RESTRICTED
WORLD TRADE WT/ACC/RUS/16
14October 1996
ORGANIZATION(96-4254)
Original: English
ACCESSION OFTHE RUSSIAN FEDERATION
Information Regarding theDevelopment ofRussian Federation Legislation
onForeign Economic Regulation in1996
ThePermanent Mission oftheRussian Federation hassubmitted thefollowing information
regarding thedevelopment ofRussian Federation legislation onforeign economic regulation in1996,
withtherequest thatitbecirculated totheMembers oftheWorking Party.
_______________
Inaccordance withtheGATT/WTO practice foracceding countries, theRussian delegation
haskepttheWorking Party regularly informed onRussia 'sexisting legislation ontheeconomy, foreign
economicactivitiesregulationsandrelateddevelopments.Thesesubjectshavebeenthoroughlydiscussed
inL/7410, WT/ACC/RUS/2, WT/ACC/RUS/4, WT/ACC/RUS/9, andanumber ofother documents,
including those presented within theframework ofthefourth session oftheWorking Party onRussia 's
accession totheWTO.
Inaddition, approximately fivehundred legislative actsoftheRussian Federation havebeen
translated intotheEnglish language andsubmitted totheWTO Secretariat (seeL/7410/Add.1,
WT/ACC/RUS/2/Add.1, andWT/ACC/RUS/12).
During thissame period, work hascontinued intheRussian Federation todevelop thelegal
foundation ofitsforeign economic activity. Twoprincipal factors haveinfluenced thislegislative work
in1996. These factors were: first,theongoing economic reform aimed atstrengthening market-based
relations intheRussian economy; andsecond, theprogressive integration ofRussia intotheworld
economy. Oneimportant catalyst forthiskindoflaw-making wastheintention toharmonize Russia 's
foreign trade regime withtherespective requirements ofGATT/WTO. Thisiswhyevery newdraft
law,before being enacted, hasbeen scrutinized forGATT/WTO consistency inaccordance with
Article XVI, paragraph 4,oftheMarrakesh Agreement Establishing theWorld Trade Organization.
InJanuary 1996, adevelopment ofgreatsignificance totheadvancement ofamarket economy
inRussia wastheadoption ofPartIIoftheCivil Code oftheRussian Federation (theCivil Code).
Theadoption ofPartIIoftheCivilCode superseded statutes enacted alongtimeagowhich weretailored
tooutdated needs based onrigidplanning, acentralized economy, anddominant State ownership.
Thisevent followed theadoption ofPartIoftheCivil Code which went intoforce on
1January 1995. Elaborating onprovisions setforthinPartIoftheCivil Code, alawonjointstock
companies wasenacted inDecember 1995. Drafting work isunder wayonlawsonlimited liability
companies andonState-owned andmunicipally-owned enterprises. Apriority taskinthese andother
efforts istoprovide legalsupport formarket change inRussia byensuring theuniformity andsystemic
nature oflegislation oncommercial organizations builtaround theCivilCode asthecoreofapplicable
regulations.WT/ACC/RUS/16
Page2
Work hascontinued ondraft legal actswhich should streamline taxation procedures. In
March 1996 anupdated lawonexcises wasapproved. On1January 1996, theprofit taxlawwas
amended. ThedraftoftheGeneral PartoftheTaxCode oftheRussian Federation hasbeenplaced
before theState Duma. TheTaxCode isacomprehensive document encompassing thewhole range
oftax-related issues, designed tosystematize andadjust theentire array oftaxation laws. Thepurpose
ofthenewtaxdocuments, including boththose already ineffect andthose stillbeing drafted, isto
create ataxation system which would beconsistent, transparent, andreadily manageable. Thisproposed
newsystemdoesnotenvisionanyarrangementstoprovideincentives(ordisincentives)tosomeeconomic
sectors, enterprises, orregions attheexpense (ortothebenefit) ofothers.
Russian Presidential Decree No.1008 "OntheApproval ofaConcept fortheDevelopment
oftheSecurities Market intheRussian Federation," dated 1July1996, hasapproved aconceptual
plantodevelop thecountry 'ssecurities market, which provides forthedevelopment ofrelated State
policy andstrategy forupgrading thelegalbasis ofthesecurities market.
OneofthemoresignificantenactmentsregulatingforeigneconomicactivitiesincludestheFederal
LawNo.157-FZ "OntheStateRegulation ofForeign Trade," dated 13October 1995, which entered
intoforcein1996.1Thisfederal lawlaysdown fundamental principles fortheStateregulation offoreign
trade, procedures fortheconduct offoreign trade byRussian andforeign entities, andtherights,
obligations,andliabilityofStateauthoritiesoftheRussianFederationanditsterritorialsubjectsregarding
foreigntradeactivities.Thisfederallawdefinesforeigntradeasentrepreneurialactivitiesininternational
exchanges ofgoods, work, services, information, andintellectual assets.
Thisfederal lawestablishes thattheRussian Federation 'sforeign trade istoberegulated by
theConstitution,theLawontheStateRegulationofForeignTrade,otherfederallaws,generallyaccepted
principles andnorms ofinternational law,andinternational agreements towhich Russia isaparty.
Thisprovision isespecially important inthelightofRussia 'saccession totheWorld Trade Organization.
Thisfederal lawstresses theintegrity ofthesystem fortheState regulation offoreign trade
andforexport control throughout theRussian Federation, andofitscustoms territory, thepriority
ofeconomic rather thanadministrative measures ofState regulation, theequality ofallparticipants
inforeign trade, theprotection oftherights andinterests bytheState, andtheexclusion ofunwarranted
interference withactivities bytheState anditsagencies.
Chapter IIofthefederal lawdefines anddelimits thecompetence oftheRussian Federation
anditsterritorial subjects inthefieldofforeign trade. Thelimits ofauthority oftheRussian Federation
extend,amongotherthings,tothegovernmentalregulationofforeigntrade,includingfinancial,currency,
credit, tariff, andnon-tariff regulation; export control, thecertification ofproducts during their
importation andexportation, andtheprotection ofRussia ’seconomic sovereignty andtheeconomic
interests ofitsterritorial subjects.
Thisfederal lawincludes provisions regarding basicmethods forgovernmental regulation which
areaccepted inworld practices andfallwithin theterms ofreference oftheWorld Trade Organization.
Mostnotably, Article 14ofthisfederal lawprioritizes thecustoms tariffmethod forregulation offoreign
trade. Article 15ofthisfederal lawliststhelimited cases where itispossible toinvoke quantitative
restrictions. Theprovisions ofthisArticle areconsistent withbasicprovisions setforthincorresponding
WTO agreements.
1Thisfederal lawwaspassed bytheStateDuma on7July1995, approved bytheFederation Council
on21July1995, signed bythePresident on13October 1995andbecame effective, forthemostpart,
30daysafterwards, butitsArticles 15,16and19tookeffect laterin1996.WT/ACC/RUS/16
Page3
Thisfederal lawspecifies thatagovernmental foreign trade monopoly maybedeclared, on
atemporary basisandbywayofanexception, ontheexport orimport ofindividual categories ofgoods
inconformity withArticle XVIIoftheGATT, 1994, i.e.government-controlled Statetrading enterprises
must beguided bytheprinciples ofnon-discrimination andfaircommercial practices, andbyother
WTO principles anddisciplines.
Inaccordance withGATT 1994 andwithinternational agreements towhich theRussian
Federation isaparty, thisfederal lawcontains provisions onexport andimport prohibitions and
restrictions fornational security reasons, onparticipation ininternational economic sanctions, on
retaliatory measures, border trade, andfreeeconomic zones.
Article 18ofthisfederal lawregulates indetail thepossible employment ofsafeguards against
imported products, andisincompliance withgenerally recognized standards ofinternational law.
Itisbased, inparticular, onprovisions oftheWTO Agreement onSafeguards.
Thisfederallaw’soperationin1996hasmarkedasignificantstepforwardinintegratingRussia's
legislation intotheWTO legalsystem andstrengthening market methods intheRussian economy and
foreign economic activity regulations.
Inaccordance withprovisions andprinciples intheFederal Export Promotion Programme,
andGovernmentResolutionNo.53"OnAdditionalSupportforRussianExportsofGoodsandServices",
dated 20January 1996, theforemost taskinthisfieldistodevelop anational governmental system
toencourage andpromote exports withahighadded value. Crucial components ofthissystem should
include efficient arrangement ofexport guarantees, financing onshort, medium, andlong-term crediting
terms, andtheinsurance ofexport loans tohedge exporters against long-term commercial (banking)
andpolitical risks.
Export liberalization hasbeencarried onthrough anumber ofresolutions. On21March 1996,
theRussianFederationissuedGovernmentResolutionNo.300whichabolishedthemandatoryregistration
ofexport contracts. Another Government Resolution, No.479of1April 1996, lifted export duties
onalltypes ofgoods. Under Government Resolution, No.413of11April 1996, newcustoms duty
ratesforindividual categories ofgoods havebeeninplace since 15May1996.
Work hasproceeded inrevising thelegalregulation ofinvestment intheRussian economy.
Related changes toapplicable Russian legislation aredesigned tocultivate afavourable investment
climate, improve Russia 'simage asahostcountry forinvestment, andincrease thelegalstability of
theinvestment process.
Onestepinthisdirection came with theadoption ofFederal Law No.FZ-225 "On
Production-sharing Agreements" dated 30December 1995, which aimstofurnish conditions forthe
attraction offoreign anddomestic investors innatural resources byproviding government guarantees
totheeffect thattheconditions ofspecified agreements willremain consistent. Inkeeping withthis
Law, investors (including bothRussian andforeign parties) areexempted from alltaxes, customs
payments, andotherobligatory deductions, withtheexception ofprofit tax,payments formining rights,
premiums payable towards medical andsocial insurance schemes, andduestowards theemployment
fund.
Russian Government Resolution No.534"OnAdditional Incentives forPrivate Investment
intheRussian Economy", dated 1May1996, hasbeendesigned tosupport highly-effective commercial
investment projects withrecoupment periods oflessthantwoyears through theGovernment 'sprovision
totherespective private investors offunds accounting forapercentage oftherelated project costs.WT/ACC/RUS/16
Page4
Russian Government Resolution No.883"OnConcessions Regarding Payment ofCustoms
Duties andValue-added TaxWith Respect toGoods Imported byForeign Investors asContributions
totheCharter Capital ofEnterprises With Foreign Equity Participation," dated 23July1996, forits
part,permits thefavourable customs duties treatment forgoods imported ontothecustoms territory
oftheRussian Federation ascontributions tothecharter capital ofventures withforeign equity
participation provided that:(a)suchgoods arenotexcisable; (b)suchgoods belong tofixedproduction
assets; and(c)suchgoods areimported within thattimeframe which isestablished bythenewly-created
enterprise 'sfoundation documents fortheestablishment ofitscharter capital.
Considering theposition ofRussia 'sKaliningrad Region asanenclave (oranexclave), Federal
Law No.13-FZ "Regarding aSpecial Economic Zone intheKaliningrad Region", dated
22January 1996, hasestablished preferential terms, inparticular, exemptions from customs duties
andtaxes, forbusinesses within thisterritorial subject oftheRussian Federation.
AGovernment-sponsored draftlawonfreeeconomic zones haspassed itsfirstparliamentary
reading. Itsunderlying concept isthatinvestors infreeeconomic zones should enjoy thesame customs
procedures which arestipulated forfreecustoms zones andqualify forcorresponding customs tariff
andtaxrebates. Anadministrative-legal procedure willbeinplace toattract investors (onthebasis
oflicences granted tothem). Freeeconomic zones willoccupy relatively small territories andwill
mostly beoftwotypes, namely: freecustoms zones (which willfocus oninternational trade) and
export-oriented production zones (which willfocus onproduction operations).
Afinaldraft federal lawworth mentioning isthedraft Law"OnMeasures toProtect the
Economic Interests oftheRussian Federation During Foreign Trade inGoods". When drafted, this
lawshouldprovidecomprehensiveregulations,drawingontherespectiveWTOagreements,withrespect
toprocedures forapplying safeguards, anti-dumping duties, subsidies, andcountervailing measures.
Insummary, thework in1996ondrafting lawswasaimed atcreating thelegislative framework
tosupport thepolicy ofreforms carried outinthecountry, andtheoperative regulation oftheprocesses
under wayinthekeyfields ofeconomy andforeign economic activity.
Ananalysis ofthelawsadopted shows thepositive results which havebeenachieve withrespect
tothecreation ofthelegalbasis inthesphere ofinstitutional transformation, andthefeasible actions
which havebeentaken toexpand thelegalfoundation andpromote economic reform intheregulation
offoreign economic activity.