CHAPTER 3

COMMERCIAL POLICY AND FOREIGN TRADE

OVERVIEW

    The Kingdom of Saudi Arabia is dedicated to the concept of free trade based on competition. There are no foreign exchange controls, quantitative restrictions or tariff barriers. Any increase in imports from any country depends on competitive prices, good quality, and punctual delivery. Imports, wholesale, and retail trade are in the hands of the Saudi private sector. On the whole, Saudi Arabia pursues a predominantly liberal trade policy. No price restrictions or quotas are imposed on importers except for alcoholic beverages and pork products which are prohibited.

    The significance of foreign trade to the national economy comes from the unique position of Saudi Arabia in the world economy, which is characterized by the following:

• The Kingdom is the world's leading crude oil exporter.
• The Kingdom holds substantial public financial assets abroad in the form of liquid reserves and other investments. The private sector also has its own foreign investments.
• Since the mid 1980's, the Kingdom has emerged on the international scene as an exporter of processed goods, and in particular, petrochemicals.

Throughout the past twenty-five years, the rapid growth process has coincided with the establishment of the Kingdom as an important market for the world's major exporting countries. Foreign trade is expected to play an important role in the development process, as the share of total exports in GDP is expected to increase because of expanding non-oil exports. Furthermore, development efforts in the industrial sector are expected to accelerate import substitution and increase Saudi petrochemical exports in the late 1990s.

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