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On October 28, 2005 World Trade Organization Director-General
Pascal Lamy announced the conclusion of "Working Party"
negotiations for Saudi Arabia's accession to the global trading
organization. Closing the Working Party phase, a process that
began in July 1993, was the last significant hurdle on the path to
WTO membership for the Kingdom. The final step, said to be merely
a formality, is referral of the accession request to the WTO
General Council, expected to occur on November 11, 2005.
Today Arab News, the largest English daily in
the Kingdom, in an editorial, discussed the implications of WTO
membership and globalization on businesses in Saudi Arabia. We are
pleased to share it with you.
Patrick W. Ryan
Editorial: WTO Membership
Arab News
http://www.ArabNews.com
30 October 2005
That the Kingdom is on the threshold of full
membership in the World Trade Organization demands a look at what
it would mean for country and our economy. The conclusion Friday
of 12 years of long and complex negotiations will lead to formal
acceptance of the Kingdom’s membership application by the WTO
General Council when it meets on Nov. 11.
It has been a long haul in which the
negotiators have concerned themselves with both the minutiae of
trade such as quails eggs and major issues such as capital markets
liberalization. Although it has taken a long time, all those
involved, both in the WTO and the Kingdom, deserve warm
congratulations for sticking doggedly and successfully to their
task. Even while the process was taking place, the notion of
globalization in world trade became central. Though the rising
industrial nations such as China and India are building their own
new technology and expertise, they are largely producing on behalf
of companies from other countries — generally, though not
exclusively in Europe and North America.
Globalization effectively means that it is no
longer countries which are trading with each other but the world
that is trading with itself. For the Kingdom, WTO membership was
essential if it wished to become part of this new globalized
economy. Among the 148 existing WTO members, there were those long
convinced that the absence of the world’s largest oil exporter
was an absurdity and that its voice should be heard.
However, for the Kingdom itself, membership
poses considerable challenges, both commercial and psychological.
Saudi business is going to have to learn two hard lessons
virtually simultaneously. First it must figure out how to survive
without captive markets. At the very same time, it has to find out
how to face competition from international companies which
themselves long ago learned how to survive in highly competitive
markets. During the transitional period of WTO membership, some
Saudi companies will have no difficulty in transforming themselves
into world-class businesses, if they are not so already. Others
will take foreign partners. Still others will merge to strengthen
their capital and operational bases. There will however be many
who will simply not manage the transformation. Part of their
problem may be that they will not persuade middle management and
other employees to review the way they work, tighten their
discipline and look always to the best way to increase efficiency
and profitability. With an increasing flow of graduates coming
into the job market, existing workers will also begin to realize
that if they fail to deliver, there will be others eager to take
their places.
It is understandable that a few Saudis still
regret the need to embrace the changes inherent in WTO membership
and point to the considerable achievements the Kingdom has made by
itself in the last 30 years. They ignore the fact that the world
moves on. Indeed, it is because of the astonishing achievements of
the last three decades that we are now ready to take our place in
the WTO and face up to the challenges that membership will bring.
Source: Arab
News
Reprinted with permission.
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