Riyadh knocks on WTO door but wants to preserve '\'unique status'\'

Published October 31st, 2001 - 02:00 GMT

OPEC heavyweight Saudi Arabia is knocking loudly on the door of the World Trade Organization (WTO), but is not willing to give up its "unique religious status" in return for membership. 


The kingdom is alone among the six-nation alliance of the oil-rich Gulf Arab states that has been denied accession rights to the WTO, which meets in neighboring Qatar November 9-13, and has remained a candidate since 1996. 


"It should be clear to our trade partners that the kingdom has a status which is unique in the world. We have been honored as hosts of the two holy mosques" in Mecca and Medina, Commerce Minister Osama Al-Faqih said recently. 


"While talking about opening up to world trade, we must affirm that there are commodities, activities and services forbidden in Islam and thus cannot be practiced in Saudi Arabia," Faqih added. 


In 1996, Faqih had hoped Riyadh would become a WTO member by the end of the following year, but the goal still appears as remote as ever. Faqih said he was "hopeful that the past six years of serious efforts would soon be fruitful." 


Interior Minister Prince Nayef Bin Abdul Aziz, who heads the main WTO committee in Saudi Arabia which last met in mid-October to review the membership process, has ruled out any concessions on basic issues. Saudi officials decline to say what those issues are, but they are believed to be linked to the kingdom's purely Islamic judicial system, commercial arbitration, penal code and the list of activities forbidden under Islam. 


"I believe the kingdom has done a lot in its bid to join the WTO, but it is difficult to touch on issues related to religion, social values and traditions," said Abdul Aziz Daghistani, director of The Economic Studies House. "The kingdom is implementing an economic reform package, including a number of good bills approved by the Consultative Council ... and has cut customs tariffs from 12 to five percent," Daghistani, a former member of the Council or Shura, told AFP


In the past several months, Saudi Arabia has opened up to direct foreign investment by awarding more than 400 projects worth over nine billion dollars. The cabinet also issued two landmark bills to reform the justice system. The first is the penal procedures law that underlines the rights of detainees and suspects, while the second regulates the legal profession. 


On Monday, the cabinet also opened up the market partially for insurance companies which adopt the Islamic cooperative insurance system. The kingdom has also signed memoranda of understanding with several foreign oil majors for the multi-billion gas project known as the "Gas Initiative." 


But the WTO wants the kingdom to do more on the economic front to secure a place alongside the 142 states already WTO members, an economist said "They want the kingdom to open up several economic sectors, mainly banking, insurance, aviation, telecommunications and others," said Said Al-Shaikh, chief economist of National Commercial Bank, leading Saudi bank. 


"They also want the kingdom to end the sole agency rules for the wholesale and retail sectors. The idea of a single distributor needs to be modified. "Riyadh is also required to end the duality of its taxation system. Under the system, Saudis pay the religious zakat, a 2.5 percent tax, while foreign partners pay an average of 25 percent on net profits," Shaikh said. 


The WTO seeks a reduction of the so-called negative list of sectors that are off limits to foreign investors to open the upstream oil sector and the pharmaceutical industries, Shaikh said. The Head of the Saudi Arabian General Investment Authority (SAGIA) Prince Abdullah Faisal bin Turky Al-Saud said in Abu Dhabi Monday the negative list will be amended in February to open up more sectors to foreign investments. 


Riyadh has taken the course of direct negotiations with WTO members and has already signed bilateral agreements with 11 countries, but not with the European Commission or the United States. 


"I believe it's not to do with permitting alcohol and pork. It's more to do with economics," pointed out Shaikh. "Alcohol is banned and will continue to be so no matter what," he added. — (AFP, Riyadh) 


by Omar Hasan  


© Agence France Presse 2001 

© 2001 Mena Report (www.menareport.com)

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