G/SCM/Q2/RUS/7  
 
25 April 2014  
(14-2517)  Page: 1/6  
Committee on Subsidies and Countervailing Measures  Original: English  
 
 SUBSIDIES 
REPLIES TO QUESTIONS1 POSED BY THE UNITED STATES REGARDING THE NEW 
AND FULL NOTIFICATION OF THE RUSSIAN FEDERATION2 
The following communication, dated 24 April 2014, is being circulated at the request of the 
Delegation of the Russian Federation.  
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  1  NOTIFIED PROGRAMS 
With respect to "Civil Aircraft industry support  (7)," the Russian Federation states that 
it has amended Resolution No. 466 of 25 June 2002, and will provide subsidies under the program exclusively for fulfilment of obligat ions to Russian producers on contracts 
concluded before 1 January 2011. It appears that the Russian Federation seems to be 
budgeting 630 million Rubles annually under this program for 2012, 2013 and 2014. 
Could the Russian Federation pl ease explain how long the pr e-2011 contracts will be in 
force and how long it intends to continue  to provide support under this program? 
 Reply 
 
The reply to this question was submitted in the document G/SCM/Q2/RUS/5. 
 
2  OTHER PROGRAMS 
Publicly available information indicates th at the Russian Federation administered 
several other support programs in 2012 that ma y meet the requirements for notification 
set forth under Article 25 of the Agreement on Subsidies and Countervailing Measures 
(SCM Agreement). Could the Russian Federa tion please explain why each of the 
programs below should not be notified, or  provide the information required under 
Article 25 of the SCM Agreement?   2.1  Federal Targeted Programs and State Programs 
Under several Federal Targeted Programs (FTPs) and State Programs (SPs), the Russian 
government appears to have provided - or in structed other bodies to provide - grants, 
capital investments, equity infusions, goods and services other than general 
infrastructure, R&D support and R&D contract s to specific sectors and enterprises: 
 1. SP "Development of Industry and Incr easing its Competitiveness for the Period 
until 2020;" 
2. FTP "Development of Civil Aviation for 2002 to 2010 and for the period until 2015." 
3. Federal Targeted Program "Development  of the Electronic Component Base and 
Radio-electronics;" 
4. FTP "Development of Ci vil Marine Technology;" 
                                               
1 G/SCM/Q2/RUS/2. 
2 G/SCM/N/253/RUS. G/SCM/Q2/RUS/7 
 
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  5. FTP "Development of the Pharmaceutic al and Medical Industry of the Russian 
Federation for the Period until 2020 and Beyond;" 
6. FTP "National Technological Base for 2007 to 2011;" 7. FTP "Increasing the Efficient Use and Development of the Resource Potential for 
the Commercial Fishing Industry from 2009 to 2012." 
 Reply 
 State Program "Development of Industry and Increasing its Competitiveness for the Period until 2020" was launched in 2013. Therefore, this programme will be notified in subsequent periods starting from 2013. As for the FTP "National Technological Base for 2007 to 2011", there were only 
two subprogrammes of this FTP which were still in operation in 2012. Information on this FTP is 
provided in the updated new and full notification as well as on the other programmes referred to in this question. 
 
2.2  Government Resolution No. 265 of 30 March 2009 
The full title of this program appears to be : "Rules for Granting Subsidies from the 
Federal Budget to Organizations in the Milit ary-Industrial Complex from 2009-2011 for 
Partial Compensation of Interest Expense for Loans Received from Russian Credit 
Organizations for the Implementation of I nnovative and Investment Projects for the 
Production of High-Technology Products".  
 
Reply 
 
This Resolution was not notified as it was aimed at supporting of organizations of the military 
industry.  
2.3  Government Resolution No. 357 of 6 June 2005 
It appears that Government Resolution No. 357 of 6 June 2005 "On Approving the Rules 
on Refunds from the Federal Budget to Russi an Exporters of Industrial Products for a 
Portion of the Interest Charges on Loans Obtained from Russian Lending Organizations 
and from the State Corporation Bank for Development and Foreign Economic Affairs 
(Vneshekonombank)" ("Government Resolut ion No. 357/2005") reimburses applicants 
up to 66 per cent of interest expenses on certain loans related to the export of high-
value added industrial products.  
 
1. Please clarify whether Government Re solution No. 357/2005 is still in force. 
If Government Resolution No. 357/2005 is no  longer in effect, please provide 
the name and cite of the successor  legal measure, if applicable. 
 Reply 
 The Government Resolution No. 357/2005 was applied until 5 November 2013.   
It was repealed by the Resolution of the Government of the Russian Federation No. 961 of 
25 October 2013 "On Providing Subsidies from the Federal Budget to Russian Organizations-Exporters of Industrial Products for Military Purposes for Compensation of Part of Expenses for 
Payment of Interests on Loans Obtained from Russian Credit Organizations and from the State 
Corporation "Bank for Development and Foreign Economic Affairs (Vnesheconombank)".   
2. Please explain why Government Resol ution No. 357/2005 was not notified or 
provide the information required under Article 25 of the SCM Agreement. 
 Reply 
 The Government Resolution No. 357/2005 was notified in the updated new and full notification.  
3. Please describe all the eligibility crit eria by which exporters are selected to 
receive funds pursuant to Government Resolution No. 357/2005. What are the eligibility criteria used by Minist ry of Industry and Trade (MOIT) to G/SCM/Q2/RUS/7 
 
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  determine what products are "high- value added industrial products" 
pursuant to Article 3(c) of Gove rnment Resolution No. 357/2005?  
 Reply 
 According to paragraph 3 of the Government Resolution No. 357/2005, compensation was carried out in relation to the companies which exported industrial products during the period exceeding 
3 years and met the following requirements: 
 
a. assignment of the credit resources for export of industrial products with high degree of 
processing; 
b. timely execution of loan agreements within the terms and amounts established by the 
schedule of repayment of the loan; 
c. absence of overdue debts on obligatory paymen ts to the Federal budget and state extra-
budgetary funds. 
Eligibility criteria used by the Ministry of Industry and Trade of the Russian Federation (MIT) to 
determine what industrial products were "industrial products with high degree of processing" 
pursuant to Article 3(c) of the Government Resolution No. 357/2005 were the following: 
 
- the products had to pass through at least 4 stages of technological processing of raw 
materials or semi-finished products; 
 
- the products had to fall within the scope of th e Order of the Ministry of Industry and Trade 
of the Russian Federation No. 518 of 29 April 2012 "On Approval of the List of Industrial 
Products with High Level of Processing". 
 
4. Please state whether the interest subs idies provided pursuant to Government 
Resolution No. 357/2005 are limited to certain types of loans. In your 
response, describe the purpose (e.g., working capital or equipment purchases) and terms (e.g., length, inte rest rate) of loans which qualify for 
interest subsidies pursuant to Government Resolution No. 357/2005. 
 
Reply 
 
To qualify for subsidies the loans had to be aimed at exports of industrial products with high 
degree of processing. The Resolution specifically provided the rules of calculation of maximum levels of compensations: (a) for loans in Russian Roubles maximum compensation amounted to 
2/3 of the Central Bank refinancing rate, (b) for loans in foreign currency maximum compensation 
amounted to 2/3 of the interest rate of the loan issued to the exporter.  
5. Please describe the mechanism by wh ich interest charges are reimbursed.  
 
Reply 
 
The mechanism of reimbursement of interest was established in paragraph 6 of the Government 
Resolution No. 357/2005. In order to receive fundin g the applicant had to fill the application form 
and provide it to the MIT. The decision on f unding was taken by the MIT and the Ministry of 
Finance of the Russian Federation. The organization could have been refused to get the subsidy in 
cases when the criteria mentioned in the reply to the question 3 were not met or the budget funding for this programme during the current year was exhausted.  
6. To the extent that Government Re solution No. 357/2005 appears to provide 
interest subsidies contingent upon expo rt, please discuss this program in the 
context of Russia's obligations under  Article 3 of the SCM Agreement. 
 
Reply 
 
This programme expired on 5 November 2013. 
 G/SCM/Q2/RUS/7 
 
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  2.4  Government Resolution No. 1432 of 27 December 2012 
Government Resolution No. 1432 of 27 De cember 2012 "On Appr oving the Rules on 
Granting Subsidies to Producers of Agricu ltural Machinery" ("Government Resolution 
No. 1432/2012") appears to disburse financial support to producers equal to "15% of 
the price" of specific categories of agricu ltural equipment which have undergone certain 
"technological processes" on Russian Territory.  
1. Please clarify whether Government Resolution No. 1432/2012 is still in force. 
If Government Resolution No. 1432/2012 is no longer in effect, please provide the name and cite of the su ccessor legal measure,  if applicable. 
 
Reply 
 
The Government Resolution No. 1432/2012 is currently in force. 
 
2. Please clarify why support under  Government Resolution No. 1432/2012 
should not be notified pursuant to Article 25 of the SCM Agreement or 
provide the information required under Article 25 of the SCM Agreement. 
 Reply 
 
The Government Resolution No. 1432/2012 came in to force on 1 January 2013. Therefore, this 
programme will be notified in subsequent periods starting from 2013.   
3. Please fully describe all the eligib ility criteria by which producers of 
agricultural equipment are selected to receive funds pursuant to Government 
Resolution No. 1432/2012. In particular , please fully describe the various 
"technological processes that must ta ke place on Russian territory" with 
respect to the manufacture of agricultural equipment that qualifies for support pursuant to Government Resolution No. 1432/2012.  
 
Reply 
 
According to paragraph 5 of the Government Reso lution No. 1432/2012, subsidies are provided to 
the manufacturers that meet the following criteria: 
 
a. the manufacturer is a legal entity and a tax resident of the Russian Federation during the 
period exceeding 3 years performing production of agricultural machinery; 
b. the manufacturer has the rights for design and technological documentation to the 
extent necessary for development, production, upgrading and maintenance of the agricultural machinery, equipment and its components, as well as provides for the sold 
agricultural equipment warranty for the period not less than 12 months; 
c. the manufacturer has the agreements with service organizations for maintenance and 
repair of the agricultural machinery in more than 40 regions. 
"Technological processes that must take place on Russian territory" with respect to the 
manufacture of agricultural equipment are listed in paragraph 6 of the Government Resolution No. 1432/2012. These processes are divided into 5 groups depending on the equipment concerned 
(for tractors, harvesters, agricultural machinery for different purposes, equipment for milk 
production, equipment for milk storage). These operations include production, assembly, welding, mechanical processing, polishing, painting and testing of different parts and components of the equipment. 
 G/SCM/Q2/RUS/7 
 
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  4. Please describe the form of the fi nancial support disbursed pursuant to 
Government Resolution 1432/2012. In your  description, please describe the 
mechanism by which the support is prov ided (e.g. is a payment disbursed to 
the manufacturer before or after it sells the agricultural equipment). 
 
Reply 
 
In accordance with the Government Resolution No. 1432/2012 financial support is provided on a 
monthly basis to the agricultural machinery manufacturers in the form of grants from the Federal budget. Subsidies are provided to the manufacture rs which fulfil the requirements established by 
paragraph 13 of the Government Resolution No . 1432/2012. Payment is accomplished after the 
agricultural equipment has been sold. 
 
5. Please clarify whether Government  Resolution No. 1432/2012 requires that 
producers that receive funds from the government charge a lower price to 
the equipment purchaser. 
 
Reply 
 
According to paragraph 13(h) of the Governme nt Resolution No. 1432/2012 the manufacturer has 
to sell the equipment with a discount of at le ast 15 percent of the price established under 
paragraph 13(c) of the Government Resolution No. 1432/2012. 
 
6. To the extent that Government Resolution No. 1432/2012 provides subsidies 
contingent upon the use of domestic over imported g oods, please discuss this 
program in the context of Russia obligat ions under Article 3 of the Subsidies 
Agreement. 
 
Reply 
 The Government Resolution No. 1432/2012 does not contain provisions that make subsidies 
contingent upon the use of domestic over im ported goods. We therefore see no basis for 
discussion of this programme in relation to article 3 of the SCM Agreement.  
2.5  Support to Aircraft Producers 
In addition to the FTP for the Development of Civil Aviation listed above, the Russian 
Federation appears to have provided - or inst ructed other bodies to provide – additional 
support for aircraft producers through the following programs. Please explain why the 
programs below should not be notified under Article 25 of the SCM Agreement or provide the information required under Article 25 of the SCM Agreement:  
1. "Subsidies to Russian leasing companie s for partial compensation of interest 
expense for loans received from Russian  credit organizations and the state 
corporation 'Bank for development and foreign economic affairs 
(Vnesheconombank)' in 2008-2012 for the purchase and subsequent transfer 
of aircraft to Russian airlines under leasing agreements, and also to specified 
companies and producers of aircraft fo r loans received from Russian credit 
organizations and the state corporation 'Bank for development and foreign 
economic affairs (Vnesheconombank)' in 2008-2012 for the acquisition of 
flight simulators for Russian aircra ft" approved by Resolution of the 
Government of the Russian Federation No. 1073 of 22 October 2012. 
 
2. "Rules for granting subsidies from th e federal budget to Russian airlines for 
the partial compensation of leasing pa yment expenses for aircraft received 
by Russian airlines from leasing co mpanies under leasing agreements for 
carrying out domestic region and local air transport" approved by Resolution 
of the Government of the Russian Federation No. 1073 of 22 October 2012. 
 G/SCM/Q2/RUS/7 
 
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  Reply 
 
The Resolution of the Government of the Russian Federation No. 1073 of 22 October 2012 and the 
relevant rules for granting subsidies were notified in the updated new and full notification. 
 
3. Publically available information indica tes that Russian state-controlled banks 
have provided significant loans to Ru ssian aviation enterprises. Could the 
Russian Federation please describe any policies stipulating the interest rate, 
duration or terms for such loans, and the extent to which such loans differ 
from analogous loans availabl e from the private sector? 
 
Reply 
 
Russian banks, including state-controlled banks, could have provided loans to Russian aviation 
enterprises, however we are unable to identify to which subsidy or specific measure the United 
States refers to in its question.  
 
Equity and Property Contributions  
 According to the Russian Ministry of Finance, the Russian Federation allocated contributions to the authorized capital an d/or property to joint stock companies, 
including enterprises in the aviation, chemic al, energy and electronics industries, and 
state corporations such as Russian Technolo gies. Could the Russian Federation please 
explain why such contributions should not be notified, or provide the information 
required under Article 25 of the SCM Agreement for said programs? 
 Reply 
 Contributions from the Federal budget to the auth orized (chartered) capitals of the certain joint 
stock companies in Russia in 2012 were notified in the updated new and full notification.  
Automobile Transportation Expenses 
 Government Resolution No. 1070 of 20 Dece mber 2010 approves support to Russian 
Railways for the transport of automobiles ma nufactured within the Russian Federation 
to the Far Eastern Federal District, as well as for the transport of automobiles manufactured in the Far Eastern Federal District to other regions of the Russian 
Federation. Government Resolution No. 1401 of  27 December 2012 approves support to 
auto-producers of vehicles manufactured in the Far Eastern Federal District to other 
regions of the country. Could the Russian Fe deration please explain why this program 
should not be notified, or provide the information required under Article 25 of the SCM 
Agreement for the program? 
 Reply 
 The Resolution of the Government of the Russian Federation was notified in the updated new and full notification. The Resolution of the Gove rnment of the Russian Federation No. 1401 of 
27 December 2012 came into force on 1 January 2013. Therefore, this programme will be notified 
in subsequent periods starting from 2013.   
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