Page 93 - Aamir Rehman - Dubai & Co Global Strategies for Doing Business in the Gulf States-McGraw-Hill (2007)

Here to Stay: GCC Market Attractiveness and Risks 77

outlet sizes, the Saudi authorities can protect small retailers such as
neighborhood stores and convenience outlets. These protections
may prove crucial for helping the Saudi middle class absorb the
shock of economic transformation.
Oman’s exceptions also reflect the need to protect key local
industries. The local agriculture sector in particular is well
protected—duties on dates and bananas are 100 percent of the orig-
inal price; importing fruits that compete with Oman-grown crops
have 80 percent duties when in season. Many service sectors are
protected: at least 51 percent of ownership of restaurants must be by
locals. The financial services industry, however, is remarkably
open: foreign banks can fully own branches. One regulation that is
particularly onerous to international firms is the one creating a
maximum of foreign staff within foreign companies—fixed at a
mere 20 percent. To make matters worse, foreign staff visas, which
last two years, are renewable only for a maximum of four years. 25
Inclusion in the WTO marks a fundamental leap forward for the
GCC countries in opening their markets—tariffs are reduced and
eliminated in some cases, foreign investment is made more
welcome, and the GCC nations submit themselves to the WTO’s
mechanisms for resolving trade disputes. At the same time, how-
ever, companies must study the details of each country’s
agreements and regulations, as the exceptions and timelines
negotiated impact market openness tremendously. Although
change is in the air, the fine print must be read.
In addition to WTO accession, several GCC countries have
negotiated bilateral agreements with major economic powers. Both
Bahrain and Oman have agreements with the United States, ratified
in 2006. The UAE was engaged in similar negotiations with the
United States but talks were put on hold in the wake of the Dubai
Ports World controversy. Few business leaders appreciated the
adverse impact of that controversy on US economic ties with one of
the world’s most dynamic economies. While President George W.
Bush has announced a vision for a US–Middle East Free Trade Area
by 2013, 26 US foreign policy in the region presents a major
roadblock to building deeper economic ties.
Meanwhile, bilateral negotiations between the GCC
(as a collective) and the EU were at an advanced stage at the time of
this writing. These talks have been ongoing for decades—they