Definition of Accession in International Trade Law
Accession is a term used to describe the process by which a state which did not participate in the treaty making process or its ratification becomes a party to the said treaty at a later date. It the process by which the acceding state party shows its agreement to be bound by the terms of an international or regional treaty or convention (Borchert, Gootiiz & Mattoo, 2012, p. 18). Saudi Arabia became a member of the World Trade Organization (WTO) in 2005 through accession. Accession to the WTO has enabled Saudi Arabia to trade effectively in goods and services with other international states. In this paper, I’ll concentrate on Australia’s international trade in services and accession to the WTO.
Saudi Arabia’s WTO accession documents
These are documents that a state party wishing to be bound by the terms of a treaty submits to the Organization. They are the documents that the Working Committee on accession considers before they decide whether to recommend a state for accession or to reject the accession request altogether (Al Rajhi et al, 2012, p. 47). The Working Party is charged with examining the application to accede and then to submit recommendations to the council which includes but not limited to a proposed/draft.
In this case of Saudi Arabia, the Documents that Saudi Arabia submitted to the Working Committee included:
- Memorandum on the Foreign Trade Regime of Saudi Arabia. This outlines how Saudi Arabia conducts its international trade, the states that it trades with including the trade agreements with such states (Ball et al, 2012, p. 49). State parties to the WTO also submitted their questions on Saudi Arabia’s request to join WTO; questions which Saudi Arabia replied to and submitted the said replies to the Working Committee on Accession.
- Economic Development Plans. These are plans made by Saudi Arabia on their development agenda. The plans enable the Working Committee to interrogate such plans and make recommendations whether those plans are compatible with WTO agenda and policies. In the case of Saudi Arabia, they submitted their sixth and seventh development plans.
- Economic policies such as policies on competition, pricing, privatization, investment regime e.t.c. these policies help the Working Committee in making decisions as to the suitability or lack of it in Saudi Arabia being recommended to accede to WTO. The framework applied in enforcing the policies should also be submitted to the Working Committee.
- Policies that affects trade in services- these included Council of Ministers Decision, Labor and Workmen Law as well as Cooperative Insurance Companies Control Law. These as well assist the Working Committee on accession to make an informed decision.
Commitments on trade in services
During the application and submissions to the Working Committee on accession, Saudi Arabia made the following commitment in regards to trade in services.
- Any foreign services providers will be required to apply and seek approval from the General Investment Authority before they are allowed to establish any commercial service provision in Saudi Arabia. These business enterprises will be subjected to income tax.
- Saudi Arabia committed to make any subsidy in the country available to foreign entities providing services except those subsidies reserved for Saudi Arabia nationals.
- Saudi Arabia committed to allow entry as well as temporary stay of individuals such as Business Visitors, Intra-corporate transferees on Information Technology, contractual service providers, Independent professionals, installers, maintainers e.t.c. will be allowed temporary stay for a period of up to 90 days which is subject to renewal for an equal amount of time upon application and reasonable cause being shown. This would allow service providers to promote and provide their services in Saudi Arabia without any form of restriction (Aust, 2013, p. 32).
- Insurance service providers with agents in Saudi Arabia are allowed to operate, to open new business operations as well as offer new products for up to a period of 3 years.
International Trade treaties/Agreements in which Saudi Arabia is a party
Saudi Arabia is a party to the following international treaties on trade in services. The treaties include:
- General Agreement on Trade in Services (GATs)
This is a WTO treaty which came into force in 1995 after Uruguay negotiations. All the state parties who have ratified WTO or acceded to it are members of GATs. The treaty however provides that a state that accedes to WTO is free to incorporate an exemption to the rule stating that all WTO members should be members of GATs. GATs treaty covers the sectors such as Business, Engineering and Construction, Communication, Education, Distribution, Financial, Environment, Tourism, Health, Recreation, Transport as well as Sporting. Saudi Arabia acceded to the Treaty in 2005 when it became a member of WTO through accession.
GATs therefore make it possible for natural persons to move to other countries though temporarily with the aim of providing services with little regulation applicable. It is aimed at removing any restrictions on the provision and access to important services.
Saudi Arabia’s Accession to the WTO and Its Impact on International Trade in Services
(b). Gulf Cooperation Council
The Gulf Co-operation Council and the European Free Trade Area FTA (GCC-EFTA FTA is an agreement that applies to goods as well as services. It has been in force from the June of 2009. It has been signed by GCC countries including Saudi Arabia, Qatar, and Kuwait among others as well as EFTA countries including Switzerland.
The agreement is meant to achieve liberalization of their markets so as to conform with GATs as well to promote competition in the member states for goods and services. The agreement has certain export benefits to members which include:
- No introduction of new custom duties to trade between party states except the customs that are in the agreement;
- State parties are not allowed to introduce custom duty on any import that originates from another state party; and
- State parties have undertaken to make available effective, adequate and protection of intellectual property and their enforcement and in complies with the TRIPS Agreement.
This agreement is important to the member states as it removes restrictions on the movement and provision of goods and services respectively. This promotes trade, development and cohesion among and between the member states.
The impact of WTO in Saudi Arabia
Accession to WTO has opened up the economy of Saudi Arabia in the promotion and protection of copyright, the promotion of rule of law and foreign investment
The accession to WTO has also promoted competition among local companies as well as the creation of a global economy which has as a consequence increased the access to a variety of goods and services.
Additionally, it has opened up Saudi Arabia to international trade in terms of exports to WTO member states thereby protecting the Kingdom of Saudi Arabia from restrictive and discriminatory policies as well as creation of dispute resolution procedures between states to avoid disputes.
In my well considered opinion, accession to the WTO by Saudi Arabia has opened up most industries and has gradually revolutionized international trade. The future of international trade in goods and services in Saudi Arabia will grow substantially impacting greatly in fields such as Information and Technology and free trade; unrestricted exchange, transfer and provision of service. International trade will open other markets and as a result lead to industrialization and general development as well as improving the living conditions of citizens of the Kingdom of Saudi Arabia.
Conclusion
As discussed above, accession to WTO has opened up Saudi Arabia to the international world leading to interaction through trade. The trade agreements and policies have revitalized the economy due to the exchange of a myriad of goods and services as well as improving peaceful coexistence among neighbors.
References
Al Rajhi, A., Al Salamah, A., Malik, M., & Wilson, R. (2012) Economic Development in Saudi Arabia Routledge
Aust, A. (2013). Modern treaty law and practice Cambridge University Press
Borchert, I., Gootiiz, B., & Mattoo, A. (2012) Policy barriers to international trade in services: evidence from a new database. The World Bank
https://www.wto.org/english/thewto_e/countries_e/saudi_arabia_e.htm accessed on 18 November, 2018
https://www.wto.org/english/tratop_e/dispu_e/dispu_e.htm accessed on 18 November, 2018
https://www.wto.org/english/thewto_e/whatis_e/tif_e/disp1_e.htm accessed on 18 November, 2018
https://stat.wto.org/CountryProfile/WSDBCountryPFView.aspx?Country=SA& accessed on 18 November, 2018
https://stat.wto.org/CountryProfile/WSDBCountryPFView.aspx?Country=US accessed on 18 November, 2018
https://www.wto.org/english/news_e/news18_e/ds565rfc_27aug18_e.htm accessed on 18 November, 2018
https://mci.gov.sa/Agencies/ForeignTrade/doc-agreements/Pages/default.aspx accessed on 18 November, 2018
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