Like other WTO hopefuls, Saudi Arabia has to sign bilateral agreements, usually with its most important trading partners, as well as adopt the whole body of WTO laws, before it can enter the trading organisation.
Saudi Arabian Trade Minister, Hashem Yamani, described Sunday's deal with the EU as an important milestone.
"We would like to finish the major steps already by the end of 2003. Very early next year, we should be in. That is our target," the minister said.
"Accession to the WTO is a way to really get more investors from outside so that our economy can get better," he said.
"I think it is important for the region," European Trade Commissioner Pascal Lamy said as he signed the trade agreement with Yamani.
Saudi Arabia's main trade partner is the EU. It also wants to seal a deal with the United States.
"We would like to finish the major steps already by the end of 2003. Very early next year, we should be in"
Saudi Trade Minister
Lamy said such agreements were important as they helped to create a network of trade pacts and interests that were a force for stability in the otherwise turbulent Middle East.
The Trade Commissioner said the deal with Saudi Arabia could help further talks on an overall trade agreement between the EU and the Gulf Cooperation Council, which groups Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates.
The EU-Saudi deal means the average tariff level that the kingdom will apply to industrial goods imported from the EU will be close to 12%. Similar pledges were made for agricultural goods.
Saudi Arabia also agreed to further open various service sectors, including telecommunications, construction, banking and insurance.