Includes the barriers (tariff and non-tariff) that U.S. companies face when exporting to this country.
As a member of the World Trade Organization (WTO), Saudi Arabia has taken positive steps to become a more open, transparent, and predictable market; however, U.S. firms report experiencing market barriers in the following areas: intellectual property rights protection, technical standards and regulations, performance and localization requirements, delayed payments, dispute resolution, and the Arab League Boycott.
Intellectual Property Rights Protection (IPR)
Saudi Arabia was recently removed from the United States Trade Representative Special 301 Report (Priority Watch List) on April 2022 due to steps the Saudi Authority for Intellectual Property took to publish its IP enforcement procedures; increase enforcement against counterfeit and pirated goods and online pirated content; create specialized IP enforcement courts with trained judges and expedited timelines; conduct strong IP awareness, outreach, training, and support; set up a centralized committee to coordinate IP enforcement actions across multiple authorities; and train IP specialists in 76 different authorities to increase government compliance with IP laws. Stakeholders continue to raise concerns that the Saudi Arabia Food and Drug Authority (SFDA) granted marketing approval to domestic companies for subsequent versions of registered products, without requiring the submission of data that meets the same requirements applied to the initial applicant, despite the period of protection provided to the initial applicant by Saudi regulations. The SFDA has not granted these concerning marketing approvals since October 2020, and the United States will continue to closely monitor SFDA’s actions in this area. For further information, the 2022 Special 301 Report can be viewed on the USTR website.
Technical Standards and Regulations
The Saudi Standards, Metrology and Quality Organization (SASO) continues to move toward adherence to a single standard in technical regulations, which is often based on International Organization for Standardization or International Electrotechnical Commission standards, to the exclusion of other international standards, such as those developed by U.S.-domiciled standards development organizations. Saudi Arabia’s exclusion of these other international standards, which are often used by U.S. manufacturers, can create significant market access restrictions for industrial and consumer products exported from the United States. In addition to SASO, several other government agencies are responsible for specific products or issues related to imports, such as the Saudi Food and Drug Authority and the Ministry of Environment, Water and Agriculture. The Zakat, Tax, and Customs Authority under the Ministry of Finance remains the principal agency responsible for implementing customs procedures.
Performance and Localization Requirements
In 2019, the Local Content and Government Procurement Authority (LCGPA) was established to develop local content in government procurement and to enhance its efficiency. As the authority responsible for local content policy, the LCGPA established strategic partnerships with companies to assist them in the implementation of their own, self-initiated local content programs. Government-controlled enterprises in Saudi Arabia are increasingly introducing local content requirements for foreign firms. Saudi Aramco’s “In-Kingdom Total Value Added” (IKTVA) program, for example, strongly encourages the purchase of goods and services from a local supplier base and aims to retain Aramco’s percentage of locally manufactured energy-related goods and services at a minimum of 70 percent. Saudi Arabia’s military is reforming its procurement processes and policies to incorporate new Saudi employment and localized production goals. The Saudi Arabian Government’s Vision 2030 program calls for 50 percent of defense materials to be produced and procured locally by 2030, and simultaneously seeks comparable increases in the number of Saudis employed in this sector.
U.S. companies continue to experience significant payment delays for contracts performed for Saudi public- and private-sector entities. In April 2021, the Ministry of Finance launched the “Etimad” platform which, in theory, enables companies to submit their financial claims online to government agencies.
Traditionally dispute settlement and enforcement of foreign arbitral awards in Saudi Arabia have proven time-consuming and uncertain, carrying the risk that sharia principles can potentially trump any foreign judgments or legal precedents. Even after a decision is reached in a dispute, effective enforcement of the judgment can take a long period of time. In 2016, the Saudi Center for Commercial Arbitration (SCCA) was established with arbitration rules that conform to internationally recognized standards and principles. The SCCA offers dispute resolution services to both domestic and foreign firms. Some firms have already started incorporating the SCCA by reference in their contracts. SCCA arbitration awards can be enforced in local courts if they comply with sharia. The enforcement of foreign arbitration awards for private-sector disputes has yet to be upheld in practice. Saudi Arabian Government agencies are not allowed to agree to international arbitration without express approval from the Council of Ministers, which is rarely granted.
Arab League Boycott
The GCC announced in the fall of 1994 that its members would no longer enforce the secondary and tertiary aspects of the Arab League Boycott. The primary boycott against Israeli companies and products still applies. Advice on boycott and anti-boycott related matters is available from the Office of Antiboycott Compliance at the U.S. Department of Commerce’s Bureau of Industry and Security at: https://www.bis.doc.gov/index.php/enforcement/oac.