The Marketplace Report: Saudis Join WTO

Saudi Arabia won admittance to the World Trade Organization on Friday. Noah Adams speaks with Stephen Beard of Marketplace about how membership in the free trade group could affect the monarchy ruling the oil-rich nation, anxious to keep Western influence out but desperate to develop jobs for a restless young population.

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NOAH ADAMS, host:

Back now with DAY TO DAY. I'm Noah Adams.

Saudi Arabia has just been given the green light to join the World Trade Organization. Membership is likely to bring big changes to the desert kingdom, one of the most devout and insular countries in the Middle East. Gaining full access to the world trading group has taken the Saudis 12 years of tough talking. Joining us from the MARKETPLACE newsroom in London is Stephen Beard.

Stephen, why does it take Saudi Arabia that long, a rich country and the world's biggest oil exporter, to get into the WTO?

STEPHEN BEARD ("Marketplace"): Well, one of the reasons, Noah, is that that insularity that you refer to and the very conservative brand of Islam that the country practices, this has led a lot of Saudis to recoil from WTO membership. The fear has been that, you know, once you join this Western-dominated body committed to the goal of free trade, you open the floodgates. For example, you make it impossible for the Saudis to ban the import of things they find offensive like alcohol, pork and what they would regard as pornography.

ADAMS: Now some of those things have changed. The restrictions are relaxed a bit, especially about import controls?

BEARD: Well, yes. The Saudis have agreed to lift many import restrictions, but as analyst George Joffe points out, the mullahs need not be too concerned; WTO membership is unlikely to trigger a tidal wave of booze, pork and porn into the kingdom.

Professor GEORGE JOFFE (Cambridge University): I suspect it'll be extremely difficult to actually sell such products in Saudi Arabia, and therefore, in effect, there'll be a de facto ban on their import, even though there's no legislation to actually say so.

BEARD: Another obstacle to membership has been the fact that the Saudis have to agree to allow imports from the old enemy, Israel. But again, practically speaking, that may not be too much of a problem; there may not be much demand for Israeli products in Saudi Arabia.

ADAMS: Well, given all that, though, why would Saudi Arabia want to join the WTO if they have those misgivings?

BEARD: The country has a big problem: rapidly growing population, large numbers of unemployed, disaffected young people, which poses all sorts of social and security threats. We can't, of course, forget that 9/11 was mainly the work of young Saudi nationals. The Saudi government believes that WTO membership will bring more trade and investment from the outside world, which will develop more labor-intensive businesses, creating more jobs. The country may be awash with oil and oil money, but this tends not to generate a lot of jobs, and it can be very cyclical. Revenues collapse when the price of oil falls sharply, as it has on several occasions over the past decade.

Anyway, more on Saudi Arabia later today on "Marketplace," and we'll conclude our New York special looking at some of the changes happening to the neighborhoods of Lower Manhattan.

ADAMS: Stephen Beard of public radio's daily business show, "Marketplace." "Marketplace" joins us regularly at this time for talks about money and business. It's produced by American Public Media.

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