VI. TRADE REGULATIONS AND STANDARDS Tariffs and Import Taxes Saudi Arabia does not impose any import taxes. Customs duties vary from zero to 30 percent applied on the cost, insurance, and freight value as follows: Sugar, rice, soybean meal, livestock, fresh or frozen meat, corn and barley, and tea, coffee and cardamon are exempt. A 30 percent duty rate is applied on tobacco. A 20 percent tariff is applied on the following: Some biscuits and candies, table eggs, poultry meat, dairy products, paints, bleach, cleaning products, desert coolers, aluminum (rods, pipes, structures, drums, and boxes), mineral water, dry batteries, salt, lubricating oils, electric cables, oxygen and ethylene gas, plastic household equipment and utensils, wood products including furniture, steel (pipes, rods, tubes, fencing, and barbed wire), cement, and soap. Other items carry a 12 percent customs duty. In accordance with the Unified Economic Agreement between the Gulf Cooperation Council states (GCC: Saudi Arabia, United Arab Emirates, Bahrain, Oman, Qatar, and Kuwait), products manufactured in any one of these member states will be exempt from customs duties when exported to any of the GCC states provided that 51 percent of the factory equity is owned by a GCC national. In practice, some non-tariff barriers remain. The Statute for Protection and Encouragement of National Industries provides certain privileges to protect local industry by way of limiting or prohibiting imports of competitive products, or raising customs duties from 12 to 20 percent on the imports of competitive products. This "infant industry" protection is usually given only when the local supplier is able to meet 50 percent of local requirements with no loss in the quality of the product, though exceptions exist. In addition, licensed manufacturers may apply for and receive an exemption of duty on imported raw materials and components. Customs Valuation All merchandise moving through Saudi customs ports is appraised by the Department of Customs of the Ministry of Finance. Import valuation is primarily used for collection of import duties and often does not reflect the actual transaction value. Saudi customs valuation procedures are not GATT-consistent, nor are they based on invoice value. Minimum prices are used, which is contrary to GATT. Customs agents rely on their own experience and local prices, as well as some contact with manufacturers, to assess import tariffs. For statistical purposes, the valuation of imported merchandise is the CIF value. The value of exported merchandise is based on free on board valuation (FOB). The Saudi tariff nomenclature is consistent with the Harmonized System. There does not seem to be a significant body of rule-making or documentation available. Appeals are frequently done orally, and an appeals committee, under the Deputy-Director General of Customs, meets frequently. Although Saudi Arabia is a member of the Customs Coordination Council, Saudi Customs officers do not have the authority to do investigative work on business premises nor do they have enforcement powers. These powers are vested in the Ministry of Interior. Import Licenses The importation of certain articles is either prohibited or requires special approval from competent authorities. In addition, import of the following products requires special approval by Saudi authorities: agricultural seeds; live animals and fresh and frozen meat; books, periodicals, movies, and tapes; religious books and tapes; chemicals and harmful materials; pharmaceutical products; wireless equipment; horses; products containing alcohol, e.g. perfume; natural asphalt; archaeological artifacts. Export Controls Saudi exporters need to submit a copy of their commercial registration which indicates they are allowed to export. They are also required to submit a certificate of origin of Saudi products (issued by the Ministry of Commerce). Certain items such as antiques, Arabian horses, livestock, or subsidized items need special approval to export. Exports of oil, petroleum products, natural gas and wheat all require export licenses. Temporary Entry For temporary entry of goods for promotional purposes, imports need an invoice with the value of the goods endorsed by the local chamber of commerce, and a certificate of origin. The invoice should state that the goods are being imported for exhibition purposes only and will be re-exported. Saudi customs requires a deposit for these goods (either 12 percent or 20 percent of the total value). This deposit is refundable when the exhibition is over. Additionally, handling charges will be collected by the customs authorities. Import/Export Documentation The following documents are required for exporting goods into Saudi Arabia: A notarized certificate of origin authenticated at a Saudi diplomatic mission and local chamber of commerce or U.S. - Arab Chamber; A similarly authenticated invoice (in triplicate) which must state the country of origin, name of the carrier, brand and number of goods, and description of the goods including weight and value; A clean bill of lading; Documents indicating compliance with health regulations, if applicable; Insurance documents if shipments are sent C.I.F. The original documents must be accompanied by an Arabic translation; Saudi Arabian Standards Organization (SASO) certificate, if applicable; Radiation Certificate, if applicable. Labelling, Marking Requirements Labelling and marking requirements are compulsory for any products to be exported to Saudi Arabia. The Saudi Arabian Standards Organization (SASO) is responsible for establishing labelling guidelines in the Kingdom. Labelling is particularly important for companies marketing food products, personal care products, health care products, and pharmaceuticals. SASO has specific requirements for identifying marks and labels for various imported items. Companies can request a copy of the labelling requirements by contacting SASO at Tel: 01-456-9900 or Fax: 01-452-0086. Quality control laboratories at ports of entry may reject the entry of products that are in violation of existing laws. Products arriving at port having less than one-half of the time remaining between production and expiration date will be rejected and cannot be sold on the market. U.S. manufacturers are urged to discuss labelling requirements with their selected representative or distributor. Prohibited Imports Imports from Israel are banned entirely. In addition, products produced by companies on the Damascus boycott list or shipped on vessels on this list are also banned. Importation of the following products are also prohibited by law: Weapons, alcohol, narcotics, pork, pornographic materials, distillery equipment, and certain sculptures. Special approval is required for the import of seeds, food, livestock, books, periodicals, religious books, movies, chemicals, pharmaceuticals, wireless equipment, horses, perfumes, natural asphalt, and archaeological pieces. There are health and sanitation regulations on all imported foods. The Ministry of Commerce has issued a number of directives aimed at preventing outdated goods from entering the Kingdom and requiring Arabic and point of origin labeling. Standards (incl. ISO 9000 Usage) The Saudi Arabian Standards Organization (SASO) is actively pursuing its goal of implementing more than 1300 standards in Saudi Arabia and throughout the GCC. The development of product standards inconsistent with those in the United States has in the past been a significant barrier to U.S. exports to the Kingdom, blocking sales of an estimated $100 million to $500 million in previous years. Labeling and expiration date requirements are stringent and an impediment to U.S. frozen food and fresh meat exports. Saudi electric current standards -- 127 volts, 60 cycles -- have denied entry to many U.S. nonconforming electrical products. A standards expert has been detailed to SASO from the U.S. Department of Commerce National Institute for Standards and Technology to advise the Saudi government in developing standards and to work to insure that new standards are not inconsistent with those in the United States. New draft standards are forwarded to U.S. industry associations for comments and recommendations, before finalization by SASO. Other developed nations have similar programs. The U.S. Standards advisor can be reached by fax at (9661) 488-3237. SASO/SMO-GCC has decided to adopt ISO 9000 as approved standards for Saudi Arabia and the other Gulf states. These standards are identical to ISO 9000, and awaiting approval by the SMO-GCC committee. Compliance will be on a voluntary basis. However, it would be prudent for U.S. industry and services to consider this matter as serious. There may be many cases where procurement agencies will insist on purchasing and placing orders only with those companies that have registered with SASO/SMO-GCC, and are in compliance with ISO 9000, or the U.S. equivalent series. For U.S. companies, SASO has not decided how to handle registration, but it would seem logical that a competent third party in the U.S. be selected to represent and act on SASO's behalf. In Saudi Arabia, SASO will set up their own certification organization for locally manufactured products. Free Trade Zones/Warehouses There are no free trade zones in Saudi Arabia. Special Import Provisions Other than those mentioned above, there are no special import provisions. Unusual cases should be worked out on a case-by-case basis with Saudi Customs. Membership in Free Trade Arrangements Other than the GCC, Saudi Arabia has no free trade arrangements.