Saudi Arabia’s International Trade Relations

This paper discusses Saudi Arabia’s WTO accession documents and the commitments it made in line with trade in services. It elaborates on international agreements and treaties that deal with trade in services in which Saudi Arabia is a member. The impact of the WTO on trade in services in Saudi Arabia is also discussed.

Running head: SAUDI ARABIA’S INTERNATIONAL TRADE RELATIONS 1
Saudi Arabia’s international trade relations
Name
Institution

SAUDI ARABIA’S INTERNATIONAL TRADE RELATIONS 2
Saudi Arabia’s international trade relations
Introduction
International trade has become a significant aspect of numerous international affairs. As a
result of international trade, most nations are not only becoming interdependent to one another
but they are also trying to conduct efficient world trade. Saudi Arabia is one of the largest
countries in the Gulf region with an estimated population of 32 million. It also has the largest
economy in the Arab World with a GDP of 683.7 billion dollars (Al Rajhi et al., 2012). In line
with being the largest economy in the Arab world, it is also the only G-20-member country from
the region. The government of Saudi Arabian is in charge of major economic activities in the
region. The country has approximately 16 per cent of world petroleum reserves and further plays
a critical role in OPEC (Ball, Geringer, Minor and McNett, 2012). Saudi Arabia is also one of
the largest supplier, exporter, large-scale oil refiner as well as a producer of natural gas. This
paper seeks to discuss Saudi Arabia’s WTO accession documents and the commitments it made
in line with trade in services. The paper will further elaborate on international agreements and
treaties that deal with trade in services in which Saudi Arabia is a member. Besides, the impact
of the WTO on trade in services in Saudi Arabia will be discussed.
Arabia’s WTO accession document
Evidently, Saudi Arabia has established itself to be one of the biggest markets on the
planet and in addition in the Arab world for both manufactured as well as service goods. Saudi
Arabia got its formal accession in 2005 following the effective bilateral agreements with the
USA (Abedini and Péridy 2008). The procedure of Saudi Arabia accession and participation to
the World Trade Organization (WTO) has provided numerous benefits. The Saudi Arabia entry
in the WTO has increased trade volume, presents several negotiating as well as addresses

SAUDI ARABIA’S INTERNATIONAL TRADE RELATIONS 3
cultural and economic problems (Goldstein, Rivers and Tomz 2007). Saudi Arabia WTO
accession has enabled the country to remove protective barriers, open key service segments, for
example, saving money, and protection, legitimate and capital markets to remote cooperation,
place ceilings on tariffs and further protect intellectual property rights. The country has built an
open, transparent and rule-based regime to tackle the technical trade barriers. The WTO
accession has also enabled the country to call for tariff limitation in different sectoral initiatives,
government procurement agreements notwithstanding publishing service (Mohanty, et al. 2011).
Saudi Arabia has also changed rivalry laws to give against anti-protection with respect to WTO
rules.
International Treaties or agreements in which Saudi Arabia is a member
Saudi Arabia is a party in several bilateral and multilateral trade agreements. To start
with, Saudi Arabia is one of the members of the Gulf Cooperation Council (GCC). The GCC
comprises of countries such as Bahrain, the UAE, Qatar and Kuwait (Mohanty et al., 2011).
GCC is a regional intergovernmental political and economic union (Reiche, 2010). The GCC
trade agreement fosters free entry of goods and services among member states. It also promotes
economic, social, security and cultural cooperation between the six states that convenes each
year to discuss regional affairs. Cumulatively, the GCC countries produce almost a half of the
world oil reserves (Rajhi, et al. 2012).
On the other hand, Saudi Arabia is also a member of the Greater Arab Free-Trade Area
(GAFTA). GAFTA is a standout amongst the most basic financial accomplishments in Arab
regular work (Abedini and Péridy, 2008). It contributes towards framing the Arab regular
market. The GAFTA liberalizes goods and services through customs duties and charges
exception between all the Arabic member countries of the GAFTA (Zarrouk, 2000). The

SAUDI ARABIA’S INTERNATIONAL TRADE RELATIONS 4
exception is in the less developed countries (Mohanty, et al. 2011). The Arab countries have
further engaged in negotiations to liberalize investments and services among them to further
encourage economic integration among the Arabic countries.
The impact of World Trade Organizations on trade in services in Saudi Arabia
Saudi Arabia settled on a key decision to join the World Trade Organization (WTO) to
profit by both the exchange opportunities as well as the perceived globalization. The WTO
agreements were essentially formed to transform the existing market system and further improve
international trade that complies with global rules (Rajhi, et al. 2012). The changes that have
been formed have made a significant impact on government policies, enterprise reorganization,
as well as transforming the national economy (Al-Somali, Gholami and Clegg, 2009). Most of
the Saudi Arabian companies enjoy greater opportunities when they enter into an effective
partnership with international companies. The companies take full advantage of their
accumulative efforts in the trans-borders economy.
Additionally, the formation of the WTO introduced new elements in Saudi Arabia. It has
made the trade to become multi-faceted and dynamic particularly in the services sector. The
improvement of the IT revolution has made everything to be exchanged immediately particularly
in innovation, finance and intellectual property (Goldstein, Rivers and Tomz, 2007). It has also
safeguarded the Saudi Arabian Kingdom from biased trade approaches of different nations by
guaranteeing more prominent relationship and includes the utilization of the settlement
procedure to resolve the exchange question with different nations (Goldstein, Rivers and Tomz
2007). The WTO has also ensured that Saudi Arabia is not subjected to anti-dumping practices
unless within the WTO guidelines framework (Saudi Ministry of Commerce and Investment,
2012). The WTO on trade in services will prompt domestic economic reforms, privatization as

SAUDI ARABIA’S INTERNATIONAL TRADE RELATIONS 5
well as make the country a Foreign Direct Investments destination. As argued by Saudi
businesses, the WTO accession will ensure greater domestic efficiency in the Saudi Arabia
economy (Abedini and Péridy 2008). As much as joining WTO will increase trade in services in
the world, WTO promotion could have a significant effect on several Saudi industries such as the
petrochemical industry, finance service sectors and telecommunications (WTO, 2005).
Since Saudi Arabia holds the privilege of exchange for upstream oil generation, the WTO
promotion has profited chances to open this segment further to rebuild and update itself through
collaboration (Goldstein, Rivers and Tomz 2007). It has likewise facilitated the stream of
products and ventures between countries, making it even worldwide in nature. The rapid
developments in the service sector will enable Saudi Arabia to diversify its market and products
to allow them to go beyond national boundaries in future (Rose, 2004). The circumstance will
call for dire monetary changes that will help in defeating the difficulties of promotion.
Conclusion
Saudi Arabia’s international trades in services have encouraged some significant changes
in the worldwide trade scene. The WTO accession will be viewed as a basic advance to
rejuvenate the Saudi private part if managed appropriately. The collaboration of the Saudi market
system will play a significant role in shaping the trade systems as well as the Saudi domestic
market. This will not only enable the local market to be straightforward and responsible but will
also expand the market share.

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