An official website of the United States government

U.S. Statement on the Trade Policy Review of Kuwait
February 7, 2012

Delivered by David Shark,
Deputy U.S. Permanent Representative to the WTO

Thank you, Chair.

The United States is pleased to participate in Kuwait’s first Trade Policy Review.  We welcome the convening of this long-delayed initial trade policy review of Kuwait, because we believe that the transparency obtained from TPRs is important for the WTO and for the Members subject to the review. We hope that this review will be a positive experience for Kuwait and that future reviews can occur within appropriate timeframes.  We extend a warm welcome to Ambassador Dharar A. R. Razzooqi and the entire Kuwait delegation.  We appreciate the report that your delegation submitted for this meeting, which provides useful information on developments in, and contributes to the transparency of, Kuwait’s trade policy regime and practices. The Secretariat’s report was similarly informative and comprehensive.  I would also like to thank our discussant, Ambassador Shahid Bashir, for his meaningful contributions to this important TPR for Kuwait.

The United States and Kuwait 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, our bilateral trade is expanding.  In 2010, the U.S. exported almost $3 billion in goods to Kuwait, up more than 42 percent from 2009, and imported more than $5 billion in goods from Kuwait, also up more than 42 percent from 2009.  Additionally, U.S. foreign direct investment in Kuwait was almost $2 billion in 2010.

While Kuwait has reason to be pleased with the results of its economic reform efforts to date, the United States believes that there are areas for improvement.  We commend the Government of Kuwait for acknowledging the value of modernizing its business environment, tackling excessive administrative and procedural obstacles to doing business, and increasing the transparency, accountability and effectiveness of government administration, and we look forward to hearing more about the steps the government is taking in this regard.

In its report, the government outlines its efforts to diversify Kuwait’s economy and efforts to address other structural issues that have come to characterize the nation’s economy and life, including by enacting new laws or amending existing laws and regulations.  Given that foreign investors tend to favor locations that provide strong and effective intellectual property protection, we hope that these legislative changes will also address the concerns that we have raised regarding Kuwait’s intellectual property laws, particularly the 1999 Copyright Law.  We encourage Kuwait to take appropriate steps to address current high levels of copyright piracy and to bring its legislation into full compliance with TRIPs obligations. Such measures would help Kuwait enhance its status as an investment destination.

On investment, we encourage Kuwait to carefully consider the impact of its existing investment restrictions on the investment climate.  For example, we urge Kuwait to think seriously about whether restrictions on the ability of non-Kuwaiti citizens to pursue commercial activities in Kuwait without a Kuwaiti partner and the ability of non-Kuwaiti partners to own more than 49% of the company’s capital – are helping Kuwait to fulfill its potential as an attractive investment destination.

The United States would also like to note the key role that a fair and transparent government procurement regime can also play in attracting foreign investment.  We urge Kuwait to become an observer to the WTO Committee on Government Procurement.  In addition, since the revision of the Government Procurement Agreement (GPA) that was agreed upon at the WTO Ministerial in December 2011 will facilitate accession to the GPA, we strongly encourage Kuwait to commence accession to the GPA as soon as possible.

In the modern international economy, the information and communications technology (ICT/telecom) sector continues to grow in importance, not only for mobile telephones and the Internet, but for ICT’s impact on all economic sectors – from finance to hydrocarbons, from transportation to health care.  We encourage Kuwait to deepen development in its ICT sector through reform and the strengthening of an autonomous and accountable regulatory authority.  International experience shows that a strong independent ICT regulator is essential to creating a competitive market and a legal environment conducive to foreign and private investment, economic growth, modernization, anti-corruption measures, and establishment of responsive social services such as e-Government, e-Education, e-Medicine, and e-Administration.  Along with Kuwait’s oil and gas sector, its ICT sector has a growing impact on its own economy, the region of the Middle East and North Africa and the world.

We would also like to highlight the complex nature of Kuwait’s import regime.  As the Secretariat’s report notes, foreign entities may only establish a branch in Kuwait and may only pursue commercial activities in Kuwait through a Kuwaiti agent.  The Secretariat’s report also notes a requirement for documents to be authenticated and consular fees to be paid on commercial invoices.  The interplay of these types of requirements seems highly burdensome, and we hope Kuwait will shed light on these practices and the scope of their application during the course of this review.

Another important issue relates to notifications, an important aspect of our work here at the WTO because notifications provide transparency that is essential to the operation of WTO agreements, including the ability of Members to assess if substantive obligations are being respected. The United States notes that up to mid-October 2011, Kuwait had made only 69 notifications of standards and technical regulations to the WTO.  We would like to urge Kuwait to ensure that all such regulations and standards are notified to WTO Members as required by the TBT and SPS Agreements. It is of utmost importance that the notifications include draft versions of the regulations, that they be issued with enough advance notice that stakeholders have sufficient time to review and comment on them, and that Kuwaiti 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 leads to rules and regulations that better meet their objectives while minimizing trade distorting effects.  We encourage Kuwait to update or submit its notifications, as appropriate.

We also request that Kuwait, 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.

In general, the United States continues to be concerned about the lack of transparency in Kuwait’s trade policy regime, which has led us to ask Kuwait so many written questions for this TPR.  We, ourselves, became increasingly surprised at how many matters we found to be important and for which we were unable to obtain answers independently.  The institutional value of the TPRM in enhancing the WTO’s core principle of transparency came into sharp focus. We thank Kuwait in advance for its efforts to respond to our questions, and we plan to review its responses carefully and request clarifications as necessary during the course of this TPR.

The United States encourages Kuwait to take advantage of the opportunities to implement meaningful economic reforms, which, as experience has shown, will significantly advance Kuwait’s objectives of inclusive growth and economic development.  The United States joins other WTO Members in supporting Kuwait’s use of an open trade policy to fulfilling these broader objectives.

In conclusion, Chair, the United States shares a positive and supportive partnership with Kuwait, and we hope that Kuwait will find this review to be useful in its reform efforts and in its participation at the WTO.

Thank you.