PSI Entities (IFIA members) for
delivering professional global PSI services were based on the ad-valorem  scheme. Saudi Arabia was
not operating in a vacuum and could not unilaterally impose on the PSI industry an entirely oddscheme contrary to the practice prevailing throughout that industry.  Nevertheless, Saudi Arabia had
succeeded in introducing reasonable modifications to the fixed ad valorem  method by adopting a cost
responsive graduated percentage of FOB fee structure which was amongst the lowest in the worldcoupled with shipment aggregation, resulting in a much higher degree of approximation of the cost ofservices as well as higher equitability. Saudi Arabia had further made adjustments to situations wherea disparity existed between the cost of PSI services and the percentage of FOB value of the producte.g. the fees for inspection of cars had a maximum ceiling of US$48.00 per car.
80. He further added that if a consensus of WTO Members determined that the ad valorem
scheme was not appropriate, and if an amendment was made to the existing PSI Agreementprescribing an alternative fee scheme, Saudi Arabia would be ready to follow the course of prevailing
international practice and comply accordingly.  He also noted that any unfavourable consideration of
its ICCP Regime on grounds of its inspection fee structure would be discriminatory in nature, in lightof the WTO’s acceptance of some Members’ application of the fixed ad valorem  scheme.
81. [The representative of Saudi Arabia stated that from the date of accession to the WTO Saudi
Arabia would ensure that the requirements of th e Agreement on Preshipment Inspection were met in
full.  He further confirmed that Saudi Arabia would ensure that the operations of any preshipmentinspection companies retained by Saudi Arabia  met the requirements of the WTO Agreement,
including the establishment of charges and fees consistent with Article VIII of the GATT 1994, and
would comply with the due process and transparency requirements of the WTO Agreements, in
particular Article X of the GATT 1994, and the Agreement on the Implementation of Article VII ofthe GATT 1994.  The Working Party  took note of these commitments.]
Sanitary and Phytosanitary Measures
82. In response to requests for information, the representative of Saudi Arabia supplied detailed
information on the Saudi Arabian Sanitary and Phytosanitary regime in document WT/ACC/SAU/17.In addition, he also submitted information on the shelf life of food products in document
WT/ACC/SAU/27.
83. The representative of Saudi Arabia stated that  the legal basis for sanitary and phytosanitary
requirements in Saudi Arabia was the Royal Decree number M/10 on 3/3/1392 H developed by theWT/ACC/SPEC/SAU/4
Page 27
competent standardization body (i.e. Saudi Arabia n Standards Organization, SASO).  Saudi standards
covered sanitary requirements for food products by means of the following measures:
(i) measures following the standards a nd guidelines of Codex Alimentarius;
(ii) measures not covered by the standards and guidelines of Codex Alimentarius were
based upon scientific studies or the most a ppropriate measures of other WTO Members.
84. In addition, the representative of Saudi Arabia stated that the veterinary quarantine bylaw
issued by Decree of the Council of Ministers number 208 dated 26/1/1396 H covered sanitary andveterinary requirements and measures pertaining to animals and animal products conforming to theruling of the International Zoosanitary Code specifying the regulations recommended for internationaltrade with regard to animals and animal products issued by the Office International des Epizootics.He noted also that the agricultural quarantine bylaw issued by the Decree of the Council of Ministersnumber 207 dated 26/1/1396 H set out requirements and phytosanitary measures conforming to therules issued from ICCP initially based on FAO publications.  Periodic preventive health circulars
issued by the Ministry of Health pursuant to the weekly epidemiological circular issued by the WHO
were also concerned with sanitary and phytosanitary measures.
85. In response to further requests for information, the representative of Saudi Arabia stated that
sanitary and quarantine measures for animal health, living plants and seeds, measures for theprevention of epidemic diseases spread and the control on the use of veterinary medicines andpesticides were administered by the Ministry of Agriculture and Water, as well as the Ministries ofCommerce and Municipalities.   Sanitary measures for fresh vegetables and fruits were governed bySASO standards and applied by the Ministry of Agriculture and Water.  When no approved
international standards applied to these products, the Kingdom of Saudi Arabia approved the
standards applied in EC States and Members of the WTO.  Standards concerning sanitary measuresfor food commodities (meat, meat products and processed foods) were imposed by SASO but appliedby the Ministries of Industry and Commerce on the locally made products, and by the Ministry ofCommerce on imported products.  The Ministry of Municipalities participated in internal control ofproducts in the markets which were mainly controlled by the Ministry of Commerce.  Measuresrelating to effects on the human health and its relation with  animal sanitary and phytosanitary andfood safety were imposed by the Ministry of Health through the issuing of periodic preventativecirculars to inform and caution other concerned bodies about relevant risks.
86. He further noted that sanitary measures of Saudi Arabia were consistent with the SPS
Agreement and also with the recommendations and guidelines issued by international and regionalWT/ACC/SPEC/SAU/4
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organizations.  Saudi Arabia was a permanent and active member in the international organizations on
plant and animal regulations, including FAO and the International Office of Epizootics (IOE).  SaudiArabia's SPS measures did not arbitrarily or unjustifiably discriminate between different countrieswhere identical or similar conditions prevail.  Also they did not discriminate between the territory of
Saudi Arabia and other countries where identical or similar conditions prevailed.  Saudi Arabia's SPS
measures were not applied in a manner which constitutes a disguised restriction on international trade.
87. In response to requests for information on the transparency of Saudi Arabia's SPS measures,
the representative of Saudi Arabia stated that Saudi Arabia's SPS measures were published inadvance.  The Kingdom of Saudi Arabia had an established system for informing governments andother standards organizations of changes, and full sets of guidelines detailing all requirements werefreely available to any interested parties  Saudi Arabia's SPS measures and requirements were notifiedto the Embassies in the Kingdom and to Chambers of Commerce.
88. Some members of the Working Party stated that the information on Saudi Arabia's sanitary
and phytosanitary measures gave a good overview of the regime.  They sought confirmation that
measures were based on risk assessments carried out in accordance with Article 5 of the SPSAgreement.  In response, the representative of Saudi Arabia confirmed that Saudi Arabia’s SPSmeasures conformed to all standards, guidelines or recommendations issued by the internationalbodies specifically designated by the SPS Agreement i.e. Codex Alimentarius Commission,International Office of Epizootics and International Plant Protection Conventions (Saudi Arabia was amember of all three organizations).  In accordance with Article 3.2 of the SPS Agreement, these SPSmeasures were fully consistent with the SPS Agreement.  For SPS measures related to risk assessment
not covered by the above three international bodies (such as microbiological risks and shelf life of
food products), Saudi Arabia relied on scientific studies, guidelines and recommendations eithercarried out by itself in limited cases or by specialized internationally accepted research institutes,universities or scientific references.  The appropriate level of protection adopted by Saudi Arabia wasconsistent with the guidelines and recommendations issued by these internationally recognized bodiesand Saudi Arabia had thus taken into account the objective of minimizing negative trade effects.  Heconfirmed that Saudi Arabia's SPS measures were based on risk assessment in accordance withArticle 5 of the SPS Agreement.
89. Some members of the Working Party identified certain possible areas of inconsistency with
the requirements of the SPS Agreement, such as the Council of Ministers Resolution No. 207
(26.1.1396H) "Agricultural Quarantine Regulations" requ irement in Article 6 that products be free of
all weed seeds, regardless of whether such weed seeds were quarantine significant, in accordance withWT/ACC/SPEC/SAU/4
Page 29
relevant international guidelines.  Some members also noted that the Council of Ministers Decree
No. 208 (26.1.1396H) "The Statutory Instrument of the Veterinary Quarantine", Article 3 stated that"no animal may be admitted ... from any country that was infected with any epidemic disease ...".These members were of the view that this requirement was inconsistent with Article 6 of the SPS
Agreement.  In response the representative of Saudi Arabia stated that upon  accession, the Kingdom
of Saudi Arabia would comply with the relevant WTO obligations.  In response for furtherinformation concerning the importation of seeds, he noted that there was no fee charged for theinspection of seeds.  The seeds were first subject to a visual examination to check for impurities andto ensure that the phytosanitary information in th e import documents was correct.  Thereafter samples
of the seeds were sent to laboratories to check for aflatoxins.
90. Some members of the Working Party stated that certain laws, such as the "Approval of
Importing Alfalfa and Vegetable Seeds from Non- Arab Countries", and "Approval of Importing
Flower and Forage Crop Seeds from Non-Arab C ountries" appeared to only apply to "non-Arab"
countries, which suggested problems in relation to the consistency of these regulations with the
principle of most-favoured-nation treatment.  In response to further questions, the representative ofSaudi Arabia noted that all regions of a particular country were subject to the same sanitary andphytosanitary requirements.  Some members of the Working Party stated that position appearedinconsistent with the SPS Agreement’s requirement that, in applying SPS measures, WTO Membersrecognize "regional conditions" affecting human, animal and plant health risks.  In response, to theseand further concerns expressed by Working Party members about particular regulations and practicesin the Saudi Arabian SPS regime, the representative of Saudi Arabia stated that those regulations
would be reviewed.
91. Some members of the Working Party noted that the time limits relating to shelf life in Saudi
Arabia appeared to be unduly short.  In response, the representative of Saudi Arabia stated that allSaudi Arabia’s shelf life determinations were scientifically based on investigations carried out bySaudi Arabia itself and on international and other countries’ national standards, scientific studies andreports conducted/issued by specialized internationally reputable research institutes and universities,and international scientific references.  The final determination of shelf life was based on studies forwhich "the stated storage conditions" most closely resembled Saudi Arabian conditions. Theseconditions had been thoroughly investigated and surveyed by Saudi Arabia in the report entitled
"Proceedings of Symposium on the Transportation, Handling & Storing of Food Products in the
Kingdom, Part I and II  dated 26-28 February 1989".  In this connection, he noted that Codex defined
"Use-by-Date" as "the date which signifies the end of the estimated period under any stated storagecondition after which the product probably will not have the quality attributes normally expected byWT/ACC/SPEC/SAU/4
Page 30
the consumers.  After this date, the food should not be regarded as marketable".  He further added that
the term "unacceptable to the consumer" and "unfit for human consumption" respectivelycorresponded to, and were self evident from the above definition.  He further added that Saudi Arabiarelied for the determination of the shelf life of food products on available scientific studies by
specialized, and internationally recognized bodies and on references, based on research conducted for
academic or industrial/commercial purposes.  The fact that part of this research was conducted bymanufacturers demonstrated that Saudi Arabia took into consideration differences in manufacturingand packaging processes.  This wide spectrum of scientific basis did not affect Saudi Arabia's right toengage in shelf life determination as an SPS measure for perishable food products and as a TBT-technical regulation appropriate to Saudi Arabia's climatic conditions for shelf stable food products.
92. In response to further questions he noted that manufacturer determined shelf life that was
followed in other countries were neither uniform nor could be considered as official SPS measures bygovernments.  Nevertheless, shelf life periods of perishable food products were not imposed
unilaterally, but rather adopted in accordance with the same open process applicable to standards, i.e.
through technical committees entrusted with the preparation of the standard whose diversifiedmembership includes representatives of the industrial and commercial sectors.  These members hadthe opportunity to influence the decision on shelf life determination and insure its responsiveness tothe needs of the industry, not to mention the period afforded for consultation and comment by anyinterested parties.  In addition, SASO administ rative procedures and directives provided the
opportunities for manufacturers to submit at any tim e the scientific basis for their own determined
shelf to SASO for evaluation.  If those manufacture rs could demonstrate objectively that their shelf
life periods were appropriate to Saudi Arabia's level of SPS protection as well as the food quality
criteria, Saudi Arabia would revise its shelf life standards accordingly.
93. In response to further questions, the representati ve of Saudi Arabia noted that the same shelf
life periods were applied to domestic and imported food products alike.  In the case of shelf stableproducts, the TBT Agreement granted Saudi Arabia the right to take into account the effect of thecountry’s specific climatic and infrastructural conditions (i.e. transportation, storage and handlingconditions).  However climatic conditions were the major factor considered by SASO in determining
shelf life.  In rare cases covering particular products where non-concurrence or differences were foundbetween the internationally recognized studies and references, the tendency had been to rely more
heavily on the shorter shelf life periods determined by these studies as an indirect compensation for
not specifically accounting for the infrastructural fact ors.  With the improvement of the infrastructural
factors, a more relaxed attitude would be adopted.WT/ACC/SPEC/SAU/4
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94. Some members of the Working Party noted that the Agreement on Sanitary and Phytosanitary
Measures required that WTO Members accept the sanitary and phytosanitary measures of othermembers, subject to confirming objectively that those measures were adequate to achieve theimporting country's level of sanitary and phytosanitary protection.  In response, the representative of
Saudi Arabia stated that upon accession, Saudi Arabia would accept the certification of exporting
countries in accordance with the requirements of the Agreement on Sanitary and PhytosanitaryMeasures.
95. Some members of the Working Party requested that Saudi Arabia identify all areas of
inconsistency and provide a timetable for bringing th e Saudi Arabian regime into conformity with the
requirements of the SPS Agreement.  In response, the representative of Saudi Arabia stated that aninternal review had already been commenced into Saudi Arabia’s SPS regime guided by thecomments of the WTO Working Party in this respect.   At a later stage, the representative of Saudi
Arabia provided members of the Working Party  with a comprehensive Action Plan for the
Implementation of the SPS Agreement in document WT/ACC/SAU/42.  It was anticipated that all
legislation and practice would be in full confor mity with the requirements of the SPS Agreement by
the date of accession, if not earlier.
96. [The representative of Saudi Arabia stated that Saudi Arabia's sanitary and phytosanitary
standards system would be in compliance with WTO provisions under the Agreement on theApplication of Sanitary and Phytosanitary Measures as of the date of accession to the WTO, and thatSaudi Arabia would apply all measures of the Agreement on the Application of Sanitary andPhytosanitary Measures in a least trade distortive manner from the date of accession without recourse
to any transition period.  The representative of Saudi Arabia further confirmed that, no rules stricter
than those laid out by international organizations such as OIE would be applied.  The Working Party
took note of these commitments.]
Trade Related Investment Measures
97. Some members of the Working Part congratulated Saudi Arabia on its generally very liberal
investment regime and asked whether there were any measures in place in Saudi Arabia that wereinconsistent with the requirements of the Agreement on Trade Related Investment Measures
(TRIMS).  In response, the representative of Saudi Arabia stated that there were no measures  in place
in Saudi Arabia that were inconsistent with the requirements of the Agreement on Trade RelatedInvestment Measures (TRIMS).  He noted that in particular, there were no measures in place in SaudiArabia that were of the kind described in the "Illustrative List" in the Annex to the Agreement onTRIMS.  Some members of the Working Party enquired whether Saudi Arabia imposed any transferWT/ACC/SPEC/SAU/4
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requirements in relation to technical or management know-how or upon foreign investors.  In
response, the representative of Saudi Arabia stated that no precise requirements on such transfers hadbeen specified.
98. [The representative of Saudi Arabia stated that Saudi Arabia would not maintain any
measures inconsistent with the TRIMs Agreement and would apply the TRIMs Agreement from the
date of accession without recourse to any transi tion period.  The Working Party took note of this
commitment.]
State Trading
99. Some members of the Working Party asked the representative of Saudi Arabia whether there
were any enterprises operating within the Kingdom of Saudi Arabia that enjoyed any exclusive orspecial privileges within the terms of the definition set down in Article XVII of GATT 1994.  Inresponse, the representative of Saudi Arabia stated that the Saudi Arabian Oil Company (SaudiAramco) and the Grain Silos and Flour Mills Orga nization (GSFMO) made purchases and sales solely
in accordance with commercial considerations and acted in a manner consistent with the general
principles of non-discriminatory treatment enshri ned in Article XVII of GATT 1994. Saudi Arabian Oil
Company (Saudi Aramco) was established by a royal decree in 1987.  It was responsible for most of theproduction and export of crude oil and natural gas in the Kingdom.  It was also responsible for therefining and marketing of products within Saudi Arab ia and entered into joint venture refineries with
others.  Although owned by the government, it was run on a commercial basis and had a board of
directors, chaired by the Minister  of Petroleum and Mineral Resources.  The board consists of members
from the company’s executive management, government officials, private sector and international
companies.  The general policy of the Corporati on was determined by the Supreme Council of the
Corporation which was presided over by the Presid ent of the Council of Ministers or his designated
representative.  Ten further members from the privat e sector and government officials were appointed
by royal order.
100. The Grain Silos and Flour Mills Organization (GSFMO) was established by a Royal Decree
in 1973 in order to support the development of the domestic agricultural sector, particularly wheatproduction for national security reasons. GSFMO was charged with forming a grain storage, flourproduction and animal feed processing conglomerate as well as with creating a stable market forgrains in order to safeguard farmers from price fluctuations. It was the only organization allowed to
import grains, flour, and animal feed.WT/ACC/SPEC/SAU/4
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101. [The representative of Saudi Arabia confirmed that after accession to the WTO, Saudi Arabia
would observe WTO provisions, in particular, Article XVII of the GATT 1994, the WTOUnderstanding on that Article, and Article VIII of the GATS regarding state trading, with respect to
the State-owned enterprises and other enterprises and entities with special or exclusive privileges
identified above, in particular abiding by the provisions for notification, non-discrimination, and the
application of commercial considerations for trade transactions.  The Working Party took note ofthese commitments.]
Free Zones
102. In response to questions, the representative of Saudi Arabia stated that the Kingdom of Saudi
Arabia maintained no free zones.
Agricultural policy
103. The representative of Saudi Arabia provided information on its agriculture sector, including
tables on domestic support and export subsidies in document WT/ACC/SAU/19 andWT/ACC/SPEC/SAU/1/Rev.4.  Saudi Arabia also engaged in negotiations on domestic supports and
export subsidies.  In this connection, the representative of Saudi Arabia also described the specialflexibilities Saudi Arabia would require in the support of its agriculture sector in document
WT/ACC/SAU/28.  The commitments reflecting the re sults of these negotiations are annexed to the
Protocol of Acces sion of Saudi Arabia to the WTO.
104. Some members of the Working Party requested that Saudi Arabia provide detailed
information on the role of the Saudi Agricultural Bank, in particular in the area of its mandate withregard to providing agricultural loans and subsidies.   In response, the representative of Saudi Arabia
stated that the Saudi Arabian Agricultural Bank was founded by the Royal Decree No. 58 issued on3/12/1382. It was a government financial institution specializing in providing funding to theagricultural sector in order to assist in the development of agriculture, and improve agriculturalproductivity through the deployment of state of the art scientific and technical methods.  The Bank
granted loans through 13 branches, with 57 offices throughout the Kingdom in order to facilitate
provision of services to farmers in their regions. The Bank grants farmers, agricultural projects,fishermen, bee keepers and farm cooperatives two types of agricultural loans free of interest.  Herecalled, in this connection, that the charging of interest was prohibited in Saudi Arabia due toreligious reasons.  The opportunity costs for agricultural loans were equal to the average rates ofmedium term commercial loans during the period 1993-1995.  Short term agricultural loans withmaturity of one year were being granted for seasonal crop farming and marketing and thereforeinclude costs of seasonal production such as seeds, fertilizers, ploughing and cultivation.  Mid-termWT/ACC/SPEC/SAU/4
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loans of up to ten years maturity to fund fixed costs such as buildings and other installations as well as
farm equipments such as engines, irrigation pumps and agricultural machineries, were also availablein addition to the funding to specialized agricultural projects.  During the period 1992-1995, the Bankhad granted the following loans:
Year Short term loans M edium term Total loans
No Amount
(thousand SRls)No amount
(thousand SRls)No amount
(thousand SRls)
1992 213 2168 4161 772982 4374 775150
1993 158 1589 4271 928972 4429 930561
1994 145 758 3677 669798 3822 670556
1995 71 575 2571 412014 2642 412589
Source: Saudi Arabian Agricultural Bank, Thirty Second Annual Report 1415/1416 H,1995
US$1 = SRls 3.75
105. He added that the Bank had also been responsible for the disbursement of a package of
agricultural subsidies incurred by the government towards reduction of agricultural expenditures inorder to increase the average return on agricultu ral production. These subsidies included: engines,
irrigation pumps, agricultural machinery, poultry equipments, dairy production equipment, in additiontransport costs from the country of origin of high breed cows imported to the Kingdom were alsopaid.
The following table shows total agricultural subsid ies disbursed through the bank during the period
1992-1995 :
Year Total subsidies   (Thousand SRls)
1992 677902
1993 248624
1994 355434
1995 not available
Source: Saudi Arabian Agricultural Bank, Thirty second Annual Report, 1415-1416 H, 1995
US$1 = SRls 3.75
106. In response to further questions, the representative of Saudi Arabia stated that in pursuance of
the current Development Plan Saudi Arabia would distribute land in areas where large quantities ofrenewable water resources were available.  Investment would be encouraged in large agriculturalprojects that depend on renewable water resources, using modern irrigation systems that consume lowquantities of water.  Domestic production of vegetables and fruits grown in green-houses would beencouraged, as would the fishing industry using advanced technology.  The Plan foresaw that wheat
production would be gradually reduced, from more than 4 million tons before 1994, to
2.8 million tons in 1994, 2 million tons in 1995 and 1.3 million tons in 1996.  The production ofbarley would be reduced from 2 million  tons in 1994-1995 to one million tons in 1996.  Imported anddomestically produced barley was purchased by the Grains, Silos, Flour and Milling Organization andWT/ACC/SPEC/SAU/4
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then sold to livestock producers at the fixed price of US$74.67 per ton.  The same programme of the
present subsidies would be continued during the Sixth Plan period in order to promote or encourageimplementation of the previous programs.
107. Some members of the Working Party asked whether there was any support to the dairy sector.
In response, the representative of Saudi Arabia stated that there was no specific support for the dairy
sector.
108. In response to questions concerning the provision of irrigation water for crop production, the
representative of Saudi Arabia stated that irrigation water for crop production was provided by privatefarmers, and not by the Government.  He noted that there were no subsidies associated with therunning of irrigation equipment.
109. Some members of the Working Party requested that the representative of Saudi Arabia clarify
the role of  the Grains, Silos, Flour Milling Or ganization (GSFMO) in the export and subsidisation of
wheat.  In response, the representative of Saudi Arabia stated that since 1995 the GSFMO had not
exported wheat or barley.  Export controls were maintained for subsidized wheat and barley through
export licences.  In response to further questions, he added that the exportation of date palm seedlings,barley, corn maize and soy beans was conditional upon the repayment of subsidies intended for thesupport of domestic production.
Trade Related Intellectual Property Regime
110. In addition to the Memorandum on the Foreign Trade Regime, the representative of Saudi
Arabia provided the Working Party with a Supplementary Memorandum on Trade Related IntellectualProperty Rights (WT/ACC/S AU/5).  The representative of Saudi Arabia provided the Working Party
with the text of the Trademarks Regulations, Patents Law, and the Law for the Protection of
Copyrights (L/7645/Add.1).
111. Some members of the Working Party congratulated Saudi Arabia on its generally high level
of protection of intellectual property rights.  They noted that Saudi Arabia had taken significant stepstowards making its trade regime fully consistent with the Agreement on Trade Related Aspects ofIntellectual Property Rights (TRIPS), but that some problems remained.  Some members asked thatSaudi Arabia take immediate steps to address problems in its intellectual property regime, and askedalso that Saudi Arabia commit itself to full implementation of the TRIPS Agreement without atransitional period.  In particular, some members of the Working Party expressed concerns in relation
to the protection of copyrights;  the duration of patent protection;   protection of plant varieties;WT/ACC/SPEC/SAU/4
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length of time before compulsory licensing and working requirements were applied;  protection for
sound recordings and audiovisual works; protection for broadcasts and satellite transmission; explicitprotection for computer software programs; implementation of Articles 1-21 of the Berne Convention;and the protection of well-known marks.
112. With reference to copyright, some members of the Working Party considered that Saudi
Arabia’s laws did not fully reflect its obligations under the Universal Copyright Convention.  Inaddition, the provisions of the Saudi laws did not provide protection for sound recordings.  SaudiArabia had not yet joined the Berne, Paris, or Geneva Phonograms Conventions.  Membership in such
multilateral intellectual property agreements demonstrated a strong commitment to protection andsupports local enforcement.   Other apparent deficiencies included the fact that there were no laws thatprotect broadcasts and satellite transmissions, and that the term of protection for audiovisual workswas 25 years, not 50 years as called for in the TRIPS Agreement.   Saudi Arabia's laws also appearedto lack sufficient legal penalties to deter piracy, e.g., substantial fines or prison sentences.  In
response, (in document WT/ACC/SAU/28) the representative of Saudi Arabia stated that Saudi
Arabia's intellectual property regime would be brought into full conformity with the requirements ofthe Agreement on TRIPS five years from the date of Saudi Arabia's accession to the WTO.  Indocument WT/ACC/SAU/39, the representative of Sa udi Arabia provided members of the Working
Party with a detailed plan on the steps being ta ken to ensure full implementation of the TRIPS
Agreement by the end of the transitional period requested.
113. In response to questions from members of the Working Party, the representative of Saudi
Arabia stated that ongoing reviews of  the WTO conformity of Saudi law had so far revealed that
there were some areas of incompatibility that would need to be rectified either through amendment of
existing legislation or enactment of new laws.  It would  also be necessary to introduce theadministrative machinery to ensure the enforcement of  TRIPS standards.    In this regard, he noted
that Saudi Arabia's Copyright Law conformed to the requirements of the Universal CopyrightConvention and the Arab Copyrights Convention, as well as to most provisions of Article 9 to 14 ofthe TRIPS Agreement.  Saudi Arabia would amend its Copyright Law, as necessary, to implement theTRIPS Agreement Articles 9 to 14.  Copyright holders could prevent others from offering the rightholder's works for rental without authorization.   The Copyright Law was enforced on domestic and
imported products.  To the extent that the Copyright Law did not meet the TRIPS Agreement
requirements, Saudi Arabia would introduce necessary changes to meet its TRIPS Agreement
obligations.  Saudi Arabian law and practice in relation to Copyrights would be in full conformitywith the requirements of the Agreement on Trade Related Aspects of Intellectual Property Rightsfrom the end of the needed transition period.WT/ACC/SPEC/SAU/4
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114. Concerning patents, the representative of Saudi Arabia noted that in general, patentable
subject matter in Saudi Arabia was consistent wi th the requirements of Section 5 of the TRIPS
Agreement.  Processes (methods of manufacturing) were patentable, and were protected frominfringing use.  Plant varieties protection were not currently patentable, even though the TRIPS
Agreement required the protection of plant varieties (Article 27(3)). Patent holders in Saudi Arabia
were accorded the rights mentioned in Article 28 of TRIPS.  A patent holder was required to makefull industrial use of the patent in Saudi Arabia within two years.   Although the current Patent ofInventions Law conferred a term of protection of 15 years with the possibility of a five year extension,
the representative of Saudi Arabia stated that it was foreseen that the period of protection for nationalsof WTO Members, could be automatically granted a five year extension after the elapse of the initial15 year protection period.  Concerning compulsory li censing, the representative of Saudi Arabia noted
that the Agreement on TRIPS required the granting of compulsory licences no earlier than three yearsfrom the date of the patent.  The current Patent Law permitted the grant of a compulsory licence after
two years of the patent date, with a possibility of extension of two additional years. It was clear that
there was no complete conformity.  The ongoing review of Saudi Arabian Patent Law had revealedthat in comparison with Article 27(3) of the TRIPS Agreement,  the exclusion of patentabilitycontained in paragraphs (a) and (b) of Article (8) was in  accordance with 27 (1) of the TRIPSAgreement which limits the patentable inventions to those which were related to products orprocesses;  paragraph (c) of Article (8) was in full compliance with subparagraph (b) of Article 27(3)of the TRIPS Agreement except that paragraph (c) did not exclude “Micro-organisms” from “Plantsand animals” and did not include "non-biological pr ocesses” as processes excluded from “biological
processes for the production of plants and animals";  and that paragraph (d) of the Patent Law was in
full compliance with sub-paragraph (a) of Article  27(3) of the TRIPS Agreement.  In relation to
Article 9 of the Patent Law, the Shariah was considered the "umbrella" of the legal system of SaudiArabia. All laws of Saudi Arabia should be in consistent with the Shariah. Article 9 could therefore beconsidered to be in accordance with the TRIPS Agreement (Article 27(2)). Banning patents overproducts contrary to the Shariah did not economically damage international patent holders of suchproducts since the marketing of such products was prohibited.
115. In response to requests for information concerning the protection of trademarks in Saudi
Arabia, the representative of Saudi Arabia stated that the Trademarks Law complied with Article (15)
of the TRIPS Agreement in distinguishing the essential element of the trademark which could be
capable of protection.  Actual use of trademark was not a precondition for registration.  The nature ofgoods or services did not constitute an obstacle for registration, unless the goods or services wereinconsistent with the Shariah. He also noted that internationally well known trademarks wereprotected in Saudi Arabia.  In particular, the Trademarks Law provided that a trademark could not beWT/ACC/SPEC/SAU/4
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registered when "...marks (were) identical to or similar to internationally known marks even if they
were not registered in the Kingdom".  If registration of a trademark was accepted, the competentdepartment then published the registration.  Any interested party could object to the acceptance of atrademark's registration within ninety days from the date of publication of the registration.  The owner
of a registered trademark was considered as the only right holder of all rights conferred under
Article 16 of the Agreement on TRIPS.  The exceptions to the rights conferred by a trademark set outin Article 17 of the TRIPS Agreement were also re flected in the Trademarks Law.   The requirements
of Article 20 and 21 of the TRIPS Agreement were also reflected in the Trademarks Law.  Asrequired under Articles 22 to 24 of the TRIPS Agreement, geographical indications were protectedunder the Trademarks Law, geographical names could not be registered as a trademark under SaudiArabia’s Trademarks Regulations if their use caused a misunderstanding as to the source of productsor services, or their origin.  Due to the religious prohibition of alcoholic beverages, geographicalindications of origin of wines and spirits were not protected in Saudi Arabia.  Foreign non-residents
with which Saudi Arabia enjoyed reciprocal agreements could register trademarks through an official
attorney.  Some members of the Working Party noted that the period of protection for a trademarkwhen the requirement of use was not fulfilled was five years, two years more than the period requiredby Article 19 of the Agreement on TRIPS.  These members noted also that the initial and renewableperiod of period of protection for trademarks where the requirement of use was fulfilled was ten years,three years more than the period required by Article 18 of the Agreement on TRIPS.  Therepresentative of Saudi Arabia stated that following WTO accession, all nationals of WTO Memberswould be able to register trademarks in Saudi Arabia and would enjoy national treatment.
116. In response to requests for information concerning the protection available for industrial
designs, the representative of Saudi Arabia responded that industrial designs would be protected by aProposed Industrial Designs Law which would be implemented by The King Abdulaziz City for
Science and Technology (KACST).
117. In response to requests for information concerning the protection available for layout designs,
the representative of Saudi Arabia noted that Layout Designs of Integrated Circuits were not coveredby current laws.  This issue was under review and the protection provided would be consistent withWTO obligations.
118. Some members of the Working Party requested information on the protection available for
undisclosed information.  The representative of Saudi Arabia stated that although undisclosed
information was currently protected by the Companies Law, Labour Law and Banks Control Law,work was underway to prepare an Unfair Competition Law that would deal comprehensively with thisWT/ACC/SPEC/SAU/4
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issue.  That law would be implemented by the Ministry of Commerce.  He added that anti-competitive
practices would be covered by the law as well.
119. Some members of the Working Party noted the steps being taken by Saudi Arabia to eliminate
some problems in the area of enforcement, in particular the piracy of intellectual property.  It was
clear that much of the necessary legislation was in place, but that was experiencing difficulty in fully
implementing and enforcing the new laws.  These members of the Working Party urged Saudi Arabiato work towards full conformity with the Ag reement on TRIPS from the date of Saudi Arabia's
accession to the WTO.  In response to comments concerning the enforcement of border measures, therepresentative of Saudi Arabia stated that border measures in Saudi Arabia were broadly consistentwith the provisions of the TRIPS Agreement which authorized the judicial or administrative bodies toissue a provisional seizure decision.  The power to make such a decision was contained in Articles 34and  132(3) of the Implementing Rules of the Saudi Customs system.  Moreover, Customs authorities,in coordination with the Ministry of Commerce, seiz ed consignments infringing intellectual property
rights or involving commercial fraud,  consistently with Article (58) of the Agreement.  The only
identified inconsistency between the Customs Law and the TRIPS Agreement concerned the penaltiesprovided for by the relevant Saudi law.
120. The representative of Saudi Arabia stated that it was the intention of Saudi Arabia to fully
comply with the requirements of the Agreement on TRIPS as soon as possible.  Much of the requiredlegislation was already in place.  In addition, Shariah provided significant protection of intellectualproperty rights.  Saudi Arabia was working towards codification of all laws required by theAgreement on TRIPS. However, despite Saudi Arabia's desire to achieve full consistency with the
Agreement on TRIPS as soon as possible, because of difficulties in providing the required training to
the personnel who would administer the legislation, Saudi Arabia may need to have recourse to atransitional period.   In this connection, in doc ument WT/ACC/SAU/28, the representative of Saudi
Arabia stated that Saudi Arabia would propose a tr ansitional period of five years, under paragraph 2
of Article 65 of the Agreement on TRIPS, to apply the provisions of the Agreement.
121. In response to requests from members of the Working Party  that Saudi Arabia try to
minimise further the transitional period requested for full compliance with the TRIPS Agreement, therepresentative of Saudi Arabia presented an Action Plan for the Implementation of the TRIPSAgreement in document WT/ACC/SAU/43, in which he proposed that Saudi Arabia fully apply the
Agreement on TRIPS by the end of 2002.  Members of the Working Party  welcomed this reduction in
the transition period requested and urged Saudi Arabia to take even greater steps to try to implementthe Agreement on TRIPS in full from the date of accession, without recourse to any transition period.WT/ACC/SPEC/SAU/4
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122. [The representative of Saudi Arabia stated that Saudi Arabia would apply fully all the
provisions of the Agreement on Trade-Related Aspects of Intellectual Property Rights [by 2002][from the date of accession to the WTO, without recourse to any transition period].  The WorkingParty took note of this commitment.]
Policies Affecting Trade in Services
123. In addition to the Memorandum on the Foreign Trade Regime, the representative of Saudi
Arabia provided the Working Party with information on the services regime in Saudi Arabia in aSupplementary Memorandum on the Foreign Tr ade Regime, (WT/ACC/SAU/5);  as well as
supplementary background notes and information in documents WT/ACC/SAU/23 and 24.
124. Some members of the Working Party congratulated Saudi Arabia on its very liberal services
regime.  They noted, in particular, the high number of foreign workers and service providers alreadyresident within Saudi Arabia.
125. Some members of the Working Party requested clarification of the roles of various
government agencies in the approval of new investments of foreign capital in the services sector.  In
response the representative of Saudi Arabia stated that all investments, whether in a joint venture orwholly owned, were required to be approved by the Foreign Capital Investment Committee under thechairmanship of the Ministry of Industry and Electricity.  In addition, other Ministries, such as theMinistry of Commerce, the Ministry of Healt h, the Ministry of Education, the Saudi Arabian
Monetary Agency, the Ministry of Post, Telegraph and Telephone, Ministry of Communications andthe Ministry of Defence and Aviation had a role in the approval process for investment in particularservice sectors.
126. Some members of the Working Party requested information on the regulation of the financial
services sector and in particular requested information of the conditions under which a foreign bankcould obtain a licence to establish a branch within Saudi Arabia.  In response, the representative ofSaudi Arabia stated that financial firms' activities were regulated by the Banking Control Law.  UnderArticle 2 of the Banking Control Law, any natural or legal person was required to have a licence tocarry on banking business.  Under Article 3 of the Banking Control Law, a Saudi national bankoperating nation wide could be granted a licence if, inter alia , it was a Saudi joint stock company.
This included joint venture banks.  A foreign bank could be granted a licence to establish branches inSaudi Arabia if it satisfied the conditions determined by the Council of Ministers upon the
recommendation of the Minister of Finance and National Economy.  The representative of Saudi
Arabia added that the Saudi Arabian Monetary Authority (SAMA) always acted consistently with theWT/ACC/SPEC/SAU/4
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requirements of Articles XVI and XVII of the GATS when considering an application for a new
licence.  Upon the recommendation of the Saudi Arabia n Monetary Authority, the Minister of Finance
and National Economy and the Council of Ministers would evaluate the recommendation taking intoaccount the following objective considerations: the macroeconomic needs of the financial and
banking system; the development of new products and services; the level of existing competition in
the market; the benefits to the consumer; the introduction of new technologies; the impact on thefinancial stability and soundness of the banking system; the professional and business standing of thefounders and members of the Board of Directors; and the capital adequacy of the proposed enterprise.
127. He further added that Saudi Arabia provided for a wide range of judicial, arbitral and
administrative procedures with respect to trade in services.  Saudi Arabia had administrativeprocedures for the review of administrative decisions affecting trade in services.  Such decisions wereappealable to the Board of Grievances under the Council of Ministers Resolution No. 190 of16.11.1409 H Concerning Rules and Procedures to be Followed by the Board of Grievances and the
Board of Grievances Law.  Commercial disputes were generally covered by the Board of Grievances
and some other standing and ad hoc committees.  Some members of the Working Party asked therepresentative of Saudi Arabia to provide information on the review of decisions concerning thelicensing of service providers in Saudi Arabia.  In response the representative of Saudi Arabia statedthat a number of Ministries and Agencies were involved in approval of the right to provide a servicein Saudi Arabia; for example: the Ministry of Commerce for engineers, legal practitioners,accountants and insurers; the Ministry of Defence and Aviation for civil aviation, tourism and travelagents; the General Organization for Technical Education and Occupational Training for technical
institutes and national occupational centres; the Ministry of Health for medical practitioners,
pharmacists, hospitals; the Ministry of Communications for maritime transport; and the Saudi ArabianMonetary Authority for banks.  In all cases the Ministries and Agencies involved had internalstanding committees of senior officials to review initial administrative decisions pertaining tolicensing.  Decisions of standing committees could be appealed to the responsible Minister or Agencyhead.  Administrative Decisions involving potential civil suits against the government could bebrought before the Board of Grievances.
128. In response to requests for information on the nature and extent of incentives, tax exemptions
and subsidies available to service providers in Saudi Arabia, on a national treatment basis, the
representative of Saudi Arabia stated that foreign services projects licensed by the Ministry of
Industry and Electricity were entitled to five year corporate income tax holidays pursuant toArticle 7(b) of the Investment of Foreign Capital Regulations.WT/ACC/SPEC/SAU/4
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129. In response to requests for information concerning restrictions on the provision of
professional services, the representative of Saudi Arabia stated that all professional services weretreated in the same manner.  A licence was required to provide professional services.  To be eligiblefor a licence the company was required to be: reputable and well recognized in the field of its
profession; to have been registered and successfully practising in the field for at least ten years; and to
be prepared to participate in the training and the building of Saudi nationals' experience andintroducing relevant technology.  In addition, the foreign company should employ or have at least onerepresentative in Saudi Arabia.  That representative should stay in Saudi Arabia for a period not lessthan 9 months per year; have at least a university degree in the field of the company specialization;and have not less than 10 years experience successfully.  In response to requests for furtherinformation concerning the conditions required to be  fulfilled in order to be eligible for grant of a
licence, the representative of Saudi Arabia stated that a foreign company would be considered asreputable, well recognized and practising in the field successfully if it was registered under the
companies law of its home country, was certified as financially viable by its bankers, produced copies
of audited balance sheets for the last two years, produced a list of previous contracts/assignments,outside Saudi Arabia, certified by the Chamber of Commerce and Industry in the company's homecountry, and also produced certificates of satisfactory completion of assignments from former clients.Concerning the participation in training and th e introduction of technology, the applicant company
should give an undertaking that it would train Saudi nationals and would introduce the newtechnologies and know-how that it employed in it s home country.  He also added that the foreign
existing companies already licensed to operate in Saudi Arabia had a period of one year to fulfil those
conditions.  If they do not do that, the licence may be cancelled.  New companies had to fulfil the
conditions from the beginning of their business activities.
130. Some members of the Working Party asked whether Saudi Arabia planned to liberalise the
limitations placed on the participation of foreigne rs in security underwriting, commodity brokerage
services and currency exchange operations, as well as the limitations placed on the participation offoreigners in land transportation and professional services.  In response, the representative of SaudiArabia stated that although there were limitations on the participation of foreign individuals insecurity underwriting, commodity brokerage services and currency exchange operations, there wereno such limitations on foreign banks, excepting the requirement to be licensed.  There were no plans
to liberalise those conditions.
131. Some members of the Working Party asked whether there were any instances of less than
national treatment for foreign service providers.  The representative of Saudi Arabia stated that onlySaudi Arabian nationals were allowed to participate in security underwriting, commodity brokerageWT/ACC/SPEC/SAU/4
Page 43
services, currency exchange operations, commercial agencies, customs clearance agencies, real estate
agency, transportation (land based) and civilian security.  Postal services, basic telecommunicationsservices, radio and television transmission services were reserved to the State.  He further added thatunder Article 8 of the Unified Economic Agreement of the Gulf Cooperation Council, member States
were to agree on rules which would insure natio nal treatment for Gulf Cooperation Council nationals
in, among other things, freedom of movement, work and residence, right of ownership and freedom ofexercising economic activity, including service activities.  Saudi Arabia, together with the other GulfCooperation Council members, was in the process of implementing this agreement.  In addition, some
bilateral agreements signed by Saudi Arabia conferred preferred or reciprocal supplier status oncompanies from signatory countries with regard to  certain services.  Agreements with Egypt and
Jordan conferred reciprocal supplier status for cross-border truck and public transportation vehicles;agreements with Egypt and Tunisia granted preference to national shipping and transport modes inbilateral trade; agreements with Lebanon, Syria and Turkey provided for reciprocal treatment with
regard to transportation and transport vehicles; an d an agreement with Morocco included reciprocal
airline privileges.
132. In response to requests for information concerning the rules governing temporary residence in
Saudi Arabia by foreigners, the representative of Saudi Arabia stated that the Law of Residency wasenforced by the Ministry of Interior.  In addition, the Ministry of Labour approved applications for thepresence of foreigners who work or were given licence to practice work in the private sector.  Somemembers of the Working Party requested information on the system of mandatory "sponsorship" offoreign employees and investors by Saudi nationals.  The representative of Saudi Arabia stated that
"sponsorship" by a Saudi Arabian national was required for all visa applications, in order to ensure
that only genuine foreign workers and business persons were granted visas.  Once a contract wasoffered, a visa would be granted.
133. In response to questions concerning the limitations placed upon the total number of natural
persons employed in particular sectors, the representative of Saudi Arabia stated that as a matter ofprinciple, work was considered a Saudi citizen's right.  Consequently, a foreigner would not beemployed when to do so would displace a Saudi worker.  The Labour and Workers Regulationsrequired that any enterprise, Saudi or foreign ow ned, would ensure that the percentage of the Saudi
workers engaged by the employer should not be less than 75 percent of the total workforce.  However,
the Regulations also permitted the Minister of Labour to reduce the required percentage in
circumstances where qualified Saudi workers were not available.  Foreign workers were required toobtain work permits from the Ministry of Labour, and an application for a permit was required to beaccompanied by a submission from the proposed employer confirming the non-availability ofWT/ACC/SPEC/SAU/4
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qualified Saudis for the work and a guarantee of repatriation at the conclusion of the applicant's
contract.  All service providers activities, regardless of ownership were obliged to reserve certainpositions for Saudis, including personnel managers, treasurers, civilian security guards, andtransaction follow-up clerks to government departments.
134. Some members of the Working Party requested clarification of the qualification requirements
and procedures for approval of foreign service providers.  In response, the representative of SaudiArabia stated that different categories of services required different types of approval.  For example,for medical services, the service provider should have a medical degree from a recognized institution.For educational services, the service provider should have adequate academic qualifications in therelevant disciplines from a university or a recognized institution.  For the provider of accounting andauditing service, the provider should be a certifi ed accountant from a recognized institute.  In
addition, all foreign companies should possess the necessary technical expertise, financial capabilities,and occupational proficiency.
135. In response to questions concerning restrictions placed on foreign service providers
procurement of business inputs, the representative of Saudi Arabia stated that all non-Saudicontractors must assign not less than 30 percent of the works included in their contract to whollyowned Saudi companies.  All contractors were obliged to purchase the tools and equipment whichthey procure for performance of their contracts from Saudi agents for these tools and equipment inSaudi Arabia.  Contractors were required to obtain the following services from local Saudiestablishments: transportation services for goods and services within Saudi Arabia, (if the contractordid not perform this service by itself directly by equipment owned by the business and with personnel
directly employed by the business) banking and insurance services; services for the leasing and
purchase of land and buildings; and catering services and supply of foodstuffs.
136. Some members of the Working Party asked whether permission for a foreign owned service
provider to own real property was automatic once the licence to engage in business activities as aforeign establishment in Saudi Arabia was obtained.  In response, the representative of Saudi Arabiastated that acquisition of a licence to engage in business activities automatically entitled the project
owners to acquire real property needed for the conduct of the business activities.
137. [Following the completion of bilateral negotiations with WTO Members, the schedule of
specific commitments on services of Saudi Arabia will be reproduced in Part II of the Annex to the
Protocol of Accessi on of Saudi Arabia].WT/ACC/SPEC/SAU/4
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Government Procurement
138. Some members of the Working Party  requested that Saudi Arabia undertake to accede to the
Agreement on Government Procurement upon accession to the WTO.  The representative of SaudiArabia replied that the Agreement on Government Procurement was a Plurilateral Agreement,
adherence to which was not a precondition for accession to the WTO.
139. [The representative of Saudi Arabia stated that Saudi Arabia would, upon accession to the
WTO, commence negotiations for membership in the Agreement on Government Procurement bytabling an entity offer.  He also confirmed that, if the results of the negotiations were satisfactory tothe interests of Saudi Arabia and the other members of the Agreement, Saudi Arabia  would completenegotiations for membership in the Agreement within  a year of accession to the WTO.  The Working
Party took note of these commitments.]
Transparency
140. Some members of the Working Party requested information on whether legislation was
required to be published in any official journal pr ior to its entering into force.  In response, the
representative of Saudi Arabia stated that Article 71 of the Basic Rule of Law provided that any lawwas required to be published in the Official Journal before it could enter into effect.
141. [The representative of Saudi Arabia said that from the date of accession all laws and
regulations, decrees on judicial decisions and administrative rulings of general application related totrade would be published in a manner that fulfils the WTO requirements.]
Notifications
142. [The representative of Saudi Arabia said that at  the latest within six months of the entry into
force of the Protocol of Accession, Saudi Arabia would submit all additional notifications required by
any agreement constituting part of the WTO Agreement.  Any regulation subsequently enacted by SaudiArabia which gained effect to the laws enacted to implement any Agreement constituting part of the
WTO Agreement would also conform to the requireme nts of that Agreement.  The Working Party took
note of these commitments.]
Trade Agreements
143. In response to questions the representative of Saudi Arabia submitted the text of the Unified
Economic Agreement signed on 11 November 1981 unde r the Gulf Cooperation Council.  He said that
the free-trade agreement met all the requirement s of Article XXIV of GATT Agreement 1994, includingWT/ACC/SPEC/SAU/4
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in particular paragraphs 5 (b) and 8 (b) thereof.  The free-trade area had eliminated duties and other
restrictive regulations of commerce and also all th e trade between the member s of the Gulf Cooperation
Council in the products originating in the member st ates and work was proceeding to further harmonise
trade and commercial policies.  He also subm itted the programme for the implementation of the
Agreement Facilitating and Developing Trade Exchange among Arab States to create a Free-trade Area
and the Agreement Facilitating and Developing Trade Exchanges among Arab States.  Saudi Arabiawould notify these agreements upon becoming a WTO Member.
144. [The representative of Saudi Arabia stated that  his Government would obs erve the provisions of
the WTO including Article XXIV of the GATT 1994 and Article V of the GATS in its trade agreements,
and would ensure that the provisions of these WT O Agreements for notification, consultation and other
requirements concerning free trade areas and custom s unions of which Saudi Ar abia was a member were
met from the date of accession.  The Working Party took note of these commitments.]
Conclusions
145.  [The Working Party took note of the explanations and statements of Saudi Arabia concerning
its foreign trade regime, as reflected in this report.  The Working Party took note of the assurancesgiven by Saudi Arabia in relation to certain specific matters which are reproduced in paragraphs ... ofthis report.  The Working Party took note of the commitments given by Saudi Arabia in relation tocertain specific matters which are reproduced in paragraphs [18], [24], [38], [49], [51], [53], [55],[56], [77], [81], [96], [98], [101], [122], [139], [142]  and [144] of this report.  The Working Party took
note that these commitments had been incorporated in paragraph 2 of the Draft Protocol of Accessionof Saudi Arabia to the WTO .]
146. [Having carried out the examination of the fore ign trade régime of Saudi Arabia and in the
light of the explanations, commitments and concessions made by the representative of Saudi Arabia,the Working Party reached the conclusion that Saudi Arabia be invited to accede to the MarrakeshAgreement Establishing the WTO under the provisions of Article XII.  For this purpose, the Working
Party has prepared the draft Decision and Protocol  of Accession reproduced in the Appendix to this
report, and takes note of Saudi Arabia's  Schedule of Concessions and Commitments on Goods [to beprepared] and its Schedule of Specific Commitments on Services [to be prepared] that are annexed tothe Protocol.  It is proposed that these texts be adopted by the General Council when it adopts thereport.  When the Decision is adopted, the Protocol of Accession would be open for acceptance by
Saudi Arabia which would become a Member thirty days after it accepts the said Protocol.  The
Working Party agreed, therefore, that it had completed its work concerning the negotiations for theaccession of Saudi Arabia to the Marrakesh Agreement Establishing the WTO.]WT/ACC/SPEC/SAU/4
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[TO BE COMPLETED.]WT/ACC/SPEC/SAU/4
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APPENDIX
ACCESSION OF THE KINGDOM OF SAUDI ARABIA
Draft Decision
The General Council,
Having regard to the results of the negotiati ons directed towards the establishment of the
terms of accession of the Kingdom of Saudi Arabia to the Marrakesh Agreement Establishing the
World Trade Organization and having prepared a Protocol for the Accession of the Kingdom ofSaudi Arabia,
Decides, in accordance with Article XII of the Marrakesh Agreement Establishing the World
Trade Organization, that the Kingdom of Saudi Arabia may accede to the Marrakesh Agreement
Establishing the World Trade Organization on the terms set out in the said Protocol.WT/ACC/SPEC/SAU/4
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PROTOCOL OF ACCESSION OF THE KINGDOM OF SAUDI ARABIA
TO THE MARRAKESH AGREEMENT ESTABLISHING
THE WORLD TRADE ORGANIZATION
DRAFT
The World Trade Organization (hereinafter referred to as the "WTO"), pursuant to the
approval of the General Council accorded under Article XII of the Marrakesh Agreement Establishingthe World Trade Organization (hereinafter referred to as "WTO Agreement"), and the Kingdom ofSaudi Arabia (hereinafter referred to as "Saudi Arabia"),
Taking note of the Report of the Working Party on the Accession of Saudi Arabia to the WTO
in document WT/ACC/SAU/… (hereinafter referred to as the "Working Party Report"),
Having regard to the results of the negotiations on the accession of Saudi Arabia to the WTO,
Agree as follows:
Part I - General
1. Upon entry into force of this Protocol, Saudi  Arabia accedes to the WTO Agreement pursuant
to Article XII of that Agreement and thereby becomes a Member of the WTO.
2. The WTO Agreement to which Saudi Arabia accedes shall be the WTO Agreement as
rectified, amended or otherwise modified by such legal instruments as may have entered into forcebefore the date of entry into force of this Protocol.  This Protocol, which shall include thecommitments referred to in paragraph 145 of the Working Party Report, shall be an integral part ofthe WTO Agreement.
3. Except as otherwise provided for in the para graphs referred to in paragraph 145 of the
Working Party Report, those obligations in the Mu ltilateral Trade Agreements annexed to the WTO
Agreement that are to be implemented over a period of time starting with the entry into force of thatAgreement shall be implemented by Saudi Arabia as if it had accepted that Agreement on the date ofits entry into force.
4. Saudi Arabia may maintain a measure inconsistent with paragraph 1 of Article II of the GATS
provided that such a measure is recorded in the list of Article II Exemptions annexed to this Protocoland meets the conditions of the Annex to the GATS on Article II Exemptions.WT/ACC/SPEC/SAU/4
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Part II – Schedules
5. The Schedules annexed to this Protocol shall become the schedule of Concessions and
Commitments annexed to the General Agreement on Tariffs and Trade 1994 (hereinafter referred toas the "GATT 1994") and the Schedule of Specific Commitments annexed to the General Agreement
on Trade in Services (hereinafter referred to as "GATS") relating to Saudi Arabia.  The staging of
concessions and commitments listed in the Schedules shall be implemented as specified in therelevant parts of the respective Schedules.
6. For the purpose of the reference in paragraph 6(a) of Article II of the GATT 1994 to the date
of that Agreement, the applicable date in respect of the Schedules of Concessions and Commitmentsannexed to this Protocol shall be the date of entry into force of this Protocol.
Part III - Final Provisions
7. This Protocol shall be open for acceptance, by signature or otherwise, by Saudi Arabia
until ….
8. This Protocol shall enter into force on the thirtieth day following the day of its acceptance.
9. This Protocol shall be deposited with the Director-General of the WTO.  The Director-
General of the WTO shall promptly furnish a certified copy of this Protocol and a notification ofacceptance thereto pursuant to paragraph 7 to each member of the WTO and Saudi Arabia.
10. This Protocol shall be registered in accordance with the provisions of Article 102 of the
Charter of the United Nations.
11. Done at Geneva this ….. day of ………………. , two thousand, in a single copy in the
English, French and Spanish languages each text being authentic, except that a Schedule annexed
hereto may specify that it is authentic in only one or more of these languages.
__________