U.S. and Saudi: Talking Business

Despite a sharp decrease in oil imports from Saudi Arabia this year, the eight-year-old U.S.-Saudi Arabian Joint Commission on Economic Cooperation is keeping up a lively dialogue to promote technical joint ventures, trade and investment.

At its most recent annual meeting held in Riyadh at the end of October, the Saudi side, led by Finance Minister Muhammed Abalkhail, reassured the Americans that Saudi Arabia did not intend to make any substantial sales on its investment in U.S. securities—and in any event would not draw down any of its foreign exchange reserves. According to the U.S. Treasury, there has been a seven percent drop in total holdings of U.S. government securities by Middle East oil exporters since last December. Other observers estimate that at least half of this amount would be accounted for by Saudi Arabia, but that it would still represent no more than four percent of the holdings.

For its part, the U.S., through Secretary of the Treasury Donald Regan, tried to reassure the Saudis that the U.S. budget deficits would not lead, as many U.S. economists have been alleging, to a continuation of high interest rates. But he also told them that the U.S. was worried that when Saudi Arabia's nine petrochemical complexes become operational within the next two years, the prices might be too competitive with the ailing U.S. industry—and warned that in that event higher tariffs might have to be imposed.

The highlight of the meeting in Riyadh was the signing of three new program agreements in the areas of emergency medical services, space-related science and technology, and transportation. The U.S. Health and Human Services Department will organize training programs for the Red Crescent Society as part of the Kingdom's emergency medical system. NASA and the Saudi Arabian National Center for Science and Technology also agreed to jointly conduct study and research programs and to exchange and train scientists, and the U.S. Department of Transportation will oversee the Kingdom's plans for road and other transportation.

These form the latest additions to a long list of joint projects which have been launched since the Commission got under way in 1974, and which provide, among other things, for U.S. help in creating a modern customs service, a central statistics department, a government agricultural lending institution, a tax department, and an auditing bureau.

On the other hand, the Saudis are still showing little interest, according to American officials at the latest meeting, in a proposed bilateral tax treaty that would principally benefit the U.S. business community. The U.S. also failed, as in previous meetings, to convince the Saudis to adopt a bilateral investment treaty similar to the one signed by the U.S. and Egypt last year, "They feel they already offer enough business incentives," according to a U.S. government source.

Meeting at the same time as the Joint Commission, but separately, were top business executives from both countries. Among the American corporations represented were AT&T, Bechtel, Boeing, Chase Bank, Exxon, General Electric, Merrill Lynch, and Rockwell.

U.S. exports to Saudi Arabia, despite that country's decreased income, have been holding up well this year. According to the Department of Commerce, they totalled $4.2 billion for the first six months of 1983, compared to $4.4 billion for the same period last year (although the U.S. lost its place as the Kingdom's leading supplier to Japan).

In contrast, Saudi Arabia exported only $1.25 billion to the U.S. during that same period, compared to $4.4 billion during the first six months of 1982. Practically all the exports consisted of oil.