RESTRICTEDWORLD TRADE
ORGANIZATIONWT/ACC/RUS/27
20 July 1998
(98-2846)
Working Party on the Accession
of the Russian FederationOriginal:  English
ACCESSION OF THE RUSSIAN FEDERATION
Information Regarding the Development of
Foreign Economic Legislation of the Russian Federation
The Permanent Mission of the Russian Federation has submitted the following information
regarding the development of Russian Federation legislation on foreign economic regulation since thelast meeting of the Working Party held on 9-11 December 1997.
In this context, the Government of the Russian Federation has also the following comments to
make with respect to the note by the Secretariat  (reproduced in doc. WT/ACC/SPEC/RUS/7 dated
19 March 1998) which incorporates the synopsis of legislation and other regulatory acts of the
Russian Federation:
- this document represents only partial information on the relevant Russian legislation and other
regulatory acts;
- the information provided is, in some cases, inaccurate and classified in an arbitrary manner. For
example, legislation pertaining to the agricultural sector is classified under "industrial
policy "sub-heading. Equally, the sub-heading "state-trading" (Article XVII of GATT 1994)
includes regulations dealing with state-owned enterprises not covered by GATT 1994 or anyother WTO agreement. Legislation and regulations in bold cannot in many cases be viewed as
"Main Russian Legislative and Other Regulatory Acts";
- thus, in view of the Russian Federation, document WT/ACC/SPEC/RUS/7 has only limited
information value; it should not either  interpreted as creating any obligations on the part of theGovernment of the  Russian Federation, or used for negotiating  purposes in the course of
Russia's  accession to the WTO.
1. General Provisions
On 8 February 1998, Federal Law No. FZ-14, "On Limited Liability Companies" came into
force, establishing a firm and long-term legal framework for effective activities of relevant  legalentities (including those in which foreigners have shares) in the Russian Federation in accordance
with the internationally accepted principles.
On 6 May 1998, Federal Law No. FZ-70 become effective, making some important additions to
the RSFSR Law "On Competition and Restriction of Monopolistic Activities in Commodity Markets"
of 1991 by defining the term "affiliated persons" that was not previously existent in the Russian lawand by establishing rules governing the activities of such persons in commodity markets.
Pursuant to Presidential Decree No. 483 of 30 April 1998, the organizational structure of the
Russian Federation Government was changed. In particular, the Ministry of Industry and Trade ofWT/ACC/RUS/27
Page 2
Russia was established, taking over all the functions earlier vested with the dissolved  Ministry for
Foreign Economic Relations and Gosstandart of Russia, most of those vested with the dissolved
Ministry for Cooperation with the CIS Countries and some of those vested with the Ministry of
Economics with respect to the implementation of nation-wide industrial policies.
Therefore, most of the issues  that need to be addressed in connection with Russia's accession to
the WTO are now concentrated in a single authority - a situation which is expected to have a positive
impact on the accession negotiations.
2. Market Access
2.1. Tariff Measures
The abrupt (and adverse in many respects) change in the economic situation that occurred in
Russia during the period in question made it necessary to adjust the rates of import duties that had
remained virtually unchanged for more than two years (since September of 1996).
These adjustments were implemented by Russian Federation Governmental Resolutions
No. 1402 of 7 November 1997, No. 1608 of 19 December 1997, No. 16 of 18 January 1998, No. 245
of 21 February 1998, No. 435 of 11 May 1998 and, finally, No. 546 of 1 June 1998 covering 187
items of the import customs tariff  of the Russian Federation, i.e. less than 2 per cent of the total
number of the schedule items. In this regard, the following substantive  issues should be pointed out.
The aforesaid adjustments of the rates of import duties were partly aimed at increasing their
level (124 items) and partly at reducing it (63 items).
The reduced rates will become effective immediately, while the increased ones can come into
force not earlier than six months as of the date of promulgation of the decision to that effect, as
provided for by Russian Governmental Reso lution No. 1347 of 22 October 1997, which was
discussed at the last meeting of the Working Party. Thus, the increase in import duties cannot take
place in Russia earlier than in December of 1998.
The contemplated increase in import duty rates is fully consistent with the tariff offer submitted
by Russia to  WTO members, affecting less than 1 per cent of the total value of Russian imports, and
will not result in any increase in the weighed average import tariff.
On June 3, 1998, the Russian Government issued its Order No. 726-r which is of major
importance since it provides  for the reduction of the number of tariff peaks (i.e. items the duty rates
for which amount to 30 per cent) from 857 to 557 (by 300 items) during 1998 and for the decrease in
the peak rates from 30 per cent to 20 per cent. Russia has submitted the list of these tariff items to the
WTO Secretariat.
On February 14, 1998, Federal Law No. FZ-29 was signed into force and became effective,
making some alterations to the Federal Law "On Excise Duties" of 1997. The rates of excise duties
were refined, which should be done on a regular basis due to the inflation process, since most excise
duties in Russia have specific values (i.e. are expressed in rubles per commodity unit) rather than ad
valorem ones. At the same time, the procedure for calculation of excise duties and excise duty
payments was streamlined to a certain extent. However, the most important principle of the Law "OnExcise Duties" stating that both the domestic and imported goods should be excisable in the same
manner has remained unchanged.WT/ACC/RUS/27
Page 3
2.2. Non-Tariff Measures
The Government of Russia by its Resolution No. 1423 of 15 November 1997 made some
amendments to the list of ozone-depleting substances that are subject to import licensing. Thus, the
relevant Russian list was brought in full compliance with the international list of ozone-depleting
substances as set forth in the Montreal Protocol.
On 19 December 1997, the Government issued its Resolution No. 1606 substantially
streamlining the importation of certain categories of medicines into Russia.
On 8 January 1998, Federal Law No. 5-FZ, "On Fees for the Issuance of Licenses and for the
Right to Produce and Sell Ethyl Alcohol, Alcohol Containing and Alcoholic Products" entered into
effect, aimed mainly at strengthening supervision over sales of alcoholic products in the domestic
market.
In accordance with that Law, the Government by its Resolution No. 307 of 14 March 1998
made some additions to the procedure for alcohol import licensing by stipulating that import licenses
for alcohol and alcoholic products may be issued either to persons entitled to wholesale these goods in
the Russian market or to Russian manufacturers thereof.
Unfortunately, some of the provisions of the aforesaid Law No. 5-FZ, in particular those
concerning the amount of export and import license fees for alcoholic products (Article 3), imposeunjustified barriers for the development of foreign trade and, in the Government 's opinion, should be
revised. In this connection, the Government of Russia introduced a draft law to that effect in the StateDuma.
It should be also mentioned that the Government of Russia by its Resolution No. 114 of
2 February 1998 imposed import licenses for fruit liqueurs stronger than 28 degrees. It should be also
pointed out that there are no quantitative restrictions on the importation of these products.
The process of liberalization of foreign trade in gold, silver and other precious metals and
stones was continued. On 26 March 1998, Federal La w No. 41-FZ, "On Precious Metals and Precious
Stones" the fundamental one in this sector, came into force. It was the first Russian law to clearlydefine the term "precious metals and stones" (in Article 1). Furthermore, it set forth (In Articles 10
and 25) the principles and procedures for governmental regulation and control of the importation and
exportation of precious metals, stones and products thereof into and from Russia.
On 18 February 1998, the Government adopted its Resolution No. 207 entitling commercial
lending organizations to export refined gold and silver under licenses without any quantitativerestrictions. And under Governmental Resolution No. 432 of 8 May 1998, these organizations were
granted the right to export refined gold and silver under general licenses having a validity period of up
to three years instead of single export licenses linked to specific contracts.
2.3 Contingency Protection Measures
On 14 April 1998, Federal Law No. 63-FZ, "On Measures to Protect the Economic Interests of
the Russian Federation in Foreign Trade in Goods" was signed into force and became effective. The
Law established the procedure for application and imposition of safeguard measures, anti-dumpingmeasures and countervailing measures, as well as of all other governmental regulations of exports and
imports as permitted by the provisions of the GATT 1994, including balance-of-payments measures..
The Law is based on the WTO Agreements on Im plementation of Article VI of GATT 1994, on
Subsidies and Countervailing Measures and on Safeguards, as well as on the provisions of Articles  I,WT/ACC/RUS/27
Page 4
XII and XX of GATT 1994. Some minor divergences from the GATT/WTO provisions as found in
the Law are explained by the fact that Russia intends to use that Law in its relations with all countries
participating in  world trade, including those who are not members of the WTO and non-market
economy countries. However, all 25 Articles of the Law consistently adhere to the following main
principle of the GATT 1994 in this area: any protective measure can only be taken on the basis of aninvestigation, open to all the parties concerned, determining that it is the increased, subsidized or
dumping import of a particular commodity that has caused the material injury to the domestic industry
in question.
The Government by its Order No. 69-r of 30 May 1998 placed the responsibility for conducting
investigations in every and each case provided for by the aforesaid Law with the Ministry of Industry
and Trade of the Russian Federation.
Governmental Resolutions No. 226 of 26 February 1998 and No. 431 of 8 May 1998
established procedures for automatic import licensing of carpets and rugs from EU countries and of
certain categories of colour televisions. These licensing procedures are not associated with any
quantitative or other restrictions. Any participant in foreign trade  activities may get a license. Such
licensing procedures are contemplated by the afor esaid Law No. 63-FZ and are  aimed exclusively  at
monitoring  the  importation of these  goods.
3. State Trading Enterprises (STEs)
It was already earlier reported  (see WT/ACC/RUS/16/Rev. 3) that the Federal Food
Corporation (FFC), whose activities had caused a particular interest of the Working Group
participants, was liquidated and all regulations adopted in its respect had ceased to be valid as from
20 September 1997.
The main objectives of the Federal Agency for Food Market Regulation established instead of
FFC are:
- to monitor agricultural markets;
- to promote the development of competition in this field;
- to arrange (whenever necessary) for commodity investments in agricultural  markets; and
- to act as state customer for the formation of the operational food reserve of the Russian
Government. .
It should be stressed that purchases for state needs and commodity investments will be made
not by the Agency itself but by business entities selected solely on the basis of public tenders
(Government Resolution No. 1224 of 26 September 1997).
However, even these objectives are performed by the Agency on a very modest or, as one could
say, negligible scale as  yet. For instance, Government Resolution No. 392 "On the EconomicEnvironment of Operations of the RF Agroindustrial Sector in 1998", dated 15 April  1998,
determines (Section 6) that the role of the Agency in implementing the extensive program of measures
set forth in this Government decision will be defined as real moneys become available to the Agency.
Meanwhile, Government Resolution No. 315 of 14 March 1998 just started activities to form the
charter fund of the Agency.WT/ACC/RUS/27
Page 5
Therefore, at present the Agency is not covered by the definition of a state trading enterprise
given in Article XVII of the GATT 1994 or Uruguay Round Understanding on this Article. However,
the Russian party will continue its careful study of this matter.
On 20 November 1997, a Presidential Decree No. 1243 dissolved JSC Russian Coal Company
(Rosugol) which had previously been notified by  the Russian party in WT/ACC/RUS/18 as a state
trading enterprise. Its administrative functions were transferred to the Russian Ministry of Fuel and
Energy and its business and commercial functions to two joint stock companies, Lizingugol and
Investugol, which operate on purely market princi ples. These decisions confirm once more that the
course of market reform in Russia is irreversible.
4. Technical Barriers to Trade (TBT)
Important changes aimed to eliminate technical barriers to trade continued in Russia during the
past period. For instance, Decision No. 16-P of the Constitutional Court, dated 11 November 1997,declared unconstitutional certain provisions of Article 11 of the Federal Law "On the Border "
imposing a border fee on crossing the Russian border, which Article had caused concern of manyWTO members. Pursuant to the decision of the Constitutional Court, Article 11 was radically
reworded, and now the payers of the border fee include only individuals and vehicle owners.Commodities are exempt from this fee, and its introduction is delayed until 1999-2000.
In addition, Decree No. 8-P of the Constitution al Court declared inconsistent with the
Constitution and invalidated forthwith Article 266 of the Russian Customs Code under which the
Russian customs authorities had previously been entitled to confiscate products. Now cargo
confiscation may only be effected by court decision.
Government Resolution No. 1536 of 27 December 1997 approved the "Regulations for
Confirmation of Suitability of New Materials, Products, Structures and Technologies for Construction
Purposes". According to these Regulations, all new (including imported) building materials and
structures may only be used after their suitability for construction purposes is confirmed in the formof a technical certificate issued by the Russian Ministry of Land Policy, Construction, Housing and
Utilities.
It should be specifically emphasized that this document is based on the principle of non-
discrimination of foreign products, since all its provisions equally apply to both Russian and foreign
products.
An important step towards harmonization of Russian and international standards was made in
connection with Russia joining the Agreement on the Use of Humane Methods for Wild Animal
Catching (Government Resolution No. 253 dated 26 February 1998).
Finally, it should be specifically noted that a joint decision of the Russian State Committee for
Standards, the Russian Ministry of Public Health and the Russian Ministry of Agriculture determined
in June 1998 a clear distribution of duties between the State Committee for Standards, the Agency for
Sanitary and Epidemic Supervision and the Veterinary Service with respect to certification of food
products and products of animal origin. This decision will allow a remarkable facilitation of the entryof imports into Russian territory.WT/ACC/RUS/27
Page 6
5. Intellectual Property (TRIPS)
On 30 March 1998, Resolution No. 367 of the Russian Government formed the Supreme Patent
Chamber within the Russian Agency for Patents and Trademarks and approved its regulations.
Pursuant to this decision, the Supreme Patent Chamber has the duty to review all complaints and
petitions of applicants which are not subject to judicial consideration.
6. Investment Measures (TRIMS)
The legal acts determining the treatment of foreign investments in Russia are described in
enough detail in the documents WT/ACC/R US/5/Add1 and WT/ACC/RUS/16/Rev. 3 (TRIMS
Section). For the period after the last meeting of the Working Group, the State Duma has adopted no
amendments to these laws or new laws in this area.
However, Presidential Decree No. 135 "On Additio nal Measures to Attract Investments into the
Russian Automotive Industry " of 5 February 1998 and Government Resolution No. 413 of
23 April 1998 specifying the main provisions of the Decree were adopted.
These documents caused a great interest of foreign investors and numerous questions of
Working Group participants. The substance of these decisions is that finished vehicles manufactured
under a project with foreign participation from foreign components in Russian territory will be
deemed of Russian origin and will not be subject to customs payments (i.e. duties, VAT and excise
taxes). Customs payments will only be charged with respect to the components upon their importation
into Russia.
However, in order to obtain such privileges, a number of conditions should be satisfied. First,
the interest of the foreign investor in the charte r capital of the commercial entity implementing the
project should be at least 150 million rubles (i.e. about US$25 million).
Secondly, the share of costs incurred under such project in Russia in the cost of finished end
products should be at least 10 per cent in the first year and at least 50 per cent after five years of
project implementation.
The adoption of the regulations described above was caused by the most urgent need to speed
up the development of domestic industry and restructuring of the Russian economy. Understanding
the importance of complying with the WTO rules  in this field, the Russian party expects that
Presidential Decree No. 135 and Government Resolu tion No. 413 will remain in effect for a limited
period.
7. Government Procurement
For the period under review, the Russian Federation continued to develop its regulatory
framework with respect to purchases for state needs.
On 18 November 1997, the Government adopted its Resolution No. 1443 which approved an
extensive program of activities to train specialists in purchases for state needs on the basis of tenders
and auctions.
Since March 1998, the Ministry of Economics has been issuing a regular bulletin publishing
numerous notices of tenders and auctions to be held both at the federal and regional level.
Government Resolution No. 216 of 18 February 1996 brought all applicable regulatory acts of
the Government governing purchases for state needs into conformity with the requirements ofWT/ACC/RUS/27
Page 7
Presidential Decree No. 305 dated 8 April 1997. This Decree was discussed in detail at the sixth and
seventh meetings of the Working Group and requires that government purchases be made at public
tenders and auctions, including with the participation of foreign companies.
8. Services
Federal Law No. 16-FZ "On the Accession of the Russian Federation to the UNIDROIT
Convention on International Financial Leasing" took effect on 12 February 1998. It appears that this
act will result in an increase in the scope of international financial leasing operations in Russia.
On 6 March 1998, the Russian Government approved by its Resolution No. 283 a Program for
accelerated adoption of the international accounting principles and standards by Russian entities. This
decision will also play a positive role in creating a favorable environment for foreign investment.
Finally, Government Resolution No. 507 of 26 May 1998 cancelled the system of individual
privileges and discounts in determining rates at the federal railways. Wherever such rates are reduced,such decision will apply to all consignors, including foreign ones.
_______________
It remains the consistent policy of the Russian Federation to liberalize foreign trade activities
and to bring its national legislation into conformity with the WTO rules and regulations.
__________