A bilateral agreement between Riyadh and Washington in September paved the way for the multilateral deal. ‘The exact terms of Saudi accession won’t be published until after the General Council’s rubber stamp, but they will be based 95 per cent on the deals agreed with the US and the EU,’ says a local economist. Working party agreement also signals that some consensus has been reached between Saudi Arabia and the EU on the contentious issue of gas pricing in the petrochemicals industry (Petrochemicals, MEED Special Report, 28:10:05 pages 40-41).
A key issue during talks was whether the kingdom would join as a developed or developing nation, the latter allowing extended transition time. The designation ‘developed’ appears to have been settled on, although as with all countries, additional adjustment time has been negotiated for certain service industries.
Accession will be felt mainly in the services and agricultural sectors. ‘The kingdom is already open in the import of goods – there are a few protected sectors but in most areas, tariffs are between zero and 5 per cent – and imports already account for some 52 per cent of the kingdom’s non-oil private sector GDP [gross domestic product], so we are importing as much as we can and need,’ says Khan Zahid, chief economist and vice-president of Riyad Bank
. ‘In Western states, services account for a big part of the economy and many firms are waiting to go abroad. However, looking at the experience of other countries which have acceded, none have been swamped or had their economies destroyed.’