RUSSIAN FEDERATION – CERTAIN MEASURES CONCERNING DOMESTIC AND FOREIGN PRODUCTS AND SERVICES REQUEST FOR CONSULTATIONS BY THE EUROPEAN UNION
Document: REQUEST FOR CONSULTATIONS BY
Date: 26 July 2021
Document codes: WT/DS604/1; G/L/1392; S/L/433
Complainant: EU
Respondent: Russia
Third parties: Australia, Brazil, Canada, China, Colombia, India, Japan, South Korea, Moldova, Switzerland, Ukraine, United Kingdom, U.S.
Dispute stage: Panel
Agreements cited: Art. XVII:1  Services (GATS)Art. III:4, XI, XVII:1(c), XVII:2  GATT 1994  Protocol of Accession

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
Federation 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 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/DS604/1 • G/L/1392 • S/L/433

a. Price preference applied to procurements by State -related entities favouring Russian
origin products 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, 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 tender 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 procurement 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 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% 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 these investment projects in
a specific registry;

4 http://government.ru/docs/all/108260/
WT/DS604/1 • G/L/1392 • S/L/433

- 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 legal 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 Decree 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 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;
- 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 products
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

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 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 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
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

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 GATT 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
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 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 in 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-
controlled 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 conformity
with customary business practice, to compete for participation in such purchases.
WT/DS604/1 • G/L/1392 • S/L/433

- Article III:4 of the GATT 1994, read in conjunction with Article III:8 of the GATT of 1994,
because, by requiring Russian State-owned enterprises, State-trading enterprises 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.