RESTRICTED

(95-3550)

Original: English

ACCESSION OF SAUDI ARABIA

Questions and Replies to the Memorandum

on the Foreign Trade Régime (L/7489 & Add.1)

In a communication dated 23 June 1993, circulated as document L/7248, the Government of Saudi Arabia applied for accession to the General Agreement pursuant to Article XXXIII. At its meeting on 21 July 1993, the Council set up a Working Party to examine Saudi Arabia's application for accession (C/M/265) and approved the terms of reference of the Working Party which are reproduced in document L/7287/Rev.1. In document L/7489 contracting parties were invited to submit in writing questions concerning the Foreign Trade Régime of Saudi Arabia. The present document sets forth the questions submitted by contracting parties in connection with Saudi Arabia's foreign trade régime and the replies thereto provided by the Saudi Arabian authorities. The annexes mentioned in this document, which are available in the Secretariat for consultation, are listed in document L/7645.

Delegations wishing to raise additional questions concerning Saudi Arabia's foreign trade régime might inform the delegation of that country (with a copy to the secretariat) of such questions in advance of the meeting of the Working Party, so that considered replies can be made available by Saudi Arabia to members at the time of the Working Party meetings.

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The system of comprehensive planning is structured around the development plans, of which there have been five five-year plans. These development plans provide a framework for government planning so as to increase the efficiency of government policies and government expenditures in a balanced and coordinated manner for the betterment of the Kingdom of Saudi Arabia and its people.

An examination of several of the broad goals of the development plans provides an excellent indication of how this system of comprehensive planning affects international trade.

Diversifying the Economy and Reducing Dependence on Oil: All the development plans have stressed the need to establish strong economic sectors and income sources other than in the oil sector. Primary instruments used to implement this policy have been the Saudi Industrial Development Fund, the Royal Commission for Jubail and Yanbu, and the eight industrial cities. Due in large part to these programmes, industries have been established which have resulted in the diversification of the Kingdom’s economy. This diversification has resulted in growth of non-oil exports.

Raising Living Standards and Improving the Quality of Life: A continuing goal has been to distribute the benefits of the Kingdom’s increasing wealth throughout the population and to provide opportunities for all members of Saudi society to participate in the development process. In general, the raising of the living standards of Saudi society has resulted in an increase in the citizens’ purchasing power and a concomitant increase in the level of imports.

Regional Development: Balanced and integrated regional development has been a goal of all five year plans. One manifestation of this policy has been the enactment of measures to promote the agricultural sector. Promotion of the agricultural sector has, in turn had an affect on preventing migration from rural areas and increasing employment in agricultural areas and agricultural products that meet some domestic demand.

Broadening the Linkages Between the Kingdom and other Nations: In light of its expanding role in the world politically, economically, socially and in religion, an important goal is to broaden and deepen the Kingdom’s relationships with international organizations and other countries, especially the Gulf Cooperation Council. How this policy affects international trade is readily apparent from just two examples. First, the Unified Economic Agreement among the Gulf Cooperation Council members has led to a free trade area which has resulted in greater trade among the members of the GCC. Second, the decision by the Kingdom to accede to the GATT will secure Saudi Arabia’s full participation in the international trading community.

Developing and Completing the Physical Infrastructure: One of the major objectives on which development plans have concentrated is the provision of physical infrastructure necessary to modernize the national economy and increase its involvement in international economy. Therefore, oil revenues in the first three plans were invested primarily in establishing the physical and social infrastructure systems essential to a stable, productive and just society. The emphasis has recently changed to the maintenance of existing facilities, thereby ensuring their long term value to the Kingdom. Physical infrastructure such as roads, ports, and airports, have had a direct impact on international trade by facilitating the import and export of goods and services.

Developing Human Resources: The development plans have placed great importance on human resource development, through advances in primary, secondary, and higher education as well as vocational and technical education and training. Development of human resources has increased, and will continue to increase, the productive employment of Saudi citizens. The impact of this development on international trade occurs in various ways. Increasing the productive employment of Saudi citizens increases their purchasing power which, in turn, increases demand for imported goods and services. It may also lead to the development of domestic industries that enjoys comparative advantages which results in changes in the size and nature of imports and exports.

The Kingdom of Saudi Arabia never said it was at a low level of economic development. What it did say is that it should be treated as a developing country within the context of the GATT. The following are among the reasons why:

Please refer to Reply 2. As a developing country within the context of the GATT, Saudi Arabia would expect that all provisions relating to developing countries would apply to Saudi Arabia.

The statement has three purposes. First, it is an acknowledgment that the Kingdom of Saudi Arabia considers itself a developing country for purposes of the General Agreement on Tariffs and Trade and the World Trade Organization. Second, it signals Saudi Arabia’s expectation that the Contracting Parties will accord to the Kingdom the treatment accorded to other developing countries that are either signatories to the General Agreement on Tariffs and Trade or members of the World Trade Organization. Third, it indicates the Kingdom’s strong approval of the principles and objectives outlined in Article XXXVI and expectation that other members will live up to these principles and objectives.

Reply 5

Saudi Arabia intends to apply for membership in the WTO when the internal procedures are completed. These procedures are now in the final stage.

Please refer to answer 5.

Saudi Arabia has requested accession to GATT 1947. As stated in Reply 5, Saudi Arabia intends to request membership in the WTO after completing internal procedures.

No. Saudi Arabia does not require any product produced or sold in Saudi Arabia to contain domestically-produced content.

The following are updates of the statistical data provided in Chapter II:

Saudi Arabia’s gross domestic product is estimated to have risen by 1.0 per cent, in nominal terms, in 1993 to a total of about $123 billion. Private sector growth is estimated to have been 5.1 per cent.

The non-oil sector of the economy contributed over 63 per cent of total economic output in 1992, at current prices. By economic activity, construction accounted for 8.8 per cent of GDP, trade for 7.0 per cent, and agriculture, forestry and fishing for 6.5 per cent.

In current prices, the oil sector accounted for 37.1 per cent of country’s economic output in 1992. Over the period 1986-1992, the value of crude oil and petroleum product exports accounted for an average 73 per cent and 17 per cent, respectively, of the total value of exports.

The cost of living for all consumers recorded an increase of 0.8 per cent in 1993 and 0.6 per cent in 1994. The national budget for 1995 projects revenues of SR135 billion and expenditures of SR150 billion. Spending will be cut 6.25 per cent from the 1994 level.

During the period 1981-1992, exports averaged approximately 45 per cent of nominal GDP and imports averaged some 28 per cent of GDP. In 1992 exports amounted to $50 billion while oil exports totalled $47 billion. In 1992, the United States purchased the largest share of Saudi exports, 21 per cent, followed by Japan, 16 per cent, and South Korea, 7 per cent.

In 1993 exports amounted to $42 billion while oil exports totalled $39 billion. For detailed information on imports in 1993, please refer to Annex 1.

Saudi Arabia does not issue growth forecasts.

The government will safeguard Islamic values by duly observing, disseminating and confirming Allah’s Sharia. The Islamic values that guide Saudi Arabia’s trade are the same Islamic values that guide Moslems around the world. The government will safeguard these Islamic values by duly observing and confirming these values. It is known that Islamic values stress the preservation of life and property, and protect the rights of all people without discrimination. Islamic values are the reason for most prohibited imports (as well as domestic production and export of such prohibited items). They also lead to the country’s free enterprise system through the guarantee of private property. Islamic values respect the contracts made among individuals, firms, and governments.

According to the Basic Law of Rule, the Kingdom is an Arab Islamic state, its constitution is derived from the Holy Quran and the Sunna. Information about the Holy Quran and the Sunna is readily available. The rule in Saudi Arabia is based on fairness, justice, consultation and equality. All natural resources are owned by the state. Private and public property are protected by the state. Taxes and dues are based on fairness and shall not be imposed except in case of need. Social and economic development shall be sought pursuant to a fair and studied plan.

The overall objectives of the Fifth Development Plan (1990-1995) are as follows:

More specific plan objectives in relation to domestic industries include the following:

More specific plan objectives in relation to oil investment include the following:

More specific plan objectives in relation to the service sector include the following:

The Fifth Development Plan and the previous four plans do not identify specific firms to be supported. However, two industrial sectors have been mentioned in almost all the plan documents as sectors in which the Kingdom demonstrates a comparative advantage and whose development should be encouraged in order to diversify the economy. These two are basic petrochemical industries and downstream petrochemical industries.

Saudi Arabia does not plan to seek special GATT/WTO treatment for any firm or sector. It, however, would reserve its right to use relevant GATT/WTO provisions available to all member countries.

The Kingdom is currently in the preliminary stages of a programme to privatize productive organizations through the flotation of shares of those companies deemed to be ready for privatization. The Custodian of the Two Holy Mosques, King Fahd ibn Abdulaziz, has reconfirmed the Kingdom’s determination to expand its privatization drive so that it encompasses profitable enterprises such as the telephone service. Analysis is ongoing with regard to the precise steps to be taken and their timing. The goal of giving the private sector the opportunity to undertake many of the current economic tasks of the Government has also been put forth in the Sixth Development Plan.

Reply 14

A copy of Decree No. 142 of 1413 (H) setting out the "General Objectives and Strategic Bases of the Sixth Development Plan" is reproduced in Annex 2.

Please refer to Annex 2.

Other than the Law for the Protection and Encouragement of National Industry, the laws and regulations concerning industrial development are the Saudi Industrial Development Fund Law, the Investment of Foreign Capital Regulation, and the Rules for Coordination and Encouragement of the Establishment of Industrial Projects in the Gulf Arab States Cooperation Council. Please refer to Annex 3 for (unofficial) English language translations of all four documents.

Reply 17

The paragraph in question referred to "institutional support" in the context of developing the Kingdom’s banking and financial sector and financial markets. Government support for development of the financial sector and financial markets takes place in three primary ways: (1) by allowing for the use of various financial instruments under the regulatory supervision of the government; (2) by encouraging the use of advanced technology and training programmes within the financial sector; and (3) by further developing the capital market in Saudi Arabia through enhancement of the government's management of the share market. For example, in 1993 the Electronic Securities Information System (ESIS) was enhanced by the introduction of ESISNET, which offers national coverage by extending some of the order management and settlement delivery services throughout the Kingdom.

To the extent that foreign investors are licensed to participate in the financial sector, then foreign investors will enjoy the institutional support provided by the government. For example, the joint venture banks that currently operate in Saudi Arabia are not prohibited in any way from offering the same services and financial instruments as wholly Saudi owned financial institutions. However, there are limits imposed on foreign participation in the share market. Non-Gulf Cooperation Council investors are, for all practical purposes, prohibited from investing in the Saudi stock market.

Government support for development of the financial sector and financial markets takes place in three primary ways: (1) by allowing for the use of various financial instruments under the regulatory supervision of the government; (2) by encouraging the use of advanced technology and training programmes within the financial sector; and (3) by further developing the capital market in Saudi Arabia through enhancement of the government's management of the share market. For example, in 1993 the Electronic Securities Information System (ESIS) was enhanced by the introduction of ESISNET, which offers national coverage by extending some of the order management and settlement delivery services throughout the Kingdom.

Activities of foreign financial firms are governed by the Banks Control Law. Under Article 2 of the Banks Control Law, any natural or juristical person must have a licence to carry on, in the Kingdom, banking business. Under Article 3 of the Banks Control Law, a national bank - a bank the head office of which lie in the Kingdom--may be granted a licence if, among other things, it is a Saudi joint stock company. This includes joint venture banks. A foreign bank - a bank whose head office lies outside the Kingdom and its branches therein--may be granted a licence to establish one or more branches in the Kingdom if it satisfies the conditions determined by the Council of Ministers upon the recommendation of the Minister of Finance and National Economy.

Reply 19

As mentioned in Reply 12, basic petrochemical industries and downstream petrochemical industries have been mentioned in the development plans as sectors in which the Kingdom has a comparative advantage and whose development is hence encouraged. Table 1 in Annex 4 provides a breakdown of licensed foreign investments by International Standard Industrial Classification (ISIC).

Reply 20(a)

There are no programmes targeted at specific sectors. However, potential investors in priority sectors (See Reply 11) are advised of generally available incentives to encourage investment in those priority sectors.

The following incentives are currently generally available: Lease of land at a nominal fee; loans by the Saudi Industrial Development Fund; customs duty exemptions for raw, process and packaging materials; assistance in the selection of industrial projects, the preparation of their economic feasibility studies and their evaluation; provision of organizational, operational, technical and managerial assistance. See Reply 20(a).

One of the specific objectives of the Fifth Development Plan was to maximize the domestic transformation of domestically produced raw materials and intermediate products, particularly petroleum derivatives and petrochemicals. There is no specific timetable for this development as it is a continuing process, the specific elements of which are subject to market conditions. The government of Saudi Arabia’s role is to provide the infrastructure and institute programmes that will reveal the Kingdom’s comparative advantage in this sector.

The Kingdom is currently in the preliminary stages of a programme to privatize productive organizations through the flotation of shares of those companies deemed to be ready for privatization. Analysis is ongoing with regard to the precise steps to be taken and their timing.

The government will facilitate and encourage the participation of the private sector by providing opportunities for scientists and researchers to conduct scientific and technological research, with the cooperation of the King Abdul Aziz City for Science and Technology (KACST) and other universities. The Kingdom will support centres and programmes for basic and applied research.

The government of Saudi Arabia is involved in scientific research through KACST. The main objectives of KACST are focused on supporting, encouraging and conducting basic and applied research.

The basic functions of KACST can be outlined as follows:

2. Carrying out basic and applied research programmes.

In addition to the universities and other higher education institutions in the Kingdom of Saudi Arabia, different government agencies are involved in basic research activities in their areas of interest. They either perform research by themselves or provide funds to others.

The Kingdom will continue supporting development of scientific research activities through encouragement of foreign investments. Both domestic and foreign firms will be encouraged to perform scientific research on equal basis. The protection of intellectual right will help both domestic and foreign firms in this area.

The General Objectives and Strategic Bases of the Sixth Development Plan states the following government objectives concerning technological development and scientific research:

The two primary means used to increase the ratio of domestic to foreign labour services are (1) increasing the level of education, and (2) increasing the level of technical proficiency. The government provides financing to improve the quantity and quality of educational services, including technical schools, in order to further the objective of greater use of domestic labour. In addition, the Investment of Foreign Capital Regulation states that one of the conditions for obtaining a licence for the investment of foreign capital is that "the foreign capital is accompanied by foreign technical expertise." Further, the Labour and Workers Regulations states that "every employer shall improve his Saudi workers’ level of technical proficiency in work carried out by non-Saudi workers in order to enable them to be sufficiently qualified in their occupation so that they can replace non-Saudi workers."

With regard to differential treatment given to foreign labour services, the Labour and Workers Regulations states that "the percentage of the Saudi workers engaged by the employer shall not be less than 75 per cent of his total workforce." It also says that "where Saudi workers with the necessary technical proficiency or academic qualifications are not available, the Minister of Labour may provisionally reduce the said percentage."

International participation in the various service sectors is governed by the Investment of Foreign Capital Regulation. In addition, there are the following sector specific laws and regulations:

BANKING SERVICES: The Banks Control Law;

MARITIME SERVICES: Order No. 53 Dated 24.3.1403 (AH);

HEALTH SERVICES: Ministerial Order Number 4104/20M of 1408 Concerning the Implementing Regulations to the Private Medical Establishment Law;

EDUCATIONAL SERVICES: Implementing Regulations to the Regulation of Technical Institutes and National Occupational Centres;

TOURISM SERVICES: Ministerial Order No. 1/1/4/8/10 of 29.6.1400 Regarding Regulation of Tourism and Travel Agencies and Companies Engaged in Air Transport;

ENGINEERING SERVICES: Ministerial Order No. 264 of 16.9.1402 Concerning Organization of the Practice of the Profession of Engineering Consultancy;

ACCOUNTING SERVICES: Law of Certified Accountants, and the Implementing Regulations of the Accountants Law;

LEGAL SERVICES: Ministerial Order Number 1190 of 1402 Pertaining to the Regulation of Carrying on the Profession of Legal Consultancy; and

PHARMACEUTICAL SERVICES: Law Concerning the Carrying on of the Profession of Pharmacy and Trading in Medicaments and Medical Preparations.

Applicable provisions of all these laws are provided in Annex 5, with the exception of the Investment of Foreign Capital Regulation, which is reproduced in Annex 3.

The policy on and laws governing the employment of expatriates is covered under the Labour and Workers Regulations. Chapter 3 of the Regulations states the following:

Work is a right of the Saudi national and no other person shall be allowed to exercise this right unless the conditions set down in this chapter shall have been fulfilled.

It shall not be allowed to prompt entry of foreigners to work or permit them to do work with private companies and firm, except pursuant to the Minister of Labour’s approval and the obtaining of a work permit as per the pro-forma proceedings and rules laid down by the Labour Ministry. The said permit shall not be given unless the following conditions have been satisfied:

The Labour and Workers Regulations states that "the percentage of the Saudi workers engaged by the employer shall not be less than 75 per cent of his total work force." It also says that "where Saudi workers with the necessary technical proficiency or academic qualifications are not available, the Minister of Labour may provisionally reduce the said percentage."

The Investment of Foreign Capital Regulation states that one of the conditions for obtaining a licence for the investment of foreign capital is that "the foreign capital is accompanied by foreign technical expertise." Further, the Labour and Workers Regulations states that "every employer shall improve his Saudi workers’ level of technical proficiency in work carried out by non-Saudi workers in order to enable them to be sufficiently qualified in their occupation so that they can replace non-Saudi workers."

In general, there are few restrictions on cross-border provision of services. That is to say, residents of Saudi Arabia are generally not precluded from using any services available to them that originate from establishments outside the Kingdom of Saudi Arabia, with the exception of callback services.

Rules concerning temporary residence in Saudi Arabia by foreigners engaged in trade in services are governed by the Law of Stay. As a general policy, such foreigners are granted the right to stay in Saudi Arabia provided one or more of the following conditions are satisfied:

In addition, Chapter 3 of the Labour and Workers Regulations states the following:

With regard to restrictions on the establishment of an operation, foreign capital, whether in a joint venture or wholly owned, must be approved by the Foreign Capital Investment Committee. The conditions for approval under the Investment of Foreign Capital Regulation are that the capital be invested in development enterprises, other than extraction of petroleum and mining, and that the foreign capital be accompanied by technical expertise. In addition, there are sector specific laws and regulations covering the following areas:

Banking: Article 3 of the Banks Control Law states that in order to be granted a licence to establish one or more branches in the Kingdom, a foreign bank shall have to satisfy the conditions determined by the Council of Ministers upon the motion of the Minister of Finance and National Economy. Refer to Reply 18 for further details.

Accounting: Saudi Arabian only provides for the establishment of accounting firm only under a licence granted to a certified accountant in accordance with the Law of Certified Accountants, and under Article 1 of the Law, only Saudi nationals can be registered as certified accountants within Saudi Arabia.

Legal Services: Article 2 of Ministerial Order No. 1190 of 16.2.1402 AH concerning the regulation of carrying on the profession of legal consultancy states that in order to grant a licence to practice the profession of legal consultant, the applicant must be a Saudi national. In addition, Article 3 of Ministerial Order No. 1190 of 16.2.1402 AH states that a legal consultancy office may take the form a joint professional partnership between two or more Saudi legal consultants who are authorized to carry on the profession.

Travel and Tourism: Article 3 of Ministerial Order No. 1/1/4/8/10 of 29.6.1400 AH concerning the regulation of tourism and travel agencies and companies engaged in air transport states that a foreign firm wishing to obtain a licence to establish a tourism or travel agency can do so, subject to laws and implementing regulations made in accordance with the Investment of Foreign Capital Regulation and provided they belong to states which give Saudi nationals a right to establish travel and tourism offices in their countries.

Shipping: Article 3 of Ministerial Order No. 53 of 24.3.1403 AH concerning the application for licences by maritime companies and firms for carrying on maritime carriage states that the authorized capital must, for the duration of the period of licence be in the ownership of Saudi nationals or in partnership with non-nationals in a proportion to be determined by the Foreign Capital Investment Committee.

Saudi Arabia recognizes the professional licence granted by a national authority for any foreign physician. However, the physician cannot practice in Saudi Arabia unless he has passed a qualifying test conducted by the Saudi Arabian Ministry of Health. The professional licensure of other professionals is subject to certification by the Authority of Equivalence of Degrees in the Ministry of Higher Education.

Yes. Foreigners are prohibited from participating in services such as civilian security guards, commercial agents, customs clearing agents, transaction follow-up clerks to government departments, and real estate agents.

Yes. For example, the presence of foreign banks is limited to branches or joint ventures; foreign participation in the maritime carriage sector is limited to joint ventures; currency exchange operations, and technical institutes cannot be owned by foreigners; and, a foreign accountant, lawyer or pharmacist must work out of the office of a Saudi licensed accountant, lawyer, or pharmacist, respectively.

Specific rules and regulations affecting imports of financial services are the Banks Control Law and the various applicable regulations issued by the Saudi Arabian Monetary Agency. Those that most directly affect imports of telecommunications services are the various applicable regulations issued by the Ministry of Post, Telephones, and Telegraphs. Those that most directly affect imports of health services are the Law of Private Medical Establishments, Ministerial Order Number 4104/20M of 1408 concerning the implementing regulations to the Private Medical Establishment Law, and the various applicable regulations issued by the Ministry of Health. Those that most directly affect imports of educational services are the Public Institution for Technical Education and Occupational Training Law, the Implementing Regulations to the Regulation of Technical Institutes and National Occupational Centres, and various applicable regulations issued by the Ministry of Education and the Ministry of Higher Education. Those that most directly affect imports of professional services are the Law of Certified Accountants, the Implementing Regulations of the Law of Certified Accountants, Ministerial Order Number 264 of 1402 concerning engineering consultancy, Ministerial Order Number 1190 of 1402 pertaining to the regulation of carrying on the profession of legal consultancy, the Law Concerning the Carrying on of the Profession of Pharmacy and Trading in Medicaments and Medical Preparations, and various applicable regulations issued by the Ministry of Trade and Commerce. In addition, the Law of Stay and the Labour and Workers Regulations apply to the import of all labour, including labour needed for the services mentioned in the question.

Imports of service sectors have been affected by the system of comprehensive planning for economic and social development to the extent that the Foreign Capital Investment Committee has been guided by the economic and social development objectives and to the extent that service sector imports have been considered by the Foreign Capital Investment Committee.

Please refer to Reply 26.

Please refer to Reply 26.

Please refer to Replies 26, 27, 28, and 29.

The agreements with Jordan and Egypt confer reciprocal supplier status with regard to cross-border truck and public transportation vehicles; the agreements with Tunisia and Egypt stipulate that preference shall be given to national shipping and transport modes in bilateral trade; the agreements with Syria, Turkey and Lebanon provide for reciprocal treatment with regard to transportation and transport vehicles; the agreement with Morocco includes reciprocal airline privileges.

The primary body responsible for regulating the telecommunications sector is the Ministry of Posts, Telephones and Telegraphs. It is responsible for licensing all operations and/or services rendered in the telecommunications sector within the Kingdom of Saudi Arabia. Please refer to Reply 36 for more details.

Foreign entities are permitted to supply enhanced telecommunications services in Saudi Arabia. The following is an indicative list of the enhanced services which foreign entities are permitted to supply: electronic mail, voice mail, fax and telex messaging, file transfer, conferencing, and on-line information and data-base retrieval.

In all cases, users must use the public telecommunication network and only with the authorization of the national telecommunication authorities.

Foreign investment by suppliers of enhanced services is governed by the same principles and practices applied to foreign investment in general. Namely, the foreign investment is subject to the grant of a licence which is provided to enterprises which, among other things, further the development of the Kingdom and supply foreign technical expertise.

As was stated in the Memorandum on Foreign Trade Regime (L/7489), standards are applied to a wide variety of goods in a non-discriminatory manner. By the end of 1994, the Saudi Arabian Standards Organization (SASO) had prepared over 800 standards and measures, copies of which can be obtained from SASO or the main Chambers of Commerce in the Kingdom. The list may include standards for those goods which are referred to as "customer premises equipment." It should also be mentioned that Saudi Arabia is a participating member of the International Telecommunications Union and the Consultative Committee for International Telephones and Telegraphy, and as such supports the adoption of international standards which assure inter-operability and are applied in a non-discriminatory fashion.

There are no plans to privatize basic telecommunications services. Foreign corporations continue to enjoy national treatment in participating in the construction, modernization, and maintenance of the basic telecommunication infrastructure.

Maritime transport, port, and onward services are governed by the Law of Ports, Harbours and Lighthouses, and the various regulations and orders issued by the Ministry of Communications. Under Order number 53 of 1403, foreign investors in the maritime carriage sector are governed by the provisions of the Investment of Foreign Capital Regulation. Anyone wishing to carry on the business of maritime carriage must have a licence issued by the Ministry of Communications. Licences are issued to companies or organizations whose authorized capital is in the ownership of Saudi nationals or in partnership with non-nationals in a proportion to be determined by the Foreign Capital Investment Committee.

Import restrictions related to the environmental are of three types:

Environmental protection and conservation services are subject to the Procurement of Government Purchases Law, the Council of Ministers Resolution 124 (1403), or the Standard Rules for Government Purchases.

Please refer to Reply 40.

The government provides the following services: public administration, defense, education and vocational training, health care, social security and welfare services, housing and community amenities, certain athletic activities, television and radio broadcasting, telecommunications, public utilities, certain financing operations, environment and meteorological services, insurance, port and airport services, and mass transportation such as trains, planes, and buses. It should be mentioned that some of these activities are open to the private sector. In fact, the government encourages the private sector to participate in activities such as health care, insurance, and transportation.

In the early stages of its development, the Saudi Arabian government took an active role in the establishment of enterprises in order to ensure the success of the development process and maximize the benefits of oil revenues. A major facet of the sixth development plan is the development of policy giving the private sector the opportunity to assume many of the economic tasks currently undertaken by the government. The private sector will be provided with the opportunity to operate, manage, and maintain various economic activities with the understanding that this will result in lower costs, better performance, and additional employment opportunities for Saudi citizens.

The Custodian of the Two Holy Mosques, King Fahd ibn Abdulaziz, has reconfirmed the Kingdom’s determination to expand its privatization drive so that it encompasses profitable enterprises such as the telephone service. This will be done through the timely flotation of the shares of various basic industries set up by the state. No exact date has been set nor has the specific methodology of privatization been specified.

There are no excise taxes applied to imports or domestic products. Tariff revenues in 1992 were SR9.9 billion representing 6.2 per cent of government revenues. Complete information on 1993 is unavailable.

The Basic Law of Rule, instituted by Royal Decree No. A/90 dated 27 Shaaban 1412 AH, sets down the law concerning political authority within the Kingdom. Article 56 of the Basic Law of Rule states that the King is the Chairman of the Council of Ministers and will be assisted by the ministers in the performance of his duties. It also states that the Law of the Council of Ministers shall lay down the powers of the Council regarding the internal and external policies, the organization and coordination of the various Government authorities; and it shall set down the conditions to be satisfied by, the powers of, the method of responsibility and all affairs of the ministers.

Upon a request by the chairman of the Council of Ministers, the Consultative Council shall study treaties and international agreements under consideration and make suggestions with regard to such documents, as is deemed appropriate, in the form of resolutions. The resolutions passed by the Consultative Council are forwarded to the chairman of the Council of Ministers, who will pass them to the Council of Ministers for consideration. When the points of view of both councils are concordant, they shall, after being approved by the King, be enacted. In case of a difference of opinion, the King shall approve what he considers appropriate.

Laws, treaties and international agreements and concessions shall be enacted and amended by Royal Decrees after having been considered by the Consultative Council. No initials shall be affected on any agreement or obligation to which the state is a party, except after having referred such agreement or obligation to the Council of Ministers, save where the ministers or the responsible officer representing the Kingdom has been given the power to do so.

The Kingdom of Saudi Arabia will do whatever is required, whether through Royal Decree, Council of Ministers Decree or Ministerial Orders to bring its trade regime into conformity with its GATT obligations where it is determined that such conformity does not currently exist.

Please refer to Annex 1.

Please refer to Annex 1.

Please refer to Annex 1 for import statistics. The current Saudi Arabian customs tariff rates can be found in Annex 6.

The services trade and transfers components of the balance of payments consists of both receipts and payments. The receipts portion embodies investment income, bunker oil sales, expenses of pilgrims and other visitors, the expenses of foreign missions, receipts of the Saudi Arabian Airlines, and port and airport revenues. The payments portion consists of freight and insurance charges, oil sector payments, travel expenses overseas, investment income payments, foreign aid, subscriptions of capital to regional and international development agencies, and certain government imports.

The average weighted (1993, by value) tariff for agricultural goods is 7.5 per cent and for industrial goods is 10.5 per cent. A table listing average weighted tariffs for each of the twenty one sections follows below. No information is available on average effective tariffs but these would be lower than the average tariffs found in the table due to duty exemptions.

Animal and Animal Products 6.9 %

Vegetable and Vegetable Products 5.5 %

Fats and Oils 12.0 %

Prepared Foods and Tobacco 13.7 %

Mineral Products 12.6 %

Chemical Products 7.8 %

Plastics and Rubber 12.6 %

Leather Products 12.0 %

Wood Products 12.2 %

Paper Products 11.8 %

Textile and Textile Products 12.2 %

Clothing Accessories 12.9 %

Stone and Glass Products 12.2 %

Precious Metals, Jewellery 2.2 %

Base Metals 13.6 %

Machinery and Electrical Equipment 12.0 %

Transportation Equipment 7.6 %

Miscellaneous Instruments 10.2 %

Arms and Ammunition 4.1 %

Miscellaneous Manufactures 15.9 %

Art, NEC 12.0 %

With regard to customs regulations, the Minister of Finance and National Economy is responsible for implementing the Customs Law and may issue any orders necessary to carry out its responsibilities. Of course the Ministry of Finance and National Economy would consult with all appropriate interested parties, both in the public and private sector, prior to issuance of such orders. The Customs Law itself can only be changed by a Royal Decree, alone or together with a Council of Ministers Resolution, and this would generally only occur after consultation with all appropriate interested parties, both in the public and private sectors, prior to issuance of the change. There is no written regulations on how these consultations should be carried out.

The Customs Tariff revision which took place in 1988 did not involve a complete review of all customs regulations. The revision was restricted to the adjustment of the tariff rates themselves.

The Customs tariff revision in 1988 involved raising the tariff rates but it did not include any change in the customs regulations themselves. The tariff rates were changed as follows:

Protective tariffs were instituted for steel pipes, barbed and fencing wires, lamp posts, construction steel, and all kinds of soap.

There are currently no plans to update or revise the current tariff schedule. Of course proposals to change the tariffs for individual line items are considered from time to time and adjustments could be made at any time in the future. In addition, changes of a more sweeping nature could be made as a result of events such as an agreement with the other Gulf Cooperation Council members on the details of a customs union or in response to changing fiscal conditions.

Saudi Arabia would be prepared to negotiate the binding of its tariffs, keeping in mind its position as a developing country in the early stages of industrialization and bearing in mind the principle of mutual advantage. The level and extent of bindings will emerge from the tariff negotiations.

The complete list of tariff rates can be found in Annex 6.

Please see Table 1 in Annex 7 listing all products by 8 digit Harmonized Code that attract specific or mixed duties.

Please see Reply 54.

The duties of 12 per cent could be revised upwards if there is a need for generating more revenues, which could not be raised from other sources. Changes in individual line items are permitted are based on a decision from the Council of Ministers after a joint recommendation from the Minister of Finance and National Economy, Minister of Industry and Electricity, and Minister of Commerce. The recommendation is made only after a study is performed by a joint committee formed by the three ministries. The new tariff rate is effective the day after it is published in the official gazette, the Um Al-Qura. Changes to the tariff rates of a more sweeping nature, such as in 1988, would usually be made in conjunction with the release of the fiscal budget and after deliberative consideration by the Council of Ministers. In all cases the Council of Ministers gives final approval to changes in tariff rates. It may be stated that duties have not been revised since 1988, which shows that changes in tariffs are not frequent.

Please refer to Reply 56.

Please see Tables 2 and 3 in Annex 7 listing all products by 8 digit Harmonized Code that are subject to duties of 20 per cent and 30 per cent.

The GATT does not require contracting parties to apply all import duties on an ad valorem basis. The GATT also does not require that specific and mixed duties should be converted to ad valorem duties. Many contracting parties use specific and mixed duties.

Please refer to Reply 58. There are no items other than tobacco products attracting 30 per cent tariffs.

Tariff levels are not accorded per HS chapter but rather on an individual 8-digit line basis. The complete list of tariff rates can be found in Annex 6. Saudi Arabia would be prepared negotiate the binding of its tariffs, keeping in mind its position as a developing country in the early stages of industrialization and bearing in mind the principle of mutual advantage. The level and extent of bindings will emerge from the tariff negotiations.

Please refer to the Implementing Regulations to the Customs Law, an (unofficial) English translation of which is reproduced in Annex 8. Warehouse charges can be found in Article 57. Portage dues can be found in Article 79. Supervising charges can be found in Articles 80 and 81. Penalties related to customs clearance can be found in Articles 192 and 206 and Chapter 18.

Loading, unloading and storage charges are levied on the basis of services rendered. These charges depend on the time and labour involved for loading and unloading, on the weight and volume of imports and on the length of the storage period.

Loading, unloading and storage charges are not "other duties and charges of any kind" within the meaning of Article II. 1 (b) of the GATT. These are charges for services rendered by port/airport authorities.

Please refer to Replies 62 and 63. Loading, unloading and storage charges are fees and charges for services rendered within the meaning of Article VIII.1(a) of the GATT. There are no other charges imposed on or in connection with importation or exportation with reference to Article II.1(b) of the GATT.

Saudi Arabia does not apply any internal taxes within the meaning of Article III of the GATT. The question of national treatment or breach thereof is not involved.

Saudi Arabia does not have internal taxes or charges upon products which treat domestically produced product differently from imported product.

Charges and fees such as loading, unloading and storage charges are levied for services rendered. These are not charged on ad Valorem basis. These charges do not provide any revenue to the Government of the Kingdom of Saudi Arabia.

Saudi Arabia does not at present have any legislation/regulations relating to trade remedies (anti-dumping, countervailing, and emergency relief). Should Saudi Arabia introduce trade remedies legislation/regulations after accession, the Kingdom will ensure their consistency with obligations in Article VI and XIX as well as with the Agreements on Implementation of Article VI; Subsidies and Countervailing Measures; and Safeguards.

See Reply 68.

As was stated in the Memorandum on Foreign Trade (L/7489), Saudi Arabia extends preferential treatment to other members of the Gulf Cooperation Council in accordance with the Unified Economic Agreement of the Cooperation Council of the States of the Arab Gulf. In addition, under the auspices of the Arab League, and in conjunction with efforts to establish an Arab Common Market, Saudi Arabia has concluded bilateral trade and economic agreements with other Arab League countries, which, among other things, provides for preferences in the trade of certain goods and services. The purpose of these agreements is to facilitate and promote trade among members of the Arab League under the umbrella of the Arab League economic agreements and not to create obstacles to the trade of other countries.

Saudi Arabia applies the principal of "most-favoured nation" to all countries with which it enjoys normal diplomatic relations.

Saudi Arabia restricts or limits imports of products based upon country or region of origin when it is deemed to be in the Kingdom's essential security interest, as allowed under Article XXI of the GATT.

The two principal forms of taxation in the Kingdom are the Zakat and the income tax. In general, non-Saudis business entities and professionals are subject to income tax while Saudi entities are subject to Zakat. Any mixed entity with part Saudi and part foreign ownership pays Zakat on the Saudi-owned portion and income tax on the foreign-owned portion.

Zakat is an Islamic tax payable annually by Saudi companies and citizens. It is assessed on total capital resources, including capital, retained earnings, resources not held for liabilities and net profits but excludes amounts invested in fixed assets such as real estate. The tax rate is 2.5 per cent - of liquid assets - on companies and individual business activities.

Non-Saudi companies operating in Saudi Arabia and joint-venture companies having less than 25 per cent Saudi ownership are subject to income tax. Joint-venture companies that have 25 per cent or more Saudi ownership are entitled to tax holidays of up to ten years in the case of agricultural and industrial companies and five years in all other cases. After the tax holiday, foreign partners are subject to income tax. During the tax holiday, Saudi companies are required to pay Zakat and submit accounts and proceed with the usual tax filing procedures. Tax holidays start from the day of production for industrial and agricultural projects and from the date of commercial registration for the rest. Ministerial Resolution No. 3/3170 of 2.12.1413 AH provides for a ten year tax holiday on profits arising from new capital investments in existing industrial joint venture projects.

Non-Saudi individuals are obligated to pay income tax on capital investments. There are no income taxes on wages and salaries of guest workers or nationals. Transactions by non-Saudis involving the sale of such things as produce, and rental income derived from such things as equipment and property leases, are taxable.

There is no exemption or deferral based on the existence or level of exports.

There are no internal taxes. Please refer to Reply 71.

Imports from GCC countries are accompanied by certificates of origin which are issued by the responsible authority in the exporting country. Animals, agricultural products and natural resources are considered domestic products if they are produced locally. (It has been assumed that domestic production of these items will add value of at least 40 per cent or more to the final production price). For industrial products, the responsible authority in the exporting country should certify that the domestic content is at least 40 per cent of the production final price. Thus all the components or the costs that enter in the process of production through its final stage could count toward the domestic contents requirement to receive the preferential tariff treatment offered by Saudi Arabia (and other GCC members) on GCC exports.

All Arab League members with whom Saudi Arabia trades (Syria, Lebanon, Jordan, Yemen, Morocco, Algeria, Tunisia, Libya, Egypt, Sudan, Mauritania, Djibouti, Somalia, Kuwait, Bahrain, Qatar, Oman and the United Arab Emirates) grant or receive preferences from Saudi Arabia.

Preferential treatment covers Chapters 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 25, 26, 27, 40, 41, 43, 44, 45, 47, 50, 53, 54, 57, 73, 74, 75, 76, 77, 78, 79, 80, and 81 provided that these commodity groups are in their primary form or have been modified to make them suitable for human consumption, excluding manufactured and semi-manufactured products.

There are no trade preferences of a non-tariff nature accorded to goods under the Arab League preferential system.

The six members have decided to unify customs tariffs under a phased programme beginning with selected goods and commodities. The various governments are working to see that this programme is completed as soon as possible. At the current time, officials of the six GCC states are working on the completion of a common tariff schedule. The GCC has no plans at the present time to open the GCC trade arrangement to other interested countries.

The six members have decided to unify customs tariffs under a phased programme beginning with selected goods and commodities. The various governments are working to see that this programme is completed as soon as possible.

Imports that require authorization or import licensing and their approval processes are:

There are no non-tariff import restrictions or requirements in Saudi Arabia.

Sowings: to be tested by the quality control lab to ensure that they are free of epidemics.

Foodstuffs: to be tested by quality control lab to ensure that they are free of epidemics.

Livestock (Chapter 1): to be presented to the representative of quarantine to ensure they are free of diseases.

Books and periodicals (Chapter 49): To be examined by the representative of the Ministry of Information.

Films (Chapter 37): To be examined by the representative of the Ministry of Information prior to release.

Chemicals (Chapters 28, 29): A prior approval from the Ministry of Industry & Electricity is required.

Pharmaceutical products (Chapter 30): A prior approval from the Ministry of Health is required.

Wireless (radio) equipment (Chapters 27, 26, 25, 85): A prior approval from the Ministry of Interior is required.

Horses (01.01): approval from the Chivalry Club is required.

Perfumery (Chapter 33): To be examined by the representative of the Ministry of Commerce.

Natural asphalt (27149010): A prior approval from the Ministry of Petroleum and Mineral Resources is required.

Antiques (Chapters 6, 2, 27): A prior approval from the Ministry of Education is required.

Traders can obtain detailed information on import procedures from a wide variety of sources which are publicly available such as the Implementing Regulations of the Customs Law, the Ministry responsible for overseeing the imported goods in question, appropriate employees of Saudi Arabian embassies and consulates abroad, the Saudi Arabian Chamber of Commerce, the Customs Directorate, or any one of a number of private sources.

Answers to the questions contained in L/5640/rev.9 are in Annex 16.

Saudi Arabia’s labelling requirements do not differentiate between imported and domestically produced products. Labelling requirements are specified in individual Saudi Arabian standards, of which there are over eight hundred for the protection of consumers. Information on labelling requirements for individual products can be obtained from SASO.

Please see Table 4 in Annex 7 for a list of banned goods and their GATT justification.

The Ministry of Information is responsible for determining which publications and materials are prohibited for moral or religious reasons. Decisions are made based on the teachings of the Holy Quran and the Sunna. In general, publications and materials are prohibited which show pornographic representations or contain other matter which is prejudicial to Islamic morals. Appeals may be made to the Ministry of Information.

Saudi Arabia applies a primary boycott on products originating in Israel. The implementation of this policy is of a political, rather than commercial, nature. Boycott is maintained for security reasons in accordance with the provisions of Article XXI of the GATT (and Article 14 of the GATS). Secondary and tertiary boycotts have been removed in law and practice.

Narcotics (all kinds, forms and names) such as hashish, opium, heroin, morphine, cocaine, cannabis, marijuana and all substances for in the first table of the Ministry of Health., attached with the Ministry of Health. circular No. 234/1433/27 dated 13/05/1392 H. (Narcotics of Chapters 13, 23).

Liquors and toxicants of all kinds including those which contain alcoholic substances in any proportion; equipment used for distillation of liquors and substances solely used for liquor distillation (Chapter 22).

Medical preparations or those containing toxic substances and dangerous medicaments, subject to obtaining licence from the Ministry of Health. (Chapter 30).

Medicaments not explaining composition, ingredients and doses thereof, whether such details are shown thereon or in a leaflet therein (Chapter 30).

All kinds of fireworks, subject to licence according to the Weapons and ammunition law (Chapter 36).

Explosives, denotative materials and gunpowder of all kinds and potassium chlorates unless imported by a competent governmental agency or under licence according to the Weapons and Ammunition Law (Chapter 36).

Blank invoices bearing titles of foreign companies abroad (48.20, 49.11).

Commodities bearing the government emblem (two swords and a palm tree in between with a long stem with the leaves at the end) except under approval from the Ministry of Interior (different headings).

Publicity materials for all kinds of cigarettes (various headings).

Night binoculars which enable vision in the dark and binoculars which take photographs in the dark (90.05).

Arms of all types and their parts and ammunition, including military gear except those imported for competent governmental entities or under licence according to the arms and ammunition law (chapter 93).

Fire arms designed for shooting non-live ammunition such as signal guns and other pneumatic guns or those operated by gas or springs, etc., of a kind used for industry or sports purposes except under licence from the Ministry of Interior (Chapter 39).

Tools and machines designed for gambling excluding those for innocent amusement (Chapter 95).

Three-dimensional pictures which contradict shariah and public morality imported for the purpose of sale in commercial quantities (Chapter 95).

Articles designed for floor covering or for wearing bearing the wording of Allah or Quranic verses or prophet's sayings (various headings).

Cross and commodities bearing the cross and any pictures, inscriptions, drawings, quotations or expressions or publications of books and other printed matters, films and tapes violating the Islamic shariah or Islamic morality or the printed matter regulation (various headings).

Military badges, ranks and uniform except by permission from the military entity which will use them (various headings).

Rifles used for boys' training on shooting except under licence from the Ministry of Interior according to the arms and ammunition law (Chapter 97).

Guns causing annoying sound except under licence from the Ministry of Interior (Chapter 97).

All commodities subject to restrictions can be released upon approval from authorized departments, including foodstuffs and consumption products of all kinds of chapters (1)-(24), after being tested by the competent labs to ensure suitability for human consumption.

Please refer to Replies 77 and 79 and Annex 7.

While imports of long-validity pasteurized liquid milk in containers of more than one liter are prohibited, it should be noted that there is no quantitative restriction on long-validity pasteurized liquid milk in containers of one liter or less, nor is there any restriction on imports of other types of milk, such as powdered milk. Imports of dates are banned except for squ’i dates which are permitted from 22 November to 21 June.

Imports of long-validity pasteurized liquid milk in containers of more than one liter are prohibited. However, it should be noted that there is no quantitative restriction on long-validity pasteurized liquid milk in containers of one liter or less, nor is there any restriction on imports of other types of milk, such as powdered milk. Imports of dates are banned except for squ’i dates which are permitted to be imported from 22 November to 21 June.

The provisions concerning pasteurized liquid milk and dates are in conformity with the GATT and can be justified under Article XX (b) and (d).

Imports of long-validity pasteurized liquid milk in containers of more than one liter are prohibited. However, it should be noted that there is no quantitative restriction on long-validity pasteurized liquid milk in containers of one liter or less, nor is there any restriction on imports of other types of milk, such as powdered milk. Imports of dates are banned except for squ’i dates which are permitted to be imported from 22 November to 21 June. Saudi Arabia would consider converting the quantitative restrictions on the two agricultural items, dates and liquid milk, into tariffs, in accordance with the principle of "tariffication."

Please refer to Replies 87 and 88.

There are some restrictions on particular imports. A list of these restrictions can be found in Chapter 7 of the Implementing Regulations of the Customs Law (see Annex 8).

Please refer to Reply 78.

The statement in paragraph 6 is a general statement.

Article 51 of the Implementing Regulations of the Customs Law (see Annex 8) dictates the method of assessing duties. It says:

Freight charges are based of actual freight invoice submitted by the importer, except for air freight where a nominal charge of SR 0.5 per kilogram is applied instead of the high air freight charges usually presented in air freight invoice. In case freight invoice is not submitted, there is a list of freight charges similar to international freight charges.

Please refer to Annex 8 which contains the Implementing Regulations of the Customs Law including the section pertaining to auctioning of cargo.

If the importer disputes the value of imported goods assessed by a Customs official, he may apply to Customs for a further ruling. The Customs Department will refer the matter to an internal ad hoc committee, composed of a valuation expert, tariff expert, and legal advisor, for settlement of the dispute. The number of complaints vary substantially depending on import quantities and cases where customs believes that the importer provided unrealistic invoice. In general, there are approximately thirty-six cases annually.

The questionnaire relates to the implementation of the provisions of the Agreement on Customs Valuation. Since Saudi Arabia is not applying the provision at present, the questionnaire does not appear to be relevant. It would become relevant after Saudi Arabia starts applying the Customs Valuation Agreement.

If it is decided that the transaction value is not to be taken as a basis for the customs value, the customs port bases the value on "the nearest comparable value". The nearest comparable value is assessed by referring to similar imported goods at similar or close time and similar quantities. If such identical or similar goods are not available, the customs refers the case to the Headquarters where a valuation committee will in turn apply the deductive valuation method based on local markets, after deducting charges and duties to reach the c.i.f. value. Computive valuation method is not applicable in the Kingdom.

Nowhere does either Article VII of GATT 1947 or the WTO Agreement on the Implementation of Article VII define valuation in terms of "at 'the time of export'." The former says that value "should be the price at which, at a time and place determined by the legislation of the country of importation...". When Saudi Arabia would apply the provisions of the Agreement on Customs Valuation, it would abide by these in its laws and regulations.

Please refer to Reply 98(a).

Saudi Arabia applied minimum price for a number of goods but has recently abandoned such practice except for the following goods:

- Cars (78/2)

- yeast (21/2)

Please refer to Reply 98(a).

If the importer disputes the value of imported goods assessed by a Customs official, he may apply to Customs for a further ruling (this applies to duty assessment as well). The Customs Department will refer the matter to an internal ad hoc committee, composed of a valuation expert, tariff expert, and legal advisor, for settlement of the dispute. If the importer and/or exporter continues to disagree with the decision, he may file a case with the Board of Grievances under the Rules and Procedures to be followed by the Board of Grievances, an (unofficial) English translation of which is reproduced in Annex 9.

Please refer to Reply 100.

Yes. Saudi Arabia requires that goods sold or otherwise placed in commerce in Saudi Arabia be marked with respect to country of origin.

Saudi Arabian policies regarding Rules of Origin are currently in conformity with all applicable GATT and the Uruguay Round agreements.

For products to be considered of GCC origin, they must contain a minimum of 40 per cent GCC value added (see Reply 73 above). The Arab League agreements provide for the same value added.

Article 9 of the Agreement to Facilitate Trade and Exchange and to Organize Transit Among the Arab League states:

Article 5 (c) of the Saudi Arabia-Jordan bilateral agreement states:

Article 4 of the Saudi Arabia-Tunisia bilateral agreement states:

Article 4 of the Saudi Arabia-Syria bilateral agreement states:

Article 4 of the Saudi Arabia-Lebanon bilateral agreement states:

Article 11 of the Saudi Arabia-Morocco bilateral agreement states:

Article 1, Section 4 of the Saudi Arabia-Iraq bilateral agreement states:

Article 4, Section 1 of the Saudi Arabia-Egypt bilateral agreement states:

As the Kingdom extends MFN treatment to all imports, there are no specific rules of origin regulations for MFN trade. The importer must, however, provide to Customs a certificate of the nationality of the goods. In all cases the method for determining the origin of the good is examination of the certificate of origin.

Fax copies will generally be accepted for clearance of goods provided that the importer agrees to provide original documentation within a certain period of time. Exceptions to this practice usually occur when the importer has failed to meet his prior commitments. There is no requirement that the documentation be "officially" translated However, translations are subject to verification by the proper authorities.

The process for appealing rulings on classification is fully explained in paragraph 56 of the Memorandum on Foreign Trade (L/7489). When a dispute arises between the customs and importer about classification of the goods, the dispute is referred to the Tariff Committee of the Headquarters of customs which is composed of four members of the senior customs officials and a representative from the customs part, when necessary. Resolutions of this committee are taken by majority of opinions. In certain cases, the opinion of the World Customs Organization, Brussels, is sought for guidance.. Under certain circumstances, administrative actions can be appealed to the Board of Grievances (see Annex 9).

The "Classifications Committee" is not independent of the Customs authority. Refer to Reply 106 regarding appeals of administrative actions.

The standard practice of SASO is to distribute draft standards to all the standard organizations in countries which are interested in receiving such draft standards. Recipients are given three months to respond to the draft standards. This process is generally repeated until SASO decides to issue the standards in their final form.

A technical committee within SASO is given responsibility to analyze all comments it receives on draft standards. The technical committee meets in open session to discuss the comments. Comments are incorporated based on the technical committee’s deliberations. The technical committee either reissues the draft standard or sends its recommendation to the SASO Board of Directors which can accept or reject the recommendation.

There is no difference in the treatment of imported and domestic products with respect to technical and other standards. This is true with regard to health standard certification as well.

As Saudi Arabia is not a signatory to the Agreement on Technical Barriers to Trade nor was it a party to the negotiations, it was not provided with the aforementioned questionnaire. It should be mentioned that Saudi Arabia’s standards regime is consistent with the Agreement on Technical Barriers to Trade.

Please refer to Annex 10, which contains an (unofficial) English translation of Royal Decree M/10 of 3.3.92 (H) and of the Council of Ministers Resolution No. 172 of 25.2.1392 H which establishes the Saudi Arabia Standards Organization and provides it with its regulatory powers. With regard to imports, the Implementing Regulations of the Customs Law (see Annex 8) provide the Customs Directorate with the authority to examine imports and to restrict the import of goods which do not meet Saudi standards.

Government regulations governing standards and certification procedures can be found in the Um Al-Qura, the official government gazette. In addition, the Saudi Arabian Standards Organization publishes, from time to time, updates on the list of standards and the certification procedures for standards.

If there is a problem relating to any standard, the Saudi Arabian government allows for comments to be submitted, either in writing or orally, and without discrimination, to a panel of experts. These comments will be discussed upon request and both the comments and discussions will be taken into account in rendering any necessary decision. The panel may also consult relevant international bodies, at the request of either party to a dispute, or on its own initiative.

Standards are developed for a variety of commodities and products, whether they be imported or produced domestically, that could generally be considered to belong to an eight-digit harmonized code category (although an individual standard could cover different eight-digit harmonized code products or a group of products at a six, or possibly a four-digit harmonized code level). Not all products have had standards specified, in which case they are not subject to any specific standard requirement.

Please refer to Saudi Arabian Standards Organization standards 457 and 702 in Annex 10 with regard to the first part of the question. With regard to the second part of the question, please refer to Reply 116.

Each food product has a time period through which it remains fit for human consumption. After that it becomes unacceptable to the consumer because of changes in its organoleptic or chemical properties or in its nutritive value or its functional properties or which makes it unfit for human consumption. Food liability to alteration depends upon many intermingled agents the most important of which are:

The Saudi Arabian Standards Organization prepares standards for expiration of all food products based on scientific references, research, special studies, and expiration periods applied in some other countries. It takes into consideration the comments of government authorities in the Kingdom, national and foreign companies, as well as the transportation, storage and handling methods, and the climatic conditions in the Kingdom. Please refer to Annex 10 for (unofficial) English translations of the standards related to shelf life.

Saudi Arabia harmonizes all its standards on as wide a basis as possible. However, its standards may differ from others when it determines the relevant international standard, guideline, or recommendation is not sufficient to achieve the appropriate level of protection which will ensure the health and safety of the residents of Saudi Arabia.

The Saudi Arabian climate is among the harshest in the world. In the summer, average temperatures in the coastal regions range from 38(C to 49(C and the humidity can exceed 90 per cent. In the interior, temperatures can reach 54(C. Such climatic conditions are extremely hard on products susceptible to deterioration or spoilage such as tires and foodstuffs. Periodically high dusty atmospheric conditions are also a climatic phenomenon. In order to ensure the health and safety of the residents of Saudi Arabia, the government is therefore very conservative in its application of standards on a number of products.

Its chief concerns regarding automobiles are:

Its chief concerns regarding cigarettes are:

Its chief concerns regarding baby formula are:

Conditions governing import of goods into Saudi Arabia with regard to standards and certification, in force at the time, have to be fulfilled for all goods requiring prior approval. Details of specific conditions for individual product are available upon request from the Saudi Arabian Standards Organization.

Saudi Arabia’s current rules and regulations are consistent with the WTO Agreement on Sanitary and Phytosanitary Measures.

Saudi Arabia harmonizes its sanitary and phytosanitary standards with internationally accepted guidelines wherever possible. However, a standard set by the Kingdom may differ from a standard associated with an "internationally accepted guideline" when the authorities determine the relevant international standard, guideline, or recommendation is not sufficient to achieve the appropriate level of protection which will ensure the health and well being of the humans, animals, and plant life within Saudi Arabia.

All of the Kingdom's sanitary and phytosanitary standards are scientifically based. There are over 125 different standards related to various "farm products" and testing methodology for these products. If there is a concern about the scientific basis for standards related to any specific "farm product," Saudi Arabia would be glad to address the issue. Alternatively, any specific standard can be obtained from the Saudi Arabian Standards Organization. A catalogue of the standards can be found in Annex 10.

Please refer to Annex 10, which contains (unofficial) English translations of Royal Decree M/10 of 3.3.92 (AH) and of the Council of Ministers Resolution 172 of 25.2.92 (AH), as well as Annex 15, which contains a catalogue of Saudi standards issued by the Saudi Arabian Standards Organization. There are some 285 different standards related to food and agricultural products. Any specific standard can be obtained from the Saudi Arabian Standards Organization. It should be noted that Saudi standards are applicable to all foodstuffs, not just imported foodstuffs.

There are no products that are highly restricted or outright banned for animal or plant health reasons.

If there is a problem relating to the application of any standard, the Saudi Arabian government allows for comments to be submitted, either in writing or orally, and without discrimination, to a panel of experts. These comments will be discussed upon request and both the comments and discussions will be taken into account in rendering any necessary decision. The panel may also consult relevant international bodies, at the request of either party to a dispute, or on its own initiative. If the importer and/or exporter continues to disagree with the decision, he may file a case with the Board of Grievances under the Rules and Procedures to be followed by the Board of Grievances (see Annex 9).

Saudi Arabia is a member of the Codex Alimentarius Commission and the International Office of Epizootics. It works with these two bodies, as well as with the Food and Agriculture Organization and the World Health Organization in establishing and applying sanitary and phytosanitary measures. Of course the harsh climate in Saudi Arabia requires especially strict standards. Saudi Arabia will follow the standards and disciplines of the SPS Agreement upon becoming a member of the WTO, when the SPS Agreement would become applicable.

Paragraph 4 of Article 26 of the Customs Law indicates that if owner of commodities entering the country wants to re-export them before leaving the customs and before paying customs duties and other charges, he can do so after paying warehouse, loading and unloading chargers, provided that the commodities are not food, cloth, medical, or construction items, the commodities are not desirable and do not satisfy the importer’s order, loading or unloading was made by mistake, and/or after arrival, defects, damages, or other reason make the commodities not suitable for marketing.

In any of these cases, the importer requests a re-exportation indicating type and value of the shipment and freight permit. The customs officials allow export if there are no violations.

With regard to the second part of the question, according to the Implementing Regulations of the Customs Law, warehouse charges "shall not be levied in respect of the imported goods where a dispute has arisen between Customs and the interested party" (Article 64). Also, according to Article 68, "goods incoming from abroad into the Customs storage, the import of which has been banned by an order of the local authority, the owner thereof shall re-export them...in which case they will be exonerated from warehouse charges." There is no provision for exemption from port handling and supervision charges.

The export duty on untanned hides and skins is imposed to ensure the availability of untanned hides and skins for the domestic processing industry.

The equivalent ad valorem export tariff on untanned hides and skins in 1991 was 20.7 per cent.

The information of Paragraph 65 is about domestic subsidies, not export subsidies. Subsidies provided to farmers are not export subsidies. The provision of assistance in the agriculture sector and the purchase of wheat at prices higher than those prevailing in the world market is not in any way contingent upon the export of any products that are produced. In any case, the current agriculture subsidy policy is under review.

Export of subsidized goods by individuals is considered smuggling and punishable under the law either by imprisonment or fines or both.. Under the Implementing Regulations of the Customs Law, the Customs Department is vested with the right to search every person, motor car or passenger vehicle, lorry or anything else which passes through its gate or from the Customs jurisdiction or crosses the Customs line. Customs is also vested with power to do the same at sea on commercial ships, barges, boats and other seaworthy vessels within the Kingdom's jurisdiction. Withdrawal of goods of whatever kind which cross the Customs line or the Customs jurisdiction must hold a legal authorization to that effect. After being completed by the interested party, the application for legal authorization shall be presented to the Director of Customs for approval of the export. Items which are concealed with a view to avoid the restrictions imposed on exports of subsidized goods are liable to confiscation.

The Grain Silos and Flour Mills Organization was established by a Royal Decree in 1392 (H) when the Kingdom was highly dependent on imported foodstuffs, particularly grains, due to limited local production. The objectives of the GSFMO were stated as follows: (1) to form an integral industry of grain storage, flour production and processing animal feed; (2) to establish any other relevant food industries; (3) to market its products inside and outside the Kingdom; (4) to purchase grains and create a convenient reserve stock to face emergency circumstances; and (5) to meet the goals of the approved agricultural policy.

In order to achieve the above goals, the role of the GSFMO was stated as follows: (1) to establish silos projects in the midst of production areas to help farmers in marketing their crops and facilitate transporting their crops to various markets; (2) to create a stable market with fixed prices announced in advance in order to safeguard the farmers from price fluctuations and merchants' exploitation.

Saudi Arabia does not confer an export subsidy on wheat. The GSFMO prices guarantee is available for all grain offered irrespective of where it is marketed. The GSFMO is compensated by the Government for any shortfall resulting from sales (Domestic and Export) at prices below the guaranteed purchase price. The GSFMO operations and financing are thus similar to those of typical agricultural marketing boards in developed countries.

The Kingdom donates a large amount of wheat to poor countries. Domestic wheat and barley is purchased at fixed prices which can vary from year to year. In general, acquisition prices have been higher than the prices received for Saudi wheat in export markets. However, this can change depending on changes in the government purchase price and the price for wheat in international markets. The guaranteed prices for 1995 has been reduced from 2.5 SR per Kg to 1.5 SR.

The Ministry of Petroleum has given oil companies operating in the Kingdom the right to export oil and oil products.

The Saudi Agricultural Bank does not approve agriculture exports. However, it requires that subsidies on imported agricultural tools and equipment be repaid prior to their (re)export.

There are no other restricted or prohibited export goods other than those stated in Paragraph 64 and 65 of L/7489. Justifications for such practice can also be found in the mentioned paragraphs.

Saudi Arabia does not currently plan on establishing an export credit agency or to begin using export subsidies.

None of the export credit programmes provide credit at rates below the cost of the funds. All export credit programmes are self supporting.

Incentives provided to industry are spelled out in The Law for the Protection and Encouragement of National Industry an (unofficial) English translation of which is reproduced in Annex 3. Decisions on extending incentives are made on a case by case basis by the Ministry of Industry and Electricity, in view of the development needs of the Kingdom of Saudi Arabia as defined in the extant development plan and the particulars of the relevant situation.

The prices of energy and petroleum products is not in any way contingent upon export performance and, hence, can not be considered an export subsidy. Furthermore, the price of energy and petroleum products is available at the same level to all users: industrial, household, or otherwise. The government looks upon energy and petroleum products as a resource which should be shared to the greatest extent possible with all the citizens of the Kingdom. The most efficient way to implement this policy is to distribute energy and energy products at the lowest appropriate cost. The price of energy and petroleum products is not a subsidy in terms of Articles 1 and 2 of the Agreement on Subsidies and Countervailing Measures.

Murabaha, derived from the Arabic word ribh, meaning profit or gain, is a sale in excess of the first price whereby the buyer and seller agree upon an already defined profit. It is a trust sale involving a sale transaction based upon revealing the price of the commodity as paid by the seller. A Murabaha contract is concluded only after adding a specified percentage or definite sum to the revealed price.

Saudi Arabia promotes goods produced in the Kingdom through its participation in international trade fairs.

Yes, information on the operations of the three regional export credit programmes is readily available by requesting such information directly from the Islamic Development Bank, Arab Monetary Fund, and/or the Inter-Arab Investment Guarantee Corporation.

The purpose of the Programme is to promote inter-Arab trade.

The facility offered by the Islamic Development Bank is to be utilized mainly for the importation of development goods such as fertilizers, refined petroleum products, fuel oil, crude oil, industrial raw materials, industrial intermediate goods, and construction material.

Within the limits of short term financing and goods with development bias, it is up to the member country to suggest the commodity and the Bank is flexible in its consideration with regard to the eligibility of the commodity involved. There is no standard list of approved commodities as this would introduce rigidity and restrict the scope of the Foreign Trade Financing operations. Depending on the availability of funds and the Bank’s experience to promote larger deposits, the scheme may include in due course some essential consumer goods, specifically food items.

Member countries of the Islamic Development Bank apply for the foreign trade financing. Therefore, it is up to each individual country to decide which enterprises benefit from the programme. Applications from member countries for utilization of the foreign trade financing facility should indicate the type of commodities involved, the traditional sources of supply, quantities, technical specifications, amounts in US dollars, and periods of deliveries.

Access to the Inter-Arab Trade Finance Programme of the Arab Monetary Fund is limited to exporters and importers in Arab countries dealing in goods eligible for refinancing by the Programme. Eligible goods include goods produced or manufactured domestically from indigenous Arab raw materials and/or other factors of production and goods in which the value added in an Arab country amounts to at least 40 per cent.

Saudi Arabia does not subsidize agricultural exports. Subsidies provided are production subsidies and are not contingent upon export performance. Please refer to Reply 131.

Goods in transit are handled through regular customs facilities. Details of how such transactions are performed and regulated can be found in Chapter 17 of the Implementing Regulations of the Customs Law (see Annex 8). There are no detailed statistics compiled on the specific nature and extent of "goods in transit." Free trade zones are not necessary for transit facilities as is the practice and experiences of many other countries.

The price Saudi Aramco charges for its products is a matter of negotiation between Saudi Aramco and its individual customers, taking into consideration costs of shipping, insurance, ...etc. Some of these prices are under long-term contracts that will only be subject to change at the end of the contract. In any case, pricing policy within the Kingdom of Saudi Arabia will be consistent with the Kingdom’s obligations under the GATT/WTO. Please refer to Reply 137 for further details.

The government of Saudi Arabia does not collect production and consumption data for butane and MTBE.

The policy of the Saudi Arabian government on foreign investment in the petrochemical sector is based on the globalization and integration of the industry. The Kingdom’s experiences in joint ventures with foreign partners has become a benchmark for successful global cooperation in producing and marketing of petrochemicals. Foreign partners have access to feedstocks and energy resources as well as other facilities and advantages. Feed stock pricing, particularly propane, butane, and naphtha is based on international prices with necessary adjustments for domestic users. These adjustments basically involve operational, storage and terminalling costs, as well as costs exclusively associated with gas exports to world markets.

The Council of Ministers issued a resolution in its session of December 6, 1992 regarding the pricing of liquid gas--butane, propane, and natural gasoline-- for national industries. Please refer to Reply 144(b) for details. There was no time limit mentioned in the resolution. Please refer to Replies 137 and 143 for further details.

The liquid gases utilized by manufacturers of MTBE are provided under the same pricing policy as liquid gases utilized by all other domestic industries. All domestic users pay the same price for butane and other feed stocks.

Please refer to Reply 144(d)

Saudi Arabia intends to adopt and follow policies which encourage development of industries in which it enjoys a comparative advantage and which will further the development of the country. Production and export decisions are in general based on supply and demand criteria and are within specific control of producing companies.

The incentives provided to encourage investment in facilities used to produce petrochemicals are the same incentives generally available to all industries deemed to be eligible for such incentives. Please refer to Reply 146.

The creation of a soda ash industry in Saudi Arabia will be supported using the same incentives generally available to all industries deemed to be eligible for such incentives. Please refer to Reply 146.

Under the Law for the Protection and Encouragement of National Industry, the Ministry of Industry shall make recommendations to the Council of Ministers about taking measures deemed appropriate for the protection of national industry based on the local production’s sufficiency, both quality and quantity wise, as well as the interest of the consumer. This policy is consistent with the GATT. It applies equally to wholly Saudi-owned, joint venture, and wholly foreign owned firms.

The incentives provided to encourage investment in industries deemed to be eligible for such incentives include lease of land at a nominal fee; loans by the Saudi Industrial Development Fund; customs duty exemptions, upon approval, for raw, process and packaging materials; assistance in the selection of industrial projects, the preparation of their economic feasibility studies and their evaluation; provision of organizational, operational, technical and managerial assistance; provision of rental accommodations; and tax holidays for certain foreign investments. Reference is also made to Reply 155, 174 and 175.

The only restriction on foreign investors access to these measures is with regard to their access to funds from the Saudi Industrial Development Fund. Companies with foreign shareholders are eligible for a loan of up to 50 per cent of the project cost if the Saudi nationals hold 50 per cent of the shares. If the Saudi share is less than 50 per cent, then the financing will be granted at a proportionally reduced level.

As explained in the Memorandum on Foreign Trade (L/7489), the Saudi Arabian government accords to the free market economy a primary role in the Kingdom and provides the private sector with abundant opportunities to participate in the country’s development process. When the government believes it necessary to provide incentives or implement measures that it will be in the best developmental interest of the country, it will do so, within the context of its recognition of the primacy of market forces. This approach is followed with regard to measures designed to encourage import substitution industries. First, such measures are implemented only when it is determined economic to do so, given the particulars of the relevant industry and the interests of consumers. Second, some measures are intended to be temporary; loans must be repaid and protective duties--which are relatively low in any case--are subject to reduction. Third, measures, such as provision of land at a nominal rental fee, only provide infrastructural assistance beyond which the industries themselves are beholden to market forces.

"Adequate means and incentives" refers to those measures which are provided to encourage investment in industries deemed to be eligible for such incentives include lease of land at a nominal fee; loans by the Saudi Industrial Development Fund; customs duty exemptions, upon approval, for raw, process and packaging materials; assistance in the selection of industrial projects, the preparation of their economic feasibility studies and their evaluation; provision of organizational, operational, technical and managerial assistance; provision of rental accommodations; and tax holidays for certain foreign investments. The term was used to show that export-oriented industries would be eligible for the same generally available privileges offered to any industry which benefited from the Law for the Protection and Encouragement of National Industry. Saudi Arabia does not subsidize exports.

One of the objectives of the Gulf Cooperation Council is the coordination of developmental efforts in each of the six members so as to avoid duplication and encourage efficiency and economy of scale under the umbrella of the Unified Economic Agreement. A number of initiatives have been undertaken with the goal of facilitating coordination and cooperation policies pertaining to Gulf industrial development.

Ministerial Resolution No. 152 of 20.8.1409 (AH) approved the "Rules for Coordination and Encouragement of the Establishment of Industrial Projects in the Gulf Arab States Cooperation Council," an (unofficial) English translation of which is reproduced in Annex 3. These rules specify guidelines for coordination and encouragement of the establishment of industrial projects within the GCC states having a minimum capital cost of SR 20 million, or equivalent in the currencies of the Council States. Some of the important rules are listed below:

Another major vehicle is the Gulf Organization for Industrial Consulting (GOIC), whose establishment was agreed to in 1976. Among the most important activities of the GOIC are:

In addition, industrial cooperation has been encouraged by the establishment of the free trade area, the sanctioning of ownership of shares of certain joint stock companies as GCC nationals, on a national treatment basis, and the implementation of various joint ventures.

Non-Gulf firms are free to participate in all industrial cooperative efforts in Saudi Arabia within the context of Saudi Arabia’s Investment of Foreign Capital Regulation and other applicable laws.

The laws relating to incentives for industry are The Saudi Industrial Development Fund Law and The Law for the Protection and Encouragement of National Industry, (unofficial) English translations of which are reproduced in Annex 3. They cover all incentives.

The Law for the Protection and Encouragement of National Industry makes no distinction between enterprises by nationality of ownership. The only incentive mentioned by the Law for the Protection and Encouragement of National Industry which distinguishes between foreign and national investors is the incentive regarding access to the Saudi Industrial Development Fund. Please refer to Reply 146.

The Law for the Protection and Encouragement of National Industry is fully consistent with all applicable provisions of the GATT/WTO.

Please see Reply 150.

The laws relating to incentives for industry are The Saudi Industrial Development Fund Law and The Law for the Protection and Encouragement of National Industry. Unofficial English translations are reproduced in Annex 3.

Generally, land is provided to industrial establishments under three different circumstances. First, the Royal Commission at Jubail and Yanbu provides land to industrial establishments at the annual rental fee of SR 0.08 per square meter for a thirty year lease. Second, the eight industrial cities provide land to approved industrial establishments at an annual rental of SR 0.08 per square meter for a twenty-five year lease. Third, municipalities may provide land for industrial establishments at a rate which is negotiated between the municipality and the industry. Loans are provided to industrial establishments by the Saudi Industrial Development Fund for which they are charged administrative fees--generally 2.5 per cent of the loan value per annum--and service charges. Other incentives provided to industrial establishments include customs duty exemptions, upon approval, for raw, process and packaging materials; assistance in the selection of industrial projects, the preparation of their economic feasibility studies and their evaluation; provision of organizational, operational, technical and managerial assistance; provision of rental accommodations; and subsidies for training Saudi employees.

The only criteria that the Ministry of Industry and Electricity uses in approving the establishment of an industry in an industrial city is that the industrial establishment must provide a feasibility study which shows that the establishment will be profitable. There are no trade related requirements.

The Law for the Protection and Encouragement of National Industry provides for custom duty-exemption to the local industries in the following cases:

In order to obtain custom duty exemption, local industrialist establishments apply, on a prescribed form, to the Protection Department at the Ministry of Industry and Electricity. The Ministry approves duty exemption on a case by case basis, depending on the nature of material, machinery and tools etc. There is no trade related criteria.

Please refer to Reply 156. All industries are eligible for favourable customs treatment. Customs exemptions are implemented on a most-favoured nation basis.

Please refer to Reply 146.

Article 7 of the Law for the Protection and Encouragement of National Industry states that measures such as the imposition of the 20 per cent protective tariff must take into consideration the sufficiency, both quantity and quality wise, of the relevant domestically produced product, as well as the interest of the consumer. Every request is looked at on a case-by-case basis and any number of special circumstances could influence the recommendation. No details are available on recommendations.

The last time protective tariffs were granted was in 1988. At that time, protective tariffs were instituted for steel pipes, barbed and fencing wires, lamp posts, construction steel, and all kinds of soap. Those domestic industries which manufactured these items were assisted by the introduction of these protective tariffs.

There is no law that specifically covers foreign joint ventures. The Investment of Foreign Capital Regulation covers foreign investment in general, including foreign capital in joint ventures (see Annex 3).

It is our understanding that the government encourages foreign investment via joint ventures with local companies and that it is illegal for foreigners to conduct business entirely on their own behalf within Saudi Arabia. Also, it is our understanding that there is no minimum level of equity foreign companies must meet to set up a joint venture, at least 25% Saudi participation is required in order to qualify for tax and other benefits. In addition, although there is no formal legal impediment to foreign equity holdings in excess of 75%, the Foreign Capital Investment Committee is unlikely to approve such projects. Is this understanding correct?

The government does encourage foreign investment via joint ventures but Saudi regulations do not require local participation, except as noted in Reply 164.

Under the Investment of Foreign Capital Regulation, at least 25 per cent Saudi participation is required in order to qualify for tax exemptions.

The decision to provide a licence for the investment of foreign capital is made on the basis of the facts appropriate to that particular case. The only conditions in the Investment of Foreign Capital Regulation are that the capital be invested in development enterprises, other than extraction of petroleum and mining, and that the foreign capital be accompanied by foreign technical expertise.

The decision to provide a licence for the investment of foreign capital is made on the basis of the facts appropriate to that particular case. The only conditions in the Investment of Foreign Capital Regulation are that the capital be invested in development enterprises, other than extraction of petroleum and mining, and that the foreign capital be accompanied by foreign technical expertise.

The decision to provide a licence for the investment of foreign capital is made on the basis of the facts appropriate to that particular case. The two general criteria listed in the Investment of Foreign Capital Regulation are that the capital be invested in development enterprises, other than extraction of petroleum and mining, and that the foreign capital be accompanied by foreign technical expertise. A list of the licences granted to foreign investments from 1.1.1414 until 13.3.1415 (AH) by company, sector, and foreign investor, is provided in Table 2 of Annex 4. As a general rule, Saudi Arabia does not disclose proposals that have been rejected. The Investment of Foreign Capital Regulation which govern foreign investment approval procedures covers both industrial and non-industrial investments.

Foreigners are prohibited from participating in services such as civilian security guards, commercial agents, customs clearing agents, transaction follow-up clerks to government departments, and real estate agents. In addition, foreign investment is prohibited in security underwriting and commodity brokerage services, including currency exchange operations, as well as in technical institutes; and, a foreign accountant, lawyer or pharmacist must work out of the office of a Saudi licensed accountant, lawyer, or pharmacist, respectively. Other professional service suppliers must have a contract before being allowed to establish a commercial presence. In addition, there are various sectors reserved to the state such as basic telecommunications, railroads, mass transit, postal service, public administration, and public broadcasting.

This is not true. An investor, however, must show that he is serious about the project by successfully establishing it, whether in the same sector or in another one.

Yes. For example, foreign participation in the maritime carriage sector is limited to joint ventures.

Please refer to Annex 3 for an (unofficial) English translation of the Investment of Foreign Capital Regulation.

No.

In the area of taxation, non-Saudi business entities are subject to income tax while Saudi entities are subject to Zakat. The former is income based while the latter is a wealth-based. Thus, there is no automatic preference given to domestic interests in the area of taxation. In areas where the government provides assistance in the form of soft loans, customs duty exemptions, and land at a nominal rent, there is no specific regulation stating that domestic interests (or joint ventures involving domestic interests) are given preference. Rather, foreign capital, whether in a joint venture or wholly owned, must be approved by the Foreign Capital Investment Committee before it can be eligible for such programmes. With regard to loans from the Saudi Industrial Development Fund, companies with foreign shareholders are eligible for a loan of up to 50 per cent of the project cost if the Saudi nationals hold 50 per cent of the shares. If the Saudi share is less than 50 per cent, then the financing will be granted at a proportionally reduced level. Saudi Arabia considers this to be consistent with GATT.

See table entitled "Saudi Industrial Development Fund Loans to Establishments" in table 3, Annex 4. Also, please refer to the (unofficial) English translation of the Saudi Industrial Development Fund Law reproduced in Annex 3.

The loan programme conducted by the Saudi Industrial Development Fund is entirely consistent with the GATT and the WTO Agreement on Subsidies and Countervailing Measures. These loans are not contingent upon export performance nor are they contingent upon the use of domestic over imported goods. Companies with foreign shareholders are eligible for a loan of up to 50 per cent of the project cost if the Saudi nationals hold 50 per cent of the shares. If the Saudi share is less than 50 per cent, then the financing will be granted at a proportionally reduced level.

Please refer to Reply 171.

The decision to provide a loan is 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 states that the Fund shall provide medium or long term loans to (1) new industrial enterprises that will be established in the Kingdom and (2) existing private industrial enterprises for the extension of their activities or the replacement of their equipment and introduction of modern methods thereto.

Article 4 of the Law states that the Fund shall carry out a full evaluation of the economic benefits of the enterprise required to be financed. It shall take into consideration the soundness of its management in order to ascertain the benefit of the industrial enterprise from economic, financial and technical aspects.

Article 4 also states that when examining the enterprises requiring financing from it, the Fund shall see whether the financing required for the whole of the enterprise has been effected reasonably and whether the volume of the Fund’s aid represents a reasonable percentage of the total financing needs of the enterprise.

In addition, Article 4 states that the Fund shall obtain sufficient financial guarantees, from the owners of industrial enterprises financed by it, commensurate with the volume of the financing given by the Fund.

In Jubail Industrial City, the following infrastructure has been constructed to assist industrial establishments:

Availability of:

power: 230kv, 115 kv, and 34.5 kv; 3-phase, 60 hz;

natural gas;

telephone, telex, pager system and data transmission;

potable water;

fire water;

seawater for industrial cooling;

sanitary waste collection and treatment;

solid waste collection and disposal;

storm water disposal;

Deepwater Seaport

Integrated Road Network

Airport

Above ground corridors for pipelines and conveyor systems between plants and the port

In Yanbu Industrial City, the following infrastructure has been constructed to assist industrial establishments:

Availability of:

power: 115 kv, 34.5 kv, and 13.8 kv; 3-phase, 60 hz;

telephone, telex, pager system and data transmission;

potable water;

fire water;

industrial wastewater collection and treatment;

seawater for industrial cooling;

sanitary waste collection and treatment;

solid waste collection and disposal;

storm water disposal;

Deepwater Seaport

Integrated Road Network

Airport]

In addition, the Royal Commission assists in the following areas:

Saudi Arabia's economic growth in past decades relied almost entirely upon crude oil exports. In order to encourage diversification of the Kingdom's economy, Saudi Arabia embarked upon a programme of industrialization to develop other products in addition to crude oil. The Royal Commission for Jubail and Yanbu was created as a primary means for carrying out this mission. It was thought at the time that the concentration of the government's efforts to encourage industrial development in a limited number of locations would result in the most productive and efficient use of the government's limited resources. The Royal Commission has concentrated on building physical infrastructure such as ports, airports, roads and utilities needed by the industries in Jubail and Yanbu. Please refer to Reply 174 for more details.

The Royal Commission has concentrated on building physical infrastructure such as ports, airports, roads and utilities needed by the industries in Jubail and Yanbu. It has also played a significant role in protecting the environment in the area.

Support is provided to individual firms and industrial sectors only to the extent that such firms and sectors take advantage of the generally, nation-wide available programmes.

Measures which are provided to encourage investment in industries deemed to be eligible for such incentives include lease of land at a nominal fee; loans by the Saudi Industrial Development Fund; customs duty exemptions, upon approval, for raw, process and packaging materials; assistance in the selection of industrial projects, the preparation of their economic feasibility studies and their evaluation; provision of organizational, operational, technical and managerial assistance; provision of rental accommodations; subsidies for training Saudi employees; and tax holidays for certain foreign investments. As stated in the Memorandum on Foreign Trade (L/7489) and in Reply 176, the Royal Commission for Jubail and Yanbu also provides assistance to industry. Saudi Arabia also promotes industrial goods produced in the Kingdom through its participation in international trade fairs. The only programme where there is a restriction based on foreign ownership is the provision of loans under the Saudi Industrial Development Fund. Companies with foreign shareholders are eligible for a loan of up to 50 per cent of the project cost if the Saudi nationals hold 50 per cent of the shares. If the Saudi share is less than 50 per cent, then the financing will be granted at a proportionally reduced level.

Ownership of land by non-Saudis is governed by the Law of Appropriation of Real Property in the Kingdom of Saudi Arabia. In general, a non-Saudi national may not, other than by succession, acquire the right of ownership to real property within the Kingdom of Saudi Arabia. However, there are exceptions as follows:

Agricultural subsidies include the following government payments:

In addition, the Grain Silos and Flour Mills Organization sells improved wheat and barley seed for about Saudi Riyals 1800-1900 per ton.

Purchase prices for wheat are currently fixed at SR1.5 per kilogram for large agricultural companies and SR2 per kilogram for other producers. The purchase price for barley is currently fixed at SR1 per kilogram.

As mentioned in the Memorandum on Foreign Trade (L/7489), the system of support is currently under review by a Ministerial Committee. It would be premature to comment on any possible revisions. Please refer to Reply 181.

There is no set timetable for the completion of the review of the system of support by the Ministerial Committee. Any conclusions reached by the committee will be released following the completion of its work.

Please refer to Replies 179, 180, and 181. When Saudi Arabia becomes a member of the WTO, it would accept and implement the obligations under the Agreement on Agriculture including domestic support commitments.

Please refer to Reply 182.

The Kingdom’s agriculture policy is implemented on the basis of several objectives, including:

Please refer to reply 179. The GSFMO guaranteed purchase prices for wheat and barley are offered irrespective of where the grain is marketed. Government payments to GSFMO to cover the general shortfall between GSFMO sales realizations and payments to farmers are not related to export volume. No export subsidy is conferred.

The Saudi Arabian government subsidizes 50 per cent of the price fixed by the Ministry of Agriculture and Water for irrigation engines and pumps. Regarding other production subsidies, see Reply 183.

Please refer to Tables 4 and 5 in Annex 4.

Data on consumption levels of dairy products is generally not available. However, using some trade data as well as some published production data, and assuming inventories do not change, we can make the following extremely tentative consumption estimates for fresh milk, butter and ghee for the year 1991:

Fresh Milk Butter & Ghee

(Tons) (Tons)

Local Production: 284,000 866

Imports: 47,008 26,203

Less Exports plus Re-exports: 31,579 283

Total domestic consumption: 299,429 26,786

Based on the data above, imports of fresh milk accounted for 16 per cent of domestic consumption of fresh milk in 1991, and imports of butter and ghee accounted for 98 per cent of domestic consumption of butter and ghee. Data on other dairy products is unavailable.

Saudi Arabia does not subsidize the exports of milk and milk products.

Short-term loans are extended for a period not exceeding one year and relate to seasonal crop production and marketing thereof. This type of loan is intended to cover the costs of seasonal agricultural production such as ploughing charges, seeds, seedlings, chemical fertilizers, and labour costs.

Medium-term loans are extended for a period not exceeding 10 years. These loans are extended to provide financing for engines, pumps, irrigation equipment, machinery, drilling of wells, construction of watering facilities, water collection pools, water reservoirs, rooms for machinery and workers, pipes bleachers and green houses in addition to costs of shoots and nursery plants, manure and fertilizers, levelling costs, fishing gear and bee-keeping requirements. This type of loans also includes the financing of new specialized agricultural projects or expansion of existing ones such as broilers, layers, dairy, green houses, animal feed projects, and other agricultural products as well as projects for raising and fattening calves and sheep.

Long-term loans are extended for a period not to exceed 25 years and cover fallow land reclamation of large areas.

As is true with all the specialized credit institutions, the Saudi Agricultural Bank does not charge interest on loans. Minimal fees are charged to ensure the seriousness of applicants. The loan programme is operated out of a revolving fund which was established by a capital subscription from the Ministry of Finance and National Economy.

The government does not provide the Saudi Agricultural Bank with a monopoly over the provision of any financial service to the agricultural sector. There are no restrictions on other banks to provide financial service to the agricultural sector.

Please refer to Reply 188.

Since the inception of the bank in 1384 (1962), the aggregate value of total loans amounted to SR 26.503 billion (US$ 7.1 billion). Of these, short-terms loans totalled SR 282.93 millions (US$ 75.45 million) and medium and long-term loans totalled SR 26,220.6 millions (US$ 7.0 billion). A total of 358,019 farmers benefited from bank loans facilities.

As is true with all the specialized credit institutions, the Saudi Agricultural Bank does not charge interest on loans. Minimal fees are charged to ensure the seriousness of applicants.

The loan programme is operated out of a revolving fund which was established by a capital subscription from the Ministry of Finance and National Economy. At the current time the Bank's costs for providing loans are entirely covered by its operating revenues.

It is virtually impossible to say what a "comparable commercial loan" would cost. First, rates charged for loans vary depending on the circumstances of each particular loan so it is very difficult to make a generic statement comparing loan charges which differ widely in conditions. Second, in the vast majority of cases, the purpose of the loans made by the Agriculture Bank differ from the purpose of the loans made by commercial banks thus making a comparison imperfect.

The first condition for qualifying for a loan is that the applicant must have a guarantee by one or more of the following:

One or more types of guarantees may be accepted for one loan as follows:

Second, along with his loan application, the farmer must attach any required documents, e.g. an ownership deed, lease contract, or a permit to drill a well.

Third, an investigator inspects the farm and an economic study is prepared. The study includes: a complete description of the project, the purpose of the project, a time schedule of execution, the location of the project, its production capacity, possible expansion, experience and efficiency of the promoters, whether the needed expertise is available locally or will be imported, and finally the markets where the products will be sold. Attached should be the ownership deed, licences and quotations from local or foreign suppliers, and the approval of the Ministry of Agriculture or Municipality as the case may be.

The Investment of Foreign Capital Regulation covers foreign investment in general, including foreign capital in joint ventures (see Annex 3). Under the code, investment of foreign capital is subject to the grant of a licence issued by the Ministry of Industry and Electricity upon the recommendation of an interagency committee, and the proposed investment must satisfy two conditions: (1) that the foreign capital is to be invested in development enterprises (not including enterprises for the extraction of petroleum and minerals, and (2) it must be accompanied by foreign technical expertise. The Ministry of Industry and Electricity is responsible for issuing an order, upon the motion of an interagency committee, determining the development enterprises in conformity with the Development Plan.

The provision of technology does not in and of itself qualify foreign capital for approval under the Investment of Foreign Capital Regulation. The foreign capital must also be invested in what are determined to be development enterprises.

The conditions that foreign capital be accompanied by foreign technical expertise aims at encouraging technology transfer to the Kingdom. Technology transfer is not a restriction on foreign investment. In fact, the Kingdom encourages the inflow of foreign capital by all means.

In accordance with the Investment of Foreign Capital Regulation, The Ministry of Industry and Electricity, upon the motion of the inter-Ministerial Investments Committee, has issued a Ministerial Order (Number 952 of 1400) determining that the following groups of enterprises are considered development enterprises for the purposes of the Investment of Foreign Capital Regulation:

With regard to the basis for approval, each particular proposal is examined with regard to its developmental and technological merit, its potential contribution to the Kingdom, and its consistency with the Development Plan in place at the time. Because the circumstances for each proposal differ, it is impossible to be more specific.

Of the 1354 licences issued for foreign capital investment in Saudi Arabia, 137 have been for enterprises wholly owned by foreign entities. The authorities apply the Investment of Foreign Capital Regulation in a firm and consistent manner and in accordance with the development plans of the Kingdom. Of course, in view of the Kingdom’s development over the past thirty years, an investment that would have been considered to be consistent with the Kingdom’s development needs three decades ago, may no longer be viewed in the same way.

The second sentence of Paragraph 86 should be read to mean that foreign investment is given national treatment within the context of the Investment of Foreign Capital Regulation, not the Government Procurement Law.

An (unofficial) English translation of the Investment of Foreign Capital Regulation is reproduced in Annex 3.

The Investment of Foreign Capital Regulation is fully consistent with all applicable GATT regulations and with the Uruguay Round Agreement on Trade-Related Investment Measures. A minimum level of foreign ownership is not required for a licence to be granted under the Investment of Foreign Capital Regulation. Moreover, even if there were such a requirement, neither the GATT nor the Uruguay Round Agreement on Trade-Related Investment Measures prohibit requirements regarding the level of foreign ownership. Saudi Arabia does not apply any TRIMs prohibited by the Uruguay Round Agreement on Trade-Related Investment Measures.

An (unofficial) English translation of the Companies Law is reproduced in Annex 12. Under Article 228 of the Law, domestic and foreign companies must obtain a licence from the Ministry of Commerce before establishing a branch. agency, or representative office. Ministerial Order No. 1502 of 8.3.1400 AH, an (unofficial) English translation of which is also reproduced in Annex 12, describes the process for a wholly foreign-owned company to obtain a licence to establish an office in the Kingdom. For companies that do not fall within the purview of Ministerial Order No. 1502 of 8.3.1400 AH, the process would be that which is required by the Foreign Capital Investment Regulation, namely, an application to the Foreign Capital Investment Committee under the chairmanship of the Ministry of Industry and Electricity.

Saudi Arabia has no plans at the present time to change its regulations concerning participation of foreigners in the securities market. Share trading in Saudi Arabia is restricted to Saudi nationals. Non-Saudi GCC nationals are allowed to participate in the share market but only to the extent to which the original allocation of shares was subscribed by non-Saudi GCC nationals. There are non-GCC nationals who hold shares of joint stock companies which are traded in the share market but these non-GCC nationals must receive permission from concerned authorities, such as the Saudi Arabian Monetary Agency and the Ministry of Commerce, prior to selling their shares.

Production of tobacco and tobacco products is banned in Saudi Arabia.

The government has no plans at this time to change its current policy regarding foreign investment in the petroleum sector.

Saudi Arabia can confirm that it does not apply any measures or requirements which are inconsistent with the TRIMs Agreement including such measures as listed in the Annex thereto.

An (unofficial) English translation of the Government Purchases Law is reproduced in Annex 11.

See Reply 201.

The government publishes notice of its procurement requirements via tender invitations. Notices and advertisements inviting tenders shall be inserted at least twice in the Official Gazette (Um al-Qura') and two other Saudi Arabian newspapers or sent by official letter to the persons who are invited to tender. The first notice or advertisement shall appear at least one month prior to the date fixed for tendering save when the law provides otherwise.

The two most significant preference practices in the Saudi government procurement system are:

Among the major procuring entities in the central government are: The Ministry of Health, the Ministry of Defense, the National Guard, the Ministry of Communications, the Ministry of Post, Telephone and Telegraph, the Grain Silos and Flour Mills Organization, and the General Organization of Desalination. Among the major procuring entities in the subcentral government are the emirates of Riyadh, Jeddah, Makkah, and Medina, and the Dammam Municipality as well as the Riyadh Water Department, the Eastern Water Department and the Western Water Department. Among the major procuring entities that could be classified as government-owned enterprises or largely government-owned enterprises are Saudi Aramco, Saudia Airlines, and the Eastern, Central, Western, and Southern Electricity Companies.

Offset arrangements are negotiated on a case-by-case basis. However, as is the case in the licensing of foreign investment, schemes which involve technology transfer, train Saudi nationals in technical and managerial skills, and further the economic diversification objectives of the Kingdom are encouraged.

Ministerial Resolution No. 124 of 29.5.1403 AH states that:

There are no plans at this time to amend the government procurement regulations.

For details on the standard rules for government purchases, please see the Government Purchases Law, an (unofficial) English translation of which is reproduced in Annex 11.

The Ministry of Industry and Electricity is vested with the power to prepare lists of products of local industry which are suitable for Government purchases after ascertaining their quality, the suitability of prices and the availability of quantities of such products.

No, Saudi Arabia does not intend to negotiate accession to the Agreement on Government Procurement. Joining this Agreement is optional under the GATT and under the Agreement establishing the WTO. The Agreement on Government Procurement is one of the plurilateral agreements, acceptance of which is not a necessary condition for joining the GATT/WTO.

Saudi Arabia does not plan to become a party to the Agreement on Government Procurement.

No, Saudi Arabia does not intend to negotiate accession to the Government Procurement Code.

Saudi Arabia does not plan to become a party to the Agreement on Government Procurement.

An (unofficial) English translation of Ministers Resolution 124 of the year 1403 (H) can be found in Annex 11.

An (unofficial) English translation of the Standard Rules for Government Purchases can be found in Annex 11.

See Reply 211.

The State Trading Enterprises make their sales and purchases in the same manner as private enterprises, using different modalities depending on different situations. Sales and purchases may sometimes be made by inviting bids and tenders and sometimes by private negotiations. Statistics and percentages of the modes of sales and purchases are not available.

Foreign service suppliers are allowed to sell services to state trading enterprises in the same manner that they are allowed to sell services to non-state trading enterprises.

The GSFMO is an agricultural marketing board similar to those established in a number of developed countries. The purpose of the GSFMO is to encourage domestic grain production by providing silo capacity and offering a uniform guaranteed price to producers. To avoid abuse of the guaranteed price, imports are controlled. The GSFMO sells in the domestic and the case of wheat export markets. Typically of marketing boards, it only exports wheat surplus to domestic demand. Portion of the wheat available for export is donated as aid. In its commercial export sales the GSFMO operates solely in accordance with commercial considerations and in a non-discriminatory manner.

Saudi Aramco and the GSFMO are the only wholly government-owned entities which export goods. There are a number of wholly-government owned entities which import goods, such as various government departments, but in no case are such imports purchased by the government entity for resale on the domestic market.

Please refer to Reply 216.

The statement that "Saudi Aramco is responsible for all exports and imports of goods and services related to the oil industry" refers to its dominant position in the Kingdom as producer and marketer of both crude oil and a variety of downstream products. With the exception of two small operations in the former Neutral Zone, Saudi Aramco produces and markets all crude oil produced in Saudi Arabia. In addition, Saudi Aramco is sole owner and operator of four refineries and joint venture partner in three others. There is one other small refinery in the former Neutral Zone which is not associated with Saudi Aramco. There are also several lube oil plants which are not associated with Saudi Aramco. With regard to exports, Saudi Aramco has authority over the marketing of products produced at its facilities.

The Saudi government itself does not market any oil or oil products. Rather, Saudi Aramco is responsible for sales of crude oil to both domestic refineries, joint venture refineries abroad, and other foreign purchasers. Saudi Aramco is also responsible for the marketing of the output of the domestic refineries and shares in the marketing of the output from the three "export" refineries with the joint venture partners..

Fixed prices are determined on the basis of what price is needed to encourage the farmer to build, maintain, and/or expand his operation. The fiscal consequences are also considered. The fixed prices are reviewed annually.

The prices offered to farmers for their crops of wheat and barley are generally higher than those witnessed on the world market.

To the extent that the farmers know what price they can expect to receive a certain amount of their wheat and barley, then such a programme can be considered to be a "guaranteed price support system."

There are no products exclusively controlled by the GSFMO. However, the GSFMO is the only entity which is allowed to import and export wheat, wheat flour and fodder. In addition to its international trading activities, GSFMO is involved in the domestic storage, purchase and sale of wheat and wheat products, barley, and fodder for livestock and poultry.

The statement quoted in the question refers to purchases or sales involving either imports or exports, i.e. those purchases and sales which fall within the purview of Article XVII of the GATT.

In accordance with Article XVII of the GATT, the GSFMO:

See Reply 207.

As stated in the Memorandum on Foreign Trade (L/7489), the two state-trading enterprises are Saudi Aramco and the Grain Silos and Flour Mills Organization.

Neither organization maintains statistics on the amount or value of foreign goods purchased. With regard to exports, the most recent foreign trade statistics show the following data on exports of oil and wheat.

Oil Value (percent of total) Volume

1991 SR 163,490 million (91%) 358 million MT

1992 SR 174,244 million (93%) 373 million MT

1993 SR 144,636 million (91%) 359 million MT

1991 SR 318 million (0.2%) 951 thousand MT

1992 SR 528 million (0.3%) 1,181 thousand MT

1993 SR 674 million (0.4%) 1,569 thousand MT

In the case of oil, Saudi Aramco is responsible for the export of over 95 per cent of crude oil by both value and volume. Over the period 1986-1991, Saudi Aramco was responsible for about 50 per cent of the exports of refined products. In the case of wheat, the Grain Silos and Flour Mills Organization is responsible for all wheat exports.

Please refer to Reply 216.

Upon becoming a member of the GATT, Saudi Arabia will meet Article XVII notification requirements.

Sales by state enterprises, whether it be GSFMO or Saudi Aramco, are generally made at fixed prices but are subject to change. The prices of products sold to domestic entities have been lower than the prices for products sold to export markets. However, this can change depending on changes in the government sale price and the price for the product in international markets. A current exception to this generality would be applicable to sales of liquid gases.

There are price controls for certain types of bread, a staple for those most in need. This is made possible by subsidizing the sale of flour through the Grain Silos and Flour Mills Organization.

In the past, the use of direct and indirect subsidies had four main functions. First, they were used to protect citizens from fluctuations in the prices of basic foods and essential items. Second, they were a means for distributing the benefits of the country's increased wealth. Third, they were applied to assist the destitute, families with special needs, and for students and other deserving groups. Fourth, they were used to assist in diversifying the country's economic base and promote self-sufficiency in grain production as a national security measure.

Over time, the usefulness of some subsidies has declined and there has been a need to rationalize the provision of others. As a result, under the sixth development plan the government will continue to review the system of subsidies granted by the government for goods and services in order to suggest means of rationalizing consumption thereof without jeopardizing the status of the low income strata of society. Also it will ensure that all government departments which administer public services make economic efficiency fundamental to the function of these services by adopting two basic principles: (1) the cost of producing such services to the Saudi community should be reduced; and (2) the prices of such services should not be less than production costs, except in rare cases -- and with the provision that they should be periodically reviewed.

Subsidies in Saudi Arabia have the same general impact on imports and exports as they do in every other country in the world, that is they can lead to higher or lower imports -- or higher or lower exports -- depending upon the particular circumstances and variables involved. For example, subsidizing the purchase of agricultural machinery leads to higher imports of this machinery since the vast majority of such machinery is imported. On the other hand, the same subsidy could cause lower imports of agricultural produce since a more mechanized farm can produce more agricultural products that might otherwise be imported.

Saudi Arabia will take whatever actions are necessary to ensure its compliance with its international obligations whether it be through Royal Decree or Ministerial Resolution, or through administrative actions.

Upon its accession to the GATT, Saudi Arabia will comply with all applicable GATT articles and decisions.

Please refer to Annexes 13 and 14 for (unofficial) English language translations of The Trademarks Law, The Patents of Invention Law, Commercial Agencies Regulations, and The Law for the Protection of Copyrights (Copyright Law) can be found in Annexes 13 and 14.

Please refer to the Trade Marks Law, the Patents of Inventions Law, and the Copyright Law, (unofficial) English translations of which are reproduced in Annexes 13. Saudi Arabia extends national treatment to foreigners with regard to intellectual property rights.

Articles 1 and 2 of the Trade Marks Law define which marks are or are not deemed to be trade marks for purposes of eligibility to register the mark with the Ministry of Trade.

Saudi Arabian trademark law provides for the refusal or cancellation, and the prohibition of the use, of a trade mark which constitutes a reproduction of the registration of a trade mark which has an international reputation.

Under Article 55 of the Trade Marks Law, the proprietor of a mark may institute infringement actions at any time, pursuant to a petition to which is attached an official certificate purporting to the registration of the mark. The registrar maintains a register in which are entered all registered trade marks, notices of assignments and transmissions thereof, licences to use the mark, as well as the renewal or deletions thereof.

Article 2 of the Trade Marks Law lists a variety of reasons why an application for a trade mark would be rejected. In addition, an application can be rejected for failing to meet any of the terms and conditions provided for in the Trade Marks Law and the Implementing Regulations.

Please refer to Part VIII of the Trade Marks Law for information on offenses and penalties.

Under Article 25 of the Trade Marks Law, the person who has registered a mark shall be deemed to be the sole owner thereof. The owner of the mark need not give actual notice of the exclusive right of the right holder to potential infringers prior to initiating a civil or criminal case or any other actions which would bar others from using the mark or nearly similar representations.

Foreigners normally resident in the Kingdom who are licensed to carry on a commercial act or trade activity and foreigners belonging to a state which deals with the Kingdom on a reciprocal basis are allowed to register trade marks. All persons who have registered a trade mark in Saudi Arabia are treated equally under the Trade Marks Law and its Implementing Regulations.

In addition to the Trade Marks Law, the Kingdom has the Law to Combat Commercial Fraud. The law protects consumers from being deceived as to, among other things, the nature, type or origin of commodities. These regulations can be used to prevent the sale of counterfeit goods or of goods being passed off as goods manufactured by another entity.

Under Article 25 of the Trade Marks Law, the person who has registered a mark shall be deemed to be the sole owner thereof. The Law does not allow for different parties to register identical or similar marks.

Transmission of ownership or a pledge must be advertised and inscribed in the register maintained by the Trade Marks Office. Failure to do so would result in loss of all appropriate rights and privileges under the Trade Marks Law.

Decisions of the trademark registrar are appealable to the Board of Grievances.

Rights relating to industrial designs are covered by the Copyright Law, an (unofficial) English translation of which is reproduced in Annex 13. Saudi Arabia does not anticipate making any modifications of its laws regarding intellectual property rights at the present time. Upon its accession to the WTO, Saudi Arabia will take whatever actions are necessary to ensure its compliance with its obligations.

Rights relating to layout-design (topographies) would be covered by the Patents of Inventions Law. There are no changes needed to Saudi law to implement the WTO Agreement on Trade Related Intellectual Property Rights. Protection for layout designs would be handled in the context of the Patent of Inventions Law, the Law to Combat Commercial Fraud, and the Customs Law.

With regard to process patents, the Patents of Inventions Law does not currently prevent third parties not having the owner’s consent from the act of using the process itself.

Please refer to Articles 4 through 10 of the Patent of Inventions Law (see Annex 13).

Articles 29 to 33 of the Patents of Inventions Law covers assignment and transfer of patents and the licensing of rights under a patent. Basically there are no restrictions but there are registration and fee requirements.

Please refer to Articles 34 through 43 of the Patents of Inventions Law for the conditions under which compulsory licences may be granted. The provisions of the Patents of Inventions Law pertaining to compulsory licences is fully consistent with Articles 30 and 31 of the WTO Agreement on Trade-Related Intellectual Property Rights.

There are seven examiners in the Patent Office.

PATENT APPLICATIONS

There have not been any patents issued to date.

See Reply 234(f).

King Abdulaziz City for Science and Technology, which is responsible for implementing the Patents of Inventions Law, began the process of developing the Law in 1985. The Law itself was enacted in 1989, at which time patent application forms and related forms began to be issued.

Under Article 49 of the Patents of Inventions Law, a commission is vested with the power to hear all disputes and contests of the decisions issued in respect of patents. The commission is composed of three lawyers and two technicians. Members are nominated by the President of the King Abdulaziz City of Science and Technology and confirmed by the Council of Ministers.

The time frame for litigations of copyright infringement suits depends on the seriousness of the case. Generally, it takes from three to six months on average.

Sound recordings, data base compilations (whether in machine readable form or other form), computer software, and literary works are protected under the Copyright Law, an (unofficial) English translation of which is reproduced in Annex 13.

The Kingdom's enrolment in the Paris-based Universal Copyright Convention (UCC) took effect as of July 13, 1994.

The Ministry of Information has issued circulars to various entities including government offices, retail outlets, computer software shops and computer games outlets, reminding them of the Kingdom’s accession to the Universal Copyright Convention and the protection accorded to foreign works under the Convention. The circular also pointed out the necessity of not using or selling pirated works.

Please refer to Reply 232.

Saudi law does not currently provide for the term of protection to performers and producers of phonograms as stipulated under Article 14 paragraph 5.

There is no provision in the Copyright Law for compulsory licensing per se. However Articles 8 through 12 and Article 15 of the Law define the special circumstances under which authors’ rights are not protected.

Trademark rights and rights relating to geographical indications are covered by the Trade Marks Law. Copyright and related rights and rights relating to industrial designs are covered by the Copyright of the Author Law and the Royal Decree No. M/12 of 1414 on Saudi Arabia’s adherence to the Universal Copyright Convention. Patent rights and rights relating to design (topographies) of integrated circuits are covered by the Patents of Inventions Law. Rights relating to the protection of undisclosed information are covered by Islamic Shariah and the Companies Law. There is currently no additional legislation regarding these areas which is now planned or awaiting enactment. However, Saudi Arabia may in the future adopt additional legislation in these areas in accordance with the Kingdom’s policies and interests.

With regard to trademark rights and rights relating to geographical indications, foreigners are entitled to register trade marks if they (1) normally reside in the Kingdom and are licensed to carry on a commercial act or trade activity; or (2) belong to a state which deals with the Kingdom on a reciprocal basis. Regarding copyright matters, foreigners and foreign works are provided the same protection as nationals and national works under the Universal Copyright Convention. The Patents of Inventions Law does not differentiate between foreign and national patent applicants. With regard to the protection of undisclosed information, foreigners and nationals are not differentiated under the Islamic Shariah and the Companies Law.

As mentioned in the previous question, foreigners are allowed to register trade marks only if (1) they normally reside in the Kingdom and are licensed to carry on a commercial act or trade activity; or (2) they belong to a state which deals with the Kingdom on a reciprocal basis.

There are no categories of intellectual property rights in which Saudi Arabia grants to the nationals of any foreign country with which enjoys normal diplomatic relations an advantage, favour, privilege, or immunity which is does not grant to any other foreign country with which enjoys normal diplomatic relations.

Please refer to Replies 241, 242, and 243.

With regard to enforcement, there are no categories of intellectual property rights where Saudi Arabia accords to foreign right holders treatment less favourable than Saudi Arabia accords to its own nationals.

There are no categories of intellectual property rights in which Saudi Arabia accords to foreign right holders from one or more countries with which it enjoys normal diplomatic relations access to rights and remedies denied to foreign right holders from other countries with which it enjoys normal diplomatic relations.

For trademark violations, the Board of Grievances has the power to adjudge all civil and criminal cases. An administrative procedure initiated by filing a complaint with the department of internal trade (DIT) at the Commerce Ministry is an alternative to a judicial proceeding in the Board of Grievances. The DIT can request the infringer to stop selling infringing products and the DIT can bring a criminal action before the Board of Grievances.

For patent violations, a commission, composed of three lawyers and two technicians, is vested with the power to hear all disputes and contests of the decisions issued in respect of the patents; it also has the power to hear the criminal cases which result from the violation of the Patents of Inventions Law and its implementing regulations. An appeal against the decision of the commission can be made to the Board of Grievances.

With regard to copyright violations, a commission composed of not less than three members, one of whom must be a legal consultant, has been given the authority to hear alleged infringements of either a civil or criminal nature. Appeals of administrative decisions can, under certain circumstances, be made to the Board of Grievances.

In addition, under the Implementing Regulations to the Commercial Fraud Law, an Adjudication Commission has been given the authority to hear alleged violations of the law of either a civil or criminal nature. Appeals of administrative decisions can, under certain circumstances, be made to the Board of Grievances.

Saudi Arabia provides the full range of relief required by the WTO Agreement on Trade Related Intellectual Property Rights. Part VI of the Copyright of Authors Law allows for injunctive relief, damages, seizure and destruction of infringing goods, provisional relief and criminal sanctions--consistent with the WTO Agreement on Trade Related Intellectual Property Rights-- for violations involving copyrights. Part VIII of the Trade Marks Law and Article 45 of the implementing regulations allows for injunctive relief, damages, seizure and destruction of infringing goods, border relief, provisional relief and criminal sanctions--consistent with the WTO Agreement on Trade Related Intellectual Property Rights--for violations involving trade marks. Articles 22 and 47 of the Patents of Inventions Law allows for injunctive relief, damages, seizure and destruction of infringing goods, border relief, provisional relief, and criminal sanctions--consistent with the WTO Agreement on Trade Related Intellectual Property Rights--for violations involving patents. In addition, border relief is provided for under the Customs Law.

Saudi Arabia will take all necessary steps to conform to its international obligations and responsibilities.

Please refer to Replies 229-245.

Please refer to Reply 246.

Upon becoming a member of the WTO, Saudi Arabia would assume the obligations under the various Agreements, including the TRIPS Agreement. It would implement and apply the provisions of the TRIPS Agreement in accordance with paragraph 2 of Article 65 of the TRIPS Agreement.

Rights relating to the protection of undisclosed information are covered by Allah’s Shariah and the Companies Law. Saudi Arabia does not see the need to make any modifications of its laws regarding protection of undisclosed information.

Article 38 of the Trade Marks Law states that "the licence contract may not impose on the beneficiary such restrictions which are not consequent upon the rights vested by the registration of the mark or which are not necessary to safeguard such rights." In addition, it should be noted that inasmuch as one of the conditions for approval of foreign capital investment in Saudi Arabia is that the investment be accompanied by foreign technical expertise, practices which would restrict the transfer of this technology could be deemed to be in violation of the Investment of Foreign Capital Regulation.

Please refer to Reply 248.

First, it should be stated that Saudi Arabia is a member of the World Intellectual Property Organization and supports its objectives. Second, Saudi Arabia believes its current domestic legal framework is sufficient given the country's extant laws, level of development and national development policies. Any changes will be made commensurate with the Kingdom’s national interest and international obligations.

With the exception of those intentions that have already been made known or put into effect, Saudi Arabia has, at this time, no plans to become a party to any additional agreements, unions, or conventions. However, in accordance with the nation's policies and interests, Saudi Arabia may in the future announce its intention to become a party to an agreement, union, or convention of which it is not now a member.

Please refer to Reply 253.

It would be premature to discuss invocation of Article XXXV of the GATT. Saudi Arabia will take any action to protect its national interests and, at the same time, fulfil its international obligations.

In 1994, the six-members of the Gulf Cooperation Council decided to unify customs tariffs under a phased programme beginning with selected goods and commodities. An office has been established to supervise the working toward unification of tariff rates and schedules under the phased plan.

Coordination of external trade policies is an ongoing process carried out through multilateral and bilateral discussions at various levels, including ministerial meetings and meetings among the six heads-of-state. One manifestation of the results of this coordination is the occurrence of bilateral meetings between the Gulf Cooperation Council members--as a group--and other countries and entities such as the United States, Japan, and the European Union. Another is the strong position the members have taken against the discriminatory nature of various petroleum taxation policies.

No.

Saudi Arabia’s application of the Gulf Cooperation Council free trade area meets all the requirements of Article XXIV of the GATT. In accordance with paragraph 5(b) of Article XXIV, the duties and other regulations of commerce maintained by the Kingdom are not higher or more restrictive than the corresponding duties and other regulations of commerce existing prior to the formation of the free-trade area. In addition, in accordance with paragraph 8(b), the free-trade area has eliminated duties and other restrictive regulations of commerce on substantially all trade between the six Gulf Cooperation Council members in products originating in the member states.

The free trade area among the GCC members is a fully operational and comprehensive free trade agreement covering trade in goods and services as well as capital and labour movements. The Arab Common Market, on the other hand, has not been fully formed. As stated in the Saudi Arabia Memorandum on the Foreign Trade Regime (L/7489), the Arab League, of which Saudi Arabia is a member, is working toward the creation of an Arab Common Market. The bilateral trade and tariff conventions among Arab states are an integral part of this effort.

In 1981, the Arab League members--including Saudi Arabia--signed the Agreement Facilitating and Developing Trade Among Arab Countries with the objective of forming a common market for all member countries and to improve integration of the Arab countries’ economies. The agreement allows for tariff and non-tariff concessions among the member countries, especially on raw and semi-manufactured products.

Consistent with the objectives of the 1981 agreement, Saudi Arabia has signed and/or renewed a number of trade and tariff agreements with fellow Arab countries. These agreements include the Unified Economic Agreement of the Gulf Cooperation Council countries as well as bilateral agreements with Morocco, Egypt, Iraq, Syria, Algeria, Tunisia, Jordan, Lebanon, and Yemen. The agreement with Egypt is the newest, having been signed in 1991. The bilateral agreements are periodically reviewed and updated.

The statement that the purpose of the Arab Common Market is "...not to create obstacles to the trade of other countries," was made to assure the Members that, in accordance with GATT Article XXIV, paragraph (4), the Kingdom recognizes the purpose of the Arab Common Market is to "facilitate trade between the constituent territories and not to raise barriers to the trade of other contracting parties with such territories."

Please refer to Reply 34.

Saudi Arabia does not at present have any legislation/regulations specifically referring to the imposition of anti-dumping and countervailing duties. However, under Article 7 of the Law for the Protection and Encouragement of National Industry, the Council of Ministers are empowered with the ability to take such measures deemed appropriate for the protection of local production, in accordance with the stipulations of the Law and of other valid laws. Please refer to Reply 68.

Saudi Arabia is prepared to take all actions necessary to ensure its compliance with its international obligations and commitments.

Copies of the Customs Regulations and the Investment of Foreign Capital Regulation can be found in Annexes 8 and 3, respectively.

The Commercial Agencies Regulations of the Kingdom govern the relationships between firms that have product lines that are sold or serviced in the Kingdom and the domestic distributor. All persons carrying on the activities of a commercial agent must be registered with the Ministry of Commerce and registration is restricted to Saudi nationals. The regulations are not a foreign trade policy tool. Rather, they were implemented to protect the interests of consumers and commercial agents in Saudi Arabia, as well as the interests of foreign and domestic suppliers. An (unofficial) English translation of the Commercial Agencies Regulations is reproduced in Annex 14.

There are entities other than Saudi nationals and Saudi companies which can import goods.

The commercial dispute resolution system in Saudi Arabia is based on the Law of Arbitration and the Implementing Regulations to the Law of Arbitration. Unofficial English translations of the Law and its Implementing Regulations are reproduced in Annex 15.

Procedures regarding arbitration are contained in the Law of Arbitration and the Implementing Regulations to the Law of Arbitration, (unofficial) English translations of which are reproduced in Annex 15. Disputes involving foreign investments and government departments would generally be handled through administrative actions within the concerned department. In addition, a foreign investor may file a case with the Board of Grievances under the Ministerial Order No. 190 of 16.11.1409 AH Concerning Rules and Procedures to be Followed by the Board of Grievances (see Annex 9).

There is no mention in paragraph 115 of a commercial disputes court mechanism. The commercial disputes court was superseded by the Law of Arbitration, a copy of which is reproduced in Annex 15.

Within each concerned Ministry and Department, i.e. the Ministry of Finance and National Economy, Ministry of Commerce, Customs General Department, etc., there are designated bodies for the purpose of review of decisions/orders of the officials regarding the application of the foreign trade regime. If a trading entity is still not satisfied, it can make an appeal to the Minister for redress of its grievances.

There are no such thing as "import agency" requirements in Saudi Arabia. Rather, there are commercial agency requirements. The commercial agent has to be registered with the Chamber of Commerce. The Chamber of Commerce also certifies papers, documents, and certificates required by different government regulations from commercial agents.

With respect to trade policy, the Chamber of Commerce does the following:

Any person or firm which is registered with the Chamber of Commerce can be a member of the Chamber of Commerce.

Each regional Chamber of Commerce elects two-thirds of its Board of Directors. The Minister of Commerce validates the election results and, in consultation with the Minister of Industry and Electricity, appoints the remaining one-third. The Council of Chambers of Commerce is formed from the head of each regional Chamber of Commerce and one elected member from each regional Chamber of Commerce.

Saudi Arabia’s practice concerning publication of trade laws, regulations and decrees is fully consistent with GATT requirements. The Um al-Qura is the official publication for the notification of laws, regulations and decrees. Regulations, laws and decrees of concern to the contracting parties to the GATT/WTO will not take effect before they are officially published in the Um al-Qura.