Trade policy review report by the secretariat

3  TRADE AND INVESTMENT REGIME

3.1  General Framework

1.1.  The Kingdom of Saudi Arabia is a monarchy. The King is the head of the Government, judiciary and the Commander in Chief of the military. The Cabinet³, headed by the King, exercises both executive and legislative powers and executes the legislative authority with the assistance of the Consultative Council (Majlis Al-Shura).⁴ The King started appointing women as members of the Consultative Council in January 2013. In 2015, the King introduced the Crown Prince and Deputy Crown Prince as deputy prime ministers⁵ in the Cabinet. Municipal elections, which are held every five years, were introduced in 2005.

1.2.  Since the last review, some structural changes in the organization of the government bodies have been introduced: under Royal Decree No. A/69 of 29 January 2015, a number of committees and councils⁶ were annulled and replaced by the Political and Security Affairs Council and the Economic and Development Affairs Council; and the role of the Supreme Economic Council has been taken over by the Economic and Development Affairs Council. According to the authorities, the Bureau of Experts (under the Council of Ministers), in collaboration with relevant bodies, is to review laws, regulations and ordinances affected by the annulment of the old committees and councils. The Bureau is also expected to lay down the administrative arrangements required in this regard, including drawing up the responsibilities of the new councils.

1.3.  The judicial system continues to be based on Shariah (Islamic law).⁷ The Constitution of the Kingdom protects the independence of the judiciary and judges. The judicial system consists of: (i) specialized courts (i.e. civil public courts, commercial courts, family courts, criminal courts and labour courts); (ii) courts of appeal; and (iii) the Supreme Court. These courts are responsible for adjudicating all cases except administrative cases, which are handled by the Board of Grievances.⁸ The law also provides for alternatives to adjudicate commercial matters, such as arbitration.⁹

1.4.  In 2013, Commercial Courts were established by the Shariah Pleadings Law.¹⁰ The Commercial Courts have jurisdiction for all commercial disputes, cases filed against and between natural and corporate persons in relation to their businesses, cases involving alleged violations of commercial legislation (without prejudice to the jurisdiction of the Board of Grievances), and bankruptcy cases and related procedures. The Law also sets out procedures for appeals to the courts of appeal and to the Supreme Court.

1.5.  Since the last review, policies, including trade policies, continue to be formulated and implemented by means of legal instruments. Sharia is the highest legal instrument, followed, in order of precedence, by:

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  Royal Decrees, which are issued by the King to enact primary legislation and amendments approved by the Council of Ministers, and to approve international treaties;
  
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  Royal Orders which are issued by the King and may address any matter;
  
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  Council of Ministers Decisions, which promulgate implementing regulations to address particular matters raised under primary legislation, without a Royal Decree or Order;
  
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  Ministerial Decisions are issued to make effective implementing regulations; and
  
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  Circulars, which are issued by ministries to clarify rules/regulations pursuant to a piece of legislation.
  

1.6.  The Council of Ministers and the Consultative Council receive draft legislation prepared by the relevant government agencies for their review and further submission to the King for issuance of Royal Decree to enact the legislation. In case of divergent views between the two bodies on the draft legislation, the King has the final word. All legal instruments are published in the Official Gazette (Umm Al-Qura) and enter into force on the date of publication, unless otherwise specified.

1.7.  Following the ratification by Royal Decree and enactment by the Consultative Council and Council of Ministers, international agreements enter into force as domestic laws. Where conflicts or inconsistencies between international agreements and domestic law occur, the most recent laws take precedence.¹¹

3.2  Trade Policy Formulation

1.1.  During the period under review, there have been no significant changes to the ministries responsible for the day-to-day formulation and implementation of trade policy in Saudi Arabia. The Ministry of Commerce and Industry (MCI) has overall responsibility for trade policy, including ensuring compliance with the WTO agreements. The MCI coordinates with other relevant ministries and agencies, such as the Economic and Development Affairs Council, and the Saudi Negotiating Team in charge of WTO-related issues. The Saudi Negotiating Team is composed of representatives from MCI, Ministry of Finance, Ministry of Economy and Planning, Ministry of Petroleum and Mineral Resources, Ministry of Agriculture, Ministry of Foreign Affairs, and Saudi Arabian Monetary Agency.

1.2.  The private sector also provides inputs either directly to the MCI or through the chambers of commerce and industry. Each chamber, governed by a board of directors, is a private association to which local businesses (including traders, professionals, and industrialists) belong. The Minister of Commerce and Industry appoints one third of the Directors; the rest are elected by the members. There are currently twenty-eight chambers of commerce and industry located around the country.¹²

1.3.  As a member State of the Gulf Cooperation Council (GCC), Saudi Arabia is in the process of harmonizing its trade-related legislation with that of the other members. According to the authorities, this has been achieved to a large extent. To date, seven GCC resolutions had been adopted by the GCC member States covering, inter alia, customs union requirements, the extension of domestic treatment to all GCC nationals, customs-related issues, and industrial organization (Section 3).

1.4.  The main trade-related laws and regulations are presented in Table A2.1. During the period under review, Saudi Arabia has notified the Gulf Cooperation Council ("GCC") Amended Common Law on Anti-Dumping, Countervailing and Safeguard Measures (the "Law") to the WTO.¹³

1.5.  Investment in Saudi Arabia is regulated by the Commercial Agencies Law of 1962 and its Implementing Regulations of 1981, while foreign investment, in particular, is governed by the Foreign Investment Law 2000 and its implementing regulations adopted in 2002. This was further amended through the Saudi Arabian General Investment Authority Board Resolution No. 2/74 adopted in 2014 (Section 2.5).