State of Kuwait
• Capital :- Kuwait city.
• Official Languages :- Arabic.
• Government :- United hereditary constitutional monarchy.
• Currency :- Kuwaiti dinar (KWD)
• Population (2013 estimate) :- 2,695,316
• GDP (nominal):- 2012 estimate
- Total = $173.240 billion
- Per capita =$45,824
• Main industrial products :- Petroleum, fertilizers, chemicals,
construction materials, processed food.
• Kuwait, officially the State of Kuwait, is an Arab country in
western Asia. Situated in the northeastern edge of the Arabian
peninsula at the tip of the Persian Gulf, it shares borders with
Iraq to north and Saudi Arabia to the south.
• In 18th and 19th centuries, Kuwait was a successful center of
trade and commerce. Kuwait rivaled Basra as an entrepot for
trade between India and Middle East. Kuwait was also the
center of boast construction in the Persian Gulf region.
• In the early 20th century, Kuwait declined in regional economic
importance, mainly due to trade blockades by British Empire
and Al Saud. Kuwait’s economy was devastated by trade
Country Background (cont’d)
• After World War I, Kuwait emerged as an independent
sheikhdom under the protection of the British Empire.
Kuwait’s oil fields were discovered in 1937.
• Kuwait is a constitutional monarchy with a parliamentary
system of government. Kuwait city serves as the country’s
political and economic capital.
• The country has the fifth largest oil reserves and petroleum
products now account for 87% of export revenues and 75% of
• Kuwait is the 8th richest country in the world per capita. It is
classified as a high income economy by the World Bank and is
designated as a major non-NATO ally of United States.
B) Complete study on the
Economic parameters of the
country with focus on a Member
of Trading Blocks with Trade
barriers in place.
Kuwait is a small, relatively open economy with proven crude oil
reserves of about 96 billion barrels (15.3 km3) – around 9% of
world reserves. Petroleum accounts for nearly half of GDP, 90%
of export revenues and 95% of government income. Kuwait
lacks water and has practically no arable land, thus preventing
development of agriculture. About 75% of potable water is
either distilled or imported. Higher oil prices reduced the budget
deficit from $5.5 billion to $3 billion in 1999; prices are expected
to remain relatively strong throughout 2000s. The government is
proceeding slowly with reforms. It inaugurated Kuwait's first
free-trade zone in 1999 and would continue discussions with
foreign oil companies to develop fields in the northern part of
Main Economic indicators
2008 2009 2010 2011 2012
GDP at current
148.8 105.9 14.3 161.8 164.0
GDP per capita at
current prices (USD)
43,370 30,440 34,730 43,590 42,060
GDP (% change) 6.0 -4.6 3.1 4.4 5.4
13 -3 2 7 12
Exports (% change) 8.0 -13.0 2.7 4.6 4.4
Imports (% change) 9.0 -8.4 1.3 6.5 10.0
index (% change,
10.6 4.0 4.0 4.7 4.4
KWD/ 1 USD
0.27 0.29 0.29 0.28 0.28
A Brief About Kuwaiti Market
• The state of Kuwait adopts free policy in the light of a free
economic system. Kuwaiti markets are considered as an oasis
for free trade.
• In the light of United Custom Law of the GCC countries,
custom duties do not exceed 5% on most of the goods
imported from outside the custom union.
• The relation between price and quality is the decisive factor in
the success of the marketing goods of such countries in the
Kuwaiti market. Kuwait is also an establishing member in
World Trade Organization. (WTO).
• Kuwait’s new investment law authorizes tax holidays up to 10
years. Incentives include grants, tax deferrals, special access to
credit and import quota exemptions.
• A variety of incentives offered to new manufacturing
businesses under the investment laws. Industrial enterprises
that are eligible to receive such investment incentives must
first obtain a permit from Minister of commerce and industry
prior to being establish. Eligible enterprises are businesses run
by Kuwaiti individuals or companies established in Kuwait.
• The work force of an approved industrial enterprise must be
composed of at least 25% Kuwaiti nationals, unless waived by
the ministry of Commerce and Industry because of the
unavailability of sufficient qualified Kuwaiti labor.
Kuwait is a member of the following trade blocks:-
• Gulf Cooperation Council (GCC)
• Organization of the Petroleum Exporting Countries (OPEC)
• Council of Arab Economic Unity (CAEU)
• Greater Arab Trade Area (GAFTA)
• Middle East Free Trade Area (MEFTA)
• General Agreement on Trade and Tariff (GATT)
• Arab Free Trade Area (AFTA)
Gulf Cooperation Council (GCC)
• The Gulf Cooperation Council (GCC) is also known as the
Cooperation Council for the Arab States of the Gulf (CCASG). It
is a political and economic union of the Arab states
broadening the Persian Gulf and constituting Peninsula
• The six member states of the union are Bahrain, Kuwait,
Oman, Qatar, Saudi Arabia, and United Arab Emirates. Its head
quarter is located in Riyadh, Saudi Arabia.
• The unified economic agreement between these countries of
the Gulf Cooperation Council was signed on November 11,
1981, in Abu Dhabi. It came into force on December 1, 1981.
Objectives of the GCC
• Formulating similar regulation in various fields such as
economy, finance, trade, customs, tourism, legislation and
• Fostering scientific and technical progress in industry, mining,
agriculture, water and animal resources.
• Establishing scientific research centers.
• Setting up joint ventures.
• Unified military presence (Peninsula Shield Force).
• Encouraging cooperation of the private sector.
• Strengthening ties between their people.
• Establishing a common currency
GCC ; The Customs Union
Trade between the GCC member states will be conducted within
the framework of a customs union that shall include, at
minimum, the following :-
• A common external customs tariff (CET).
• Common customs regulations and procedures.
• Single entry point where customs duties are collected.
• Elimination of all tariff and non-tariff barriers, while taking
into considerations laws of agriculture and veterinarian
quarantine, as well as rules regarding prohibited and restricted
• Goods produced in any member state shall be accorded the
same treatment as national product.
GCC International Relations
Member States shall take necessary measures to achieve the
• Negotiate collectively in a manner that serves the negotiating
position of the member states.
• Collectively conclude economic agreements with trading
• Unify import and export rules and procedures.
• Unify commercial exchange policies with the outside world.
Balance of payments- current a/c net of trade group $298,378
Foreign direct investment- inward flows (million dollars) $25,960
Foreign direct investment – outward flows (million dollars) $21,825
Intra-group trade as a percentage of regional exports 5.1%
Intra-group trade as a percentage of total exports 5%
Service exports of trade groups (million dollars) $47,000
Service imports of trade groups (million dollars) $170,994
Trade group annual average export growth 36.2%
Trade group annual average export growth (10-year avg) 18.4%
Trade group annual average import growth 16.3%
Trade group annual average import growth (10-year avg) 17.8%
Trade group exports (million dollars) $889,947
Trade group imports (million dollars) $426,620
Value of intra-group trade (exports in million dollars) $44,130
Organization of Petroleum Exporting
• Organization of the Petroleum Exporting Countries (OPEC) is
an oil cartel whose mission is to coordinate the policies of the
oil producing countries. The goal is to secure a steady income
to the member states and to secure supply of oil to the
• OPEC is an intergovernmental organization that was created at
the Baghdad Conference on September 10-14, 1960, by Iraq,
Kuwait, Iran, Saudi Arabia and Venezuela. Later it was joined
by 9 more governments Libya, United Arab Emirates, Qatar,
Indonesia, Algeria, Nigeria, Ecuador, Angola and Gabon.
Council Of Arab Economic Unity
• The Council of Arab Economic Unity (CAEU) was established by
Egypt, Iraq, Jordan, Kuwait, Libya, Mauritania, Palestine, Saudi
Arabia, Sudan, Tunisia, Syria, United Arab Emirates and Yemen
on 3rd June, 1957.
• It became effective on 30 May 1964, with the ultimate goal of
achieving complete economic unity among it’s member states.
• The organization is devoted to achieving economic integration
within framework of economic and social development and to
promoting freedom of movement of labor, capital, and
• The organization’s chief policy making organ is the council,
which is composed of economic and trade and industry
ministers. The council meets twice each year to develop
policies leading to custom unions.
Objectives of CAEU
• To formulate regulations, legislations, and tariffs, aiming at the
creation of a unified Arab Custom area.
• To co-ordinate foreign trade policies with a view to ensuring
the co-ordination of the region's economy vis-à-vis world
• To co-ordinate economic development and formulate
programs for the attainment of joint Arab development
• To co-ordinate legislation for taxes and duties.
• To co-ordinate financial and monetary policies with the aim of
achieving monetary unity.
• To formulate unified regulations for transport and transit in
the contracting countries
Greater Arab Free Trade Area
• Greater Arab Free Trade Area (GAFTA) was declared within the
Social and Economic Council of Arab League as an executive
program to activate Trade Facilitation and Development
Agreement that has been in force since January 1st, 1998.
• The GAFTA includes in its membership 17 Arab countries:
Jordan, United Arab Emirates, Bahrain, Saudi Arabia, Omen,
Qatar, Morocco, Syria, Lebanon, Iraq, Egypt, Palestine, Kuwait,
Tunis, Libya, Sudan, Yemen.
• GAFTA is one of the most important economic achievements
in the area of Arab common work. It contributes to efforts
towards establishing the Arab Common Market.
Objectives of GAFTA
• Gradual reduction in tariff rates, fees, and taxes with similar
implications at an annual rate of 10% starting 1/1/1998 and
based upon rates effective January 1st 1998.
• Products that are forbidden (to be traded) for religious,
environmental, security, and health reasons are exempted from
the Execution Program of GAFTA. These products will be
subjected to applicable national laws.
• Removal of all non-trade barriers (administrative, quotas, and
• Application of the “Agricultural Calendar” given the following
Middle East Free Trade Area
• The US-Middle East Free Trade Area (MEFTA) initiative was an
ambitious plan to achieve a single free trade agreement (FTA)
between the United States and all countries between Western
Sahara and Iran. It was launched by George W Bush in 2003.
• Here, in theory, that means pushing all the countries up a scale of
necessary conditions: from WTO membership to a Trade and
Investment Framework Agreement leading to a bilateral
investment treaty and/or an FTA.
• Bush’s MEFTA project was clearly driven by US geopolitical and
"security" interests and not just economic goals. The MEFTA
project directly comes up against the EU’s plans for FTAs with the
Mediterranean (EMFTA) and the Gulf states.
• However, while the US initially set the deadline for MEFTA at
2013, the Obama Administration seems not to have followed
through with it in the way that the previous administration had
General Agreementon Trade and Tariff
• The General Agreement on Tariffs and Trade (GATT), which was
signed in 1947, is a multilateral agreement regulating trade among
153 countries. According to its preamble, the purpose of the GATT
is the "substantial reduction of tariffs and other trade barriers and
the elimination of preferences, on a reciprocal and mutually
• The GATT functioned de facto as an organization, conducting eight
rounds of talks addressing various trade issues and resolving
international trade disputes.
• This agreement also created the World Trade Organization (WTO),
which came into being on January 1, 1995. The WTO implements
the agreement, provides a forum for negotiating additional
reductions of trade barriers and for settling policy disputes, and
enforces trade rules
GATT; 3 institutions + UN
1. International Monetary Fund (IMF) was established to
facilitate international payments.
2. International Bank for Reconstruction and Development.
After the War, European countries and Japan had to rebuild
their production plants; this meant that these countries
required a large amount of foreign capital. To encourage
free flow of private capital, International Bank for
Reconstruction and Development (IBRD, now the World
Bank) was also established.
3. To facilitate free trade, International Trade Organization
(ITO) was to be born.
4. As a political complement to these institutions, United
Nations was also established in 1945 to replaced the League
Major Provisions of GATT
(i) GATT obligates each country to accord non discriminative,
most favored nation (MFN) treatment to all other contracting
parties with respect to tariffs.
(ii) MFN treatment does not mean free trade or national
treatment. Imports from contracting parties are subject to tariffs
or quotas. MFN treatment means that no other countries with
some exceptions receive better treatment or lower tariffs.
Major Provisions of GATT
• Exceptions to MFN
(i) Existing tariff preferences such as those between British
(ii) GATT/WTO allows the formation of customs union, which
causes a significant erosion to the MFN principle.
(iii) An escape clause allows any contracting party to withdraw
or modify tariff concessions, if it threatens a serious injury to
Major Provisions for GATT
2. Quantitative Restrictions
GATT in general prohibits the use of quantitative restrictions on
imports and exports.
(i) agriculture - when government needs to remove surplus of
agricultural and fisheries products. Important to US
(ii) balance of payments - to safeguard balance of payments. If a
country's foreign exchange reserve is low.
(iii) Developing countries - LDCs may use import quotas to
encourage infant industries.
(iv) National Security- Strategic controls on certain exports.
Patents, Copyrights, Public Morals
Major Provisions of GATT
3. Developing Countries
Special Provisions to promote the Trade of Developing
Countries. In 1965, the contracting parties added Part IV (Trade
and Development) to GATT.
(i) Developed economies will give high priority to
reduction/elimination of tariffs on products of LDCs.
(ii) refrain from introducing tariffs and NTBs to such imports.
(iii) refrain from imposing internal taxes to discourage
consumption of primary products from LDCs
(iv) not expect reciprocal commitments from LDCs.
By 2016, China may become the largest economy in the world.
Its status may be changed to that of a developed economy.
Major Provisions of GATT
4. Other Provisions
Provisions to eliminate concealed protection such as customs
valuation. For example, American Selling Price valuation. By ASP,
an ad valorem tariff is imposed on the domestic price.
procedural matters: each member is entitled to one vote,
decisions are made by majority vote. 2/3 majority is required to
waive obligations. settlements of disputes.
Arab Free Trade Area
• In the February 1997, the Arab Economic Union (a body
established in 1957 in the framework of the Arab League) decided
to create an Arab Free Trade Area (AFTA) by the year 2008.
• For this purpose, 18 of the 22 members of the Arab League signed
a treaty aiming at the elimination of all trade barriers between
them by gradually lowering by 10% each year the customs duties
on their trade and in gradually removing trade barriers in a
process which started in February 1998.
• At the Arab Summit held in Amman in March 2001 (Arab summits,
the heads of states stresses the need to move forward towards
the long-term objective of creating a strong Arab economic bloc.
In September 2001, the Arab League’s Economic and Social
Council which monitors the progress made, met in Riyadh and
noted some advancement and decided to move the deadline for
the end of the transition period forward to early 2005.
Objectives of AFTA
The Greater Arab Free Trade Zone should boost the economies of
the member countries in several ways:
• Form a bigger and more homogenous market and thus attract
more foreign direct investments (regional, European and
• Increase trade between the member countries: despite the fact
that some of these countries produce the same goods and are in
competition for the export markets, they are complementary in
many sectors Reduce the flow of smuggled goods which are not
taxed and often hurt local productions as well as the balance of
• Strengthen the member countries’ negotiating power when
dealing with powerful economic blocs such as the EU or in
international arenas such as WTO meetings (so far, 6 Arab
countries are members of WTO: Morocco, Tunisia, Egypt, Jordan,
Oman and Kuwait)
• The U.S. goods trade deficit with Kuwait was $4.4 billion in
2008, an increase of $2.7 billion from $1.6 billion in 2007. U.S.
goods exports in 2008 were $2.7 billion, up 9.5 percent from
the previous year. Corresponding U.S. imports from Kuwait
were $7.1 billion, up 72.2 percent. Kuwait is currently the
52nd largest export market for U.S. goods.
• The stock of U.S. foreign direct investment (FDI) in Kuwait was
$637 million in 2006 (latest data available).
• As a member of the Gulf Cooperation Council (GCC), Kuwait
applies the GCC common external tariff of 5 percent for most
products, with a limited number of GCC approved country-
specific exceptions. Kuwait’s exceptions include 417 food and
agriculture items, which remain duty free, as well as tobacco
products, which are subject to a 100 percent tariff.
Import Prohibitions and Licensing
• Kuwait prohibits the importation of alcohol and pork products,
and requires a special import license for firearms. Used
medical equipment and automobiles over five years old
cannot be imported. Also prohibited are any books,
periodicals, or movies that insult religion and public morals,
and all materials that promote political ideology.
• Kuwait continues to prohibit imports of live cattle from the
State of Alabama and beef from the State of Oklahoma. The
U.S. government has engaged local officials in an effort to
encourage them to recognize U.S. control measures and World
Animal Health Organization guidelines regarding Bovine
• In Kuwait, the import clearing process has historically been
time consuming, requiring large quantities of paperwork, and
numerous redundancies. However, the Customs Department
is currently undergoing a major privatization effort,
contracting with a private company to provide customs
support services. The implementation of a state-of-the-art
computer system has made the import process less
complicated and more efficient. In October 2005, Customs
began implementation of the Micro-Clear system at the
Kuwait airport and completed implementation at all ports of
entry in early 2006
• Kuwait began implementation of the WTO Customs Valuation
Agreement in September 2003.
Textiles and Apparel
• Textiles and apparel products (dutiable at 5 percent)
accounted for approximately 6 percent of Kuwait’s imports in
Export Subsidies Policies
• Kuwait does not directly subsidize any of its exports, which
consist almost exclusively of crude oil, Petroleum products
and fertilizers. Kuwait imports 98% of the country’s food
• Some local vegetables grown by farmers, and are subsidized
by the government; some of these vegetables are sold to
nearby countries. However, the amounts grown and sold are
not significant enough to have any real impact on local or
foreign agricultural markets.
STANDARDS, TESTING, LABELING, AND CERTIFICATION
As part of the GCC Customs Union, the six Member States are
working toward unifying their standards and conformity
assessment systems. However, each Member State currently
continues to apply either its own standard or a GCC standard,
resulting in a complicated situation for some U.S. businesses.
GCC Member States do not consistently send notification of new
measures to WTO Members and the WTO Committees on
Sanitary and Phytosanitary Measures (SPS) and Technical
Barriers to Trade (TBT) or allow WTO Members an opportunity
to provide comments.
Sanitary and Phytosanitary Measures
• In May and October 2007, respectively, Bahrain and Oman
notified WTO Members of proposed procedures meant to
harmonize food safety import requirements for all GCC
Member States. The United States and other WTO Members
provided comments outlining significant concerns with the
procedures, which, as currently drafted, do not appear to have
a clear scientific basis and would substantially disrupt food
exports to GCC Member States from their trading partners.
The GCC Member States indicate that they are developing a
response to these comments, and the United States has
established a dialogue between U.S. and GCC technical
experts to discuss the procedures and potential amendments
to address the concerns raised.
• In March 2003, Kuwait implemented its International Conformity
Certification Program (ICCP), a pre- shipment certification
program requiring that covered products be tested and certified
by a single private company before being imported into Kuwait.
The program applied to imports of: (1) household appliances and
electronics; (2) new and used cars and other vehicles; (3)
chemicals, including motor oil and paint; (4) building materials,
including cement, gypsum, and bricks; and (5) paper and plastic
• The GCC Standards Committee is currently developing a
conformity assessment scheme to be adopted ultimately by each
of the six Member States and has set 2010 as a deadline for full
implementation by each Member State.
• Kuwait’s government procurement policies require the purchase
of local products, where available, and prescribe a 10 percent
price advantage for local firms in government tenders. In 2004,
the Council of Ministers agreed to increase this price advantage to
15 percent. However, the increase has not yet been implemented
as it requires amendment of the GCC countries’ unified
agreement, which has not yet occurred.
• Offset obligations apply to military contracts with a value equal to
or above KD3 million, civil government contracts with a value
equal to or above KD10 million and oil and gas contracts (with
the exception of oil and gas exploration and production
contracts). Offset obligations amount to 35 percent of contract
value with offset multipliers being established to target
investment into specified sectors of the Kuwaiti economy.
INTELLECTUAL PROPERTY RIGHTS (IPR) PROTECTION
• Kuwait is still in the process of drafting amendments to its
intellectual property law to implement the WTO TRIPS
• Although Kuwaiti officials, particularly Kuwait Customs,
continue to make progress on copyright enforcement and
pursue cases through the judicial process, U.S. industry
reports a lack of deterrent criminal penalties. U.S. industry
also reports that sales of pirated and counterfeit goods remain
high in Kuwait, and the use of unauthorized computer
software continues in private enterprises.
• Foreign-owned banks are restricted to opening only one
branch, can only offer investment banking services, and are
prohibited from competing in the retail banking sector.
Furthermore, foreign banks are subject to a maximum credit
concentration equivalent to less than half the limit of the
largest local bank and are expressly prohibited from directing
clients to borrow from external branches of the bank or taking
any other measures or arrangements to facilitate such
Agent and Distributor Rules
• Only Kuwaiti nationals and corporations may act as agents and
distributors for foreign companies and exporters, according to
Kuwait’s Commercial Agencies Law of 1964.
• Kuwait currently maintains a variety of restrictions on foreign
direct investment and applies discriminatory taxation policies. In
May 2000, Kuwait’s National Assembly approved legislation that
allows foreign nationals to own up to 100 percent of all
companies listed on Kuwait’s stock exchange, except banks. In
January 2004, the National Assembly gave final approval to a bill
permitting 100 percent foreign ownership of banks.
• The foreign direct investment law that took effect in February
2003 authorizes majority foreign ownership in new investment
projects and 100 percent foreign ownership in the following
sectors: infrastructure projects such as water, power, waste water
treatment or communications; investment and exchange
companies; insurance companies; information technology and
software development; hospitals and pharmaceuticals; air, land
and sea freight; tourism, hotels and entertainment; and housing
projects and urban development
Corporate Tax Policies
• In 2005, a number of corporations received income tax bills
from Kuwaiti tax authorities although the companies had no
commercial presence in Kuwait. Bills were typically sent to the
companies’ Kuwaiti distributors and often included years of
back taxes. Some companies have challenged the tax in court,
and others are working with the U.S. and Kuwaiti governments
to seek a legislative or regulatory solution. Kuwaiti law and
judicial decisions are ambiguous in defining what does or does
not constitute taxable presence.
• On December 26, 2007, the Kuwaiti National Assembly passed
legislation reducing the tax rate on foreign companies from 55
percent to 15 percent.
C) International Trade Statistics
(Exports and Imports items)
• Imports in Kuwait increased to 1935 KWD Million in the
second quarter of 2013 from 1864 KWD Million in the first
quarter of 2013.
• Kuwait main imports are: machinery, mechanical appliances,
electrical equipment and electronics (24 percent of total
imports); transport equipment (14 percent); base metals and
articles thereof (12 percent); chemicals and related products
(9 percent) and vegetables (6 percent). Main import partners
are: United States (12 percent of total imports), China (10
percent), Saudi Arabia (8 percent) and South Korea (7
percent). Others include: Japan, Germany and India.
Product Trade Value Share Growth
(thousands) (%) (% 5 year)
Passenger Vehicles 3,972,054 6.14 143.79
Semi Finished Products of Iron & Steel 1,178,474 1.82 2,024.52
Seamless Iron & Steel Tubes & Pipes 968,880 1.50 1,300.70
Water Heaters 769,034 1.19 1,509.42
Articles of Jewelry & parts 731,509 1.13 644.82
Cell Phones & Video Recorders 671,953 1.04 184.03
Chicken 648,283 1.00 3,570.95
Non Crude Oil 625,987 0.97 644.11
Medicines in Doses 525,900 0.81 220.42
Trucks 512,143 0.79 138.24
Importing Into Kuwait
The right to import goods into Kuwait on a commercial basis is
restricted to Kuwaiti individuals and firms who are members of
the Kuwait Chamber of Commerce & Industry (KCCI) and who
have import licenses issued by the Ministry of Commerce &
Kuwaiti customs duties are the lowest in the region, though there are
protective tariffs on some goods. However commercial samples worth up to
KD 5,000 may be brought in temporarily.
• Duty is levied as a percentage of the CIF value of the goods up, but
excluding unloading in, Kuwait. It is calculated and must be paid in Kuwaiti
Dinar (KD). Where importers are invoiced in foreign currencies, customs
use a list of 'standard' exchange rates to translate the CIF value into KD.
• But most goods may be imported duty free, including:
• food products, medicines, essential consumer goods, live animals, bullion,
printed matter, etc., except where these (such as bread) are manufactured
• industrial and farm products from other GCC states provided they have at
least 40% added value in the GCC exporting country; and
• raw materials, semi-processed goods, equipment and spare parts for new
industrial establishments provided exemption has been obtained.
• Exports in Kuwait increased to 7999 KWD Million in the second
quarter of 2013 from 7749 KWD Million in the first quarter of 2013.
• Kuwait is the world´s eighth biggest exporter and the tenth largest
producer of oil. Shipments of crude and refined oil account for 95
percent of total exports.
• Main export partners are: South Korea (18 percent of total
exports), India (15 percent), Japan (14 percent), China (10 percent)
and United States (8 percent). Others include: Saudi Arabia, United
Arab Emirates and Pakistan.
Kuwait Oil Sector Exports
• In 2007, Kuwait’s total exports of crude and refined products
reached nearly 2.7 million bbl/d. Of the 2.6 million bbl/d of crude
oil Kuwait produced, roughly 1.6 million bbl/d was exported. The
Asia-Pacific region received 1.3 million bbl/d, the United States
received 175,000 bbl/d, and Western Europe received 109,000
• Kuwait's single export blend ("Kuwait Export") has a specific gravity
of 31.4°API (a typical medium Mideast crude), and is
consideredsour with 2.52 percent sulfur content.
• Mina al-Ahmadi is the country's main port for the export of crude
oil. Kuwait also has operational oil export terminals at Mina
Abdullah, Shuaiba, and at Mina Saud.
Value Of Exports And Imports
Year National Exports
Petroleum others Exports Imports
2008 22,178 821 460 23,459 6,679
2009 13,479 990 466 14,935 5,723
2010 16,588 1085 286 17,959 6,499
2011 12,309 643 149 13,101 3,436
D) Comparative or Competitive
advantages they have in
Oil In Kuwait
• Located in the Middle East region that contains 75 per cent of the
world's oil reserves, Kuwait has great petroleum resources. Today it
is one of the long-term major oil producers with the fourth largest
oil reserves in the world.
• Oil has made Kuwait rich. Oil is Kuwait’s largest productive sector
by a long way, and oil rents are the foundation of even the non-oil
economy. But wealth does not lead automatically to economic and
• The origins of Kuwait’s oil industry date back to the 1920s. In 1921,
Sheikh Ahmad Al-Jaber Al-Sabah became Ruler of the State of
Kuwait. He was well aware of the activities of oil prospectors in
neighboring Bahrain, Saudi Arabia and Iraq, as well as the Anglo-
Persian Oil Company’s success in southern Iran.
Kuwait’s Oil Economy
• Oil was first discovered in Kuwait in 1938, following a concession
agreement between the state of Kuwait and Britain that allowed
the British to explore and produce from Kuwaiti oil fields, with
production starting in 1948.
• Kuwait’s oil revenues have always accrued directly to the state.4
Until 1975, the mechanism was royalties and taxes on profits paid
by foreign oil companies. In 1975, Kuwait nationalized the
country’s oil industry, and in 1980 placed both the upstream and
downstream sectors under the control of its national oil company,
the Kuwait Petroleum Company
• Kuwait’s oil revenues grew substantially in the decades after oil
was discovered, rising from US$760 thousand in 1946 to US$567.5
million by 1965 and, following the oil price bonanza of the mid-
1970s, US$9.8 billion in 1976, the equivalent of 2.3 times non-oil
Comparative Advantage in Oil
• Kuwait undoubtedly has a significant competitive advantage
when it comes to capital and energy. With oil production of
469m barrels in the first 6 months of 2007, the country can
offer both cheap energy for manufacturing an abundance of
feedstock for downstream activity in the petrochemical sector.
• Increased production has enabled Kuwait to significantly boost
its oil exports to key Asian countries this summer.
• Much of Kuwait’s oil comes from a small number of mature
fields dominated by Greater Burgan which, at 1.3m bpd,
accounts for almost half of production. However, the
discovery this summer of new fields in western Kuwait
containing reserves of commercial-grade oil and gas will
bolster plans to expand output.
The Oil Sector
2004 2005 2006
Average Daily Oil Production 2.38 mln
Average price per barrel,
Kuwait Export Crude
$32.62 $45.7 $47.6
Annual revenue from oil
$25.6 billion $42.9 billion $50.2 billion
World Trade Organization
• The World Trade Organization (WTO) is an international
organization that establishes rules for international trade
through consensus among its member states. It also resolves
disputes between the members, which are all signatories to its
set of trade agreements.
• The WTO states that its aims are to increase international
trade by promoting lower trade barriers and providing a
platform for the negotiation of trade and to their business
The WTO discussions should follow these fundamental principles of
• A trading system should be free of discrimination in the sense that
one country cannot privilege a particular trading partner above
others within the system, nor can it discriminate against foreign
products and services.
• A trading system should tend toward more freedom, that is,
toward fewer trade barriers (tariffs and non-tariff barriers).
• A trading system should be predictable, with foreign companies
and governments reassured that trade barriers will not be raised
arbitrarily and that markets will remain open.
• A trading system should tend toward greater competition.
• A trading system should be more accommodating for less
developed countries, giving them
• more time to adjust, greater flexibility, and more privileges.
Kuwait and WTO
• The State of Kuwait has been a WTO member since
1 January 1995.
• The first review of the trade policies and practices of Kuwait
takes place on 7 and 9 February 2012. The basis for the review
is a report by the WTO Secretariat and a report by the
Government of Kuwait.
• Trade Policy Reviews are an exercise, mandated in the WTO
agreements, in which member countries' trade and related
policies are examined and evaluated at regular intervals.
Significant developments that may have an impact on the
global trading system are also monitored. All WTO members
are subject to review, with the frequency of review depending
on the country's size.
• The World Bank is an international financial institution that
provides loans to developing countries for capital programs.
World Bank’s official goal is the reduction of poverty.
• The World Bank comprises two institutions: the International
Bank for Reconstruction and Development (IRBD) and
International Development Association (IDA)
• The World Bank was created at the 1944 Bretton Woods
Conference, along with 3 other institutions, including the
International Monetary Fund (IMF).The World Bank and the
IMF are both based in Washington DC, and work closely with
• The IBRD has 188 member countries, while the IDA has 172
Kuwait and The World Bank
• Kuwait joined the World Bank in 1962. For thirty years the
Bank and the Arab States of the Gulf Region have been
partners in the Strategic Cooperation Program (Technical
Cooperation Program until 2008), supporting the rapid
development of this closely linked group of distinctively
• Early requests for the Bank's technical assistance ranged from
the development of infrastructure--such as the interstate
Saudi-Bahrain Causeway--to industrial policy and economic
• Outstanding regional progress was made through public
investment in high quality infrastructure, and in the creation
of multi-annual development plans with integrated objectives
Kuwait & the World Bank Strategic
• Kuwait has been a partner in the Strategic Cooperation Program
(SCP) for over thirty years. The program covered a broad range of
issues in different development areas.
• In FY06, the program began to grow significantly in size and
diversity of subject areas. In November 2006, an agreement was
reached on a rolling three-year program through December 31,
• Under the new agreement, the program became more strategic and
began to focus on strategic planning and its alignment with budget
processes, public sector management, anti-corruption measures,
and other issues vital for the development of the country. The
government’s request to scale up fee-based services included a
proposal to establish a World Bank office in Kuwait; the agreement
on the establishment of the office was signed in September 2008.
International Monetary Fund
• The International Monetary Fund (IMF) is an International
Organization that was initiated in 1944 at Bretton Woods
Conference and formally created in 1945 by 29 member
• The IMF’s stated goal was to assist in the reconstruction of the
world’s International payment system post World War II.
• The IMF describes itself as “an organization of 188 countries,
working to foster global monetary cooperation, secure
financial stability, facilitate international trade, promote high
employment and sustainable economic growth, and reduce
poverty around the world.
• Its headquarters are in Washington D.C., United States.
Kuwait & IMF
Kuwait’s high oil prices and increased production have enabled the
government to continue to record high fiscal and external surpluses
and build strong buffers, the International Monetary Fund (IMF) said
in a report. The IMF showed in its report, released after its Executive
Board concluded Article IV consultation with Kuwait on Nov 25, that
“overall real non-oil gross domestic product (GDP) growth is
projected to increase modestly to three percent in 2013, driven by
an increase in domestic consumption and pick-up in public
investment.” It showed that “the overall average consumer price
inflation (CPI) is projected at three percent in 2013,” whereas the
fiscal and external surpluses are projected at 27 percent of GDP and
39 percent of GDP, respectively, in 2013.
India’s Imports From Kuwait
• India’s imports from Kuwait went up by 7.07% in US$ terms
from US$ 7704.25 million in 2007-08 to US$ 8,249.49 million
in 2009-10. In Rupee terms, the imports rose by 25.93% from
Rs. 30,95,993.03 lakhs to Rs 38,98,799.19 lakhs in the
corresponding period. India’s imports from Kuwait (excluding
POL) were US$ 339.69 million in 2009-10.
• The major items imported by India were Organic Chemicals,
Plastic and Articles thereof, Iron and Steel, Fertilizers,
Aluminum and Articles thereof, Salt; Sulphur; Earths and
Stone, Inorganic Chemicals; Organic or Inorganic Compounds
of Precious Metals, Copper and Articles thereof, Nuclear
Reactors, Boilers, Machinery and Mechanical Appliances,
Agreements between India and
• Trade Agreement was signed in February 1974.
• MOU on cooperation in the field of Telecommunications was signed in
• Agreement for the promotion of Economic, Commercial and Technical
Cooperation was signed in February 1992.
• Agreement for Encouragement and Reciprocal Protection of Investment
was signed in November 2001 and ratified in June 2003.
• Agreement on Drug Demand Reduction and Prevention of Illicit
Trafficking in Narcotic Drugs, Psychotropic Substances and Precursor
Chemicals and Related Matters was signed in June 2006 is awaiting
• MOU on Civil Aviation between India and Kuwait authorities, latest one
signed in June 2007.
• Agreement on the Avoidance of Double Taxation and Prevention of Fiscal
Evasion of Taxes on Income was signed in June 2006; it came into force
with effect from October 17, 2007