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Experts assess Saudi Arabia’s effort to join the World Trade Organization
"A powerful confluence of forces drives globalization," says Renato Ruggiero, former Director-General of the WTO. "Some of them no doubt reflect government policies, but more fundamentally, these are forces with a life of their own – forces unleashed by technological change, especially in the fields of transport and communications."
For the 135 countries within WTO, membership confers low-tariff access to markets worldwide and use of the Geneva-based organization's dispute settlement mechanism. For Saudi Arabia, membership in WTO will intertwine the Kingdom's economy with the global marketplace.
Many observers think Saudi Arabia has been, at best, unenthusiastic during the seven protracted years of negotiations with the WTO and the General Agreement on Tariffs and Treaties, WTO's predecessor organization.
But Middle East experts understand why the Kingdom is exercising caution before opening its doors to free and open trade with the West.
"Saudi Arabia has learned from the experiences of its neighbors," says Wyche Fowler, Jr., U.S. Ambassador to Saudi Arabia. "Although I think the Kingdom recognizes that it will eventually move forward (in the WTO membership process), I believe they also don't want to become an economic and cultural colony of the West. Saudi Arabia is going through an introspective time as its seeks to preserve its culture in a changing world."
"People sometimes forget that the Kingdom's political system is based on Islam," says Sandra Charles, a former U.S. Government policy expert whose Washington consulting firm specializes in Middle East affairs. "As the seat of Islam's two most holy places [Makkah and Madinah], one should think of it like the `Vatican of Islam.' In other words, the rules are different from a secular system. I think this is hard for Americans and most Westerners to understand."
John Duke Anthony, president of the Washington-based National Council on U.S.-Arab Relations, uses the same analogy when describing Saudi Arabia's potential relationship with the WTO and the global economy. "Just as it is nonsensical to expect the Vatican to liberalize its viewpoints on long-standing matters of faith and morality, it is likewise unreasonable to expect Saudi Arabia to abandon its own views on faith and culture."
In recent months, however, Saudi Arabia has informed countries supporting its admission into the WTO – including the United States, its official sponsor – that it now intends to actively seek membership in the world body.
"Now that we are pursing membership in the WTO more aggressively, it seems the United States is placing demands in our way that may prevent us from achieving membership," observes Medlej Al-Medlej, executive director of the Washington office of the U.S.- Saudi Arabian Business Council. "These demands include opening up our financial sector – which currently is impossible – and also opening our insurance market, which, potentially, could be huge."
"The U.S. has taken the basic position that Saudi Arabia must do a lot of market targetization work – reforming the banking sector, opening the insurance market, becoming more transparent – before they can become a member of WTO, not after," says Kevin Taecker, a former economist with the Saudi American Bank.
"But it's my belief they've got the cart before the horse," adds Taecker. "In Saudi Arabia's case, it's much better to work with them on market targetization while having them as a member of WTO. For the Saudi way of decision-making and consensus building, it's usually more difficult to get consensus in the absence of a treaty than with a treaty. Having the WTO treaty, from the Saudi perspective, makes the whole process of consensus-building more stream-lined."
Among many experts on Saudi Arabia, there is unanimity that the admission of the Kingdom into the WTO would give a huge boost to the country’s economy, the largest in the Middle East.
"I think Saudi Arabia's membership in the WTO will be a short-term negative, but a long-term plus," says Al-Medlej. "It will be good to be part of the global economy: We sell a lot of petrochemical products, and we currently pay a lot of taxes that membership in the WTO will eliminate or reduce."
"With the Treaty, comes opportunity," says Taecker. "The Saudis will be able to compete on the global market, and foreign businesses will give new consideration to seeking business partners in the Kingdom. The downside of WTO membership may entail some Saudi businesses not being able to compete with their foreign counterparts. But this, of course, is the competitive nature of business: There are no guarantees in business."
Joseph Montville, a former American diplomat who now serves as director of the Washington-based Center for Strategic and International Studies, a foreign policy think tank, shares Taecker's caution. "We recognize the importance of helping the Saudis to modernize at a pace that they can absorb," says Montville. "But we also see the need to be serious about it. This means collaborations in trade, WTO membership, and investment law reforms, and using information technology to stimulate and help the economy grow. All are important elements in this modernization."
However, Prince Sultan bin Salman bin Abdulaziz, Saudi Arabia's secretary-general of the Higher Tourism Commission (and a former space shuttle astronaut) is confident the cultural and spiritual underpinnings of Saudi Arabia will strengthen the Kingdom as it becomes a major player in the global economy, "For Saudis, religion is the opposite of inhibition; it pushes us to achieve," says Prince Sultan. "For Saudis, tradition is a stepping stone to the future, not the past."
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Table of Contents Crown Prince Abdullah: A leader with a global vision |
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Today, Saudi Arabia is facing the prospect of enormous economic and social change as it seeks membership in the World Trade Organization (WTO), a step that will enable the Kingdom to participate in the dramatic globalization that has transformed the world since the end of the Cold War.