International trade has become a significant aspect of numerous international affairs. As a result of international trade, most nations are not only becoming interdependent to one another but they are also trying to conduct efficient world trade. Saudi Arabia is one of the largest countries in the Gulf region with an estimated population of 32 million. It also has the largest economy in the Arab World with a GDP of 683.7 billion dollars (Al Rajhi et al., 2012). In line with being the largest economy in the Arab world, it is also the only G-20-member country from the region. The government of Saudi Arabian is in charge of major economic activities in the region. The country has approximately 16 per cent of world petroleum reserves and further plays a critical role in OPEC (Ball, Geringer, Minor and McNett, 2012). Saudi Arabia is also one of the largest supplier, exporter, large-scale oil refiner as well as a producer of natural gas. This paper seeks to discuss Saudi Arabia’s WTO accession documents and the commitments it made in line with trade in services. The paper will further elaborate on international agreements and treaties that deal with trade in services in which Saudi Arabia is a member. Besides, the impact of the WTO on trade in services in Saudi Arabia will be discussed.
Evidently, Saudi Arabia has established itself to be one of the biggest markets on the planet and in addition in the Arab world for both manufactured as well as service goods. Saudi Arabia got its formal accession in 2005 following the effective bilateral agreements with the USA (Abedini and Péridy 2008). The procedure of Saudi Arabia accession and participation to the World Trade Organization (WTO) has provided numerous benefits. The Saudi Arabia entry in the WTO has increased trade volume, presents several negotiating as well as addresses cultural and economic problems (Goldstein, Rivers and Tomz 2007). Saudi Arabia WTO accession has enabled the country to remove protective barriers, open key service segments, for example, saving money, and protection, legitimate and capital markets to remote cooperation, place ceilings on tariffs and further protect intellectual property rights. The country has built an open, transparent and rule-based regime to tackle the technical trade barriers. The WTO accession has also enabled the country to call for tariff limitation in different sectoral initiatives, government procurement agreements notwithstanding publishing service (Mohanty, et al. 2011). Saudi Arabia has also changed rivalry laws to give against anti-protection with respect to WTO rules.
Saudi Arabia is a party in several bilateral and multilateral trade agreements. To start with, Saudi Arabia is one of the members of the Gulf Cooperation Council (GCC). The GCC comprises of countries such as Bahrain, the UAE, Qatar and Kuwait (Mohanty et al., 2011). GCC is a regional intergovernmental political and economic union (Reiche, 2010). The GCC trade agreement fosters free entry of goods and services among member states. It also promotes economic, social, security and cultural cooperation between the six states that convenes each year to discuss regional affairs. Cumulatively, the GCC countries produce almost a half of the world oil reserves (Rajhi, et al. 2012).
On the other hand, Saudi Arabia is also a member of the Greater Arab Free-Trade Area (GAFTA). GAFTA is a standout amongst the most basic financial accomplishments in Arab regular work (Abedini and Péridy, 2008). It contributes towards framing the Arab regular market. The GAFTA liberalizes goods and services through customs duties and charges exception between all the Arabic member countries of the GAFTA (Zarrouk, 2000). The exception is in the less developed countries (Mohanty, et al. 2011). The Arab countries have further engaged in negotiations to liberalize investments and services among them to further encourage economic integration among the Arabic countries.
Saudi Arabia settled on a key decision to join the World Trade Organization (WTO) to profit by both the exchange opportunities as well as the perceived globalization. The WTO agreements were essentially formed to transform the existing market system and further improve international trade that complies with global rules (Rajhi, et al. 2012). The changes that have been formed have made a significant impact on government policies, enterprise reorganization, as well as transforming the national economy (Al-Somali, Gholami and Clegg, 2009). Most of the Saudi Arabian companies enjoy greater opportunities when they enter into an effective partnership with international companies. The companies take full advantage of their accumulative efforts in the trans-borders economy.
Additionally, the formation of the WTO introduced new elements in Saudi Arabia. It has made the trade to become multi-faceted and dynamic particularly in the services sector. The improvement of the IT revolution has made everything to be exchanged immediately particularly in innovation, finance and intellectual property (Goldstein, Rivers and Tomz, 2007). It has also safeguarded the Saudi Arabian Kingdom from biased trade approaches of different nations by guaranteeing more prominent relationship and includes the utilization of the settlement procedure to resolve the exchange question with different nations (Goldstein, Rivers and Tomz 2007). The WTO has also ensured that Saudi Arabia is not subjected to anti-dumping practices unless within the WTO guidelines framework (Saudi Ministry of Commerce and Investment, 2012). The WTO on trade in services will prompt domestic economic reforms, privatization as well as make the country a Foreign Direct Investments destination. As argued by Saudi businesses, the WTO accession will ensure greater domestic efficiency in the Saudi Arabia economy (Abedini and Péridy 2008). As much as joining WTO will increase trade in services in the world, WTO promotion could have a significant effect on several Saudi industries such as the petrochemical industry, finance service sectors and telecommunications (WTO, 2005).
Since Saudi Arabia holds the privilege of exchange for upstream oil generation, the WTO promotion has profited chances to open this segment further to rebuild and update itself through collaboration (Goldstein, Rivers and Tomz 2007). It has likewise facilitated the stream of products and ventures between countries, making it even worldwide in nature. The rapid developments in the service sector will enable Saudi Arabia to diversify its market and products to allow them to go beyond national boundaries in future (Rose, 2004). The circumstance will call for dire monetary changes that will help in defeating the difficulties of promotion.
Conclusion
Saudi Arabia’s international trades in services have encouraged some significant changes in the worldwide trade scene. The WTO accession will be viewed as a basic advance to rejuvenate the Saudi private part if managed appropriately. The collaboration of the Saudi market system will play a significant role in shaping the trade systems as well as the Saudi domestic market. This will not only enable the local market to be straightforward and responsible but will also expand the market share.
References
Abedini, J., & Péridy, N. (2008). The Greater Arab Free Trade Area (GAFTA): an estimation of its trade effects. Journal of Economic Integration, 848-872.
Al Rajhi, A., Al Salamah, A., Malik, M., & Wilson, R. (2012). Economic Development in Saudi Arabia. Routledge.
Al-Somali, S. A., Gholami, R., & Clegg, B. (2009). An investigation into the acceptance of online banking in Saudi Arabia. Technovation, 29(2), 130-141.
Ball, D., Geringer, M., Minor, M., & McNett, J. (2012). International business. McGraw-Hill Higher Education.
Goldstein, J. L., Rivers, D., & Tomz, M. (2007). Institutions in International Relations: Understanding the Effects of the GATT and the WTO on World Trade. International Organization, 61(1), 37-67.
Mohanty, S. K., Nandha, M., Turkistani, A. Q., & Alaitani, M. Y. (2011). Oil price movements and stock market returns: Evidence from Gulf Cooperation Council (GCC) countries. Global Finance Journal, 22(1), 42-55.
Reiche, D. (2010). Energy Policies of Gulf Cooperation Council (GCC) countries—possibilities and limitations of ecological modernization in rentier states. Energy Policy, 38(5), 2395-2403.
Rose, A. K. (2004). Do we really know that the WTO increases trade?. American Economic Review, 94(1), 98-114.
Saudi Ministry of Commerce and Investment (2012). Foreign trade. Retrieved from https://mci.gov.sa/Agencies/ForeignTrade/doc-agreements/Pages/default.aspx on November 15, 2018
WTO (2005). Kingdom of Saudi Arabia and the WTO. Retrieved from https://www.wto.org/english/thewto_e/countries_e/saudi_arabia_e.htm on November 15, 2018
Zarrouk, J. (2000). The greater Arab free trade area: limits and possibilities. Catching up with the Competition: Trade Opportunities and Challenges for Arab Countries, 285-305.
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