RESTRICTED
WORLD TRADE WT/ACC/SAU/13/Add.1
26March 1997
ORGANIZATION(97-1250)
Original: English
ACCESSION OFTHE KINGDOM OFSAUDI ARABIA
Additional Questions andReplies
Addendum
TheMinistry ofCommerce oftheKingdom ofSaudi Arabia hassubmitted further additional
replies toquestions raised after thesecond meeting oftheWorking Party held on6and
8November 1996, withtherequest thattheybecirculated tomembers oftheWorking Party. The
questions andreplies arereproduced hereunder.
_______________WT/ACC/SAU/13/Add.1
Pageii
TABLE OFCONTENTS
Page
No.Question
No.
II. ECONOMY, ECONOMIC POLICIES AND FOREIGN
TRADE
2. Economic Policies
(a) Main directions 1 1-4
(b) Monetary andfiscal policies 3 5-6
III. FRAMEWORK FOR MAKING AND ENFORCING
POLICIES AFFECTING FOREIGN TRADE INGOODS
AND TRADE INSERVICES
5. Laws andLegal Acts 3 7
Transparency 4 8-10
IV. POLICIES AFFECTING TRADE INGOODS
(WT/ACC/SAU/8)
1. Import Regulation
(b) Characteristics ofNational Tariff 4 11-13
(c) Tariff quotas, tariff exemptions 5 14
(d) Other duties andcharges 6 15-18
(e) Quantitative import restrictions 7 19-24
(f) Import licensing procedures 9 25-37
(h) Customs valuation 13 38-40
(l) Rules oforigin 14 41-42
(o) Safeguard régime 14 43-44
2. Export Regulation
(c) Quantitative export restrictions 15 45-47
(e) Other measures 16 48
3. Internal Policies Affecting Foreign Trade inGoods
(a) Industrial policy 17 49-52
(b) Technical regulations andstandards 18 53-57
Shelf Life 21 58-59
(c) Sanitary andphytosanitary measures 22 60-75
International Conformity Certification Programme (ICCP)
(WT/ACC/SAU/6 andAdd.1) 28 76-85
National Treatment 33 86
Fees 33 87
Customs Valuation 34 88
Unnecessary Obstacles toTrade 34 89
Regarding theWTO Import Licensing Agreement 36 90-102WT/ACC /SAU/13/Add.1
Pageiii
Page
No.Question
No.
Registration 40 103-104
Listing 41 105-111
(d) Trade-related investment measures 44 112-118
(e) State-trading enterprises 50 119-122
VII. INSTITUTIONAL BASE FOR TRADE AND ECONOMIC
RELATIONS WITH THIRD COUNTRIES
Arab League Preferences 51 123-141
IV. POLICIES AFFECTING TRADE INGOODS
4. Policies Affecting Foreign Trade inAgricultural Products 55 142
Specific Comments onTables 56 143-154
(e) Internal policies 59 155-160
V. TRADE-RELATED ASPECTS OFINTELLECTUAL
PROPERTY RIGHTS
1. General 60 161-164
2. Substantive Standards ofProtection
(a) Copyright andrelated rights 64 165-172
(b) Trademarks, including service marks 66 173-176
(c) Geographical indications 68 177-178
(d) Industrial designs 68 179-180
(e) Patents 69 181-183
(f) Plant varieties 70 184
(h) Protection ofundisclosed information, control ofanti-
competitive practices 70 185-186
4. Enforcement 70 187-188
VI. TRADE-RELATED SERVICES REGIME (WT/ACC/SAU/5
AND WT/ACC/SAU/6/Add.3)
2. Policies Affecting Trade inServices
(b) Judicial, arbitral oradministrative tribunals affecting trade in
services 71 189
(c) Qualification requirements andprocedures 72 190
(d) Monopolies andexclusive service suppliers 72 191
(e) Restrictions on,orrequirements of,specific types oflegal
entities 72 192
(h) Government procurement 73 193
(i) Aid,grants, taxincentives orpromotion schemes 73 194WT/ACC/SAU/13/Add.1
Pageiv
Page
No.Question
No.
3. Market Access andNational Treatment
(a) Limitations onthenumber ofservices suppliers 74 195-200
(d) Limitations onthenumber ofnatural persons employed in
particular sectors 77 201
(f) Limitations ontheparticipation offoreign capital 77 202-204
(g) Measures providing forlessthannational treatment 78 205
4. Exceptions toMost Favoured Nation Treatment 79 206-227WT/ACC /SAU/13/Add.1
Page1
II. ECONOMY, ECONOMIC POLICIES AND FOREIGN TRADE
2. Economic Policies
(a) Main directions
Question 1.
Itisourunderstanding thatwhile theSixth FiveYear Plan contemplates serious consideration
ofprivatization ofanumber ofState owned firms, thatnosteps haveyetbeentaken toactually
initiate aselection offirms forprivatization ortodevelop themethods andtoolsthatwillbeused
toaccomplish this.
CanSaudi Arabia confirm thatunderstanding, and/or describe thestatus ofitsefforts todate
inthisarea?
Reply
TheSixth Development Plancalls forconsideration ofpossibility ofprivatizing selected
government-owned facilities attheappropriate timeprovided that,suchprivatization willbeofreal
benefit totheNational economy. ThePlanprovides forthegradual saletotheprivate sector of
government shares, injointstock companies, following in-depth studies ofeachindividual case, so
thatthesocial andeconomic costsandbenefits canbeproperly evaluated andtiming canbedetermined
when appropriate conditions prevail.
Theprogramme ofprivatization isinitsinitial stages andtheMinisterial Committee hasas
yettaken nospecific Privatization decisions.
Question 2.
CanSaudi Arabia confirm thatfirms from non-GCC countries bepermitted toparticipate in
privatization purchases onanequal footing withfirms from within theGCC?
Reply
According totheSixth Development Planthegovernment ’sprivatization programme willbe
implemented through oneormore ofthefollowing methods:
- increasing thecapital ofbothgovernment-owned companies andjointpublic/private sector
companies andoffering thenewly issued shares forpublic subscription;
- offering some shares ofgovernment-owned companies forsaleinthefinancial market ona
gradual basis andinamanner thatwould notadversely affect thestability ofthismarket;
- selling theentire government share ofthese companies toprivately owned venture capital
companies listed onthelocalstock market.
Question 3.
Please listallfirms located inSaudi Arabia owned bytheGovernment ofSaudi Arabia, orin
which itholds asignificant financial interest.WT/ACC/SAU/13/Add.1
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Reply
Theparticipation oftheSaudi Public Investment Fund (SPIF) inSaudi jointstocks companies,
areasfollows:
No Company Name %ofshares
owned bySPIF
1. SABIC 70.0
2. SCECO- Central Region 0.02
3. Southern Region Cement Co. 37.4
4. Al-Qassim Cement Co. 23.4
5. Yanbu Cement Co. 10.0
6. Saudi Cement Co. 0.013
7. Eastern Cement Co. 10.0
8. Saudi RealEstate Co. 65.7
9. SOVALA 6.0
10. GASCO 14.0
11. Saudi Hotels Co. 30.0
12. National Shipping Company ofSaudi Arabia 28.8
13 Saudi Arabia Public Transportation Co. 20.0
14. Saudi Ceramics Co. 10.0
15. Saudi Fisheries Co. 40.0
16. NADEC Co. 20.0
17. National Company ofCooperative Insurance 50.0
18. Taiba Co.forInvestment andDevelopment 3.0
19. Saudi Cairo Bank 25.0
Question 4.
Paragraph 22ofdocument WT/ACC/SAU/4 mentions thepossible roleofprivatization enabling
thecountry togenerate economic growth andensuring future development. Which sectors are
likely tobeprivatized? Istheparticipation offoreign companies conceivable? Ifyes,willthey
benefit from thesame treatment asnational companies?
Reply
Please seereplies 5,6,7,9,10,and11ofWT/ACC/SAU/8.WT/ACC /SAU/13/Add.1
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(b) Monetary andfiscal policies
Question 5.
What portion ofnational taxrevenues areaccounted forby(a)theincome taxontheprofits of
foreign entities and(b)theZakat applied totheassets ofSaudi citizens?
Reply
Incometaxescurrentlyrepresent4.5percentofnon-oilrevenues."Zakat"islistedinthe"others"
category, which includes government sales, rentals ofproperty, finesandother miscellaneous receipts.
"Others" constitute 26percentofnon-oil revenues.
Question 6.
Isthere anybasis under which Zakat could belevied onforeign nationals andentities instead
oftheincome tax?
Reply
No.
III. FRAMEWORKFORMAKINGANDENFORCINGPOLICIESAFFECTINGFOREIGN
TRADE INGOODS AND TRADE INSERVICES
5. Laws andLegal Acts
Question 7.
Atthesecond Working Party, Saudi Arabia indicated thattheprocess ofratification ofitsAccession
Protocol willinvolve consultation leading toaRoyal Decree which willbothaccept theobligations
ofWTO Membership andprovide thebasis forimplementing those obligations:
(a) WilltheAgreements constituting theWTO bedirectly applicable under Saudi lawonce
Saudi Arabia isaWTO Member?
(b) What willhappen toanyexisting Saudi legislation which isincompatible withWTO rules
whenSaudiArabiaenactstheRoyalDecreeratifyingtheProtocolofAccessiontotheWTO?
(c) Isthere anylegalconstraint which would hinder Saudi Arabia from introducing legislation
implementing future WTO obligations inadvance ofWTO accession?
(d) Where dointernational treaties, suchastheWTO, fitintoSaudi Arabia ’shierarchy of
laws?
Reply
(a) Saudi Arabia willtakethenecessary domestic legalaction toimplement WTO obligations.
(b) Saudi Arabia willreview allexisting laws, regulations andenforcement procedures interms
oftheirWTO compliance. Then, necessary changes willbeintroduced inaccordance withterms of
accession tobenegotiated.WT/ACC/SAU/13/Add.1
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(c) Theprocess ofratification oftheaccession protocol willinvolve consultations leading toa
Royal Decree thatwillbothaccept theobligations ofWTO Membership andprovide thebasis for
implementing those obligations.
(d) Please seeReply 14inWT/ACC/SAU/8.
Transparency
Question 8.
Isthere alegalobligation topublish alllaws, decrees andadministrative orders relating totrade
and/or economic policy intheUmAl-Qura?
Reply
Please seereply 269ofL/7645/Add.1.
Question 9.
Candecrees, lawsandadministrative orders takeeffect before publication? Ifyes,under what
circumstances? How frequently doesthisoccur?
Reply
No.
Question 10.
Candecrees, laws andadministrative orders beapplied retroactively? Ifyes,under what
circumstance? How frequently doesthisoccur?
Reply
No.
IV. POLICIES AFFECTING TRADE INGOODS (WT/ACC/SAU/8)
1. Import Regulation
(b) Characteristics ofNational Tariff
Question 11.
WewouldappreciatefurtherclarificationofSaudiArabia’sreplytoquestion18(WT/ACC/SAU/6).
Withregardtothisresponse,wewouldbeinterestedinSaudiArabia'sviewsastothecircumstances
under which recourse toArticles XIIandXIXoftheGATT 1994andtheWTO Agreements and
Understandingselaboratingtheirprovisions,wouldbeinadequatetoaddresstheneedforadditional
temporary protection from imports ofadomestic industry.
Could Saudi please provide information regarding which industries might beconsidered for
additional protective measures.WT/ACC /SAU/13/Add.1
Page5
Reply
Asadeveloping country initsearlystages ofdevelopment, Saudi Arabia maywishtoprovide
increased tariff protection tocertain industries topromote investment. Itwould notseem appropriate
tointroduce balance-of-payments orsafeguards restrictions forthispurpose. Noindustries arecurrently
being considered foradditional tariffprotections. Saudi Arabia would ofcourse observe, onaccession,
itsWTO obligations notably those ofGATT Article II.
Question 12.
Intheresponse toquestion 20inWT/ACC/SAU/6, Saudi Arabia states thatthecurrent tariff
rateontobacco products isnow50percent(raised from 30percent). Recent reports indicate
thatSaudi Arabia isconsidering anincrease of10percentintheimport dutyontobacco and
tobacco products effective January 1997. Wehavealsoreceived reports stating thattheproposed
increase isthefirstofseveral increases designed toeventually establish theimport duty for
tobacco/products at100percent.
CanSaudi Arabia confirm thatthereport ofaplanned import dutyincrease ontobacco andtobacco
products of10percentage points inJanuary 1997 iscorrect? Does Saudi Arabia contemplate
anyfurther revision toitscustoms schedule toinclude additional products?
Reply
Theminimum tariff ratefortobacco products willberaised from 50percentto70percent
effective 1July1997. Byyear2000, thistariff ratewillbereviewed upward.
Question 13.
What isthefunction ofthetechnical committee referred tointhefirstpartoftheresponse to
Question 14inWT/ACC/SAU/6? Doesit,forexample make recommendations fortariff changes?
IsthisCommittee different totheCommittee referred tointhesecond partoftheresponse? If
yes,what form doesthecoordination between thetwoCommittees take?
Reply
TheCommittee referred tointhefirstpartoftheresponse isatemporary inter-Ministerial
technical committee thatprovides technical support tothepermanent committee described inthesecond
part.
(c) Tariff quotas, tariff exemptions
Question 14.
Approximately what portion ofSaudi Arabia 'sgoods imports areexempted from tariffs?
Reply
Asindicated inpara67ofWT/ACC/SAU/4, theshare of1994totalimports, byvalue, ofduty
freeitems was18.4percent.WT/ACC/SAU/13/Add.1
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(d) Other duties andcharges
Question 15.
Weunderstand thatSaudi Arabia haseliminated import feesandcharges listed inSaudi Arabia ’s
"Customs Regulations andRules" which wassupplied totheWTO. These included awharfage
charge (3percentofduty), amunicipal fee(6percentofduty), andaSpecial Contribution for
al-Falah Schools (1percentofduty). Inaddition, weunderstand thattheduties onlicensing
andcertification forautomobiles inArticle 62havealsobeenrepealed. Wearepleased thatSaudi
Arabia hasaddressed theWTO inconsistency ofthese charges prior tocompletion oftheaccession
process.
Could Saudi Arabia citethelawordecree thatrepealed these measures?
Reply
Vehicle registration feeswerecancelled in1393 A.H. byaRoyal Decree. Al-Falah schools
feewasrepealed in1392 A.HbyaMinisterial Resolution. Municipal feeswere cancelled bya
Ministerial Resolutions in1395 A.H.
Question 16.
Inaddition totariffs andwarehouse, porterage, andsupervision charges, andthecharges for
"after hours" portclearance operations, please listanyother charges, fees,taxes, orborder charges
onimports.
Wealso note that thepre-shipment inspection feelevied onmany imports under the
government-mandated ICCP (0.5percentofshipment value) isnotbased on"theapproximate
costofservices rendered", andtherefore isnotconsistent withArticle VIII.1(a).
Reply
There arenotaxes, finesorfeeslevied onimports except those inreply29ofWT/ACC/SAU/6.
Question 17.
Saudi Arabia notes numerous warehouse dues, portage charges andsupervision charges inthe
response toquestion 29(WT/ACC/SAU/8). What istherelation ofthese feestothecostofservices
rendered?
Reply
Thefees,portagesandsupervisionchargescollectedforservicesperformedbyprivatecompanies
entered intocontracts withthecustoms Department. These feesandcharges areassessed aftera
deliberate study andarenotincluded inthecustoms value forassessment ofcustoms duties.
Question 18.
Theresponse toquestion 30(WT/ACC/SAU/8) does notsupply thecomplete listofcharges
requested, e.g.,wenotethattheICCP (through itspre-shipment inspection feeandconformity
assessment fee)represents anadditional charge onimports.WT/ACC /SAU/13/Add.1
Page7
Based onrecently received documentation, weunderstand thatSaudi Arabia haseliminated the
wharfage fee,municipal fee,special contribution forAl-Falah schools, andcharges onautos.
Weapplaud theelimination ofthese GATT-inconsistent fees. Wewould appreciate information
onwhen andbywhat specific measure these feeswere eliminated. Weseekacommitment that
anyfeesandcharges thatmaybeimposed inthefuture willbefullyconsistent withWTO rules.
Reply
Fordetails ontheelimination ofthese fees,please seereply 15above.
Saudi Arabia canconfirm thatanyfeesorcharges introduced willbefullyconsistent withWTO
rules.
(e) Quantitative import restrictions
Question 19.
Weapplaud Saudi Arabia 'scommitment toreplace itsbanondates andlong-validity milkwith
tariffs aspartofitsaccession.
Anumber ofdocuments havebeensupplied addressing restricted imports. While weappreciate
thisuseful information, weseek clarification regarding products subject toimport bans,
prohibitions, andrestrictions. Asingle listofallproducts subject toimport restrictions, with
themeasure andGATT/WTO justification foreachspecific product would facilitate review.
Reply
Theinformation requested willbesupplied inarevision ofAnnex 3toWT/ACC/SAU/4 to
besubmitted shortly.
Question 20.
Annex 7Dprovides alisting ofcertain items "banned" from import, along withtherespective
Article XXjustification. Intheresponse toquestion 15inWT/ACC/SAU/6, Saudi Arabia provides
ageneral description ofadditional items thatare"prohibited duetotheintended illegal useof
theproduct", along withArticle XX(andXXI) justifications. Additional products arenoted in
SAU/6, question 40asbanned imports onthebasis ofArticle XXI.
What istherelation ofthelistsprovided inquestion 15andquestion 40toAnnex 7D? How is
the"intended use" ofproducts noted inquestion 15determined? Where inSaudi Arabian
regulations aretheprohibitions onthese items noted?
Reply
Theinformation requested willbesupplied inarevision ofAnnex 3toWT/ACC/SAU/4 to
besubmitted shortly.
Question 21.
Inparagraph 95oftheCustoms Regulations, Saudi Arabia notes items which are"forbidden"
imports. Notallofthese items arenoted inAnnex 7Dorintheresponse toquestion 15.WT/ACC/SAU/13/Add.1
Page8
Please explain howthese items arespecifically restricted. What istheGATT justification for
eachrestriction?
Reply
Theinformation requested willbesupplied inarevision ofAnnex 3toWT/ACC/SAU/4 to
besubmitted shortly.
Question 22.
Why doesthelistof"banned" items inAnnex 7Dnotinclude thebooks listed onpage 218ofthe
Customs Regulations andRules ofImplementation (submitted asAnnex 8)?
Reply
Thelistofprohibited items willbereviewed inthepreparation ofarevision ofAnnex 3to
WT/ACC/SAU/4.
Question 23.
Wehave noted thattheversion oftheCustoms Regulations submitted asAnnex 8dates from
1965. Thisversion seems tobeoutofdate. Forexample, the1995 Amendments circulated to
theWorking Party hasDuties ontheLicensing andCertification ofAutomobiles asArticle 56,
whereas itisArticle 63intheversion inAnnex 7.Please provide anup-to-date version ofthe
Customs Regulations andRules ofImplementation, sothattheWorking Party doesnotfocus
onmeasures which arenolonger applicable.
Reply
Anupdated version oftheCustoms Regulations wassubmitted totheWTO Secretariat.
Question 24.
Fortheitems listed inArticle 95ofAnnex 8(Article 88ofthe1995Amendments totheCustoms
Regulations andRules ofImplementation:
(a) Please listthegoods which arestillcovered bythisarticle (import restrictions);
(b) Which ofthegoods listed aretotally banned from import intoSaudi Arabia byanyperson
orentity?
(c) Which ofthegoods listed maybeimported intoSaudi Arabia by“certain agencies ”?
(d) Foreachofthegoods which maybeimported bycertain agencies, please provide afull
listofwhich persons orentities mayimport these items andindicate under what conditions
importation maybecarried outbythese persons orentities.
(e) Foreachitemlisted inArticle 95ofAnnex 8and/or Article 88ofthe1995 Amendments
andnotlisted inAnnex 7D,please provide theWTO justification formaintaining import
restrictions (whether prohibition, restrictive licensing orquota).WT/ACC /SAU/13/Add.1
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Reply
Theinformation requested willbesupplied inarevision ofAnnex 3toWT/ACC/SAU/4 to
besubmitted shortly.
(f) Import licensing procedures
Question 25.
Weseekmore complete information onSaudi Arabia ’ssystem forimport licensing.
Theinformation provided inresponse totheimport licensing questionnaire doesnotprovide the
rationale forlicensing eachproduct, northeGATT justification fortherequired licensing. At
leastforsome products (e.g., seeds), thelicensing system would appear toactasaquantitative
restraint andlicensing forother products (such asagricultural pesticides, agricultural equipment
andasphalt) raise questions astopurpose (andWTO-consistency).
Itiscritical totheaccession process thatwethoroughly understand howSaudi Arabia usesimport
licences. Saudi Arabia hassubmitted information ontheprocedures andrationale forimport
licences governing seeds, butsimilar information needs tobeprovided forallother products subject
tolicensing.Thesubmissionofcompleteinformationrequestedintheimportlicensingquestionnaire
forallsuchproducts willfacilitate theWorking Party examination.
Reply
Theinformation requested willbesupplied inarevision ofAnnex 3toWT/ACC/SAU/4 to
besubmitted shortly.
Question 26.
Please clarify (a)forwhich products import licences restrict thevolume ofimports permitted
intoSaudi Arabia, whether based onfixed quotas oranassessment ofmarket demand, and(b)
forwhich products theimport licences areusedasaregulating mechanism forreasons ofhealth
andsafety.
Reply
(a) Import licensing isnotemployed tolimitquantities ofimports.
(b) Theinformation requested willbesupplied inarevision ofAnnex 3toWT/ACC/SAU/4 to
besubmitted shortly.
Question 27.
Theresponse toquestion 35inWT/ACC/SAU/6, Saudi Arabia states thatthetimeframe for
granting licences varies byproduct.
Please provide thetimeframes forsuchlicences foreachproduct listed inthequestionnaire.WT/ACC/SAU/13/Add.1
Page10
Reply
Theinformation requested willbesupplied inarevision ofAnnex 3toWT/ACC/SAU/4 to
besubmitted shortly.
Question 28.
WenoteinWT/ACC/SAU/4, thatanumber ofproducts imported intoSaudi Arabia require
authorization orimport licensing andthathealth orsafety doesnotseem tobethebasis forthe
requirement. Ofparticular noteisSaudi Arabia ’srequirement thatallhorses begranted prior
approval from theChivalry Club.
Could Saudi Arabia please provide anexplanation fortherequired approval andwhether approval
isgranted automatically oronthebasis ofcriteria.
Wewould beinterested inknowing thecriteria associated withobtaining alicence toimport from
theChivalry Club, whether theClub isagovernment entity, ifnotagovernment entity thenon
what basis isitpartofthelicensing system, andwhat isitsroleisinimporting horses.
Reply
TheChivalry Club isnotagovernment entity. Because ofitsexpertise, itischarged with
theprotection ofthepurity oftheArabian horse strain; prepares pedigrees; andregulates importation
ofbreeding animals.
Question 29.
Theresponse toquestion 30inWT/ACC/SAU/6 states thatthedifference between banned items
andprohibited items isthat"abanmaybeimposed duetoreligious reasons andsuchitemmay
notbeallowed toenter, while theimportation ofthe"prohibited" itemmayberestricted tocertain
agencies".
Could Saudi Arabia please clarify how"certain agencies" would beauthorized totrade in
"prohibited" items? Would suchtrade beconsidered State trading duetothese restrictions?
Reply
Notallprohibitions aremaintained forreligious reasons. Some aremaintained fornational
security reasons orcrime prevention. These items maybepermitted entry byauthorized government
agencies forlegitimate use.
Question 30.
Weseekmore specific information onSaudi Arabia ’simport licensing system -information which
hasnotbeen supplied inthequestionnaire orintheresponses inWT/ACC/SAU/8.
Please describe insome detail theapproval process required foreachlicensed product.
Please provide information onthetimeframes involved forlicence approval foreachproduct.
Please indicate thecriteria usedbyeachrelevant Ministry granting import licences? Arethese
criteria published andavailable totraders?WT/ACC /SAU/13/Add.1
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Reply
Theinformation requested willbesupplied inarevision ofAnnex 3toWT/ACC/SAU/4 to
besubmitted shortly.
Question 31.
Theresponse toquestion 46states thatthepurpose oflicensing imported seeds istoensure, "...the
quality ofimported seedandtomeet thegrain requirement". Thisresponse doesnotdirectly
respond tothequestion.
Toassist theWorking Party inbetter understanding thereasons forthese requirements, Saudi
Arabia should address directly thequestions concerning thereasons fortherestriction onimported
seeds.
If,forexample, thisissue isseedquality, Saudi Arabia should provide thecriteria usedtoassess
seedquality forbothdomestic andimported seeds, anddescribe howthese criteria areapplied.
Saudi Arabia should alsodescribe howtherestriction onimported seeds helps "tomeet thegrain
requirement".
Reply
There isnoquantitative restriction ontheimportation ofseed, perse.Licences areissued
forseedthatmeets quality requirements. However itisnecessary fortheMinistry ofAgriculture to
ensure thatrequests forpermits relate toquantities genuinely required forseedrather thanfoodpurposes.
There isariskthatgrain could enter asseedandbepresented toGSFMO asdomestic grain entitled
tosubsidy.
Question 32.
Theresponse toquestion 47isnotadequate toassess theconformity ofSaudi Arabia 'sprocedures
withWTO provisions.
Please respond totheparticular points intheoriginal question, listing, inter alia,the"different
examination procedures forapproval" followed bythe"different ministries andagencies dealing
withdifferent subjects..".
Reply
Theinformation requested willbesupplied inarevision ofAnnex 3toWT/ACC/SAU/4 to
besubmitted shortly.
Question 33.
Could Saudi Arabia setoutthetimes taken forapproval ofimport licensing requests, setting out
thedifferent times forthevarious categories ofgoods asnecessary?
Reply
Please seereply 32above.WT/ACC/SAU/13/Add.1
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Question 34.
Could Saudi Arabia provide more detail onthecriteria forissuing licences andtheagencies and
ministries involved?
Reply
Please seereply 32above.
Question 35.
Please confirm thatimport licensing isonlyrequired fortheproducts listed inAnnex 16to
L/7645/Add.1.
Reply
Thelistofproducts under restrictions willbeup-dated intherevision ofAnnex 3to
WT/ACC/SAU/4.
Question 36.
Theresponses given toquestions 42,44and47inWT/ACC/SAU/8 areincomplete. Please provide
detailed information onthecriteria applied byeachrelevant Ministry indeciding whether ornot
togrant animport licence.
Reply
Please seereply 32above.
Question 37.
Regarding theresponse toquestion 38inWT/ACC/SAU/8 (Council ofMinister ’sDecision No.77
dated 28/1/1395 A.H.):
Article 1:what arethecriteria usedbytheMinister ofAgriculture toauthorise ornottheimport
ofagricultural machines? Isthere anexisting listofprohibited agricultural machines oristhe
decision taken onacasebycasebasis?
Article 7:How longdoestheresponsibility oftheseller onanydefect affecting themachine last
after thepurchase?
Isthere alocal production inSaudi Arabia ofagricultural machines including water pumps or
their engines?
Reply
Thecriteria usedbytheMAW arebeing supplied totheWTO secretariat.
Theresponsibility oftheseller onanydefect affecting themachine lastsoneyear,during which
hemust either repair themachine freely orreplace itbygiving thepurchaser newone. After that
period, heisobligated toprovide necessary maintenance andspare parts atreasonable prices whenWT/ACC /SAU/13/Add.1
Page13
required bythepurchaser. Thisobligation shallcontinue foroneyearfollowing theexpiry dateof
seller contract asanagent from thetimeofappointing another agent.
There isalocalproduction inSaudi Arabia ofagricultural machines including tractors, water
pumps andtheirengines.
(h) Customs valuation
Question 38.
Based ontheinformation supplied intheCustoms Valuation questionnaire (Annex 4),Saudi
Arabia 'slegislation would appear tocontain numerous provisions thatareWTO-inconsistent.
Weseekgreater elaboration ontheSaudi Arabian customs valuation system anddetails onthe
specific provisions oftheAgreement notnowinforce inSaudi Arabia 'simport valuation régime
andexactly howSaudi Arabia intends tobring itsrégime intoconformity withtheWTO rules.
These details arerequired whether ornotSaudi Arabia isgranted atransitional period after
accession toimplement theAgreement.
Saudi Arabia should usethetimeduring itsaccession negotiations todevelop andenact thelegal
procedures andarrangements required tofully implement theCustoms Valuation Agreement
atthedateofaccession.
Inparticular, there should benoimpediment totheimmediate revision ofSaudi Arabia 'scustoms
valuation lawsandregulations toprovide forfullconformity withtheWTO Customs Valuation
Agreement, andimmediate efforts tocomply withitsprovisions.
Reply
TheSaudi Arabia agrees thatitscustoms valuation system maynotbefullyWTO compliant.
Existing lawsarebeing reviewed forconsistency, andamendments andadditions willbeconsidered.
Saudi Arabia willbesubmitting alistofprovisions forwhich itisseeking delayed implementation.
Question 39.
Please provide afulllistwithHSCodes oftheceramic products subject tominimum pricing for
customs valuation purposes.
Reply
Ceramic product which issubject tominimum pricing forcustoms valuation purposes is
[HS69089010].
Question 40.
Saudi Arabia states intheresponse toQuestion 49inWT/ACC/SAU/8 thatthere isnominimum
pricing forvehicles. Wewelcome thisstatement, butitisincontradiction toearlier statements
(seeforexample theresponse toquestion 50inWT/ACC/SAU/6). Please comment onthisapparent
contradiction.WT/ACC/SAU/13/Add.1
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Reply
Theapparent contradictions arises fromthefactthatwhile minimum prices havebeenremoved
fornewcars(forwhich valuation isbased onmanufacturers ’prices). They aremaintained for
second-hand vehicles only.
(l) Rules oforigin
Question 41.
Weunderstand thatSaudi Arabia intends toinstitute appropriate procedures atthetimeofits
accession tomeet therequirements oftheWTO Agreement onRules ofOrigin.
Werequest thatSaudi Arabia prepare aplanfortheimplementation oftheAgreement anddiscuss
itwiththeWorking Party prior toitsaccession.
Reply
Saudi Arabia isreviewing itscurrent origin régime andwillshortly beinaposition toconfirm
itspreliminary finding thatthere isnoinconsistency withWTO rules. Most-favoured-nation national
treatment requirements andtransparency principle areincorporated inSaudi Law. Saudi Arabia will
inform theWorking Party ofthefinalresults ofthisreview.
Question 42.
PleaseexplainwhySaudiArabiaconsidersthatacertificateoforiginis"indispensable"(Question51
inWT/ACC/SAU/6).
Reply
Saudi Arabia considers thatcertificates oforigin are“indispensable ”topermit verification
ofaccuracy ofany“marks oforigin ”orproduct labels andthereby prevent deception ofconsumers.
Moreover, accurate identification oforigin isimportant forstatistical purposes.
(o) Safeguard régime
Question 43.
Saudi Arabia hasrepeatedly indicated thatithasnolegislation orregulations thatspecifically
govern antidumping, countervailing duties orsafeguard measures. Ithascited, however, the
LawfortheProtection andEncouragement ofNational Industry asoneinstrument available to
thegovernment toprotect domestic producers.
Theprovisions oftheLawdonotappear toconform withWTO requirements.
Weunderstand thatSaudi Arabia isprepared toreview thisLawtoensure itsconsistency with
WTO, inparticular Article 7,which authorizes thegovernment totakesuchprotective measures
as"restricting orbanning offoreign imports similar tothelocal production, imposing higher
customs duties onsimilar imports, orproviding thevarious financial aidstoanindustrial
establishment".WT/ACC /SAU/13/Add.1
Page15
WeseekacommitmentfromtheGovernmentofSaudiArabiathatitwillinstituterevisedlegislation
consistent with theWTO Agreements onSafeguards, Antidumping, andSubsidies and
Countervailing Measures inthecontext ofitsaccession.
Reply
Saudi Arabia doesnotconsider thatArticle 7powers areappropriate forthetypes ofaction
contemplated inGATT Articles VIorXIX. WTO Membership doesnotimpose arequirement to
introduce traderemedy legislation butthatifsuchlegislation isintroduced itshould conform toagreed
norms. Should Saudi Arabia introduce legislation onsafeguards, antidumping, andcountervail itwill
conform toWTO obligations.
Question 44.
What wastheoutcome ofthereview oftheWTO compatibility oftheLawfortheProtection
andEncouragement ofNational Industry mentioned intheresponse toQuestion 55in
WT/ACC/SAU/6 andQuestion 36inWT/ACC/SAU/8?
Reply
Although certain ofthemeasures provided forinArticle 7could conflict withWTO obligations,
theLawleaves tothegovernment thediscretion todetermine thenature ofanyprotective measures.
Thegovernment willadminister theLawinamanner thatconforms toWTO obligations.
2. Export Regulation
(c) Quantitative export restrictions
Question 45.
Saudi Arabia notes intheresponse toquestion 61(SAU/6) thatcertain products areprohibited
from export, including livestock, horses, baby milk, medicines, datepalm saplings, barley, corn,
maize, andsoyabeans.
Wenote that these restrictions would appear tobeinconsistent with theprovisions of
GATT Article XI.Weunderstand that, insome cases, therestriction isintended toprevent the
export ofsubsidized consumer goods.
Please provide thespecific GATT/WTO justification forprohibiting orotherwise restricting the
export ofeachitem. Ifsome form ofcertification isrequired forexport, please indicate thecriteria
applied toreceive thecertificate andindicate howthis"licensing" system isoperated ina
transparent andnon-discriminatory fashion.
Reply
Restrictionsaremaintainedtoensurethatexportersrepayanysubsidiesreceivedbeforeexporting
(e.g., loans byTheSaudi Agricultural Bank). These restrictions would appear toconform tothe
provisions ofArticle XX(d) ofGATT.
Generally, approval forre-exportation ofthesegoods canbeobtained within oneweek. There
arenospecific criteria required; onlyacopyoftheimport documentation andrepayment ofthesubsidy
arerequired.WT/ACC/SAU/13/Add.1
Page16
Question 46.
Saudi Arabia notes thatexports ofpetroleum products (except lubricating oilsandasphalt) are
restricted andsubject toapproval from PETROMIN.
Whymust approval begranted byPETROMIN forexports ofthese products? What istheprocess
which PETROMIN follows forapproving exports ofsuch products? What criteria govern
PETROMIN 'sdecisions?
Reply
Noprior approval from PETROMIN isneeded fortheexport ofpetroleum products. Saudi
Aramco andjoint venture refineries, export petroleum products from theterminals according to
commercial criteria without prior approval from PETROMIN. What isreferred inresponse 61of
WT/ACC/SAU/6 concerns theexport ofsubsidized petroleum products destined forlocalconsumption.
Butsince 1995, domestic prices ofmost petroleum products arenotsubsidized.
Question 47.
Foreachoftheproducts listed intheresponse toQuestion 61inWT/ACC/SAU/6, please provide
thereason forrestricting orprohibiting export.
Fortheproducts whose export isrestricted, what form dothese restrictions take?
What isthepurpose ofeachoftheexport restrictions?
Isthere aquantitative element toanyoftheexport restrictions?
Fortheproducts whose export isprohibited, canexportation takeplace under anycircumstances?
Ifsoplease detail.
Reply
Except asnoted below, thepurpose oftheexport restrictions istoensure repayment ofproducer
orconsumer subsidy:
- toprevent excessive run-down indomestic breeding herds, exports offemale livestock is
prohibited;
- natural fauna exports arecontrolled inconformity withSaudi Arabia ’sobligations under CITES;
- petroleum products arecontrolled toprevent export ofproducts specially priced forthedomestic
market;
- export ofuntanned leather iscontrolled toimplement collection ofexport tax.
(e) Other measures
Question 48.
Weunderstand thatSaudi Arabia levies aSR2000/ton export taxonuntanned hides. What
percentage oftheaverage export price pertonisthistax?WT/ACC /SAU/13/Add.1
Page17
Reply
Theexport dutyofSaudi Riyals 2,000 permetric tononuntanned hides isequivalent to
advalorem rateof22.6percentin1994.
3. Internal Policies Affecting Foreign Trade inGoods
(a) Industrial policy
Question 49.
Saudi Arabia states inWT/ACC/SAU/4 thattherationale forpricing butane, propane, andnatural
gaslower than theexport price isattributable tolower costs ofstorage, transportation and
marketing. Yet,thebasis forfixing theprices ofthese products domestically (asstated inthe
Resolution of6December 1992) isnotcost-based, butrather isaflat30percentdiscount off
thelowest export price.
Could Saudi Arabia explain thediscrepancy between these twostatements?
Reply
Itwasdeemed foraccounting andlogistical purposes thatthe30percentdiscount is
representative ofthesaved costs ofproviding butane, propane, andnatural gas,tolocalusers. The
lowprices ofLPG tolocal users reflects thecomparative advantage ofSaudi Arabia asanenergy
resourceful country.
Question 50.
Itwould behelpful ifSaudi Arabia would indicate the"privileges andspecial conditions" granted
tofirms operating inthepetroleum andmining sectors established under theLawfortheProtection
andEncouragement ofNational Industry andwhich areapparently itemized inArticle 9ofthat
Law, rather thanreferring theWorking Party tothelawinquestion (response toQuestion 37
inWT/ACC/SAU/8).
Reply
Firms operating inthepetroleum andmining sectors werenotestablished under theLawfor
theProtection andEncouragement ofNational Industry. The“privileges andspecial conditions ”
mentioned inArticle 9ofthelawaregranted tofirms operating inthepetroleum andmining sectors
under other lawsandagreements. Noprivileges areitemized inArticle 9ofthelaw.
Question 51.
DoesSaudi Arabia allow foroutward processing inthejewellery sector (HScodes 7113and7114)?
Reply
Outwardprocessinginthejewellerysectorispermitted,however.Regularimportdutyislevied.
Question 52.
Among theobjectives oftheSixth Development Planmentioned inparagraph 103ofdocument
WT/ACC/SAU/4, isthedevelopment ofeconomically feasible import substitution industries andWT/ACC/SAU/13/Add.1
Page18
theincrease oftheindustrial sector 'scontribution towards meeting thelocaldemand forconsumer
andcapital goods. More information onmeasures planned bytheGovernment ofSaudi Arabia
forachieving these objectives havebeenstated indocument L/7645/Add.1. However, noconcrete
measure hasbeendescribed there. Could youplease listsome oftheplanned measures andassure
thattheywillnotbetrade-related investment measures?
Reply
Asstated indocument L/7645/Add.1 "Since 1970 theKingdom ofSaudi Arabia hasadopted
aseries ofFiveyearPlanasguidelines fortheeconomic andsocial development ofthecountry".
Therefore, these Plans donotcontain "planned measures". However, themajor programmes which
willbeimplemented forthedevelopment oftheindustrial sector, during thesixth plan, include an
industrial investment programme. Theobjective ofthisprogramme istoacquaint investors atlocal,
GCC, Arab country andinternational levels, withtheinvestment opportunities available inimport
substitution andexport-oriented industries, through thepreparation ofinitial investment profiles for
feasible projects.
Developmentofeconomicallyfeasibleimportsubstitutionindustriesareundertakenbytheprivate
sector according tothedictates ofthemarket. Measures provided bythegovernment areindustrial
incentives consistent withWTO rules. These measures wereoutlined indocument WT/ACC/SAU/4
paras. 103to106.
Theyarealsospelled outintheLawfortheProtection andEncouragement ofNational Industry
(Annex 3ofL/7645/Add.1) andfurther explained inthereplies 146and147ofthesame document.
Wecangiveassurance thatthese measures include noprohibited trade-related investment
measures.
(b) Technical regulations andstandards
Question 53.
While weappreciate Saudi Arabia 'sresponse totheTBT questionnaire, wenote thatthe
information supplied isnotsufficiently detailed forareview ofSaudi Arabia 'sstandards régime
interms ofWTO rules.
Werequest thatSaudi Arabia provide more complete information onitsrégime.
What specific rules andregulations govern thedevelopment, adoption andapplication oftechnical
regulations, standards andconformity assessment procedures?
Aredraft standards published inadvance forpublic comment? Inwhat publications aredraft
standards announced? Inwhat publications arefinalstandards published? What istheprocess
foraddressing comments ondraft standards?
Weappreciate Saudi Arabia ’sprovision ofinformation (WT/ACC/SAU/4, Annex 5)asforeseen
under Article 15.2oftheAgreement onTechnical Barriers toTrade. Notably, weappreciate
thedesignation ofacentral contact point forinformation andtheidentification oftherelevant
central government publication. Some questions, however, remain onSaudi Arabia 's
standardization andregulatory policies andprocedures.WT/ACC /SAU/13/Add.1
Page19
Reply
(a) Continuous coordination among Ministries andgovernment agencies involved inimplementing
Saudi Arabia ’sstandardization policies isinsured under theinherent structure ofSASO ’sBoard of
Directors; theBoard members include representatives from allconcerned Ministries, (inaddition to
theChambers ofCommerce andIndustry). TheBoard approves theadoption ofnewstandards, and
individual members oversee harmonization initsimplementation among theirrespective Ministries.
(b) Administrative procedures areinforce atSASO requiring:
- publication ofnotice inseveral localnewspapers announcing thatadrafttechnical regulation
isavailable forcomment within 3months;
- distribution ofcopies ofthedrafttoallconcerned Ministries, alllocalChambers ofCommerce,
foreign embassies, major localmanufacturers andmajor Saudi importers whose products are
affected bytheproposed regulation.
Afterthe3monthsperiod,aseconddraftincorporatingacceptablecommentsislikewisepublished
anddistributed forfinalcomments within onemonth.
(c) SASO ’spolicies andadministrative procedures carry specific instructions touseinternational
standards wherever applicable, orusethem asthebasis fordevelopment ofSASO ’sownstandards
insituations where thespecific climatic andgeographic conditions warrant that.Forelaboration, refer
toSection I“Background ”ofWT/ACC/SAU/9
Theconformity assessment methods adopted byICCP areinaccordance withWTO conformity
assessment relating toTBTandPSI.
Question 54.
Initsreply toquestion 69(WT/ACC/SAU/8), Saudi Arabia states thatitmakes extensive use
ofinternational standards.
(a) How doesSAG determine ifaninternational standard isrelevant toitsneeds?
(b) Which riskassessment methodology doesSAGutilize toensure thatthere isascientifically
demonstrated need toprotect human, animal orplant health? When riskassessments
fordifferentproductsresultinsimilarqualitativeprobability,aretheserisklevelsuniformly
judged tobeacceptable ornot,irrespective oftheproducts (orcountries) involved? If
not,please explain.
Reply
(a) International standards arenormally presumed toberelevant toSaudi Arabia 'sneeds unless
Saudi Arabia 'sspecific climatic, geographic, infrastructure orpublic morals (including religious)
conditions applicable tothestandard render itinappropriate torealize thelegitimate objectives ofthat
standard. Forexample, international electrical safety standards applicable tomultiple voltage/frequency
personal computers arefullyadopted astheyarewithout change since these computers aredesigned
forindoor operation atconditions similar tothose prescribed intherelevant international standards.
Safety requirements forlightbulbs orelectric cable which maybeutilized outdoors under highambient
conditions maynotbeaddressed byinternational standards andwarrant aSaudi specific standard.WT/ACC/SAU/13/Add.1
Page20
(b) Saudi Arabia identifies various hazards (e.g.biological, chemical andphysical agents) towhich
exposure byhuman, animal orplant lifecauses adverse health effects. International guidelines such
astheCodex Code forfoodproducts isexamined andadopted ifappropriate orotherwise usedonly
asreference iffound toresult inhigher qualitative adverse effects probability and/or severity. Inthe
latter case,together withthecasewhere theinternational SPSstandardizing bodies havenotprescribed
standards orguidelines fortheparticular hazard, Saudi Arabia reverts tostandards adopted byWTO
Members which havesimilarly prevailing specific conditions, orother advanced WTO Members who
utilize strictscientifically credible riskassessment techniques, choosing thelowest allowable tolerance
fortherelevant hazard. Inverylimited instances allowed byitspresent infrastructure capability, Saudi
Arabia conducts itownscientifically based riskassessment studies suchasshelflifestudies forchilled
meat. Theabove policy isconsistent withArticle 5.7oftheSPSAgreement.
Question 55.
Wenoteintheresponse toquestion 72(WT/ACC/SAU/8) thatthere exist twobodies charged
withthedevelopment ofstandards inSaudi Arabia -SASO andaTechnical Committee.
IfbothSASOandtheTechnicalCommitteedevelopstandards,howarethesestandardscoordinated
between thetwoorganization. How dotheydiffer? Caneither orbothorganizations develop
astandard foranyproduct and/or service?
Reply
Thereply 72ofWT/ACC/SAU/8 hasbeenmisunderstood. ByRoyal Decree, SASO isthe
onlyBody authorized andcharged withdeveloping standards forSaudi Arabia. Thereply outlines two
different approaches tothedevelopment ofstandards within SASO itself: SASO Standards areeither
developed bySASO stafforbyatechnical committee under theauspices ofSASO. Bothapproaches
leadtoaSASO adopted standard upon approval bytheSASO board ofdirectors.
Question 56.
Saudi Arabia hasindicated thatithasbased itsconformity assessment procedures ontheSaudi
ISO9000 series ofstandards andprocedures (reply toquestion 73,WT/ACC/SAU/8).
WenotethatISO9000isasetofgeneric standards which manage thequality control operations
within acompany.
Wewould appreciate acopy ofSaudi Arabia 'sISO9000 standards andprocedures forreview.
Reply
Saudi Arabia 'sconformity assessment procedures involve inspection, testing, typeevaluation
andsurveillance asdefined byISOGuide 2.Inspection isdoneonapre-shipment basisinaccordance
withPSIAgreement. Testing iscarried outbyinternationally accredited laboratories complying with
therequirements ofISOGuide 25.TypeEvaluation andSurveillance (Type Approval) areinaccordance
withtherequirements ofISOGuide 28which requires inspection ofthemanufacturer ’squality control
management system. Compliance ofthemanufacturer withISO9000standards counts towards partial
satisfaction oftheType Approval requirements.WT/ACC /SAU/13/Add.1
Page21
Question 57.
Saudi Arabia states initsreply toquestion 74(WT/ACC/SAU/8), thattesting laboratories and
theircertification isassessed bySASO or"...by recognized body withwhich SASO hasabilateral
mutual recognition agreement".
Could Saudi Arabia please clarify thisstatement? Istheright toenter intoanMRA reserved
solely forgovernment entities?
Reply
Bylarge, nationally recognized authoritative bodies withwhich theremaybeadvantage arising
frommutual recognition aregovernment entities. However, Saudi Arabia doesnotpreclude thecases
where suchbodies maybeprivate enterprises eligible forMRA.
Shelf Life
Weappreciate thevarious concerns expressed bySaudi Arabia tojustify theneed for
mandatory shelfliferegulations (variable temperature conditions, handling andstorage problems
within theKingdom, etc.). However, weseekadditional information regarding theprocess by
which Saudi Arabia establishes shelf lifestandards forfoodproducts.
Question 58.
(a) Wewould appreciate itifSASO would provide theWorking Party withcopies ofshelf-life
studies forbaby food, andcanned fruits andvegetables.
(b) What areSaudi Arabia 'sacceptable levels ofriskforthese standards based onitsanalysis
oftheactual riskinvolved? Please explain thequalitative adverse health effects Saudi
Arabia haseliminated bytheimposition ofitsshortened shelf-life requirements?
(c) Inmany instances theSAG maintains numerous standards related tothesame
product/commodity. Forexample, theSAG currently has23standards related tomeat
alone, such as"Measurement ofpH", and"Total FatContent Determination", etc.,in
addition to8-10general standards related toallfood products such as"Shelf Life,
Labelling, Food Packaging Requirements, Transportation andStorage", etc.Thenumber
andvariety ofindividually published standards bytwoseparate SAG organizations, can
often create unnecessary confusion andimpediments tointernational trade.
Reply
(a) Saudi Arabia follows theCodex Guidelines forshelflifestandards forbabyfood, canned fruits
andvegetables. Asformeats, aTechnical Report bySASO andincooperation withtheMeat Industry
Research Institute ofNewZealand entitled “Product-Life ofDomestic andImported Chilled Sheepmeat
inSaudi Arabia ”,1991 wasissued andacopyissubmitted totheWTO Secretariat.
(b) Please seereply 65below.
(c) Asindicated inthereply toQuestion 55,there isonlyoneSAG Agency issuing standards,
namely SASO. Standards aredistinguished because theyaddresses adistinct product characteristic or
method ofsampling/testing andmayapply horizontally tomore thanoneproduct category. Alistof
standards applicable toeachproduct category isreadily available from SASO Information Centre orWT/ACC/SAU/13/Add.1
Page22
from theICCP Programme Manager Regional orCountry offices thereby eliminating anypotential
confusion
Question 59.
Does SAG intend tointegrate andconsolidate itsproduct standards totheminimum number
necessary?
Reply
Todatethere hasnotbeenademonstrated needtointegrate orconsolidate SASO product
standards. However, positive substantiated suggestions arewelcome bySASO.
(c) Sanitary andphytosanitary measures
Question 60.
InGATT document L/7489, Saudi Arabia indicated thatimports oflivestock, poultry, hatching
eggs, hides, hair,furs,wool, fresh fruits, vegetables, seeds, grains, materials usedasanimal fodder
such asbarley, sorghum andhay,organic fertilizers andagricultural pesticides aresubject to
Ministry ofAgriculture andWater inspection andquarantine.
Could Saudi Arabia confirm, asisstated inparagraph 60ofL/7489 andintheresponse to
question 77inL/7645, thatthese measures areimplemented inorder toprotect human, animal
orplant health?
Reply
Yes.
Question 61.
Asrequested inGATT document L/7645, could Saudi Arabia provide acomprehensive list,by
6-digit HStariff line,ofallcommodities which aresubject toMinistry ofAgriculture andWater
(MAW) inspection andquarantine?
Reply
Products subject toMAW inspection are:
Products subject toAgriculture Inspection bytheMinistry of
Agriculture LaboratoryHSChapter
Beespackages 1
AllFresh Agricultural products 4
Cuttings 6
Ornamental foliage 6
Fresh vegetables 7
Fruits 8
Dates 8WT/ACC /SAU/13/Add.1
Page23
Products subject toAgriculture Inspection bytheMinistry of
Agriculture LaboratoryHSChapter
Seeds 12
Grain andother materials usedasfeedforanimals 23
Pesticides 31
Chemical fertilizers 31
Sowing seeds 32
AllAgricultural pesticides 38
Products subject toAnimal Quarantine HSChapter
Allkinds ofliveanimals (alledible kinds) thatareconsidered legally
eatable1
Allferocious andundomesticated animals 1
Allkinds oflivepoultry andrabbits 1
Allkinds ofornamental birds 1
Allkinds ofornamental fish 3
Hatching eggs 4
Sperm 5
Animal hair 5
Concentrated fodder, vitamins, andmineral salts, etc. 23/9
Veterinary medicine 30/3-4
Veterinary vaccines 30/2
Hides andskins 41
Fursandwool ofanimal origin 43
Question 62.
Could Saudi Arabia provide copies ofthelaws andregulations setting outthecriteria and
procedures forthisinspection andquarantine?
Reply
Please seereply 38ofWT/ACC/SAU/8.
Question 63.
Could Saudi Arabia provide copies ofanyriskassessments upon which these measures arebased?
Reply
Copies arebeing forwarded totheWTO Secretariat (seeWT/ACC/SAU/14).WT/ACC/SAU/13/Add.1
Page24
Question 64.
Asrequested inL/7645, please provide copies ofthelaws andregulations which explain the
purposes ofSaudi Arabia ’slabelling requirements.
Reply
Some ofthestandards explaining theSaudi labelling requirement are:
- Saudi Standard No.573/1994: Instruction Manual forAppliances, Instruments andEquipment;
- Saudi Standard No.1/1995: Labelling ofPrepackaged Foodstuffs.
These twostandards aresubmitted totheWTO Secretariat.
Inaddition, specific labelling requirements arealsoindicated intheapplicable standards. All
available SASO standards canbeobtained from SASO Information Centre inRiyadh.
Question 65.
Inexplaining thedevelopment ofitsshelf-life requirements, Saudi Arabia hasstated that, after
acertain timeperiod, foodproducts "become unacceptable totheconsumer" (L/7645/Add.1).
Could Saudi Arabia describe howitdetermines whether aproduct is"unacceptable tothe
consumer" ifthatdetermination isnotmade inthemarket. Inadopting shelf-life requirements,
areconsiderations other than"acceptability totheconsumer" taken intoaccount (e.g., scientific
assessments ofhealth risks)? Could Saudi Arabia provide examples ofanyrelevant risk
assessments?
Reply
Thephrase "unacceptable totheconsumer" isunderstandably misinterpreted. Theintended
meaning isthatfoodproducts become "unfit forhuman consumption" afteracertain timeperiod, based
onscientific assessment ofhealth risks(notmarket determination) suchas:
- chemical requirements (rancidity, moisture content, heavy metals, permitted foodadditives,
etc.);
- microbiological requirements (salmonella, E.Coli...according tothenature ofproducts).
Question 66.
InGATT document L/7489, Saudi Arabia indicated thataMinistry ofHealth certificate isrequired
inorder toimport certain pharmaceutical products. Could Saudi Arabia provide detailed
information onanyriskassessments upon which thisrequirement maybebased?
Reply
Riskassessment ofpharmaceutical products isbased onscientific dataonquality, safety and
efficacy. Thisisdonetoinsure thatthesepharmaceutical products which contain alcoholic substances,
narcotics, orpsychotropic substances arenotabused.WT/ACC /SAU/13/Add.1
Page25
Question 67.
With respect toregulations established toprotect human, animal orplant health, could Saudi
Arabia explain what steps itisprepared totaketorecognize theequivalence ofWTO Members '
health controls andcertifications? Please provide copies ofanyrelevant lawsorregulations.
Reply
Copies being forwarded toWTO Secretariat (seeWT/ACC/SAU/14).
Question 68.
With respect toregulations established toprotect human, animal orplant health, could Saudi
Arabia explain what steps ittakes toensure thatitsregulations donotarbitrarily orunjustifiably
discriminate among WTO Members ’products? Please provide copies ofanyrelevant lawsor
regulations.
Reply
Saudi Arabia 'sSPSrégime isscientifically based. Riskassessments arecarried outonthe
basis ofinformation supplied byinternational organizations andrisksareassessed forSaudi Arabia ’s
circumstances. There isnoarbitrary orunjustifiable discrimination.
Copies ofrelevant lawsandregulations arebeing forwarded toWTO Secretariat.
Question 69.
With respect toregulations established toprotect human, animal orplant health, could Saudi
Arabia explain what steps ittakes toensure thatitsregulations arenomore trade-restrictive than
required toachieve theappropriate levelofhealth protection? Please provide copies ofanyrelevant
lawsorregulations.
Reply
Regulations aredrawn upinaccordance withscientific principles andarefrequently based on
international norms. They arenomore trade-restrictive thanisnecessary.
Copies ofrelevant lawsandregulations arebeing forwarded toWTO Secretariat.
Question 70.
Could Saudi Arabia provide copies ofanylaws, regulations oradministrative guidelines setting
outtheprocedures tobefollowed, including theperformance ofappropriate riskassessments,
prior totheadoption ofmeasures intended toprotect human, animal orplant health?
Reply
Copies ofrelevant lawsandregulations arebeing forwarded toWTO Secretariat.WT/ACC/SAU/13/Add.1
Page26
Question 71.
InWT/ACC/SAU/6, theresponse toquestion 83indicates thataHealth Certificate isrequired
for"some products (such asfresh meat, chilled orfrozen meat meat)".
Could Saudi Arabia provide acomplete list,by6-digit HStariff line,ofallproducts requiring
theHalal Certificate, theHealth Certificate, andtheCertificate ofOrigin.
HasSaudi Arabia performed riskassessments upon which therequirement forHealth Certificates
forthese products isbased? Could Saudi Arabia identify therelevant riskassessments?
Reply
Halal Certificates andHealth certificates andCertificate ofOrigin arerequired formeatand
poultry [HSChapter 2].Thereason forHalal Certificate istoensure thatanimals areslaughtered
according toIslamic Sharia. Thereason forHealth Certificate intoensure thesafety oftheproduct
andsuitability forhuman consumption.
Question 72.
Concerning theresponse toquestion 38(WT/ACC/SAU/8) (which provides thetranslation of
Decision No.50dated 17/3/1410 A.H.):
Arethere anyregulations orguidelines establishing theprocedures tobefollowed inregulating
these products, including anyrequirement thatmeasures bebased onscientific evidence and
systematic riskassessments?
Reply
Copies ofrelevant lawsandregulations arebeing forwarded toWTO Secretariat.
Question 73.
WillSaudi Arabia provide advance notice toitstrading partners andanopportunity tocomment
onproposed newprocedures fortheperformance ofradiation examination onmaterials listed
in(A&B) prior toenforcement bytheMinistry ofAgriculture?
How willnotification beprovided?
How willSAG evaluate acountry ’sriskforradiation exposure?
WillSAG conduct ariskassessment andanalysis todetermine thevalidity ofradiation testing
forspecific products from specific countries?
Reply
Thelimits ofGamma radiation infood, animal feeds, etc.,andtheprocedures forperformance
ofradiation examination arebased onRoyal Decree No5/B/16001 dated 8/11/1407 AH. Reference
ofmethods formeasuring isbased on(IAEA andAOAC) which arereferences forSaudi Standards
anditsdrafts issued bySASO.WT/ACC /SAU/13/Add.1
Page27
Question 74.
With respect tomeat subject toinspection bytheMinistry ofCommerce (Quality Control
Laboratory):
(a) Dotheregulations allow forrecognition ofdisease-free regions within WTO Member
economies?
(b) How doestheMinistry ofAgriculture determine which diseases totestfor?
(c) Isthere anyrequirement thatriskassessments beconducted todetermine whether import
regulation isrequired?
(d) IstheMinistry ofAgriculture listofanimal diseases andregions inwhich theyexistpublicly
available? Please provide acopy totheWorking Party.
With respect tocontrols onhormones, growth inducers, antibiotics, andanycancerous substances:
(e) Does thisconstitute abanonallimported products which maycontain residues ofthese
substances?
(f) May individual products within these groups befreely imported aslongasthere isno
indication thatsuchresidues mayexist?
(g) Have anyriskassessments beenconducted toidentify specific health concerns associated
withspecific products within these product groups?
(h) What procedures areusedtodetermine whether asubstance maybe"cancerous"?
Reply
(a) No.tofacilitate administration ofcontrols, allregions ofaparticular country receive thesame
treatment.
(b) TheMinistry ofAgriculture receives published information from international bodies, e.g.
WHO,FAOandOIEthatindicatepresenceofparticulardiseasesinparticularlocalities.Thisinformation
isusedtodetermine testing priorities.
(c) TheMinistry isstrongly guided byinternational assessments ofrisksbutmayconduct itsown
riskassessments taking intoconsideration localconditions.
(d) TheMinistry ’slistsaremade available tothelocalimporting community through Chambers
ofCommerce.
(e) No.Indetermining tolerable levels ofresidues, Saudi authorities areguided byinternational
standards suchastheCODEX.
(f) Yes.
(g) Seereply (c)above.
(h) Saudi authorities would follow international norms.WT/ACC/SAU/13/Add.1
Page28
Question 75.
WenotethatinSaudi Arabia 'sstandard "Microbiological Criteria forFoodstuffs -PartI"the
tolerance levelforsalmonella inrawmeat andpoultry hasbeen established atzero.
Could Saudi Arabia please provide thescientific basis forthisrequirement, given thatazero
salmonella tolerance would appear tobeunrealistic inrawmeat andpoultry?
Reply
Refer toreply54(b) above. Codex doesnothaveaguideline foracceptable Salmonella tolerance
level. Thezerotolerance levelisadopted byICHSF (aninternational technical Specification body)
andbyother industrialized countries suchasNewZealand, Canada andFrance. Thequestion whether
zerotolerance isrealistic ornothastobeaddressed tothose international bodies ortotheWTO countries
which haveconducted therespective riskassessment studies.
International Conformity Certification Programme (ICCP) (WT/ACC/SAU/6 andAdd.1)
These questions aresubmitted forresponse inaddition totheinformation required inthe
Chairman ’snoteontheICCP issue from theNovember 6-8meeting oftheWorking Party.
Saudi Arabia hasargued thattheICCP isfully compatible withWTO rules. Members
raised objections tothisprogramme attheWorking Party meeting inMay, prior tothefull
implementation oftheICCP. Inthemonths since, wehavenoted ourcontinued concerns regarding
theWTO inconsistencies ofthisprogramme.
Members expressed concerns thattheGovernment ofSaudi Arabia proceeded with
implementation oftheICCP, particularly inthelightofconcerns raised atourlastWorking Party
meeting andtheunderstanding thatconsultations would beheldontrade-related concerns prior
toproceeding withfullimplementation.
Wecontinue tobelieve thatSaudi Arabia should eliminate theICCP orotherwise bring
theprogramme intocompliance withWTO rules.
Inaddition totheWTO Agreement onTechnical Barriers toTrade (TBT) andtheWTO
Agreement onPre-shipment Inspection (PSI), which Saudi Arabia States aretherelevant
international agreements governing theICCP, GATT Articles III(national treatment), VII
(valuation forcustoms purposes), VIII(feesconnected withimportation), X(transparency) and
theAgreement onImport Licensing Procedures arealsorelevant. TheICCP, aspresently designed
andimplemented, isinconsistent withanumber ofthese GATT/WTO requirements.
Members recognize thechange andimprovement made intheICCP withregard totrade
infoodproducts. Wenotethatthe"optional" coverage offoodproducts helps toalleviate concerns
thattheprogramme would result inadditional restrictive delays andregulations. However, we
believe thatSaudi Arabia canachieve itsstated objective ofensuring asafefoodsupply through
therecognition ofequivalent standards andsystems offoodcontrol incountries thatmeetorexceed
Saudi Arabian standards. Weremain concerned thatthecontinued inclusion offoodproducts
intheICCP could stillresult inadditional burdens anddelays ofexports.WT/ACC /SAU/13/Add.1
Page29
Question 76.
SASO 'sinformational brochure ontheICCP indicates thatCertificate ofConformity should be
obtained prior toshipment "toavoid anyunnecessary delay orriskofrejection attheportof
entry".
Please provide clarification onwhat ismeant by"optional" coverage offoodproducts under the
ICCP.
Reply
Exporter hasachoice ofwhether tousetheProgramme toobtain CoCprior toshipment or
shipdirectly toSaudi Arabia forinspection andtesting byMOC upon arrival atSaudi Ports.
Question 77.
Please provide information onhowpre-shipment certification contributes tofoodsafety.
Reply
Pre-shipment inspection provides added assurance andverification ofdocumentation, health
certificates etc.andalsoensures theintegrity oflabelling, packaging andtransportation.
Question 78.
Could Saudi Arabia provide assurances thattheICCP willnotbeexpanded toinclude additional
foodproducts?
Reply
Thepresent listofregulated foodproducts isbased onthecurrent assessment oftherelevant
health risks. Adrastic variation inconsumer susceptibility tothese health risksandanevaluation of
theeffectiveness ofpre-shipment versus postarrival conformity assurance measures maytrigger motives
foraddition ordeletion ofproducts from thelist.
Question 79.
Could theSAG please explain whether food product shipments willbesubject tothesame
registration, listing andfeecomponents oftheSCCP asother regulated products?
Reply
Similar process applies tofoodproducts butwithmore frequent surveillance, orevidence of
existing surveillance activities.
Question 80.
SaudiArabiahaspreviouslystatedthattheUnitedStatesfoodcontrolsystemandproductstandards
meet, andinsome instances exceed, Saudi Arabian standards.
IstheSAG prepared torecognize theequivalency oftheUnited States system, thereby exempting
imports ofUnited States foodproducts from theICCP/SCCP?WT/ACC/SAU/13/Add.1
Page30
Reply
TheICCPimplementstheprovisionsofTBTArticle2.7byacceptingasequivalentthestandards
ofother Members eveniftheydiffer fromSaudi Arabia ’sown,provided thatthesestandards adequately
fulfil theobjectives oftheSaudi Standards. United States foodstandards thatmeettheabove criteria
arefullyrecognized. However, Saudi standards forfoodproducts incorporate requirements thatmay
notbeaddressed bytheUnited States standards counterpart. Classical examples arelanguage labelling
requirements andHalal Certificate. Inaddition, certain United States foodstandards donotmeet
comparable Saudi standards, e.g.tolerance level forsalmonella inrawmeat andpoultry addressed
under Question 75.Themere existence ofcertain United States foodstandards thatmeetorexceed
Saudi standards onlypartially satisfies requirements oftheSaudi Standards anddoesnotjustify the
generalization thatallUnited States foodstandards meetorexceed Saudi requirements.
Regarding ICCP conformity assessment procedures versus theUnited States Control System,
itisreiterated thatevaluation results oftestreports orcertificates heldbytheproduct through
manufacturer commissioned accredited orSASO approved laboratories arefullyrecognized byICCP
totheextent theydemonstrate compliance withSaudi standards. Tothiseffect, theICCP alsoaccepts
results ofwitnessed testing orevenmanufacturer ’sapproved dataforcertain manufacturers having
highly credible testing facilities, procedures, andquality control systems.
However, thefinalverification andcertification function restswiththeProgramme Manager.
Question 81.
InICCP/SCCP revision 8,itisnoted thatthesatisfactory review offoodshipments carrying a
certificate ofconformity willresult intheissuance ofaSASO counter certificate upon arrival.
Please explain thepurpose ofobtaining acertificate ofconformity ifSASO willissue a
counter-certificate upon arrival.
Reply
Asstated inanswers toearlier questions, thisisnotacounter certificate. Itismerely aletter
ofrelease, inArabic.
Question 82.
Saudi Arabia states thatgovernments should nominate approved testing laboratories totest
conformity toSASO standards. However, wenotethatsome countries donotapprove laboratories
forthetesting offood(andother) products.
Intheabsence ofacertificate ofconformity howwillfood shipments from these countries be
treated?
Reply
SASO andtheProgramme Manager arecontinuously involved intheprocess ofapproving
qualified andaccredited laboratories inallcountries oftheworld toprovide asmuch geographical
coverage aspossible. Manufacturers cannominate newlaboratories forevaluation andapproval by
SASO inaddition tothose nominated bygovernments. Ifanapproved laboratory isnotavailable in
theexporting country orinaconveniently located andaccessible neighbouring country, exporter ofWT/ACC /SAU/13/Add.1
Page31
food products canalways exercise theoption ofdirect shipment toSaudi Arabia subject to
testing/inspection upon arrival.
Question 83.
Saudi Arabia hasindicated thatdomestic goods aresubject tothesame standards andinspection
procedures.
Please provide acopyoftheinformation thatisprovided todomestic suppliers onhowtocomply
withtheinspection andcertification requirements (oracitation). Isthisinformation published
orbywhat means dodomestic producers become aware oftherequirements?
Reply
DomesticallymanufacturedproductsmustsubscribetotheSASOStandardsSystemasacondition
forthegranting oftheirmanufacturing Licence bytheMinistry ofIndustry. Technical representatives
oftheMinistry ofIndustry stationed ineachindustrial cityorcomplex areconstantly involved in
inspection andmonitoring ofthevarious factories anddrawing samples fortesting asrequired toinsure
adherence totheSaudi standards andquality control measures. Theresult isasystem thatcanbe
considered asequivalent toselfdeclaration ofICCP Registered products.
ICCP registered products subscribe toInternational standards ortotheexporting country ’s
ownstandard system which maynotbeequivalent to,orfullysatisfy therequirements oftheSASO
standards. Theselfdeclaration process normally eliminates theneedforpre-shipment testing associated
withthestandards addressed bythedeclaration. Pre-shipment inspection (PSI) andinspecial cases
pre-shipment testing (PST) normally concentrate onassessment ofconformity withtheSaudi specific
requirements notpresent inthestandards towhich compliance isdeclared, andnosuchanalogous
procedure isnecessary fordomestic products.
Random pre-market inspections ofdomestic products (analogous torandom PSIofICCP
registered products) areperformed bytheMinistry ofCommerce, Ministry ofIndustry, andSASO
including sample testing asanadditional requirement compared withICCP procedures. Recently a
committee comprised ofrepresentatives from thethree government agencies wassanctioned for
specifically controlling thedomestic products corresponding totheICCP regulated product categories.
Thecommittee ’staskistoinsure thatjointinspections areuniformly performed attheappropriate
frequency, method andscope. SASO plays animportant roleasamember ininsuring thattheinspection
andtesting procedures arenomore favourable orlessstrict thancorresponding procedures under the
ICCP.
Domestic products bearing SASO quality marks arerandomly inspected andtested about four
times ayear(minimum oftwotimes ismandated) including inspection oftheir quality control
management system (typically ISO9000compliant). Factories thatfailthetestsorinspections areliable
toimmediate temporary shutdown. Theanalogous procedure ofsurveillance applicable toICCP Type
Approved products onlyrequires onceayearfactory audits plusoccasional random pre-shipment
inspections.
Itfollows thatconformity assessment procedures applicable todomestic products areatleast
asstrict ifnotstricter thancomparable procedures under theICCP.WT/ACC/SAU/13/Add.1
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Question 84.
(a) Saudi Arabia hadindicated thatitwillrecognize certification marks onimported products
"when suchmarks areapproved bytherecognized foreign authority". What isarecognized
foreign authority?
(b) What istheprocess forasupplier toensure thatproduct bearing acertification mark
isrecognized bySASO?
(c) What criteria isusedtodetermine whether additional product testing isnecessary?
(d) How doesSAG monitor andapprove Inchcape approved testing laboratories? Arethere
written criteria?
Reply
(a) Recognized foreign authority isanauthoritative body which gives accreditation (formal
recognition ofcompetence tocarry outspecific tasks) asdefined under ISOGuide 2.Generally, they
aregovernment orother nationally recognized bodies ofvarious countries offering multi-disciplinary
laboratoryaccreditationserviceconformingtotherequirementsoftherelevantISO/IECguides.Typically
these bodies aremembers ofILAC orIAF.
Certification marks approved byrecognized authoritative bodies willberecognized subject
toevaluation todetermine thecompliance ofproducts bearing thecertification mark(s)to theSaudi
Arabian standards andconditions.
(b) Recognition forcompliance toSASO standards isperformed under theauspices ofthe
programme. Bycontacting either SASO oraSASO Regional Listing Centre orProgramme Country
Office asupplier canestablish thelevelofcompliance ofaproduct toSASO standards.
(c) Additional testing isdetermined bytheSASO Approved Laboratory based ontheProgramme
Compliance Verification guidelines. Inmost cases these taketheform oftestsforthespecific
requirements which arenotaddressed bygeneric, international standards.
(d) There arenoInchcape approved testing laboratories, assuch. SASO approves alllaboratories
based upon internationally accepted (ISO) criteria, suchasISOGuide 25.Laboratories accredited
bynationally recognized authoritative bodies aregenerally eligible forapproval.
Question 85.
Under theICCP/SCCP, ifSASO hasdetermined thatanother standard isequivalent totheSASO
standard, isthisinformation publicly available sothatallproducers canbenefit?
Reply
SASO hasmade thisinformation available through theProgramme Manager. Allregistrants
intheprogramme areinformed andperiodically updated andsurveyed regarding thestandards that
areapplicable totheproduct category. Anyone seeking thisinformation cancontact theSASO Regional
Listing Centres, Programme Country Offices andSASO offices intheKingdom directly.WT/ACC /SAU/13/Add.1
Page33
National Treatment
Question 86.
Itisnotclearthatunder theconformity assessment procedures oftheICCP thatnational treatment
isprovided forimported products. Given thatdomestic products arenotsubject totheICCP
pre-shipment inspection andconformity assessment procedures, wequestion whether national
treatmentobligationsunderGATTArticleIII.4,WTOPSIArticle2.2andWTOTBTArticle5.1.1
arerecognized.
Weseeclarification thatthesame standards andconformity assessment procedures govern like
domestic products.
Aredomestic products subject tothesame ICCP Guidelines andprocedures? Ifnot,thenplease
explain howdomestic products aretreated differently andwhat procedures govern conformity
certifications performed bySASO.
Reply
Please seereply 83above.
Fees
Question 87.
(a) Saudi Arabia hasstated thatthepre-shipment inspection feesareconsistent withWTO
rules. Thefeesstructure ispresently notinconformity withWTO rules.
Therecital tothePSIagreement states, "that theprinciples andobligations ofGATT 1994
apply tothose activities ofpre-shipment inspection entities that aremandated by
governments...". AsSaudi Arabia hasmandated theprogramme, theGATT provisions
ofArticle VIII onfeesconnected with importation areapplicable toInchcape as
administrator oftheICCP.
TheICCP advalorem pre-inspection feeof5percentofshipment value isnotbased on
"the approximate costofservices rendered", andtherefore isnotconsistent with
Article VIII.1(a)
(b) Wealsonotethattheregistration fee($500 annually) andthelisting ($50perproduct)
raise potential inconsistencies withArticle VIII.
Reply
(a) Feescharged under ICCP/PSI cover actual services rendered toexporters andneither have
anyfiscal purpose norareintended toprovide protection todomestic industries, asmostoftheregulated
products arenotevenproduced inSaudi Arabia.
ThePSIAgreement itselfissilent onthequestion offees.Asameans forconformity assessment
subjecttoTBTprovisions,ICCP’sPSIisunderobligationtofollowinternationalguidelinesandpractices.
Therecitals toPSIAgreement acknowledge thatanumber ofdeveloping country Members
haverecourse topre-shipment inspection. About 30WTO Members haveimplemented PSIschemesWT/ACC/SAU/13/Add.1
Page34
andopted fortheadvalorem feescheme which provides simplicity ofadministration, transparency
andpredictability toexporters. Suchscheme would notpenalize exporters ofsmall shipments norwould
itdiscriminate against exporters from inaccessible countries orcountries withrelatively fewexports
totheimporting Member.
Saudi Arabia willcontinue applying theadvalorem feescheme asthemost internationally
followed practical method forrecovering theapproximate costoftheservices rendered. Under the
ICCP, advalorem isvolume graduated at0.5percent, 0.4percentand0.15percentrespectively
reflecting thelower coststructures achieved athigher economies ofscale.
(b) Theregistration feeisnoted intheguidelines andisacombination feeof$500.00 plus$50.00
foreachIDENTIFIED lineitem. Thisidentification isperformed bytheregistrant inorder toaddress
thevarying nature oftherepresentation oftheproducts being registered. Bytheendofthefirstyear
ofregistration themanufacturer should havereached thestageofeligibility fortypeapproval. IfSASO
Type Approval Licence isnotobtained, registration renewal feesforthesecond yeardrops to$350
plus$35foreachidentified lineitem. Thefeesreflect thecostofregistration totheapproximation
degree possible while maintaining uniformity andareconsistent withGATT Article VIII.
Customs Valuation
Question 88.
Wenotethatunder theFeessection oftheICCP Guidelines, Inchcape assumes theroleofassessing
theaccuracy ofcustoms valuation (paragraph 7.2), andcanrefuse toissue acertificate of
conformity iftheshipment value isjudged tobeunderstated. Howsuchadetermination regarding
theaccuracy ofshipment value istobeconducted isnotaddressed.
GATT Article VIIlaysoutobligations fordetermining product value. Inaddition, theAgreement
onCustoms Valuation andtheAgreement onPSIcontain rules forprice verification.
Aretheprocedures which Inchcape follows forcustoms valuation consistent withthese WTO rules?
Reply
Customs valuation hasnever beenpartoftheprogramme andthereference tounderstated
shipment values hasbeenremoved from theICCP Guidelines.
Unnecessary Obstacles toTrade
Question 89.
Saudi Arabia states thattheICCP ispresumed nottocreate anunnecessary obstacle totrade.
While technical regulations thatareprepared, adopted andapplied forlegitimate objectives and
based oninternational standards arepresumed nottocreate anunnecessary obstacle totrade,
itisthecasethatSASO standards arenotnecessarily based on,orinaccordance with, international
standards.
Under TBT Article 5.1.2, conformity assessment procedures arenottobemore strict than is
necessary toprovide adequate confidence thatproducts conform withtherelevant standard.WT/ACC /SAU/13/Add.1
Page35
Asthestated purpose oftheICCP istofacilitate trade, wequestion whether theconformity
assessment procedures aremore strict than isnecessary, andneedlessly duplicate conformity
assessments conducted byother internationally recognized bodies.
Wealsonotethatunder Article 6oftheTBT, Members areencouraged toaccept theresults of
conformity assessment procedures usedbyother Members, evenwhen theprocedures differ from
their own, provided theprocedures offer anassurance ofconformity withstandards equivalent
totheir ownprocedures.
Saudi Arabia hasindicated inmeetings thatitpresently accepts manufacturers 'self-declarations
ofconformity forsome exporters.
What isthestatus ofthisdevelopment? What arethecriteria usedtodetermine theacceptance
ofself-declarations ofconformity?
There isminimal information onthisaspect oftheICCP contained intheprogramme guidelines.
Weseekclarificationandtransparencyontheprocedurespermittingmanufacturerself-declarations
ofconformity.
Reply
(a) Saudi Arabia 'stechnical regulations areprepared, adopted andapplied forWTO legitimate
objectives asstated inmany replies.
(b) Saudi Arabia adopts international standards wherever applicable (refer toreply 69of
WT/ACC/SAU/8, Section I"Background" ofWT/ACC/SAU/9 andasstated inmany replies.
(c) Thenature,scopeandfrequencyofSaudiArabia’sconformityassessmentproceduresaredirectly
related tothelevelofconfidence inaproduct ’sconformity totherelevant standards.
(d) Saudi Arabia ’spre-shipment inspection isperformed bymember bodies ofIFIAandadhere
strictly toitstechnical andprofessional standards, methods ofinspection andtesting, internal quality
assuranceprogrammesandcodesofpractice.IFIAhasfullyrecognizedWTOPSIAgreementandcomply
withitsprovisionsregardinguniformityofservice,andfees,non-discrimination,transparency,protection
ofconfidential business information, conflicts ofinterest, delays, appeals andindependent review
procedures, etc.
(e) Saudi Arabia recognizes theevaluation results oftests, certificates andquality marks
conducted/issued byaccredited laboratories thereby avoiding unnecessary duplication. (Please see
reply 110ofthisdocument). Thus Saudi Arabia ’sconformity assessment procedures arenotmore
strict thannecessary.
(f) Saudi Arabia doesnotaccept manufacturers 'self-declaration ofconformity foranyexporters
asasubstitute forICCP procedures, since from itsownexperience, selfdeclaration didnotprovide
adequate confidence attheassurance ofconformity.
(g) Selfdeclaration canonlybeaccepted under ICCP either aspartoftheregistration process subject
tocompliance verification through pre-shipment inspection, orthrough theprocedure ofallowing the
manufacturers ofproducts holding SASO Type Approval Licences toissue theirownCertificates of
Conformity forconsignments ofthese products.WT/ACC/SAU/13/Add.1
Page36
Regarding theWTO Import Licensing Agreement
Question 90.
Inchcape hasassumed global responsibility formanaging theICCP, including the"identification
andnomination ofparticipating laboratories andother testing facilities".
How doesInchcape identify participating laboratories? What criteria orprocess doesInchcape
follow? Arethere procedures forevaluating andapproving non-Inchcape facilities? How are
these third party enterprises selected toprovide certifications?
Reply
SASO haswritten tovarious world government authoritative bodies inviting themtonominate
laboratories willing toparticipate intheprogramme. Todate,laboratories havebeenidentified through
internationally ornationally published directories ofaccredited laboratories inaddition tothenetwork
ofexisting qualified laboratories known totheProgramme Manager.
Question 91.
(a) Saudi Arabia hasstated thatunder theICCP, SASO-approved third party enterprises
canprovide conformity certifications. TheICCP Guidelines provide minimal guidance
onthispoint.
Besides Inchcape Testing Services, what other SASO-approved third party enterprises
provide certifications?
(b) HowdoesSASO ensure thatthird party certifiers havethetechnical knowledge ofSASO
standards toprovide suchcertifications?
(c) Under thecertification process (pre-shipment) should testing berequired, theGuidelines
state thatalaboratory "nominated bythePCO" must beused.
Cantheexporter select thetesting laboratory from alistofapproved facilities, ormust
theexporter usethespecific laboratory cited bythePCO?
Reply
(a) Third party organizations cancarry outthirdparty certifications onbehalf ofsuppliers tothe
relevant standards recognized bySASO. These certifications willbeaccepted forusebytheProgramme
Manager indetermining eligibility forSASO Listing (Type Approval).
There isalistavailable fromtheProgramme Country Offices, which details laboratories that
canbeutilized forcarrying outpre-shipment testing (PST). Atpresent there isnoofficial listofThird
Party Certification enterprises fromwhich certifications canbeissued andaccepted bytheprogramme
toconfirm compliance toSASO standards. SASO hasrequested thenominations ofenterprises forthis
function.
(b) TheProgramme Manager isdeveloping guidelines which detail theSaudi-specific requirements
which arenotaddressed bycertifications tointernational andnon-Saudi domestic standards. Eachthird
party certifier, onceapproved andenrolled intheprogramme, willhaveaccess tothese guidelines.WT/ACC /SAU/13/Add.1
Page37
(c) Theexporter isfreetochoose alaboratory from alistofapproved facilities. Testdatafrom
anaccredited laboratory mayalsobeacceptable.
Question 92.
(a) Itappears thatSASO recognizes amanufacturer orimporter declaration ofconformity
toSASO ofother recognized standard. Ifso,thenwhyisadditional testing required for
these products?
(b) Whydotheregistration statements expire afteroneyearrequiring additional testing (and
fees)?
Reply
(a) Declarations ofConformity performed inconjunction withtheregistration exercises byand
large willresult inthesatisfaction ofthetesting requirement forproducts onapre-shipment basis.
There arehowever, certain product categories which require pre-shipment testing regardless ofthe
registration status. These categories typically havebeenchosen based uponeither asuperseding Saudi
Laworstated concern bytheSAG. Please seetheexample inreply 104(a) below.
(b) Thereisnotestingperformedonaperiodicbasis(yearlyorotherwise)tosatisfytherequirements
forregistration. Theregistration isannually renewed inorder fortheprogramme andtheclient to
maintain current status andalsotoprovide atleastanannual refinement oftheproducts compliance
statusastheproductmovestowardsfullcompliancewithSASOstandardsandrequirements.Theminimal
feesforrenewal areinplace tosupport theactivities oftheprogramme.
Question 93.
Under thelisting programme, each factory andfactory quality management system aretobe
inspected annually.
Does Inchcape recognize other quality management accreditation?
Reply
Totheextent thatthequality management accreditation fulfiltherequirements forsurveillance
assetforthbyISOguide 28,theaccreditation arerecognized. However, approval andacceptance of
suchaccreditation andquality management exercises willbedoneonacasebycasebasis.
Question 94.
Itisnoted intheGuidelines that"process related products" willrequire more frequent surveillance.
Please elaborate onthisstatement. How isprocess related defined? How isthefrequency of
surveillance tobedetermined?
Reply
Process related products arethose inwhich natural variability oftherawmaterials requires
closer monitoring andcontrol forquality assurance purposes. Examples ofthiswould befound in
cigarettes, foodproducts, some jewellery, perfumes andcosmetics. Thefrequency ofsurveillance
willbedetermined byexperience oftheconsistency ofquality found.WT/ACC/SAU/13/Add.1
Page38
Question 95.
TheGuidelines note that under thelisting programme, exporters aresubject to"special
considerations" forpre-shipment inspections intheform ofreduced frequency ofinspections and
lower fees.
How are"special considerations" tobedetermined? What criteria doesInchcape usetoaward
special considerations onacase-by-case basis?
Reply
Following Type Approval (i.e.,Listing), pre-shipment inspection isnotrequired onaroutine
basis. Seerevised Comprehensive Procedures andGuidelines.
Question 96.
(a) Does theProgramme Manager decide onthetesting laboratory tobeusedonthebasis
ofalistprovided bySASO, ordoestheProgramme Manager decide atitsowndiscretion?
(b) Inpractice, doesanyshipment ofanICCP regulated product everenter Saudi Arabia
withoutundergoingpre-shipmentinspectiontoassess"compliancewithvisuallyconfirmable
SASO sanctioned requirements"? Ifso,please provide concrete examples.
(c) Inpractice, doesanyshipment ofanICCP regulated product everenter Saudi Arabia
without undergoing pre-shipment testing? Ifso,please provide concrete examples.
Reply
(a) SASO approves alllaboratories authorized totestunder theICCP. Programme Manager or
foreign governments maynominate laboratories forapproval.
(b) Please seereply 95above.
(c) Typeapprovedproductsdonotrequireanypre-shipmenttesting.Inaddition,registeredproducts
maybesubjected tooccasional random pre-shipment testing only.
Question 97.
ForeachICCP regulated product:
(a) please provide thenumber/reference oftheapplicable Saudi standard(s);
(b) please indicate whether thanstandard isvoluntary ormandatory;
(c) please indicate whether there areanyother standards which areconsidered tobethesame
asorequivalent totheSaudi standard.
Reply
Please seeCompliance Verification Procedures.WT/ACC /SAU/13/Add.1
Page39
Question 98.
Ithasbeenstated thattheprinciple ofnational treatment isapplied incontrolling bothdomestic
products andimports. CanSaudi Arabia therefore confirm thattheinspection andsampling of
domestic products iscarried outonabatch-by-batch basis, pre-market, inthewaythatinspection
offoreign products isconducted pershipment?
Reply
Please seereply 83above.
Question 99.
Canregulated products besenttoSaudi Arabia iftheyhave notbeen “registered ”or"listed"
under theSASO Listing Programme (SCCP)?
Reply
Yes,there areseveral routes toentry intotheKingdom which donotinclude registration or
listing.However,theseroutesrequirepre-shipmentinspectionandtestingforeveryshipmentofregulated
product.
Question 100.
Appendix CtotheSCCP deals withprogramme fees. Please explain thereason whytheannual
factory surveillance feeforfactories outside North America istwice thatforfactories within North
America.
Reply
Attheoutset oftheprogramme, itwasdecided thatacentral body forinternational factory
surveillance wasrequired, interms ofconsistency ofservice delivery andcompliance control. This
called fortheuseofanexisting surveillance structure which hadanexisting service feestructure in
place. Steps arebeing taken bytheProgramme Manager toensure afairandequitable feestructure
worldwide.
Question 101.
Weunderstand thatSCCP hasbeendesigned asanalternative totheshipment-by-shipment product
inspection element oftheICCP. Ifthisisso,what doesthe“pre-shipment inspection tocheck
physically verifiable constructional requirements ”consist of,andhowarefeesstructured forthis
activity which isnotpartofthePSIactivity?
Reply
Forexporters toutilize theSCCP totheirmaximum advantage, theprogressive participation
intheprogramme through registration should culminate inType Approval (i.e.fullcompliance) which
allows elimination ofpre-shipment inspection forevery consignment.WT/ACC/SAU/13/Add.1
Page40
Question 102.
Under thepresent scheme, products either areinspected andtested onapershipment basis or
havetoundergo aproduct typeapproval plusfactory quality system inspection. Thisisavery
heavy procedure compared toaccepted international practice. What consideration isSaudi Arabia
giving toreforming itsapproach topermit theintroduction of(a)amanufacturer ’sselfdeclaration
coupled withpost-market enforcement; and/or (b)quality system certification asanalternative
toproduct typeapproval?
Reply
Theprevious system ofselfdeclaration coupled withpostmarket enforcement failed drastically
toprovide assurance ofconformity. Technological andinfrastructure problems associated withSaudi
Arabia ’sinadequate in-country inspection andtesting capabilities andexpertise constitutes impediments
topostmarket enforcement andexposes thesystem toabuses through deceptive practices bycertain
exporters. Inaccordance withTBTArticle 5.4,thiscondition constitutes alegitimate justification for
exemption toMembers from strictly following international standards andguidelines inaMember ’s
conformity assessment procedures.
Nevertheless, pre-shipment inspection isaninternationally accepted practice fullyrecognized
byWTO under PSIAgreement andisparticularly geared totheproblems andneeds ofdeveloping
countries.
Quality system certification ontheother handisonlyanindicator ofenduring consistency
inproduct characteristics anddoesnotaddress theconformity ofproducts torecognized standards and
more specifically toSaudi requirements notpresent ingeneric standards.
Likewise, Type Approval isaninternational practice addressed under ISOGuide 28.Thus
thestatement thatSaudi Arabia ’sconformity assessment procedures needreform isnotjustified.
Registration
Question 103.
Thebenefits ofregistration under theSASO Listing Programme (SCCP) aresaidtoinclude (a)
"waiver ofroutine pre-shipment testing requirements", (b)"streamlined issuance ofthecertificate
ofconformity" and(c)"recognition oftheproduct ’sstatus bySaudi customs officials".
(i) Please describe indetail thepractical effects ofthebenefits listed at(b)and(c)
(ii) How often ispre-shipment testing carried outiftheproducts areregistered?
Reply
(i) Theeffects of(b)isthatCoCissued more quickly. Andtheeffects of(c)arethatgoods cleared
through Customs more efficiently.
(ii) Occasional random pre-shipment testing mayberequired based onthenature oftheproduct.WT/ACC /SAU/13/Add.1
Page41
Question 104.
(a) Isthepre-shipment testing forregistered products, when itiscarried out,thesame as
thatforunregistered products? Ifnot,please detail thedifferences.
(b) How dotherequirements forpre-shipment testing ofregistered products compare with
those forsample testing ofproducts manufactured inSaudi Arabia?
(c) How doesthefrequency ofpre-shipment testing ofregistered products compare withthe
frequency ofsample testing ofproducts manufactured inSaudi Arabia?
Reply
(a) Thepredominant practice isnottorequire testing ofregistered products foreachconsignment.
Thepurpose oftesting certain limited Registered products istodetermine toahigher degree ofsurety,
thatproducts meetthecritical requirements setforthbytheSAG. Anexample ofthisisthemandatory
testingofradioreceiverstoensurethattheradioisoperatingwithinSaudiArabianallowablefrequencies.
Thetesting isthesame forregistered products andnonregistered products, iftesting isrequired.
(b) Foroccasional random pre-shipment testing ofregistered products, please seereply 83above.
Asforproducts ofthecritical categories, Saudi Arabia doesnotmanufacture products ofthistype.
However, should suchdomestic product beintroduced, aprocedure similar tothatapplied onimports
would beimplemented.
(c) Sample testing ofdomestically manufactured products ismore frequent thanthatforICCP
registered products.
Listing
Question 105.
"Regulated products shall beevaluated byaqualified testing laboratory ”.Does theRegional
Listing Centre decide onthetesting laboratory tobeusedonthebasis ofalistprovided bySASO
oronitsownresponsibility?
What ismeant bya"qualified testing laboratory"?
Reply
Tocomply withISOGuide 28,theRegional Listing Centre requires thatlaboratories furnishing
testdatatotheprogramme forthepurpose ofacceptance andproduct compliance comply with
internationally accepted guidelines suchasISOGuide 25.Asupplier cannominate alaboratory that
itisfamiliar withorthelaboratory canbeselected fromalistgenerated bySASO andtheProgramme
Manager. Ifthelaboratory complies withtherequirements ofISOGuide 25orsimilar criteria, then
thetestdatawillbeaccepted forthepurpose ofevaluation bytheRegional Listing Centre orProgramme
Country Office.
Question 106.
Does theRegional Listing Centre accept testresults produced byother internationally recognised
testing organisations inearlier tests? Ifnot,whynot? Ifitdoes, isacceptance ofthese testresults
contingent upon anyconditions?WT/ACC/SAU/13/Add.1
Page42
Reply
Yes, suppliers canprovide testdatagenerated from internationally recognized testing
organizations totheProgramme. Thistestdatawillbeusedduring theevaluation oftheproduct to
theSASO requirements totheextent thatthetestdataaddresses therequirements oftheSASO standard
andSaudi Arabian specific requirements being utilized.
Question 107.
Thebenefits oflisting under theSASO Listing Programme (SCCP) aresaidtoinclude (a)"special
consideration during pre-shipment inspections which maytaketheform ofreduced frequency
orfeesforinspection", (b)"waiver ofroutine pre-shipment testing requirements", (c)"streamlined
issuance ofthecertificate ofconformity" and(d)"recognition oftheproduct ’sstatus bySaudi
customs officials".
(i) Please describe indetail thepractical effects ofthebenefits listed at(c)and(d).
(ii) How often ispre-shipment testing carried outiftheproducts arelisted?
Please bemore specific about theform ofthe“special consideration ”referred tointhe
firstbenefit listed.
(iii) Isthepre-shipment testing forlisted products, when itiscarried out,thesame asthat
forunlisted products? Ifnot,please detail thedifferences.
(iv) How dotherequirements forpre-shipment testing oflisted products compare withthose
forsample testing ofproducts manufactured inSaudi Arabia?
(v) How does thefrequency ofpre-shipment testing oflisted products compare with the
frequency ofsample testing ofproducts manufactured inSaudi Arabia?
Reply
(i) Please seereply 103above pluselimination/reduction ofpre-shipment inspection.
(ii) Normally, never.
(iii) Thetestrequirements, since theyaretaken from thesame setofstandards, arethesame.
Differences mayariseinterms ofhowandwhen thetestsarecarried out.Listed products arenotsubject
tothetesting asarequirement fortheissuance oftheCertificate ofConformity, therefore theshipment
isnothelduppending testresults.
(iv) Please seereply 83above.
(v) Domestically manufactured products aretested more frequently thanICCP listed products
Question 108.
Therelationship between registration andlisting isnotwholly clear.
Islisting mandatory atthetimeoffirstannual renewal ofaregistration, oranoptional step?WT/ACC /SAU/13/Add.1
Page43
Reply
Theregistration process hasbeendeveloped toprovide anavenue forgreater compliance to
Saudi Arabian requirements, ascontained inSASO andSASO sanctioned standards. Iftheactivities
performed during registration result inproducts which comply withSASO requirements thensuppliers
mayselect theListing (Type Approval) option duetothebenefits thatarederived. Listing isnot
mandatory atanytimeduring theprogramme.
Question 109.
Registration isdescribed as"aninitial steptowards fullcompliance withSASO standards". This
implies thatregistration byitself doesnotconstitute anapproval toSaudi requirements. Where
intheregistration process ifatallisadecision made thataproduct infactconforms toSaudi
requirements, orisregistration aform oftemporary 1year acceptance ofmanufacturer 's
declaration ofconformity pending listing?
Reply
Theregistration isinextricably linked totheon-going pre-shipment inspection andtesting
operations oftheprogramme. While performing thepre-shipment inspection, theproducts areinspected
forcompliance tovisually verifiable criteria suchasmarkings, accessibility andthelike.Bytracking
these criteria intheform ofdiscrepancy reports, andatthesame timenotholding uptheflowof
regulated products totheKingdom, wecanmonitor thedegree ofcompliance totheSASO requirements.
On-going surveys andquestionnaires areaddressed totheregistrant andusedtodetermine the
particular levelofstandards awareness andcompliance toSASO standards.
Bymonitoring theresults ofthesurveys, coupled withafocus ontheresults ofdiscrepancy
reports resulting from pre-shipment inspections, wecanefficiently migrate towards fullcompliance
toSASO requirements without disrupting international trade.
Theamount oftimethataregistrant wishes toutilize theregistration process asameans of
demonstrating compliance toSASO requirements isentirely uptotheparticular registrant. Thebenefits
derived fromtheprogramme, vis-à-vis listing versus registration versus direct shipping totheKingdom
must beevident totheparticipant intheprogramme.
Question 110.
Intheresponse toquestion 87(WT/ACC/SAU/8) itisstated that"SASO willaccept inspection
andcertification byforeign inspection andcertification agencies approved bySASO".
Please listtheagencies which have been approved orwithwhich SASO hasabilateral mutual
recognition agreement.
Doesthisresponse mean, asweunderstand itto,thatexporters arenotobliged tousethedesignated
programme manager -ITS-inorder tofulfil therequirements oftheICCP? Ifnot,what isthe
meaning oftheresponse toquestion 87(WT/ACC/SAU/8)?
Reply
Theonlypre-shipment inspection andcertification bodydesignated bySASO towhich exporters
canrevert forissuance ofCertificate ofConformity istheProgramme Manager.WT/ACC/SAU/13/Add.1
Page44
Evaluation results ofinspections andcertificates conducted/issued bySASO approved foreign
agencies arerecognized andaccepted bytheProgramme Manager infulfilment ofitsdutyascertification
body onbehalf ofSASO.
TBTArticle 6.1setsoutthecriteria foracceptance oftheresults ofconformity assessment
procedures intheexporting Member ’scountry asbeing thesatisfaction thatthose procedures offer
asassurance ofconformity withapplicable standards. Except whenever there isvalid reason tothe
contrary, accreditation ofconformity assessment bodies byinternational standardizing institutions would
beconsidered asadequate tosatisfy theassurance criteria. Conformity assessment bodies which are
notaccredited byinternational standardizing bodies mustmeettheassurance satisfaction criteria through
evaluation andapproval byITSandSASO. Products certified byinternationally accredited orSASO
approvedconformityassessmentbodieswillrequireaCertificateofConformityissuedbytheProgramme
Manager toverify theaccreditation status ofthebodyissuing theoriginal certificate andasadocument
recognizable bytheSaudi authorities. Thisdoesnotpreclude ITSfromcarrying outrandom testsand
inspections inorder tosatisfy itself ofthecontinued andenduring assurance ofconformity.
Question 111.
(a) Inrecognising additional overseas certification bodies ascompetent toassess products
toSASO requirements, canyouconfirm thatthecriteria applicable tosuchbodies (for
them tobeeligible) would becompliance withtheISOGuides ortheir equivalent such
astheEN45000 standards applicable tocertification bodies?
(b) Please specify theprecise criteria forrecognition.
(c) Please confirm (orotherwise) thatsuch recognition would constitute analternative to
obtaining product approval through theICCP programme manager ortheSCCP Regional
Listing Centres.
Reply
(a) Yes,totheextent thatoverseas certification bodies candemonstrate thecapability toevaluate
productstotheSASOProgrammerequirements,theywillbeacceptediftheycandemonstratecompliance
totheISOguides andtheirequivalents.
(b) Thecriteria forrecognition doesnotdiffer from similar systems inplace around theworld.
Organizations must benominated andanassessment oftheaccreditation heldbytheparticular
organization willbereviewed. Ifthereview yields positive results thentheparticular organization will
beenrolled asaSASO approved laboratory.
(c) Please seereply 110above.
(d) Trade-related investment measures
Question 112.
Saudi Arabia hasstated thatitdoesnotbelieve itapplies anymeasures orrequirements which
areinconsistent withtheAgreement onTrade-Related Investment Measures (TRIMs), including
themeasures listed intheAnnex tothatAgreement.
Under these circumstances, isSaudi Arabia prepared tostate initsaccession documents thatit
does notmaintain measures thatarenotinconformity with theTRIMs Agreement andwillWT/ACC /SAU/13/Add.1
Page45
therefore notinvoke provisions intheAgreement thatprovide fortheprogressive elimination
ofsuchmeasures within afixed period oftime?
Reply
Saudi Arabia isagreeable totheinclusion inaccession documentation ofareference tothe
factthatitmaintains noprohibited TRIMs.
Question 113.
Regarding theresponse toquestion 18ofWT/ACC/SAU/10, what other types ofconditions must
investors accept inexchange forobtaining alicence orforreceiving investment incentives?
Reply
(a) Thetwogeneral criteria listed intheInvestment ofForeign Capital Regulation are:
- thecapital beinvested indevelopment enterprises otherthanextraction ofpetroleum andmining;
- theforeign capital beaccompanied byforeign technical expertise.
Thedecision toprovide alicence forinvestment offoreign capital ismade onthebasisofthe
factsappropriate tothatparticular case, i.e.theforeign Capital Investment Committee hastoinsure
thattheproject isfinancially andeconomically feasible andthemarket fortheproduct orservice is
notsaturated.
(b) The"foreign technical expertise" termincludes thefollowing:
- technical know-how;
- management know-how;
- depending onproject/sector needs orrequirements.
(c) Developmentprojects,forpurposesundertheForeignCapitalInvestmentLawandtheMinisterial
Resolution implementing thisLaw, aredefined asfollows:
ThefollowingprojectsshallbeconsideredasdevelopmentprojectsforpurposesundertheForeign
Capital Investment Law:
(i) projects forthedevelopment ofmanufacturing industry;
(ii) projects forthedevelopment ofagriculture production;
(iii) projects forthedevelopment ofhealth services;
(iv) projects fortheprovision ofservices;
(v) projects forundertaking ofcontracts.
Each oftheabove mentioned projects aredetailed below:
(i) Projects forthedevelopment ofmanufacturing industry shallmean projects which convert raw
materialsintosemi-finishedorfinishedgoods;orsemi-finishedgoodsintofinishedgoods.Manufacturing
industry mayalsomean processing, packing andwrapping offinished products.
(ii) Projects forthedevelopment ofagricultural production shallmean those projects undertaken
forthedevelopment of:WT/ACC/SAU/13/Add.1
Page46
- agricultural resources: suchastheproduction offruits, vegetables, cereals, grains (excluding
wheat andbarely), cropseeds, green fodder, development ofnurseries andgreenhouses;
- animal andlivestock resources: animal husbandry andlivestock production ofcattle, orrabbits
andproduction ofhoney, milkanddairy products;
- fisheries resources: suchasfishing orconstruction ofartificial tanks andtakes forfishfarms.
(iii) Projects forthedevelopment ofhealth services shallmean those projects undertaken forthe
establishment, maintenance, management andoperation ofhospitals, dispensaries andmedical centres.
(iv) Projects forprovision ofservices shallinclude, butnotnecessarily belimited to,thefollowing:
banking services; hotel andtourist services; training services; operation andmaintenance services;
environmental maintenance andconservation services; marine transport services; computer services;
establishment ofmodern technology workshops; coldstorage; andwellknown restaurants.
(v) Projects forundertaking contracts include, butarenotnecessarily limited tothefollowing:
Contract forCivil Construction Projects:
- distinguished buildings andmedical installations suchas(hospitals, dispensaries, laboratories
andmedical research centres);
- airportbuildingssuchas(passengerterminals,airplanehangers,maintenanceworkshops,control
towers, offices andwarehouses);
- airport runways andairplane parks;
- tunnels;
- water andsanitary drainage works:
(a) water networks: suchaspipelaying andconstruction oftanks, valves andpumping
plants related towater networks andfirefighting systems, etc.,
(b) sanitary drainage networks: suchaspipelaying, building ofcollection rooms and
manholes andre-asphalting works,
(c) water purification plants: suchaspurification, treatment andsterilization stages plants
andrelated auxiliary works,
(d) sanitary drainage purification plants: suchastreatment andsterilization stages plants
andrelated auxiliary works,
(e) sanitary drainage purification plants: suchastreatment andsterilization stages plants
andrelated auxiliary works,
(f) irrigation andsanitary drainage projects: theyinclude irrigation systems, land
reclamation andfarmdevelopment;
- railways: theyinclude railways, underground trains, tramlines, express transport systems
andmonorail trains.WT/ACC /SAU/13/Add.1
Page47
Contracts forElectrical Projects:
- electrical works:
(a) power generation (power generation stations ofallkinds),
(b) power transmission anddistribution networks (airandunderground cables laying,
building ofsubstations andtransformers andother related works);
- communication systems: such astelecommunication systems andradio andtelevision
transmission stations;
- electronic installations: suchasradio andtelevision studio equipment, central andcomputer
equipment andsatellite stations andrelated installations.
Contracts forMechanical Projects:
- air-conditioning andrefrigeration works: theyinclude airconditioning works forbuildings,
coldstorage andfreezing units;
- pumping andfiltration stations: theyinclude construction ofpumping andfiltration stations
andalltheirtechnical accessories.
Contracts forIndustrial Projects:
- construction offactories: suchasbuilding offactories ofallkinds;
- refining andpetrochemical works: theyinclude construction ofrefineries andbuilding oftanks
andallworks related totheconstruction ofpetrochemical installations;
- oilandgaspipelaying: suchaslaying works related topetrochemical installation;
- water desalination: itincludes theconstruction ofwater desalination plants andallrelated
mechanical installation andtechnical accessories.
Other development projects notelsewhere specified inthisresolution maybeconsidered on
therecommendation oftheForeign Capital Investment Committee.
There arenospecific criteria ofapproval ofinvestment inservices. Investment inservices is
covered byForeign Capital Investment Law.
Please, alsoseereply 52above.
Question 114.
Reply23inL/7645/Add.1statesthattheInvestmentofForeignCapitalRegulationrequires"foreign
technical expertise" asanecessary condition ofinvestment. Reply 13inWT/ACC/SAU/8 states
thatthisrequirement "does notnecessarily mean atechnology transfer requirement."
Theresponse isnotprecise. CanSaudi Arabia giveexamples ofsucharequirement asithas
been applied?
Please discuss possible conditions where therequirement would mandate technology transfer?WT/ACC/SAU/13/Add.1
Page48
What isthepurpose ofthisprovision? How hasitbeen applied inpractice?
Reply
Please seereply 113(b) above.
Question 115.
Under what conditions cannon-Saudi, non-GCC natural andlegalpersons carry outimportation
activities?
Reply
Noservice sectors areexcluded fromthescope oftheunified agreement, except localtransport
within eachG.C.C. Member State.
G.C.C. nationals getfullnational treatment, whereas therearecertain limitations onforeigners
asexplained inWT/ACC/SAU/5.
Question 116.
LawfortheProtection andEncouragement ofNational Industry intheKingdom ofSaudi Arabia
(Annex 3AoftheConsolidated List). AdArticle 7:
TheMinistry ofTrade andIndustry shall make recommendations totheCouncil ofMinisters
onmeasures which aredeemed tobeappropriate fortheprotection oflocal production. These
measures could cover, inparticular, measures restricting orbanning foreign imports which are
similar tothelocal production.
DidtheSaudi Arabian Government adopt suchmeasures during thelastyears? Ifyes,inwhich
sectors? Intheopposite case, which sectors could beconcerned bysuchmeasures?
Reply
No,Saudi Arabia hasnot,inrecent years restricted orbanned foreign imports under Article 7(i)
oftheLawfortheProtection andEncouragement ofNational Industry intheKingdom.
Question 117.
Investment ofForeign Capital Regulation (Annex 3CoftheConsolidated List).
(a) AdArticle 2:IftheMinister ofIndustry andElectricity hasrefused togrant alicence
foraninvestment offoreign capital, maytheconcerned foreign investor appeal against
thisdecision? Ifyes,please indicate theprocedure provided for.
(b) According toArticle 7,letter (b),anindustrial oragricultural enterprise inwhich foreign
capital hasbeen invested shall beexempted from both income andcompanies 'taxfor
tenyears ifatleast 25percentofitscapital isheldbySaudi nationals. Inthecaseof
theestablishment ortheexpansion ofindustrial projects, thegranting ofsoftloans from
theSaudi Industrial Development Fund depends likewise ontheSaudi participation (see
paragraph 105,WT/ACC/SAU/4). Actually, companies withforeign shareholders are
eligible forsuchloans -upto50percentoftheproject costiftheSaudi nationals holdWT/ACC /SAU/13/Add.1
Page49
50percentoftheshares. Does theSaudi Arabian Government consider toextend inthe
nearfuture these advantages toenterprises wholly owned byforeign investors?
(c) AdArticle 10.al.1and2:TheMinistry ofIndustry andElectricity may, according to
Article 10,withdraw alicence toanestablishment, putitintoliquidation ordeprive it
ofitsprivileges ifitfailstocomply withtheprovisions ofthepresent Regulation within
acertain timelimit. Arethese three different actions determined byestablished criteria?
Ifyes,which arethey? Does theconcerned foreign investor, incaseofliquidation ofan
establishment, receive theresults ofthisliquidation?
Reply
(a) IftheForeign Capital Investment Committee rejects thelicence application foraninvestment
offoreign capital, theconcerned foreign investor mayappeal thedecision totheMinister ofIndustry
andElectricity.
(b) No,therearenoplans toextend, inthenearfuture, national treatment to100percentforeign
investors withrespect totaxholidays andsoftloans from theSaudi Industrial Development Fund.
(c) Generally speaking, theliquidation isimposed onlyafterexhausting allother lesser measures
inthelaw. Butifliquidation isimposed, foreign investor isentitled toreceive whatever results of
liquidation which therelevant lawsallow.
Question 118.
Paragraph 57:Canyouspecify theeight possible forms ofbusiness companies existing within
theKingdom. Inparticular, please explain thedifference between a"partnership limited byshares"
anda"joint-stock company".
Reply
Eight forms ofbusiness companies arelisted inpara.57ofWT/ACC/SAU/5 andtheCompanies
LawiswiththeWTO secretariat.
Thedifference between ajoint-stock company (JSC) andapartnership limited byshares (PLS)
isasfollows:
(i) Thenumber ofshareholders inaJSCshould beatleast5;thereisnoupper limit. Thenumber
ofshareholders inaPLSisaminimum of2andamaximum of50.
(ii) Theauthorized capital ofaJSCshould beatleastSR10million ifthere isapublic offering
ofshares, andSR2million ifthereisnopublic offering. Moreover, thepaidupcapital should
beatleast50percentoftheauthorized capital. Thecapital ofaPLSshould beatleast
SR500,000 anditmust befullypaid.
(iii) AJSCisestablished under aRoyal Decree ifthegovernment holds ashare initorthe
government gives itagrant. Ifotherwise, aJSCisestablished under aDecree signed bythe
Minister ofCommerce. APLSisestablished byacontract certified bytheMinistry ofJustice
andpublished intheofficial gazette “Umal-Qura ”.
(iv) Theshares ofaJSCarepublicly traded, where astheshares ofPLSarenotpublicly traded
andarenotlisted onthestock exchange.WT/ACC/SAU/13/Add.1
Page50
(e) State-trading practices
Saudi Arabia hasindicated thatSaudi Aramco andGSFMO possess special rights and
privileges andareState trading enterprises.
While weagree withthisassessment, wearealsoconcerned thatgiven themajor State
roleintheSaudi economy, other enterprises operate asSTEs under theprovisions ofGATT
Article XVII. Weencourage Saudi Arabia toreview theoperations ofthese operations inlight
ofArticle XVII requirements.
Wewillhaveadditional comments andquestions afterreview ofmaterial recently supplied.
Question 119.
InWT/ACC/SAU/4, Saudi Arabia states thatalarge partofdomestic wheat production is
purchased bytheGSFMO, andthatinsome instances theGSFMO, "must export wheat which
ispurchased inexcess ofexpected domestic sales ofwheat andwheat flour".
Theresponse toquestion 98inWT/ACC/SAU/8 states thatSaudi Arabia hasnowheat surplus
toexport. Yetthedatasupplied inAnnex 6ofSAU/4 ontheoperations ofGSFMO clearly indicates
significant wheat exports.
Please explain what appears tobecontradictory statements.
Reply
Please seerevised WT/ACC/4.
Question 120.
Please provide clarification astowhether ornottheGSFMO isengaged intheexporting ofwheat
orother commodities tointernational markets, astheabove statement appears tocontradict claims
thattheGSFMO isprohibited from exporting wheat bydecree.
Reply
Yes,recently introduced decree prohibits GSFMO from exporting wheat.
Question 121.
WenotethatSaudi Arabia registered sales ofwheat ontheinternational market asrecently as
1995.
Could Saudi Arabia please explain whether these sales were made byprivate traders orthe
GSFMO?
Ifthesalesweremade bytheGSFMO, please provide information onhowsuchsalesweremade.
Didthesales include anyexport subsidies?
Reply
Nowheat export wasmade byGSFMO.WT/ACC /SAU/13/Add.1
Page51
Question 122.
SaudiArabiahasstatedthatthepossibilityexiststhattheoperationsofGSFMOcouldbeprivatized.
Hasanytimetable been established fortheprivatization oftheGSFMO?
Reply
Atthemoment, there isnotimetable established fortheprivatization ofGSFMO.
VII. INSTITUTIONAL BASE FOR TRADE AND ECONOMIC RELATIONS WITH THIRD
COUNTRIES
Arab League Preferences
Question 123.
AreallArab products noted intheresponse toquestion 21inWT/ACC/8 subject tofulltariff
exemptions forallArab League countries -orareonlyselected products ofthislistexempted
based onbilateral negotiations?
Reply
Yes,allproducts listed inreply 21ofWT/ACC/SAU/8 aresubject tofulltariff exemption.
Question 124.
Asapreliminary phase foraplanned "duty-free Arab market", doesthere existaplanandschedule
fortheformation offreetrade area(orcustoms union) within areasonable time, asrequired
under GATT Article XXIV?
Ifso,please provide thetextofthatplantotheWorking Party. Please elaborate ontimetable
forplanned regional freetrade area.
Reply
Yes,there isaplantoreactivate theFreeTrade Arab Market andaprogramme wassetto
implement itin10years starting from 1998.
Question 125.
Howdoestheproduct coverage ofthecurrent arrangement meettheArticle XXIV rules? Itwould
appear thatmany products arenotincluded inthepreferential system.
Reply
Thelistofproducts granted preferential treatment among theArab League Members isa
preliminary phase towards extending thislistwithin theproposed programme which wasunanimously
approved atthemeeting oftheEconomic andSocial Council oftheArabLeague aiming atestablishing
anArab freetrade area.WT/ACC/SAU/13/Add.1
Page52
Question 126.
Please provide theWorking Party with acopy oftheexplanatory notes toAnnex Iof
WT/ACC/SAU/6/Add.3.
Reply
Theexplanatory notes areincluded inWT/ACC/SAU/6/Add.3/Corr.1
Unified Economic Agreement Between Countries oftheGulf Cooperation Council
(WT/ACC/SAU/6/Add.2)
Question 127.
Article 3oftheUnified Economic Agreement Between theCountries oftheGCC states thatin
addition toaminimum GCC value-added of40percenttoqualify forduty-free treatment when
traded within theGCC, goods must beproduced byfirms whose ownership isnotlessthan
51percentbyGCC citizens.
Thiswould appear toviolate Article XXIV oftheWTO, which requires thatafreetrade area
orcustoms union eliminated duties andcharges onsubstantially alltrade.
InArticle 4oftheUnified Economic Agreement between thecountries oftheGCC, oneofthe
stated objectives oftheuniform customs tariff "shall betheprotection ofnational products from
foreign competition" based ona"uniform minimum Customs tariff".
Wenotethatunder GATT Article XXIV, members ofcustoms unions arenottoraise barriers
tothetrade ofother Members. Specifically, duties andregulations imposed onimports ofnon-GCC
members should notbegenerally higher ormore restrictive thanprior totheformation ofthe
customs union.
What isthestatus oftheestablishment ofauniform GCC external tariff? Please confirm that
theduties andregulations imposed onnon-GCC imports willbedeveloped inconformity with
Article XXIV.
Reply
Most factories inGCC countries would meetthe51percentGCC ownership threshold and
therefore most intra-GCC trade iscovered.
GCC Member States arecontinuing towork onformulation ofacommon external tariff. No
datehasbeenfixed fortheconclusion ofthiswork.
Saudi Arabia canconfirm thatinpreparing acommon GCC external tariff, itwillcontinue
tobemindful ofpotential WTO obligations.
Question 128.
Please explain what ismeant bytheestablishment ofa"minimum" external tariff inthecontext
oftheGCC customs union.WT/ACC /SAU/13/Add.1
Page53
Reply
Aminimum m.f.n. tariff (foritems other thanthose thataredutyfreeinthenational tariffs
ofGCC States) of4percenthasbeenestablished asafirststepinharmonization leading toacommon
external tariff.
Question 129.
Saudi Arabia hassaidthatthedraft Gulf Cooperation Council (GCC) common tariff schedule
isstillunder discussion andwould belimited onlytoanomenclature forclassification ofthegoods
without proposing actual customs dutyrates. Could Saudi Arabia advise howthese discussions
areprogressing? When isthefinal agreement onrates ofcustoms duty(including transitional
arrangements) expected tobeachieved? Wewould begrateful fordetails ofthecommon tariff
when itisagreed.
Reply
Itispremature tocomment onthedetails oftheGCC common schedule atthepresent since
noagreement hasbeenreached yet.Once anagreement isreached, itwillbeannounced.
Question 130.
Willthecommon external tariff cover tariff lines corresponding tosubstantially allofSaudi
Arabia 'simports from theworld? What percentage ofSaudi Arabia 'stotal imports from the
world arecovered bytariff linesaffected bytheGCC common tariff? What tariff linesarenot
covered bythecommon tariff? Areexceptions tobeallowed under thecommon tariff forindividual
GCC members? Ifso,could details oftheaffected tariff lines foreachcountry beprovided?
Areexceptions temporary andinaccordance withspecific phase-out periods?
Reply
Please seereply 129above.
Question 131.
Willtheformation oftheunified customs tariff result inanincrease ordecrease inSaudi Arabia 's
tariff rates?
Reply
Please seereply 129above.
Question 132.
Howwilltheformation ofthecommon tariff schedule affect Saudi Arabia ’sability toundertake
tariff negotiations inthecontext ofitsWTO accession?
Reply
Please seereply 129above.WT/ACC/SAU/13/Add.1
Page54
Question 133.
Please listtheproducts bytariff heading which arecovered bytheAgreement?
Reply
Please seereply 129above.
Question 134.
Please listtheproducts bytariff heading which benefit from preferential trade under the
Agreement?
Reply
Please seereply 129above.
Question 135.
Please listtheproducts bytariff heading whose trade isfullyliberalised under theAgreement?
Reply
Please seereply 129above.
Question 136.
Please listtheproducts bytariff heading which arenotcovered bytheAgreement?
Reply
Please seereply 129above.
Question 137.
Please listtheproducts bytariff heading which donotbenefit from preferential trade under the
Agreement?
Reply
Please seereply 129above.
Question 138.
Please listtheproducts bytariff heading whose trade isnotfullyliberalised under theAgreement?
Reply
Please seereply 129above.WT/ACC /SAU/13/Add.1
Page55
Question 139.
Please provide acopyandexplanation ofthepreferential rules oforigin relating toGCC trade.
Reply
Please seereply 129above.
Question 140.
Given thattheGATS Agreement didnotexistatthetimeoftheoriginal notification oftheUnified
Economic Agreement oftheGCC, when doSaudi Arabia anditsGCC partners intend tonotify
thatAgreement under Article VoftheGATS?
Reply
Thisquestion involves allGCC partners, fourofwhich arealready WTO Members.
Question 141.
Regarding theresponse toQuestion 184inWT/ACC/SAU/6, please confirm whether ornotgoods
intransit through aGCC country andultimately destined foranother GCC country payimport
dutyonlyonce.
Reply
Please seereply 129above.
IV. POLICIES AFFECTING TRADE INGOODS
4. Policies Affecting Foreign Trade inAgricultural Products
Annex AofDocument WT/ACC/SAU/6
Question 142.
Weappreciate thatSaudi Arabia submitted itsagricultural support schedule andwerecognize
theefforts thatwent intopreparing thisdocument. OneMember notes thatthere appear tobe
someproblemsinWT/ACC/SAU/6.Werealizethatdomesticsupportcalculationsarecomplicated,
butbelieve thattheproblems canberesolved through technical assistance andweencourage Saudi
Arabia tofollow WT/ACC/4 closely regarding theappropriate methodology.
Wenotethatanexport subsidy table wasnotincluded inWT/ACC/SAU/6. Weinterpret this
tomean thatSaudi Arabia intends tobinditsexport subsidy commitment atzero; wecommend
thisverypositive steptoward trade liberalization.
InWT/ACC/SAU/6, Saudi Arabia usedthebaseperiod 1986-88. WT/ACC/4 clearly states that
themost recent 3-year period beused when calculating domestic support andexport subsidy
commitments. Welookforward toreviewing datafor1993-95 inSaudi Arabia ’sagricultural
schedule.WT/ACC/SAU/13/Add.1
Page56
Finally, wewould appreciate having additional detailed descriptions ofcertain measures included
inthesupporting tables. Such information willmake iteasier forMembers toanalyze Saudi
Arabia ’sAMS offer.
Reply
Please seerevised WT/ACC/4 information circulated inWT/ACC/SPEC/SAU/1.
Specific Comments onTables:
Question 143.
Asoutlined incolumn twoonsupporting tables 1and2,Member Countries would benefit from
adescription ofthemeasures inplace foritems under the"Green Box" anditems under "Measures
exempt from thereduction commitment duetospecial anddifferential treatment". Itisdifficult
toascertain what typeofprogrammes arecurrently ineffect andwhether theyshould beexempted
from thetotalAMS calculation.
InDS:2, wewould appreciate anexplanation of"opportunity costforagricultural loans". Please
explain howthis"opportunity cost" iscalculated, including itssignificance. Also, wedonot
understand how"Bad Debts forAgricultural Loans" could beconsidered aninvestment subsidy
generally available toagriculture.
InSupporting Table DS:4, please fillintheappropriate column (column 2or3)forproduct-specific
AMS. These numbers should come directly from DS:5, 6,and7.Again, there should beonly
oneproduct-specific amount calculated foreachcommodity based ontheaverage baseperiod.
Wenotethatthere arenosupporting tables for"Feed (corn andsoyabeans)" or"Other Product",
yetSaudi Arabia hascalculated anAMS forthese groups. These supporting tables must be
provided toinclude these products inyour AMS calculations.
Saudi Arabia hasincluded "Opportunity Costs forLoans" initstotalAMS calculation. However,
inSupporting table DS:2, Saudi Arabia claimed thatthisprogramme wasexempt from reduction
commitments. Iftheprogramme isexempt from reduction commitments itshould beincluded
inthetotalAMS calculation.
InSupporting Table DS:5, please explain whylocalandimported barley aredifferentiated. Could
Saudi Arabia please explain howthere could bedomestic support foranimported commodity?
Inaddition, please calculate anaverage totalmarket price support foreachcommodity inDS:5.
There should beoneprice support amount foreachcommodity based ontheaverage 3-year period
of1993-95. Theoneprice support amount foreach commodity should betranscribed into
Supporting Table DS:4 under column 2.
Reply
Please seerevised WT/ACC/4 information circulated inWT/ACC/SPEC/SAU/1.
Question 144.
InSupporting Table DS:6, theentire table needs tobefilled out. Please show howyouarrived
atthefinaltotaldirect payment amount. Thedirect payment amount fordairy andpoultry shouldWT/ACC /SAU/13/Add.1
Page57
betranscribed intoSupporting Table DS:4 under column 3.Currently, itappears thatdairy
andpoultry have notbeen included intable 4.
Saudi Arabia indicates intable7,thatother product-specific support isnil.However, insupporting
table 4,Saudi Arabia notes thatother product-specific support is89.31 for1986; 42.40 for1987;
and33.92 in1988. Please explain thisdiscrepancy.
Reply
Please seerevised WT/ACC/4 information circulated inWT/ACC/SPEC/SAU/1.
Question 145.
InSupporting tableDS:9, itwould behelpful toexplain thenature ofthemeasure "engines, pumps,
andAgricultural machinery". Isthemeasure aninput subsidy, credit, orother financial input
assistance? Also, please explain howthetotalnon-product-specific support incolumn 6wasderived
byfilling intherestoftheapplicable columns inthetable.
Reply
Please seerevised WT/ACC/4 information circulated inWT/ACC/SPEC/SAU/1.
Question 146.
WenotethatinDS:4 thecurrent total AMS wasnotcalculated. Column 4should contain an
average value matched uptoeachmeasure incolumn 1.Alloftheamounts incolumn 4should
becalculated toarrive atthecurrent totalAMS.
Saudi Arabia hasprovided domestic support information fortheperiod 1986-88. Information
relating tothemost recent representative three yearperiod should beprovided.
Reply
Please seerevised WT/ACC/4 information circulated inWT/ACC/SPEC/SAU/1.
Question 147.
Does theexchange rateusedinthesupporting tables represent anaverage during the1986-88
period oramore recent representative period? WillSaudi Arabia beexpressing itscommitments
inUSdollars?
Reply
Please seerevised WT/ACC/4 information circulated inWT/ACC/SPEC/SAU/1.
Question 148.
Supporting table DS:5 (market price support) doesnotindicate what external reference prices
havebeenusedincreating theprice gap(forexample, istheexternal reference price incolumn 5
forwheat aUnited States 'f.o.b. export price).WT/ACC/SAU/13/Add.1
Page58
Reply
Please seerevised WT/ACC/4 information circulated inWT/ACC/SPEC/SAU/1.
Question 149.
Opportunity costs forloans totheagricultural sector appear tobeincluded inboth theAMS
calculation (asnon-product specific support) andwithmeasures exempt from reduction onthe
basis ofspecial anddifferential treatment (i.e.included inboth supporting table DS:4 and
supporting table DS:2). Wewould suggest thatthisassistance would bemore appropriately
excluded from theAMS calculations andmore appropriately included under investment aidsin
thegreen box.
Reply
Please seerevised WT/ACC/4 information circulated inWT/ACC/SPEC/SAU/1.
Question 150.
Weseekclarification ontheinclusion ofmarket price support forimported barley intheAMS
(Supporting Table DS:5).
Reply
Please seerevised WT/ACC/4 information circulated inWT/ACC/SPEC/SAU/1.
Question 151.
Thenon-exempt direct payments ondairy andpoultry (Supporting Table DS:6) have notbeen
included inthecalculation ofthetotalAMS (Supporting Table DS:4). Weseekclarification that
support forthese products istherefore deminimis.
Reply
Please seerevised WT/ACC/4 information circulated inWT/ACC/SPEC/SAU/1.
Question 152.
Weassume that"engines, pumps andagric. machinery" listed inSupporting Table DS:9 is
non-product specific AMS support (Supporting Table DS:9 appears tobeincorrectly headed and
should readasnon-product specific AMS support) andisalsodeminimis. Inthislatter case,
itisalsonotclear what theexact nature ofthesupport is.
Reply
Please seerevised WT/ACC/4 information circulated inWT/ACC/SPEC/SAU/1.
Question 153.
Onexport subsidies, wewould expect Saudi Arabia tosubmit astatement totheeffect thatit
doesnotmaintain anyexport subsidy listed inArticle 9.1oftheAgriculture Agreement.WT/ACC /SAU/13/Add.1
Page59
Reply
Saudi Arabia hasindicated thatitdoesnotconsider thatitmaintains export subsidies asdefined
inArticle 9.1. Allagricultural subsidies areincluded intables providing dataondomestic support
initsrevised response toQuestionnaire WT/ACC/4.
Question 154.
With reference toSupporting Table DS:6 (annexed toWT/ACC/SAU/6), thefigures related to
Dairy products andPoultry products onthistable refer to"Total payment". Inthenewtables
thatSaudi Arabia willprovide ondomestic support (with amore recent period), would itbepossible
tohavemore information onwhatkindofpayments iscovered bytheexpression "Total payment"?
Reply
Please seerevised WT/ACC/4 information circulated inWT/ACC/SPEC/SAU/1.
(e) Internal policies
Question 155.
Please describe indetail thesystem offeescharged toloanrecipients andexplain howSaudi Arabia
intendstoincludethecostofprovidingloans,includingforegoneinterestpayments,initscalculation
oftotaldomestic support?
Reply
Please seerevised WT/ACC/4 information circulated inWT/ACC/SPEC/SAU/1.
Question 156.
Inthereply toQuestion 103inWT/ACC/SAU/6, Saudi Arabia hassaidthatitdoesnotconsider
theprovisions oftheICCP relating toinspection ofagricultural products tobeasanitary and
phytosanitary (SPS) measure.
Does Saudi Arabia consider thatitwillhave anyproblem inimplementing theSPSAgreement
infullfrom thedateofaccession andwithout recourse toanytransition period?
Ifyes,please specify theproblems anticipated andlistthemeasures thatwould havetobetaken
toresolve these problems?
Reply
No,Saudi Arabia willnothaveproblem inimplementing theSPSAgreement.
Question 157.
Further totheresponse toquestion 111inWT/ACC/SAU/6, thebasic by-laws ofGSFMO
apparently would allow ittobeprivatized. DoesSaudi Arabia haveanyplans toprivatize GSFMO?WT/ACC/SAU/13/Add.1
Page60
Reply
TheSaudi Government willstudy theprivatization ofGSFMO.
Question 158.
Saudi Arabia hassaidthatGSFMO doesnotexport wheat atpresent. IsSaudi Arabia willing
totakethecommitment nottoexport anywheat infuture through theGSFMO?
Reply
GSFMO hasnoplans toexport wheat inthefuture. Itisdebarred fromexporting bydecree.
Question 159.
Further totheresponse toquestions 130and149inWT/ACC/SAU/6, wearelooking forward
toreceive acopy ofSaudi Arabia 'srevised (WT/ACC/4-type) document ondomestic support
programmes, based onarecent 3yearperiod, aspromised bySaudi Arabia intheWorking Party
on8November. Itisnevertheless alsoimportant forustoknow howapossible newSaudi Arabian
agricultural policy willlooklike.Wewould therefore liketohavemore information, atleaston
thetimetable forthecompletion ofthework bytheMinisterial Committee onthisimportant task.
Reply
TheMinisterial Committee hasnotimetable forthecompletion ofitsreview. Anyconclusions
reached willbereleased following thecompletion ofitswork.
Question 160.
Wewould liketoknow ifagricultural products other thanwheat flour receive consumer subsidies
(responses toquestions 137and138inWT/ACC/SAU/6)?
Reply
Noother agricultural products, aside from wheat flour, receive consumer subsidies.
V. TRADE-RELATED ASPECTS OFINTELLECTUAL PROPERTY RIGHTS
1. General
Question 161.
Wehavereviewed thedocumentation provided bySaudi Arabia forthismeeting intheprotection
ofintellectual property. Wewillreceive further information inresponse toquestions tabled earlier,
aswellascopies ofSaudi Arabia ’sIPRlawsforWorking Party review.
Wethink itisclear from itssubmissions andother statements inthisforum thatSaudi Arabia
iscommitted tothetaskofprotecting intellectual property aspartofitsstrong commitment to
amarket-based economic system andanopen import market. Itshould alsoberecognized that
theGovernment ofSaudi Arabia has,inrecent years, taken steps tobetter protect intellectual
property which have been encouraging.WT/ACC /SAU/13/Add.1
Page61
Now, aspartofitsaccession totheWTO, Saudi Arabia willjoinother WTO Members inthe
commitment toprovide adequate andeffective protection andenforcement ofintellectual property
rights under theAgreement onTrade-Related Aspects ofIntellectual Property Protection.
Based onourinitial review, webelieve atthistimeSaudi Arabia ’sintellectual property régime
fallsshort ofthestandards setintheWTO TRIPS Agreement. There aredeficiencies inSaudi
Arabia ’spatent, copyright andtrademark régimes which arenotfully consistent withTRIPS.
Thepreliminary analysis indicates thatthemost significant deficiencies appear intheareas of
patents andcopyrights.
Intheareaofpatents, Saudi Arabia ’spresent lawappears toprovide patent protection onlyfor
aterm of15years, notthe20years provided forintheTRIPS Agreement. Actual product
protection isdifficult toobtain because sofewpatents arebeing granted, andthere arecompulsory
licensing requirements forproducts thatarenotmanufactured inSaudi Arabia within fouryears.
Intheareaofcopyrights, Saudi Arabia ’s1989lawalsolacks some keyTRIPS provisions. Saudi
Arabia ’slaws have notbeen amended toreflect itsobligation intheUniversal Copyright
Convention. Inaddition, theprovisions ofthisConvention donotprovide protection forsound
recordings, which areamajor focus ofourIPRconcerns intheSaudi Arabia market .
Atthistime, Saudi Arabia hasnotyetjoined theBerne, Paris, orGeneva Phonograms Conventions.
Wethink thatmembership insuch multilateral intellectual property agreements demonstrates
astrong commitment toprotection andsupports localenforcement. Under current circumstances,
webelieve thatforeign works areatalegal disadvantage intheSaudi market inprotecting their
intellectual property rights.
Other deficiencies include thefactthatthere arenolaws thatprotect broadcasts andsatellite
transmissions, andthattheterm ofprotection foraudiovisual works is25years, not50years
ascalled forintheTRIPS Agreement.
Saudi Arabia 'slawsalsoappear tolacksufficient legalpenalties todeter piracy, e.g.,substantial
fines orprison sentences. Ourownexperience indicates thatIPRenforcement isaproblem for
Saudi Arabia. Wewould liketoseeamore consistent andcontinuous effort toenforce current
lawsandtostrengthen them.
Withrespecttotrademarkprotection,inordertobeTRIPS-consistent,SaudiArabiashouldprotect
well-known marks whether ornottheyareregistered inSaudi Arabia. Protection ofwell-known
marksshouldextendtoabroadscopeofgoodsandservicesandshouldallowownersofunregistered
well-known marks topursue civilandcriminal remedies against infringing andcounterfeit uses
oftheir marks. Owners ofunregistered well-known marks should alsohave theopportunity to
oppose orcancel aconfusingly similar mark registered byanother.
Aswenoted before, weareencouraged bytheefforts undertaken bySaudi Arabia toreduce piracy
inanumber ofareas. Weremained veryconcerned, however, thatwhile some efforts havebeen
made tostem video andsound recording piracy, computer software piracy isstillrampant
throughout thecountry.
ItisourviewthatSaudi Arabia should takeimmediate steps toaddress these problems, correcting
theidentifieddeficienciesduringtheaccessionprocess,andcommittofullimplementationofTRIPS
without transition upon accession.WT/ACC/SAU/13/Add.1
Page62
Asafirststep, weneedmore definitive information about current plans tobring Saudi Arabia 's
lawsintolinewiththeAgreement, bothinterms ofnorms andenforcement measures. Wevery
much lookforward toworking withtheSaudi Arabian government toward theagreed goalof
conformity withTRIPS obligations.
(a) During various presentations attheSecond Working Party Meeting onSaudi Arabia ’s
régime fortheprotection ofintellectual property, Members outlined where theybelieve
Saudi Arabia isnotcurrently inconformity withtheWTO Agreement onTrade-Related
Aspects ofIntellectual Property Protection (TRIPS).
Inlightoftheconcerns andquestions expressed inthese presentations, could Saudi Arabia
please listprecisely which provisions oftheWTO TRIPS Agreement arenotcurrently
being observed orimplemented initsrégime, indicating what Article oftheTRIPS
Agreement isinvolved andwhat provision ofSaudi Arabia 'slaws?
(b) InitspresentationattheSecondWorkingPartymeeting,thedelegationsnotedthefollowing
areas where thelegalprovisions orimplementation ofSaudi Arabia 'scurrent régime for
theprotection ofintellectual property rights appears tofallshort oftheprovisions ofthe
WTO TRIPS Agreement:
- duration ofpatent protection;
- protection ofplant varieties;
- length oftimebefore compulsory licensing andworking requirements areapplied;
- protection forsound recordings andaudiovisual works;
- protection forbroadcasts andsatellite transmission;
- explicit protection forcomputer software programs;
- implementation ofArticles 1-21oftheBerne Convention; and
- theprotection ofwell-known marks.
Wewould appreciate adetailed description bySaudi Arabia foreachofthese eight areas
astohowSaudi lawatthistimedoes, ordoesnot,fully comply withtheprovisions of
theWTO TRIPS Agreement, citing theTRIPS Article andprovision ofSaudi Arabia 's
lawsinvolved.
(c) What specific measures isSaudi Arabia nowtaking toaddress theproblems listed inthe
response to(a)andtothelistofissues in(b),e.g.,toupgrade orchange lawsorregulations
tobring therégime intoWTO conformity?
(d) What specific additional measures doesSaudi Arabia propose totakenext, andhowlong,
doesSaudi Arabia contemplate making these changes willtake?
Wewould appreciate that, initsresponses to(c)and(d),Saudi Arabia include any
timetable ithasfordrafting andsubmitting amendments forofficial approval and
implementation tocomply withtheWTO TRIPS Agreement.
Reply
(a) Thereview oftheWTO conformity ofSaudi IPlawisnotyetcomplete. However, itseems
thatthere aresome areas ofincompatibility thatwillneedtoberectified either through amendment
ofexisting legislation orenactment ofnewlaws. Itwillalsobenecessary tointroduce theadministrative
machinery toensure enforcement toTRIPS standards.WT/ACC /SAU/13/Add.1
Page63
Atentative listofareas ofincompatibility withrespect topatents:
TRIPS PATENT LAW
27(1) 25,34
31(B) 34
31(C) 36,42
31(F) 36,39
31(L(2)) 35
33 27
Regarding industrial designs, plantvarieties andlayout designs, noregulations forprotection
arenowavailable.
(b) Duration ofpatent protection. TRIPS requires aduration 20years from filing (Article 33).
Patent lawincludes aduration of15years fromgrant, withapossible extension of5years (Article 27).
Itisclear that there isnoconformity. Please refer also toReply 17ofdocument
WT/ACC/SAU/6/Add.3.
Protection ofplantvarieties. TRIPS require protection ofplantvarieties (Article 27(3)). Plant
varieties arenotcurrently covered byPatent Law. Please refer alsotoReply 16ofdocument
WT/ACC/SAU/6/Add.3.
Length oftimebefore compulsory licensing andworking requirements areapplied. TRIPS
requires thegranting ofcompulsory licensing (CL) noearlier thanthree years from patent date
(TRIPS 2(1), Paris 5(a)(4)). Patent Lawallows thegranting after2years form patent date, witha
possibility ofextension oftwoadditional years (25). Itisclearthatthere isnocomplete conformity.
Question 162.
InSeptember 1996additional questions oncopyright andrelated rights, trademarks, geographical
indications, industrial designs, patents, plant varieties, layout designs ofintegrated circuits and
enforcement were submitted totheWTO Secretariat. When willSaudi Arabia beinaposition
toanswer these questions?
Reply
These questions were replied toinWT/ACC/SAU/8 andWT/ACC/SAU/10.
Question 163.
Inseveral instances Saudi Arabia stated thatallnecessary changes toSaudi Arabian lawwillbe
introduced tocomply withitsinternational obligations. Itisourunderstanding, thatsome draft
lawsalready existbuthave notyetentered intoforce. Could theGovernment ofSaudi Arabia
listthem, explain their main elements andthedelays fortheir entering intoforce?
Reply
AdraftIndustrial Design Lawisnowbeing reviewed forTRIPS consistency.
Forlayout design andplant varieties, there isnoregulation forprotection yet. Please see
replies 16and18ofWT/ACC/SAU/6/Add.3.WT/ACC/SAU/13/Add.1
Page64
Question 164.
Saudi Arabia iskindly requested tore-present alltheinformation ithasalready provided todate
onIntellectual Property Rights, inasingle consolidated document thatfollows theformat ofthe
relevant partofWT/ACC/1. Thiswillconsiderably facilitate thework oftheWorking Party
inidentifying theoutstanding issues.
Reply
These documents arealready withtheWTO Secretariat.
2. Substantive Standards ofProtection
(a) Copyright andrelated rights
Question 165.
Could Saudi Arabia describe fortheWorking Party theprovisions ofArticle 7oftheCopyright
Lawconcerning therights ofthecopyright owner, including anyexceptions orlimitations tothose
rights?
Reply
According ofArticle 7oftheCopyright Law, therights ofthecopyright are:
- toattribute hiswork tohimself andtoward offanyinfringements ofhisinterest inthework;
- tooppose anyalteration, distortion, amendment ormodification ofhiswork;
- topublish, record, offer, transfer, translate hiswork, andtodecide alltheconditions and
limitations inthatrespect;
- tomake anymodifications ordeletions inhiswork ashedeems fit;
- towithdraw hiswork ofartfrom circulation;
- tofinancially exploit hiswork inanylegally admissible form.
Theexceptions orlimitations oftherights are:
- copying, translating, quoting thework ofartforuser’spersonal andprivate use;
- including, paragraphs fromtheprotected workinanother workprovided theparagraphs
areattributed totherightholder;
- including paragraphs fromarticles innewspapers andmagazines inpress summaries,
subject toattribution totherightholder;
- using theprotected work bywayofillustrations inteaching;
- copying orpublishing current political, economic, religious articles published in
newspapers ormagazines provided thatthesource andthename oftheauthor is
mentioned;
- reproducing speeches, lectures andlegalproceedings, andthelike,delivered inpublic
andcarried bymass media, subject toattribution oftheauthor;
- presenting, performing oracting thework ofart,afterithasbeenpublished, ina
society, cluborschool provided theperformance oracting doesnotprovide financial
return;
- projecting orplaying awork ofart,afterithasbeenpublished, bymusical bands of
theArmed Forces, thebands oftheStateorofpublic corporation provided thatthere
isnofinancial return.WT/ACC /SAU/13/Add.1
Page65
Question 166.
Could Saudi Arabia explain inmore detail (than inits"consolidated list"dated 2August 1996)
themain elements ofitscopyright protection andrelated rights, including theexceptions tothe
exclusive copyright?
Reply
Please seereply 165above.
Question 167.
How doesSaudi Arabia ’slaw protect foreign works firstpublished outside Saudi Arabia by
non-Saudi Arabians?
Reply
Theprotection offoreign intellectual works firstpublished outside Saudi Arabia bynon-Saudi
nationals isgoverned bybilateral agreements ormultilateral agreements towhich Saudi Arabia and
thecountry concerned aremembers.
Question 168.
Once Saudi Arabia hasbecome aMember ofWTO, howwillworks beprotected thatexisted
before Saudi Arabia ’saccession?
Reply
These works willbegiven protection forthefulltermadmissible under TRIPS Agreement.
Forexample, Saudi Arabia iscommitted toprotect works published before theKingdom joined the
Universal Copyright Convention (UCC).
Question 169.
Saudi Arabia states inits"consolidated list"thatitwillintroduce thenecessary changes inSaudi
Arabian lawtomeet therequirements oftheTRIPS Agreement.
Reply
Yes,itwould bedonebuttheKingdom willneedatransition period toimplement theTRIPS
Agreement.
Question 170.
Could Saudi Arabia listthese shortcomings (beyond those already mentioned intheconsolidated
list)? What isthetimeframe forsuchchanges? Could Saudi Arabia provide draft texts?
Reply
Thetimeframe forsuchchanges willbeinaccordance withtheterms ofaccession tobe
negotiated. Please alsoseereply 161above.WT/ACC/SAU/13/Add.1
Page66
Question 171.
Indocument WT/ACC/SAU/6/Add.3 Saudi Arabia states thatitslawconforms tomostprovisions
ofArticle 9to14oftheTRIPS Agreement. Could Saudi Arabia explain where itseesthe
shortcomings?
Reply
Please seereply 161above.
Question 172.
Please explain howSaudi Arabia willcomply withArticles 1through 21oftheBerne Convention
(1971) andtheAppendix thereto asrequired byArticle 9oftheTRIPS Agreement. Theanswer
toQuestion 122indocument WT/ACC/SAU/8 isnotclear tous.
Reply
TheKingdom ofSaudi Arabia willamend itscopyright law,asnecessary, oranappropriate
timetoimplement TRIPS Articles 9to14.
(b) Trademarks, including service marks
Question 173.
What arethecircumstances under which theregistration ofatrademark canbesuccessfully
objected to?Could theGovernment ofSaudi Arabia explain thereasons thatarebased onIslamic
rules?
HowdoestheSaudi Arabian Trademark Lawdefine therights conferred toatrademark owner?
What aretherights conferred toanowner ofa"well-known" trademark?
Reply
Theregistration ofatrademark canbeobjected toif:
- thetrademark isalready registered inSaudi Arabia inanother party’sname (other thanthe
applicant);
- another party canestablish thatitowns anidentical orsimilar thatisinternationally "well
known";
- interested parties object totheregistration ofmark, within 90daysofitsregistration, onthe
ground thatsuchregistration iscontrary toanyoftheprovisions oftheTrademarks Regulations.
Registration ofatrademark canberefused forreasons based onIslamic rules, ifthetrademark
isoffensive forreligious reasons, e.g.,itgives thepicture oftheProphet Mohammed, isbased on
drawings orphotographs ofholyplaces, isbased ondistorted shapes orworks ofholybooks, isbased
onsigns orshapes ofprohibited products suchasporkoralcohol, etc.
Aparty whoregisters amark shallbeconsidered asitssoleowner andsuchownership shall
notbecontested iftheparty whohasregistered itusesitcontinuously foratleasttwoyears fromthe
dateofregistration; unless ajudgment isissued tothecontrary.WT/ACC /SAU/13/Add.1
Page67
Themark'sowner shallhavetheright toprevent others from using itorusing anysimilar
mark which might mislead thepublic astoproducts orservices forwhich themark wasregistered
aswellassimilar products orservices.
Therights ofaparty consequent onregistration shallbetenyearandforsimilar periods if
application arefiledforrenewal.
Anowner ofa"well-known" trademarks enjoys thesamerights asaregistrant ofatrademark.
A"well-known" trade mark isonethatisknown outside theborders oftheoriginating jurisdiction
andisknown inSaudi Arabia.
Question 174.
Itisstated that"useofatrademark withdescriptive terms foralongperiod oftimemayconstitute
anexception totheright conferred byatrademark". Could theGovernment ofSaudi Arabia
bemore explicit andexplain, e.g.definition oflongterm, other conditions tobefulfilled etc.?
Arethere anyreasons which arerecognized asvalid grounds fornon-use? Please explain.
Reply
Thereasons identified inreply 173above aretheonlyonesrecognized asvalid grounds for
non-use.
Question 175.
InWT/ACC/SAU/10 theGovernment ofSaudi Arabia answers (toquestion 4)thatunregistered
well-known marks areprotected. However, inWT/ACC/SAU/6/Add.3 (question 8)itisstated
thattheprotectionofinternationallywell-knowntrademarksisextendedtoallcategoriesofproducts
andservices aslongasanapplicant intends toregister aninternationally well-known trademark.
Could theGovernment ofSaudi Arabia explain these statements?
Reply
Unregistered "well-known" marks areprotected; theonlycondition being thatthatmark be
registered inthejurisdiction ofitsowner.
Question 176.
Theanswer toQuestion 7indocument WT/ACC/SAU/6/Add.3 states thatthenature ofgoods
orservices canconstitute anobstacle forregistration, when theyarenotinconformity withIslamic
rules. Please giveexamples.
Reply
Examples arealcohol, porkproducts, products bearings thepicture ofProphet Mohammed,
etc.WT/ACC/SAU/13/Add.1
Page68
(c) Geographical indications
Question 177.
Could theGovernment ofSaudi Arabia explain howitslawdeals withtrademarks thatconsist
ofageographical indication?
Reply
Geographical names shallnotbeconsidered asatrademark under Saudi Arabia ’sTrademarks
Regulations iftheirusecauses amisunderstanding astothesource ofproducts orservices, ortheir
origin.
Question 178.
Does Saudi Arabian Lawprotect against theuseofageographical indication although literally
trueastotheterritory, region orlocality inwhich thegoods originate, falsely represents tothe
public thatthegoods originate inanother territory? Please explain.
Reply
Asstated inreply 177above, ifthegeographical indications “cause amisunderstanding as
tothesource ofproducts orservices ”evenifthese areliterally astotheterritory, region orlocality,
themark cannotberegistered, andifregistered canbecancelled.
(d) Industrial designs
Question 179.
Initsanswer toQuestion 13(WT/ACC/SAU/6/Add.3) Saudi Arabia explains thattheprotection
ofindustrial designs willbecovered byaproposed Industrial Designs Law which willbe
implemented bytheKing Abdulaziz CityforScience andTechnology.
Could theGovernment ofSaudi Arabia explain themain elements ofthisdraft?
What isthetimeframe forthenewlawtoenter intoforce?
Could theGovernment ofSaudi Arabia provide acopy ofthedraft?
Reply
Allavailable information regarding theproposed Industrial Design Law havebeenreflected
inreply 13ofWT/ACC/SAU/6/Add.3 andreply 12ofWT/ACC/SAU/10.
Question 180.
Itismentioned thatanIndustrial Design Lawisproposed. Howareindustrial designs protected
under Saudi Arabian Lawatpresent? How aretextile designs protected? Please explain?WT/ACC /SAU/13/Add.1
Page69
Reply
There isnoIndustrial Design LawinSaudi Arabia. Accordingly, there isnotextile designs
protection yet.Cautionary notices innewspapers arepractised toinform public about theownership
ofdesigns.
(e) Patents
Question 181.
Could Saudi Arabia describe fortheWorking Party theprovisions ofArticles 8and9ofthePatent
Lawrelating tosubject matter notpatentable, including specific reference toprovisions thatare
notconsistent withthose oftheWTO TRIPS Agreement?
Reply
Comparing Article 8ofthePatent lawwithArticle 27(3) ofTRIPS shows thefollowing:
- paragraph (a)and(b)ofArticle (8)areexcluding items frombeing patentable. Thisexclusion
isinaccordance with27(1)ofTRIPS which limits thepatentable inventions tothose which
arerelated toproducts orprocesses;
- paragraph (c)ofArticle (8)isinfullcompliance with subparagraph (b)ofArticle 27(3) of
TRIPS except thatparagraph (c)didnotexclude “Micro-organisms ”from“Plants andanimals ”
anddidn'tinclude “non-biological processes ”asprocesses excluded from“biological processes
fortheproduction ofplants andanimals ”;
- paragraph (d)ofthePatent Lawisinfullcompliance withsub-paragraph (a)ofArticle 27(3)
ofTRIPS.
AsforArticle 9,Shari'aisconsidered the"umbrella" ofthelegal system ofSaudi Arabia.
AlllawsofSaudi Arabia should beinconsistence withShari'a.Article 9canbeconsidered tobein
accordance withTRIPS (Article 27(2)). Banning granting patents toproducts contrary withShari'a
doesnothave, economically, anydamage topatents holders ofsuchproducts since themarketing of
suchproducts would beprohibited.
Question 182.
What aretheconditions forgranting apatent?
Could Saudi Arabia clarify whether pharmaceutical andagrochemical products areincluded?
What aretheexceptions forgranting apatent? Please explain.
Reply
Asforconditions forgranting apatent, please seeArticles 4and9ofthePatent Law.
Since there arenospecific exclusion inthepatent lawforpharmaceutical andagrochemical
products from being patentable, these products canbeconsidered included.WT/ACC/SAU/13/Add.1
Page70
Asforexceptions forgranting patent, please seeArticles 8and9ofthePatent Law. For
explanation, please seereply 181above.
Question 183.
Could theGovernment ofSaudi Arabia explain whether their lawprovides forajudicial review
ofanydecision torevoke orforfeit apatent? Ifyes,please explain.
Reply
Please seereply 234(i) ofL/7645/Add.1 andthelastpartofreply 13ofWT/ACC/SAU/10.
(f) Plant varieties
Question 184.
Could theGovernment ofSaudi Arabia clarify whether plant varieties areprotected under Saudi
Arabian lawatpresent?
Reply
Please seereply 16ofWT/ACC/SAU/6/Add.3.
(h) Protection ofundisclosed information, control ofanti-competitive practices
Question 185.
Initsanswer toQuestion 19Saudi Arabia mainly liststhelawswhich arerelated totheprotection
ofundisclosed information. Could theGovernment ofSaudi Arabia alsoexplain howundisclosed
information isprotected?
Reply
Please seepara. 23ofWT/ACC/SAU/5.
Question 186.
TheGovernment ofSaudi Arabia states thattheproposed Unfair Competition Lawwillcover
theprotection ofundisclosed information aswellasthecontrol ofanti-competitive practices.
When willthislawenter intoforce? What areitsmain elements?
Reply
Theproposed lawiscurrently under study andnofinaltexthasbeenreached.
4. Enforcement
Question 187.
Articles42to49oftheTRIPSAgreementoutlinecivilandadministrativeproceduresandremedies.
Please explain howSaudi Arabian lawcomplies withthenamed TRIPS provisions.WT/ACC /SAU/13/Add.1
Page71
Reply
Please seereply 161above.
Question 188.
Please explain, whether andhowSaudi Arabian lawcomplies withtheTRIPS provisions related
toborder measures.
Reply
TheTRIPSbordermeasuresinSaudiArabiaarenotsubstantiallyinconsistentwiththeprovisions
oftheAgreement which authorizes thejudicial oradministrative bodies toissuetheprovisional seizure
decision (order). Thisisactually applied under Article (34)andArticle 132(3) oftheImplementing
Rules oftheSaudi Customs system. Moreover, Customs authorities seizetheconsignments infringing
TRIPSorinvolvingcommercialfraudincoordinationwiththeMinistryofCommercewhichisconsistent
withArticle (58)oftheAgreement.
Asregards books, publications, audio/video tapes andcomputer software, samples ofthese
products arereferred totherepresentative oftheMinistry ofInformation atthecustoms port. The
disagreement between ourcustoms lawandtheAgreement islimited topenalties.
VI. TRADE-RELATEDSERVICESREGIME(WT/ACC/SAU/5andWT/ACC/SAU/6/Add.3)
2. Policies Affecting Trade inServices
(b) Judicial, arbitral oradministrative tribunals affecting trade inservices
Question 189.
Could Saudi Arabia provide details onthepolicies andprocedures which govern thereview of
administrative decisions?
Reply
Anumber ofMinistries andAgencies areinvolved inapproval oftherighttoprovide aservice
intheKingdom; e.g.:
- Ministry ofCommerce: engineers, legalpractitioners, accountants, insurers;
- Ministry ofDefense andAviation: civilaviation, tourism andtravel agents;
- General Organization forTechnical Education andOccupational Training: technical institutes
andnational occupational centres;
- Ministry ofHealth: medical practitioners, pharmacists, hospitals;
- Ministry ofCommunications: maritime transport;
- Saudi Arabian Monetary Authority: banks.
Decisions relating tolicensing ofenterprises andindividuals, Saudi andforeign aretaken at
theappropriate level.WT/ACC/SAU/13/Add.1
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Inallcases theMinistries/Agencies involved haveestablished internal standing committees
ofsenior officials toreview initial administrative decisions pertaining tolicensing.
Decisions ofstanding committees maybeappealed totheresponsible Minister/Agency head.
Administrative Decisions involving potential civilsuitagainst thegovernment canbebrought
before theBoard ofGrievances whose functions andprocedures aredetailed inAnnex 9toL/7645.
(c) Qualification requirements andprocedures
Question 190.
Could Saudi Arabia provide details ofthequalification requirements forforeign suppliers of
services?
Reply
There aredifferent types ofqualifications requirements fordifferent categories ofservices.
Forexample, formedical services, theservice provider should haveamedical degree fromarecognized
institution. Foreducational services, theservice provider should haveadequate academic qualifications
intherelevant disciplines fromauniversity orarecognized institutions. Fortheprovider ofaccounting
andauditing service, theprovider should beacertified accountant from arecognized institute.
With regard toqualification requirements offoreign companies, itshould benoted thatsuch
companies mustpossess necessary technical expertise, financial capability, occupational proficiencies.
Information about previous implemented operations arenecessary toevaluate suchcompanies.
(d) Monopolies andexclusive service suppliers
Question 191.
Saudi Arabia saysthatthegovernment istheexclusive supplier ofcertain services including public
utilities andrailroad services. Does Saudi Arabia have anyplans toliberalise these sectors?
Reply
No,there arenoplans.
(e) Restrictions on,orrequirements of,specific types oflegal entities
Question 192.
Could Saudi Arabia provide details ofthepolicies, rulesandconditions which apply when aforeign
bank seeks alicence toestablish abranch intheKingdom?
Reply
(a) Currently, there arenoconsiderations inconsistent withArticles XVIandXVII oftheGATS
thataretaken intoaccount bySAMA when itrecommends approval ofanewlicence.WT/ACC /SAU/13/Add.1
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(b) Upon therecommendation ofSAMA togrant alicence, theMinister ofFinance andNational
Economy andtheCouncil ofMinisters would evaluate therecommendation taking intoaccount the
following objective considerations:
- themacroeconomic needs ofthefinancial andbanking system;
- thedevelopment ofnewproducts andservices;
- thelevelofexisting competition inthemarket;
- thebenefits totheconsumer;
- theintroduction ofnewtechnologies;
- impact onthefinancial stability andsoundness ofthebanking system;
- theprofessional andbusiness standing ofthefounders andmembers oftheBoard ofDirectors;
- capital adequacy.
Allorsome ofthese factors would influence thedecisions.
(h) Government procurement
Question 193.
Please confirm thattheapplication oftheGovernment Purchases Law onprocurement by
governmental agencies ofservices isrestricted topurchases fordirect consumption bythe
government agency involved, anddoesnotinvolve thepurchase ofservices related totheproduction
ofgoods orfurther services soldontheSaudi Arabian market.
Please indicate anyinstances where thisisnotthecase, i.e.,where services procured under the
Government Purchases Lawareinputs inthedevelopment ofgoods soldinthecommercial market.
Reply
Thepurchases ofgovernment agencies ofgoods andservices arefortheirdirect consumption.
(i) Aid,grants, taxincentives orpromotion schemes
Question 194.
Please listandbriefly describe thenature andextent ofincentives, taxexemptions andsubsidies
available toservice providers inSaudi Arabia, identifying those available toSaudi Arabian service
providers thatarenotavailable toforeign service providers onanational treatment basis, e.g.,
wenotethatforeign-owned jointventures areeligible forpreferential taxtreatment iftheforeign
partner holds lessthan75percentequity.
Reply
Foreign services projects licensed bytheMinistry ofIndustry andElectricity areentitled to
fiveyearcorporate income taxholidays asdescribed inArticle 7(b)oftheInvestment ofForeign Capital
Regulations (Annex 3CtoL/7645). Also, please seereply 113above.WT/ACC/SAU/13/Add.1
Page74
3. Market Access andNational Treatment
(a) Limitations onthenumber ofservices suppliers
Question 195.
Regardingparagraphs59-60inWT/ACC/SAU/5,whichconcerntheparticipationofforeigncapital,
weseekadditional information onthereview andapproval process forforeign service operations.
Howlongdoesthisprocess normally take? What istherecent history ofapplications intheservices
sector, i.e.,number submitted peryear, number accepted, andnumber rejected?
Reply
Please seereply 113above.
Question 196.
Werequest aclear statement ofSaudi Arabia 'scriteria andprocedures forapproving commercial
presence inservices sectors.
Ourunderstanding, asstated intheresponse toQuestion 26inWT/ACC/SAU/6/Add.3, isthat
commercial presence inallservices sectors areconsidered “development enterprises ”andtherefore
meet oneofthecriteria forapproval under theInvestment ofForeign Capital Regulation. In
addition, however, theinvestment must be“accompanied byforeign technical expertise. ”
Please explain howthissecond criterion, regarding foreign technical expertise, isapplied. What
standards andguidelines exist?
Reply
Notallservices areregarded as"development enterprises" forthepurposes oftheForeign
Capital Investment Law.
Astotheexplanation ofthecriterion of"foreign technical expertise", please seereply 113(b)
above.
Question 197.
Inaddition, inresponse toQuestion 27(WT/ACC/SAU/6/Add.3), Saudi Arabia states thatthere
areother conditions forapproval mentioned inL/7645/Add.1. Inreviewing thatdocument we
findonlythatthefollowing response appears anumber oftimes:
"The decision toprovide alicence fortheinvestment offoreign capital ismade onthebasis of
thefacts appropriate tothatparticular case. Thetwogeneral criteria listed intheInvestment
ofForeign Capital Regulation arethatthecapital beinvested indevelopment enterprises, other
thanextraction ofpetroleum andmining, andthattheforeign capital beaccompanied byforeign
technical expertise."
This response does notprovide sufficient detail ontheadditional criteria, ortheprocess for
approval ofestablishment ofacommercial presence byforeign service providers.WT/ACC /SAU/13/Add.1
Page75
Please provide more information onwhat ismeant by"thefacts appropriate tothatparticular
case".
Reply
Please seereply 113above.
Question 198.
Does Saudi Arabia apply an"economic needs test" totheapproval offoreign investment
applications? Ifthisisthecase, arethestandards forapplying theneeds testpublished -orare
theylefttothediscretion ofaninvestment review agency?
Reply
Indetermining whether aproject should beconsidered "development" theapproval offoreign
investment indevelopment projects, aneconomic needs testisapplied onacase-by-case basis, depending
onthenature oftheproject andonwhether ornotthemarket isalready adequately supplied bycompeting
domestic products. Thestandards forapplying theneeds testarelefttothediscretion oftheForeign
Capital Investment Committee.
Question 199.
With respect tocross-border services, Saudi Arabia hasstated inL/7645/Add.1 thatitdoesnot
place anyrestrictions oncross-border delivery ofservices, except callback services. Yetinreply
toQuestion 130,Saudi Arabia states thataneconomic needs testmayormaynotbeapplied to
cross-border services, depending ontheservice sector concerned.
Please explain thiscontradiction. Intheevent thatthefirststatement isincorrect, please provide
fullinformation oneachsector inwhich aneconomic needs testapplies, thenature andcriteria
ofsuchatest,andhowthetesthasbeen applied inpractice.
Reply
Seereply 198above.
Question 200.
Thereply toQuestion 130appears topresent newobstacles tocommercial presence inprofessional
services.
(a) Please provide alistoftheprofessions towhich these restrictions apply.
(b) Please provide more information ontheprocess andcriteria bywhich theMinister of
Commerce provides aresolution foralicence forestablishing aprofessional company
between aSaudi national andanon-Saudi.
(c) Please explain howtheMinister ofCommerce determines thattheforeign company is
"reputable", "well recognized", "practising inthefield successfully", "participating in
training andbuilding Saudi nationals ’experience", and"introducing itstechnical
technology".WT/ACC/SAU/13/Add.1
Page76
(d) Please explain themeaning ofthestatement, "theforeign company should adjust itself
withthese conditions, maximally, within oneyearfrom thedateofimplementing this
resolution". What penalties canbeimposed iftheforeign company failstomeet these
conditions? Does thestatement concerning transference from Saudi tonon-Saudi shares
mean thatpartnerships withlessthan25percentSaudi participation areprohibited?
Reply
(a) These apply toallprofessional services.
(b) Thecriteria forproviding aresolution foralicence are,asalready explained inreply 131of
WT/ACC/SAU/8, arethefollowing, andoncethese aremettheMinister ofCommerce approves the
issuance ofalicence:
- theforeign company should bereputable andwellrecognized inthefieldofitsprofession;
- theforeign company should beestablished andregistered foratleasttenyears andpractising
inthefieldsuccessfully;
- theforeign company should participate intraining andbuilding Saudi nationals ’experience
aswellasintroducing itstechnical technology. ThisArticle hasbeenamended byMinisterial
Resolution No.929of29.8.1416 A.H. tobecome asfollows:
- theforeign company should employ orhaveatleastoneprominent representative in
theKingdom, thisrepresentative should:
- stayintheKingdom foraperiod notlessthan9months peryear;
- haveatleastauniversity degree inthefieldofthecompany specialization;
- haveanexperience notlessthan10years successfully.
(c) Aforeign company should beconsidered asreputable, wellrecognized andpractising inthe
fieldsuccessfully ifit:
- isregistered under thecompanies lawofitshome country;
- iscertified asfinancially viable byitsbankers;
- produces copies ofaudited balance sheets forthelasttwoyears;
- producesalistofpreviouscontracts/assignments,outsideSaudiArabia,certifiedbytheChamber
ofCommerce andIndustry inthecompany ’shome country;
- produces certificates ofsatisfactory completion ofassignments from former clients.
Asforparticipation intraining andintroducing technology, theapplicant company should give
anunderstanding thatitwould participate intraining Saudi nationals andwould introduce new
technologies andknow-how thatitmaybeemploying initshome country.
(d) Thephrase "foreign company should adjust itself withthese conditions, maximally, within
oneyear...."means thattheexisting companies already licensed haveaperiod ofoneyeartofulfil
theconditions noted inreply 131ofWT/ACC/SAU/8. Iftheydonotdothat,thelicence maybe
cancelled. Asfornewcompanies, theyhavetofulfil theconditions from theverybeginning.WT/ACC /SAU/13/Add.1
Page77
(d) Limitations onthenumber ofnatural persons employed inparticular sectors
Question 201.
OurGovernment 'sconcern withtemporary entry inthecontext ofservices trade istoassure that
skilled personnel ofservice companies, primarily managers andtechnicians, beabletoenter a
country onatemporary basis toassist inthedelivery ofservices inthatcountry. These concerns
donotrelate toimmigration policy.
Thistypeofcommitment hasbeenwidely recognized inWTO Members 'schedules asbeing integral
tosectoral commitments oncommercial presence, i.e.,asahorizontal market access commitment
inmode 4.
OurGovernment 'sinterest isinmeeting theneeds ofourdomestic companies, which have long
maintained thateaseinassigning management andtechnical personnel toforeign operations of
anenterprise isimportant toefficiency andcompetitiveness.
Itwaswiththese business needs inmind thatcommitments intheGATS cover temporary admission
ofservices salespersons, intra-corporate transferees (managers, executives, andspecialists),
personnel engaged inestablishment, andfashion models andspecialty occupations. Weseeksimilar
access forourownservice providers.
Finally, webelieve thatcommercial presence andtemporary admission areclosely related. Unless
aninvestor candohisbesttomake aforeign subsidiary competitive andprofitable, theinvestment
willbeoflessvalue thanitotherwise would be.Theincentive toinvest willthusbereduced.
Theability toarrange temporary entry oftechnical andmanagement employees ofthecompany
isoneofthesteps thathelpmake aforeign investment inservice companies profitable.
(a) Does Saudi Arabia haveanyplans toliberalise thelimitations placed ontheparticipation
offoreignersinsecurityunderwriting,commoditybrokerageservicesandcurrencyexchange
operations?
(b) Does Saudi Arabia have anyplans toliberalise thelimitations thatareplaced onthe
participation offoreigners inlandtransportation andprofessional services?
Reply
(a) There arelimitations ontheparticipation offoreign individuals insecurity underwriting,
commodity brokerage services andcurrency exchange operations. However, there arenolimitations
onforeign banks inthisregards, provided those entities takeoutalicence under thelaw.
(b) No,there arenoplans atpresent.
(f) Limitations ontheparticipation offoreign capital
Question 202.
Generally, weareinterested inmore information onyourgovernment 'srequirement thatforeign
capital must onlybeinvested in"development enterprises" andourunderstanding thatallservices
activities areconsidered "development enterprises".WT/ACC/SAU/13/Add.1
Page78
Does thismean thatasapractical matter allforeign investment inservices industries isapproved
automatically bytheForeign Capital Investment Committee?
Please outline theapproval procedures imposed bythisbody, aswellasbytheMinistries identified
intheSupplementary Memorandum ashaving oversight authority forvarious sectors (para. 39
ofWT/ACC/SAU/5).
Reply
Please seereplies 113and196above.
Question 203.
Could youelaborate ontherequirement that"foreign capital isaccompanied byforeign technical
expertise".
Reply
Please seereply 113above.
Question 204.
CanSaudi Arabia provide further details ontherules andconditions regarding approval forthe
entry offoreign capital whether inajointventure orwholly-owned? Arethere plans toliberalise
suchrules? Could Saudi Arabia provide details onthecriteria defining development projects?
Reply
Please seereply 113above.
Therules governing foreign investment inSaudi Arabia areconsidered already veryliberal.
(g) Measures providing forlessthannational treatment
Question 205.
Paragraph 60ofWT/ACC/SAU/5 states that, "Only Saudis areallowed toparticipate inthe
following activities: security underwriting, commodity brokerage services, currency exchange
operations, commercial agencies, customs clearance agencies, real estate agents, land
transportation ’sandcivilian security. Also, certain sectors arereserved fortheState suchaspostal
services, basic telecommunications services, radio andtelevision transmission services".
Arethere anyrequirements inlaw,decree, orregulation thatrequire aforeign service provider
togothrough aSaudi Arabian commercial agent toconduct business inSaudi Arabia?
Reply
TheMinistry ofCommerce Decision No.50dated 24.7.1402 A.H. states thatallcommercial
service agencies issubject totheSaudi Commercial Agency Regulations.WT/ACC /SAU/13/Add.1
Page79
4. Exceptions toMost Favoured Nation Treatment
Question 206.
Wewould appreciate additional information from Saudi Arabia concerning preferences fortrade
inservices among GCC countries insectors other thanthetransport sector, including withrespect
tomovement ofcapital andlabour.
Reply
Please seetheUnified Economic Agreement Between theCountries oftheGulfCooperation
Council inWT/ACC/SAU/6/Add.2, Chapter 2,Article 8.
Question 207.
Re.para36.(WT/ACC/SAU/5) Could Saudi Arabia present inmore detail thesectors inwhich
itimports services?
Reply
Complete statistics arenotavailable atpresent.
Question 208.
Re.para37(WT/ACC/SAU/5) Inviewofthelarge number offoreigners working inSaudi Arabia,
canregulations concerning residence bechanged atshort notice?
Reply
Changes tobeintroduced maytakealongtimeifitrequires anamendment orchange toa
Royal Decree. Other administrative procedures, maybechanged ainshort notice.
Question 209.
Re.para 38.(WT/ACC/SAU/5). How isforeign ownership regulated intheCompanies Law?
(a) Isthere alimit tothepercentage offoreign ownership, andifso,doesthisapply toall
legal entities?
(b) Isthere anationality requirement forthedirectors, managers andboard members of
companies andforother legal entities?
(c) IntheInvestment ofForeign Capital Regulation arethere limits onforeign investment
inspecific sectors oftrade inservices?
(d) What isthelegal status oftheInvestment ofForeign Capital Regulation?
Reply
(a) There isnolimittothepercentage ownership under theCompanies Law.WT/ACC/SAU/13/Add.1
Page80
(b) There isnonationality requirement fordirectors, managers, andboard members ofcompanies,
except thatthepersonnel managers ofacompany should beaSaudi national.
(c) Investment ofForeign Capital Regulations covers development projects inindustry, agriculture,
andservices asexplained inreply 113above. However, itdoesnotcover trade inservices sector.
(d) Investment ofForeign Capital Regulations wasenacted bytheRoyal Decree No.M/4dated
2.2.1399 A.H., aspertheCouncil ofMinisters Decision No.17dated 18.1.1399 A.H.
Question 210.
Re.para39.(WT/ACC/SAU/5) Regarding rulesconcerning temporary residence andwork permits
forforeigners.
Arethese regulations allinform oflawsordodifferent ministries apply thelawswithDecrees?
Does aforeign worker need several permits from different authorities?
Reply
Foreign workers inSaudi Arabia needawork permit. Inaddition, special permits maybe
required forcertain occupations suchphysicians andpharmacists whoneedalicence issued bythe
Ministry ofHealth.
Allforeign workers needtohavearesidency permit, unless theycome forshort visits such
asbusiness visits orHajjorUmra.
Question 211.
Re.para 40.(WT/ACC/SAU/5) Arethejudicial, arbitral andadministrative procedures with
respect totrade inservices different forforeign legal ornatural persons ascompared withSaudi
Arabian legal ornatural persons? Ifso,please explain indetail.
Reply
No.Established foreign legalandnatural service providers enjoy national treatment interms
oftheiraccess tojudicial arbitral andadministrative procedures including recourse toCourts theBoard
ofGrievances andalladministrative tribunals.
Question 212.
Re.para41.(WT/ACC/SAU/5)Aretheoccupationalproficienciesoracademicqualificationsneeded
inthecountry, decided onacasebycasebasis, oristhere asetofcriteria forqualification
requirements forforeign service suppliers?
Reply
Licensingofforeignprofessionalsisnormallybasedonpublishedacademic/occupationalcriteria.
Where therelevant lawisexpressed inbroad terms, qualification decisions aretaken onacasebycase
basis. Forexample qualifications foraccountants areaBachelor 'sdegree inaccountancy orbusiness
administration "oranyother certificate deemed bytheMinistry ofEducation tobeequivalent tosuch
degree" TheMinistry willdetermine "equivalence" onacase-by-case basis.WT/ACC /SAU/13/Add.1
Page81
Question 213.
Re.para 42.(WT/ACC/SAU/5) Intheareas where thegovernment isexclusive supplier, does
Saudi Arabia have plans tochange thesupplier status toallowing other suppliers inanyofthe
services mentioned?
Reply
There arenocurrent plans toprivatize thegovernment ’smonopolies mentioned nortoallow
competitors toenter themarkets.
Question 214.
Re.para 47.(WT/ACC/SAU/5) Does Ministerial Resolution No.124of29.5.1403 inpractice
mean thatthere canbenoindependent provision onservices byforeign contractors forgovernment
procurement ofservices?
Does thisResolution cover onlygovernment procurement?
Reply
Ministerial Resolution applies onlytoconstruction services. Saudi sub-contractors could of
course themselves sub-contract toforeign services providers.
Question 215.
Re.para49.(WT/ACC/SAU/5)Pleaselisttheprovisionsconcerningaid,grants,domesticsubsidies,
taxincentives andpromotion schemes where treatment isdifferent forSaudi Arabian natural
andlegal persons when compared withforeign natural andlegal persons.
Arethere regulations concerning thepromotion ofuseofdomestic labour asopposed toforeign
labour, other thantheonespresented intheWT/ACC/SAU/5?
Reply
With theexception ofprovisions listed inpara. 61ofWT/ACC/SAU/5, established foreign
services providers enjoy national treatment.
Question 216.
Re.para 50.(WT/ACC/SAU/5) Candomestic business enterprises benefit from taxholidays?
Reply
No,taxholidays apply onlytotheincome taxpaidbyforeign enterprises. Domestic enterprises,
including those injointventures withforeigners, payZakat.
Question 217.
Re.para 54.(WT/ACC/SAU/5) Arethere anyexceptions tothegeneral ruleof75percentof
workforce being Saudi nationals intheLabour andWorkers Regulations. IstheLabour and
Workers Regulation alaw? Arethere more specific criteria fortheMinister ofLabour touseWT/ACC/SAU/13/Add.1
Page82
hisdiscretionary powers toreduce therequired percentage? Forhowlongisatemporary reduction
valid? Aredifferent foreign service providers given different authorizations forthepercentages
andforthelength ofvalidity oftheexemption?
Reply
Yes,theLabour andWorker Regulations isaLaw. TheMinister ofLabour hasauthority to
reduce therequired percentage depending ontheneedoftheSaudi labour market andtimelimits are
flexible.
Question 218.
Re.para. 56.(WT/ACC/SAU/5) Isthelistofpositions reserved forSaudis exhaustive?
Reply
No.
Question 219.
Re.para57.(WT/ACC/SAU/5)Inadditiontoquestionsconcerningpoint38.,pleaseclarifywhether
intheeight possible forms ofbusiness companies inSaudi Arabia there isdifferent treatment
forforeign investors incomparison todomestic investors?
Areallforeign investors given similar treatment?
What other legal actsapply toestablishment offoreign branches?
Reply
TheCompanies Lawdoesnotdifferentiate between domestic andforeign enterprises nordoes
itdifferentiate between enterprises ofdifferent nationalities.
Question 220.
Re.para58.(WT/ACC/SAU/5). Arecriteria forlicences forbanking activities inSaudi Arabia
different forforeign natural orlegal persons ifcompared withSaudi Arabian natural orlegal
persons?
What aretheconditions foraforeign bank toestablish abranch inSaudi Arabia?
Dothese conditions existintheform oflawsorother regulations?
Reply
Please seereply 192above.
Question 221.
Re.para 59.(WT/ACC/SAU/5) Aretheconditions mentioned theonlycriteria forapproval of
investment offoreign capital?WT/ACC /SAU/13/Add.1
Page83
CantheForeign Capital Investment Committee approve foreign capital investment forother
purposes?
Dotheconditions mean thatcapital investment inservices enterprises isnotpossible except for
services development enterprises?
Reply
Yestheconditions mentioned inpara59aretheconditions forapproval under theInvestment
ofForeign Capital Regulation.
TheForeign Capital Investment Committee approve foreign capital projects intheindustrial
agriculture andservices sectors.
Aproject would needtoqualify as"development" tobeapproved.
Question 222.
Re.para 60.(WT/ACC/SAU/5) Arethese theonlysectors related toservices, where there isa
requirement ofSaudi nationality?
Reply
Yes.
Question 223.
Re.para 61.(WT/ACC/SAU/5) Isthepermission toownthenecessary realproperty obtained
automatically atthesame timeastheauthorization tocarry onactivities asaforeign establishment
inSaudi Arabia?
Arenon-Saudi service industries categorically notentitled tocertain promotional programmes
asmentioned?
Ifso,please explain thereasoning behind this?
Aresectors other thanthose mentioned subject torestrictions onmode ofsupply?
Reply
Theacquisition oftheindustrial licence entitles theproject owners toowntherealproperty
within theKingdom inaccordance withtheLawforNon-Saudi Ownership ofRealEstates.
Theprogrammes mentioned arerestricted to100percentSaudi corporations. Itisconsidered
thatcorporations thathaveforeign ownership willalready haveexport marketing skills andcontacts
andthusdonotneedgovernment financed support inexport promotion.
Question 224.
Re.para63.(WT/ACC/SAU/5) (a)Arethese alltheagreements thatgivepreferential treatment
tospecific countries?WT/ACC/SAU/13/Add.1
Page84
(b) What isSaudi Arabia 'sposition ontheUnited Nations Liner Codes?
Reply
(a) Yes.
(b) TheKingdom hasalready ratified theUnited Nations Liner Codes pursuant totheRoyal Decree
No.52/M Dated 22/12/1404 H.
Question 225.
Ad.Ministerial Order No.264dated 16.9.1402(H), Organization ofthePractice oftheProfession
ofEngineering Consultancy, Parts IandIII(annex 5FoftheConsolidated List) Article 1:
What arethereasons torestrict allbusiness ofengineering consultancy toholders ofalicence
from theauthority oftheMinistry ofTrade?
Reply
Thelicensing requirement hasbeeninstituted to:
- ensure thatenterprises andindividuals areprofessionally andfinancially qualified toundertake
engineering work inSaudi Arabia; qualifications varyaccording tothetypes ofwork tobe
undertaken which areidentified inlicences;
- forindividuals, implement thegovernment ’spolicies asregards Saudization inthework force.
Question 226.
Ad.LawofCertified Accountants (Annex 5GoftheConsolidated List) Article 2/1:
According toArticle 1andArticle 2,onlyregistered Certified Accountants being Saudi citizens
areallowed topractice theprofession ofauditing accounts. Isthisunderstanding correct orare
there anyother possibilities forforeign service providers toprovide auditing services inSaudi
Arabia?
Reply
Article 35oftheCertified Public Accountants Regulations states thatforeign accounting firms
mayprovide auditing andaccounting profession services inSaudi Arabia through cooperation contract
withSaudi accounting firms inconformity withtheexecutive by-laws. Article 14oftheexecutive
by-laws explains thecooperation conditions between theSaudi accounting firms andtheforeign
accounting firms, which include:
- theforeign firmmust bealicensed firminitscountry;
- cooperation contract mustbesigned between theSaudi firmandtheforeign firm, inaccordance
withtheform approved bytheSaudi Organization forCertified Public Accountants.
Question 227.
Ad.Ministerial Order No.1190, dated 16.2.1402(H), pertaining totheRegulation ofCarrying
ontheProfession ofLegal Consultancy (Annex 5HoftheConsolidated List), Article 2/1:WT/ACC /SAU/13/Add.1
Page85
What arethereasons torestrict allbusiness oflegalconsultancy toSaudi nationals holding alicence
from theauthority oftheMinistry ofTrade? Does Saudi Arabia seepossibilities toliberalize
thissector inthenearfuture?
Reply
InSaudi Arabia therestriction ensures thatlegalpractitioners arefamiliar withlocallegislation
andprocedures which arebased ontheSharia. There arenoplans toliberalize thissector.