Saudi Arabia says it will impose legal measures against unilateral free trade agreements

Ain-Al-Yaqeen | 7 January 2005





Saudi Arabia said its stand on the free trade agreements Bahrain concluded with the United States did not amount to a dispute with the Gulf neighbor but rather reflects the Kingdom’s keenness to see the Gulf Cooperation Council resolutions being honored.

Saudi Arabia said it would impose duties on foreign goods imported through Bahrain if the Gulf state pressed ahead with implementing a free trade agreement with the United States.

Finance Minister Dr. Ibrahim Al-Assaf said the Kingdom will be forced to take measures, including legal action, to protect its interests from being harmed by unilateral free trade agreements concluded by Gulf Cooperation Council states with other countries.

The Kingdom will return to imposing customs duties in trading with GCC member states which breach the GCC’s common tariff, he warned. "Foreign goods coming through these countries will be taxed," the minister told a press conference in Riyadh.

Bahrain’s signing of a free trade agreement with the US angered the Kingdom ahead of the recent GCC summit held in December in Manama. The Kingdom criticized its neighbors for forging separate economic and security agreements with foreign powers, accusing them of weakening Gulf solidarity. It said such unilateral moves undermine the GCC’s economic integration efforts. The GCC groups Saudi Arabia, Bahrain, Kuwait, Oman, Qatar and the United Arab Emirates.

When ratified, the Bahrain-American trade agreement would have duties on 100 percent of consumer and industrial products and 81 percent of the American agricultural exports being lifted immediately.

Dr. Al-Assaf reiterated the same position saying unilateral preferential trade agreements signed by some GCC states with international powers would weaken the bloc’s negotiating position which took much time and effort to consolidate.

"The signing of unilateral free trade agreements on the part of any GCC member is in clear violation of the GCC economic pact ratified by all council members," the minister said. He warned foreign goods coming from those countries will be screened to ensure their industrial components do not enjoy privileges exceeding those enjoyed by Saudi industries.

He said trade privileges contained in unilateral trade agreements between some GCC members and international powers sometimes surpass those provided by member states to each other.

"This is a clear violation of the GCC economic pact which states that no member country shall grant privileges to non-members exceeding those granted under the pact," he explained.

His statements came one day after a long-awaited Arab free trade zone came into effect on Saturday, with the elimination of customs duties on inter-Arab trade in a bid to stimulate the region’s economy.

The free trade zone currently groups 17 Arab League member states, including both Saudi Arabia and Bahrain, whose trade represents 94 percent of all Arab trade.

Arab League Secretary-General Amr Moussa said he hoped the five other league members, Algeria, Mauritania, Somalia, Djibouti and the Union of the Comoros will soon join.

The objective of the zone is to increase inter-Arab trade as well as Arab and foreign investment in the region, which will increase growth rates and the standard of living of Arab citizens, Moussa said.

Dr. Al-Assaf said Saudi Arabia is not demanding Bahrain scrap the agreement with the US and it is not against these kinds of agreements being concluded with the US or any other country as long as they conform to the provisions of the GCC economic pact and the resolutions adopted by GCC leaders.

Minister of Finance Dr Ibrahim Al-Assaf has reiterated the support of the Kingdom of Saudi Arabia to agreements that are collectively signed by the GCC member states with other countries for the purpose of reaching a duty-free zone.

Addressing a press conference, Dr Al-Assaf said ’any individual signing of agreements by a GCC member state with other countries constitutes a flagrant violation to the economic agreement earlier signed by the GCC Leaders’.

’The Kingdom of Saudi Arabia believes that cooperation and economic integration constitute the corner stone for any joint Arab work’, he said.

Dr Al-Assaf refuted the reports which said that bilateral agreements don’t contradict with the Gulf Custom Union, and said the GCC Secretariat General had made it clear that bilateral agreements run counter to the agreements concluded by the GCC Leaders.

As regards the Arab duty-free zone, Dr Al-Assaf said the Arab countries signed an economic agreement in1983, and added ’but unfortunately the agreement was not seriously implemented ’.

’Taking that fact into account, the Kingdom of Saudi Arabia worked with other Arab countries in 1997 for establishing a duty-free zone’, he noted.

Dr Al-Assaf said bilateral agreements contradict with the requirements of the custom union earlier approved by the GCC Supreme Council.

’After the establishment the custom union, it is assumed that work will start for the establishment of the common market’, he pointed out adding that ’ but it is feared that the march of the custom union will be impeded due to violation of procedures pertaining to its establishment’.

Dr Al-Assaf confirmed the keenness of the Kingdom of Saudi Arabia on joint economic Arab work, and said the Kingdom had made great sacrifices for realizing that goal.

Foreign Minister Prince Saud Al-Faisal, speaking after the Manama summit, expressed alarm over some members entering into separate bilateral agreements with international powers instead of acting collectively. "These separate arrangements are not compatible with the spirit of the charter of the GCC. They diminish the collective bargaining power and weaken not only the solidarity of the GCC as a whole but also each of its members in both the intermediate and long terms," Prince Saud said.

Prince Saud Al-Faisal, the Foreign Minister, confirmed that the Kingdom of Saudi Arabia was aware of the occurrence of some negotiations between some Gulf Cooperation Council member countries and other non-member countries, but was not aware that the matters deals with a free trade zone.

He said that a study conducted by the GCC Secretariat General has shown the risks of such agreements that might be reached by some member states with non-member states.

Any similar agreement should mean from the practical point of view the destruction of the GCC in its capacity as an economic and customs bloc, he quoted the study as saying.

Despite that, the Kingdom has addressed this critical situation through judiciousness, consultation and negotiation, rejecting to be dragged by provocative sentiments, Prince Saud said, adding that the Kingdom will never allow its friendly relation with any GCC member state to be prejudiced by the negatives of to this case.

He confirmed that Saudi Arabia is sincerely keen to continue constructive cooperation with all members of the GCC to maintain the bloc’s very being.

This came in the weekly press briefing held by the Minister of Foreign Affairs at the Ministry of Foreign Affairs in Riyadh.

Prince Saud told reporters that all economic blocs are confined to their members and that the GCC is not an exception.

The signing by any member or more of an economic federation of a duty free trade zone with a non-member country merely means flagrant breach of a fundamental base of the federation, Prince Saud stated, adding that the GCC is not an exception of this concept.

He said talk is now not about an ordinary economic agreement of the kind that comes every day in the news, but we are speaking about a duty free trade zone which is totally different from other ordinary agreements as it offers a non-member county the same privileges of the GCC member countries and at the same time denies them the rights obtained by the agreement GCC-member signatory.

He emphasized that the problem doesn’t concern only a particular member country but rather the entire bloc and that it does endanger its very being.

The problem is never between the Kingdom of Saudi Arabia and any other GCC member and/or members, he added.

It is also neither an interference in the sovereignty of another sisterly country as the Kingdom’s position was not based on a selfish interest but emanating from its keenness of the survival and effectiveness of this entity and the continuation of its long march that turned quarter of a century.

Saudi Arabia’s Foreign Minister declared that the Kingdom would never resort to escalation or exaggeration of the problem, calling for a solution that would appease all parties as long as there is room to reach a solution.

As customary in such cases, efforts of concerned parties would be built up to contain the crisis and continue the blessed march of the Council, he told the press.

In response to a question on the repercussions of the U.S. - Bahraini agreement over the Kingdom’s endeavor to join the WTO, Prince Saud dashed out such assumption.

I would like to explain that the detriment incurred by other GCC countries from this agreement is sizable, and is a real harm, as the privileges that could be reached through negotiation will be subject to this agreement, he said.

Asked about what the Kingdom views to get out of this impasse, Prince Saud expressed belief that the Kingdom alone could not determine the solution.

The solution emanates from a collective perspective of the future of the GCC, the future of the agreement and the future of guides which have collectively been crystallized by the GCC member states in the economic framework and the economic integration, he said.

On the other hand "companies that are exporting Israeli products will be boycotted by the Kingdom," said the president of the Saudi Exports Development Center (SEDC) of the Saudi Council of Chambers of Commerce and Industry, Dr. Abdul Rahman Al-Zamil.

He was speaking at a press conference to announce the first Saudi exporters conference which was opened by the Commerce & Industry Minister Dr. Hashem Yamani last Tuesday.

Dr. Zamil said that these companies would be reported to the Damascus-based Arab-Israeli Boycott Bureau for blacklisting. He added that the matter would be taken up at the meeting.

He also threatened to recommend the imposition of tariffs on any country which promotes Israeli products.

Dr. Zamil expressed hopes that the establishment of a Supreme Commission for Exports Promotion would be announced next year. "Now the matter has been referred to the Council of Ministers by a study team comprising officials from the ministries of industries, commerce, finance and the Saudi Arabian General Investment Authority (SAGIA) and SEDC," he added.

"Although there are no direct imports to Iraq, a substantial quantity of Saudi products can be found in Baghdad. Saudi exports find their way there through the Gulf countries. Our exports to United Arab Emirates, Kuwait and Jordan have increased many times, indicating half of Saudi products are being channelled to Iraq through these three countries," Dr. Zamil noted. Regarding the conference, Dr. Zamil said it is under the patronage of Dr Yamani who will deliver the keynote address.

The president said that non-oil exports had jumped from SR3 billion in 1981 to SR32.4 billion in 2002. "This is an indication of the trend to diversification of the economic base," he added. In 2004, non-oil exports are estimated to reach SR45 billion. The president said the SEDC had been urging the government to re-define non-oil exports. Once the new definition is made, the volume of exports will automatically jump from SR45 to SR85 billion.

SEDC has released a 341-page manual in Arabic and English. The book was published in cooperation with the Geneva-based International Trade Center and is available free-of-charge to Saudi exporters. "It is an Export Answer Book for small and medium-sized exporters in the Kingdom," Dr. Zamil explained.

Meanwhile the Kingdom of Saudi Arabia is keen on seeing an increase in trade exchange with the State of Kuwait and is determined to counter all impediments curbing brisk exchange, Saudi Minister of Commerce and Industry Hashim Al-Yamani told KUNA.

In exclusive remarks, the minister said the meeting earlier in the day with the visiting delegation from Kuwait Chamber of Commerce and Industry was "fruitful" and discussed all impediments to smooth exchange of goods between the two neighbor states.

He also revealed that Kuwait Chamber of Commerce and Industry and the Saudi Council of Chambers of Commerce and Industry approved establishment of a committee that would hold quarterly meetings to discuss means of bringing smoother and stronger trade exchange.

Kuwait’s Chamber of Commerce and Industry Chairman Ali Al-Ghanim noted that such meetings are of great importance as they give further encouragement to efforts in this regard in an atmosphere of fruitful transparency.

The meeting, held at the minister’s office, was attended by Kuwait Chamber members and the Chairman of Riyadh Chamber of Commerce and Industry Abdurrahman Al-Jraisi.

The delegation from Kuwait Chamber of Commerce and Industry had arrived in Riyadh last night on an official three-day visit. The delegation were received upon arrival by the Kuwaiti Ambassador to the kingdom Sheikh Jaber Al-Duaij Al-Ibrahim Al-Sabah and Chairman of Riyadh Chamber of Commerce and Industry Abdul Rahman Al-Jeraisi.

The Saudi Minister of Commerce and Industry Dr. Hashim Yamani received the Chairman of Kuwait’s Chamber of Commerce and Industry Ali Al-Ghanim and his accompanying delegation. They reviewed bilateral relations and other issues of mutual interest. In the year 2003, the volume of trade exchange between the Kingdom and Kuwait amounted to SR 3, 467 million and the number of joint projects totaled 61 with an invested capital of SR 21, 867 million.

The Kuwait Chamber of Commerce and Industry (KCCI) signed on Tuesday a cooperation agreement with the Saudi Council of Chambers of Commerce and Industry. The agreement is expected to bolster bilateral cooperation between the two Arab Gulf nations and increase their trade exchange.

Head of the Saudi Council, Abdul Rahman Al-Jeraisi told a meeting that preceded signing the agreement that the two sides worked hard to eliminate any hurdles on the way of achieving their proposed goals.

He hoped trade exchange between Kuwait and Saudi Arabia would be doubled in the soon future, highlighting the opportunities created by a number of Saudi mega projects for Kuwaiti investors.

Ali Thnayan Al-Ghanim, chairman of the KCCI said, on his part, the revenues of investments in the Gulf states and other Arab nations have proven to be greater than those of investments in foreign countries.

He said Kuwait has plans to spend USD40 billion on public utility projects and invited Saudi businesspersons to invest in Kuwait. He suggested the creation of a mutual fund to invest in joint projects and boost cooperation among the two states’ private firms.

source : Ain-Al-Yaqeen

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