Should the United States of America rethink their policy regarding

Saudi Arabia trade relations?

The report advises the Office of the United States Trade Representative to rethink the policy that
it recommends to the President of the United States regarding trade relations with Saudi Arabia.
The suggestions support the idea of significantly reducing the amount of exported goods and
services in the top export categories that include aircraft, arms and ammunition. This cut in the
trade relations with Saudi Arabia would not only benefit the United States of America, but also
the Kingdom of Saudi Arabia.
The current trade relations and the climate in which they are taking
place

Saudi Arabia was the 22nd largest goods trading partner with $35.2 billion in total goods trade
during 2017.As it can be seen in Figure 1 goods exports totaled $16.3 billion while goods
imports totaled $18.9 billion. As a result the U.S. goods trade deficit with Saudi Arabia was $2.5
billion in 2017, a shift from a goods trade surplus of $1.1 billion registered in 2016.

Figure 1: U.S. trade in goods with Saudi Arabia in 2017 given by The United States Census
Bureau
Exports 2017

Figure 2: United States Exports by Country in 2017

 Saudi Arabia was the United States' 20th largest goods export market in 2017.
 U.S. goods exports to Saudi Arabia in 2017 were $16.3 billion accounting for 1.1% of
overall U.S. exports in 2017.
 The top export categories (2-digit HS) in 2017 were: aircraft ($3.6 billion), vehicles ($2.6
billion), machinery ($2.2 billion), electrical machinery ($1.6 billion), and arms and
ammunition ($1.4 billion).
 U.S. total exports of agricultural products to Saudi Arabia totaled $1.5 billion in 2017.
Leading domestic export categories include: corn ($266 million), tree nuts ($114
million), hay ($110 million), vegetable oils (ex. soybean) ($96 million), and rice ($88
million).
 U.S. exports of services to Saudi Arabia were an estimated $9.2 billion in 2017. Leading
services exports from the U.S. to Saudi Arabia were in the travel, maintenance and repair
services, and technical and other services sectors.
Imports 2017

Figure 3: United States Imports by Country in 2017

 Saudi Arabia was the United States' 21st largest supplier of goods imports in 2017.
 U.S. goods imports from Saudi Arabia totaled $18.9 billion in 2017.
 The top import categories (2-digit HS) in 2017 were: mineral fuels ($18 billion), organic
chemicals ($303 million), special other (returns) ($247 million), aluminum ($164
million), and fertilizers ($148 million).
 U.S. total imports of agricultural products from Saudi Arabia totaled $5 million in 2017.
Leading categories include: processed fruit & vegetables ($3 million), snack foods,
cheese ($618 thousand), roasted & instant coffee ($39 thousand), and other dairy
products ($38 thousand).
 U.S. imports of services from Saudi Arabia were an estimated $1.2 billion in
2017. Leading services imports from Saudi Arabia to the U.S. were in the travel,
transport, and technical and other services sectors.

Investment 2017

 U.S. foreign direct investment (FDI) in Saudi Arabia (stock) was $11.1 billion in 2017, a
4.7% increase from 2016. U.S. direct investment in Saudi Arabia is led by nonbank
holding companies, mining, and wholesale trade.
 No data on Saudi Arabia's FDI in the U.S. are available. Saudi Arabia's direct investment
in the U.S. is led by real estate, information services, and retail trade.

As it can be seen in Figure 2, from January to October 2018 goods exports totaled approximately
$11.5 billion and goods imports totaled nearly $19.7 billion. This results in a deficit of $8.2
billion.
 Figure 4:U.S. trade in goods with Saudi Arabia in January-October 2018 given by The United
States Census Bureau

Exports 2018

As of January-October 2018 Saudi Arabia is the United States' 22th largest goods export market.
U.S. goods exports to Saudi Arabia were $11.5 billion accounting for 0.82% of overall U.S.
exports from January to October 2018.

Figure 5: Share of exports to Saudi Arabia in overall U.S. exports (in billion dollars)
Imports 2018

As of January-October 2018 Saudi Arabia is the United States' 19th largest goods supplier. U.S.
Goods imports to Saudi Arabia totaled $19.7 billion accounting for 0.93% of overall U.S. exports
from January to October 2018.

Figure 6: Share of imports to Saudi Arabia in overall U.S. imports (in billion dollars)

The assassination of a journalist and the U.S. response

Weeks after the permanent American resident and journalist, Jamal Khashoggi’s disappearance
and reported murder in Istanbul, the Saudi government’s cover story has failed to answer basic
questions, despite mounting evidence that Saudi operatives killed him. U.S. President Donald
Trump has signaled that he would resist re-thinking U.S. policy on Saudi Arabia and move on.
Khashoggi’s slaying is part of a global trend that already existed before Trump took office but
appears to have accelerated: authoritarian states, including China and Russia, publicly and
shamelessly kidnapping, detaining, and murdering critics and journalists. Trump’s reaction could
accelerate the current trend of declining freedom in the world.
Based in part on electronic U.S. intelligence intercepts and other evidence handed over by
Turkish authorities, the Central Intelligence Agency has concluded with high confidence that
Saudi Crown Prince Mohammed bin Salman (MbS) likely gave the kill order
With Riyadh’s culpability in the murder increasingly apparent President Donald Trump
continues to refer to the Kingdom of Saudi Arabia as a strategic ally of the United States.
Even as distressing news broke about what happened to Khashoggi, Trump, despite warning of
“severe punishment” if the kingdom turned out to be responsible for the disappearance, issued a
red line: He wasn’t going to stop selling arms to Saudi Arabia. This raises a bigger question
about the militarization of Trump’s foreign-policy approach worldwide.
More than a decade after the talk of using “smart power,” and President Barack Obama’s
attempts to put diplomacy and development on a higher footing achieving mixed results, Trump
has completely reversed the trend: He cut and gutted diplomacy, increased military spending,
and moved to increase arms sales worldwide.

Why Saudi Arabia trade relations need to be diminished?

For decades, the American people have been sold by their leaders the idea that U.S.-Saudi ties
being indispensable to the security of the U.S. homeland and a vital facet of promoting peace in
the Middle East. U.S. administrations across the political divide have reflexively viewed the
Saudis as integral to containing Iranian power in the Middle East, stabilizing energy prices
during gluts in the energy market, and providing America with instrumental information on
terrorist groups like Al-Qaeda in the Arabian Peninsula.
Most of these arguments, however are inaccurate. Riyadh’s behavior is as clear an indication as
any that, far from being the amazing ally the foreign policy establishment frequently claims, the
Kingdom is at best a nettlesome, half-hearted partner on very specific issues of common interest.
Concerning stabilizing the oil market, the Saudis have a mixed record. Riyadh’s motivation in
maintaining stability in the market has nothing to do with being a good friend to America and
everything to do with Riyadh’s economic interest. A country that depends on oil returns to pad
its budget, build up its foreign exchange reserves, and finance its national subsidies on
everything from gasoline and food to housing can’t afford a long period of low profits. If prices
rise too high over an extended period, the Kingdom will increase crude exports to preserve
market share and assure that overseas buyers don’t switch suppliers. The Saudis do so not as a
favor to the American consumer but rather as a necessity.
Moreover, the Kingdom’s role as a force multiplier for the United States is also vastly
overstated. Since Mohammed bin Salman was named Defense Minister in 2015 and ascended to
second-in-line to the throne in 2017, Saudi Arabia has been as destabilizing to the region’s
security and politics as its Iranian archenemy. In fact, Saudi foreign policy under the reign of
Crown Prince Mohammed has been an unending series of humanitarian debacles punctuated by
strategic recklessness.
For instance, Riyadh’s three and a half year air campaign in Yemen has failed in its primary
military objective of pushing the Houthis out of the Yemen’s capital and back into the northern
highlands. Instead, Saudi (and Emirati) bombing has transformed Yemen into a place of great
suffering, where small children die of disease and starvation every day, weddings are turned into
funerals, food is enormously expensive, and the country’s economy is insolvent. Moreover,
the bomb dropped on 9 August, that killed 40 boys aged from six to eleven years old dropped on
a school bus in Yemen by a Saudi-led coalition warplane was sold to Riyadh by the US,
according to reports based on analysis of the debris. This shows recklessness in the Kingdom’s
actions.
The Saudi-led political isolation and economic blockade of Qatar, meant to force Doha to sever
relations with Iran, has only solidified ties between both. The kidnapping and forced resignation
of the Lebanese prime minister earlier in the year—later taken back upon his release under
French pressure—was an international embarrassment, giving further proof to MbS’s highly
impulsive decision-making. Finally, there is now the state-sanctioned murder of a permanent
American resident and journalist, apparently on the orders of the Crown Prince. This suggests
that the Saudi Arabia is governed by an authoritarian system through fear and self-interest, a
system that the United States of America cannot afford to be associated with.

Why the U.S. administration should not sanction Saudi Arabia?

Saudi Arabia enjoys a privileged position both in geopolitical and economic terms. It will have a
powerful hand to play if tensions with the US and the west escalate and it follows through with
Sunday’s warning of retaliation.
Its vast oil reserves – it claims to have about 260bn barrels still to extract – afford the most
obvious advantage. The kingdom is the world’s largest oil exporter, pumping or shipping about
7m barrels a day, and giving Riyadh huge clout in the global economy because it wields power to
push up prices.
An editorial in Arab News by Turki Aldhakhil, the general manager of the official Saudi news
channel, Al Arabiya, offers a hint of what could be in the offing.
He said Riyadh was weighing up 30 measures designed to put pressure on the US if it were to
impose sanctions over the disappearance and presumed murder of Jamal Khashoggi inside the
country’s Istanbul consulate. These would include an oil production cut that could drive prices
from around $80 a barrel to more than $400, more than double the all-time high of
$147.27 reached in 2008.
This would have profound consequences globally, not just because motorists would pay more at
the petrol pump, but because it would force up the cost of all goods that travel by road.
Saudi Arabia also supports thousands of US jobs via its arms purchases. It is the world’s second-
largest arms importer after India and 61% of those imports come from the US.
Saudi Arabia has shown in the past that it is not afraid to leverage its unique political and
economic position to get its own way. An investigation into allegations of bribery involving the
British defense firm BAE Systems in the country was dropped under Tony Blair’s government in
2006. Blair said Riyadh had threatened to stop cooperating on intelligence matters, putting
Britain at greater risk of a terrorist attack.
Saudi Arabia does have something to lose though, given that foreign money is a key plank of its
plans to diversify its economy away from oil and address a high unemployment rate of nearly
13%. The Saudi stock market plunged by as much as 7%, or around $33bn, over fears about the
ramifications of the country’s threat of retaliation against the US.

What should the U.S. administration do?

Accepting being threatened and pressured by Saudi Arabia with oil production cuts that would
increase the prices of a barrel is not a healthy position from the United States of America
because it would show the entire world that money can overthrow even the basic human rights.
Also, this position gives the other oppressive regimes the signal that their behavior is acceptable
which is very dangerous for the whole world. The extreme friendliness with MbS harms not only
the United States of America but also Saudi Arabia. The Kingdom’s leader is a leader which, in
the words of one Saudi critic, has created a climate of fear and intimidation. Also the critic said
“We Saudis deserve better” and that critic was Jamal Khashoggi and this extreme friendliness
and support from the Trump administration encourages MbS’s actions and it needs to stop before
it gets any words.
In the following paragraphs are presented some action points that should be suggested to the
President of the United States of America.
First, President Trump must stop posing as the unofficial spokesperson to Crown Prince
Mohammed, a man who has done more damage to the Kingdom’s international reputation than
the fifteen Saudi nationals who executed the 9/11 terrorist attacks on America. While terminating
diplomatic, intelligence, and trade ties with Riyadh would certainly be a mistake, so would
continuing to cast MbS as a reformer in an otherwise dark region.
Saudi Arabia is attempting to alter its economic model in major ways, at least on paper, and this
offers an opportunity for the United States to deploy tools other than weapons deals to shape and
influence the country’s policies at home and abroad and incentivize real change. Appointing an
ambassador to Riyadh nearly two years into the administration would be a good start—it won’t
fix the U.S.-Saudi relationship, but it would help balance out an incomplete and reckless
military-centric approach.
Flooding the region with more weapons is unlikely to resolve deeper issues in Saudi Arabia and
beyond and as a result it is advisable to reduce the amount of aircraft, arms and ammunition.
Also, the U.S. senate should vote a bill that would remove U.S. military forces from Yemen’s
civil and also terminate the mid-air refueling support to Saudi jets in Yemen.
Second, the administration must put its relationship with Riyadh in a more accurate context.
Preserving conditional ties with the Saudis may be prudent, but viewing U.S.-Saudi relations as
too big to fail is a gross misreading of the situation. Tying American power and prestige to the
hip of Saudi Arabia severely diminishes America’s diplomatic flexibility. Additionally, viewing
Riyadh in such a light gifts Saudi Arabia with far more leverage than it is entitled to. That
leverage opens up Washington to military interventions in the region—like the civil war in
Yemen—that the United States has no national security justification participating in.
Third, President Trump must view the Kingdom for what it is rather than what he wishes it to be.
It’s not an ally on the same threshold as the United Kingdom, France, Canada, or Australia, and
it shouldn’t be given the distinction of being one. Bluntly put, Saudi Arabia is a country like
most of its neighbors: despotic and highly repressive to all forms of dissent, but one the United
States may have to collaborate with on certain instances. Commented [ 1]: You must have references; make sure
you implement the structure of a policy paper

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