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Saudis’ New WTO Ploy By: Adam Daifallah
The New York Sun | Monday, January 13, 2003

Saudi Arabia’s hiring of a high-powered lobbyist with strong ties to the Bush administration could help it gain admission to the World Trade Organization, although the kingdom continues to officially boycott Israel, a WTO member nation.

The influential lobbyist is former Republican congressman Tom Loeffler, a partner at the Texas-based law firm of Loeffler, Jonas and Tuggey. His firm, retained as of December, is being paid $840,000 a year to lobby the White House and Congress on "trade issues," including matters relating to the World Trade Organization, according to documents filed by the firm with the Department of Justice.

Mr. Loeffler is close to President Bush and Vice President Cheney, serving as finance co-chair for their 2000 campaign, and for Mr. Bush’s first gubernatorial race in Texas, Newsweek reported.

Policy experts question whether Saudi Arabia’s accession to the WTO should be allowed while the kingdom continues its boycott of Israeli products and companies as well as those who do business with the Jewish state. WTO members must accord "Most Favored Nation" trading status to each other,
and boycotts are not allowed unless a country has broken trade rules or if the security of the boycotting country is threatened.

Experts say the hiring of Mr. Loeffler could be an attempt to gain accession to the WTO with the boycott still intact.

A law professor at George Mason University who has studied this issue, Eugene Kontorovich, said Saudi Arabia’s boycott violates the basic rules and principles of the WTO.

"This is not the kind of tiny detail that should be negotiated in accession talks; since the policy is repugnant to basic treaty obligations. WTO members should not even begin to think about admitting the Saudis until they extend Most Favored Nation status to all WTO members, including Israel," Mr.
Kontorovich said.

He said that if Saudi Arabia wants to improve its chances of joining "simply by getting new lobbyists, the message it’s sending is that it wants the privileges of membership in a free trade treaty without paying the dues." A spokesman for the Saudi Arabia embassy in Washington, Nail Al-Jubeir, told
The New York Sun he didn’t know what Mr. Loeffler would be doing with respect to the WTO issue.

Asked about the effect the Israel boycott might have on their bid to enter, he said: "That’s something that needs to be negotiated" and that "we’re hoping by then that the peace process will have developed far enough that the boycott would not be in place any longer."

Mr. Al-Jubeir said there are conflicts over matters between his country and the WTO like expiration date label standards; how to ensure the insurance industry remains "consistent with Islamic law"; their objection to forms that require the listing of what tariffs might be placed on items that are barred in
the kingdom like alcohol and pork, and privatization issues, copyright, and patent laws.

Saudi Arabia’s Commerce Minister, Osama Faqeeh, told the Saudi-based Arab News in October that "many steps have to be taken" before the kingdom were admitted to the WTO, saying the country is not prepared to liberalize the telecom or audio-visual sectors.

The kingdom has stated that it will not compromise its "unique status" as the home of Islam’s holiest sites for the sake of joining the WTO, Arab News reported.

A spokesman for Mr. Loeffler’s law firm, Julian Reed, said the Saudis approached Mr. Loeffler to help them in the "trade area" because he "is a prominent person in Washington and an effective voice." He said Mr. Loeffler was away on a hunting trip and not available for comment.

There is one known example of a country in the General Agreement on Tariffs and Trade, the treaty that grew into the WTO, being admitted while boycotting another member.

Egypt, then the United Arab Republic, was admitted despite its boycott of Israel in 1970, Mr. Kontorovich said. When Egypt made peace with Israel soon after, the boycott was dropped. But Mr. Kontorovich said even that is not a precedent for Saudi accession because at the time Egypt was in open hostilities with Israel.

America has taken a strong stance against the Israel boycott. The Commerce Department’s Bureau of Industry and Security administers anti-boycott regulations, which prohibit Americans from taking actions in support of unsanctioned foreign government boycotts such as the one against Israel.

Calls to the office of United States Trade Representative Robert Zoellick were not returned yesterday.

Another high-powered Washington law firm, Akin, Gump, Strauss, Hauer and Feld, is retained by the Saudis to provide "legal advice and strategic counsel" on the WTO accession issue.

A spokesman for that firm, Kristen White, said: "We have done no lobbying work on behalf of Saudi Arabia. Our Saudi work is completely legal and technical in nature."

A critic of the Saudi regime and author of the book "The Two Faces of Islam," Stephen Schwartz, said "Saudi Arabia is once again trying to get what it wants from the world without playing by the world’s rules."

"If these guys aren’t going to be forthcoming with us about subjects in 9/11, its unlikely they are going to adopt international standards of banking transparency. They remind me of this old Mafia don who was asked to describe his business in court and said ‘I don’t discuss my business with outsiders.’  The Saudis have the same attitude," said Mr. Schwartz, a senior fellow at the Foundation for the Defense of Democracies.

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