Since the launch of Vision 2030 by the Crown Prince, the Saudi economy has witnessed a remarkable transformation, positioning the Kingdom as a key destination for foreign investment. A recent report by the Ministry of Investment revealed that over 600 global companies have established their regional headquarters in Saudi Arabia, a figure that underscores the growing confidence in the strength and stability of the Saudi economy. This rapid economic growth has been accompanied by a comprehensive set of regulatory reforms aimed at fostering sustainable development and promoting fair competition within the Saudi market.
However, this significant economic appeal was not without its challenges, the most prominent of which were the unfair trade practices employed by some foreign companies. These companies used to sell their products in the Saudi market at prices lower than their normal value, i.e., lower than their price in the exporting country, to grab a larger market share at the expense of local producers and manufacturers. These practices are known in international trade law as "dumping,” which is a trade practice that can undermine the principle of equal opportunity and lead to unfair competition.
Saudi companies find themselves facing artificially cheap imported goods, which negatively impact their competitiveness. The effects of dumping do not stop there; rather it extends to causing serious damage to the local industry, including a decline of sales, excess inventory, and reduced profits. This may force some local factories to reduce production or even shut down operations entirely and lay off workers.
The Kingdom recognized early on the risks posed by this phenomenon. Since joining the World Trade Organization in 2005, it has placed great emphasis on enacting domestic legislation to combat unfair international trade practices. Among these was the Law of Trade Remedies in International Trade, issued by Royal Decree No. M/60 dated November 23, 2022. This law empowers the General Authority for Foreign Trade (GAFT) to investigate complaints, examine the technical and legal aspects, verify the existence of harm and the causal link, and then submit recommendations for imposing tariffs or temporary measures when necessary.
This shows the Kingdom's commitment to balancing the protection of local producers and manufacturers with ensuring fair competition for importers, which aligned with the objectives of Vision 2030 to promote a fair and sustainable competitive investment environment. The Kingdom has also joined international and Gulf Cooperation Council agreements on anti-dumping.
The Kingdom's formulation of legal frameworks to combat dumping aligns with international practices, whereas the European Union, for example, applies anti-dumping measures to certain imported products from China to protect the European market from unfair competition. Similarly, China has imposed high tariffs on chemical products imported from the EU, the US, Japan, and Taiwan, reflecting the desire of countries to protect their domestic industries from such harmful trade practices.
In conclusion, the key question remains: how can local manufacturers and producers overcome these challenges, given the government support for the sector and the existence of anti-dumping regulations in the Saudi market?
The role of local manufacturers and producers remains crucial in combating dumping. The regulatory body cannot act alone to address unfair trade practices; it requires the initiative of local manufacturers and producers to monitor such practices and submit evidence-based complaints. This highlights the responsibility of national companies, particularly joint-stock companies, to protect their market share and safeguard the interests of their shareholders. They can do this by utilizing existing regulatory frameworks and available support from relevant authorities, and by seeking legal expertise from specialized consulting firms.
Abdullah Mohamed Aldosari is a specialized attorney in anti-dumping cases. Holder of a master’s degree in international Commercial Law from the University of Westminster, London; Aldosari is a former government advisor with more than 15 years of distinguished service in the public sector. At present, he is practicing as legal counsel at an international law firm.
Abdullah.aldosari@atad-lawfirm.com
