WT/DS604/1  
G/L/1392  
S/L/433  
 
26 July 2021  
(21-5733) Page: 1/6 
  Original: English  
 
RUSSIAN FEDERATION – CERTAIN MEASURES CONCERNING DOMESTIC AND FOREIGN 
PRODUCTS AND SERVICES  
REQUEST FOR CONSULTATIONS BY THE EUROPEAN UNION  
The following communication, dated  22 July 2021 , from the delegation of the European Union  to the 
delegation of the Russian Federation , is circulated to the Dispute Settlement Body in accordance 
with Article 4.4 of the DSU.  
 
_______________  
 
 
My authorities have instructed me to request consultations with the government of the Russian 
Federatio n pursuant to Article 1 and 4 of the Understanding on Rules and Procedures Governing the 
Settlement of Disputes (DSU), Article XXII:1 of the General Agreement on Tariffs and Trade 1994 
("GATT 1994") and Article XXII of the General Agreement on Trade in Services (GATS) with regard 
to various measures favouring domestic products and services provided by domestic entities ove r 
foreign products and services provided by foreign entities.  
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 State -owned 
enterprises, State -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 Russ ian Federation 's import substitution 
policy for industrial products and  covered by Law 223.3  
The respective laws, decrees etc. have been applied, or may be applied, by the relevant State -
related entities and/or by relevant Russian authorities. The EU cha llenges the respective measures 
both as such and as applied.  
The measures at issue can be summarised as follows.  
 
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 services 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 mun icipal needs, and subordinate legal acts as 
enumerated in the replies to Trade Policy Review questions (WT/TPR/M/345/Add.1, question 60).  WT/DS604/1 • G/L/1392 • S/L/433  
 
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  a. Price preference applied to procurements by State -related entities favouring Russian 
origin products and services from Russian entities  
The R ussian 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 Sta te-related entities, including State -
owned enterprises and State -trading enterprises. 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 services 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, including State -owned enterprise s and State -trading enterprises. The EU 
challenges this measure insofar as it applies to non -governmental purchases by State -related 
entities that are not governmental agencies. The EU challenges this measure as such and also the 
instances of application a s applied, notably the application of Decree 925 by the relevant State -
related entities and by relevant authorities 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 30% for radio -electronic products) their purchase price offer, while imported 
goods and services provided by foreign entities are assessed on the basis o f their actual 
(non-reduced) price offers, thus significantly increasing the chances of Russian 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 which the winner is determined by reducing the 
initial (maximum) contract price specified in the procurement documentation by the value 
of the "step" referred to the proc urement documentation, if a provider of goods originating 
in foreign countries or a foreign provider of services wins the auction, the contract is 
concluded at a price 15% (or 30% for radio -electronic products) below the proposed contract 
price. This price  reduction is not applied to Russian bidders.  
• In relation to auctions (or 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 i n 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% 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  of certain products outside 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 applies to purchases for certain  investment 
projects with state support (including private companies with 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 the se investment projects in 
a specific registry;  
 
4 http://government.ru/docs/all/108260/  WT/DS604/1 • G/L/1392 • S/L/433  
 
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  - the obligation to indicate in the lists certain engineering products which are required for the 
project;  
- the examination of the investment projects in this registry and the authorisation to purchase 
certain imported engineering products necessary for these investment projects by the 
Government Import Substitution Commission without any clear, transparent, obj ective 
criteria apart from the apparent objective to substitute imported engineering products with 
domestic like -products.  
The EU 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 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 l egal entities and in particular Article 3.1 of this law;  
- Federal Law of 31 December 2014 No. 488 -FZ on industrial policy of the Russian Federation 
and in particular Article 18(1);  
- Government Decree of the Russian Federation No 1132 of 2014 on the Procedur e 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 inclusion on the register of investment 
projects and maintaining the register of such investment projects6; 
- Government D ecree of the Russian Federation No 1485 of 29 December 2015 on approving 
the rules for determining the unit prices of mechanical engineering products which are 
required for the implementation of investment projects by legal entities7;  
- Government Decree o f 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; 
- Governmental Order No 2744 -r of 29 December 201510; 
- Governmental Order No 2781 -r of 31 December 201511. 
c. Minimum quotas for domestic products in procurement procedures of certain State 
related entities favouring Russian origin pro ducts  
The Russian Federation has adopted quotas reserved for Russian -origin products in the context of 
the procurement of goods by S tate-owned enterprises, State -trading enterprises and other 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 
 
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/  
10 http://government.ru/docs/all/105107/  
11 http://government.ru/docs/all/105223/  WT/DS604/1 • G/L/1392 • S/L/433  
 
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  year. The minimum share ranges between 1% and 90% of the purchases depending on the specif ic 
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 EU challenges this measure insofa r as it applies to non -governmental 
purchases by State -related entities that are not governmental agencies. The EU challenges this 
measure as such and also the instances of application as applied, notably the application of the 
minimum quotas by the releva nt 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 
Clients12; 
- Resolution of the Government of the Russian Fed eration 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) Perform ed (Rendered) by Foreign Persons in Procurement for 
the Needs of State Defence and National Security13; 
- Resolution of the Government of the Russian Federation dated 10 July 2019 No. 878 on 
Measures for Stimulating Radio electronic Production on the Territo ry 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 Government of th e Russian 
Federation14. 
*** 
This request  also covers any annexes or schedules thereto, amendments, supplements, 
replacements, renewals, extensions, implementing measures or any other related measures.  
2. Legal basis for the complaint in respect of the Russian  measures  
The various measures described 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/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 mea sure, State -owned and State -
controlled enterprises 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 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(a) GATT 1994, because 
by providing for a price preferen ce to goods of Russian origins in competitive tenders and 
auctions for the procurement of goods for non -governmental purposes, by a wide range of 
 
12 http://government.ru/ docs/all/131253/  
13 http://government.ru/docs/all/127752/  
14 http://government.ru/docs/all/122858/  WT/DS604/1 • G/L/1392 • S/L/433  
 
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  State -related entities that are not governmental agencies including State -owned enterprises 
and State -trading enterprises, the Russian 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 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 GAT T 1994, read in conjunction with Article XVII:2 of the GATT 1994 
because by providing that a wide range of State -related entities including State -owned 
enterprises and State -trading enterprises 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 principles 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 
paragrap hs 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 Members 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 planned future purchases of certain foreign engineering products 
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 1994, because by imposing a requirement of prior approval by the 
Government Import Government Commission for the purchase of certain imported goods, 
this Russian measure provides for a restriction on the importation of certain foreign products 
into its territory.  
- 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 entities including State -owned enterprises and State -
trading enterprises depend on the authorisation of the Government Import Substitution 
Commission, this Russian measure prevents such entities from acting i n a manner consistent 
with the general principles of non -discriminatory treatment prescribed 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 -
control led enterprises that conduct commercial activity do not make purchases (not intended 
for governmental use) in accordance with commercial considerations, including availability, 
and enterprises of other WTO Members are not afforded adequate opportunity in c onformity 
with customary business practice, to compete for participation in such purchases.  WT/DS604/1 • G/L/1392 • S/L/433  
 
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  - Article III:4 of the GATT 1994, read in conjunction with Article III:8 of the GATT of 1994, 
because, by requiring Russian  S tate-owned enterprises, State -trading en terprises and other 
State -related entities that are not governmental agencies, for the procurement of goods for 
non-governmental purposes, to 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 requirements 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 that S tate-owned enterprises, State -trading enterprises 
and other State -related entities purchase certain quantities of products of Russian origin for 
non-governmental use, the Russian measure provides for a discriminatory treatment of 
goods of foreign origin compared to goods of Russian 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 covered agreements.  
The European Union reserves the right to address additional measures and claims, includi ng under 
other provisions of the covered agreements, regarding the above matters during the course of the 
consultations.  
__________