Question

A. Analyse the existence of WTO-World Trade Organization for development of Middle East nations. [1000 – 1200 words].

B. Identify the impact of WTO’s role on any ONE of the industry [Petrochemical Industry or Telecommunications Industry or Financial Sectors] for the development of Industrial sector and economic growth of Saudi Arabia. [1000-1200]

Answer 1

1. Membership in the WTO and adherence to its rules and regulations can be advantageous to the Middle East countries, in a variety of ways.

• They will be entitled to most-favored nation treatment and national status treatment, effectively securing market access.
• With the world becoming more of an integrated global community, membership will allow these countries to be involved and have their interests represented appropriately.
• Membership and compliance with WTO obligations encourages greater private sector participation, thus increasing competition, efficiency and product diversification.
• Membership and compliance will increase global confidence in these countries and, potentially, direct foreign investment.
• Adherence to WTO rules and regulations will provide the countries with leverage in brokering future negotiations with the WTO and its other members.
• Membership in the WTO will ensure the countries have a fair forum for settling their potential trade disputes with other members who may wield more trading power.

The countries of the Middle East in joining the WTO and complying with their obligations and commitments require a revamping of these countries’ legal, commercial and trade structures. Moreover, these countries must address the issues of corruption in their systems and the implementation of effective legal systems to enforce the changes occurring and protect investors’ rights. Resolution of these issues will be key to open competition. The Middle East have begun to recognize the importance of integratratung successfully into the global international community and the international trade arena.

Telecommunications

1.                  Competition in the mobile telecommunications market started in 2005, with the issuance of a 2nd mobile license to Mobily (Etihad Etisalat) and 2 fixed data services licenses to Bayanat and the Integrated Telecommunications Company, and has resulted in major improvements in terms of service offerings, quality of service, customer care, reduced prices, and subscriber growth.

2.                  The licensing process for the issuance of a third mobile license and Fixed Services licenses started in 2006. For the mobile license nine applicants were technically qualified for opening of their financial bids. Zain Saudi Arabia (MTC, Kuwait) had the highest bid and was issued the third mobile license in 2008. In addition three fixed services applicants were technically qualified and selected, and a license issued to Etihad Atheeb Telecom (Batelco - Bahrain) in 2009.

3.                  Fixed telephone lines stood at 4.13 million at the end of 2010, of which around 3 million, or 72% were residential lines. This represents a household teledensity of around 67%, or 67 residential lines for every 100 households. The population teledensity is around 15 % or 15 telephone lines for every 100 inhabitants.

4.                  Broadband subscriptions have grown 68-fold over the last 5 years, from 64,000 in 2005 to over 4.4 million at the end of 2010. The broadband penetration rate stood at around 16 % of population at the end of 2010, or 16 broadband connections for every 100 inhabitants.

5.                  Broadband household penetration is a more relevant indicator as a single broadband connection in a house can provide high speed data access to all members of a household. At the end of 2010, household broadband penetration stood at around 42%.

6.                  Despite the high growth rates over the last few years, there is still potential for more growth in broadband services. The broadband market is significantly underserved in many suburban and rural areas. With the opening of the fixed telecommunications market to competition, the intense competition in mobile broadband offerings, and the increased consumer demand for fast internet connections, the broadband market is expected to continue to grow at a fast pace, as mobile and fixed service providers continue to roll out their broadband networks with competitors fulfilling the growing demand.

7.                  The number of internet users grew from around 1 million in 2001 to 11.4 million at the end of 2010, more than a ten-fold increase in 9 years. Internet penetration increased to 41% of the population by the end of 2010 or 41 Internet users for every 100 inhabitants. This internet penetration rate is lower than that of developed countries (64%), but is well above the world average (26%).

8.                  The Communication and Information Technology Commission (CITC) has launched a study to assess the feasibility of issuing unified licenses as well as expanding resale in major ICT markets.