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WTO: USA & Saudi Arabia Conference - Coggle Diagram
WTO: USA & Saudi Arabia Conference
Understanding the World Trade Organisation
Function
Administering trade agreements
Acting as a forum for trade negotiations
Settling trade disputes
Reviewing national trade policies
Building the trade capacity of developing economies
Cooperating with other international organizations
History
The WTO officially commenced on 1 January 1995
It started under the Marrakesh Agreement which was signed by 123 nations on 15 April 1994
It replaced the General Agreement on Tariffs and Trade (GATT), which commenced in 1948
Introduction
The WTO is the only international organization dealing with the global rules of trade
The WTO has 164 members, accounting for 98% of world trade
The WTO’s top level decision-making body is the Ministerial Conference, which meets usually every two years
Both Saudi Arabia and the USA are part of WTO
WTO Agreements
Through these agreements, WTO members operate a non-discriminatory trading system that spells out their rights and their obligations
Goods
Deals with specific sectors relating to goods, such as agriculture, and with specific issues such as product standards, subsidies etc.
Services
Banks, insurance firms, telecommunications companies, tour operators, hotel chains and transport companies looking to do business abroad enjoy the same principles of more open trade that originally only applied to trade in goods
Intellectual Property
The WTO’s Intellectual Property Agreement contains rules for trade in ideas and creativity
The rules state how copyrights, patents, trademarks etc. should be protected when trade is involved
Dispute Settlement
Governments bring disputes to the WTO if they think their rights under the WTO agreements are being infringed
Trade Monitoring
Improve's transparency and members see the reviews as constructive feedback on their policies
Solutions for Saudi Arabia's Trade Issues with USA
Problem 1:
No trust because of the killing of Jamal Khashoggi
Context of Problem
Saudi Arabia is upset about the fact that USA has lost its trust in the country because of the assassination of Khashoggi
He was a Saudi journalist who covered major stories, including the:
Soviet invasion of Afghanistan
The rise of the late al-Qaeda leader Osama Bin Laden
After he went into a self-imposed exile in the USA, he started writing about and criticised the policies of Crown Prince Mohammed bin Salman
He had to visit the Saudi consulate in Istanbul, however, he never came back out of there
Investigators concluded that Khashoggi was forcibly restrained after a struggle and injected with a large amount of a drug, resulting in an overdose that led to his death
The Saudi public prosecution said in late September 2018 that a total of 31 individuals were investigated over the killing and that 21 of them were arrested
However, after this event occurred, the USA lost trust in Saudi Arabia as they believed they were dealing with criminals which is now troubling Saudi Arabia as they believe this bilateral relationship now lacks trust
Solution to Problem
Saudi Arabia should be more understanding that the USA has lost it's trust and needs time to re-gain it
Even though Saudi Arabia has claimed that they had nothing to do with the killing of Khashoggi, it is human tendency for anyone to still have their doubts, therefore they should be understanding of the sentiments that the USA currently possesses
In order to regain the USA's trust, they can also negotiate a trade agreement that guarantees that they will export crude oil to them at least for the next 10 years and that there will be nothing to worry about
Problem 2:
Imbalance in the inter-dependence of both countries
Context of Problem
The “Shale Revolution” refers to the combination of hydraulic fracturing and horizontal drilling that allowed the USA to increase its production of oil and natural gas which now account for 36% of total U.S. crude oil production
This new production capacity has reduced the United States’ dependence on oil imports from overseas and continues to provide an important economic boost
Saudi Arabia still imports many things from the USA, although, the USA now imports lesser quantities of oil from Saudi Arabia, thus showing the imbalance present in their relationship
$23.9 billion is how much the USA exports to Saudi Arabia
$14.9 billion is how much USA imports from Saudi Arabia
This becomes a problem because in case this relationship falls apart, Saudi Arabia will be impacted a lot more than the USA which may also lead to political repression
Solution to Problem
There are 2 options to solve this problem:
With the help of the IMF, Saudi Arabia can look at diversifying it's economy by focusing on the private sector such as tourism, manufacturing and renewable energy in order to drive growth
The WTO can also help Saudi Arabia debate trade negotiations with other countries so that they can decrease their reliance on the USA
Some of these countries include China, UAE, India etc.
Solutions for USA's Trade Issues with Saudi Arabia
Problem 1:
Dealing with Potential Criminals
Context of Problem
Background information has been given in "Problem 1" of the Saudi Arabian side
However, from the USA's perspective, they feel unsafe dealing with potential criminals as many people believe that it was actually the Prince that had given the order to kill the journalist, therefore, Biden is worried that the entire government may be conducting wrongful acts which is why he does not trust them anymore
Solution to Problem
From the USA's side, even though an incident like this has occurred, they need to accept Saudi Arabia's side when they have declared that it was not them that killed Khashoggi by trusting them
It is also better that the USA lets internal affairs of the country not affect their trade relation as Saudi Arabia is one of their very big contributors and they would not want to destroy this relationship that did not occur on their soil
Problem 2
: Warfare in Yemen
Context of Problem
The UN had verified the deaths of at least 7,700 civilians by March 2020, with most caused by Saudi-led coalition air strikes
The Houthi movement ousted president of Yemen Abdrabbuh Mansur Hadi due to political and economical griviences
Since he was pro-Saudi, he then called upon them for help which is why the country then launched a intervention launched on 26 March 2015
The intervention initially consisted of a bombing campaign on Houthi rebels and later a naval blockade and the deployment of ground forces into Yemen
Since the USA is supporting them by providing them with arms, they in no way want their name associated to being the cause of this humanitarian crisis/genocide, rather they have been trying to maintain a consistent relationship with Yemen by providing them with financial aid
Now that Saudi Arabia is named to be the cause of what the UN is calling “the greatest humanitarian threat” is going to definitely be a cause of a concern for the USA
Solution to Problem
In order to solve this problem, a small addition in the current TIFA between both the countries will be required
It is also suggested that the USA takes the opinion of the UN in understanding the role they play in the Yemen crisis and attain any help in providing aid to the country so that there is no loophole where they could be blamed for the impact of these events
Both countries can agree to add another article, Article 9 which will state that either country will not be held liable for the use of the imports attained by them, therefore, with the help of this article, in no way will the USA be held liable for the arm use in terms of the Yemen crisis
Problem 3
: Gun Violence in Saudi Arabia
Context of Problem
The annual rate of all gun-related deaths in Saudi Arabia is 0.35 per 100,000 of population
This value is neither to high or low, however, the USA's arms could be blamed for this, thus raising concern
Solution to Problem
The same solution of adding Article 9 to the TIFA could be used to solve this problem too
An elaboration to this solution can be found in the solution branch of problem 2 of the USA's side
Background of USA & Saudi Arabia's Trade Relation
The USA is Saudi Arabia’s second-largest trading partner
Saudi Arabia is one of the United States’ largest trading partners in the Middle East
USA
Exports
Aircraft ($240 billion in 2019)
Machinery, nuclear reactors, boilers ($1.99 billion in 2019)
Vehicles other than railway, tramway (1.99 billion in 2019)
Arms and ammunition, parts and accessories ($1.64 billion in 2019)
Imports
Comprise of exports of Saudi Arabia
Saudi Arabia
Exports
Mineral fuels ($12 billion)
Saudi Arabia is the third largest source of oil for the United States
They give an estimated half a million barrels of oil per day to the market
Aluminum ($295 million)
Fertilizers ($231 million)
Organic chemicals ($183 million)
Imports
Comprise of exports of USA
The U.S. and Saudi Arabia currently have a trade investment framework agreement :
The agreement was signed in 2003
It is typically an umbrella agreement for ongoing structured dialogue between the United States and foreign governments on economic reform and trade liberalization
The agreement promotes the establishment of:
Legal protections for investors
Improvements in intellectual property protection
More transparent and efficient customs procedures
Greater transparency in government and commercial regulations
Link to an available copy of the official TIFA
http://www.sice.oas.org/ctyindex/USA/TIFAs/USA_SAU_e.pdf