SAUDI-U.S. TRADE

    H.R.H. Prince Bandar Bin Sultan Bin Abdul Aziz, Ambassador of the Kingdom of Saudi Arabia to the United States of America stated at the beginning of this Guide that "the U.S.-Saudi relationship was primarily economic in character, when in the late 1930's American companies discovered vast oil reserves in the Kingdom." The Ambassador also elaborated that "Commercial interests survive longer than strategic interests. When countries do business together, they stay together." The Honorable Michael Kantor, U.S. Secretary of Commerce, wrote in the foreword of this Guide "Saudi Arabia is our close ally and our most important trading partner in the Middle East and North Africa region. This relationship is based on mutual strategic interests and the very real benefits of our long-term commercial and economic partnership. Strategic considerations have made us allies, but the ties of trade have brought us truly together."

This special partnership between the Kingdom of Saudi Arabia and the United States of America has always been strong and dynamic, ever since King Abdul Aziz Al-Saud opened the valve that let the first barrel of oil flow into the first tanker (the D. G. Scofield) at Ras Tanura on May 1, 1939. This unique relationship has provided the right atmosphere for a long term healthy business partnership to develop. Actually, the development of this partnership can be traced back to the Kingdom’s first exploration contract with the Standard Oil Company of California in 1933. Appendix XI shows that the number of the Saudi- U.S. joint projects, operating in the Kingdom, was 233 at the end of August 1995, with a total capital of SR44,947.22 million (U.S. $11,985.93 million). Furthermore, there are approximately 40,000 Americans living and working in the Kingdom.

Saudi-U.S. trade volume reached a peak value of U.S. $21.7 billion in 1981, and then declined to a trough of $6.5 billion in 1985. It increased from U.S. $7,503.1 million in 1986 to U.S. $14009.1 million in 1990. Due to the Gulf Crisis, the volume of U.S.-Saudi trade climbed to U.S. $18,905.6 million in 1991, about the same level it reached in 1980, and then slightly declined to SR18,449.0 million in 1992 (see table 19, graph No. 2 and graph No. 3). Since 1993 the Saudi-U.S. trade volume was stable around the value of its normal average of fifteen billion U.S. dollars annually.

TABLE 19 *
SAUDI - U.S. MERCHANDISE TRADE (Millions of Dollars)
YEAR SAUDI EXPORTS SAUDI IMPORTS SURPLUS/DEFICIT
to U.S. from U.S.

YEAR SAUDI EXPORTS
TO U.S.
SAUDI IMPORTS
FROM U.S.
SURPLUS/DEFICIT
1986 4054.3 3448.8 + 605.5
1987 4886.5 3373.4 +1,513.1
1988 6236.9 3799.2 +2,437.7
1989 7,181.3 3,576.0 +3,605.3
1990 9,974.3 4,034.8 +5,939.5
1991 12,153.6 6,572.0 +5,581.6
1992 11,285.7 7,163.3 +4,122.8
1993 8,431.5 6,665.6 +1,765.9
1994 8,307.0 6,010.5 +2,296.0
1995 8,898.0 6,085.0 +2.813.0

 

leading saudi imports from the u.s.
(f.a.s. - value in millions of dollars)
(1990-1995)

BY MAIN COMMODITIES

1990

1991

1992

1993

1994

1995
Food and Live Animals 225.9 240.4 223.6 210.7 312.6 313.5
Beverages and Tobacco 186.7 213.9 175.1 212.5 212.6 196.7
Crude Materials (except fuel) 0.0 30.8 42.0 0.0 0.0 0.0
Mineral Fuels, Lubricants, etc. 0.0 0.0 0.0 0.0 0.0 16.1
Oils & Fats (animal & vegetable) 38.5 30.4 25.2 0.0 0.0 97.4
Chemicals & Related Products 36.2 93.4 24.5 0.0 51.9 93.8
Manufactured Goods 210.8 508.7 1,517.5 2,548.9 1,145.9 1,006.6
Machinery & Transport Equip. 1,255.21 1,656.7 2,552.4 2,530.4 1,274.3 1,729.7
Miscellaneous Manufactured 41.7 47.4 273.0 152.9 356.3 375.6
Other Articles 0.0 1,725.8 2,770.7 2,32.9 1,657.6 1,059.3
Special Category 0.0 115.5 414.1 0.0 0.0 1,345.8

* - Compiled by the Commercial Office, Embassy of Saudi Arabia, Washington, D.C.
Source: U.S. Department of Commerce, Bureau of the Census, Washington, D.C.


Graph No. 2

Graph number three reflects the fact that long term trend of the Saudi-U.S. trade volume during the period 1980-1995 has been positive with an annual average about U.S. $13,558 million.

 


Graph No. 3

The United States has successfully maintained its leading position in the Saudi Arabian market place since 1988 (see tables 16,17 and graph No.4). The value of Saudi imports of American goods during this period, excluding military equipment, was about SR44 billion (U.S. $11.7 billion). Graph number five represent the leading Saudi imports from the U.S. in 1994.


Graph No. 4

 


Graph No. 5

Saudi Arabian preference for American manufactured goods remains strong. The U.S. is one of the Kingdom's top three suppliers in major import categories. U.S. trade prospects could be greatly enhanced with careful targeting of potential growth sectors. The sectors with the strongest growth potential are discussed in Chapter 4 bellow.

The Ministry of Industry and Electricity and the Ministry of Finance and National Economy are both committed to the promotion of import-substitution and export-oriented joint ventures that serve to diversify the Kingdom's industrial base and enhance its technological capabilities. Joint venture incentives are universally available to all projects that fulfill the requirements of the Foreign Capital Investment Code. A modern and advanced physical infrastructure, communications and transportation systems in Saudi Arabia are some of the best in the world. American entrepreneurs are invited to make use of this infrastructure and the host of other business incentives through establishing a long-term presence in the Saudi Arabian market. American small firms that now export their products to the Kingdom will be able to establish local manufacturing bases for export to other markets in the region. Reaching the Saudi Arabian market is the topic of the following chapter.