U.S. Statement on the Trade Policy Review of Saudi Arabia

Delivered by Ambassador Michael Punke
Deputy U.S. Trade Representative and U.S. Permanent Representative to the WTO

 As Delivered

January 25, 2012

The United States is pleased to participate in Saudi Arabia’s first Trade Policy Review (TPR) since it joined the WTO in 2005.  As this is the first TPR of the New Year, the United States offers its best wishes to all Members for a year of peace, good health, and prosperity.  Saudi Arabia’s accession to this organization and its continued trade liberalization efforts reflect the successful realization of His Majesty King Abdullah’s vision of economic reform and diversification.

We warmly welcome Minister of Commerce and Industry Dr. Tawfiq AL-RABIAH and the entire Saudi delegation.  We value the report that your delegation submitted for this meeting and we hope that your government will be able to say, when the TPR is finished, that your hard work was well worth the effort in terms of Saudi Arabia’s own self-assessment as well as your government’s contribution to the WTO’s basic principle of transparency.  In addition, we appreciate the Secretariat Report which provides a useful context for exploring Saudi Arabia’s trade and investment policies. Finally, we welcome the discussant, Ambassador Joakim Reiter, and thank him for his input into this important milestone in Saudi Arabia’s WTO Membership.

The Secretariat tells us that since Saudi Arabia’s accession to the WTO in 2005, the Kingdom has continued a development strategy to diversify its economy away from crude oil and natural gas by promoting downstream industries, improving education and health services, and modernizing infrastructure.  Furthermore, the Secretariat points out that Saudi Arabia’s development strategy has concentrated on a liberal trade regime and has been accompanied by structural reforms that have created a more friendly business environment. We note that this strategy resulted in Saudi Arabia’s positive economic performance during 2005-2010, despite the challenges presented by the global economic crisis.  We also note that Saudi Arabia, as a member of the G20, undertook restraint with respect to imposing new trade restrictions despite the global economic downturn.  The trade policy practices of the government, including the commitments it undertook to become a Member of the WTO, seem to be helping Saudi Arabia reach its development goals.

Inasmuch as Saudi Arabia’s economy is increasingly dependent on international trade, we are pleased to note that the government is taking steps to boost its participation in the multilateral trading system, commensurate with Saudi Arabia’s growing importance worldwide, including through the establishment of Saudi Arabia’s WTO mission in June 2010.  Saudi Arabia is becoming a major world merchandise and services trader.  According to the Secretariat, in 2010, Saudi Arabia ranked 12th among world merchandise exporters and 21st among importers.  In services trade, Saudi Arabia ranked 33rd among exporters and 11th among importers. While companies still face investment restrictions in certain activities such as fisheries and oil exploration/drilling/production, Saudi Arabia, the Secretariat reports, has become the eighth largest recipient of FDI in the world.

The United States is proud to be a leading partner in Saudi Arabia’s economic growth and economic reform efforts.  The  United States and Saudi Arabia enjoy a broad, deep and robust bilateral relationship, with cooperation spanning many of the economic and security issues confronting the Middle East and the world.  On the commercial front, U.S. foreign direct investment in Saudi Arabia was $8.0 billion in 2010, and our bilateral trade is expanding.

While Saudi Arabia has reason to be pleased with the results of its economic reform efforts to date, the United States would like to highlight several areas that we believe need greater attention.  In particular, it is important that Saudi Arabia fulfill its commitment to begin GPA accession negotiations, in accordance with Saudi Arabia’s 2005 Working Party Report.  We strongly urge Saudi Arabia to begin its GPA accession by the end of April of this year.  The United States stands ready to work with Saudi Arabia on its GPA accession.  This action would be a good way for Saudi Arabia to work toward boosting its participation in the multilateral trading system, and we will be interested to hear the government’s plans in this regard.

The United States would also like to see Saudi Arabia continue to improve the adequacy and enforcement of IPR protection, including through the imposition of penalties that will deter copyright violations, action to increase the use of legal software within the government, and adequate protection for patented pharmaceutical products.

According to the Secretariat’s Report, Saudi Arabia is harmonizing its regime on standards and technical regulations at the GCC level, and we are pleased to recall that the Kingdom accepted the TBT Code of Good Practice in 2006.  The United States would like to urge Saudi Arabia to continue developing and expanding its efforts to ensure that technical regulations and standards are notified to WTO Members in draft form with enough advance notice that stakeholders have sufficient time to review and  comment and that Saudi authorities can take those comments into account before finalizing the regulation or standard.

The United States has found that consultation with, and involvement by, all interested parties in the regulatory process lead to rules and regulations that better meet their objectives while minimizing trade distorting effects.  U.S. firms are committed to ensuring that their products meet relevant Saudi and GCC technical regulations in order to access the Saudi market, and would like to avoid past instances where they were unaware of technical regulations in advance of implementation, leaving them with little or no time to modify their manufacturing processes.  The United States stands ready to work with Saudi Arabia on this effort.

In addition, Saudi Arabia is a leader within the Gulf Cooperation Council as the GCC reduces trade barriers, harmonizes regulations, and increases transparency.  We encourage Saudi Arabia to work with its GCC colleagues to accelerate that important work in line, of course, with its WTO obligations.  We also request that Saudi Arabia, as well as its GCC partners, complete their review of the Secretariat’s Factual Presentation on the GCC Customs Union, so that it can be reviewed in the Committee on Regional Trade Agreements.

The United States shares a positive and supportive economic partnership with Saudi Arabia, and we hope that Saudi Arabia will find this review to be useful not only in its reform efforts, but also in its efforts to increase its WTO participation.  We look forward to engaging constructively with Saudi Arabia, and all Members, on new approaches to achieving meaningful results in the Doha Round and on innovative approaches to the WTO’s work as an institution, where all major players do their part to liberalize trade and to create and apply meaningful trade rules. As a friend and ally, the United States shares a strong common interest in Saudi Arabia’s continued growth and prosperity.  It is with this perspective in mind that we look forward to working closely with Saudi Arabia to achieve our common goals.

Mr. Minister, we wish you and your team a successful review, and we look forward to further cooperation with Saudi Arabia, both here at the WTO and in our bilateral exchanges.

Thank you.