RESTRICTED
WORLD TRADE WT/ACC/RUS/17/Add.1
11April 1997
ORGANIZATION(97-1493)
Original: English
ACCESSION OFTHE RUSSIAN FEDERATION
Additional Questions andReplies
Addendum
ThePermanent Mission oftheRussian Federation hassubmitted replies toquestions raised
afterthemeeting oftheWorking Party heldon15-16 October 1996, withtherequest thattheybe
circulated tothemembers oftheWorking Party. Thequestions andreplies arereproduced hereunder.
_______________
Legislative Developments
Regarding Replies inWT/ACC/RUS/9/Add.1
Question 13.
Thereply toadditional question 31states thatthe"adoption ofother lawsreforming thetaxsystem
isnotplanned" except fortheproposed draft TaxCode (according totheresponse).
Under these circumstances, how willtheprovisions ofDecree No.685of8May 1996 be
implemented?
Ifthese reforms arenotbeintroduced until thenewTaxCode takes effect, forwhat purpose
wasthisdecree promulgated earlier thisyear? Werefer specifically tothree provisions calling
for:
(a) institution oftaxamnesty;
(b) clarification ofregulations governing deductibility ofbusiness expenses, inorder to
listexplicitly those deductions which areforbidden; and
(c) revision ofschedules forcalculating capital depreciation deductions;
(d) there arenoplans currently tointroduce acomprehensive taxamnesty.
Answer:
(b)(c) Adraft hasbeenprepared ofaFederal Law"OntheProcedure forAccounting forthe
ProductionandSellingCostsofProducts(Work,Services),DeterminingOrganizations'FinancialResults,
andAllocating Their Incomes."WT/ACC/RUS/17/Add.1
Page2
Concerning Purchases forState Needs
Question 80.
Could Russia clarify theprocess bywhich concessional government credit isprovided totheCity
ofMoscow forcentralized foodimports. Forexample, isthere acompetitive bidprocess forthe
purchases, which istransparent, bywhich importers areselected tomake these purchases? What
other cities/regions inRussia receive preferential credit topurchase foodstuffs?
Answer:
Noconfessional government credits havebeenextended totheCityofMoscow in1996-97
forcentralized foodimports.
SeealsoAnswer toQuestion 81herein.
Question 81.
How arethequantities ofimports forcentralized regions determined? Arethere requirements
ontheorigin (Russia orCIS) orother characteristics inorder toreceive preferential credit?
Answer:
SeeAnswers 26and27ofWT/ACC/RUS/9 andthelawreferenced therein, aswellas
thechange noted inAnswer toQuestion 75(WT/ACC/RUS/17).
Question 82.
What kindoftaxorother exemptions doRussian organizations, suchashumanitarian orother
special interest groups receive?
Answer:
Responding further, inaccordance withRussian Federation LawNo.2116-1 "OntheProfit
Taxation ofEnterprises andOrganizations," dated 27December 1991, assubsequently amended, funds
received asfreeaidfromforeign countries under inter-governmental agreements anddonations from
foreign organizations tosupport Russian education, science, andculture arenotincluded intaxable
profits.
Enforcement ofIntellectual Property Rights
Question 110.
Please explain thecriminal andcivilremedies available forcopyright infringement andtheextent
towhich theyfullyimplement theobligations inTRIPS Articles 41,45,50and61.Intheresponse,
please specify, interalia,whether these remedies mayinclude theseizure, forfeiture anddestruction
ofinfringing articles andequipment usedtomake theinfringing articles, asrequired byArticles 46
and61,andthemanner inwhich thegrant ofcivilprovisional relief isprovided inaccordance
withTRIPS Article 50.WT/ACC/RUS/17/Add.1
Page3
Answer:
ThejudicialremediesavailableforcopyrightinfringementsaredescribedinWT/ACC/RUS/7
onpages 24-25. Intheopinion oftheRussian Delegation, these arefully consistent withTRIPS
Articles 41,45,50,and61;acknowledging thattheTRIPS Articles usesome notions which elude
aprecise definition (forexample, "effective" inArticle 41).
Morespecifically,theseizureofcounterfeitgoodsisprovidedforbyArticle50oftheRussian
Federation LawNo.5351-1 "OnCopyright andRelated Rights" of9July1993 asamended on
19July1995; andtheirobligatory forfeiture anddestruction ortransfer tothecopyright owner, as
wellasthecourt'srighttoforfeit infringing materials andequipment, byArticle 49ofthesameRussian
Federation Law.
Finally, theprocedures forgranting procedural relief aredescribed inWT/ACC/RUS/7
onpages 26-28.
Question 111.
When willtheRussian Federation determine which agency hasleadresponsibility forcopyrights
andrelated rights, perquestion 88ofWT/ACC RUS/9/Add.1?
Answer:
Lead responsibility fortheimplementation ofgovernmental policies forIPRenforcement
lieswiththeRussian Federation Ministry ofJustice (under Presidential Decree No.642“OnMeasures
fortheDevelopment ofOrgans ofJustice intheRussian Federation, dated 2May1996).
Asfarastheenforcement ofrights incomputer programs anddatabases areconcerned,
executive, supervisory, authorizing, regulatory, andorganizational functions arevested intheRussian
Agency forPatents andTrademarks (under Resolution oftheGovernment oftheRussian Federation
No.211“OnIssues oftheRussian Agency forPatents andTrademarks ”,dated 22February 1997).
Copyright protection isexercised bycourts and,where goods aresoldinviolation of
copyright, protection mayalsobeexercised bytheAnti-Monopoly Committee.
There arenospecific plans atpresent toestablish anyother governmental agencies inthis
field.
Question 124.
TheRussian Federation hasnotyetbecome amember oftheConvention fortheProtection of
NewVarieties ofPlants.
What isthetimeframe within which Russia intends tojointhisConvention? Ifsuchplans do
notexist, whynot?
Answer:
Russia isconsidering accession totheConvention fortheProtection ofNewVarieties of
Plants. Onerestraining factor isthelackoffunds needed topaytherespective membership dues.WT/ACC/RUS/17/Add.1
Page4
Question 125.
Thetermofprotection forselection attainments is30years afterregistration butforcertain plants.
What istherational forthelonger term ofprotection forgrapes, decorative trees, fruit crops,
andforest trees?
Answer:
Thetermofprotection forattainments intheselection ofgrapes anddecorative treesis
5years longer thanthatforherbaceous crops owing tothelower reproduction rateofarboreal crops.
Thisisconsistent withtheinternational Convention fortheProtection ofNewVarieties ofPlants.
Question 129.
Concerning theactivities oftheAnti-Monopoly Committee toprotect against theunauthorized
disclosure ofconfidential information orviolation ofintellectual property rights asatypeofunfair
competition (perWT/ACC/RUS/7):
What isthesizeoftheCommittee 'sstaff?
How areinvestigations conducted inconnection with unfair competition, such asmisuse of
trademarks orprotection ofundisclosed information. Please describe indetail theprocedures
followed bytheAnti-Monopoly Committee ininvestigating acomplaint, including theopportunity
given parties toparticipate intheproceedings, theevidence thatmust beproduced orthatis
acceptable toproduce andtheform ofthedecision rendered.
What have been theaccomplishments oftheCommittee since thefirsthalfof1995?
Answer:
TheRussian State Committee onAnti-Monopoly Policy andSupport forNewEconomic
Entities (the"Anti-Monopoly Committee") anditsregional branches (hereinafter referred tocollectively
as"anti-monopoly agencies") dealwithcasesofunfair competition, including illegal usesoftrademarks
andconfidential information, inaccordance withtheRSFSR LawNo.948-1 "OnCompetition and
ontheLimitation ofMonopolistic Activities onCommodity Markets" of22March 1991andwiththe
Rules fortheExamination ofCases Involving Violations ofAnti-Monopoly Legislation.
Theinitiation ofproceedings maybedonebyapplications bycommercial andnot-for-profit
organizations, federal andsub-federal executive agencies, andlocal self-government authorities, as
wellaspublic prosecutors. Suchapplications mustbeaccompanied bydocuments supporting charges
ofunfair competition. Unfair competition proceedings mayalsobeinstituted byanti-monopoly agencies
ontheirowninitiative.
Acomplaint overanalleged instance ofunfair competition, which isreceived byan
anti-monopoly agency, ispassed onbyitsheadtotheunfair competition control department. Thelatter
examines theapplication andattached supportive documents andreports itsfindings backtothehead
oftheanti-monopoly agency who,uponbeing satisfied thatabreach ofanti-monopoly legislation appears
tobeinevidence, orders aCommission ofatleastthreepeople tobeformed toinvestigate thisspecific
case. Within fivedaysaftertheissuance ofsuchanorder, thechairman ofthenewly-established
Commission rules toinstitute relevant proceedings andsetsadateforthefirstmeeting ofthe
Commission. Theruling issenttotheparties involved inthecase(applicant anddefendant) and,ifWT/ACC/RUS/17/Add.1
Page5
necessary, tothirdparties. Asofthedateofthisruling, theparties involved inthecaseandsaidthird
parties maygetacquainted withthematerials ofthecase, withtheexception ofdataconstituting trade
secrets. TheCommission may, atitsowndiscretion, invite various experts toexplain those matters
related totheparticular casewhich require special knowledge tobeunderstood.
TheCommission holds ameeting toheartheclaims oftheapplicant, thedefendant, and
other parties summoned bytheCommission. They havetherighttoproduce evidence, participate in
theexploration ofevidence, putforthquestions tooneanother, lodge petitions, andprovide oraland
written explanations. Theexamination ofthecaseattheCommission 'smeeting isconducted byits
chairman inamanner ensuring thefullest possible all-round review andevaluation ofthecircumstances
ofthecase, termination ofunfair competition andremoval ofitsconsequences, andrespect forthe
rights andlawful interests oftheparties involved intheproceedings. Commission members areentitled
tostudy petitions, statements, andexpert conclusions, andtoaddress questions totheapplicant, the
defendant, andother parties taking partintheproceedings.
Upon theresults ofthiskindofexamination and,asarule,onthebasis ofdocumented
evidence, theCommission adopts adecision which describes thecircumstances ofthecaseasdetermined
bytheCommission anddraws appropriate conclusions. TheCommission makes itsdecision byasimple
majority voteintheabsence oftheapplicant, defendant, andother parties involved intheproceedings.
Thedecision thusmade isannounced immediately uponthecompletion oftheexamination ofthecase
andtakes effect asofthemoment ofbeing readout.
Ifnecessary, theCommission issues abinding order, based onitsdecision, toterminate
thecorresponding instance ofunfair competition andtoremove itsconsequences. Thisorder liststhe
specific actions which theoffender must takeandsetsreasonable deadlines fortheadoption ofsuch
measures. Such decisions and/or orders maybechallenged incourt within sixmonths.
In1995, anti-monopoly agencies initiated 53proceedings overpurported infringements
ofintellectual property rights, and2proceedings overalleged unauthorized usesofconfidential
information, asaresult ofwhich 13orders were issued tocorrect theproven violations. In1996,
therespective figures stood at18,4,and15.There wasnotasingle instance ofcourts reversing decisions
ororders byanti-monopoly agencies.
These statistics testify totheincreased activity ofanti-monopoly agencies inefforts toprotect
businesses andthegeneral public from unfair competition, andtothehighqualifications oftheir
personnel.
Question 130.
Court cases intheRussian Federation involving intellectual property rights appear totakeplace
overaperiod ofyears anddelays arefrequent. Insome instances, hearings scheduled farin
advance arecancelled onthedaytheyaretotakeplace, causing considerable waste ofbothtime
andmoney ofparties whohave flown toRussia toparticipate. Onecourt found ithadno
jurisdictiontoaddressacasebecausejurisdictionwasgiventheHighPatentChamberbylegislation.
Because theHigh Patent Chamber doesnotexist, theplaintiff wasleftwithout aremedy.
What isbeing doneintheRussian Federation toaddress these problems, which mustaffect Russian
citizens asmuch astheydoforeigners?WT/ACC/RUS/17/Add.1
Page6
Answer:
Ashasbeen previously pointed outonanumber ofoccasions (inparticular, in
WT/ACC/RUS/7 onpage24),allcases involving onlylegalentities andself-employed entrepreneurs
(including foreign ones) since 1July1995 havebeenreferred toarbitration courts. Itwould appear
therefore, thattheadverse experience ofsome companies asfarastheresolution oftheirdispute is
concerned (whose examination mayhavebegun before 1July1995, andhascontinued tothisday)
incourts ofgeneral jurisdiction isnolonger indicative ofthecurrent stateofaffairs.
Inaddition, afinaldecision hasbeenmade onthepossibility ofchallenging decisions by
Rospatent 'sChamber ofAppeals incourt evenintheabsence ofaHigh Patent Chamber (seeAnswer
toQuestion 121ofWT/ACC/RUS/17).
Question 131.
TheInterdepartmental Commission fortheEnforcement ofIntellectual Property Rights thatthe
Russian Federation established tocoordinate theefforts ofthevarious governmental bodies has
been inexistence fornearly ayear.
What have been theaccomplishments oftheCommission inreducing copyright piracy and
trademark counterfeiting? What aretheCommission ’splans forthenexttwoyears?
Answer:
Responding further, aStatute oftheInter-Departmental Commission fortheEnforcement
ofIntellectual Property Rights (the"Commission"), anditsmembership, hasbeenapproved bythe
Russian Government initsResolution No.912,dated 9September 1995. Under thatStatute, the
Commission istoplanandorganize theadoption byfederal andsub-federal executive authorities
concerned ofcomprehensive inter-departmental measures toprevent andterminate typical violations
ofRussian legislation ontheprotection ofintellectual property.
InFebruary 1996, theCommission discussed theReport "OntheMore Acute Issues of
Infringements ofRights inTrademarks andonMeasures toCutShort Such Violations" anddecided
todraw upawellrounded planofmeasures toprevent andterminate typical breaches oflegislation
ontrademarks andother means ofindividualizing goods andservices, aswellaslegislation designed
toavert unfair competition. Thework wastobedonebytheenforcement unitthenbeing setupunder
theCommission.
InJune1996, theCommission considered measures toensure thefulfilment ofRussia 's
obligations stemming from international IPRagreements. TheCommission subsequently instructed:
- theRussian Committee forPatents andTrademarks (Rospatent) andtheState Customs
Committee, along withtheMinistry ofJustice, toprepare proposals regarding customs
control arrangements toprevent themovement ofgoods which infringe upon intellectual
property rights across thecustoms border oftheRussian Federation; and
- theInterior Ministry andexecutive authorities concerned toimplement plan-based measures
tostopillegal salesofprinted products, sound andvideo recordings, Compact discs, and
other goods produced andmarketed inviolation ofintellectual property rights.
With aview tocombating misuses ofIPRassets during theproduction anddistribution
ofcomputer software, books, music recordings, movies, andvideos, theAnti-Monopoly Committee,WT/ACC/RUS/17/Add.1
Page7
theInterior Ministry, theStateCustoms Committee, andtheFederal TaxPolice worked out,andagreed
upon withtheNational Procurator General 'sOffice inJune1996, “Recommendations onMethods
toProtect Intellectual Property Assets, ”which were senttotheabove federal executive authorities '
regional branches asaguide forpractical action. These federal authorities made theheads oftheir
regional branches andservices along withthelatter'ssubordinates responsible fortheprotection of
intellectual property rights atlocallevelinorder tocombat offences andcrimes inthisfieldinaccordance
withapplicable legislation, andissued instructions forcorresponding training tobeorganized and
exchanges ofinformation tobearranged between theappropriate units ofdifferent ministries and
departments. Thecoordination ofrelated efforts bytheseunitswasentrusted totheInterior Ministry 's
Economic Fraud Directorate. Onerecommendation wastosetuptaskforces consisting ofofficers from
theInterior Ministry, theStateCustoms Committee, theFederal TaxPolice, andtheAnti-Monopoly
Committee tocarry outjointactivities against themanufacture, supplies, andsalesofpirated products
onRussian territory. Customs authorities weretotakemeasures toprevent suchcounterfeit products
from crossing thenational border. TheFederal TaxPolice jointly withother law-enforcement and
supervisory services were toidentify organizations andenterprises producing, selling, orimporting
pirated products andconcealing resulting incomes from taxation. TheAnti-Monopoly Committee 's
regional branches were instructed together withtheregular andtaxpolice tocrack down onunfair
competition intheform ofsalesofgoods produced inviolation ofcopyright andrelated rights, and
tohaverecourse torestrictive orders andfinesonalarger scale inthese efforts.
Statistics andreviews ofpractical achievements intheanti-piracy drive using theabove
“Recommendations onMethods toProtect Intellectual Property Assets ”upontheresults of1996 can
onlybepresented afterreports arereceived from theregional branches ofthecorresponding federal
executive authorities oftheRussian Federation, butadecline inpiracy ismanifest eventoday.
AdraftofaRussian Presidential Decree "OnUrgent Measures toEnhance theProtection
ofIntellectual Property intheRussian Federation," wasconsidered bytheCommission atitsmeetings
(inNovember 1995andFebruary 1996), andwasinitially agreed uponwithfederal executive authorities
andother interested organizations. Itwasprepared forpresentation totheRussian Government as
another contribution tothepackage ofmeasures toorganize thefightwithillegal usesofintellectual
property assets; butthedraft'ssubmission totheGovernment wassuspended inconnection withthe
issuance ofRussian Presidential Decrees No.642"OnMeasures toDevelop Justice Agencies inthe
Russian Federation," dated 2May 1996, andNo.1177 "OntheStructure ofFederal Executive
Agencies," dated 14August 1996. These twodecrees should result insubstantial adjustments ofthe
tasks andfunctions vested infederal executive authorities, especially theMinistry ofJustice, aswell
astheCommission, asfarastheprotection ofintellectual property rights isconcerned.
TheRussian Government hassince instructed anumber offederal executive agencies and
otherorganizations toconsider issues related tothemaintenance ofuniform Statepolicies onintellectual
property protection, theresumption oftheCommission 'swork within thenewframework ofRussian
federal executive agencies, areinforcement oftheCommission 'smembership, andnecessary changes
toitsStatute.
Question 132.
Inresponse toQuestion 454ofWT/ACC/RUS/4, theRussian Federation identified three main
problems faced bythose responsible forenforcement ofintellectual property rights: (i)theweakness
ofthelaw-enforcement system ingeneral; (ii)theinefficiency oftheexisting legislation onthe
arrest ofimported counterfeit goods; and(iii)theabsence ofclarity intheissue ofretroactive
protection offered totheholders ofcopyright andneighbouring rights.WT/ACC/RUS/17/Add.1
Page8
Please describe thesteps theRussian Federation hastaken toreduce oreliminate these problems.
What steps areplanned forthenexttwoyears?
Answer:
SeeAnswers toQuestions 8,114(WT/ACC/RUS/17) and136herein.
Question 133.
Section 4(e)onenforcement inWT/ACC/RUS/7 states thatnewrules governing criminal liability
fortheviolation ofintellectual property rights entered intoforce on1October 1995, providing
criminal penalties forcopyright violations.
What enforcement efforts haveresulted from thisnewlaw? How many prosecutions havebeen
initiated?
Answer:
Tobeprecise, WT/ACC/RUS/7 didnotstate thatnewrules entered intoforce on
1October 1995, butrather described thesituation existing onthatdate.In1996, anumber ofministries
andagencies issued jointrecommendations, aseries ofjointraidswerestaged, andover120prosecutions
were initiated tocombat copyright infringements (seeAnswer toQuestion 131herein).
Question 134.
What other steps isRussia taking toimprove IPRenforcement?
Answer:
SeeAnswer toQuestion 138(WT/ACC/RUS/17).
Question 135.
In1995, theRussian Federation reported thatFederal LawNo.110-FZ of19July1995 made
criminal cases involving copyright infringement apublic offence andgavejurisdiction toinvestigate
offences totheMinistry forInternal Affairs.
Please describe anysuchcases investigated bytheMinistry ofInternal Affairs todate, andindicate
whether those investigations resulted inlegal action, andifso,theresult oftheaction.
Answer:
Theprecise statistics regarding theresult ofsuchlegalactions arenotavailable. SeeAnswer
toQuestion 133herein.
Question 136.
What plans existforintroducing legislation thatwould givecustoms authorities theauthority to
actattheborder toseizecounterfeit trademarked goods andpirated copyrighted works? When
isthislegislation expected tobeintroduced?WT/ACC/RUS/17/Add.1
Page9
Answer
Aspartoftheaction programme planned bytheInter-Departmental Commission forthe
Enforcement ofIntellectual Property Rights, provisions regarding theestablishment ofcustoms control
overthemovement ofIPRassets across thecustoms border oftheRussian Federation aretobemade
apriority partofaconcept forgovernmental policies onintellectual property protection.
TheAnti-MonopolyCommittee,theStateCustomsCommittee,Rospatent,andotherministries
andagencies concerned havedrafted aRussian Presidential Decree providing fortheestablishment
ofsuchcustoms control overthemovement ofIPRassets across theborder oftheRussian Federation.
TheStateCustoms Committee isdrafting legislative actstophase inborder arrangements
designed toprotect exclusive IPRswithdueregard formodel national legislation asdeveloped bythe
World Customs Organization.
Thefifteenth meeting oftheheads ofcustoms services ofthemember countries ofthe
Commonwealth ofIndependent States hasdecided onauniform approach toorganizing customs control
overIPmovements.
Question 137.
WT/ACC/RUS/7 regarding enforcement ofintellectual property rights, states thatthearbitration
courts andthecourts ofgeneral jurisdiction bothcanhearintellectual property cases, depending
onthestatus oftheparties. There arenomeans, however, forresolving differences in
interpretation ofthelawbetween these twoseparate court systems.
What plans existtodevelop asystem forresolving differences ofinterpretation ofthelaws, since
amending thelawwillnot,inthelongrun,resolve theproblem?
Answer:
Onemechanism forresolving suchdifferences isavailable intheform ofjointplenary
meetingsoftheSupremeCourtoftheRussianFederationandtheHigherArbitrationCourtoftheRussian
Federation todealwiththemore important issues ofprinciple (intheinterests offulldisclosure, no
suchplenums havebeenheldsofartodiscuss differences inIPRenforcement). Inaddition, theSupreme
Court andtheHigher Arbitration Court, when preparing explanations forlower courts, dosometimes
takeeachother'spositions intoaccount. Thecircular ofthePresidium oftheHigher Arbitration Court
onthepossibility ofcontesting decisions made bytheChamber ofAppeals, forexample, wasdrafted
withdueregard fortheposition taken eighteen (18)months before onthisissuebytheSupreme Court.
Civil andAdministrative Procedures andRemedies
Question 156.
Could theGovernment oftheRussian Federation elaborate more onitsanswer toquestion 177
(WT/ACC/RUS/9) (does theRussian Federation haveprovisions initslawsandregulations which
comply withSection 2oftheTRIPS Agreement, inparticular Articles 44,45and46)?
Answer:
Russian legislation hasprovisions which correspond toArticles 44,45and46ofthe
TRIPS Agreement. Provisions similar tothose setforth inArticle 44,clause 1aretobefound inWT/ACC/RUS/17/Add.1
Page10
Article 50,clause 1oftheRussian Federation LawNo.5351-1 “OnCopyright andRelated Rights ”
of7July1993 asamended. Article 12,clause 4ofRussia ’sPatent Law No.3517-1 of
23September 1992contains provisions which areanalogous tothoseestablished byArticle 44,clause 2
oftheTRIPS. AsfarasArticle 45oftheTRIPS isconcerned, itshould benoted thatArticle 49of
theLawNo.5351-1 “OnCopyright andRelated Rights ”of7July1993 asamended, Article 18of
theLaw No.3526-1 “OntheLegal Protection ofComputer Programs andDatabases ”dated
23September 1992andArticle 11oftheLawNo.3523-1 “OntheLegal Protection ofLayout-Design
ofIntegrated Circuits ”of23September 1992 areinaccordance withthisTRIPS Article. Thesame
istrueofTRIPS Article 46.Russia haslegislative provisions andhistory ofjudicial applications of
judicial remedies listed inArticle 46oftheTRIPS Agreement, including theremoval without
compensation fromthecirculation oftrade infringing goods which maydamage therights holder, the
destruction ofsuchgoods, theconfiscation ofmaterials andequipment usedtomake counterfeit goods.
Seegenerally, Article 18,clause 3oftheLawNo.3526-1 “OntheLegal Protection ofComputer
Programs andDatabases ”of23September 1992, Article 50,clause 2oftheLawNo.5351-1 “On
Copyright andRelated Rights ”of7July1993 asamended andArticle 11,clause 3oftheLaw
No.3523-1 “OntheLegal Protection ofLayout-Designs ofIntegrated Circuits ”of23September 1992.
Provisional Measures
Question 157.
Why doestheRussian Federation deem thepowers ofthecourts ofitsgeneral jurisdiction an
arbitration courts beinlinewithArticle 50oftheTRIPS Agreement (Answer toQuestion 186
herein)?
Answer:
SeeWT/ACC/RUS/7, pages 26-28.
Special Requirements Related toBorder Measures
Question 158.
InWT/ACC/RUS/7 (page 28)theRussian Federation states thatitslegislation doesnotprovide
foranyspecial administrative orother procedure tosuspend therelease intofreecirculation of
goods whose importation willinfringe intellectual property rights asstipulated byArticle 51of
theTRIPS Agreement forcounterfeit trademark andpirated copyright goods. Instead, theright
holder hastohaverecourse tothejudicial procedure forprovisional measures. InWT/ACC/RUS/9
theRussian Federation states thatthisisinlinewithArticle 51oftheTRIPS Agreement. Could
theRussian Federation explain onwhatgrounds thisinterpretation isbased andwhether itscurrent
system reflects theelements which arecontained inthesubsequent Articles 52to60oftheTRIPS
Agreement? Could italsoexplain howconcrete is"theplantoimplement anadministrative
procedure inorder tomake thisarrangements more effective"? What elements doesitcontain
(Answers toQuestions 143(WT/ACC/RUS/17) and178,179,180herein)?
Answer:
TRIPS Article 51entitles eachmember country toapply toauthorities, administrative or
judicial, toperform corresponding functions. Thejudicial procedure inplaceintheRussian Federation,
ofcourse, wasestablished before theadoption ofTRIPS, butitcontains alloftheessential components
provided forbyArticles 51-56, and59oftheTRIPS Agreement. Asoftoday, Russian legislation may
arguablylackprovisionswhichwouldpreciselycorrespondtoTRIPSArticle57.AstoTRIPSArticles58WT/ACC/RUS/17/Add.1
Page11
and60,theyarenotapplicable tothesituation inquestion, since Article 58describes obligations for
onlythose cases where national legislation provides forexofficio action (andRussian legislation does
notstipulate itinthiscase), while Article 60speaks ofmembers 'rights rather thanobligations, and
theissue ofnational legislation 'sconformity tothisarticle thusappears irrelevant.
TheStateCustoms Committee oftheRussian Federation hasnowformed ajointworking
group withthecustoms administrations ofsome other CIScountries toconsider theestablishment,
inaddition totheexisting judicial procedure, ofanadministrative procedure toseizecounterfeit goods.
There isnospecific calendar timetable yetineffect fortheimplementation ofthisprocedure.
Trade-Related Investment Measures (TRIMs) -WT/ACC/RUS/13
Question 160.
Thereply toquestion 4indocument WT/ACC/RUS/13 provides abrief listofgovernment
incentives, including taxandcustoms benefits, butdoesnotspecify eligibility criteria.
Who would beeligible forthebenefits outlined inquestion 4?What types ofconditions must
investors accept inexchange forbeing eligible forthese investment incentives?
Answer:
SeeAnswer toQuestion 238herein.
Question 162.
(a) Initsreply toquestion 40(b), theRussian Federation states that"inprinciple, the
Government oftheRussian Federation doesnotplantoadopt measures which would
contravene theprovisions oftheTRIMs Agreement".
IsRussia willing tostrengthen itscommitment inregard totheTRIMs agreement and
commit tonotadopting measures thatwould contravene TRIMs provisions?
(b) Willthefollowing practices beabolished under theforeigners ’investment law:
- requirements tosellacertain percentage offoreign exchange;
- 2.10percenttaxpayment incashofremittance ofbusiness profit;
- restrictions onforeign investment inSOC project;
- abolishment oftaxholidays?
(c) What arethemain contents ofthedraft foreigners ’investment lawwhich isbeing
examined intheDuma, andwhen doyouexpect theDuma topassit?
Answer:
(a) TheGovernment oftheRussian Federation isnotplanning anymeasures thatwould
contravene TRIMs provisions, andisworking tobring itslegislation intolinewiththeserequirements.
(b) Matters ofimproving thesystem fortheattraction offoreign investment areaddressed in
thedraft"OnChanges andAdditions totheRSFSR Law'OnForeign Investment intheRSFSR ',"
which hascleared itsfirstreading bytheState Duma. After thedraftofthelawisfinally approved,
itwillbesubmitted totheWTO Secretariat.WT/ACC/RUS/17/Add.1
Page12
(c) Thedraft"OnChanges andAdditions totheRSFSR Law'OnForeign Investment inthe
RSFSR '"initscurrent form contains thefollowing provisions ofimportance toforeign investors:
- a"grandfather clause" asadirect-action provision which willcontinue ineffect forfive
years;
- offers ofcustoms andtaxbenefits toforeign investors, including privileges associated with
large-scale investments (ofoverUS$100million) andinvestments inpriority economic
fields andproduction sectors, aswellasinregions hitbydepression; and
- articles regulating theestablishment andoperation ofbranches offoreign legalentities on
theterritory oftheRussian Federation.
Question 163.
Thereply toquestion 41(d) doesnotexplicitly address TRIMs atthesub-federal level; itstates
onlythat"itdoesnotcollect dataontheir measures". There isnoindication ofwhat steps may
havebeentaken toensure thatsub-federal authorities areaware ofTRIMs obligations andwould
bewilling tonotify andeliminate allmeasures inconsistent withtheTRIMs Agreement.
What measures hasRussia taken orwillRussia taketoensure thatsub-federal authorities: are
aware oftheTRIMs provisions; arewilling/able toidentify inconsistent measures; andwould
notify andeliminate inconsistent measures? WillRussia beabletoidentify thepublications that
refer tosub-federal TRIMs?
Answer:
SeeAnswer toQuestions 224,227,229inWT/ACC/RUS/4 andAnswer toQuestion 74
inWT/ACC/RUS/9.
TheRussian Delegation reconfirms itsgeneral intention nottoincorporate inthenational
legislation anynewmeasures contrary totheTRIMs Agreement. SeealsoAnswer toQuestion 161
herein. Theauthorized agencies ofthesubjects oftheFederation willproceed, withregard toTRIMs
issues,inaccordancewithappropriateprovisionsoftheRussianlaw.Informationaboutthekeyprovisions
andduties withrespect ofTRIMs isprovided tothesubjects oftheFederation concerned through the
dulyauthorized officials from theMinistry ofForeign Economic Relations working inevery region
ofRussia. Similar information iscontained inspecialized publications devoted toWTO issues, including
TRIMs.
Question 174.
Re.WT/ACC/SPEC/RUS/3. Inthefirstparagraph (lines 4-5), thisdocument expresses that"a
neweconomic system isbeing forged, including asystem ofsupport foragricultural producers".
Could wehavemore information onthegoals andmodalities ofthissystem envisaged? Inwhich
waywillthenewsystem affect market access, domestic support, export subsidies andexport
financing?
Answer:
Atthistimethegoals, modalities, market access, domestic support andexport subsidies
ofanytransitional system areunder active consideration. Itwould bepremature tostatethataconsensus
hasemerged onanyofthese issues.WT/ACC/RUS/17/Add.1
Page13
Question 175.
Inparagraph 2,second page ofWT/ACC/SPEC/RUS/3 reference ismade toan"agricultural
credit system stillnotinplace". AretheRussian authorities planning toestablish anagricultural
credit system? Ifso,could wegetsome information onitsrelevant modalities andclarify ifthat
system would make itpossible toprovide subsidized credit?
Answer:
There areanumber ofmethods under consideration. Forexample, onewould relyupon
theprivate sector commercial banks tosupply credits forfarms, without providing government
guarantees. However, nosingle modality hasyetbeendeveloped.
Question 176.
Inthethird paragraph, the"principle ofcomparability" isintroduced todetermine "the
representative levelofsupport" aswellas"thelossorgainwithrespect toagriculture indifferent
countries".
Since theabove isanewconcept within theWTO, could theRussian Federation authorities indicate
themeaning ofthatapproach? Itmust berecalled hattheconcept oftariffication wasapplied
withacomplete different approach anditwasaformula approved horizontally onlyforUruguay
Round Participants thatbecame WTO Original Members.
Answer:
ItisunderstoodthattheGATTcontractingpartiesappliedthecomplexmethodoftariffication
toreplace theirnon-tariff barriers inagriculture withhigher tariffs, andthereby preserved theexisting
balance ofrights, obligations andprotection among themselves uponbecoming WTO Members. The
Russian Federation ’sownhistoric reform ofthepreviously centralized control overallagricultural
andnon-agricultural products iswidely known. Itistheposition oftheRussian Delegation thatthe
formulation ofitsobligations covering allcomponents oftheAgreement onAgriculture (i.e.market
access, domestic support andexport competition commitments) willbethesubject matter ofnegotiations
within theframework oftheworking party withdueregard fortheeconomic situation ofRussia, the
development levels ofitsagricultural sector, similar obligations assumed byother WTO Members,
andtheoverall progress ofthenegotiations.
Question 177.
Thelawparagraph ofthesecond page(WT/ACC/SPEC/RUS/3) includes theconcept of"restoring
government support programmes foragriculture tothose levels which would besufficient toensure
itssteady development inacompetitive market environment".
Thisconcept seems todisregard thatpresent WTO Members didnotarbitrarily establish their
levels ofdomestic support commitments during theUruguay Round, since theyhadtobasethose
commitments onthelevels registered in1986-88. Theceiling ofthose commitments weretherefore
notestablished byasubjective political decision orpolitical preference.
Atpresent, there isageneral understanding thattheRussian accession should bebased onthe
methodology included intheWT/ACC/4 WTO document.WT/ACC/RUS/17/Add.1
Page14
Answer:
TheRussian Delegation doesnotshare intheunderstanding thattheterms ofitsaccession
intheagricultural sector arenon-negotiable based uponatechnical noteissued afteritscommunication
totheDirector-General ofitsintent toaccede, andwhich would require alessfavourable baseperiod
forreductions todomestic support andexport subsidies thanthatafforded toother developed WTO
Members.
Question 178.
Onpage 3,paragraph 2ofthesame document, itissaidthattheRussian Federation "inprinciple
agrees withselective support foragricultural product exports". Then itgoesonproviding some
examples.
Export subsidies commitment ofWTO Original Members arebased inactual figures related to
the1986-90 base period. Similarly tothecaseofDomestic Support, itisintended thatnew
Members initiate negotiations departing, atleast, from figures based onvolume andbudgetary
outlays related tothebaseperiod mentioned intheWT/ACC/4 WTO document.
Answer:
SeeAnswers toQuestions 176and177herein.
Non-Paper onAgriculture -Explanatory Notes
Question 179.
WenotethatRussia usesadjustment factors tobring itscurrency calculations into1995 prices.
While theinformation isinteresting, andmakes thedatamore relevant forcurrent comparisons,
itwould bemore helpful tofollow therequirements ofWT/ACC/4 exactly andreport information
onexpenditures innominal terms foreachoftheyears listed.
Answer:
Thefigureswerereportedat1995pricesbecausetheWTOSecretariat'sWT/ACC/4document
andtheWTO Agreement onAgriculture donotinclude anindication astotheneedtomake calculations
innominal terms, andalsoinorder toensure thecomparability ofdataduring periods ofhighinflation
rates.
Question 180.
Weseeintheexplanatory notethatRussian State Statistics Committee deflator indices wereused
totranslate nominal prices intoadjusted 1995prices. Itisunclear toushowtheindices toconvert
1989-91 expenditures into1995 prices were constructed.
How were these indices calculated, what kindofindex wasused(CPI, PPI,GDP), andwhat is
thebasis forcomparison (average. fortheyear, December toDecember)?
Towhat extent dothese datainclude expenditures attheregional level? Since 1993, alotof
subsidies/agriculture policies havebeentransferred totheregional level. Abreakout ofthedata
(federal andregional), todemonstrate total inclusion ofallsupport, would greatly enhanceWT/ACC/RUS/17/Add.1
Page15
transparency. Itmaybethatcertain agriculture research andtraining andcapital investment
policies aregreen box,butwithout more detail wecannot tell.
Answer:
Measures ofsupport taken in1989-1991 were calculated using theannual GDP deflator
indices computed bytheRussian State Statistics Committee andpublished bytheRussian Statistical
Yearbook for1995 andintheRussian-language collection "Social andEconomic Situation inRussia
in1995." Thiskindofdataisperiodically reviewed bytheState Statistics Committee.
Beginning in1993, AMS datahasincluded measures ofsupport attheregional level.
Comments onspecific 1993-95 tables
DS:1 --Wewould appreciate clarification onthefollowing programmes:
Question 181.
(page 1)Under capital investment, what arenon-production facilities? Arethese facilities ports
orroads, orsome other kindofinfrastructure? Also, what ismeant bycapital investment by
research institutes, etc.?
Answer:
Non-production facilities areunderstood tomean housing, cultural- andconsumer-service
facilities, kindergartens, andother facilities unrelated toagricultural production.
Capitalinvestmentbyresearchinstitutionscoversthebuildingoflaboratories,theprocurement
ofequipment, andother likespending.
Question 182.
(page 2)Could Russia explain indetail what iscovered under “operating expenses ”listed intable
DS:1 andagain inDS:9? Thename given inbothtables isthesame, butthelevelofexpenditures
differ. Note: tobeexempted from theAMS, theexpenditures must cover provision orconstruction
ofcapital works only--isthiswhat isincluded inDS:1? Subsidized provision ofon-farm facilities,
subsidies toinputs oroperating costs, orpreferential usercharges belongs intheAMS. Isthis
what iscovered inDS:9?
Answer:
The"operating expenses" article ofexpenditures comprises adiversity ofexpenses which
forthemostpartbelong tothegreen box.These include expenditures forforest management, theupkeep
oftheforest rangers service, themaintenance ofveterinarian institutions andorganizations andofwater
supply lines, measures toprotect andusehunting resources, funding forgovernment plantquarantine
inspection services, fortheholding ofconferences, seminars, andworkshops, andforthepublication
oftraining materials, centralized expenses bygovernment technical supervision services, andthelike.
These andsimilar expenses arecovered bytableDS:1.
Those expenses fortherepair andmaintenance ofinter-farm irrigation networks which
areincluded among "operating expenses" arecovered bytableDS:9.WT/ACC/RUS/17/Add.1
Page16
Question 183.
(page 2)Wewould alsoappreciate clarification ofassistance towomen inthecountryside (cash
disbursements torural dwellers). What arethecriteria forreceiving these payments andhow
doesthisprogramme fitunder general services?
Answer:
Assistance towomen inthecountryside isseenasaprogramme ofservices andbenefits
fortheruralagricultural community and,forthisreason, isincluded among general services. Their
list,asisknown, isnotlimited topoints (a)-(e) inparagraph 2ofAnnex 2.
TheprogrammehasbeenimplementedinaccordancewitharesolutionoftheRSFSRSupreme
Soviet, dated 1November 1990, andprovides forthepayment towomen ofchildattendance allowances
attheirplaces ofemployment, additions tomothers 'wages iftheyareemployed incertain jobs, and
other measures ofsupport.
Question 184.
(page 2)Under public stockholding forfoodsecurity purposes, weneedmore detail ontheoperation
ofRussia ’sfederal andregional foodstock programmes. Could Russia describe these programmes
using thecriteria found inparagraph 3ofAnnex 2oftheUruguay Round Agreement on
Agriculture.
Answer:
Inaccordance withtheRussian Federation LawNo.53-FZ "OntheProcurement andSupply
ofAgricultural Products forState Needs" of2December 1994 thesatisfaction ofgovernment needs
foragricultural products, rawmaterials, andfoodincludes theprovision ofrequired levels offood
supplies todefense andStatesecurity forces andthelaying ofgovernment stocks ofagricultural products,
rawmaterials, andfood. Thisisconsistent withfoodsecurity purposes.
Question 185.
(page 2)Under decoupled income support: upkeep ofsocial infrastructure facilities, wewould
appreciate clarification ofhowthisprogramme meets therequirement ofpoint (a)inparagraph
6ofAnnex 2(“eligibility ofsuchpayments shall bedetermined byclearly defined criteria such
asincome, status asaproducer orlandowner, factor useorproduction level inadefined and
fixed baseperiod ”).
Answer:
Expenses forsocial infrastructure arenotbased onthetypeorvolume ofproduction and
arenotrelated todomestic orinternational prices, andtheamount ofpayments isnotrelated to
production factors. Noproduction isrequired toreceive payments.
Theinclusion ofsuchexpenses inthe“green box”isalsosubstantiated under paragraph 11
ofAnnex 2asstructural adjustment assistance.WT/ACC/RUS/17/Add.1
Page17
Question 186.
(page 3)Under income insurance andincome safety-net programmes, wewould appreciate
clarification oftheinsurance premium compensation.
Answer:
RussianGovernmentresolutionsNo.63“OnEmergencyMeasuresfortheFinancialSupport
oftheAgro-industrialComplexoftheRussianFederation”of23January1993,No.1186“OnMeasures
ofStateSupport oftheAgro-industrial Complex in1993-1994" of18November 1993, andNo.240
“OnEconomic Conditions oftheFunctioning oftheAgro-Industrial Complex oftheRussian Federation
in1995" of10March 1995 provide forinsurance premium compensation toagricultural producers
whohaveconcluded cropinsurance agreements.
Agricultural cropplantings areinsured against lossordestruction duetonatural disasters
andothermeteorological andothernatural adversities orfireswhich areuncommon inthegiven locality,
aswellasagainst diseases, pests, anddestruction bywildanimals, migratory birds, androdents.
Insurance indemnity ispayable inanamount equal to70percentofthedamage suffered.
Question 187.
(page 3)Compensation forexpenses ofcontingency seedstock fund: howdoes thismeet the
requirements ofparagraph 7ofAnnex 2?InDS:9, there isalsotheinclusion offunds toestablish
seasonal seedstocks. How arethese different?
Answer:
Contingency seedstocks areestablished primarily toprovide producers withseeds inthe
event ofnatural disasters andother emergencies. Thisiswhythiskindofcompensation isincluded
inthegreen box. Seasonal seedstocks havebeenexcluded from thereworked D:9.
Question 188.
(page 4)Under regional assistance programmes, wewould appreciate clarification ofcapital
investment intheFarNorth, andsubsidies andallowances paidintheFarNorth. What arethe
programme requirements/criteria, andhowdotheyconform tothose listed inparagraph 13of
Annex 2?Arethese programmes unique toagricultural producers, ordoestheprogramme also
extend tosmall towns andcities intheregion?
Answer:
These payments andcapital investments extend toallproducers inFarNorth areas
distinguished byextremely unfavourable conditions. Thespecific areas areprecisely andclearly
determined inapplicable government decisions. Those capital investments which areincluded inDS:1
were effected bytheMinistry ofAgriculture andFood Production andtargeted enterprises and
organizations under itscontrol. Subsidies andallowances havebeenexcluded fromthegreen boxin
thereworked derivative spreadsheets.WT/ACC/RUS/17/Add.1
Page18
DS:4
Question 189.
Intheexplanatory notes, itstates thatsupporting table DS:4 wascompiled ofproduct-specific
andnonproduct-specific AMSs thatwere above the5percentdeminimis .Itwould beuseful
tohavetheproduct andtotalagriculture values todemonstrate correct application ofdeminimis .
Forthenon-product-specific AMS, themore relevant comparison should bemade between the
aggregate non-product-specific AMS andthevalue oftotalagricultural production, asopposed
tocomparing eachnon-product-specific measure ofsupport withthevalue ofagriculture output,
todetermine deminimis levels.
Answer:
TheapplicationofthedeminimisprovisionwasasrequiredbytheAgreementonAgriculture.
Question 190.
Please provide thevalue oftotal agricultural production andthevalue ofproduction foreach
commodity covered for1993-95 innominal (not1995) prices.
Answer:
Inorder todetermine nominal prices, thefollowing deflator indices needtobeused:
1995 1994 1993 1991 1990 1989
1 2.8 11.48 1807 4156 4988
Agricultural production in1995 prices:
1995 209364 bln.rub.
1994 228000 bln.rub.
1993 259000 bln.rub.
1991 296000 bln.rub.
1990 312000 bln.rub.
1989 325000 bln.rub.WT/ACC/RUS/17/Add.1
Page 19Procurement ofindividual agricultural products in1995 prices:
1989 1990 1991 1993 1994 1995
Wheat 11287345 20090104 8217152 11744436 3621163 3297876
Rye 3079092 7974533 3069370 2549894 454674 420383
Corn 2209185 1616601 977587 618543 156545 55042
Barley 1783210 4042957 2186289 2971237 624626 408763
Sunflower 7579266 4025917 2424633 674120 137441 440744
Sugar beet 9028779 5534961 2799224 2015771 150164 120933
Flaxfibre 913303 454251 810801 215094 94651 85994
Potatoes 6054434 6309639 9224916 1282810 662257 392182
Cattle 46124036 58749632 41847952 10433587 4559566 3945158
Sheep andgoats 3784894 5048709 2366628 481570 103037 77167
Hogs 23604214 25497891 16448037 5405345 2686368 2351759
Poultry 18332396 17420290 11560825 5812304 3728799 2844163
Milk 71333887 58609574 50451982 13633448 8258683 11846892
Eggs 15573534 13424296 11984747 5469903 4934958 4695853
Wool 9604394 6043194 13691097 623556 324638 409622WT/ACC/RUS/17/Add.1
Page20
Question 191.
Why didRussia include policies, suchasenergy, equipment, andirrigation subsidies, intable
DS-4? Arethese programmes provided separately toeachcommodity, oraretheymade available
toallfarmers?
Answer:
InthereworkedDS:4,theseAMSareincludedamongtotalnon-product-specificexpenditures.
DS:5
Question 192.
These tables areconfusing. Theexplanatory notes state thatpurchasing prices were “based on
market principles rather thanapplicable regulated prices ”.Could Russia explain indetail how
itdetermined these prices? WT/ACC/4 (page 2-3)andtheAgreement onAgriculture (Annex 3)
bothstate thatadministered prices have tobeusedtocalculate theprice gap.
Answer:
DS:5 showed theprices atwhich products were procured forpublic stockholding.
Question 193.
Regarding external reference prices, itisunclear from thetables howthese prices wereestablished.
Could Russia report what prices were usedforthese calculations?
Answer:
Thesource fortheexternal reference prices for1989-91 wastheStateStatistics Committee
(Goskomstat). Theywerenotderived from1993-94 data.Thereworked tableoffers corrected references
todatasources.
Question 194.
IntheDS:5 tables, thesource given fortheexternal reference price for1993-95 iscustoms data
(for1994-95) andGoskomstat data(for1993). These datasources allgivetrade values indollar
terms. Itisunclear howexternal reference prices for1989-91 werederived from thisdata. Please
provide these calculations. Why were trade datafrom 1989-91 notusedtocalculate the1989-91
price gap?
Answer:
SeeAnswer toQuestion 193herein.
DS:6
Question 195.
What isthedifferentiated price mark-up cited inDS:6 for1989-91?WT/ACC/RUS/17/Add.1
Page21
Answer:
Thedifferentiated pricemark-up onpurchasing prices foragricultural products (surcharge
perunitofproducts soldtothegovernment) hasbeenapplied since 1989, fixed asapercentage of
purchasing prices orinrubles pertonofproducts.
DS:7
Question 196.
Wenotethatthesame dataappear inDS:4, listed asbeing in1995prices, butarereported under
thetotal product-specific AMS calculated inthistable in1991 prices. Isthisatypographical
error?
Answer:
Alldatainthetables isin1995 prices.
DS:9 -1993-95 version
Question 197.
(page 3)WenotethatRussia hasincluded purchase ofhybrid cornseedinthenon-product-specific
AMS. Why didn'tRussia include corn hybrid seedsubsidies intheproduct-specific AMS for
corn?
Answer:
Inthereworked derivative spreadsheets, purchases ofhybrid cornseeds areincluded in
tableDS:6.
Question 198.
(page 4)Wenotethatgovernment support forpedigree livestock breeding isincluded inthe
non-product-specific AMS. Why didn'tRussia include thisintheproduct-specific AMS?
Answer:
Thissupport isincluded inDS:9 forwantofbreakdown dataforspecific types oflivestock.
Question 199.
(page 4)Wenotethatsubsidies forbread grains wereincluded inthenon-product- specific AMS.
Why didn'tRussia include thisintheproduct-specific AMS?
Answer:
Thissupport isnotincluded inthereworked derivative spreadsheets, asittargets processing
enterprises.WT/ACC/RUS/17/Add.1
Page22
Question 200.
(page 5)Wewould appreciate clarification ofhowtaxbenefits were estimated, what kindoftax
benefits these are,andwhat thecriteria areforreceiving taxbenefits.
Answer:
Thetaxbenefits werecalculated onthebasisoflegislatively established differences inthe
taxation ofagricultural enterprises compared withindustrial enterprises, including withrespect toprofit
tax,property tax,androadfunddeductions. Thecalculations tookaccount ofthedifferent profit tax
ratesforindustrial andagricultural enterprises withdueregard forbalance profits inagriculture; the
differences regarding property taxratesandthemake-up oftaxable assets; andthedifferent ratesof
deductions towards roadfunds withdueregard forsales.
Question 201.
(page 5)Wewould appreciate clarification ofthe“other expenses ”category andthetypes of
non-exempt regional support included inthisamount.
Answer:
The"other expenses" category includes thatregional support which wasnotallocated among
specific programmes andcannot, forthisreason, beidentified precisely. Thisisduetothecontinuing
absence ofaccurate accounting forallspecific usesoffunds fromregional budgets, although thetotal
amount ofcashspent tosupport agriculture isknown.
1989-91 version
Question 202.
(page 1)Wewould appreciate clarification ofhowtaxbenefits were estimated, what kindoftax
benefits these are,andwhat thecriteria areforreceiving taxbenefits.
Answer:
In1989-91, theonly taxbenefits enjoyed byagricultural producers were profit tax
concessions. Theestimates ofthese benefits arebased ondifferences inthetaxation ofindustrial and
agricultural enterprises.
Question 203.
(page 1)Wewould appreciate clarification concerning theloanprogramme, howdebtwrite-offs
were estimated, andthecriteria forwriting offthedebts.
Answer:
Thebaddebts ofcollective farms andStatefarms werewritten offbyResolution No.62
oftheRSFSR Congress ofPeople 'sDeputies, dated 22June1990. Allsuchbaddebts wereforgiven
asof1July1990.WT/ACC/RUS/17/Add.1
Page23
Question 204.
(page 2)Wewould appreciate clarification ofhowtheelectric power allowance isdistributed and
thecriteria forreceiving thebenefit.
Answer:
Electric power allowances wereestimated onthebasis ofdifferences intheratescharged
toagriculture andtoindustry andwithdueregard forelectricity consumption levels.
Question 205.
Could Russia report iflivestock prices intable DS:5 areforliveanimals orforcarcass weight?
Answer:
DS-5 showed dataforliveanimals. Thereworked tablecontains thesamedatarecalculated
intothecarcass weight ofappropriate categories ofmeatusing StateStatistics Committee coefficients.
Question 206.
Please explain what specific product wasusedindetermining theexternal reference price forfluid
milk? Forexample, cheese orsome other dairy product.
Answer:
Theprice fordairy products wasused.
Question 207.
(DS-1) What aretheassumptions onwhich costestimates forindividual "green-box" measures
were based?
Answer:
DS:1, justastheother supporting tables, showed expenditures in1995 prices
Question 208.
(DS-7) Could theRussian delegation elaborate onhowwere themark-ups onpurchasing prices
calculated? Please provide ashort characteristic oftheconcept of"mark-up" asusedinexplanatory
notes tospreadsheet 7.
Answer:
SeeAnswer toQuestion 195herein.WT/ACC/RUS/17/Add.1
Page24
Question 209.
(DS-9) Arethefigures regarding interest rates foragricultural producers (10percent) andthe
estimated rateforcommercial loans in1995(180percent) nominal figures, ifso,isthisasubsidy
oncredit interest rates amounting to170percent?
Answer:
Theanswer isyestobothquestions.
Question 210.
(DS-9) Istheterm"electric power concessions" asusedonpage4equivalent totheterm"electric power
allowances" asusedintableDS-9 onpage22?
Answer:
Yes,itis.
Question 211.
Please elaborate onsafeguard measures intended tobeintroduced withregards toimported alcoholic
beverages andsugar.
Answer:
SeeAnswers toQuestions 4,170and171(WT/ACC/RUS/17).
Guaranteed Minimum Prices
Question 212.
TheRussian Federation states thatitwillextend thesystem ofguaranteed minimum prices for
agricultural products andfoodstuffs forState needs, "asaform ofsupport fortheagricultural
producer during theperiod ofadaptation oftheagrarian sector tothemarket economy".
Please clarify whoiseligible forthissupport measure.
How doestheselection process takeplace?
How arethelevels oftheminimum prices established?
Answer:
TheRussianFederationannouncedanimprovementoftheminimumguaranteedpricessystem
rather thanexpansion thereof. Thelistofproducts forwhich guaranteed prices arerecommended was
reduced fromthatannounced in1996effective 1April 1997. Theabove prices havebeensetforcertain
types offoodgrain andmilk. Entitlement totheminimum guaranteed price (ifitishigher thanthat
ofthemarket) areproducers ofagricultural goods whoselltheirproducts forgovernmental needs.
Minimum purchasing prices shallbesetbutforgovernmental procurement atalevelwhich would enable
agricultural producers toobtain theminimal profit, given theprices atthedomestic andexternal market,
anddepending onthecountry ’sfinancial situation.WT/ACC/RUS/17/Add.1
Page25
Question 213.
Please provide themost recent statistics onagricultural imports andexports, broken down by
(a)product group, (b)country oforigin and(c)country ofdestination.
Answer:
Every yeartheGovernment oftheRussian Federation publishes itsofficial statistics on
trade. In1993 thisactivity wasperformed bytheState Committee onStatistics, butsince 1994 this
activity hasbeenperformed bytheState Customs Committee. These statistics which arepublished
onbothaquarterly andyearly basisaretoovoluminous tosummarize inthisquestion andanswer format.
Although themostrecent statistics forthe1996 calender yeararestillbeing collated, theyshould be
publicly available afterApril, 1997. Thetelephone andfacsimile numbers toplace anorder withthe
publication office oftheStateCustoms Committee aretel.7-095-975-1174; andfax7-095-975-4810.
WT/ACC/RUS/13/Add.1
Question 215.
(Spreadsheet DS-4). Thesocalled "deminimis clause" doesnotoperate asanautomatic deduction
asitseems tobethecaseinthetables prepared bytheRussian Government.
Thecriteria forexcluding the"deminimis levels" from thecalculation oftheCurrent Total AMS
isclearly stated inarticle 6:4oftheWTO Agreement onAgriculture:
(a) forproduct specific domestic support, the"deminimis" provision applies tosituations
where suchsupport doesnotexceed 5percentofthetotalvalue ofproduction ofa
basic agricultural product during therelevant year; itistherefore notapplicable when
thelevelexceeds thatfigure;
(b) inthecaseofnon-product specific domestic support, the"deminimis" provision is
applicable incases where suchsupport doesnotexceed 5percentofthevalue ofthe
country 'stotal agricultural production. Thus itisnotrelated tothepossibility of
summing uptheexpenses exceeding 5percentofthepurchases oftherespective
product. Iftheexpenses exceed the"deminimis" percentage, thentheyhave tobe
considered intheir entirety, notjusttheremaining partabove thatpercentage.
Answer:
InDS:4, thedeminimis clause wasapplied inaccordance withArticle 6.4oftheAgreement
onAgriculture, withdueregard forthe5percentthreshold.
Question 216.
(Spreadsheet DS-4). Inthefirstparagraph ofpage 3,wereadthat"expenses foreachindividual
measure were compared withthevolume ofagricultural production, andamounts equal toor
smaller than5percentwerenotincluded inthecalculation ofthecurrent totalAMS". However,
article 6:4oftheWTO Agreement onAgriculture speaks of"value ofproduction", notvolume
ofproduction. Could youplease clarify thebasis ofthisapproach?WT/ACC/RUS/17/Add.1
Page26
Answer:
Bytheterm"volume ofagricultural production", thevalue ofagricultural production is
meant.
Question 217.
(Spreadsheet DS-5). Ifapplied administered prices were compiled using "prices generally based
upon market principles rather thanapplicable regulated prices", could youexplain thedifference
between the"applied administered price" andthe"external reference price" onpages 10and11?
With regards totheuseofreference world prices, could youexplain thereasons fornotusing,
forinstance, representative international market quotations?
Answer:
Theexternal reference prices weref.o.b. prices (fornetexports) andc.i.f. prices (fornet
imports).Theappliedadministrativepriceisthecostofthecorrespondingcategoriesofproductsprocured
tomeetpublic needs.
Question 218.
(Spreadsheet DS-7). Table DS-7 "contains thetotalproduct-specific AMS calculated asthesum
totalofmarket price supports (DS-5) andnon-deductible direct subsidies (DS-6)". However, in
paragraph 16ofthedocument WT/ACC/4, itisclearly stated that"theresults ofthecalculations
inSupporting Tables DS-5 andDS-6 should, along withthebudgetary cost(orrevenue forgone)
ofother measures, beentered inSupporting Table DS-7 which allows allproduct-specific AMS
tobetotalled". So,didyouconsider "thebudgetary cost(orrevenue forgone) ofother measures"?
Ifnot,could your explain whyanother approach wasapplied?
Answer:
Table DS:7 covers allproduct-specific AMS.
Question 219.
(Spreadsheet DS-7). Could youclarify theword "kindergartens" inthiscontext?
Answer:
Kindergartens arefacilities (State-owned andprivate) which careforyoung children under
sixyears old.
Question 220.
Areallprogrammes, including sub-national ones, operated byanylevelofsub-national authority,
which meet thedefinitions andcriteria oftheAgreement onAgriculture fordomestic support
included inthese tables? Foranyagricultural programmes thathave notbeenincluded, please
provide aprogramme description, andexpenditures fortheperiod 1993-95, sothattheirexclusion
from these tables canbeconfirmed. Forexample, some oftheprogrammes which wewould have
expected tobeincluded inthese tables butwhich donotappear tohave been arethefollowing
(from reply toQuestion No.57ofWT/ACC/RUS/2):WT/ACC/RUS/17/Add.1
Page27
- support fortheestablishment ofprivate farms (persons moving from cities to
agriculture villages);
- regional support toprovide financing oflivestock producers andanimal feed;
- subsidies toproducers oflivestock delivered tofederal andregional foodstocks; and
- compensation (10-30%) forformula feedusedforbreeding high-quality livestock and
poultry.
Forallofthenotified programmes, arethese infactprogrammes thatwere active during the
period notified andnotprogrammes forwhich expenditures hadbeenauthorized butnotmade?
Answer:
Bothfederal andregional agricultural AMS areincluded inthetables. Support forthe
establishment ofprivate farms isincluded inDS:1 (thesection showing AMS toprivate, owner-operated
farms). Regional support tolivestock farming andsubsidies tolivestock producers areincluded in
DS:6. Subsidies (compensation) forformula feedareincluded inDS:9.
Supporting Table DS:1: Green Box
Question 221.
Wewould liketohaveclarification regarding themeasure "Capital investment". Insupporting
table DS:1, Russia reports that8.4trillion roubles (in1995 prices) were spent in1994 forthe
construction ofirrigation, drainage, etc. However, inAnswer toQuestion No.57of
WT/ACC/RUS/2, itisreported that"capital investment intheagricultural sector accounted for
2.4trillion roubles in1994". Thedifference between thetwofigures cannot beexplained bythe
deflator usedbyRussia initssupporting table DS:1. Please provide more detailed information
toclarify thisapparent contradiction.
Answer:
Answer toQuestion 57ofWT/ACC/RUS/2 reports capital investments atthefederal level,
netofregional spending.
Question 222.
Foreach ofthemeasures listed aspublic stockholding forfood security purposes, anddirect
payments toproducers classified asdecoupled income support, income insurance andincome safety
netprogrammes, payments forrelief from natural disasters, environmental programmes and
regional assistance programmes, please provide more complete programme descriptions including
anexplanation inrelation tothegeneral criteria ofparagraph 1andtheprogramme specific criteria
(paras 3-13) inAnnex 2fortheparticular measure type.
Answer:
SeeAnswers toQuestions 184,185,186and187herein.
Question 223.
Please present dataincurrent yearvalues, notinflation adjusted values.WT/ACC/RUS/17/Add.1
Page28
Answer:
SeeAnswer toQuestion 190herein.
Supporting Table DS:4: Total AMS
Question 224.
Non-product specific measures arearepetition ofthose reported insupporting table DS:9. These
individual measures should notbereported inthistablewhich aggregates product specific support.
Answer:
Theindividual non-product-specific measures arenotincluded inthereworked DS:9.
Question 225.
TheOECD, initsreport entitled "1996 Agricultural Policies, Markets andTrade inTransition
Economies", states onpage126,thattotalagricultural expenditures under theRussian Federation 's
1995 federal budget, i.e.expenditures to:(i)agricultural production, (ii)landresources, (iii)
other measures inagricultural sector, and(iv)formation offederal foodstocks amounted to10.4
trillion rubles. CanRussia explain thediscrepancy between these figures andtheamount fortotal
AMS of56trillion rubles noted intable DS:4?
Answer:
Wedonotknow themethods anddatasources usedbytheOECD. Theciteddataprobably
isexclusive ofcoststoregional budgets andrevenue foregone. Eventheunofficial non-paper documents
drafted bytheRussian Delegation relyexclusively onofficial statistics anddataoftheRussian
Federation.
Supporting Table DS:5: Market Price Support
Question 226.
Could theRussian Federation indicate whether eligible production reported inthistable intonnes,
orinthousands oftonnes?
Answer:
Production datainDS:5 isinthousands oftons.
Question 227.
Isitpossible toexplain thediscrepancy between the"eligible" production datanoted insupporting
table DS:5 andtotal amount ofproduction asreported onpages 199and204oftheOECD
document referred toabove? Forexample, wheat production in1995 inRussia wasestimated
bytheOECDdocumentat30.1milliontonnes;however,eligibleproductionwaseither6.3thousand
or6.3million tonnes.
Answer:
DS:5 shows government procurement rather thanthetotalamount ofproduction.WT/ACC/RUS/17/Add.1
Page29
Question 228.
Would itbepossible tooutline howeligible production isdetermined? What ismeant by"grain
purchases"? Who doesthepurchasing, andforwhat use?
Answer:
Eligible production isprocurement tomeettheState'sneeds. These purchases aremade
byvarious organizations foravariety ofpurposes asdetermined bygovernmental agencies.
Question 229.
Please identify thesources andspecification oftheexternal reference prices usedinthemarket
price support calculation (e.g., quality ofproduct, atwhat location, c.i.f.orf.o.b. basis, currency
andsource ofprice data).
Answer:
Thedatasources forexternal reference prices aretheState Customs Committee andthe
State Statistics Committee. Asarule,these prices areexpressed indollars andthenconverted into
rubles attheofficial exchange rateaccording todataoftheState Statistics Committee. F.O.B prices
areusedfornetexports andc.i.f. prices fornetimports.
Question 230.
Foreach product forwhich anapplied administered price isindicated, please describe the
administered price regime forthatproduct, including what thisprice represents, what production
receives thatprice, andhowtheprice isdetermined andbywhom.
Answer:
Average prices atwhich products arepurchased bythegovernment wereusedasapplied
administrative prices foreachproduct. Applied administrative prices arebased onmarket prices as
bestdetermined bygovernmental agencies.
Supporting Table DS:6: Non-Exempt Direct Payments
Question 231.
Formany commodities, thesupport isdescribed aspartial compensation forthecostofmineral
fertilizers andpesticides. Arethese generally available input subsidies available toallcrops or
arethese administered onacrop-specific basis? Ifso,isthere areason whyhavetheynotbeen
reported asnon-product-specific support inSupporting Table DS:9?
Answer:
Asthetotalamount ofpartial compensation forthecostofmineral fertilizers andpesticides
iscalculated, theparticular crops arenotspecified. ButtheMinistry ofAgriculture andFoodProduction
reports these subsidies onacrop-specific basis. Thisisthereason whywere theyincluded among
product-specific AMS.WT/ACC/RUS/17/Add.1
Page30
Question 232.
Formany products, mostly livestock products (e.g., forsoybeans, cattle, hogs, sheep andgoats,
poultry, milk, eggs, andwool), support islisted simply aspayments. Please describe these
payments. Who iseligible toreceive them? Onwhat basis arepayments toindividual producers
calculated?
Answer:
Thesupport forallproducts listed inthequestion isprovided intheformofsubsidies per
tonofproducts soldtothegovernment.
Supporting Table DS:9: Non-Product Specific AMS
Question 233.
Wedonothave enough information ontheoperation ofmany measures reported inthistable,
suchas"debts write-offs" or"other expenses, including unidentified regional budgetary expenses"
or"taxconcessions" or"commodity credits". Please describe eachofthese measures more fully.
What aretheunidentified regional budgetary expenses? Please explain howthevalue oftaxbenefits
iscalculated andwhoreceives these benefits. How hasthevalue ofcommodity credits been
estimated? How dothese credit programmes operate?
Answer:
Responses tosome ofthese questions aretobefound inAnswers 200,201,202,and203
herein. Thecommodity credit programme wasadopted pursuant toRussian Government Resolution
No.240"OnEconomic Conditions fortheOperation oftheAgro-Industrial Complex oftheRussian
Federation in1995," dated 10March 1995. Commodity credits were extended torepay debts of
enterprises inthefuelandenergy complex tothefederal budget andtooffset future taxpayments to
thefederal budget. Theamount ofthebenefit wasdetermined based ontheinterest differential and
theBank ofRussia 'sdiscount rateatthebeginning of1995.
Other Questions
Question 234.
WerequestthatRussiaaddressthequestionscontainedinquestion159ofWT/ACC/RUS/13/Add.1.
While weappreciate Russia 'sintent tosupport, after accession, theimplementation ofonlythose
measures undertaken byregional authorities toencourage exports which areconsistent withWTO
provisions, theinformation requested onsub-central measures intheareaoftaxes andinvestment
isrelevant toanumber ofissues inRussia 'saccession, including market access andexport
competitiveness. Werestate question 159withtherequest thatRussia make itsbestefforts to
supply information ontheissues raised.
Answer:
Russia willsupply requested information onsub-central measures toencourage exports
assoonasanysuchmeasures areimplemented. SeealsoAnswer toQuestion 235(WT/ACC/RUS/17).WT/ACC/RUS/17/Add.1
Page31
Additional Questions onGoods Related Issues
Section 3.1.1 Customs Import Tariffs
Question 236.
(a) Please provide aschedule oftheweighted average import tariff forthetimeperiod
1992-1996, either byyearorbysome other subdivision oftimethatlends itself toa
precise determination, bearing inmind thattariff rates often werechanged mid-year.
Please desegregate thenumbers intocategories suchasforagricultural goods, textiles,
machinery andequipment, etc.
(b) Predictability ontariff schedules incrucial foranefficient trade. CanRussia insert
theclause foramechanism suchasprior notification fortariff changes intheCustoms
Code oftheRussian Federation?
Answer:
(a) Arough unofficial estimate ofthe1996 weighted average import tariff maybebetween
14percent-17percent.Formulating suchsummary information inamanner thatwould lenditself
toamore precise determinations requested isnotpossible inthisquestion andanswer format dueto
voluminous dataandnumerous changes tothetariffsystem overthisperiod. Atconsiderable timeand
expense, anunofficial English-language translation ofthecustoms tariff oftheRussian Federation,
asamended to1September 1996, wasprepared andwassubmitted inOctober 1996atthefourth Meeting
oftheWorking Party. Although therehavebeenonlyslight changes tothetariffrates, thenomenclature
andheading numbers were thereafter significantly revised inorder toconform tochanges tothe
Harmonized System recommended bytheCustoms Cooperation Council. Arevised English language
translation willbesubmitted induecourse. Inaddition, every yeartheGovernment oftheRussian
Federation publishes itsofficial statistics ontrade. In1993 thisactivity wasperformed bytheState
CommitteeonStatistics,butsince1994thisactivityhasbeenperformedbytheStateCustomsCommittee.
These statistics arepublished onbothaquarterly andyearly basis. Although themostrecent statistics
forthe1996calender yeararestillbeing collated, theyshould bepublicly available afterApril, 1997.
Thetelephone andfacsimile numbers toplace anorder withthepublication office oftheStateCustoms
Committee aretel.7-095-975-1174; andfax.7-095-975-4810.
(b) Inordertomaintainforeigntradetransactionsefficiently,itisplannedtoincludethefollowing
prior notification procedure fornewtariff schedules intheCustoms Code oftheRussian Federation,
whose draftiscurrently being agreed upon byagencies concerned:
- newcustoms duties takeeffect 30daysafterbeing signed intolawiftheyarelower orthe
same astheprevious dutyrates; and
- newcustoms duties takeeffect 90daysafterbeing signed intolawiftheyarehigher than
theprevious dutyrates.
SeeAnswer toQuestion 3(WT/ACC/RUS/17).
Investment Policy (WT/ACC/RUS/13)
Question 238.
Theresponse toquestion 4refers to"government involvement inprivate capital financing,"
"government orders tobuild specific facilities andmanufacture specific products," andinvestmentWT/ACC/RUS/17/Add.1
Page32
"incentives toencourage keyprojects andinvestment inpriority areas". Inaddition, theresponse
toquestion 44refers toincentives that"depend onthesector ofinvestment."
Could Russia provide specific information onthese proposals, citing legislation andother points
ofreference, ontheincentives.
Arethese programmes linked toanyparticular circumstance, e.g.,aretheyaimed atattracting
investment toexisting facilities orsectors already producing, atencouraging investment innew
sectors, oronanyother factor?
Answer:
During 1994-1996, anumber ofnewlawsandadditions toexisting lawswereenacted to
grant taxandcustoms incentives toforeign investors andcommercial organizations withforeign equity
participation.
Changes andadditions totheLawNo.1992-1 "OnValue-Added Tax"of6December 1991,
forexample, havebeenineffect since 1April 1996. Inaccordance withthese, production equipment,
components, andspare partsforitareallexempted fromVAT. Theearlier procedure whereby products
imported ascontributions totheauthorized capital ofenterprises withforeign equity participation were
exempted from payment ofVAT hasbeenreinstated. Asimilar concession applies tonon-excisable
goods brought intothecountry asrepayment ofgovernment credits provided toforeign countries by
theformer Soviet Union andtheRussian Federation.
Under thesame law,taxable assets aredetermined onthebasis ofsalesofgoods (work,
services) proceeding fromtheirrespective prices andratesexclusive ofVAT. Taxable assets alsoinclude
anyother cashreceived byenterprises inconnection withpayments forgoods (work, services); but
loans, including firm-to-firm loans, arenotsubject tovalue-added tax.
Inaccordance withFederal LawNo.64-FZ "OnChanges andAdditions totheRussian
Federation Law 'OntheProfit Taxation ofEnterprises andOrganizations '"(Clause 13),dated
25April 1995, theexcess salary taxwaseliminated effective 1January 1996.
Under Federal LawNo.54-FZ "OnChanges andAdditions totheRussian Federation Law
“OntheProfit Taxation ofEnterprises andOrganizations," dated 3December 1994, profit taxisno
longer payable onfunds usedasproductive andnon-productive capital investment, aswellasthose
spent torepay bankloans drawn andutilized forsuchpurposes.
According toInstruction No.37“OntheProcedure fortheAssessment ofTaxontheProfits
ofEnterprisesandOrganizationsandforitsPaymenttotheGovernmentBudget”,dated10August1995,
enterprises withforeign equity participation which operate inthematerial production sphere andwere
registered prior to1January 1992, retain theearlier granted benefit whereby theyareeligible fora
profit taxholiday forthefirsttwo(or,inthecaseofbusinesses setupintheFarEastern economic
region, thefirstthree) years aftermaking theirfirstbalance sheet profits.
Inaccordance withRussian Government Resolution No.883"OnCustoms Import Duty
andValue-Added TaxConcessions forGoods Imported byForeign Investors asContributions tothe
Charter Capital ofEnterprises withForeign Equity Participation," dated 23July1996, goods imported
ontothecustoms territory oftheRussian Federation asaforeign founder 'scharter capital contribution
areexempted from customs duties, provided thatsuchgoods arenotsubject toexcise tax;thatthey
belong tofixedproduction assets; andthattheyareimported within thetimeperiod setinthefoundation
documents fortheformation ofthecharter capital.WT/ACC/RUS/17/Add.1
Page33
Inaccordance withRSFSR LawNo.1545-1 "OnForeign Investment intheRSFSR," dated
4July1991, assubsequently amended, andwithRussian Government Resolution No.757"Onthe
Procedure fortheIdentification ofProducts Imported byEnterprises withForeign Equity Participation
forTheir OwnNeeds, dated 30June1994, wholly foreign-owned enterprises andjointventures with
aforeign equity ofmore than30percentmayimport products needed tomeettheirownneeds without
firstobtaining animport licence, withtheexception ofcases provided forbyinternational agreements
applying toRussian territory.
GovernmentalparticipationintheencouragementofprivateinvestmentisregulatedbyRussian
GovernmentResolutionsNo.534"OnExtraIncentivesforPrivateInvestmentintheRussianFederation,"
dated 1May1996, andNo.744"OntheProcedure fortheAllocation ofCentralized Investment
Resources onaCompetitive Basis," dated 22June1994. These regulatory actsaimtocreate favourable
conditions forthecontinued development ofprivate investment initiative andtosupport high-efficiency
investment projects witharecoupment period ofatleasttwoyears, inwhich private investors 'inputs
(share capital, profits, depreciation) account foratleast20percentofthecombined project costs,
andprovide forgovernmental backing toprivate investors inthese projects intheamount of
20-50 percentofsuchcosts. Governmental backing isprovided toprivate investors inthefollowing
ways:
- allocations from thefederal budget, toberepaid within notmore than24months;
- provisions forgovernment-owned portions ofshares innewly-created jointstockcompanies
tobesoldonthemarket upontheexpiry oftwoyears aftertherespective company begins
torealize aprofit from itsinvestment project; and
- government guarantees tocompensate investors foraportion oftheirinvested resources
intheevent thattheinvestment project failsforreasons other thantheirownfault. The
amount ofsuchsupport intheform ofgovernment guarantees depends onthecategory
oftheproject, butmaynotexceed 60percentofthetotalborrowing required forits
implementation.
Thesystem ofgovernmental measures ofsupport doesnottarget anyspecific economic
sectorsorregions,andisdesignedtoassistthosehighly-efficientinvestmentprojectswhichhavequalified
forthissupport onacompetitive basis.
Question 239.
Theresponse toquestion 7refers toamechanism ofState guarantees withtheaimofattracting
foreign investments forexpansion ofRussian export-oriented production.
Please givespecifics onthisprogramme, e.g.,howfirms qualify, howlongtheguarantees last,
what measures firms must taketoremain eligible, andacitation ofthelegislation orregulation
thatauthorizes it.
Answer:
SeeAnswer toQuestion 238herein.
Question 240.
Concerning thereferences to"Industrial Policy Guidance for1995-1997" and"Resolution No.324
of22March 1996" inquestion 40anditsresponse:WT/ACC/RUS/17/Add.1
Page34
(a) Please clarify definitively thestatus ofthese proposals andtheavailability ofthe
documents thatcontain them.
(b) If,asweunderstand, the"Industrial Policy" document wasnever finalized, please
describe theultimate disposition oftheproposal, andhowtheissues outlined inthe
"Guidance" document have been addressed insubsequent alternative initiatives.
(c) There areseveral categories oftaxinRussia suchasfederal tax,local tax,local self-
management tax,etc.,andthetaxrates often change. Theprocedure oftaxpayment
isalsoquite complicated. CantheRussian Government amend thetaxsystem ina
waythatwillpromote foreign investment?
Answer:
(a) Saiddocuments havebeenprovided totheWTO Secretariat.
(b) Amedium-term programme fortheyears 1997-2000, "Structural Adjustment andEconomic
Growth," hasnowbeendrafted, setting thefollowing guidelines forencouraging industry during this
difficult period including:
- furnishingofinstitutionalandlegislativeconditionsforthedevelopmentofpositivestructural
changes inindustry;
- taxsystem reform;
- adoption ofmeasures offoreign economic support;
- encouragement ofprivate andforeign investment; and
- limited direct government investment.
(c) seeAnswers 162and238herein.
WT/ACC/RUS/13
Agreement onSubsidies andCountervailing Measures
Question 242.
(Question 7)CanRussia please explain onwhatbasis itconsiders thatitsexport insurance schemes
(inparticular "theestablishment, withtheassistance oftheState, ofasystem ofinsurance related
toexport operations toprotect them from long-term commercial risks") anditsincentive to
export-oriented production areconsistent withtheWTO, andnotably withpoints (j)and(d)of
Annex ItotheSCM Agreement?
Does theRussian Federation intend toinvoke Article 29oftheSCM Agreement tocover atleast
some ofthese measures?
Answer:
Thesystem ofgovernmental insurance forRussian exports onlybegan totakeshape in
1996. Such systems, incorporating specialized banking andinsurance structures, have longand
successfully operated inalldeveloped countries. Russia untilrecently hadonlyoneelement ofsuchWT/ACC/RUS/17/Add.1
Page35
asystem -theRussian Export-Import Bank (Roseximbank), while theother halfofthesystem -export-
oriented loaninsurance -remained onlyonpaper. Following theestablishment oftheexport-import
insurancecompanyRoseximgarant(underRussianGovernmentResolutionNo.516“OnIssuesPertaining
totheEstablishment oftheRussian Export andImport Insurance Company ”of23April 1996), the
system hastaken onarelatively complete shape andthemechanisms inthissystem arenowoperational.
Theinsurance company 'sprincipal objective istoestablish export insurance arrangements
based oninternationally recognized market principles fortheinsurance business. Thecompany 'sspecific
business istheinsurance ofexport loans granted orguaranteed byRussian banks andtheinsurance
ofexport risksofRussian enterprises andorganizations. Thecompany willactalong thesame lines
asitscounterparts indeveloped nations. Themajor shareholders ofRoseximgarant include Roseximbank
(holding astake of51percent)andVnesheconombank (15percent)bothofwhich arecontrolled by
thegovernment. Thecompany 'ssupervisory board includes, inaddition toshareholders, representatives
oftheRussian Ministry ofFinance andMinistry ofForeign Economic Relations.
Itneeds tobepointed outinthisconnection thatdespite theestablishment ofthekeyelements
ofthesystem, some ofitsmore detailed components arestillbeing developed andapproved (which
includes, inparticular, draftregulations ontheprocedures forgranting government guarantees). That
iswhyitappears rather difficult atthisstage toprovide acomparative anddetailed analysis ofRussian
export insurance programmes andincentives forexports withaview toascertaining their exact
consistency withWTO requirements. TheRussian Government reviewed theexperience ofWTO
Members inthefieldofexport insurance andintends tofullycomply withtheprovisions ofAnnex 1
totheSCM Agreement.
TBT Related issues
Question 251.
What aretheinspection orquarantine systems ofRussia ’sagricultural products including animals?
Answer:
SeeAnswer toQuestion 34inWT/ACC/RUS/13.