Navigating shifting customs regulations in the Middle East

The landscape of trade in the Middle East region is rapidly evolving as countries seek to ease trade flows in and out of their borders. Governments in the region are implementing measures to spur economic diversification to reduce dependence on oil and reforming their customs procedures and processes to facilitate trade growth and resilience.

Underpinned by its strategic location and robust economy, Saudi Arabia’s trade dominance casts a shadow across the region. By the end of 2023, Saudi Arabia’s total trade reached USD 286 billion. Iraq’s exports hit USD 132 billion, Jordan’s were at USD 39 billion, and Kuwait’s reached USD 12 billion. This illustrates Saudi Arabia’s trade dominance in the region.

Imports into Saudi Arabia grew by 12% to reach USD 213 billion in 2023, pointing to a growing population and increased local demand. In comparison, imports into Iraq, Jordan, and Kuwait were at USD 113 billion, USD 26 billion, and USD 4 billion, respectively.

The rise of non-oil trade

The region anticipates an increase in non-oil exports as countries aim to diversify their economies. This shift is driven by deliberate government efforts, prompted by oil production cuts in the Gulf Cooperation Council (GCC) nations, notably impacting Saudi Arabia and Kuwait until late 2024. Although Iraq's oil production is steady, reduced oil prices have affected its export revenues.

Jordan is focusing efforts on increasing overall trade within the Greater Arab Free Trade (GAFTA). In 2023, GAFTA countries were the largest recipient of Jordan’s trade goods, accounting for 18.9% of its exports. On its part, Saudi Arabia is working towards hitting a target of SAR 557 billion in industrial exports by 2030. Iraq’s contribution to the overall increase in trade within the region will come from collaboration with neighboring governments to create a land route from Iraq to Egypt through Jordan.

Customs reforms: Enhancing trade efficiency

Advancements in customs play a pivotal role in supporting the ambitious targets. Each of the countries is working on a raft of customs reforms aimed at positioning themselves to take advantage of the rising tide.

Kuwait

Through its General Administration of Customs, Kuwait is streamlining its customs procedures with several initiatives. Kuwait has signed the World Trade Organization Trade Facilitation Agreement to improve transparency and ease customs by allowing better information flow.

Kuwait also exempts goods that have at least 40% of their value-added within GCC member states from import duty, facilitating trade flow. Additionally, the Kuwait Conformity Assurance Schemes (KuCAS) which regulates the quality of products in the country has implemented a Technical Evaluation Report (TER) and a Technical Inspection Report (TIR) to maintain the integrity of the products coming through customs clearance. Paired with the online customs clearance portal, these advancements are streamlining trade flows in the country.

Jordan

The Jordan Customs Department (JCD) is increasing transparency by improving regulation and integrity in the customs process. For instance, the JCD has initiated an electronic Transit Monitoring and Facilitation System (TMFS) for faster and more secure customs clearance.

The efforts put in by the Jordanian authorities, especially a reduction of the country’s maximum tariff rate to 15%, resulted in an increase of more than 30% in trade volumes through its free trade zones in 2023 from 2022.

Iraq

Iraq has been ensuring the smooth flow of goods through initiatives such as the air cargo initiative that ensures robust security and transparency in regulatory procedures through the Air Cargo Control Unit (ACCU).

For instance, the Automated System for Customs Data (ASYCUDA) in Baghdad International Airport has received support from the United Nations Conference on Trade and Development (UNCTAD), to modernise and automate customs process by leveraging digital technologies such as artificial intelligence, machine learning, and blockchain for added efficiency.

Saudi Arabia

Over the years, the Zakat, Tax, and Customs Authority (ZATCA) of Saudi Arabia has been taking steps to streamline customs and trade procedures. While the “clearance within two hours” approach hastens customs processing, ZATCA maintains strict compliance regulations.

Additional efficiencies are being realized through the online platform, Fasah, for faster customs clearance services. This is part of ZATCA’s digital transformation that envisions fully electronic transactions in the drive towards sustainable customs clearance.

To support the growth of local Saudi businesses, the authority is taking action to cancel fees on national exports. The boon on local businesses is expected to fuel sustainable growth by helping the country diversify from oil exports.

Getting goods where they need to be

The Middle East has embarked on a journey of trade transformation that is characterized by shifting priorities. The role of a logistics partner who understands the intricacies of customs and remains abreast of changes is invaluable to businesses that want to thrive in the region. The ability to move both oil and non-oil products into and out of the dynamic trade environment will make a difference for businesses trading in the region.

The right logistics partner is not only knowledgeable about customs processes but also remains up-to-date with the latest customs regulations and procedures, thereby being able to support their customers seamlessly through the entire process. Be it Jordan, Iraq, Kuwait or Saudi Arabia, the right logistics partners can take the burden of worry off your shoulders as well as ensuring compliance and due diligence in documentation and process from start to finish. This will ultimately minimize trade disruptions for your supply chains and support more reliable deliveries of your cargo.

Looking to navigate customs regulations with ease? Partner with a logistics provider who understand the complexities of Middle East Trade and can help optimize your supply chain.