WT/DS604/2  
 
19 November 2021  
(21-8724) Page: 1/6 
  Original: English  
 
RUSSIAN FEDERATION – CERTAIN MEASURES CONCERNING DOMESTIC AND FOREIGN 
PRODUCTS AND SERVICES  
REQUEST FOR THE ESTABLISHMENT OF A PANEL  BY THE EUROPEAN UNION  
The following communication, dated 17 November 2021 , from the delegation of the European Union  
to the Chairperson of the Dispute Settlement Body, is circulated pursuant to Article 6.2 of the DSU.  
 
_______________  
 
 
On 22 July 2021, the European Union requested consultations with the Russian Federation, pur suant 
with Articles 1 and 4 of the Understanding on Rules and Procedures Governing the Settlement of 
Disputes (DSU) and Article XXII:1 of the General Agreement on Tariffs and Trade 1994 ("GATT 
1994") and Article XXII of the General Agreement on Trade in Se rvices (GATS) with regard to various 
measures favouring domestic products and services provided by Russian entities over imported 
products and services provided by foreign entities.  
The consultations took place on 13 September 2021 virtually with a view to  reaching a satisfactory 
settlement of the matter. Unfortunately, the consultations failed to settle the dispute.  
As a result, the European Union respectfully requests that a panel be established pursuant to 
Articles  4 and 6 of the DSU and Article XXIII of the GATT 1994 and Article XXIII of the GATS to 
examine the matter on the basis of the standard terms of reference, as set out in Article 7.1 DSU.  
1. The measures at issue  
The Russian Federation has adopted several measures which form part of a broader import 
substitution programme aiming to replace, through a mix of restrictions and incentives, imported 
goods or services provided by foreign entities with domestic goods or s ervices provided by Russian 
entities with respect to the procurement of goods and services for non -governmental purposes by 
certain State -related entities that are not governmental agencies, including  enterprises fully or 
partially owned by the State, Sta te-trading enterprises and legal entities implementing investment 
projects with State support.    
The basic Russian legal acts governing import substitution with respect to procurement include 
Federal Law of 18 July 2011 No. 223 -FZ on procurement of goods,  works and services by certain 
types of legal entities (Law 223)1 which regulates the procurement of certain entities, including 
State -owned enterprises and State -trading enterprises and Federal Law No 488 -FZ of 31 December 
2014 on industrial policy (Law 488)2 which sets out the Russian Federation’s import substitution 
policy for industrial products and covered by Law 223.3  
 
1 http://government.ru/docs/all/100084/  
2 http://government.ru/docs/all/101573/  
3 It is to be noted that State and municipal procurements of goods and s ervices are ruled by another 
Russian legal act which is Law No 44 -FZ of 5 April 2013 on contractual system in the sphere of public 
procurement of goods, works, services for state and municipal needs, and subordinate legal acts as 
enumerated in the replies to Trade Policy Review questions (WT/TPR/M/345/Add.1, question 60).  WT/DS604/2  
 
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  The respective laws, decrees etc. have been applied, or may be applied, by the relevant State -
related entities and/or by relevant R ussian authorities. The European Union challenges the respective 
measures both as such and as applied.  
The measures at issue can be summarised as follows.  
a. Price preference granted to procurements by State -related entities favouring Russian 
origin produ cts and services from Russian entities  
The Russian Federation is granting preference to goods of Russian origin and services supplied by 
Russian entities over goods originating in a foreign country and services performed or supplied by 
foreign entities in  the framework of procurements by certain State -related entities. This price 
preference is set out inter alia in Law 223, in particular Article 3(8.1) and in Governmental Decree 
No. 925 on granting preference to goods of Russian origin and works and servic es performed or 
supplied by Russian entities over goods originating in a foreign country and works and services 
performed or supplied by foreign entities of 16  September 2016 (Decree 925).4 
The measure provides for the application of a price preference of  up to 30% for three different types 
of competitive tenders and auctions for the procurement of goods and services, by a wide range of 
State -related entities. The European Union challenges this measure insofar as it applies to non -
governmental purchases by  State -related entities that are not governmental agencies. The European 
Union challenges this measure as such and also the instances of application as applied, notably the 
application of Decree 925 by the relevant State -related entities and by relevant au thorities such as 
the Russian Federal Antimonopoly Service.  
• Concerning tender procedures (or other method), Decree 925 provides that t ender offers for 
Russian -origin goods and services provided by Russian entities are assessed by reducing by 
15% (or by 3 0% for radio -electronic products and software) their purchase price offer, while 
imported goods and services provided by foreign entities are assessed on the basis of their 
actual (non -reduced) price offers, thus significantly increasing the chances of Rus sian 
providers to win the tender. Russian -origin goods and services supplied by Russian entities 
are effectively paid at the offered price, i.e. up to 30% more than the price used for assessing 
the offers.  
• In relation to auctions (or other method) in whi ch the winner is determined by reducing the 
initial (maximum) contract price specified in the notification of procurement by the value of 
the “step” referred to the procurement documentation, if a provider of goods originating in 
foreign countries or a for eign provider of services wins the auction, the contract is concluded 
at a price 15% (or 30% for radio -electronic products and software) below the proposed 
contract price. This price reduction is not applied to Russian bidders.  
• In relation to auctions (o r other method) in which the winner is determined by reducing the 
initial (maximum) contract price specified in the notification of procurement by the value of 
the “step” referred to in the procurement documentation, if a provider of goods originating 
in foreign countries or a foreign provider of services wins the auction with a bid in which the 
contract price is reduced to zero and which leads to the right to conclude a contract, the 
contract is concluded at a price 15% (or 30% for radio -electronic product s and software) 
above the proposed contract price which is not the case for Russian providers of the 
respective goods or services.  
b. Requirement to obtain prior authorisation for the purchase of certain engineering 
products  
The purchase by certain State -related entities of certain products outside the territory of Russia is 
made subject by the Russian Federation on obtaining non -automatic and arbitrary authorisation by 
a government body (the “Government Commission on Import Substitution”). This measure a pplies 
to purchases for certain investment projects with state support (including private companies with 
 
4 http://government.ru/docs/all/108260/   
Other relevant legislation may include, for example, the Code of Administrative Offenses Arti cle 7.32.3.  WT/DS604/2  
 
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  no or limited State participation). The investment projects with State support concerned by this 
measure are defined by a minimum financial size and a minimum financial State support.  
 
The procedure for granting an authorisation to purchase imported products is composed of inter alia : 
- the obligation for the entities covered by the measure to draw up and submit lists of 
investment projects to the Russian government which includes these investment projects in 
a specific registry;  
- the obligation to indicate in the lists certain engineeri ng products which are required for the 
project;  
- the examination of the investment projects in this registry and the granting of the 
authorisation to purchase certain  engineering products outside the territory of Russia  
necessary for these investment pr ojects by the Government Import Substitution Commission 
without any clear, transparent, objective criteria apart from the apparent objective to 
substitute  engineering products purchased outside the territory of Russia with domestic 
like-products.  
 
The European Union challenges this measure as such and also the instances of application by the 
Government Commission on Import Substitution and by any other relevant authority as applied.  
This authorisation to purchase imported products is based inter ali a on the following Russian legal 
acts: 
 
- Federal Law of 18 July 2011 No. 223 -FZ on procurement of goods, works and services by 
certain types of legal entities and in particular Article 3.1 of this law;  
- Federal Law of 31 December 2014 No. 488 -FZ on indus trial policy of the Russian Federation 
and in particular Article 18(1);  
- Government Decree of the Russian Federation No 1132 of 2014 on the Procedure for 
Maintaining the Register of Contracts Concluded by Customers Based on Procurement 
Results’ (together  with the ‘Rules for Maintaining the Register of Contracts Concluded by 
Customers Based on Procurement Results’)5;  
- Government Decree of the Russian Federation No 1516 of 30 December 2015 on approval 
of the rules for selecting investment projects for in clusion on the register of investment 
projects and maintaining the register of such investment projects6; 
- Government Decree of the Russian Federation No 1485 of 29 December 2015 on approving 
the rules for determining the unit prices of mechanical engine ering products which are 
required for the implementation of investment projects by legal entities7;  
- Government Decree of the Russian Federation No 1521 of 31 December 2015 on approving 
the criteria for assigning goods to mechanical engineering products  and the unit prices of 
mechanical engineering products above which information on these products is included in 
the lists to be drafted by clients or legal entities of future requirements on mechanical 
engineering products required for the implementation of investment projects8; 
- Government Decree of the Russian Federation No 785 of 4 August 2015 on the Government 
Commission for Import Substitution9; 
 
5 http://government.ru/docs/all/93472/  
6 http://government.ru/docs/all/105194/  
7 http://government.ru/docs/all/105068/  
8 http://government.ru/docs/all/105196/  
9 http://government.ru/docs/all/102958/  WT/DS604/2  
 
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  - Governmental Order No 2744 -r of 29 December 201510; 
- Governmental Order No 2781 -r of 31 December 201 511; 
- Code of Administrative Offenses  Article  7.32.312. 
c. Minimum quotas for domestic products in procurement procedures of certain State 
related entities favouring Russian origin products  
The Russian Federation has adopted quotas reserved for Russian -origin products in the context of 
the procurement of goods by  certain State -related entities. In particular, this measure requires for 
minimum shares of Russian -origin products as a percentage of the volume of the total purchased 
products on a yearly basis per client in a given year. The minimum share ranges between  1% and 
90% of the purchases depending on the specific products and for many products these percentages 
will increase in 2022 and for the years “2023 and beyond” with 2021 being the base year. The 
Russian Federation currently applies these quotas on around  250 products. The European Union 
challenges this measure insofar as it applies to non -governmental purchases by State -related 
entities that are not governmental agencies. The European Union challenges this measure as such 
and also the instances of applica tion as applied, notably the application of the minimum quotas by 
the relevant State -related entities and by relevant authorities.  
This measure is based inter alia on the following Russian legal acts:  
 
- Federal Law of 18 July 2011 No. 223 -FZ on procurement of goods, works and services by 
certain types of legal entities, in particular Articles 3(5.2) and 3(8.1);  
- Federal Law of 31 December 2014 No. 488 -FZ on industrial policy of the Russian Federation 
and in particular Article 18(1);  
- Resolution of the Government of the Russian Federation of 3 December 2020 No 2013 on 
the Mandatory Minimum Share of Procurement of Russian Goods and Their Attainment by 
Clients13; 
- Resolution of the Government of the Russ ian Federation dated 30 April 2020 No. 616 
Prohibiting the Use of Industrial Goods Originating from Foreign States in Procurement for 
State or Municipal Needs and Prohibiting the Use of Industrial Goods Originating from Foreign 
States and Works (Services) Performed (Rendered) by Foreign Persons in Procurement for 
the Needs of State Defence and National Security14; 
- Resolution of the Government of the Russian Federation dated 10 July 2019 No. 878 on 
Measures for Stimulating Radio electronic Production on t he Territory of the Russian 
Federation in Procurement of Goods, Works, or Services for State or Municipal Needs, 
Amending Resolution of the Government of the Russian Federation dated 16 September 
2016 No. 925 and Repealing Certain Regulations of the Govern ment of the Russian 
Federation15 
- Code of Administrative Offenses  Article  7.32.3.  
*** 
This request  also covers any annexes or schedules thereto, amendments, supplements, 
replacements, renewals, extensions, implementing measures or any other related measures.  
 
10 http://government.ru/docs/all/105107/  
11 http://government.ru/docs/all/105223/  
12 
http://www.consultant.ru/document/cons_doc_LAW_34661/d6aa4cbf552406efe036ac5795f27fd90be7b4be/  
13 http://government. ru/docs/all/131253/  
14 http://government.ru/docs/all/127752/  
15 http://government.ru/docs/all/122858/  WT/DS604/2  
 
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  2. Legal basis for the complaint in respect of the Russian measures  
The various measures descri bed above appear to be inconsistent with Russia’s obligations under the 
covered agreements, in particular:  
a. Price preference rules for State -related entities  
- Paragraph 2 of the Protocol on the Accession of the Russian Federation (WT/MIN(11)/24 
WT/L/83 9) in conjunction with the Report of the Working Party on the accession of the 
Russian Federation to the WTO (WT/ACC/RUS/70, WT/MIN(11)/2), and in particular 
paragraphs 98, 99 and 1450 because, with this Russian measure, State -owned, State -
controlled enter prises and enterprises with exclusive or special privileges that conduct 
commercial activity do not make purchases (not intended for governmental use) in 
accordance with commercial considerations, including inter alia  price, and enterprises of 
other WTO Me mbers are not afforded adequate opportunity in conformity with customary 
business practice, to compete for participation in such purchases.  
- Article III:4 of the GATT 1994 read in conjunction with Article III:8(a) GATT 1994, because 
by providing for a pri ce preference to goods of Russian origins in competitive tenders and 
auctions for the procurement of goods for commercial purposes, by a wide range of State -
related entities that are not governmental agencies, the Russian measure accords to 
imported produc ts a treatment less favourable than that accorded to like products of national 
origin in respect of laws, regulations and requirements affecting their internal sale, offering 
for sale, purchase, transportation, distribution or use.  
- Article XVII:1 of the  GATS, read in conjunction with Article XIII GATS, because by providing 
for a price preference to domestic services and service suppliers for the procurement of 
services for non -governmental purposes by State -related entities that are not governmental 
agencies, the Russian measure accords to foreign services and service suppliers a less 
favourable treatment than that accords to its own like services and service suppliers.  
- Article XVII:1(c) of the GATT 1994, read in conjunction with Article XVII:2 of the GATT 1994 
because by providing that a wide range of State -related entities  apply a price preference in 
favour of domestic goods for non -governmental use, this Russian measure prevents such 
entities from acting in a manner consistent with the general princ iples of non -discriminatory 
treatment prescribed by the GATT.  
b. Import Substitution Government Commission procedure for foreign products  
- Paragraph 2 of the Protocol on the Accession of the Russian Federation (WT/MIN(11)/24 
WT/L/839) in conjunction with the Report of the Working Party on the accession of the 
Russian Federation to the WTO (WT/ACC/RUS/70, WT/MIN(11)/2), and in particular 
paragraphs 98, 99 and 1450 because, with this Russian measure, State -owned and State -
controlled enterprises that conduct commercial activity do not make purchases which are 
not intended for governmental use in accordance with commercial considerations, including 
price, quality, availability, marketability, and transportation, and would not afford 
enterprises of other WTO Mem bers adequate opportunity in conformity with customary 
business practice, to compete for participation in such purchases.  
- Article III:4 of the GATT 1994, read in conjunction with Article III:8(a) GATT 1994, because 
the requirement to notify purchases of certain foreign engineering products outside the 
territory of Russia and to obtain prior authorization of such purchases by the Government 
Import Substitution Commission for non -governmental purposes, the measure accords to 
imported products a  treatment less favourable than that accorded to like products of national 
origin in respect of laws, regulations and requirements affecting their internal sale,  offering 
for sale, purchase, transportation, distribution or use.  
- Article XI of the GATT 19 94, because by imposing a requirement of prior approval by the 
Government Import Government Commission for the purchase of certain goods outside the 
territory of Russia, this Russian measure provides for a restriction on the importation of 
certain foreign products into its territory.  WT/DS604/2  
 
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  - Article XVII:1(c) of the GATT 1994, read in conjunction with Article XVII:2 of the GATT 1994 
because by providing that purchases of certain engineering products for non -governmental 
use of a wide range of State -related entiti es outside the territory of Russia depend on the 
authorisation of the Government Import Substitution Commission, this Russian measure 
prevents such entities from acting in a manner consistent with the general principles of non -
discriminatory treatment pres cribed by the GATT.  
c. Minimum quotas for domestic products in procurement procedures  
- Paragraph 2 of the Protocol on the Accession of the Russian Federation (WT/MIN(11)/24 
WT/L/839) in conjunction with the Report of the Working Party on the accession of the 
Russian Federation to the WTO (WT/ACC/RUS/70, WT/MIN(11)/2), and in particular 
paragraphs 98, 99 and 1450 because, with this Russian measure, State -owned and State -
controlled enterprises that conduct commercial activity do not make purchases (not inten ded 
for governmental use) in accordance with commercial considerations, including availability, 
and enterprises of other WTO Members are not afforded adequate opportunity in conformity 
with customary business practice, to compete for participation in such purchases.  
- Article III:4 of the GATT 1994, read in conjunction with Article III:8 of the GATT of 1994, 
because, by requiring Russian  State -related entities that are not governmental agencies, 
for the procurement of goods for non -governmental purposes, t o purchase certain quantities 
of products of Russian origin in their procurement activities, the measure accords to 
imported products a treatment less favourable than that accorded to like products of national 
origin in respect of laws, regulations and req uirements affecting their internal sale,  offering 
for sale, purchase, transportation, distribution or use.  
- Article XVII:1(c) of the GATT of the 1994, read in conjunction with Article XVII:2 of the GATT 
1994, because by requiring State -related entities to purchase certain quantities of products 
of Russian origin for the procurement of goods for non -governmental purposes, the Russian 
measure provides for a discriminatory treatment of goods of foreign origin compared to 
goods of Russ ian origin.  
The various measures by the Russian Federation relating to procurement practices of State -related 
entities identified in this request appear to nullify or impair the benefits accruing to the European 
Union directly or indirectly under the cover ed agreements.  
The European Union asks that this request be placed on the agenda for the meeting of the Dispute 
Settlement Body to be held on 29 November 2021.  
 
 
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