RESTRICTED
WORLD TRADE WT/ACC/RUS/9
23April 1996
ORGANIZATION(96-1527)
Original: English
ACCESSION OFTHE RUSSIAN FEDERATION
Additional Questions andReplies
ThePermanent Mission oftheRussian Federation hassubmitted thereplies toquestions raised
atthemeeting oftheWorking Party heldon4-6December 1995withtherequest thattheybecirculated
totheMembers oftheWorking Party. Thequestions andreplies arereproduced hereunder.
_______________WT/ACC/RUS/9
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General
1. Please provide thefollowing documents totheSecretariat fordistribution totheWorking Party,
ifthishasnotalready beendone:
- "OnCompetition andRestriction ofMonopolistic Activity onCommodity Markets",
thelawasamended on25May251995 bythefederal LawNo.83-F3;
- Thecurrent listoffoodstuffs approved bytheGovernment, assetoutinResolution
No.650,1July1995;
- "OnState Regulations ofForeign Trade Activity", 13October 1995;
- "TheProvisional Procedure forInvestigating Imports Causing orThreatening toCause
Serious Injury toDomestic Procedures asaResult ofSuch Increased Imports of
Dumping orSubsidies", 2August 1995;
- Resolution "Commission oftheRussian government forProtective Measures inForeign
Trade", 25November 1994, andResolution "Statute ofthisCommission andits
Members", 28April 1995;
Answer: These documents were provided totheWTO Secretariat inNovember 1995.
I. TheNational Economy andEconomic Reform
Section 1.2-Economic Reforms
2. IntheA.Q. No..7itisstated thatforVAT purposed, "producers costs aredetermined in
accordance with"...(Russian Government Resolutions No..552 and661"aswellaswiththestandard
recommendations onthemethods ofproduct costplanning, recording andcalculating intherespective
industries. Therelevant regulations willbesupplied." Please explain whether themethods ofcost
planning, recording andcalculating areuniform inallindustries? Please provide theWorking Party
withthetextofrelevant resolutions andrecommendations.
Answer: Separate Model Recommendations forplanning, assessing andcalculating the
costsfortheproducts (works, services) referred toinResolution oftheRussian Government No.661
of1July11995 aretobeprepared inthenearfuture.
3. Initsanswer toadditional question 8,theRussian Federation provides alistofproducts and
services subject toprice regulation byregional governments. CantheRussian Federation confirm
thatthisisthefulllistofitems subject toprice control intheRussian Federation? What ismeant by
theterm"prices forconsumer services paidbythepopulation" inthesixth indent intheanswer to
additional question 8?
Answer: Thelistofproducts andservices subject topriceregulation onRussia 'sdomestic market
byregional governments, which wasprovided intheanswer toAQ8,hasbeenapproved byResolution
oftheGovernment oftheRussian Federation No.239“OnMeasures toRegulate Prices (Tariffs) ”
of7March 1995. Thislistisexhaustive asfaraspriceregulation byregional governments isconcerned.
The"consumer services paidforbythepopulation" termmeans public utilities.WT/ACC/RUS/9
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4. Initsanswer toadditional question 9,theRussian Federation states thatthelistofitems subject
toprice regulation willbereviewed "asnecessary". Isthere aregular timetable forreview ofitems
subject topriceregulation? What plans aretheretophase outpriceregulation onthegoods andservices
listed onpages 5-6?
Answer: Thegeneral policy offurther price liberalization wasoutlined bytheDecree ofthe
President No.221"OnMeasures toStreamline theStateRegulation ofPrices" dated 28February 1995.
There isnospecial timetable forreviewing thelistofgoods andservices, theprices ofwhich aresubject
tostateregulation. Thislist,consisting ofseparate listsofgoods andservices subject topriceregulation
atthefederal levelandatthesub-federal level, wasapproved bytheResolution oftheGovernment
oftheRussian Federation No.239“OnMeasures toRegulate Prices (Tariffs) ”,of7March 1995.
Theonlychange subsequently made tothislist,under Resolution ofthegovernment ofthe
Russian Federation No.131“OnMeasures toEnsure Stable Work ofLiquor andVodka Branch of
Industry ”ofFebruary 8,1996, wastheaddition tothelistofgoods andservices subject toprice
regulation atthefederal levelof:"Vodka andliquors withastrength ofover28percent, produced
onorimported ontotheterritory oftheRussian Federation."
5. ReA.Q.'s1&10:In1,itisstated that"products...are purchased atprices close tomarket
prices". However, in10,inreference topurchases made bythefederal government, itisstated that
"such purchases aremade atmarket prices". Please clarify whether ornotthese prices arebased on
market principles. Ifthere areexceptions, onwhatcriteria aretheybased?
Answer: Theanswers toAQs1and10should havesaidthattheformation ofprices forproducts
procured forgovernmental needs arebased onmarket principles.
TheinconsistencyintheseanswerswasduetothetranslationintoEnglishofRussianterminology.
6. ReA.Q. 4:Please provide thelistofeconomic sectors andenterprises which arenotsubject
toprivatization.
Answer: Thelistofeconomic sectors andenterprises which arenotsubject toprivatization was
established bySection 2ofthe“StateProgram forthePrivatization ofState- andMunicipally-owned
EnterprisesintheRussianFederation,”approvedbyRussianPresidentialDecreeNo.2284,ofDecember
24,1993. Asamended bylaterpresidential decrees, theupdated listiscontained inSection 2ofthe
“Recommendations onMethods ofApplying theBasic Provisions oftheState Program ”published
inEnglish inissue No.9,1994ofthe"Privatization inRussia" information bulletin, which hasbeen
provided totheWTO Secretariat.
Under theState Program, allfacilities andenterprises aredivided intothefollowing three
categories, depending onwhether privatization ispossible:
1. Federally-owned facilities andenterprises, theprivatization ofwhich isprohibited (pp.3-8);
2. Federally-owned facilities andenterprises which maybeprivatized bydecision ofthe
Government oftheRussian Federation (pp.8-11); and
3. Federally-owned facilities andenterprises which maybeprivatized byadecision oftheRussian
StateProperty Management Committee withregard fortheopinions ofthose federal executive
agencies responsible forthecorresponding economic sectors (pp.11-12).
7. ReA.Q. 10:Could Russia provide acomprehensive listofagricultural products purchased
forstatereserves in1994 andin1995? What wasthevalue, atmarket price, ofthese acquisitions?
What percentage oftotalstateacquisitions wereagricultural products forthose years? What percentageWT/ACC/RUS/9
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ofthe1995 budget didthat(centralized purchases andagricultural share) represent foreachofthose
years?
Answer: Seeanswer to10herein.
8. ReA.Q. 14:Please confirm thatnoenterprises, inwhich thestatehasacontrolling interest,
areintheagriculture oragri-food sectors. Ifitisnotthecase, please provide details ontheirstatus.
Answer: According toResolution oftheGovernment oftheRussian Federation N949"On
theListoftheJointStock Companies Established intheProcess ofPrivatization which Produce the
Products (goods, services) Having Strategic Importance fortheSecurity oftheCountry, theShares
ofwhich areEstablished asFederal Property andarenottobeSoldBefore theMaturity Date" of
18September 1995, thereare52jointstock companies engaged inpurealcohol production and34joint
stock companies engaged inproviding bakery products where 51percentofsuchcompanies ’shares
areestablished asstateproperty andcannot besoldbefore thematurity date.
9. ReA.Q. 16:Answer is"state regulation ofprices today covers goods andservices which are
responsible foronlyabout 16percentofGDP(compared with22percentinthefirstquarter of1995)".
Ofthese goods andservices, arethereanyfromtheagriculture andagri-food sector? What percentage
oftheGDP (for1995 todate) doagricultural goods account for?
Answer: Goods andservices whose prices aresubject tofederal regulation donotinclude goods
andservices from theagricultural andagri-food sector (Theonlyexceptions arevodka andliquors
withastrength ofmore than28percent,babyfoods, products soldatpublic catering outlets atschools
andfoodstuffs soldinthe\FarNorth andareas equated toit).
According totheStateStatistics Committee, agricultural products accounted for16.6percent
ofRussia 'sGDP in1995.
10. ReA.Q. 20:With reference tostockpiles ofgoods (state material reserves), please provide
acomprehensive listofthese goods (value, volume, conditions under which theyarepurchased,
conditions under which theyaresold/released onthemarket).
Answer: TheprecisequantityandvalueofgoodsinthestockpilesareclassifiedunderArticle11.6
oftheFederal Law79-FZ “OnStateMaterial Reserves ”of29December 1994andcannotbeprovided.
Thislawidentifies thetypes ofsuchgoods which would normally beincluded inthestockpiles as
foodstuffs, major rawmaterials andhumanitarian assistance material. Thegeneral conditions fortheir
release andsalewould beintheevent ofadisruption inthesupply ofsuchmaterials duetowar,natural
catastrophe, orsimilar reasons ("force majeure") ofmarket disruption.
Section 1.2.1 -Demonopolization oftheEconomy Including theForeign Trade Sector
11. Further totheanswer toadditional question 33,wewould beinterested ininformation onthe
current relationship between government (both Federal andregional) andstatetrading enterprises in
theRussian Federation, including details onhowtheRussian Federation hasgoneabout dismantling
theformer relationship between government andstatetrading enterprises.
Answer: SeeSection 1.2.1 ofL/7410 fordetails ondismantling theformer relationship between
thegovernment andstatetrading enterprises andanswer to12herein forinformation onthecurrent
relationship between thegovernment andstatetrading enterprises.WT/ACC/RUS/9
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12. ReA.Q. 27,29and33:These answers statethattherearenoproducts forwhich statetrading
intheforeign trade sector exist; there isnoexport fieldinRussia where thegovernment nominates
orotherwise selects exporters inamanner inconsistent withGATT 1994; andtherearenoenterprises
either state-owned orprivately-owned which havebeengranted exclusive orspecial rights orprivileges.
Please re-examine thisissue. Seealsoourfurther questions onA.Q. 76,204,226,239,357and360.
Answer: TheRussian Federation hascarefully reviewed thedevelopment andinterpretation of
theterm “state trading enterprise ”under Article XVII ofGATT 1994, andtherelevant WTO
Understanding ontheinterpretation ofthisArticle. Applying anextended interpretation totherecently
adopted working definition intheWTO Understanding, theRussian Federation states thatthere may
bealimited number ofenterprises which should benotified totheCouncil forTrade inGoods under
Article XVII. Thepreliminary listofsuchenterprises, andtheirprincipal activity, isgiven below:
1. Joint stock company “RAO Gazprom ”(natural gas);
2. Joint stock company “MES”(crude oil);
3. Joint stock company “Ferreign ”(Pharmaceutical);
4. Joint stock company “Alfa-Eco ”(crude oil,sugar);
5. Joint stock company “Menatep-Impex ”(crude oil,sugar);
6. Joint stock company “Raznoimport ”(non-ferrous metals);
7. Joint stock company “Roscontract ”(crude oil,oilproducts, agriculture products) ;
8. Joint stock company “Nafta-Moscow ”(crude oil);
9. State enterprise “Machinoimport ”(crude oil);and
10. Joint stock company “Rosinvestneft ”(crude oil).
TheRussian Federation isstillcollecting thestatistical information required bytheWTO
questionnaire onstatetrading, inorder tofulfilthenotification andtransparency requirements ofArticle
XVII. TheRussian Federation alsonotes thatthose enterprises which havebeengranted exclusive or
special rights orprivileges intheexercise ofwhich theyinfluence, through theirpurchase orsales,
thelevelordirection ofimports orexports, make suchpurchases andsalesonthebasisofcommercial
considerations
Section 1.2.2 -Privatisation ofState Enterprises
13. Please explain whether there areuniform criteria defining "small companies" intheRussian
economy. Onemayfeelsomewhat confused byanswers toadditional questions 52and61.Inthe
firstcase,small companies, forthepurpose ofprivatization, aredescribed ashaving "anaverage strength
ofupto200employees...". Inthesecond caseitisindicated thatsmall enterprises have"thenumber
ofemployees" smaller than100. Please explain therationale forsuchadifferentiation?
Answer: Thedefinition of"small enterprises" issetoutintheFederal LawNo88FZ"OnState
Support forSmall Entrepreneurial Ventures intheRussian Federation," passed bytheStateDuma on
12May1995 (signed bythePresident oftheRussian Federation on14July1995).
Article 3ofthisLawsays:
"1. Small entrepreneurial ventures shallbeunderstood tomean those enterprises where:
theequity share ofcharter capital heldbytheRussian Federation, non-governmental andreligious
organizations (associations), andcharitable andother funds doesnotexceed 25percent; theequity
share heldbyoneormore legal entities other thansmall entrepreneurial ventures doesnotexceed
25percent;andaverage staffing during therespective accounting period doesnotexceed thefollowing
maximum numbers (hereinafter, “small enterprises ”):WT/ACC/RUS/9
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inindustry - 100people;
intheconstruction sector - 100people;
ontransport - 100people;
inagriculture - 60people;
inscience andengineering - 60people;
inwholesale trade - 50people;
inretail trade andconsumer services - 30people; and
inother sectors andactivities - 50people. ”
"Smallentrepreneurialventuresshallalsobeunderstoodtomeanindividualsengaginginbusiness
without separate corporate identity. ”
"2. Should asmall enterprise exceed thestaffing limitsetbythisArticle, suchenterprise
shalllosethose benefits which arestipulated bylegislation forsolongassuchexcess continues and
forthesubsequent three months."
Russian legislation doesnotofferanyothercriteria fordefining small enterprises. Therationale
forthisdifferentiation isthatthenumber ofemployees ina“small”retail storewillnormally beless
thatthenumber ofemployees ina“small”construction company. TheLawtherefore recognizes these
differences among various economic sectors.
14. Wenotefrom theanswer toadditional question 59thattheState Duma completed thefirst
reading ofthenewLand Code inJulyandwould beinterested toknow whatfurther progress there
hasbeeninthepassage ofthislegislation sinceJuly,together withinformation ontheexpected timetable
foritsapproval andimplementation.
Answer: TheLand Code haspassed thesecond reading attheState Duma.
TheDecree ofthePresident oftheRussian Federation No337ofMarch 7,1996 "Onthe
realization oftheconstitutional rights ofcitizens toland" filllegalgaps which existed inrelations
overlandinRussia.
Inparticular, alllandplots which belonged tothecitizens ofRussia before 1991 become
theproperty ofsuchcitizens freeofcharge.
Therights ofruralowners aresecured withregard tothesaleofinterests inlandshares, the
transfer ofinterests inlandasinheritance, theuseofinterest inlandforfarming, exchange, leasing,
forlife-long rentandaspartofthecharter capital ofanyenterprise.
15. TheRussian Federation 'sanswer toadditional question 79refers toa"Programme forthe
Stabilisation andDevelopment oftheRussian Federation Agricultural andIndustrial Complex for1996-
2000" which hasbeenprepared. Wewould beinterested tohavefurther details onthecontent ofthat
programme.
Answer: ThedraftProgramm ewasconsidered andapproved atthesession oftheGovernment
oftheRussian Federation onFebruary 15,1996. TheProgramme isbeing amended toreflect the
comments thatweremade during itsexamination. InMarch, 1996, theamended draftwasintroduced
forapproval totheGovernment oftheRussian Federation.
Theamended draftProgramme provides forthebasic mechanisms oftheimplementation of
measures aimed atovercoming therecession inagricultural production, creating oftheconditionsWT/ACC/RUS/9
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foreconomic growth, andtheadapting theagricultural sector oftheeconomy tofunction inmarket
conditions.
Inparticular,clearerprovisionswereintroducedwithrespecttothedirectionoftransformations
inproperty relations intheagricultural sector. Thefurther development ofco-operative, corporate,
stateandprivate structures embracing farms andtheindividual landplots ofcitizens isenvisaged.
Special attention ispaidtoimprovement intheprocedures forproviding financing andloans
tocover seasonal expenditures andinvestments intheagricultural andrelated sectors, theforms and
methods ofstatesupport, including thedevelopment ofleasing, commodity credits, andtheintroduction
ofamore rational taxation system.
Astepbysteprevision oftheexisting methods ofparticipation ofbudget funds inthefinancing
oftheagricultural andrelated sectors isproposed.
Theterms ofissuance andrepayment offunds related toleasing, theexpansion ofcommodity
credits totheuseofchemicals, andtheprocedure fortheformation ofthefederal andregional stocks
offood-stuffs willbeimproved byplacing stateorders onthebasis ofbidding.
Thecredit resources ofcommercial banks, including those withlimited stateguarantees from
thefederal budget, areproposed tobeusedmore extensively forfinancing seasonal activities in
agriculture.
Measuresareplannedtodevelopthefoodmarket,coveringwholesalefoodmarkets,agricultural
exchanges, fairs, auctions, salescooperatives, etc.Comprehensive fish,fruitandvegetable, markets
willbebuiltonawidescale inurban areas inthecoming years.
Priorities fordirections ofthedevelopment ofagricultural science andfortheapplication
ofscientific advances inagriculture andrelated industries havebeenset.
Asystem ofenvironmental protection measures hasbeen provided for,aswellasthe
strengthening ofcontrol overthequality ofagricultural products andtheprimary commodities forfood
products.
Federal programmes areplanned inrelation totheelectrification andthegasification ofrural
communities, thedevelopment ofcommunication, andtheintroduction ofradio andTVinruralareas
Regional programmes forsocial development arealsocontemplated forrural areas.
ThepartoftheProgrammeentitled"TheFormationoftheMarketforMaterialandTechnological
Resources fortheAgro-Industrial Complex ofRussia" contains measures forincreasing deliveries
ofagricultural, andother equipment byleasing, andforpromoting thecreation ofsupply co-operatives
andthedevelopment ofdirect contacts with manufacturers ofagricultural equipment.
16. ReA.Q. 55: What are"acceptable prices"? Please explain.
Answer: Inthecontext oftheanswer toAQ55,"acceptable prices" means market prices.
17. ReA.Q. 74:Theanswer refers toanswers 49,63and65,none ofwhich confirm ifthe
agricultural sector isaffected: isthisthecase?WT/ACC/RUS/9
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Answer: Theprogress ofprivatization inagriculture iscovered intheanswer toAQ53
(WT/ACC/RUS/4). Furthermore, thenumber ofprivate farms inRussia hasbeensteadily increasing
and,asof1January 1996, numbered 280,000.
Privatization intheagro-industrial sector haslikewise beengathering momentum. Forinstance,
atotalof43percentofenterprises providing production andtechnical services, 54percentof
agriculturaldistributionandruralconstructionenterprises,and49percentofmotortransportenterprises
havebeenprivatized.
Atotalof67percentofenterprises inthefoodandprocessing industries and71percentof
cereal products enterprises havebeentransformed intojointstock companies.
Atotalof55percentoffisheries enterprises havebeenprivatized.
18. ReA.Q. 76:Itisstated thatRussia doesnotmaintain foreign trade, import orexport statistics
broken down separately forstate-owned andprivately owned enterprises. Itfurther states thatitis
notclearwhyRussia should monitor privatization byrecording thisprocess. Wewould positthatit
isinRussia 'sinterest tohelpustounderstand itstransition from acommand economy toamarket
economy; thusstatistics thatdemonstrate change intheownership structure ofRussian firms will,as
evidence ofthespeed andextent ofprivatization, promote international confidence intheability of
thetrading regime tooperate oncommercial principles.
Answer: Seeanswer to19herein.
19. Wewould suggest thatitmaybepossible togenerate these statistics veryeasily, based onthe
information provided byRussia inthisanswer totheeffect thatallGOSKOMSTAT reports include
acolumn thatidentifies thetypeofownership.
Answer: Reliable statistics onthisissue aredifficult toobtain atpresent.
Based onthe“Consolidated StateRegister ofEnterprises andOrganizations ofAllForms of
Ownership andManagement ”,theStateStatistics Committee (Goskomstat), initsmonthly reports on
thesocial andeconomic situation inRussia, publishes dataonongoing institutional changes which
includes abreakdown ofenterprises byform ofownership (state-owned, privately-owned, etc.),
information about theprogress ofprivatization (number andstructure ofprivatized enterprises,
privatization proceeds), anddataonthesmall business situation.
Goskomstatreportsdonotidentifythetypeofownershipbutrather,simplyindicatethecorporate
structure ofenterprises (e.g., limited liability company oropenjointstock company).
Beginning in1996, however, thesource information regarding exports andimports hasbeen
processedbytheStateCustomsCommittee,withGoskomstatusingtheresultingcustomsdatatoproduce
summary foreign trade statistics.
TheStateCustoms Committee hasnowstarted torecord exporters andimporters bytheirforms
ofownership. After completing processing records collected, theState Customs Committee plans
tosupply datawithabreakdown ofexporters andimporters intoprivate andstate-owned enterprises.
20. ReA.Q. 79:Itisstated that"only research institutions andorganizations providing research
anddevelopment services tothebranches oftheagricultural andindustrial complex (accounting for
1.5percentofenterprises) thathaveremained unprivatized." Please provide more details regardingWT/ACC/RUS/9
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these institutions. What istheiroperating budget? What percentage ofthetotalbudget wasallocated
forthese institutions in1994 (and1995)?
Answer: 71scientific institutions, including 47scientific research institutes, arepartofthe
structure oftheMinistry ofAgriculture ofRussia. None havebeenprivatized.
Budget allocations forscientific andtechnological projects amounted to57.4billion roubles
in1994, andto63.07 billion roubles in1996 which constituted, 40and20percentofthebudget
allocations foractivities aimed atproducing promising technologies andpriority respective scientific
andtechnological advances intheagro-industrial sector.
21. ReA.Q. 82and83:"...asystem ofstateregulation ofindustrial production" isstillnot
described. Please elaborate.
Answer: Thesystem ofgovernment regulation ofindustry inRussia isformed byfederal and
sub-federal agencies stipulated bytheConstitution oftheRussian Federation andlaws, aswellasby
FederalGovernmentresolutions(foradiscussionofthesystemofgovernmentalagencieswithregulatory
responsibilities inindustry seeonp.66ofSection 1.4ofWT/ACC/RUS/2).
Thesystem ofgovernment regulation ofindustrial production covers:
1. incentives toattract investment; andpolicies aiming atproviding effective arrangements to
enlist private andforeign investment topromote structural changes;
2. theestablishment ofthelegal basis forindustrial development intheprocess ofeconomic
restructuring;
3. industrial development projections, andeconomic monitoring inindustry;
4. thedevelopment ofprivatization principles andmethods, including methods tomanage state-
owned property interests more efficiently;
5. Theimplementation offederal programs inindustry, designed tofulfil various social and
economic tasks; and
6. Thecreation ofasystem ofinteraction andconsultations between non-governmental associations
andalliances ofbusiness people, andgovernmental regulatory agencies.
1.2.3 Price Liberalization
22. Weunderstand fromtheanswer toAQno.95thatrecommended prices werenotusedin1995
but"itispossible thattheywillbeusedinthefuture butnotintheplace offreely determined prices
forfarmproducts". Please explain whether Russian authorities havetheintention touserecommended
prices inthefuture? Ifso,whatwillbetheirfuture function?
Answer: Seeanswer to37herein.
23. ReA.Q. 86:Inwhich regions dolocalauthorities putaceiling onthegrowth offoodprices?
What arethefoodstuffs forwhich thelocalauthorities putaprice ceiling? Under whatlegalauthority
doesthishappen? Please elaborate onthis"interfering" inlocalmarkets inorder tolimitorprevent
foodproducts leaving theregion. What measures aretaken?
Answer: Ashasalready beennoted, Russia 'seconomy represents asingle customs territory
within which freemovements ofgoods arenotrestricted inanyway.Under Article 8oftheConstitution
oftheRussian Federation, itisprohibited toviolate theintegrity ofRussia 'smarket space.WT/ACC/RUS/9
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Federal LawNo.53-FZ "OnPurchases andSupplies ofAgricultural Products, RawMaterials,
andFood forStateNeeds," ofDecember 2,1994, guarantees thefreedom ofmovement ofagricultural
products, rawmaterials, andfoodthroughout Russian territory.
Inthose cases where localauthorities insome Russian regions violate theabove laws(byfixing
prices, banning agricultural products andfoodfrom leaving theirregions, etc.), necessary measures
aretaken, asstipulated bylegislation, tocorrect suchviolations.
Seealsoanswer to28and335herein.
24. ReA.Q. 92: Theanswer provided ontheestablishment andregulation ofminimum and
maximum mark-ups, particularly onfoodstuffs isnotcomplete. Please explain howminimum and
maximum mark-ups (forwhich products) work. Whoregulates thisprocess? Under whatauthority
isthisdone?
Answer: Seealsoanswer to3and9herein.
25. ReA.Q. 95:"Itispossible thatrecommended prices willbeusedinthefuture butnotinplace
offreely determined prices forfarmproduce." Please clarify thisapparent contradiction. Please provide
acomprehensive listofagricultural products forwhich itisenvisaged touserecommended prices in
1996. How willtheybeused? Inwhatcontext? Forwhatpurpose?
Answer: Seeanswer 37herein.
26. ReA.Q. 96:Onstatepurchases forStateneeds, theanswer provided isnotcomplete. Please
provide alistofproducts purchased, withthefollowing information foreach: volume purchased, value,
andpercentage oftotalproduction.
Answer: Purchases ofproducts, work, andservices tomeetFederal needs areregulated bythe
Federal LawNo60FZ "OnProduct Supplies forFederal State Needs" of13December 1994. Such
purchases, tobefunded outoftheFederal budget, aretobemade in1996inorder tosetupandsustain
Federal material reserves; tomaintain therequired levelofdefence capability andsecurity; toprocure
products forexports tofulfil international economic obligations; andtocarry outFederal programs.
Themachinery ofproduct purchases forpublic sector needs provides fortheallocation of
resources from theFederal budget togovernment procurement agencies which award statecontracts
fortherespective supplies onacompetitive basis.
Asestimated, product purchases tomeetFederal needs in1996 willaccount for4.4percent
ofprojected GDP asagainst 7.3percentin1995.
AFederal document entitled "OnStateProjections andPrograms fortheSocial andEconomic
Development oftheRussian Federation" provides forshort-term (one-year) forecasting toinclude lists
andvolumes ofawiderange ofproducts tobeacquired forFederal stocks. Thiswillbeimplemented
beginning in1997.
27. ReA.Q. 97:Please provide actual figures (for1995todate)bycommodity, andplanned levels
ofpurchases forfederal stocks for1996. What percentage oftotalagricultural production ofthese
purchases account for(involume andinvalue, byproduct)? What percentage ofthefederal budget
of1995 and1996 dothese purchases represent? What isdonewiththese stocks? Towhom arethey
sold? Forwhatuse?WT/ACC/RUS/9
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Answer: Under existing legislation, theRussian Government setstargets forpurchases of
agricultural products andfoodforFederal foodstocks which areusedtosupply foodtothepopulation
intheFarNorth, thecountry 'smajor industrial centres, andsuchsocalled special consumers asthe
army, Interior Ministry forces, andchild carecentres, aswellastocreate foodreserves.
Thefollowing figures arefortheactual purchases ofagricultural products forstateneeds by
theFederal Food Corporation (FFC) in1995, andrelated projections for1996:
1995 (actual) 1996 (estimated)
the.tons bln.
roubles*in%of
totaloutputthe.tons bln.
rouble*in%oftotal
output
Grain 1,084 887 1.7 4,500 3,682 5.8
Oil-bearing seeds 116 133 2.5 800 920 17.8
Sugar beet 1,000 190 5.2 6,000 1,140 30
Potatoes 175 191 0.4 600 655 1.6
Vegetables 212 289 1.9 600 818 5.5
Milk 403 220 1.0 3,450 1,880 10.1
Meat 2.1 5.7 0.04 745 2,032 14.9
* Atprices asofJanuary 1,1996, exclusive ofVAT.
According toprojections for1996, thesepurchases forFederal stocks willaccount, inaggregate,
for6.8percentofthegross value oftherespective products. Expenses fortheirpurchase forFederal
needs in1996 areexpected tototal 24.5trillion roubles, orfivepercentofallprojected Federal
budget expenditures.
TheFederal Food Corporation wasfinanced in1995andwillcontinue tobefinanced in1996
withfunds coming inasrepayment ofloans provided outoftheFederal budget in1993-94. Compared
withthetotalamount ofpurchases, thisisasmall amount which willcome toalittleover2trillion
roubles in1996.
Under theFederal Law"OnPurchases andSupplies ofAgricultural Products, RawMaterials,
andFoodforStateNeeds," Federal consumers arenotobliged touseproducts fromFederal foodstocks.
Asarule,theybuytherequired foodonthefreemarket andapply totheFederal Food Corporation
onlyiftheydonothaveenough funds forthat.
Seealsoanswer to37herein.
28. Pleaseprovideacomprehensivelistillustratingagriculturalproducts,currentminimumguaranteed
pricelevelsandacorrespondingworldprice.Areminimumguaranteedpricesthesameasrecommended
prices referred toinA.Q. 95?How arethese prices determined andcalculated? Whosetsthem?
Answer: Thesystem offreemarket pricing isineffect inthemarket foragricultural produce
andfood-stuffs.
In1995, inaccordance withtheLawoftheRussian Federation No53-FZ "OnPurchases and
Deliveries ofAgricultural Products, RawMaterials andFoodstuffs fortheNeeds oftheState" of
December 2,1994 amechanism ofminimum guaranteed purchase prices wasintroduced. Thelatter
prices aretheminimum obligatory onlyforenterprises andorganizations thatareengaged inpurchasesWT/ACC/RUS/9
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forstatereserves. Regional authorities can,inasimilar way, establish minimum guaranteed prices
when making purchases fortheregional statefoodreserves.
Agricultural producers whosellproducts tostatereserves determine prices byagreement with
thepurchasers; insodoing theyhave, however, guarantees thatprices cannot dropbelow aguaranteed
level.
Suchprices arenotobligatory andcanberegarded onlyasbench-mark prices byagricultural
producers whoselltheirproduce through other channels, aswellasbyallother participants inthe
market thatarenotconnected tostatepurchases.
Initially, thelevel ofminimum guaranteed prices wasdetermined byResolution ofthe
Government oftheRussian Federation No.240"OntheEconomic Conditions oftheFunctioning
oftheAgro-Industrial Complex oftheRussian Federation in1995" ofMarch 10,1995 based onthe
needtoensure foragricultural producers minimum profitability given market prices.
During 1995, thelevelofminimum guaranteed prices wassubject toindexation bytheMinistry
oftheEconomy ofRussia, theMinistry ofAgriculture ofRussia, andtheMinistry ofFinances ofRussia
depending ontheinflation rate,thelevel ofmarket prices, world prices, aswellastrends inthe
foodstuffs market.
TheMinistry ofEconomy ofRussia andtheMinistry ofAgriculture ofRussia developed and
approved aspecial setofmethods forthecalculation ofsetting, applying andindexing guaranteed
prices atthefederal andregional levels.
Themechanism ofguaranteed purchase prices is,infact,similar tothemechanisms applied
incountries withdeveloped market economies.
In1996,inaccordancewiththeResolutionoftheGovernmentNo.135"OnMeasurestoStabilize
theEconomic Situation oftheAgro-Industrial Sector oftheRussian Federation in1996" guaranteed
prices areestablished jointly bytheMinistry ofEconomy, theMinistry ofAgriculture andtheMinistry
ofFinance with regard forthefactors which were referred toabove. Thelistofproducts andthe
levels ofguaranteed purchase prices inthefirstquarter of1996 foragricultural products purchased
forthefederal funds ischaracterized bythefollowing statistics:
Inthousand roubles
pertonofbasic norms
exfarms without VAT
Wheat, durum, IIIgrade 760
Wheat, soft,IIIgrade (valuable) 700
Ryeforfood 445
Millet, regular 640
Buckwheat, regular 1340
Barley (forbreweries) 650
Rice, grain, regular (unhulled) 1000
Oats, regular 530
Peaforfood, yellow, green, regular 830
Maize ofvarious varieties 640WT/ACC/RUS/9
Page13
Inthousand roubles
pertonofbasic norms
exfarms without VAT
Oilseeds:
Sunflower 1200
Soy-bean 1100
Rape 1000
Mustard 1300
Castor-oil plant 2000
Sugar beet 200
Milk (pertonofmilkoffirstgrade ofbasic fatandprotein content) 1000
Cattle (pertonoflivemass ofaverage fatness) 4000
Pigs(pertonoflivemass ofsecond andthirdgrades) 5400
Poultry (foronetonoflivemass) 5600
Onthewhole, atrend ofreduction oftheinfluence ofstatepurchases ontheprocess ofpricing
intheinternal market ofRussia isobserved.
Seealsoanswer to37herein.
29. Initsanswer toadditional question 95,theRussian Federation refers tovoluntary agreements
being reached onrecommended prices foragricultural products. Howaretheprices inthesevoluntary
agreements determined? What roledomarket prices playinsetting these recommended prices?
Answer: Seeanswer to37herein.
30. Theanswer toadditional question 99indicates thatprices insome categories ofagricultural
products areregulated bylocal authorities. Which agricultural products aremost affected bythese
regional practices?
Answer: Seeanswer to23herein.
31. Intheanswer toadditional question 97,thelevel of"purchases forstateneeds" isputat
8-10percentoftotalagricultural production. Howshould thisbereadinconjunction withtheresponse
toquestion 119which states that10-20 percentofdomestic production goesintofederal foodstocks
andifregional stocks were alsocounted, thefigure would becloser to50percent? Areallthese
purchases subject torecommended prices?
Answer: Seeanswer to27herein.
Section 1.2.4 -ThePolicy forRestructuring theEconomy
32. Inthecontext ofA.Q. no.104 wewould appreciate thewritten information onbudgetary
allocation ofagricultural subsidies in1995 (thetotalamount, share inthegross agricultural output
andbygroups ofagricultural products).WT/ACC/RUS/9
Page14
Answer: Seeanswer to34herein.
33. Intheanswer toA.Q. no.114 thereisadescription ofprocedures required tocreate a"financial
andindustrial group". Please elaborate indetail what(ifany)arethelegalandfinancial consequences
ofthedecision oncreation ofa"financial andindustrial group".
Answer: Thelegalandfinancial consequences oftheestablishment offinancial andindustrial
groups aredescribed inFederal LawNo.190-FZ "OnFinancial andIndustrial Groups," ofNovember
30,1995 which hasbeensubmitted totheWTO Secretariat.
34. Theanswers toadditional questions 103and104givesome detailed information onagricultural
subsidies, butnotatotalbudgeted figure for1995. Wewould appreciate information onthetotalbudget
allocated toagricultural support in1995 andtheprojected amount for1996.
Answer: Federal budget funds allocated in1995 toenterprises andorganizations overseen by
theRussian Ministry ofFinance Department forAgriculture, Food Industry, andEnvironmental
Protection:
inmillions ofroubles
Projected for1995 Actual transfers Actual transfers
in%ofplan
1.Current expenditures, total 2,603,900.5 2,132,941.5 81.9
including:
Ministry ofAgriculture 1,115,434.8 953,886.7 85.6
including: landtax 53,040.0 11,421.3 21.5
Fisheries Committee 71,918.8 56,820.0 79.0
Forestry Committee 1,016,438.1 865,290.0 85.1
Water Management Committee 76,994.6 52,214.6 67.8
Land Committee 306,234.9 189,212.6 61.8
including: landtax 228,735.0 125,525.0 54.9
State Bread Inspectorate 9,931.6 8,565.9 86.3
Russian Agricultural Academy 6,947.7 6,947.7 100.0
2.Compensation andassistance
toagricultural producers3,422,924.1 2,444,936.3
(Federal Treasury
Bonds -758,200.0)71.4
including:
insurance payments 40,367.0
calamity relief 62,633.0
wool subsidies 164,087.0
formula feedsubsidies 455,008.0
(Federal Treasury
Bonds -50,000.0)WT/ACC/RUS/9
Page15
Projected for1995 Actual transfers Actual transfers
in%ofplan
flaxandhemp subsidies 81,904.0
subsidies forwaste processing
plants16,488.3
contingency seedstock 164,239.0
(Federal Treasury
Bonds -51,000.0)
fodder transportation 45,375.0
partial compensation of
expenses forfuelacquired for
hothouses76,323.0
support forpedigree cattle
breeding143,255.5
support foreliteseedbreeding 36,422.5
hybrid cornseedpurchases 164,000.0
(Federal Treasury
Bonds -149,000.0)
partial compensation of
expenses formineral fertilizer981,000.0
(Federal Treasury
Bonds -508,200.0)
partial compensation of
expenses forfuelandenergy
usedtoprocess flaxandhemp10,725.0
other expenditures 3,100.0
3.Funds earmarked for:
-leasing ofequipment and
spare parts1,565,000.0 934,100.0
(Federal Treasury
Bonds -191,800.0)59.7
-capital investment 793,000.0 6,500.0 0.8
4.Russian Farmer fund 214,685.4 82,561.5 38.5
5.ARIS program 17,083.9 2,000.0 11.7
6.LARIS program 40,864.2 6,000.0 14.7
7.Capital costs 2,651,924.8 1,467,682.7 (Federal
Treasury Bonds -
200,000,0)55.3
8.Expenses torehabilitate the
economy intheChechen
Republic134,500.0
9.Sochi national nature
preserve1,000.0
10.Interagro fund 100,000.0
11.Government budget loans:
-totheRostov agricultural
machinery works80,000.0WT/ACC/RUS/9
Page16
Projected for1995 Actual transfers Actual transfers
in%ofplan
-totheKrasnoyarsk harvester
factory35,000.0
TOTAL fortheAGRO-
INDUSTRIAL SECTOR11,309,382.9 7,427,222.0 (Federal
Treasury Bonds -
1,150,000.0)65.7
13.Accounts payable inthe
construction sector1,000,000.0 602,851.0 60.3
14.Government capital
investment578,565.0 206,518.0 35.7
INALL fortheAGRO-
INDUSTRIAL SECTOR12,887,947.9 8,236,585.0 63.9
Inaddition:
National Weather Forecasting
Service332,282.7 249,814.2 75.2
National Mapping Service 255,570.2 205,079.1 80.2
Ministry ofNature 37,697.2 29,681.9 78.7
Town ofChapayevsk 378.6 367.4 97.0
Federalbudgetfundsallocatedin1996toenterprisesandorganizationsoverseenbytheRussianMinistry
ofFinance Department forAgriculture, Food Industry, andEnvironmental Protection:
inmillions ofroubles asof11March 1996
Projected tobe
provided inthe1st
quarter of1996Actual transfers Actual transfers in
%oftheplanfor
the1stquarter of
1996
1.Current expenditures, total 685,013.7 337,060.8 49.2
including:
Ministry ofAgriculture 321,399.7 109,299.8 34.0
including: landtax - - -
Fisheries Committee 20,063.5 12,050,4 60.1
Forestry Committee 288,392.6 206,800.0 71.1
Water Management
Committee21,279.7 6,700.0 31.5
Land Committee 30,690.0
including: landtax - - -
State Bread Inspectorate 3,188.2 2,210.6 69.3
2.Compensation and
assistance toagricultural
producers1,139,190.7 1,900.0 0.2WT/ACC/RUS/9
Page17
Projected tobe
provided inthe1st
quarter of1996Actual transfers Actual transfers in
%oftheplanfor
the1stquarter of
1996
3.Equipment andspare part
leases292,300.0 252,535.1 86.4
4.Russian Farmer fund 56,138.9 15,398.0 27.4
5.Capital costs 1,048,414.4 12,900.0 1.2
6.Repayment andservicing
ofloans issued against
guarantees oftheFinance
Ministry1,998,570.6
TOTAL fortheAGRO-
INDUSTRIAL SECTOR3,221,057.7
Inaddition:
ARIS program 3,160.8 - -
LARIS program 7,489.2 - -
National Weather Forecasting
Service92,032.0 41,257.7 44.8
National Mapping Service 75,679.7 61,538.5 81.3
Ministry ofNature 12,555.3 7,400.0 58.9
35. ReA.Q. 102,103,105and107: Wearelooking forward toRussia providing WPmembers
withafullsetofdraftschedules ofdomestic support inagriculture, aswellassupporting data. In
themeantime, could Russia provide acomprehensive listofprograms andother agricultural support
instruments inplace in1995, withbudget allocations andprogram descriptions?
Answer: Thetrend ofreducing thefinancing andcrediting ofagriculture which isunder way
inrecent years hasresulted inasignificant reduction initsinternal support during theperiod ofthe
transition tomarket relations, andcaused aserious recession inproduction.
In1994 thestate allocated 13trillion roubles intheFederal budget, where in1995 thesum
was8.8trillion roubles. In1996itisprojected toallocate 13.2trillion roubles (according totheestimates
oftheMinistry ofAgriculture atleast23trillion roubles isnecessary).
Infact,in1995, allocations foragricultural production amounted to67percentofallocations
earmarked intheFederal budget.
Thissumincluded support fortheinternal infrastructure offarms andagricultural enterprises,
leasing, thefinancing ofmeasures inpedigree livestock breeding, andseedbreeding. Thetotalamount
ofallocations forfinancing, astheabove figures indicate, issignificantly lower thanexpenses for
thesupport ofagriculture inother developed countries, bothinabsolute andrelative terms.
In1995thefinancingofthefollowingFederalprogrammeswasplanned:"BabyFood","Revival
oftheRussian Flax", "Sugar", "Fertility", "Vegetable Oil", Fish", "Farmer", "Revival ofRussian
Villages andDevelopment oftheAgro-industrial Sector". However, fromthatlistofprogrammes theWT/ACC/RUS/9
Page18
financing ofwhich wasestimated tobeintheorder of2.4trillion roubles in1995, onlyoneprogramme,
"Baby Food", did,infact,received financing (50percentofthevolume thatwasplanned).
Aswasnoted inthecourse ofthepastmeetings oftheWorking Party, theproblem ofinvestment
inagriculture remains critical.
Seealsoanswer to34herein.
36. ReA.Q. 104,194and490: Please provide more details astothenature ofthese subsidies
andcompensations tobeprovided toagricultural producers. What arethepriority areas referred to
intheanswer (which farmproducts willbeeligible)? Please explain thecompensations envisaged.
What partofexpenditures andpartofinsurance payments willbecovered bythese compensations?
Also, whatlevelofspecific support totheagricultural sector isenvisaged in1996?
Answer: Seeanswers to34and35herein.
37. ReA.Q. 108: "Federal andregional funds purchase produce atmarket prices thatshould not
belower thanguaranteed prices andsellproduce atthemarket prices." CanRussia explain whatthe
freemarket priceis,andwhatisitsdomestic levelforkeyproducts relative toworld prices? Comment:
since Russia states thatitdoesnotprovide export subsidies toagriculture products, weexpect that
itsexport subsidy commitment willbezero.
Answer: While balancing supply against demand, freemarket prices areprices setbymarket
forces.
Itneeds tobekeptinmind thatguaranteed prices onlyapply torawmaterials purchased from
agricultural producers. However, onlyafewtypes offarmproduce (grain, potatoes, vegetables) are
supplied tofederal foodstocks asrawmaterials, while thebulkofpurchases forthese stocks comes
intheformoffinished products (meat products, dairy products, sugar, vegetable oil)fromprocessing
enterprises. Free wholesale prices forsuchproducts areinfluenced bythefreeorguaranteed prices
forthecorresponding agricultural rawmaterials andother material costs, including expenses for
processing andrequired storage, aswellassupply anddemand. Thisiswhyfreewholesale prices for
finished products ofprocessing enterprises aremore thantwice ashighasthefreeorguaranteed prices
fortherespective rawmaterials, andthey, too,areadjusted forinflation.
Inaccordance withtheFederal LawNo53-FZ "OnPurchases andSupplies ofAgricultural
Products, RawMaterials, andFood forState Needs" ofDecember 2,1994, minimum guaranteed
purchasing prices began tobeusedin1995 forpurchases tomeetpublic sector needs.
TheRussian Government didnotsetanyother, including recommended, prices foragricultural
products in1995. Asofthebeginning of1996, there werenoplans tointroduce recommended prices
thisyear.
Inthisparticular case, itisourunderstanding that“world prices ”means “import prices ”.
According toinformation available totheRussian Ministry ofAgricultural Production, inthe
second halfof1995, domestic price levels compared withimport prices stood at30-80 percentforWT/ACC/RUS/9
Page19
grain crops, 50percentforsunflower, 64percentforpotatoes, 86percentformilk, and94percent
forhogsandpoultry.
Export subsidy commitments willbeaddressed inthecourse ofthenegotiations.
38. ReA.Q. 109: "Adetailed AMS calculation willbesubmitted atanappropriate stage inthe
accession negotiations." When willthisbedone? Once itisdecided tomove tothebilateral phase
ofthenegotiations, itwillbeimportant thatthedraftschedules beprovided.
Answer: Some preliminary workhasbegun withregard tothecalculation ofAMS andequivalent
measurementofsupportinaccordancewithAnnexes3and4oftheAgreementonAgriculture.However,
there aresome important points which, inouropinion, needtobeclarified together withtheWTO
Members including forinstance, theissue ofabaseperiod forAMS calculation, andadjustment for
inflation.
39. ReA.Q. 113:"There isnostatemonopoly intheproduction andsaleofagricultural products
except forthedistribution ofthefederal stockpile ofagricultural products among consumers." Please
provide more details onthisanswer. How isthedistribution ofthefederal stockpile carried out?
Bywhatmeans, onwhatbasis?
Answer: Seeanswer to27herein.
40. ReA.Q. 116: "The draftbudget for1996 provides forsupport onlytothecoalindustry."
Thisisinconsistent withother answers provided inthisdocument (e.g.A.Q. 104,136,etc). Please
explain.
Answer: Pending.
41. ReA.Q. 117: "Measures ofstate support forexports arebased onanalysis ofexisting
international practice aswellasGATT/WTO rules anddisciplines." Please explain thisstatement.
Answer: Thecurrent stateexport support system isbased ontheFederal Exports Development
Program untiltheyear2005which wasputintoeffect byResolution oftheGovernment oftheRussian
Federation No.123“OntheFederal Exports Development Program", ofFebruary 8,1996. This
program iselaborated insuchawayastoensure thetransparency ofallmeasures provided thereby
incompliance withtheWTO Agreement onSubsidies andCountervailing Measures. Currently the
mechanisms forthepractical implementation ofitsprovisions arebeing developed.
42. ReA.Q. 118: Theanswer tothisquestion refers totheanswer toquestion 83.Answer 83
refers toregulations ofindustrial products andstateregulation, butnomention of"central planning"
and"regional/local planning" ismade. Please provide ananswer tothisquestion.
Answer: Amid economic liberalization, thereiscurrently nocentralized planning ofproduction
anddistribution ofproducts ateither thefederal orsub-federal level.
43. ReA.Q. 122: "(...) theResolution ofRussian government establishes theprices forcertain
agricultural goods thefederal agencies areready topaytoproducers, notguaranteed market prices."WT/ACC/RUS/9
Page20
Please provide acurrent comprehensive listofthese agricultural goods andtheirpurchase prices by
theRussian government.
Answer: Seeanswer to28herein.
44. ReA.Q. 129:Theanswer tothisquestion refers toA.Q. 30which isnotrelevant tothesubject
ofthequestion raised (itprovides information onnon-governmental organizations). Please provide
more details ontheform of"other assistance" which isprovided tocompanies engaged inforeign
economic activities. Arethese companies engaged intheagricultural sector? Which products benefit
from this"assistance"? What share ofthefederal budget isallocated tothis"other assistance" in
1995 todate(andin1996)?
Answer: Theterm"otherassistance"usedinAnswer61ofWT/ACC/RUS/2meanstheassistance
provided bythegovernment toevery Russian entity engaged inforeign economic activity upon its
application andirrespective oftheform ofitsownership andthespecific fieldofactivity. Naturally,
among theapplicants there maybecompanies engaged inagriculture.
Theforms ofgovernment assistance areasfollows:
- providing dataonthelegislation andother actsanddocuments regulating activity in
thefieldofforeign trade inRussia andabroad andalsotherules andregulations of
GATT/WTO;
- providing dataonthedetails, dynamics andprospects ofdifferent world markets with
respect tospecific goods, countries, groups ofconsumers, producers etc.;
- providing information onprices; and
- providing support inavoiding trade conflicts anddisputes.
These forms ofassistance areprovided byexperts ofMINFER oftheRussian Federation, its
representatives intheregions ofRussia andbyexperts atRussian trademissions abroad. Theallocations
from theFederal budget inthisareawere estimated atapproximately 35million USdollars in1995
anddropped to28million USdollars in1996.
45. ReA.Q. 130: "(...) centralized credits toagricultural enterprises andagricultural industrial
enterprises wereprovided onlyatthediscount rateoftheRFCentral Bank. (...)nocentralized credits
areenvisaged for1995." Please confirm thisfactfor1995 (with values uptodate). Arethere any
centralized credits envisaged for1996? Please explain howthisprogram operates (arethereguarantees
provided?...interest subsidies?...what aretheconditions ofeligibility?...are premiums paid?).
Answer: Theexperience of1992-94 demonstrated theineffectiveness oftheexisting procedure
forgranting centralized credits toenterprises intheagro-industrial sector, asthose arrangements did
notensure timely servicing andrepayment. Resolution oftheRussian Government No.975“Onthe
amount ofCompensation fortheDifference inInterest Rates foreasyCredits ”ofSeptember 25,1993,
abolished theconcessional financing ofagricultural producers fromNovember 1,1993. Under Federal
LawNo.46-FZ “OntheRe-execution ofIndebtedness ontheCentralized Credits andtheAccrued
Interest thereon oftheOrganizations Carrying outtheDelivery (Storage andRealization) ofProducts
(Goods) totheFarNorth Regions andtheareas Equated Thereto, ofApril 24,1995, nocentralized
credits were made available in1995.WT/ACC/RUS/9
Page21
TheRussian Government tookaseries ofmeasures in1995 inorder toimprove thefinancial
situation intheagro-industrial sector. First ofall,agreements were concluded withtheRussian
Federation 'sterritorial subjects tore-register theliabilities, including interest arrears, oflocal
organizations intheagro-industrial sector under centralized credits, received bythem in1993-94, as
domestic public debts tobedischarged byinstalments overaperiod oftenyears. Thecombined figure
fortheentire agro-industrial sector amounted to5,441.6 billion roubles. Thetotalforcentralized credits
received in1992-94, including interest dueonthem, came to1,237.6 billion roubles.
Inaddition, agreements wereconcluded tore-register asdomestic public debts intheamount
of3,844.8 billion roubles those liabilities, including theprincipal andinterest, oforganizations in
theagro-industrial sector andconsumer cooperatives which accrued under centralized credits which
were repaid from correspondent accounts ofcommercial banks without settlements provided by
borrowers.
Inorder tosupport spring fieldwork andsubsequent harvesting in1995 amid ashortage of
financialresources,agreementswereconcludedthatyearwiththeRussianFederation'sterritorialsubjects
onin-kind credits tosupply fuelandlubricants toagricultural producers inrequired amounts against
debts owed tothefederal budget byenterprises inthefuelandenergy sector. Thevalue ofthose
agreements added upto7,570.17 billion roubles.
Russian Government Resolution No.135"OnMeasures toStabilize theEconomic Situation
intheAgro-industrial Sector oftheRussian Federation in1996," ofFebruary 7,1996, provides for
using thefollowing products asin-kind credits in1996toprovide government support foragricultural
production:
- oilproducts foragricultural producers;
- fueloilforsugar factories toprocess sugar beet;
- fodder fishforfurfarms; and
- formula feedforpoultry farms.
Furthermore, theabove Government Resolution stipulates adeferment untilJanuary 1,1998,
ofdebts under in-kind credits received intheformofoilproducts bytheagro-industrial sector in1995.
46. ReA.Q. 131:Please provide the1995figures forfinancial assistance totheagricultural sector
Answer: Seeanswer to34herein.
1.3 Budgetary, Fiscal andOther Policies
1.3.1.1 TheBudget
47. ReA.Q. 136: "According tothefederal budget for1996statesupport oftheagricultural and
industrial complex should beincreased by40percentoverthecurrent volume ofpayments forthis
year." What were the1995 volumes ofpayment? What wastheshare fortheagricultural sector?
What percentage ofthefederal budget doesthisrepresent? Comment: Russia should consider the
requirementoftheAgreementonAgriculturethatWTOMembercountriesmustreducedomesticsupport
by20percentoverasix-year period from abase-level.WT/ACC/RUS/9
Page22
Answer: Russia hastaken noteoftherequirements oftheAgreement onAgriculture forWTO
members .
Seealsoanswers to34and37,38herein.
48. ReA.Q. 138: Itisstated thatRussia intends tofollow thecourse ofgradual replacement of
production subsidies byconsumer subsidies. Howwillthisbedone? Could Russia provide moredetails
onitsintentions?
Answer: Pending.
49. ReA.Q. 140:Theanswer provided refers (inA.Q. 169)toincome sources ofthebudget only.
Could Russia provide theWorking Party withthecomplete (income andexpenditures) actual 1994
budget, theplanned 1995 (actual when available), andtheplanned 1996 budget forboththefederal
andconsolidated (federal andregional) budget?
Answer: Pending.
1.3.1.2. TheSystem ofTaxation
50. ReA.Q. 145: Itisstated thatthespecial tax,currently at1.5percent, willbeabolished on
January 1,1996. However, sources indicate thattheVAT, currently at20percent, willriseto
21percentonthesame date. Could Russia confirm thisinformation andindicate whether thisrise
willapply tobothimports anddomestically produced goods?
Answer: OnJanuary 1,1996theRussian Federation abolished thespecial taxwhich amounted
to1.5percent.Thevalue added taxrate(VAT) didnotchange anditschange isnotforeseen in1996.
51. ReA.Q. 146: Theanswer refers tothe"appendix" which listsVAT-free goods imported into
theterritory ofRussia, ofwhich noneareagricultural. Please provide adetailed listofagri-food products
andtheirrespective leveloftaxation and/or exemption.
Answer: According totheLawoftheRussian Federation No1992-1 "OnValue-Added Tax"
ofDecember 6,1991 asamended, fooditems included inthelistapproved bytheGovernment of
theRussian Federation aresubject toVAT attherateof10percentwhile theVAT rateapplicable
toalltheother items isequal to20percent.Anidentical VAT rateisapplied todomestic andimported
goods.
Listed below arethefooditems onwhich VATisimposed attherateof10percent(Resolution
oftheGovernment oftheRussian Federation No.1120“OnFoodstuffs forwhich a100percentRate
oftheValue Added TaxisApplicable ”,dated November 13,1995):
- Livestock andlivepoultry;
- Meatandmeatproducts (except formeatdelicacies, i.e.,sirloin, veal,tongue, smoked
sausages, cured sausages, stuffed meat, smoked pork, smoked mutton, smoked veal,
smoked poultry, ham, baked pork, baked beef, canned ham, canned bacon, canned
tongue injelly);
- Milk anddairy products;WT/ACC/RUS/9
Page23
- Vegetable oil;
- Margarine;
- Sugar, including rawsugar;
- Salt;
- Grain, combination fodder, mixed fodder, grain waste;
- Oil-producing seeds, rawandprocessed (oilcakes);
- Bread andother baked products (including buns, rusks, bagels);
- Cereals;
- Flour;
- Pasta;
- Livefish;
- Seafood andfishproducts, including frozen fishandother processed fish,herring,
canned fishandfishpreserves (except forfishdelicacies: caviar ofsalmon andsturgeon,
beluga, Baltic salmon, sterlet, semga, trout(except forseatrout), salted/smoked
Siberian salmon, salted/smoked omul, salted/smoked salmon trout, salmon preserves
(canned Baltic salmon andFarEastern salmon), crabpreserves (frozen boiled crab
legs), squid;
- Baby foodanddiabetic food;
- Rawandprocessed, vegetables; and
- Rawandprocessed, potatoes .
52. ReA.Q. 154: Itisstated thatthere arenospecial preferences forduties ontheimport of
agricultural products which apply tocities ofdestination. Arethere exemptions from duties onthe
import offood? Isittruethat,inspiteoftheincrease from 10percentto25percentontariffs for
imported foods, certain groups havetherighttoimport foodwithout paying tariffs ortaxes (such as
theSportsmen 'sFund)?
Answer: There isnogeneral exemption fromimport duties suchasisindicated inthequestion.
53. ReA.Q. 157:"Russian government confirms itsintentions togointhedirection ofunification
ofthemethods forcalculation ofexcises ratesfordomestic andforeign goods." What isthecurrent
status? Istheunification process completed? When willthisbedone toensure national treatment
obligations aremet?
Answer: ThenewFederal LawNo.23-FZ "OnExcise Duties" ofMarch 7,1996 provides asignificant
steptoward amore uniform system ofexcise taxassessment withrespect todomestic andimported
items, andapplication ofasingle taxrate. Theabove lawenvisages thatcarswillbesubject tothe
excise taxattherateof5percent.Food items, except forbeer, alcohol andtobacco, willbeexempt
from excise tax.
Seealsoanswer to102herein.
54. ReA.Q. 158: "Astheexcess-wage taxwillbeabolished onJanuary 1,1996, various options
arecurrently being studied toavoid thecircumvention ofcorporate income taxes through thepayment
ofunreasonably highwages totheiremployees. Suchoptions maybeinvoked in1996." Please provide
more details regarding these options which maybeinvoked in1996[scenarios, products, operations,
(size, eligibility etc.)].WT/ACC/RUS/9
Page24
Answer: OnJanuary1,1996,inaccordancewiththeFederalLawNo.64-F3“OntheAmendments
totheLaw“OntheTaxation ofProfits ofEnterprises andOrganizations ”ofApril 25,1995, theexcess-
wages taxwasabolished. Notaxes orother measures intended toreplace thattaxhavebeenintroduced
andtheirintroduction in1996 isnotforeseen.
1.3.2 Subsidies toSpecific Sectors oftheEconomy
55. ReA.Q. 169: "(...) funding fortheFederal Fund forFinancial Support ofRegions in1996
willconsist of15percentofthetotaltaxincome ofthefederal budget (except for10percentof
individual income taxandimport duties)." Could Russia provide details ontheleveloffinancial support
which willbeprovided in1996? What percentage ofthefederal budget totalexpenditures willbe
allocated tothisFund?
Answer: Pending .
56. ReA.Q. 173: "(...) theconsistency ofthissystem withtheWTO Agreement ofAgriculture
willbedetermined atalaterstage." Please elaborate.
Answer: Seeanswer to38herein.
57. ReA.Q.183:Please provide acomprehensive listofagricultural products forwhich guaranteed
purchase prices apply, with their respective level ofsupport (interms ofexpenditures, notin
percentages). What aretheestablished quotas foreachofthese products?
Answer: Seeanswer to28herein.
58. ReA.Q. 188: Itisstated thattheprocedure forcalculating minimum guaranteed prices of
farmproduce forfoodfunds hasnotbeendeveloped. However, answer 97seems toprovide some
general elements oftheprocedure; isamore detailed formula being developed? Please clarify.
Answer: Seeanswer to28herein.
59. ReA.Q. 202: Theanswer provided refers toA.Q. 127,which doesnotappear toanswer the
question adequately. Please provide moredetail. Forexample, doesRussia export agricultural products
andfood, inwhatquantities andareanysubsidies provided totheirproducers? Please define these
subsidies.
Answer: Pending .
60. Theanswer toadditional question 164isincomplete. Itdoesnotanswer thepartofthequestion
relating totheconsistency ofregional development andenvironmental subsidies with the
"non-actionability" criteria ofArticle 8.2oftheWTO Agreement onSubsidies andCountervailing
Measures. Wewould appreciate answers onthese aspects.
Answer: Seeanswer to34herein. More generally, inthedocuments provided bytheRussian
side, andatthemeetings oftheWorking Party, Russia haspointed outrepeatedly that,despite the
creation ofamarket economy intheRussian Federation, Russian enterprises aswellasspecific sectorsWT/ACC/RUS/9
Page25
oftheeconomy continue toexperience difficulties inadapting tomarket conditions. Forthatreason,
whenjoiningcertainagreements,Russiaintendstomakeuseoftheappropriateimplementationprovisions
oftherelevant WTO agreements.
61. Withrespect totheanswer toadditional question 169,isthe"Federal FundforFinancial Support
oftheRegions" theonlymeans ofregional development subsidy orarethere others? What arethe
definitions applied to"regions inneedofsupport" and"regions inextreme needofsupport"?
Answer: Pending .
62. Theanswer toadditional question 173oncompensation toagricultural producers doesnotgo
farenough. Although theRussian Federation willneedtoconsider theconsistency ofitsagricultural
support schemes atalaterstage, canitprovide aninitial explanation ofhowitintends tomeetWTO
requirements inthisarea?
Answer: Seeanswers to38and60herein.
63. Wenotethatadditional information onthedairy industry requested (additional question 187)
isstillpending andlookforward tothisbeing supplied assoonaspossible.
Answer: SeeAQ187atpage4ofWT/ACC/RUS/4/Add.1.
1.3.3 Regime forForeign Investment
64. ReA.Q. 204: Weunderstand thatthefederal government mayrestrict foreign investment
activities incertain areas. However, itisstated thatonly"state monopolies/state enterprises" may
carryoutcertain activities (listed inA.Q.204). Bythenature oftheiractivities (manufacturing, planting,
cultivation, sales, processing, salesonexternal markets), itwould appear thatthese enterprises carry
outtrade. Thisraises thequestion ofwhether Russia maintains statetrading enterprises asdefined
under Article XVII. Whywould "state monopolies" carrying outthese functions notbecovered by
Article XVII?
Answer: Applying anexpansive interpretation totheworking definition adopted intheWTO
Understanding ontheInterpretation ofArticle XVII, theRussian Federation states thatthere maybe
alimited number ofenterprises which should benotified totheCouncil forTrade inGoods.
Seealsoanswer to12herein.
65. Over adozen revenue-based taxmeasures, combined withtariff androyalty regime changed
andoilexport interruptions, arehaving anegative effect onthereinvestment plans offoreign-based
companies inRussia 'soilandgassector. Amoreequitable taxregime would helpensure project growth
inthiskeysector. IstheRussian government taking stopstoaddress theseconcerns andfoster increased
foreign investor confidence?
Answer: Theadoption ofFederal LawNo.225-FZ "OnProduction Sharing Agreements" of
December 30,1995 wasaconcrete steptoimprove theinvestment environment inthefuelandenergy
sector ofRussia. Atpresent, legal actsintended toensure theimplementation oftheprovisions ofWT/ACC/RUS/9
Page26
thisLawarebeing developed. Itisimportant thatunder Article 17ofthisLaw, thestate, asaparty
tosuchagreements, undertakes toprovide fortheinvestor commercial conditions fortherealization
oftheinvestment project intheevent ofchanges, forinstance, intaxation legislation.
66. Withregard toArticle 5oftheTRIM 'sAgreement, doesRussia consider itselfasadeveloped
country oralessdeveloped country?
Answer: Aswaspointed outintheanswer toquestion 144(document WT/ACC/RUS/2) and
intheoralclarifications atthemeetings oftheWorking Party, Russia intends tojointheWTO asa
developedcountryandproceedsfromtheunderstandingthatitwillbejoiningthemajorityofagreements,
including theAgreement onTrade Related Investment Measures (TRIMs) asadeveloped country.
Most Favoured Nation Treatment andNational Treatment asApplied toForeign Entities.
67. Russia states thatingeneral Russia canberegarded asproviding national treatment toforeign
investors. Russia isrequested tolistALL exceptions tothisgeneral rule(such asthenewLawon
Alcoholic Beverages)? Does theRSFSR foresee other exceptions inthenearfuture? What arethe
"topRussian agencies" thatmust monitor compliance.
Answer: ForeigninvestmentinRussiaisaccordedatreatmentnolessfavourablethanthetreatment
ofdomestic investment projects andinvestors 'activities related thereto, except forcertain exemptions
(national treatment regime withexemptions). Thisprovision isstipulated inArticle 6"Legal Regime
forForeign Investment Projects" ofRSFSR LawNo.1545-1 "OnForeign Investments intheRSFSR",
dated July4,1991 (with amendments ofDecember 24,1993, No.2288). Theanswer oftheRussian
Federation toAQ204(WT/ACC/RUS/4, p.87-90) contains alistofmajor exemptions. Thetranslation
ofthatpassage wasinaccurate. Werequest toamend theanswer toquestion 204ofthespecified
document sothatparagraph 4onpage89reads asfollows:
"Foreign legalentities (corporations, etc.)andpersons maynotactasholders ofalicence to
render services:"
Atpresent itisnotpossible tosubmit acomplete listofallexemptions forpractical andlegal
reasons. Thereason forthatisthatRussian civillawisundergoing radical changes.
Inviewofchangesingovernmentalpolicies,regulatorymechanismsofspecifictypesofactivities
arebeing accordingly adjusted. Forinstance, Article 11ofFederal LawNo.M171-FZ "OntheState
Regulation ofProduction, Turnover andRealization ofEthyl Alcohol andAlcoholic Products", dated
November 22,1995 introduces abanontheactivities ofRussian commercial organizations withforeign
investment related topurchasing certain types ofalcoholic products outside thecustoms territory of
Russia, bottling andselling suchproducts inRussia.
Theterms offoreign investors 'participation intheprivatization ofproperty under stateand
municipal ownership wereestablished bySection IX"The UseofForeign Investments intheCourse
ofPrivatization" of"The Basic Provisions oftheProgram ofPrivatization ofState andMunicipal
Enterprises intheRussian Federation fortheYear1992" approved byDecree No.341ofthePresident
oftheRussian Federation, dated December 29,1991. These terms werechanged bySection 10of"The
StatePrivatization Programs forStateandMunicipal Enterprises intheRussian Federation" approved
byDecree No.2284ofthePresident oftheRussian Federation, dated December 12,1993. Forinstance,WT/ACC/RUS/9
Page27
itisnotpermitted touseforeign investments during theprivatization ofstateandmunicipal enterprises
located within thelimits ofaclosed territorial formation, except ininstances provided forbyResolutions
oftheGovernment oftheRussian Federation. Formore detailed information seeanswers to6and
84herein.
Paragraph 7ofArticle 11andparagraph 6ofArticle 12ofFederal LawNo.174-FZ "OnState
Environmental Assessment", ofNovember 23,1995, establish specific requirements forcommercial
organizations withforeign investment involved inconstruction, reconstruction, expansion, technical
renovation projects -when establishing suchanorganization, itismandatory topassthestateecological
expert examination:
- onthefederal level, iftheforeign investor 'scontribution exceeds $500,000;
- onthelevelofasubject oftheRussian Federation, inallother instances.
Undercurrentlegislation,theFederalGovernment,theadministrationsofsubjectsoftheRussian
Federation andlocal self-government bodies have theright todefine alistofactivities subject to
licensing. Resolution No.1218oftheGovernment oftheRussian Federation "OnLicensing Specific
Types ofActivity", dated December 12,1994, established aregulatory system withrespect toactivities
requiring licensing, theprocedure forissuing licences, anddivided thepowers ofexecutive bodies
oftheRussian Federation, itsterritorial subjects andlocal self-government bodies withrespect to
licensing types ofactivity. Issued incompliance withthisResolution are“Provisions ontheLicensing
Procedure forSpecific Types ofActivities ”which aresubject toapproval bynewResolutions ofthe
Government oftheRussian Federation. Anumber ofsuchProvisions onLicensing Procedure stipulate
thatonlythose organizations andinstitutions which areregistered assubjects ofentrepreneurial activity
mayengage incertain types ofactivities.
Herein liesoneofthedifficulties incompiling alistofbansandrestrictions forforeign investors,
since onewayofcarrying outinvestment activity involves running abusiness atone'sownrisk
(participation inthemarket asaproducer ofcommodities andservices).
Anumber ofrecently adopted Laws oftheRussian Federation provide fornational treatment
offoreign individuals andlegalentities onthebasis ofthereciprocal principle, i.e.provision ofthe
same kindoftreatment toRussian economic entities bytherespective foreign state.
Paragraph 2ofArticle 42"International Cooperation" ofFederal Law No.15-FZ "On
Communications", dated February 16,1995, stipulates that"foreign organizations orcitizens operating
inthesphere ofcommunications intheterritory oftheRussian Federation shallenjoy thelegalstatus
established forindividuals andlegalentities oftheRussian Federation tothesameextent asthespecified
status isgranted bytherespective statetoindividuals andlegalentities oftheRussian Federation".
Paragraph 6ofArticle 18ofthenewversion ofFederal LawNo.17-FZ "OnBanks andBanking
Activity", dated February 3,1996 stipulates that"The Bank ofRussia shall have theright, upon
agreement withtheGovernment oftheRussian Federation, toestablish, forcredit organizations with
foreign interests andaffiliates offoreign banks, restrictions onbanking operations, provided thatthe
respective foreign states impose restrictions ontheestablishment andoperations ofbanks withRussian
participation andaffiliates ofRussian banks".WT/ACC/RUS/9
Page28
TheRussian sideiswellaware ofthefactthattheadoption ofallexemptions from national
treatment forforeign investors onlywithin theframework ofFederal Laws willfacilitate thecreation
ofamore transparent andclearregulatory system withrespect toforeign capital investment inRussia
and,consequently, reduce uncertainty when making investment decisions.
68. TheRSFSR claims thatitpresently doesnotplace quantitative limitations ontheimport of
foreign goods. With theintroduction thelatest LawonAlcoholic Products thisisnolonger true.In
addition itseems thattheGovernment would beunder pressure fromsome industrial lobbies tointroduce
limitationsonotherproducts.Thereisaccordinglyconcernthattheuseofsuchtrade-restrictivemeasures
might develop. Russia isrequested tocomment onthis.
Answer: HavingthoroughlyanalyzedthesituationthatemergedaftertheFederalLawNo.171-FZ
"OnState Regulation ofProduction andDistribution ofEthyl Alcohol andAlcohol Products" of
November 22,1995 andtaking intoaccount theserious concern oftheWTO Members withrespect
tothisproblem, theResolution No.130"OnImport Quotas onEthyl Alcohol andAlcohol Products"
ofFebruary 8,1996 hasbeensuspended.
Intheinterests offulldisclosure, theRussian Federation hasinitiated aninvestigation, tobe
conducted inconformity withtheprovisions ofGATT Article XIX, andtheWTO Agreement on
Safeguards, inorder todetermine ifincreased imports ofalcoholic beverages arecausing serious injury
tothedomestic industry.
Inaddition, wewould liketostress that“RSFSR ”isnotavalid name forthiscountry. The
correct name istheRussian Federation orRussia.
69. Inorder toenable foreign companies toinvest inRussia andtorunastable business, itis
essential tohaveasafeenvironment where investors arenotassaulted bycriminals. What measures
doestheRussian Federation intend totaketocounteract crimes inorder tomake asafeinvestment
environment?
Answer: Creation ofasafeenvironment inthiscountry isoneoftheprincipal objectives ofthe
Government ofRussia. Thesolution tothisproblem isofparamount importance forthefuture
development ofthecountry 'seconomy.
Recently, anumber oflegislative andadministrative measures havebeentaken inthesphere
oflawenforcement tohelp create afavourable investment environment. Forinstance, an
Interdepartmental Working Group headed byofficials oftheMinistry oftheInterior hasprepared
adraftFederal Law"OnResponsibility forLegalization ofCriminal Incomes". Thisdocument has
already beenapproved byallFederal agencies, passed theexpert examination andreceived thegeneral
approval oftheEuropean Council. ThisLawistoseriously hinder "money laundering", andtogether
withtheCriminal Code andLaw"OnCombating Organized Crime" already adopted bytheState
Duma itshould make amore efficient toolforpreventing thecriminalization oftheeconomy. The
Ministry oftheInterior hasalsodeveloped adraftDecree ofthePresident oftheRussian Federation
"OntheMunicipal Police" andadditions totheLaw"OnPolice" which would enable lawenforcement
agencies tointensify theiractivity related toprotection ofbothnational andforeign entrepreneurs.
70. Inthematterofinvestmentpolicymakingandimplementation,theStateCommitteeonIndustrial
Policy, aswellastheMinistry ofFuelandPower havetheirowncompetence, while atthesame timeWT/ACC/RUS/9
Page29
theMinistry ofEconomy isthemain office incharge ofthisarea. Isthere anyplantomake asingle
channel forforeign investors inthisregard?
Answer: Thedivision ofpowers between themain Federal executive agencies wasgenerally
described inthedocument "Regime intheAreaofTrade-Related Investment Measures", inthesection
entitled "Authorities inCharge ofInvestment Policy andImplementation" (WT/ACC/RUS/5, p.2).
Thissection specifies thefunctions oftheRussian Ministry ofEconomy inthesphere ofelaboration
andimplementation ofpolicy withrespect toforeign investment. ThisMinistry inconjunction with
other Federal ministries andagencies haselaborated "AComprehensive Program forStimulating
Domestic andForeign Investment intheRussian Federation Economy" approved byResolution of
theRussian Government No.1016, dated October 13,1995. Thisprogram isafundamental document
reflecting thepolicies oftheRussian Government pertaining toforeign investment inthecountry 's
economy.
Thedivision offunctions andauthority between theMinistry ofEconomy ofRussia andother
principal Federal ministries andagencies concerns regulation andattraction offoreign investment in
thefollowing spheres:
theMinistry ofEconomy ofRussia isincharge ofelaboration ofthegeneral economic strategy,
conceptual andlegal documents, asystem ofapplication ofvarious regulatory instruments,
andcoordination ofactivities ofother federal agencies; and
theother major federal ministries andagencies willbeincharge ofelaboration and
implementation ofmeasures within theirjurisdiction aimed atimplementation ofGovernment
policies inthesphere under review.
Atpresent thereseems tobenoreason forchanging theexisting system ofstateadministration
withrespect toregulation offoreign investment.
71. Itisstated thatthelegal norms which provide fortreatment "similar to"national treatment
forforeign investment aresetoutinArticle 6oftheForeign Investment Law. Inwhatwayarethey
"similar" andnotidentical? What isthedifference? Please listtheexceptions fromnational treatment
thatarecontained inArticle 6oftheForeign Investment Law. What arethereasons formaking such
exceptions?
Answer: Thelegalregime applied toRussian andforeign investors isthesame inconceptual
terms withaccount ofcertain minor differences.
Atthestageofgranting access (entry) toforeign investors, theRussian Federation asasovereign
statedecides thematter ofpermitting foreign investors andentrepreneurs toengage ininvestment and
related activities intheterritory oftheRussian Federation byelaborating itsnational legislation and
bysigning international agreements onthepromotion andmutual protection ofinvestments. Russia
retains therighttoapply certain exemptions conditioned bythenecessity toensure national defense,
statesecurity, protection ofpublic order, protection oftheinternal market, andfulfilment ofinternational
obligations oftheRussian Federation.
Atthenextstage (thesocalled "post-investment stage"), thestructure andcontent ofthelegal
regime applied totheinvestment activities offoreign anddomestic investors arethesame, except forWT/ACC/RUS/9
Page30
afewexceptions which establish thespecifies forlegalregulation offoreign investors orenterprises
withforeign investment.
Withrespect tothelistofexceptions fromthenational treatment regime forforeign investors
seeanswer to67herein.
Itisalsoimportant totakeintoaccount theeffective norms ofRSFSR LawNo.1488-1 "On
Investment Activity intheRSFSR", dated June26,1991 which stipulates:
- inparagraph 1ofArticle 5onthe"Rights ofInvestors" that"Allinvestors shallhave
equal rights toengage ininvestment activity";
- inparagraph 1ofArticle 15on"Investment Protection" that"Thestateshallguarantee,
inaccordance withlegislation effective intheterritory oftheRSFSR, protection of
investment, including foreign investment, irrespective oftheform ofownership.
Investors, including foreign investors, shallbeprovided withequal conditions fortheir
activity which preclude measures ofdiscriminatory nature which could hinder the
management anddisposition ofinvestments".
Seealsoanswer to86herein.
72. Willthemost favoured nation treatment beprovided forintheamendment oftheForeign
Investment Law? WilltheRussian Federation make alegislation toensure MFN treatment inthearea
offoreign investment?
Answer: Onthewhole, theanswer tothisquestion wasprovided inthedocument "Regime in
theArea ofTrade-Related Investment Measures" inthesection "Most Favoured Nation Treatment
andNational Regime Treatment asApplied toForeign Entities" (WT/ACC/RUS/5, p.2).Seealso
answer to86herein.
Ingeneralterms,thecurrentRussianlegislationcontainslegalnormswhichshouldbeinterpreted
asgranting MostFavoured Nation treatment (MFN). Forinstance, theabsence ofdiscrimination against
foreign investors withrespect tothecountry oforigin orregistration andlocation isacharacteristic
ofMFN. Theprovision ongranting general MFN isincluded inallinternational agreements onmutual
protection andencouragement ofinvestments which Russia hasconcluded with33countries.
Russia willdevelop itspolicy withregard totheregulation offoreign investments withfull
respect oftherelevant WTO rulesanddisciplines ontrade-related investment measures, including those
under theGATS, andtheirimplementing practices.
Seealsoanswer to67herein.
73. Itisstated thatMFN treatment willnotapply toWTO Members concerning regard tothe
agreementsbetweentheRussianFederationandtheformerUSSRRepublics.Pleaseexplainthissituation
inamore concrete way. What arethereasons fornon-application?
Answer: TheRussian sideunderstands thisquestion toreferonlytoinvestment measures. On
thatunderstanding, theRussian sidewishes tostatethatagreements withtheformer USSR Republics
comply withthemultilateral rules anddisciplines covered bytheWTO Agreements.WT/ACC/RUS/9
Page31
74. Concerning regional legislation which conflicts withthelawsoftheRussian Federation and
thePresidential decrees, itisstated thatthese arenotvalid andwillnotbeenforced. How isthis
provision tobeensured?
Answer: Asforpossible conflicts between Federal legislation andlegislation ofsubjects ofthe
Russian Federation, andregulatory legalactsoflocalself-government bodies inthesphere offoreign
economic relations regulation, theprocedure forsettling suchconflicts isestablished bytheConstitution
ofRussia and,Federal constitutional laws.
Under subparagraph "e"ofArticle 71oftheConstitution oftheRussian Federation, "foreign
economic relations" fallwithin theexclusive jurisdiction oftheRussian Federation; under subparagraph
""thesameapplies tothe"establishment oflegalfundamentals ofasingle market; finance, exchange,
credit, customs regulation". Paragraph 1ofArticle 8oftheConstitution oftheRussian Federation
stipulates that"guaranteed intheRussian Federation shallbethesingle economic space, freemovement
ofcommodities,servicesandfinancialmeans,supportofcompetitiveness,freedomofeconomicactivity".
With respect tosubordination oflegislative andother legalacts,thislegalnorm entails thatFederal
legislation willestablish thegeneral legal norms regulating civilrelations, forms andmethods of
protection ofviolated rights onthewhole territory ofRussia, andshallguarantee theunity ofcivil
andcivilprocedural legislation.
75. Itisstated thatRussia hasneither legislative noradministrative regulations oninvestment
measures which would place restrictions ontrade ingoods. Please explain thecurrent restrictions on
investment. Aretheyconsistent withtheTRIM Agreement?
Answer: Theanswers to67,71,72herein provide explanations concerning theessence ofthe
National Treatment Regime withexemptions accorded toforeign investors intheRussian Federation,
andconcerning Most Favoured Nation treatment. Aswaspreviously stated intheanswer toAQ204
(WT/ACC/RUS/4, p.87)andindocument WT/ACC/RUS/5, these exemptions donotruncounter
totheprovisions oftheTRIMs Agreement.
76. Itisstated thatRussia intends toabolish excise taxes onthose goods where taxation differs
from thatofRussian goods. What isthetime-frame forthisabolition?
Answer: Seeanswer 53herein.
77. What aretherestrictions onnon-resident transactions within thecurrency market oftheRussian
Federation thatareimposed bytheLawonCurrency Regulation andControl? Arethese restrictions
consistent withtheAnnex-Illustrative ListintheTRIM 'sAgreement?
Answer: Inaccordance withClause 2.1ofSection 5andClause 3ofSection 4oftheInstruction
oftheCentral Bank oftheRussian Federation No.16,"OntheProcedure fortheOpening and
MaintenancebyAuthorizedBanksofNonresidents'AccountsintheCurrencyoftheRussianFederation,"
ofJuly16,1993, andpursuant toParagraph 2ofArticle 8oftheRussian LawNo.3615-1 ofOctober
9,1992 "OnCurrency Regulation andCurrency Control," nonresidents arenotallowed topurchase
foreign exchange onthecurrency market oftheRussian Federation withpayment inroubles fromT-type
accounts (rouble-denominated correspondent accounts ofnonresident banks). There arenoother
restrictions onnonresidents 'operations onthecurrency market oftheRussian Federation. Intheopinion
oftheRussian side,Russian practices inthisareaareconsistent withtheTRIMs agreement.WT/ACC/RUS/9
Page32
78. Itisstated thattheexisting currency restrictions, including access bytheforeign investors to
thecurrency exchange, willgradually beremoved. WilltheRussian Federation abolish theobligation
forinvestors toconvert 50percentoftheforeign currency earnings from exports intothedomestic
currency? Isitguaranteed thatinvestor 'searning canbetransferred toforeign countries?
Answer: Theobligatory conversion of50percentofforeign-currency proceeds fromtheexport
ofgoods (work, services) intodomestic currency through authorized banks isrequired byRussian
Presidential Decree No.629,"OnaPartial Alteration oftheProcedures fortheMandatory Conversion
ofaPortion ofForeign-Currency Earnings andfortheExaction ofExport Duties," dated June14,
1992. Thisrequirement applies tolegal entities, regardless oftheir ownership status orplace of
registration, including companies withforeign investment, aswellastoassociations, organizations,
andindividuals.
Therequirement thatexporters convert 50percentoftheirforeign-currency earnings from
theexport ofgoods (work, services) intoroubles mayonlybeabolished byaPresidential decree which
isnotforeseen atpresent.
Under Clause 9(c)ofArticle 1oftheRussian LawNo.3615-1 ofOctober 9,1992"OnCurrency
Regulation andCurrency Control," there arenorestrictions onnonresidents 'repatriation ofinterest,
dividends, andother income from investment, aswellasother currency valuables, ifsuchcurrency
valuables were previously transferred, imported, orsentintotheRussian Federation.
79. What isthejurisdiction oftheCivil Court andthatoftheArbitration Court?
Answer: Under Article 25oftheRSFSR Code ofCivil Procedure, dated June11,1964 (as
amended onApril 28,1993, andApril 28,November 30,andDecember 31,1995), thejurisdiction
ofcivilcourts comprises thefollowing categories ofcivilcases:
(1) disputes arising outof,orinconnection with, relationships under civil, family, labour, and
collective-farm lawwhere atleastoneparty tothedispute isanindividual, withtheexception
ofcases where theresolution ofsuch disputes isassigned bylawtothejurisdiction of
administrative orother agencies;
(2) those disputes relating tocontracts forthecarriage ofgoods indirect international railorair
freight traffic between state-controlled enterprises, institutions, organizations, cooperatives,
theirassociations, andother nongovernmental organizations, ontheonehand, andrailorair
transport agencies, ontheother, which arise outof,orinconnection with, corresponding
international agreements;
(3) cases arising fromrelationships under administrative law(aslisted inArticle 231oftheCode
ofCivil Procedure), namely;
(a) ofcomplaints ofinaccuracies invoters 'lists;
(b) ofcomplaints against actions bystateagencies ortheirofficials inconnection withthe
imposition ofadministrative penalties; ofcomplaints against actions bystateagencies,
nongovernmental organizations, orofficials, which infringe upon therights of
individuals; andofcomplaints against thedenial ofpermission toexitfromtheRussian
Federation togoabroad ortoenter theRussian Federation from abroad; andWT/ACC/RUS/9
Page33
(c) other cases arising from relationships under administrative law,which areassigned
bylawtothejurisdiction ofcivilcourts;
(4) cases ofspecial procedure (aslisted inArticle 245oftheCode ofCivil Procedure), including
cases:
(a) toestablish factshaving legalrelevance;
(b) todeclare anindividual missing ordead;
(c) todeclare anindividual tobeoflimited capacity orincapable;
(d) todeem property asownerless;
(e) toestablish theinaccuracy ofentries inthecivilstatus register;
(f) complaints against notarial actsorrefusal toperform suchacts;and
(g) torestore rights under lostbearer documents (summons procedure).
Civil courts arealsocompetent totryother cases assigned bylawtotheirjurisdiction.
They alsotakeupcases inwhich foreign nationals, stateless persons, orforeign companies
andorganizations areinvolved, unless otherwise stipulated byaninterstate agreement, international
treaty, ortheparties 'agreement.
Inaccordance withArticle 27oftheCode ofCivil Procedure, incases stipulated bylawor
international treaties, adispute arising from acivil-law relationship may, bytheparties 'agreement,
bereferred forresolution toathird-party court, theMaritime Arbitration Commission, ortheForeign-
Trade Arbitration Commission attheRussian Federation Chamber ofCommerce andIndustry.
Inaccordance withArticle 22oftheRussian Code ofArbitration Procedure dated May5,1995
(Federal LawNo.70FZ,ofMay5,1995), thejurisdiction ofarbitration courts encompasses economic
disputes arising outof,orinconnection with, relationships under civil, administrative, orother law,
including suchdisputes:
(1) between legalentities (hereinafter referred toas"organizations") andindividuals engaging in
entrepreneurial activities without separate legalidentity andhaving thestatus ofself-employed
entrepreneurs, awarded tothem inaccordance withtheprocedure established bylaw("self-
employed entrepreneurs"); and
(2) between theRussian Federation anditsterritorial subjects, andbetween territorial subjects
oftheRussian Federation.
Economic disputes subject toresolution byarbitration courts include, butarenotlimited to,
disputes over:
- disagreements about acontract whose conclusion isstipulated bylawordisagreements
overwhich theparties haveagreed toreferforresolution toanarbitration court;
- changes toterms andconditions, ortheearly termination, ofcontracts;
- nonperformance orimproper performance under acontract;
- recognition oftherightofownership;
- exaction ofproperty byitsowner orsome other lawful possessor from another 's
unlawful ownership;WT/ACC/RUS/9
Page34
- violations oftherights ofanowner orsome other lawful possessor other than
dispossession;
- payment ofdamages;
- invalidation (infullorinpart)ofthose non-normative actsofstateagencies, localself-
governing agencies, andother agencies which arenotconsistent withlawsandwith
other normative legalactsandwhich infringe upon therights andlawful interests of
organizations andself-employed entrepreneurs;
- protection ofhonour, dignity, andbusiness reputations;
- recognition ofanexecutive orother document ordering alevyofexecution without
recourse tocourts (without acceptance) tobenotsubject tofulfilment;
- challenging ofthedenial of,orevasion from, thestateregistration ofanorganization
orself-employed entrepreneur within theprescribed timeperiod, aswellasinother
cases where suchregistration isstipulated bylaw;
- recovery offinesfromorganizations andself-employed entrepreneurs bystateagencies,
local self-governing agencies, andother supervisory agencies, unless afederal law
provides fortheexaction ofsuchfineswithout recourse tocourts (without acceptance);
and
- recovery from thegovernment budget ofcashamounts written offbysupervisory
agencies without recourse tocourts (without acceptance) inviolation ofrequirements
setforth bylaworother legalact.
Arbitration courts alsotryother cases, including, without limitation:
- theestablishing offactsofrelevance tothearising, alteration, ortermination ofrights
oforganizations andself-employed entrepreneurs inthefieldofbusiness andother
economic activities ("the establishing offactsoflegalrelevance"); and
- theinsolvency (bankruptcy) oforganizations andself-employed entrepreneurs.
Incases stipulated bytheRussian Code ofArbitration Procedure andother Federal laws,
arbitration courts arecompetent totakeupeconomic disputes andothercasesinvolving economic agents
operating without separate legalidentity andindividuals whodonothavethestatus ofself-employed
entrepreneurs.
Federal lawsalsomayassign other cases tothejurisdiction ofarbitration courts.
Arbitration courts consider those cases within theirjurisdiction which involve organizations
andnationals oftheRussian Federation, aswellasforeign organizations, organizations withforeign
investment, international organizations, foreign nationals, andstateless persons engaging in
entrepreneurial activities, unless otherwise stipulated byaninternational agreement towhich theRussian
Federation isaparty.
Inaccordance withArticle 23oftheRussian Code ofArbitration Procedure, adispute which
hasarisen ormayarisebetween theparties outof,orinconnection with, theirrelationship under civil
lawandwhich iswithin thejurisdiction ofarbitration courts may,bytheparties 'agreement, bereferred
bythem, before anaward ispassed byanarbitration court, forresolution toathird-party court.
80. Canaforeigner useEnglish oranyother foreign language indocuments forsubmission to
theCourt orinpleading attheCourt?WT/ACC/RUS/9
Page35
Answer: Inaccordance withArticle 8oftheRSFSR Code ofCivil Procedure, dated June11,
1964(asamended onApril 28,1993, andApril 28,November 30,andDecember 31,1995), proceedings
incivilcasesareconducted intheRussian language, andinautonomous republics, autonomous regions,
andautonomous areas, theymaybeconducted inthelanguage oftherespective autonomous republic,
autonomous region, orautonomous area, orinthelanguage ofthemajority ofthepopulation ofthe
given locality.
Persons whodonothaveacommand ofthelanguage inwhich proceedings areconducted are
guaranteed therighttomake statements, giveexplanations andtestimony, plead atcourt, andsubmit
applications intheirnative tongue, andalsotousetheservices ofaninterpreter inaccordance with
theprocedure established bytheCode ofCivil Procedure.
Court documents aresupplied topersons taking partinacaseinatranslation intotheirnative
language orsome other language ofwhich theyhavecommand.
Similar provisions aretobefound inArticle 8oftheRussian Code ofArbitral Procedure,
dated May5,1995:
1. Arbitration proceedings areconducted intheRussian language.
2. Those persons taking partinacasewhodonotknow Russian havetheright togetfully
acquainted withthematerials ofthecaseandtakepartintheproceedings through aninterpreter,
andtoplead atarbitration court intheirnative language.
81. ReAQ.204 TheRussian Federation gives alistofexemptions specified byFederal Lawfor
activities declared tobeState monopolies. Isthere alsoalistofexemptions under regional orlocal
laws? Ifso,could theRussian delegation provide it.
Answer: Seeanswer to67herein.
82. ReAnswer 204-(a)Please provide alistofthemore than70types ofactivity subject to
licensing. (b)Please provide asummary explanation oftherequirements tobemettoapply forsuch
alicence. Wewould likeclarification onthedifferent levels atwhich alicence mustbeapplied for.-
(c)Canalicence ofafederal range ofapplication beobtained atlocal level? Arethere cases of
requirements atvarious levels i.e.where alicence mustbeobtained atthefederal levelandagain at
theregional orlocallevel? (d)Isthedecision torequire alicence foracertain typeofactivity taken
onlyatfederal levelforinstance through aRSFSR LaworaGovernment Decree, orcansuchdecisions
alsobetaken atlocallevel? (e)Could wehaveacopyofDecree No.492ofMay271993 "Onthe
Powers ofExecutive Bodies ofTerritories, Regions, Autonomous Entities, andCities ofFederal
Importance inLicensing ofIndividual Types ofActivity" andGovernment Decree No1418ofDecember
241994 "OntheLicensing ofIndividual Types ofActivity".
Answer:
(a) Thelistoftypes ofactivities subject tolicensing isindicated inAnnex No.1 ofResolution No.
1418oftheGovernment oftheRussian Federation "OnLicensing Specific Types ofActivities", dated
December 24,1994 which hasbeensubmitted totheWTO Secretariat.WT/ACC/RUS/9
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Article 49oftheCivil Code oftheRussian Federation prescribes theadoption oftheFederal
Law"OnLicensing Specific Types ofActivities". Adraftofsuchlawwasdeveloped andsubmitted
bytheMinistry ofEconomy ofRussia totheGovernment ofRussian inMarch 1996.
(b) Ageneral description ofrequirements totheapplication forreceipt ofalicence.
Toreceive alicence, theapplicant submits totheagency authorized toissuesuchlicences the
following documents:
- anapplication foralicence which mustcontain dataabout theapplicant: forlegalentities
-theofficial name, organizational andlegalform, legaladdress, thesettlement account
number andtheaddress oftherespective bank; forindividuals -thefullname, passport
data;
- typeofactivity which theapplicant intends toengage in;
- effective termoflicence;
- copies ofconstituent documents;
- copies ofthecertificate ofstateregistration asalegalentity;
- acertificate from anappropriate taxagency ontheregistration oftheapplicant-legal
entity andacopy ofthecertificate ofregistration ofanatural person asindividual
entrepreneur withastamp oftheappropriate taxagency;
- document certifying thepayment ofanappropriate licence fee.
(c) Effective territory ofthelicence onthefederal andlocallevel.
Alicence issued byalicensing agency iseffective onthewhole territory oftheRussian
Federation, provided itisissued byafederal executive body oraspecially authorized agency;
ontheterritory ofasubject oftheRussian Federation, provided thelicence isissued bythe
executive body oftheRFsubject;
ontheterritory ofalocal self-government body, provided thelicence isissued bythelocal
self-government body.
(d) What istheprocedure foridentifying activities subject tolicensing? Whocompiles alistof
suchactivities?
TheGovernment oftheRussian Federation hastheauthority toadopt resolutions specifying
thetypes ofactivities subject tolicensing andintroduce amendments inthelistofsuchactivities.
Proposals concerning amending theexisting listofsuchactivities maybesubmitted totheGovernment
oftheRussianFederationbyexecutivebodiesoftheRussianFederationandofthesubjectsoftheRussian
Federation.
(e) Copies ofResolutions oftheGovernment oftheRussian Federation onLicensing Specific Types
ofActivities which were submitted totheWTO Secretariat, including:
Resolution oftheRFGovernment No.492"OntheAuthority ofExecutive Power Bodies
ofAreas, Regions, Autonomous Entities, Cities ofFederal Significance Concerning theLicensing of
Specific Types ofActivities: ofMay27,1993;WT/ACC/RUS/9
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Annex 1 Model Procedure forLicensing Specific Types ofActivities ontheTerritory ofKrais,
Oblasts, Autonomous Entities, Cities ofFederal Significance;
Annex 2 AListofTypes ofActivities Subject ToLicensing ontheTerritory ofKrais, Oblasts,
Autonomous Entities, Cities ofFederal Significance;
Resolution oftheRussian Government No.1418 "OnLicensing Specific Types ofActivities",
ofDecember 24,1994.
83. ReAnswer 205-Please provide theWorking Party withtheResolution oftheGovernment
oftheRussian Federation ofJuly4,1992, No470,onApproval oftheListofTerritories oftheRussian
Federation withRegulated Visits forForeign Citizens.
Answer: Thisdocument hasbeenprovided totheWTO Secretariat.
84. ReAnswer 207-According tothisanswer, theFederal Security Service oftheRussian
Federation canprohibit theparticipation offoreign investors intheprivatization ofcompanies insome
strategic sectors suchastheoilandgasindustry. When aforeign investor istheobject ofsucha
prohibition, canhehaveaccess tothereasons justifying thisban,doeshehaveways tocontest such
decisions? Howishebeing refunded oftheinvestment made andconsequently prohibited? Inparticular,
fortheoilandgassector, isthisnotincontradiction withtheEnergy Charter? IstheRussian Federation
aware thatsuchpractices cancreate important uncertainty anddeter foreign investors inviewofthe
risksofseeing one'sinvestment ousted.
Answer: Inaccordance withSections 2.1-2.5 oftheStateProgram forthePrivatization ofState-
andMunicipally-owned Enterprises intheRussian Federation, asapproved bytheDecree ofthe
President No.2284, ofDecember 24,1993 (Collected ActsofthePresident andGovernment ofthe
Russian Federation, 1994, No.1,Art.2),facilities andenterprises instateandmunicipal ownership
aredivided intothefollowing fivegroups, depending onthepossibility oftheirprivatization:
Category One - federally-owned facilities andenterprises which maynotbeprivatized
(Section 2.1);
Category Two - federally-owned facilities andenterprises whose privatization issubject
toadecision oftheRussian Government (Section 2.2);
Category Three - federally-owned facilities andenterprises whose privatization issubject
toadecision oftheRussian StateProperty Management Committee,
tobetaken withdueregard fortheopinion oftheministries and
departments responsible fortherespective industry (Section 2.3);
Category Four - municipally-owned facilities andenterprises whose privatization is
subject toadecision ofregional governments (Section 2.4); and
Category Five - facilities andenterprises subject tomandatory privatization (Section
2.5).
Theexisting procedure fortaking decisions ontheprivatization ofstate- andmunicipally-owned
facilities andenterprises issetforthinSection 2oftheBasic Provisions oftheStateProgram forthe
Privatization ofState- andMunicipally-owned Enterprises intheRussian Federation After July1,1994,
asapproved bytheDecree ofthePresident No.1535, ofJuly22,1994. Decisions ontheprivatization
ofsuchenterprises aretaken inaccordance withfederal lawsandpresidential decrees, respectively,WT/ACC/RUS/9
Page38
bytheRussianGovernment,theRussianStatePropertyManagementCommittee,andthelatter'sregional
agencies.
Theprocedure forforeign investor participation intheprivatization offacilities instateand
municipal ownership isdefined inSection 10,"Use ofForeign Investment," oftheMethodological
Recommendations ontheApplication oftheBasic Provisions oftheStateProgram forthePrivatization
ofState- andMunicipally-owned Enterprises intheRussian Federation After July1,1994. Seealso
Letter No.ACH-6535 oftheRussian State Property Management Committee, dated July22,1994.
Unless prohibited todoso,foreign investors may, onthesame terms aseverybody else,bid
atauctions andatcommercial andinvestment tenders forshares, equities, andownership interests in,
andforproperty (assets) of,those enterprises (intheabove categories 2-5)which arebeing privatized,
aswellasthose enterprises which arebeing liquidated orhavebeenliquidated, andother facilities
instateormunicipal ownership, including unfinished construction projects andbankrupt companies,
andattenders toredeem leased property andconclude leasehold contracts.
Simultaneously withdeciding toprivatize some specific facilities andenterprises inCategory
Two, including:
- defense companies (which produce more than30percentoftheirtotaloutput under
defense contracts);
- companies intheoilandgasindustries;
- companies mining andprocessing oresofstrategic materials;
- companies mining andprocessing oresofprecious andsemi-precious stones, and
precious metals;
- companies mining andprocessing oresofradioactive andrare-earth elements; and
- those transportation andcommunications companies which aredescribed inSection
2.2oftheabove 1993 StateProgram forthePrivatization ofState- andMunicipally-
owned Enterprises intheRussian Federation,
theRussian Government maytakeadecision onofforeign investors participating intheprivatization
ofsuchfacilities andenterprises onanequal footing withRussian investors.
Following anauction (tender), itsorganizers mustprovide theRussian Government andthe
Federal Security Service (FSB) withinformation about theforeign investors whowonthebidding.
TheFSBthenmay,within onemonth, provide theRussian Government withasubstantiated conclusion
ontheneedtoprohibit thepurchase ofshares, equities, ownership interests, orproperty bytheseforeign
investors. Grounds forthebanmayinclude theinterests ofensuring national defense andstatesecurity,
protecting public order andfulfilling Russia 'sinternational obligations. Based onthisconclusion, the
Russian Government issues acorresponding resolution which mustbebrought tothenotice oftheforeign
investor whowontherespective auction ortender. Before this,noagreement isconcluded withsuch
foreign investor onthesaletothem oftheshares, equities, ownership interests, orproperty.
IftheGovernment resolves toprohibit aparticular foreign investor fromassuming therights
ofownership tosuchassets, theresults oftheauction (tender) areannulled andthedealispronounced
nullandvoidonthosegroundsandwiththoseconsequenceswhicharestipulated,forinstance,inArticles
168and169oftheCivil Code oftheRussian Federation. Anincomplete listofgrounds forthe
invalidation ofprivatization deals wassetforthinArticle 30oftheRSFSR Law"OnthePrivatizationWT/ACC/RUS/9
Page39
ofState- andMunicipally-owned Enterprises intheRussian Federation," dated July17,1991. The
listhassince beensupplemented.
Disputes overtheinvalidation ofdealstosellshareholdings injointstock companies attenders
areconsidered byarbitration courts inaccordance withRussian legislation (Section 6oftheRegulation
onInvestment Tenders fortheSaleofParcels ofShares inJointStock Companies Established Through
thePrivatization ofState- andMunicipally-owned Enterprises, asapproved byExecutive Order No.
342-r oftheRussian StateProperty Management Committee, dated February 15,1994). Disputes over
thecompensation ofdamage caused bysuchdecisions alsoaretaken upbyRussian arbitration courts.
Asfarasforeign investment already made isconcerned, theabove procedure fortheFSB's
approval ofadealdoesnotapply and,consequently, nodisputes should ariseovertherefunding of
suchinvestment.
Theabove-referenced restrictions onaccess forforeign investors totheoilandgasindustries
areinconformity withtheprovisions oftheEnergy Charter Treaty.
SeealsoAnswer 6herein.
85. ReAnswer 208-When istheFederal Law"OnInserting Amendments andAdditions inthe
RSFSR Law"OnForeign Investment"" expected tobepassed bytheDuma?
Answer: InOctober 1995, theprevious StateDuma debated three drafts ofthislaw,sponsored
bytheRussian Government andbytwodifferent groups oflegislators. During therespective voting,
however, none ofthedrafts wontherequired number ofvotes, meaning thatnone ofthem cleared
theirfirstreading andthateachisdeemed rejected. Inaccordance withtheState Duma 'srules and
procedures, anewbillonthese matters nowhastobesubmitted.
InMarch 1996, theRussian Government senttotheStateDuma 'sEconomic Policy Committee
aletter proposing thatwork beresumed onthedrafts ofthisfederal lawandthataworking group
besetupforthepurpose. Theworking group would consist ofrepresentatives oftheStateDuma and
federal executive agencies, aswellasexperts andspecialists inrelated areas.
86. ReAnswer 211-(a)Have weunderstood correctly thatoperations offoreign companies will
benefit from national treatment butthatsome exclusions could beimplemented through thepassing
ofanewfederal law? (b)IstheRSFSR aware thatthiscreates uncertainty forcompanies whomight
bethinking ofinvesting inRussia butcould befaced anytimebyanexclusion fromnational treatment
fortheiroperations? (c)Does thenewLawforesee specifically whatmayleadtosuchexclusions (it
appears fromtheanswers thatoperations offoreign companies could besubject toadifferent taxation
mode -inthisrespect, wehaveheard ofcases offiscal discrimination where taxes were based on
overheads rather thanonprofits)? (d)What doestheRSFSR understand by"thestrengthening ofthe
mechanism ofrealization ofguarantees forforeign investors" and"theestablishment ofallowable
forms ofrestrictions forforeign investors" ?(e)Theimpression gathered from theproposed new
provisions isactually oneofamore restrictive regime withmore possibilities forexclusions and
restrictions? HowdoesthisfitinwiththeRSFSR 'soften repeated complaints about alackofforeign
investment? TheRSFSR isrequested toprovide theWorking Party withacopyoftheProgramme
forAttraction ofForeign andDomestic Investment adopted bytheRussian Federation Government
in1995. Please explain further thephrase -"effective useofamortization". Have weunderstoodWT/ACC/RUS/9
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correctly thatitistheMinistry oftheEconomy thatisresponsible forcarrying outtheProgramme
forAttraction ofDomestic andForeign Investment? Other executive authorities forindustry seem
toshare theresponsibility forthedevelopment andimplementation ofgovernment policy. Please provide
afulllistoftheseadministrations beprovided aswellasaclearer viewonthesharing ofresponsibilities
(power)betweentheseadministrationsandtheMinistryofEconomy.Whatisunderstoodby"production
incentives" inthesecond indent? CantheRSFSR sayapproximately howmuch oftheFederal budget
isbeing devoted totheprogrammes mentioned inindent three? CantheRSFSR giveexamples of
investment projects financed bythegovernment?
Answer: (a),(b)-seeanswers to67and71herein.
(c) Theoperations ofcompanies withforeign investment aresubject totaxes levied atthose rates
andinthose amounts which arestipulated byRussian legislation. Companies withforeign investment,
infact,areentitled toahostofadditional benefits which, justasthetaxrates, areestablished bylaw,
andanycases offiscal discrimination, abuses, orfailure togrant dueprivileges mayandshould be
contested incourt. Taxlegislation doesnotstipulate anyother ("base" or"maximum") taxratesfor
foreign investors. Acertain category ofentrepreneurs, mostly producers, andforeign investors are
dissatisfied withthe"high" leveloftaxes andthesomewhat complex nature ofthetaxation system
inRussia. Thiscomplex system cannot beinterpreted asdiscriminatory, butitisanother reason why
theentire existing taxation system should continue tobestreamlined.
(d) In1995 andthebeginning of1996, newamendments were adopted: Federal lawsonthe
arbitration courts, theArbitration Procedural Code andPartTwooftheCivil Code which, ineffect,
establishes thenorms ofcontractual lawforamarket economy. Bothforeign andRussian legaland
natural persons, arenowabletoprotect theirrights andinterests andresolve economic disputes in
theRussian arbitration courts.
Thenumber ofinternational agreements concluded bytheRussian Federation dealing withthe
promotion andmutual protection ofinvestments hasincreased. Atthebeginning of1996, 33such
agreements havebeenconcluded. Currently negotiations with15more countries areunder way.
(e) Resolution oftheGovernment No.1016"OntheComprehensive Program fortheAttraction
ofDomestic andForeign Investment IntotheEconomy oftheRussian Federation," ofOctober 13,
1995, hasbeenprovided totheWTO Secretariat. Theleading roleassigned totheRussian Ministry
ofEconomy inimplementing thisprogram, andtherespective functions ofother federal executive
agencies aredefined inSections 2and3oftheComprehensive Program.
Table 1shows themost recent generalized dataregarding thevolume ofcapital investment
inRussia andtheroleofthefederal budget infinancing investment projects inthemid-1990s.WT/ACC/RUS/9
Page41
Table 1.CAPITAL INVESTMENT FROM ALL SOURCES OFFINANCING
(intherespective years prices, trillion roubles)
1994
actual1995
forecast1996
forecast1997
forecast
CAPITAL INVESTMENT
FROM ALL SOURCES OF
FINANCING106.2 210 310 380
- TOTAL,
in%(percent)100 100 100 100
1. ENTERPRISES 'AND
ORGANIZATIONS ’
OWN AND
BORROWED FUNDS79.2 174 258.3 317.4
inpercentofthetotal
(%)74.6 82.9 83.4 83.4
including:
a)enterprises 'own
funds66.7 140.7 215.4 260.4
inpercentofthetotal
(%)62.8 67 69.6 68.5
including:
-profits13.5 19. 35.2 42
inpercentofthetotal
(%)12,7 9.1 11.4 11.1
-depreciation 49.3 121.1 179.7 218
inpercentofthetotal
(%)46.4 57.6 58 57.4
-other funds (proceeds
from thesaleoffixed
assets, etc.)3.9 0.6 0.5 0.4
inpercentofthetotal
(%)3.7 0.3 0.2 0.1
b)commercial banks '
loans- 2 2 1
inpercentofthetotal
(%)- 1 0.6 0.3
c)resources ofnon-
budgetary funds6.3 5 2 1.5
inpercentofthetotal
(%)5.9 2.4 0.6 0.4WT/ACC/RUS/9
Page42
1994
actual1995
forecast1996
forecast1997
forecast
d)secondary security
issues- 5 7.8 9.5
inpercentofthetotal
(%)- 2.4 2.5 2.5
e)households 'funds for
individual home
building4.3 14.3 21.1 25
inpercentofthetotal
(%)4.1 6.8 6.8 6.6
f)foreign investment 1.9 7 10 20
inpercentofthetotal
(%)1.8 3.3 3.3 5.2
2. CONSOLIDATED
BUDGET FUNDS27 36 51.7 62.6
inpercentofthetotal
(%)25.4 17.1 16.6 16.6
a)federal budget funds 15.9 26.6 39 47.3
inpercentofthetotal
(%)15 12.6 12.5 12.5
including:
-government
investment11.7 18.8 32 39
inpercentofthetotal
(%)11 8.9 10.3 10.3
-other sources
(Defence Ministry
budget, coalsubsidies,
andfinancial aid)4.2 7.8 7 8.3
inpercentofthetotal
(%)4 3.7 2.2 2.2
b)localbudget
appropriations11.1 9.4 12.7 15.3
inpercentofthetotal
(%)10.4 4.5 4.1 4.1
Source: Comprehensive Program fortheAttraction ofDomestic andForeign
Investment IntotheEconomy oftheRussian Federation.WT/ACC/RUS/9
Page43
87. ReAnswer 212-(a)Does aprecise listwiththelocation ofallFEZs exist? Ifyeswewould
appreciate acopy. (b)Could theRSFSR briefly explain whatcircumstances could leadtothecompulsory
liquidation ofaFEZ?
Answer: InthedraftlawoftheRussianFederation“OnFreeEconomicZones”whichisexpected
tobeadopted bythenewDuma in1996, newcircumstances leading tothemandatory liquidation of
freeeconomic zones areestablished. Thebases foradopting suchadecision ontheliquidation ofa
freeeconomic zoneinclude asystematic andgross violation oftheeffective legislation oftheRussian
Federation inazone, failure toperform tasks andobjectives provided forbytheprovisions onfree
economic zones orthefactthattheiractivity doesnotmeetthevitalinterests oftheRussian Federation.
Theliquidation ofafreeeconomic zoneshallbeperformed bydecision oftheGovernment ofthe
RussianFederationadoptedonthesubmissionandwiththeapprovaloftheMinistryofForeignEconomic
Relations,theMinistryofEconomyoftheRussianFederation,theMinistryofFinance,theStateCustoms
Committee oftheRussian Federation, theCentral Bank oftheRussian Federation, andalsolocal
administrative bodies, ontheterritory ofwhich thefreeeconomic zonewasestablished.
Between 1990-95, thefederal authorities decided toformally establish inRussia some 20zones
withspecialregimesfordoingbusiness,includingforeigntradeprivilegescharacteristicoffreeeconomic
zones (FEZs) (seethelistbelow). These privileges granted byvarious regulations were notalways
subsequently confirmed byRussian tax,customs, orcurrency legislation.
Under recently enacted Federal Laws No.13-FZ "OntheSpecial Economic Zone ofthe
Kaliningrad Region," ofJanuary 30,1996, aswellasRussian Presidential Decree No.345"OnSome
Measures toStimulate Investment Activity intheNakhodka FreeEconomic Zone," ofMarch 9,1996,
special economic zones withspecial favourable arrangements forforeign economic activities arein
theprocess ofbeing established intheKaliningrad region, thecityofNazran intheRepublic of
Ingushetia, andinthecityofNakhodka respectively.
Listoffreeeconomic zones created between 1990-1995:
1. Freeeconomic zone“Nakhodka ”(within theadministrative boundaries ofthecityofNakhodka
ofPartizansky rayon, Primorsky krai).
2. Freeeconomic zone“Sakhalin ”(within theadministrative boundaries oftheSakhalin oblast).
3. Freeeconomic zone“Kuzbass ”(within theadministrative boundaries oftheKemerovo oblast).
4. Freeeconomic zone“Eva”(within theadministrative boundaries oftheJewish Autonomous
oblast).
5. Freeeconomic zone“Altai”(within theadministrative boundaries oftheAltaiski Krai).
6. Ecological andeconomic zone“Gorny Altai”(within theadministrative boundaries oftheAltai
Republic).
7. “LESP ”(thefreeentrepreneurship zoneofLeningrad within theadministrative boundaries
ofSt.Petersburg).
8. Freeeconomic zone“Sadko ”(within theadministrative boundaries oftheNovgorod Oblast).WT/ACC/RUS/9
Page44
9. Freeeconomic zone“Vyborg ”(within theadministrative boundaries ofthetown ofVyborg
oftheLeningrad oblast).
10. Freeeconomic zone“Yantar ”(within theadministrative boundaries oftheKaliningrad oblast).
11. Freeeconomic zone“Dauria ”(within theadministrative boundaries oftheChita oblast).
12. Freeeconomic zone “Tekhnopolis Zelenograda ”(within theadministrative boundaries of
Zelenograd, Moscow).
13. Subzone “Kurily ”(within theadministrative boundaries ofNorthern Kuril, Kuril andSouthern
Kuril Regions oftheSakhalin Oblast).
14. Freeeconomic zone“Sheremetyevo ”(established ontheterritory ofMoscow andattached
totheSheremetyevo international airport).
15. Freetradezone“Franko-Port ”(established ontheterritory ofMoscow attached totheVnukovo
airport).
16. Freetrade zone“Franko-Port Terminal ”(established ontheterritory ofMoscow attached to
theterritory oftheZapadny river port).
88. ReAQ.212 TheRussian Federation states thatforparticipants inthefreeeconomic zones
there willbeamore favourable regime, particularly asregards foreign trade. Inwhatwaydoesthe
regime favour theparticipants concerned? Inother words, whatadvantages derive from it?
Answer: FEZparticipants inforeign trade willenjoy theregimes ofafreecustoms zoneora
freewarehouse, asdefined inArticle 75-86 ofChapter 12oftheCustoms Code oftheRussian Federation
No.5221-1 ofJune18,1993. Therespective customs procedures, asdescribed intheCustoms Code,
areconsistentwiththeprovisionsofthe1973KyotoConventiononsimplifyingandharmonizingcustoms
procedures.
Itisalsoprovided thatFEZparticipants engaging inproduction maybegranted taxconcessions.
89. ReQ.A.214 TheRussian Federation recalls herethattheacquisition oflandbyforeign citizens
isexpressly forbidden. Italsostates that,byregistering itselfasaRussian commercial organization,
theforeign investor mayreceive aplotoflandforuseinthemanner specified bylandlegislation.
Thisreply prompts thefollowing questions:
Answer: Seeanswers 90and91herein.
90. WhataretherequirementsforaforeigninvestortoregisterasaRussiancommercialorganization?
Answer: TherequirementsforaforeigninvestortoregisterasaRussiancommercialorganization
areestablished byArticles 34and35ofRSFSR LawNo.445-1"On Enterprises andEntrepreneurial
Activities intheRSFSR," ofDecember 25,1990, asamended onDecember 24,1993, andArticles
12-18 ofChapter 3ofRSFSR LawNo.1545-1, "OnForeign Investment intheRSFSR," ofJuly4,
1991, aswellastheRegulation ontheProcedure fortheState Registration ofBusiness Entities, asWT/ACC/RUS/9
Page45
approved byRussian Presidential Decree No.1482 "OntheStreamlining oftheStateRegistration of
Enterprises andEntrepreneurs ontheTerritory oftheRussian Federation," dated June8,1994.
These requirements areinessence thesameforbothRussian andforeign founders ofaRussian
legalentity which isacommercial organization. Thefounders arerequired tosubmit thefollowing
documents toregistering authorities:
- application fortheestablishment ofaRussian legal entity, which must atalltimes provide
information about theorganizational andlegalformofthecommercial venture being launched,
thesizeofitscharter capital, theamounts ofthefounders 'contributions tothecharter capital,
andtheirownership interests init;
- twonotarized copies ofthefoundation documents ofthecommercial organization being
established (itscharter and/or thefounders 'agreement). Thefoundation documents mustdefine
thesubject matter andpurposes oftheorganization 'sactivities, themake-up ofitsparticipants,
thesizeofthecharter capital andtheprocedure forforming it,theownership interests ofthe
participants, thestructure, composition, andcompetence ofgoverning bodies, theprocedure
fortaking decisions, thelistofmatters decisions onwhich require unanimity, andtheprocedure
fortheliquidation oftheorganization;
- notarized copies ofthecertificates ofincorporation andofthefoundation documents ofthe
neworganization 'sparticipants (passport details iftheyareindividuals);
- documents confirming thatthefounders havecompleted those minimum contributions tothe
charter capital which arestipulated atthetimeofregistration;
- documents confirming theobtaining ofrequired consents (anenvironmental impact assessment
onthose grounds which areestablished byArticles 11and12ofFederal LawNo.174-FZ
"OnEnvironmental Impact Assessments," ofNovember 23,1995 /;aconclusion from the
Russian Anti-Monopoly Committee onthose grounds which areestablished byArticle 17of
theRSFSR Law"OnCompetition andontheLimitation ofMonopolistic Activities on
Commodity Markets intheRSFSR," ofMarch 22,1991 asamended onJune24,1992, July
15,1992, andJuly9,1993; andaconsent from theRussian State Property Management
Committee ifanyoftheRussian participants arestate- ormunicipally-owned enterprises); and
- copyofadocument confirming payment ofthestatefee.
Inaddition, theforeign founders ofaRussian commercial organization arerequired tosubmit
thefollowing documents:
- statementfromthetraderegisteroftheforeigninvestor'scountryoforigin,oranotherequivalent
proof oftheforeign investor 'slegal status, inaccordance withlegislation ofitscountry of
location, citizenship, orpermanent residency (along withitscertified translation intotheRussian
language). Individuals arerequired tosubmit acopyofadocument ontheircitizenship; and
- aletter ofgood standing issued byabankorother lending institution providing services to
theforeign investor (along withitscertified translation intotheRussian language).
Theminimum charter capital requirement foraRussian commercial organization withforeign
investment istheequivalent ofatleast1,000 times theminimum monthly statutory wage intheRussian
Federation (which amounted, inmid-March 1996, to63,250 roubles, orapproximately USD 13).
ThoseRussianlegalentitieswithforeigninvestmentwhosechartercapitalexceedstheequivalent
of100million roubles, aswellasthose engaging intheproduction andprocessing ofoil,gas,andWT/ACC/RUS/9
Page46
coal, register withtheState Registration Chamber attheRussian Ministry ofEconomy. Allother
companies ofthiskindregister withregional registering authorities.
Inaccordance withClause 1ofArticle 51oftheCivilCode oftheRussian Federation (Federal
LawNo.FZofNovember 30,1994), alawistobepassed onthestateregistration oflegalentities,
andtheState Duma hasalready considered itsdraft. Thisiswhytheexisting registration procedure
islikely tobechanged, butitisnotplanned tomake anyexceptions from thegeneral registration
procedure forlegalentities withforeign involvement.
91. Inthelastsentence ofthefirstparagraph, itisnotclear from thewords "foruse"whether
theplotoflandisforpurchase orlease. Could theRussian delegation please clarify this?
Answer: Russian land-owning individuals andlegalentities mayprovide theirplotsofland, in
fullorinpart,ascontributions tothecharter capital ofRussian commercial organizations, including
those withforeign investment, according toParagraph 2ofRussian Presidential Decree No.1787"On
theRegulation ofLand Relations andthePromotion ofAgrarian Reform inRussia," ofOctober 17,
1993. Rights touselandplots maylikewise becontributed. Byacquiring anownership interest in
aRussian organization which possesses asitebyrightofownership orunder aleaseagreement, aforeign
investor alsobecomes aco-owner ofthelandrights.
Inaccordance withClause 3ofthe"Procedure fortheSaleofPlots ofLand During the
Privatization ofState- andMunicipally-owned Enterprises, andDuring theExpansion andAdditional
ConstructionofSuchEnterprises,asWellasPlotsofLandProvidedtoIndividualsandTheirAssociations
forEntrepreneurial Activities," approved byRussian theDecree ofthePresident No.631ofJune14,
1992, landplotsunder suchtransactions maybebought byanyeconomic agent authorized toparticipate
inprivatization. Thechoice between selling alandplotandmaking itavailable onleasetotheowner
oftheprivatized company located ontherespective siteismade bytheowner ofthislandplot-the
respective federal executive agency, regional government, municipality, orlocalself-governing agency.
Theprocedure forselling plotsoflandduring theprivatization ofstate- andmunicipally-owned facilities
isestablished inClause 4.10oftheBasic Provisions oftheStateProgram forthePrivatization ofState-
andMunicipally-owned Enterprises intheRussian Federation After July1,1994, approved bythe
Decree ofthePresident No.1535, ofJuly22,1994.
Therighttolease aplotoflandtobeusedforentrepreneurial purposes maybeobtained by
purchasing leasehold rights attenders (auctions) arranged bytheowners ofplots ofland.
Therights oftheowners andleaseholders ofplots oflandaredefined bytheRussian Civil
Code andlandlegislation. Inaccordance withParagraph 3ofRussian Presidential Decree No.293,
"OnAdditional Measures toPromote Mortgage Crediting," ofFebruary 28,1996, theowner ofaland
plotmayonlypledge realestate located onsuchplotbysimultaneously mortgaging, under thesame
contract, thelandplotoritsportion which isoccupied bythisrealestate, orbypledging leasehold
rights tothelandplot.Theleaseholder ofalandplotmaynotpledge hisrightofindefinite usetothe
landplotaccommodating hisleasehold.
AnewLand Code isstillunder consideration.
Seealsoanswer to14herein.
92. Please provide theWorking Party withcopies ofthefollowing acts:WT/ACC/RUS/9
Page47
- Decree ofthePresident oftheRussian Federation "OnImproving theTreatment ofForeign
Investment" dated 27September 1993, No.1466.
- Decree ofthePresident oftheRussian Federation "OnAdditional Measures Aimed atAttracting
Investment intoMaterial Production Industries intheRussian Federation" dated 25January
1995, No.73.
Answer: These documents havebeenprovided totheWTO Secretariat.
93. WewouldappreciatereceivingdetailsoftheworkoftheRussianCentreforAssistancetoForeign
Investment including anoverview ofitspractical interventions todate.
Answer: Russia'sforeigninvestmentpromotionFederalagency-theForeignInvestmentPromotion
Centre (FIPC) -wasestablished in1995 inaccordance withtheResolution oftheGovernment No.
657“OntheRussian Centre forthePromotion ofForeign Investments Under theMinistry ofEconomics
oftheRussian Federation ”ofJune30,1995, asabody accountable totheMinistry ofEconomy.
TheFIPC'smission istoattract, facilitate, andincrease foreign investment intheRussian
Federation.
Theagency 'smain objectives are:
- toeffectively encourage foreign investment intheRussian economy;
- tostudy investment projects andbring together potential partners;
- topromote Russia asanattractive investment location;
- toadvocate lawsandregulations toimprove Russia 'sinvestment climate;
- tooffer pre-andpost-investment services toforeign investors;
- torender support andguidance toallRussian regions andtotheirrespective agencies
concerned withthepromotion ofinvestment inlocalindustry; and
- tocooperate with, usetheservices of,andprovide assistance totheRussian Chamber
ofCommerceandIndustryandthecommercialsectionsofRussia'sembassiesthroughout
theworld.
TheFIPC:
- promotes cooperation between federal andregional government agencies andpotential
investors;
- assists,advises,andprovidesadministrativesupporttoforeigncompaniesalreadypresent
inRussia;
- provides federal agencies withinformation related toforeign investment;
- assists Russian organizations, foreign firms, andbusiness people inseeking investment
opportunities andconcrete partners;
- holds talks withpotential investors onconditions forattracting andusing foreign
investment credits intheRussian economy; and
- markets Russian investment projects abroad.
TheFIPC haselaborated itsinvestment promotion methodology based onthoseprinciples which
havebeensuccessfully developed bysuchprominent investment promotion institutions astheIndustrial
Development Agency ofIreland (IDA), theForeign Investment Advisory Services (FIAS) andthe
Multilateral Investment Guarantee Agency (MIGA), thelatter twobeing agencies oftheWorld Bank.WT/ACC/RUS/9
Page48
Thebasic promotional techniques theFIPC hasdecided tousethrough itsnetwork ofoffices
ledbyitsMoscow headquarters include:
- advertising inthegeneral financial media;
- participation ininvestment exhibitions;
- advertising inindustry- andsector-specific media;
- conducting general investment missions fromsource country tohostcountry orfrom
hostcountry tosource country;
- conducting general information seminars oninvestment options;
- engaging indirect mailandtelemarketing campaigns;
- conducting industry- andsector-specific workshops fromsource country tohostcountry
andviceversa;
- engaging infirm-specific research followed bysalespresentations;
- providing investment counselling services;
- expediting theprocessing ofapplications andpermits; and
- providing post-investment services.
TheaddressoftheForeignInvestmentPromotionCentreofRussiais:19,NovyArbat,Moscow,
Russian Federation.
Tel/fax: (7-095) 203-4863, 246-9439.
E-mail: tsakunov@fipc.ecosrv.msk.su.
Internet: http://sid/kiae.net.kiae.su/fipc.html.
Reference #3016 onIPAalsoavailable through http://ipa-net.com.
1.4Government Bodies Regulating Foreign Economic Activities
94. ReA.Q. 226: Itisnoted that"regional executive bodies...can encourage regional export by
granting tolocaloperators taxandexcise privileges". Please describe suchprivileges.
Answer: Regional executive bodies mayencourage regional export bygranting taxprivileges
tolocaloperators intheformofpartial orcomplete taxholidays withrespect toregional orlocaltaxes
orwithrespect totheshare ofthefederal profit taxwhich istobepaidtothelocalbudget. However,
according totheinformation available totheGovernment these measures havenotbeenapplied.
III Foreign Trade Regime
95. ReA.Q. 239: Itisstated thatnolicences arerequired fortheimport ofagricultural products.
However, theMemorandum onForeign Trade specifically notes thatgrain isimported intofederal
stocks under licence. Please clarify. Also, please clarify whether the"certificate ofcorrespondence"
thatcertifies thequality oftheproduct anditssafety forhuman health, maybeobtained abroad (for
example, intheexporting country).
Answer: TheMemorandum onForeign Trade (L/7410) reflects thesituation which existed in
1993.
Thelicensing procedure forthegrain imported intoFederal stocks wasfullyabolished in1994.
Agricultural products imported intoRussia donotrequire licences anymore.WT/ACC/RUS/9
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The"certificate ofcorrespondence" or,tobemore precise, thecertificate ofconformity which
certifies thequality oftheproduct anditssafety forthehuman health, maybeobtained inRussia, and
abroad (intheexporting country, country oforigin oralsointhethirdcountry), provided there are
corresponding bilateral ormultilateral agreements onmutual recognition between those countries and
Russia.
Seealsoanswers toAdditional Questions 388and395ofWT/ACC/RUS/4.
96. ReA.Q. 239: Itisstated thattwoprivate companies wontherighttoimport roughly 30per
centofthetotalvalue ofrawsugar in1995. Isthisnotaspecial privilege under Article XVII?
Answer: Applying anexpansive interpretation totherecently adopted working definition inthe
WTO Understanding ontheInterpretation ofArticle XVII, theRussian Federation states thatthere
maybealimited number ofenterprises which should benotified totheCouncil forTrade inGoods.
Twosuchenterprises include “Alfa-Eco ”and“Menatep-Impex ”Seeanswer 12.
97. ReA.Q. 243: What percentage oftheFederal budget didtheimport andexport tariffs account
forin1994? In1995? What wastheshare ofagricultural products from thattotal?
Answer: Pending .
3.1.1 Customs Import Tariff
98. ReA.Q.259:"(...)thecontemplation ofagradual replacement ofratesinexcess of30percent
withinternal excise taxes". Please provide more details onhowthiswillbedone. forwhich products
willthisbedone(provide acomprehensive list)? Atwhich levelwilltheinternal excise taxesbefixed?
Answer: Resolution oftheGovernment oftheRussian Federation No.190“OnPrinciples of
Rationalization ofImport Customs Tariff ”ofFebruary 28,1995 establishes themaximum ratesfor
theimport customs duties intheamount of30percentofthecustoms value ofgoods withtheexception
ofitems ofluxury, tobacco products, alcoholic beverages, andarms.
Seealsoanswer to53herein.
99. ReA.Q. 261: "The rationale behind thedecision toraisedutyratesforagricultural products
thusmostly consisted oftheneedtoprotect theinterests ofdomestic producers." Which agricultural
products were affected? What istheaverage increase forfoodproducts?
Answer: Theratesforimport customs duties wereraised forthefollowing foodproducts (the
dataisgiven inconformity withtheCommodities Nomenclature offoreign economic activity):
Group 02 Meat (chicken inclusive)
Group 03 Fish
Group 07 Vegetables (with limited exception)
Group 09 Coffee, tee,spices
Group 15 Butter andoil(with theexception ofbutter andoilnotproduced inRussia)
Group 16 Meat andfishproductsWT/ACC/RUS/9
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Theaverage weighted rateoftheimport customs duties withrespect tofoodproducts hasgone
upfrom 11.46 percent(asofMay6,1995) to15.32 percent(asofMay12,1995).
100. ReA.Q. 264: "This question concerns specific negotiations onthedevelopment ofatariff
protocol. Russia isprepared totakeupthisissue inbilateral consultations withinterested parties."
Comment: comprehensive binding inagriculture isnotnegotiable.
Answer: TheRussian Federation takes noteofthecomment. Inouropinion, theaspects of
market access commitments (such asthetariffication, minimum market access opportunities, etc.)may
beconsidered during thenegotiations onmarket access inaccordance withtheprovisions ofthe
Agreement onAgriculture.
3.1.2 Preferential Tariffs
101. ReA.Q. 267and273: "Alistofdeveloping andleastdeveloped countries, which areeligible
fortheRussian system onnon-mutual andnon-discriminatory preferences isgiven intheintroduction
oftheRussian customs schedule." Towhatextent dopreferences cover agricultural products? Please
elaborate.
Answer: Inaccordance withResolution oftheGovernment No.1301“OnthePartial Amendment
oftheResolution oftheGovernment No.1057 ofSeptember 13,1994 “OntheApproval oftheList
oftheCountries Using theSetofPreferences oftheRussian Federation andtheListofGoods ””of
December 31,1995, these preferences extend toallagricultural products, withtheexception ofthe
following categories ofproducts:
Foreign Economic Activity
Commodity Classification codeProduct description
2009 Unfermented, alcohol-free fruitandvegetable juices (including
freshly pressed grape juice) withorwithout sugar andother
sweetening supplements
2202 Water, including mineral andcarbonated water, withsugar and
other sweetening oraromatic supplements; andother soft
drinks, withtheexception offruitandvegetable juices covered
bycommodity code2009
2203 Maltbeer
Within 2208 Nonmethylated ethyl alcohol withastrength ofunder 80
volume percent; strong alcoholic drinks, liqueurs, andother
alcoholic drinks
Agriculturalproductsandothergoods(withlimitedexceptions)importedfromtheleastdeveloped
countries areexempted fromduties, while thedutyrateforother developing countries eligible forthe
Russian system ofpreferences stands at50percentofthebaserate.SeeGovernment oftheRussian
Federation Resolution No.1057“OntheApproval oftheListofCountries Using theSetofPreferences
oftheRussian Federation andtheListofGoods towhich thePreferential Treatment Does notextend
incaseofImport totheRussian Federation ”ofSeptember 13,1994.WT/ACC/RUS/9
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3.1.9 Customs Clearance forGoods inTransit
102. ReA.Q. 311: Based ontheinformation provided inthetwotables, itisdifficult tocompare
thelevelofexcise ratefordomestically produced andimported products (oneisadvalorem, theother
isspecific). Please provide acomprehensive listofagricultural goods (byHScode) andtheirrespective
advalorem excise ratelevelforbothdomestically produced andimported products.
Answer: Excise taxratesfornationally produced andimported goods which areineffect atthe
present timewere established bytheFederal LawNo.23-FZ "OnIntroducing Changes intheLaw
oftheRussian Federation onExcises" ofMarch 7,1996. Atpresent adraftofanewFederal Law
waspresented totheState Duma oftheRussian Federation forconsideration; thedraftlawprovides
fortheintroduction ofthesame excise ratesfordomestic andimported goods.
Seealsoanswers 51and53herein.
3.1.10 Internal Taxation Relating toImported Goods
103. ReA.Q. 317: "(...) value-added taxislevied at10percentonthose foodstuffs which are
included inalistapproved bytheRussian Government." Please provide acomprehensive listofthose
products. Willtherateofthevalue-added taxstillbeat10percentfor1996?
Answer: Seeanswer 51herein.
Section 3.1.12 Anti-dumping Duties, Countervailing Duties andSafeguards
104. ReQ.A.325 What stage ofthedrafting process hasthelegislation onanti-dumping and
countervailing duties andsafeguard measures reached?
Answer: Proposed legislation onantidumping, countervailing duties andsafeguard measures
hasbeendrafted. ThisdraftFederal law“OnMeasures ofProtection ofEconomic Interests ofthe
Russian Federation intheForeign Trade ofGoods Activity ”isundergoing itssecond reading inthe
State Duma. Thisdraftlawhasbeenwidely discussed inthepublic media. Itisbased upon, andis
inconformity with, therelevant provisions ofArticles VI,XVIandXIXoftheGATT 1994, andthe
relevant WTO agreements.
Anexisting lawwhich provides ageneral legalbasis forsafeguards andretaliatory measures
istheFederal law#157-FZ “OnStateRegulation ofForeign Trade Activity ”dated October 13,1995.
Thishasbeenpreviously submitted totheWTO Secretariat.
Theadministrativeproceduresforconductingsuchinvestigationsareestablishedinthedocument
“TheProcedure forInvestigating Imports Causing orThreatening toCause Serious Injury toDomestic
Industry asaResult ofSuch Increased Imports orDumping orSubsidies ”previously approved and
published intheRussian official press, andsubmitted totheWTO Secretariat.WT/ACC/RUS/9
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3.2 Customs Tariff System: Exports
Section 3.2.2 Rates ofExport Duties
3.3 Export andImport Licensing andQuotas
104A.Weunderstand from media sources thatRussia willreduce byhalfexport tariffs onoilfor
theCaspian SeaGroup ifitships allofitsoutput through Russia rather thanGeorgia. WillRussia
confirm whether thisisaccurate andifso,arethepipelines builtyetandisittaking place?
Answer: Under theLawoftheRussian Federation No.5223-1 "OnCustoms Code" ofJune
18,1993, thepiping oftheCaspian SeaGroup crude oilwillbethesubject ofthecustoms regime
called"transit". Goods “intransit ”arenotsubject tocustoms duties.
Thepipelines inquestions arebuiltbutrequire reconstruction andcertain modernization.
3.3.2 General Procedure forIssuing Licences
105. ReA.Q. 346: Could Russia provide adraftresponse tothequestionnaire onimport licensing
procedures usedbytheCommittee onImport Licensing Procedures?
Answer: Theresponse ofRussia totheQuestionnaire onimport licensing procedures, usedby
theWTO Committee onImport Licensing Procedures (L/5460/Rev.10), issubmitted totheWTO
Secretariat together withthepresent answers.
3.5.1 Federal Tenders
106. ReA.Q.350:Theresponse refers toafederal tender "forimportation ofgoods forstateneeds".
Thissuggests thatfederal tenders distinguish inasystematic waybetween domestic sourcing andimport
sourcing. What percentage oftenders areopentobothimported anddomestic goods? Bynumber of
tenders? Byvalues? Dothebidprocesses differ? Issoinwhatway(s)?
Answer: Thedraftlaw"OntheOrganizationofTenderstoPurchaseGoods,ConstructionWorks,
andServices toMeet StateNeeds," provides foraccess tosuchpurchase procedures (public tenders)
tobegiven toprospective suppliers (contractors) irrespective oftheircountry oflocation. Ifastate
contract isbeing concluded topurchase goods, construction works, orservices tomeetnational defense
orsecurity needs andthisinvolves some matters which aredefined asstatesecrets under Russian
legislation, thegovernment mayrelyonaspecial tender arrangement stipulated bythedraftlaw.The
draftsays, however, thatwhen evaluating thequalifications ofsuppliers (contractors) inthebidding,
theGovernment maynotapply anydiscriminatory requirements orprocedures withrespect tothe
sourcing ofproducts orservices sought.
3.5.2 Centralized Import Procurement
107. ReA.Q. 352: Please provide acomprehensive listofimports financed through theFederal
budget (forthesame years mentioned intheanswer). What aretheyusedfor(retained forstateuse,
soldonwards toprivate sector, whatshares, etc.)?
Answer: Pending .WT/ACC/RUS/9
Page53
108. ReA.Q. 353: "The federal budget for1995 doesnotprovide forcentralized imports of
agricultural products andfoodstuffs." Isthesituation thesame withthebudget for1996?
Answer: Yes,seeanswer to34herein.
109. ReA.Q. 469:"According toestimates (..)Federal budgetary allocations forpurchases tomeet
thestateneeds varybyyears from 7to12percentoftheGNP." Please specify forwhatyearthese
figures apply (provide themostrecent actual data,aswellasplanned figure for1996). What percentage
ofthefederal budget dothesepurchases account for?Please provide adetailed listofproducts included
inthese purchases, aswellasthevolumes andvalues theyrepresent withrespect tototalpurchases
tomeetstateneeds.
Answer: Pending .
110. ReA.Q. 470: "Presently, thecreation ofafederal service isbeing discussed tomonitor the
organization andexecution ofstatepurchases." What isthestatus ofthisfederal service for1996?
Answer: TheRussian Ministry ofEconomy hasprepared adraftlaw"OntheOrganization of
Tenders toPurchase Goods, Construction Works, andServices toMeet StateNeeds," which regulates
procedures forarranging tenders (competitive bidding) topurchase goods forpublic sector needs. The
draftdraws ontheworld experience ofgovernment purchasing, andisbased onastudy ofinternational
systems forgovernment procurement. Thisdraftstipulates thecreation ofafederal executive agency
which willexercise inter-sectoral governance overtheprocess ofsuchpurchases, aswellascontrol
overcompliance withestablished procedures, butwillnotitselfbeempowered tomake suchpurchases.
111. Itwould appear fromtheinformation provided thattheprocurement market isclosed toforeign
products.RepliestoA.Qs476and480statethat"Russiaprohibitsthepurchaseofforeignmadeproducts
unless thepurchase oftheRussian equivalent isimpossible oreconomically inexpedient". Itisalso
noted thatthere seems tobenoobligation topublish tenders inRussia; thereply toA.Q.473 indicated
thatpublication onlytakesplace "where possible" -consequently therearelimited possibilities tolearn
about procurement opportunities. Ontheother handtheresponse toA.Q.348 states thatpublication
isobligatory. Russia isasked toclarify these apparently contradictory statements.
Inthelightoftheabove, howdoesRussia intend togoabout opening upitsprocurement market?
Answer: Asnoted inA.Q. 473, theResolution oftheRussian Government #594“On
Implementation oftheFederal Law‘OnDeliveries ofProducts forFederal StateNeeds ’”,ofJune26,
1995 provides thatpublication oftheprocurement notice isobligatory “where possible. ”Alawis
currently being drafted regarding howtenders should beorganized forthepurchase ofgoods andservices
which willreform theprocedures forFederal government procurement tenders.
112. Itisnoted that"theRussian lawmakes nodistinction between government procurement and
purchases forresale tothepopulation" (response toA.Q.476). Does Russia haveanyintention of
introducing thisdistinction? Ifso,when?
Answer: Adistinction between government procurement andpurchases forstateneeds for
subsequent resale tothepopulation isrecognized intheDraft lawdescribed inanswers 26,106,110
and111herein. ThedraftofthisLawwillbesubmitted bytheRussian Government totheStateDuma
shortly.WT/ACC/RUS/9
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3.5.3 State Trading Enterprises
113. ReA.Q. 354and447: Please provide updated dataonbarter trade withCISandnon-CIS
countries (1995 todate), withasectoral product breakdown (i.e.which products, bywhom andto
where). What products didRussia receive inreturn forthisbarter trade?
Answer: According tothepreliminary dataoftheStateCustoms Committee ofRussia, in1995
thetotalvalue ofbarter operations intheRussian export reached $4.9bn,which is17percenthigher
thantherespective figure fortheprevious year, including exports toother non-CIS countries- $2.3
bn(a16percentdecrease), andexports totheCISstates -$2.6 bn(an80percentincrease).
Russian imports through barter operations in1995amounted to$4.4bnwhich is13percent
higher thantherespective figure oftheprevious year, including theimports fromnon-CIS countries
-$1.1bn(a27percentdecrease), imports fromtheCIScountries -$3.3bn(a40percentincrease).
In1995 theshare ofnon-CIS countries inbarter operations inRussia fellto37percentas
compared to53percentin1994, whereas theshare oftheCIScountries reached 63percentas
compared to47percentintheprevious year.
Thedecrease inexports inthefieldofbarter operations ofRussia withnon-CIS countries in
1995wasmainly duetothealmost 2.5-fold decrease oftheRussian delivery offuelandenergy resources
(oil,oilproducts, coal).
Ferrous andnon-ferrous metals andtheirproducts arethemainitems inthestructure ofRussian
exports tonon-CIS countries, theshare ofwhich amounts toabout 48percent;while machinery exports
amount to13-14 percent.
Russian imports ofcommodities from non-CIS countries in1995 decreased ascompared to
theprevious yearduetothe2-fold dropintheimports offoodstuffandconsumer goods (clothing,
foot-wear, textiles). Themainitems inthestructure ofbarter imports intoRussia fromnon-CIS countries
arethefollowing: machinery andequipment witha40percentshare ofimports, andfoodstuffs and
rawmaterials forfoodstuffs production witha22-24 percentshare.
Thegrowth ofexports inthebarter trade ofRussia withCIScountries in1995 ascompared
to1994 isdueprimarily tothe4.5-fold increase intheexports ofRussian energy resources (mainly
oil).
IntheflowofRussian exports toCIScountries, halfofthetotalvalue iscovered byfueland
energy resources, and20percent bymachinery andtransport vehicles.
In1995, Russia imported fromCIScountries (based onthetotalvalue ofimports) ferrous and
non-ferrous metals, machinery, equipment andtransport vehicles -over40percent, andfoodstuffs
andconsumer goods -over25percent.
114. A.Q. 355,366and371: "The FFCis(...)responsible foracting asagovernment contractor
intheestablishment offederal andregional stockpiles ofgrains, sugar beet,oilseeds, linen andsome
other products. TheGovernment oftheRussian Federation doesnothaveintentions tointroduce state
trading foragricultural products inthefuture."
Answer: Seeanswers 27,37,116herein.WT/ACC/RUS/9
Page55
115. Wetakenoteofthelastsentence. Please provide detailed information onthevolumes and
values ofthefederal andregional stockpiles (bycommodity) established in1995(most recent figure,
andfinalyearwhen available). What percentage oftotaloutput doesthatrepresent? HowistheFFC
funded? What isitsbudget for1995 (again withplanned volumes andvalues bycommodity)? How
doestheFFCselect importing organizations?
Answer: Seeanswers 27,37,116herein.
116. ReA.Q.357and360:Withrespect totheanswers provided ("there arecurrently noenterprises
inRussia, covered byArticle XVII GATT 1994"), could Russia explain howitdefines theroleand
mandate of,forexample, theFederal Food Corporation?
Answer: From theverydateofitsfoundation theFederal Food Corporation hasnotacted in
thefieldofforeign trade, andhasnospecial orexclusive privileges.
Seealsoanswers 27and37herein.
117. ReA.Q. 357: IfRussia presently collects dataonallexclusive orspecial rights andprivileges
granted bythegovernment toRussian enterprises, inspite oftheRussian view thatthere areno
enterprises falling intotheArticle XVII category, could Russia provide thisdatatothemembers of
theWorking Party?
Answer: Seeanswer 12herein.
3.5.5 Grain
118. ReA.Q. 368: "In1995, thefederal budget oftheRussian Federation didnotprovide any
funding forcentralized purchases ofgrainabroad." What isthesituation withrespect tothe1996federal
budget?
Answer: Seeanswer 34and108herein.
119. Answer toA.Q. no.372. Please elaborate whether theprices thatthefederal agencies areready
topay(guaranteed prices) aredetermined foragiven period oftime? Aretheseprices applied uniformly
byallfederal agencies?
Answer: Seeanswer 28and37herein.
Section 3.5.7 Pharmaceutical Preparations
120. ReA.Q. 373Under several conditions mentioned inthesecond paragraph ofanswer 373,a
company maybeentitled tosellnarcotics. According totheanswer toA.Q.204, themanufacture of
narcotics anddangerous substances isstillcarried outonlybystateenterprises. Ourdelegation wishes
tobesurethatithasunderstood these answers. Inother words, areweright inourunderstanding
thatforeign investors may, under specific conditions, sellcertain narcotics whereas theymayunder
nocircumstances manufacture them?
Answer: Inaccordance withtheexisting procedure, narcotics intheRussian Federation may
indeed onlybemanufactured bystateenterprises. These enterprises which meetestablished requirements
fordealing innarcotics aregranted licences fortheircommercial saleinandoutside Russia. ForeignWT/ACC/RUS/9
Page56
manufacturers areentitled tosupply theirproducts totheRussian Federation, provided thattheyhave
animport certificate, issued bytheStanding Committee onNarcotics Control, andanimport
authorization, issued bytheRussian Ministry ofPublic Health andtheMedical Industry andtheMinistry
ofForeign Economic Relations byagreement withtheStanding Committee onNarcotics Control.
121. ReQ.A.376 TheRussian Federation states thattheMinistry ofPublic Health andtheMedical
Industrydecidestoacceptorrefuseacompany'scertificatesafterconsideringtheresultsoftheapplicant's
record. What aretheprocedures andmodalities forexamining companies 'records?
Answer: TheRussian Ministry ofPublic Health andtheMedical Industry accepts orrefuses
quality certificates from foreign manufacturers based onwhether:
(a) therespectivepharmaceuticalpreparationshavebeenproducedunderGMP(GoodManufacturing
Practice) conditions; and
(b) therehavepreviouslybeenanyqualityorotherclaimsagainsttherespectivecompany'sproducts.
3.7Standardization andCertification ofImported Goods
Standardization andCertification ofImported Goods
122. TheTBTAgreement establishes anobligation touse,where possible, international standards.
Inthelightofthis,could Russia answer thefollowing questions.
Answer: Noanswer required.
123. Reply toAQ378.Russia hasnotstated towhatextent itapplies international standards for
foodstuffs. Please could Russia doso.
Answer: Russia hasdirectly applied approximately 10percentofallISOstandards forfoodstuff
testing methods (66ISOstandards); other ISOstandards areapplied indirectly. Asfarasfoodstuff
labelling isconcerned, Russian standards areconsistent withtherequirements ofstandards setbythe
UNFAO/WHOCodexAlimentariusCommittee.Futureplansprovideforapplyinginternationalstandards
tounprocessed food(grain, vegetables, fruits, etc.)andtesting methods.
124. Referring totheanswer given toAQ383.Induecourse, could Russia please provide details
ofunique/non-international standards forspecified foodstuffs, together withtherationale fornotusing
international standards.
Answer: Seeanswer 125herein.
125. Wehavebeengiven tounderstand thatRussia iscurrently revising itsdomestic legislation for
foodstuffs control. Could details begiven oftheplanned changes, andthetiming.
Answer: Russia iscurrently drafting Law"OntheQuality andSafety ofFoodstuffs." Thebill
istobesubmittedtotheGovernmentin1996.Thecontemplatedlawshouldestablishtechnicalregulations
harmonized more closely withinternational regulations relating tofoodstuff quality.
126. Reply toAQ382.Webelieve thequestion wasaimed atfinding outwhether Russia referred
tointernational standards initsdomestic regimes. Theanswer given refers onlytoRussia 'sparticipation
ininternational bodies. Could Russia please describe theextent towhich, andinwhich sectors,
international standards areeither referred toormaybefollowed byproducers inorder toconformWT/ACC/RUS/9
Page57
toRussian regulations. CanRussia alsoidentify thesectors inwhich deviations from international
standards exist.
Answer: Russia usesinternational standards towhich ithasacceded inallsectors ofthenational
economy byapplying these standards either directly orwithsupplements reflecting thespecifics of
itsdomestic economic needs. Thenumber ofISOandIECstandards applied intheRussian Federation
totals 3,800 (31percentofthetotalof12,150 ISOandIECstandards).
AsofJanuary 1,1996, standards completely harmonized withinternational (regional) standards
accounted for18percentofallfederal standards applied inRussia. Bytheyear2000, theirshare is
togrow to50percent.
127. Reply toAQ.388.TheECunderstood thatRussia wasinfactamember oftheGeneva UN-ECE
Agreement onmotor vehicles. Could thisbeclarified.
Answer: Yes,theRussian Federation isamember ofthe1958Geneva Convention. OnJanuary
13,1992, theRussian Government declared initsnote, distributed through Russian missions to
international organizations, thattheRussian Federation isthecontinuator totheSoviet Union 'srights
andobligations under agreements concluded bytheSoviet Union. Thisalsoapplied tothe1958Geneva
Convention ontheAdoption ofUniform Conditions fortheOfficial Approval andontheMutual
Recognition oftheOfficial Approval ofAssemblies andParts ofMechanical Vehicles, dated March
20,1958.
International Standards forconformity assessment bodies
128. Reply toA.Q. 390.Under which lawsandregulations oftheRussian Federation, andforwhich
sectors, areinternational guides andstandards usedasthebasis fortheoperation ofconformity
assessment bodies.
Answer: Themajor lawandregulation applying toconformity assessment bodies are:
Article 3oftheRussian Law#5151-1 "OntheCertification ofProducts andServices" ofJune
10,1993which stipulates thatifaninternational agreement towhich theRussian Federation isaparty
establishes other rules thanthose setforth inRussian legislation oncertification, therules ofthe
international agreement prevail.
TheGeneral Procedure forProduct Certification ”inRussia (asregistered bytheMinistry of
Justice in1995) areconsistent withISO/IEC Guides 7,16,27,28,40,and44.Inorder toensure that
conformity certificates andmarks arerecognized abroad, theapplicable rules andrecommendations
areconsistentwithinternationalstandardsandproceduresassetforthinISOandIECGuide,international
standards ISO9000 and10000, European standards 45000 and29000, andindocuments ofother
international andregional organizations concerned withconformity assessment.
Conformity Assessment Procedures
129. Initsreply toAQs388and397Russia stated itwould make available in1995itsfeestructures
forconformity assessment procedures. Hasthisbeendone, andifnotwhen might suchinformation
bepublished?
Answer: Therecommended feestructures formandatory conformity assessment procedures for
products andservices havebeenagreed upon withtheRussian Ministry ofFinance, andareplanned
tobepublished in1996.WT/ACC/RUS/9
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130. WhatstepswillRussiataketoensurecompliancewithTBTAgreementArticle5.2.2.concerning
publication ofstandard processing times forconformity assessment procedures?
Answer: TherelatedrequirementissetforthinClause3.2.4ofthe“GeneralProcedureforProduct
Certification ”approved byDecision #15oftheStateCommittee forStandards oftheRussian Federation
ofSeptember 21,1994.
131. CouldRussialistthelawsandregulationswhichprovideforacceptanceofconformityassessment
results fromthirdcountries, thetypes ofconformity results accepted, andtheconditions forrecognition
ofthirdcountry bodies andtheirconformity assessment.
Answer: Under theRussian Law#5151-1 "OntheCertification ofProducts andServices ”of
June10,1993, theRussian Federation Committee onStandardization, Metrology andCertification
andother domestic organizations areentitled toestablish rules andprocedures foraccepting foreign
conformity certificates andmarks. Theprocedure forthemutual recognition ofsuch conformity
assessment results fromthirdcountries issetforthinthePrinciples Governing theMutual Recognition
ofCertification, registered bytheMinistry ofJustice onMarch 21,1994, under No.512).
132. TheCommunity understands thattheRussian Federation hasanumber ofagreements with
CIScountries under which itaccepts conformity assessment results from recognised bodies inthose
countries. Could details please begiven ofsucharrangements, interms oftheirlegal basis, sectors
andconformity assessment procedures covered. IsitRussia 'sintention, inlinewithArticles 2and
5.1.oftheTBTAgreement, toextend these arrangements tosignatories oftheTBTAgreement?
Answer: ConformityassessmentresultsfromotherCIScountriesareacceptedundertheAgreement
onPrinciples forConformity Assessments andonMutual Recognition ofTheir Results, adopted by
theInterstate Council forStandardization, Metrology andCertification (ISC) in1992, andinaccordance
withtheProcedure fortheMutual Recognition ofConformity Assessment Results, worked outpursuant
tothisAgreement andapproved bytheISCin1993.
Theprocedure forthemutual recognition ofconformity assessment results inCIScountries
isbased onbilateral agreements stipulating theuseofuniform rulesandprocedures, asquoted inanswer
128herein. Itistheintention oftheGovernment oftheRussian Federation, onaccession totheWTO,
toextend these arrangements toother signatories oftheTBTAgreement onareciprocal basis.
133. TheTBTAgreement, Article 5,demands thatconformity assessment procedures should not
create unnecessary obstacles totradeandshould beproportionate totheirobjectives. Exporters toRussia
howeversometimesclaimthattestingandcertificationproceduressometimesoverlap,leadingtoexcessive
costs anddelays ingetting products approved. Inorder tounderstand better theregulatory system in
Russia, please could Russia draw upadetailed tablesetting outthefollowing:
- references tolawsandregulations providing formandatory testing andcertification ofproducts,
andtheproduct/sectoral coverage ofthose laws;
- theMinistry oragency responsible fortheregulation ofthesector inquestion andforthe
practical application ofthecertification procedures;
- thetypes ofriskswhich thecertification procedure isaddressing
- thenature oftheconformity assessment procedure (eginspection, production oftestreports,
product type-approval, quality systems certification, orcombinations ofthese).
Answer:
Adetailed tablefollows:WT/ACC/RUS/9
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1. Law#2FZ"OntheProtection ofConsumers 'Rights" ofJanuary 9,1996(consumer products
forpersonal needs).
Agency responsible: theGosstandart ofRussia.
2. Fundamentals ofLabour Protection Legislation #5600-1 ofAugust 6,1993(producer goods).
Agency responsible: theGosstandart ofRussia.
3. Law#4979 "OnVeterinary Service" ofMay14,1993.
Agency responsible: theVeterinary Service Department oftheMinistry ofAgricultural
Production.
4. Law"OnSpace Activities".
Agency responsible: theRussian Space Agency.
5. Law#15FZ"OnCommunications" ofFebruary 16,1995.
Agency responsible: theMinistry ofCommunications.
6. Law#24FZ"OnInformation, Information Science, andDataProtection" ofFebruary 20,
1995.
Agency responsible: theCommittee onInformation Policy.
7. Law#5485 -1"OnState Secrets" ofJuly7,1993.
Agency responsible: theState Technological Commission.
8. Law#69FZ"OnFireSafety" ofDecember 21,1994.
Agency responsible: theInterior Ministry.
134. Initsreply toAQ404,Russia hasstated thatitplans toreduce theincidence ofpre-market
third party certification. Please candetails beprovided ofthescope andtiming oftheplanned
amendments tothe1993 lawongoods certification referred toinRussia 'sreply. Willthese changes
applytofoodstuffscontrol,whereasRussiaknowspre-marketcertificationisnotinternationallyaccepted
practice.
Answer: Adraft Law"OnChanges andAdditions totheRussian Federation Law'Onthe
Certification ofProducts andServices, '"hasbeensubmitted totheGovernment inMarch 1996.
Thepurpose oftheamendments istoharmonize domestic certification rules andprocedures
stillmore closely withinternationally accepted practice. These changes willalsoapply tofoodstuffs
control.
135. Could Russia please provide details ofitscurrent system forpost-market surveillance ofproduct
compliance, andwhether thissystem istoberevised toprovide analternative topre-market certification.
Answer: Thecurrent system forpost-market surveillance ofproduct compliance is:
TheRussian Committee onCommerce, inaccordance withitsstatute:
"- inorder toprotect customer rights andinterests, exercises statecontrol through the
StateTrade Inspectorate overcompliance withtrading andpublic catering norms and
rules, pricing order andregulations, andthequality andsafety ofconsumer goods at
trading, public catering, andindustrial companies, regardless oftheirownership status
anddepartmental affiliation;
"- ...issues explanations, within itslimits ofauthority, inresponse toqueries from
individuals,companies,organizations,andinstitutionsregardingtheapplicationofnorms
andrulesregulating trading activities bylegalentities andindividuals ontheterritory
oftheRussian Federation."
Seeanswer 134herein fordiscussion offuture revisions.WT/ACC/RUS/9
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136. TheTBTAgreement draws adistinction between Standards (which arevoluntary), andtechnical
regulations (which aremandatory). Itisnoted however thatunder current Russian laws, compliance
withRussian standards isfrequently mandatory. IsitRussia 'sintention toreduce theincidence of
mandatory "standards", andtooffersuppliers greater choice inwhatstandards touseinorder tomeet
regulatory requirements? Details ofanysuchreforms, interms ofsectors which might beaffected,
arerequested.
Answer: Russian legislation doesnotrecognize thenotion "mandatory standards".
TheLaw#5154 -1"OnStandardization" ofJune10,1993 stipulates thatonlyindividual
requirements which relate tosafety, environmental protection, compatibility, interchangeability, and
product marking aremandatory.
Information onanyapplicable mandatory requirements isgiven inthe"area ofapplication"
section ofastandard andincertification systems forhomogeneous products.
Astechnical legislation inRussia isupgraded (with theintroduction oftechnical regulations
forhomogeneousproductcategoriesandactivities),therangeofmandatoryrequirementssetbystandards
themselves willbereduced, andchanged intolimited technical regulations.
137. ReA.Q.406:"Atpresent under existing Russian legislation bothlocally produced andimported
food products have toundergo obligatory certification (...) GOSSTANDART ofRussia,
GOSSANEPIDNADZOR andother statecontrolled agencies areforced, unfortunately, toprohibit the
saleofagreatnumber oflocalandforeign foods." Please provide alistofallstatecontrolled agencies,
withadescription oftheirmandate andbudget allocation/operation (especially theonesoperating in
theagricultural sector). Please provide acomprehensive listofagricultural products forwhich the
saleisprohibited under theconditions described above.
Answer: Onlythefollowing Federal executive agencies intheRussian Federation exercise state
control overfoodstuffs:
- theStateSanitary andEpidemiological Supervision Service (Gossanepidnadzor) which monitors
compliancewithsanitaryandhygienicnormsandassessesproductionconditionsfromthesanitary
point ofview;
- theVeterinary Service Department oftheMinistry ofAgricultural Production which aimsto
protect thepopulation from those diseases which arecommon forpeople andanimals
- theCommittee onStandards (Gosstandart) which approves federal standards forproducts and
methods oftheirtesting, andmonitors compliance withtherequirements ofstandards which
aremandatory inaccordance withlaw;and
- theStatePlantQuarantineInspectorateoftheMinistryofAgriculturalProductionwhichexercises
quarantine control overcrops atborder points.
These agencies perform theabove functions attheexpense ofthegovernment budget.
In1995, thesaleof10,000 imported products ofalldescriptions wasprohibited, since these
products failed tomeetRussian standards. These aretoonumerous todescribe. Approximately the
same percentage ofdomestic goods were alsoprohibited.WT/ACC/RUS/9
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Standardization andcertification ofimported goods
138. ReQ.A.404 TheRussian Federation states thatinthecourse ofmarket stabilization other,
more lenient types ofcertification willbeapplied. With thisaim,adraftsetofamendments tothe
1993 Lawhasbeenprepared. Inwhatrespects dotheychange thepresent Law?
Answer: ThedraftamendmentstotheLaw#5151-1“OnCertificationofProductsandServices”
ofJune10,1993 provide forcertification onthebasis ofnotonlytesting atlaboratories accredited
with Gosstandart ofRussia, butalsoonthebasis ofdeclarations made bythemanufacturers. See
alsoanswer 134herein.
VII. Other
INTELLECTUAL PROPERTY
1.General Provisions
(a) (b) Intellectual property policy andresponsible agencies forpolicy formation and
implementation
139. Withrespect tointellectual property rights, doesRussia grant tothenationals ofanycountry
anadvantage, favour, privilege orimmunity which Russia doesnotgrant tonationals orother foreign
countries? Ifso,please describe andindicate onwhat basis thenationals ofoneormore countries
aremore favoured thanthenationals ofother countries.
Answer: Inaccordance withobligations assumed under bilateral intergovernmental agreements
onintellectual property protection between theRussian Federation andseveral CIScountries (Republic
ofArmenia, Republic ofBelarus, Republic ofKazakhstan, Kyrghyz Republic, Republic ofMoldova,
Republic ofTajikistan, Republic ofUzbekistan, andUkraine), theRussian Patent Agency accepts and
processes applications forRussian patents forintellectual property assets bothdirectly fromindividuals
andlegalentities permanently resident intheabove CIScountries andfrom patent agents registered
there, provided thatthelatterrepresent theinterests ofapplicants permanently resident intheirrespective
countries. Under mutual settlements agreements withtheRussian Federation, patent feesinsuchcases
arepayable inRussian roubles.
Works andsubjects ofrelated rights belonging toRussian rightholders andrightholders from
other countries, withwhich corresponding bilateral agreements havebeenconcluded, andcreated prior
to1973aresubject toprotection intheRussian Federation, while similar works fromother countries
arenot(with some exceptions).
Inaccordance withitsobligations under international agreements (theParis Convention for
theProtection ofIndustrial Property, theBerne Convention fortheProtection ofLiterary andArtistic
Works, etc.), Russia grants corresponding rights toindividuals andlegalentities ofthecountries which
areparties tothese agreements.
140. What isthedegree ofprotection ofdataonpharmaceutical orchemical products against unfair
commercial use? (TRIPS Article 39(3)).
Answer: Theactivities ofspecial commissions responsible forthestateregistration andclearance
foruseintheRussian Federation ofnewpharmaceutical andchemical products aregoverned bytheir
statutes which provide fortheprotection ofconfidential information, including commercial secrets.WT/ACC/RUS/9
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See,Regulations ontheRegistration Tests andRegistration ofPesticides intheRussian Federation,
asapproved bytheStateChemical Commission onJanuary 1,1995. Existing Russian legislation also
stipulates theprotection ofinsider information andcommercial secrets, andliability fortheirdisclosure
andusewithout theconsent oftheirproprietors. Seeanswer 171herein forreference toexisting
legislation. Finally, adraftFederal lawoncommercial secrets isalsounder consideration intheFederal
Council.
141. Asfarasweunderstand, individuals mayhaverecourse onlytocourts ofgeneral jurisdiction
whereas economic agents maygotoState arbitration courts. What istheaverage length ofcivil
proceedings ineachoftheabove courts? Where initiation ofcivilproceedings issubject topayment
ofafeebytheplaintiff, whatistheamount ofthefee?
Answer: Inkeeping withRussian legislation, disagreements arising outofcivillawrelationships
aretaken upbycourts ofarbitration iftheparties tosuchdisputes arelegalentities orself-employed
entrepreneurs. Ifeven oneparty tosuch adispute isanindividual whoisnotaself-employed
entrepreneur, thedispute isreferred toacourt ofgeneral jurisdiction. Forthenumber ofcases and
length oftimetoresolve these issues, seeanswer 174herein.
Theratesofstateduties andtheprocedure fortheirpayment havebeensetbyFederal Law
No.220-FZ oftheRussian Federation “OnState Duty”ofDecember 311995. Thestatedutyrates
aredifferent forcourts ofgeneral jurisdiction andarbitration courts. According totheabove Law,
theydepend ontheamount andthetypeofclaim (material and/or non-material). Incourts ofgeneral
jurisdiction, plaintiffs indisputes overauthorship andauthors indisputes overcopyrights, rights to
inventions, utility models, industrial designs, andother intellectual property rights areexempted from
statelegalfees.
142. TheRussian Federation admits that,inpractice, effective provisional measures canbeobtained
onlythrough theStatearbitration courts. Inthese circumstances how, forexample, cananindividual
copyright holder apply tohavepirated copies ofhiswork seized bythecustoms authorities?
Answer: Seeanswer 143herein.
143. Does theRussian Federation envisage specific border measures against counterfeit trademark
orpirated copyright goods, assuggested inArticle 51oftheTRIPS Agreement?
Answer: Theseizure ofproperty bycustoms authorities isamong theprovisional measures which
may, inaccordance withRussia 'sgeneral procedural legislation, betaken iffailure todosomay
complicate theenforcement ofacourt ruling ormaymake itoutright impossible. Inorder tohavesuch
measures invoked, aright holder mayapply toacourt (which, unless heisalegal entity oraself-
employed entrepreneur, willbeacourt ofgeneral jurisdiction) tostoptheinfringement and,asa
provisional remedy, toattach therespective assets, including those which mayatthemoment beunder
customs control.
Thismakes Russian legislation consistent withArticle 51oftheTRIPS Agreement. Inorder
tomake thesearrangements stillmore effective, aplanisbeing studied toimplement anadministrative
procedure totakeprovisional measures.
144. What criminal sanctions areenvisaged inthenewCriminal Code oftheRussian Federation,
particularly against counterfeiting andcopyright piracy?
Answer: ThedraftofthenewCriminal Code oftheRussian Federation contains several articles
concerning criminal liability forinfringements ofcopyright, related rights, inventors 'andpatent holders 'WT/ACC/RUS/9
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rights, andtrademark rights. Penalties forthese offenses will,inaccordance withthedraft, bemuch
harsher, including, inparticular, heavy fines, corrective labour foruptotwoyears, andimprisonment
foruptofiveyears withorwithout property confiscation.
145. Ifimplementation oftheTRIPS Agreement were torequire amendments totheRussian
Federation 'slegislation, howsooncould suchamendments beadopted?
Answer: Suchamendments could beadopted upontheentry intoforce oftheRussian Protocol
ofAccession totheWTO inaccordance withtheconditions provided therein. Ontheissue of
implementation, theRussian Federation welcomes technical advice from theWTO Members on
implementation ofTRIPS obligations. Seealsoanswer 60herein.
146. Itappears thatonacceding totheBerne Convention, theRussian Federation registered a
reservation which unilaterally reduces thescope ofArticle 18(1) oftheConvention. Isthere nota
riskthatthisreservation might prevent theRussian Federation fromcomplying withArticle 9(91) of
theTRIPS Agreement which provides thatMembers oftheWTO mustcomply withArticles 1through
21oftheBerne Convention?
Answer: SeeAnswer 147herein.
147. TheRussian Federation LawonCopyright andRelated Rights of1993 provides for50years
retroactive protection ofRussian phonograms, whereas foreign phonograms maybeprotected inRussia
onlyasfrom May1995. How doestheRussian Federation seesuchdifferent treatment asbeing
compatible withthenational treatment clause inArticle 3oftheTRIPS Agreement?
Answer: TheRussian siderealizes thatfollowing thedateofapplication oftheTRIPS agreement,
thisreservation, made withrespect totheBerne Convention, cannot beapplicable toWTO member
countries andthatworks andphonograms originating fromWTO member countries should beaccorded
retroactive protection.
148. Most ofthelegislation onintellectual property provides thatwhen theexercise ofarightis
subject toregistration, thelatter mayberefused inthename of"principles ofhumanity". Under which
category ofexemptions provided forintheTRIPS Agreement canthese principles beplaced?
Answer: Therequirement ofRussian legislation thatsomeindustrial property assets should meet,
among others, thecriterium ofhumanity inorder forrights tothemtobeprotected areconsistent with
theprovisionsoftheTRIPSAgreement(paragraph1ofArticle8,paragraph2ofArticle27...)stipulating
thatmember countries maylegislatively provide foressential measures toprotect theirpopulation 's
healthy lifestyles, public morals, andtheenvironment.
(1)(p.11.(a)(b)paragraph 4RUS/7)
149. Regarding"InterdepartmentalCommissionfortheEnforcementofIntellectualPropertyRights",
whatistheconcrete roletheRospatent plays intheprotection ofIR?
Answer: SeeAnswer 150herein.
(2)(p.21.(a) (b)paragraph 5RUS/7)
150. Whataretheconcretecontentsof"organisationalsupporttotheInterdepartmentalCommission's
work"?WT/ACC/RUS/9
Page64
Answer: Inaddition toperforming thefunctions ofapatent agency, aswellastheoptional
registration,throughaspecialagency,ofcomputerprograms,databases,andlayout-designsofintegrated
circuits, Rospatent alsodevelops proposals forformulating statepolicies onintellectual property right
protection (including proposals forming thebasisofdrafting work onregulations issued bytheRussian
Government andPresident) inorder toprovide thelegalbasis firstofalltoterminate infringements
ofintellectual property rights andensure other effective enforcement. Rospatent plans thework ofthe
Interdepartmental Commission andprepares itsmeetings which arepresided over, asarule,bythe
Rospatent chairman.
(c) Membership ofinternational intellectual property conventions andofregional orbilateral
agreements
151. Itismentioned inthememorandum that"The Russian Federation hasconcluded bilateral
intergovernmental agreement -bytheSoviet Union". Arethere anyspecial provisions applied only
toCIScountries?
Answer: Inaccordance withobligations assumed under bilateral intergovernmental agreements
onintellectual property protection between theRussian Federation andseveral CIScountries (Republic
ofArmenia, Republic ofBelarus, Republic ofKazakhstan, Kyrghyz Republic, Republic ofMoldova,
Republic ofTajikistan, Republic ofUzbekistan, andUkraine), Rospatent accepts andprocesses
applications forRussian patents forintellectual property assets bothdirectly fromindividuals andlegal
entities permanently resident intheabove-mentioned CIScountries andfrompatent agents registered
there, provided thatthelatterrepresent theinterests ofapplicants permanently resident intheirrespective
countries.Applicantsfromcountrieswhichhaveconcludedinternationalagreementsonmutualsettlements
withtheRussian Federation, paypatent feesinRussian roubles.
(d) Application ofnational andMFN treatment toforeign nationals
(1)(p.2-3 RUS/7)
152. Regarding paragraph 1ofArticle 3oftheTRIPS Agreement, doestheRussian Federation avail
itself ofArticle 6oftheBerne Convention (1971) ofparagraph 1(b)ofArticle 16oftheRome
Convention? Iftheanswer is"yes", whatisitscontent?
Answer: TheRussianFederationhasnotsofaravaileditselfofArticle6oftheBerneConvention.
Russia isnotcurrently aparty totheRome Convention.
(2)(p.2-3 RUS/7)
153. HowwilltheRussian Federation apply Article 4(MFN provision) oftheTRIPS Agreement
withregard totheprotection provided byWIPO related agreements andbilateral agreements which
theRussian Federation hasalready concluded?
Answer: TheRussianFederationiscurrentlyobliged,undercorrespondinginternationalagreements
andonareciprocal basis, togrant some privileges (including retroactive protection forworks thatare
covered bycopyright andrelated rights) totheresidents ofcountries which areparties tothese
agreements, butnoneoftherespective obligations constitutes anexception fromMFN treatment under
Article 4oftheTRIPS Agreement. Inaccordance withRussian legislation, thesame privileges will
beaccorded toallWTO member countries following thedateofapplication oftheTRIPS Agreement
intheRussian Federation.WT/ACC/RUS/9
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Inkeeping withobligations assumed under bilateral intergovernmental agreements onICR
protection between theRussian Federation andseveral CIScountries, which entered intoforce before
January 1,1995, theRussian Patent Agency accepts andprocesses applications forRussian patents
forintellectual property assets bothdirectly from individuals andlegalentities permanently resident
intheabove CIScountries andfrompatent agents registered there, provided thatthelatter represent
theinterests ofapplicants permanently resident intheir respective countries. Under international
agreements onmutual settlements between theRussian Federation andthese countries, patent feesin
suchcases arepayable inRussian roubles. Upon application oftheTRIPS Agreement intheRussian
Federation, theTRIPS Council willbeprovided themostcurrent notifications inaccordance withArticle
4(d)oftheTRIPS Agreement.
(3)(p2-3 RUS/7)
154. Arethereanymeasures which areexceptions toMFN treatment under paragraph (d)ofArticle
4oftheTRIPS Agreement?
Answer: Seeanswer 153herein.
(e)FeesandTaxes (p.3RUS/7)
155. What isthebasisforcalculating feesandtaxes, regarding "paysuchfeesinRussian roubles"
mentioned inthememorandum?
Answer: Theamountsoffeespayableforthepatentingofinventions,utilitymodels,andindustrial
designs, fortheregistration oftrademarks, service marks, andappellations oforigin, theregistration
ofassignment andlicensing agreements, andtheofficial registration ofcomputer programs, databases,
andlayout-designs ofintegrated circuits areestablished inroubles andinforeign currency byRussian
Government resolutions. Patent feesandregistration feesforcomputer programs, databases, andlayout-
designs ofintegrated circuits, primarily inrouble terms, areperiodically reviewed withdueregard
forinflation, andthese newamounts areagain approved byRussian Government resolutions.
2. Substantive Standards ofProtection, Including Procedures fortheAcquisition and
Maintenance ofIntellectual Property Rights
(a) Copyright andrelated rights, including rights ofperformers, producers ofphonograms,
andbroadcasting organization
156. Regarding "Theamount ofroyalties foreachformofuseofawork -arefixedintheagreement
between theauthor andtheemployer" mentioned inthememorandum, canparties concerned determine
suchamount ofroyalties onlybythemselves? Isthere aminimum amount ofroyalties?
Answer: Inaccordance withtheprinciples forthefreedom ofcontracts established inRussian
legislation, Article 31oftheRussian LawNo.5351-1 onCopyrights andRelated Rights ofJuly9,
1993 stipulates thattheamount ofroyalties foreachform ofuseofawork isfixed intheauthor 's
contract atthediscretion ofandbyagreement between theparties tothecontract. Forsome limited
forms ofuseofawork, there areminimum amounts ofroyalties established byRussian Government
resolutions.
Theminimum ratesofroyalties forpublic performance ofworks, reproduction ofworks by
means ofsound recordings, forrental ofcopies ofsound recordings andaudiovisual works (video films),
reproduction ofworks offineartandindustrial printing ofworks ofapplied arthavebeensetbytheWT/ACC/RUS/9
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Resolution oftheGovernment No.218“Onminimum ratesofroyalties forcertain types ofuseof
literary andartistic works ”ofMarch 21,1994.
(b) Trademarks, including service marks
(p.8RUS/7)
157. Thememorandum says"Signs which arefalseormaymislead aconsumer -which contradict
thepublic interest, theprinciple ofhumanity, ormorals". What arethecriteria usedinthisregard?
Answer: Inorder toprovide effective safeguards against unfair competition inindustry and
commerce, theRussian LawNo.3520-1 onTrademarks, Service Marks andAppellations ofOrigin,
ofSeptember 23,1992 prohibits theregistration astrademarks ortheircomponents ofthose signs
which arefalseormaymislead aconsumer astotherespective product oritsmanufacturer. Suchsigns
include those which giveaconsumer aninaccurate impression oftheproduct 'squality, itsmanufacturer,
andplace oforigin. Signs which contradict theprinciples ofhumanity andmorals include, inparticular,
indecent images, words, orappeals which insult human dignity, religious feelings, etc.Thelatter signs
arelikewise denied registration rights, which isnotinconsistent withParagraph 1ofArticle 8ofthe
TRIPS Agreement thatallows thecontracting countries tomake legislative provisions formeasures
required toprotect theirpopulations 'healthy lifestyles, public morals, andtheenvironment, orwith
TRIPS Article 15.
(p.9RUS/7)
158. When will"theHigher Patent Chamber" beestablished?
Answer: Aspecific timeframe fortheestablishment oftheHigher Patent Chamber oftheRussian
Federation iscurrently being considered.
(p.10 RUS/7)
159. Isthere anycondition fortheextension oftheperiod ofatrademark registration?
Answer: Inaccordance withRussian legislation, thevalidity period ofatrademark registration
maybeextended, eachtimebytenyears, upon request bytheholder ofthetrademark, provided that
thisrequest issubmitted within thelastyearbefore theexpiry ofthetrademark registration andis
accompanied bytheattached registration certificate sothatanextension entry canbedulymade in
itandprovided further thattheappropriate feeispaid. Russian legislation setsnoother conditions
forextending theregistration ofatrademark.
(p.10 RUS/7)
160. Isthere anycondition forthetermination ofthevalidity oftrademark registration, except for
therequirement ofnon-use foraperiod offivesuccessive years?
Answer: Inaddition tothenon-use ofatrademark foraperiod offiveconsecutive years, the
other grounds fortheannulment oftrademark registrations bythePatent Agency include, inaccordance
withArticle 29oftheRussian LawNo.3520-1 “OnTrademarks, Service Marks andAppellations
ofOrigin ”,ofSeptember 23,1992:
- theexpiry ofthetrademark registration validity period, asestablished bythisLaw;WT/ACC/RUS/9
Page67
- aruling bytheHigher Patent Chamber ontheearly termination ofatrademark
registration owing totheapplication ofacollective trademark tothose goods which
donotshare thequalitative characteristics andother common features stipulated by
Article 21oftheLaw;
- adecision byRospatent 'sChamber ofAppeals toinvalidate atrademark registration,
pursuant toArticle 28oftheLaw, upon anobjection tothisregistration which may
befiledbyanyperson atanytimeduring thevalidity oftheregistration inaccordance
withtheprocedure established byArticle 28oftheLaw;
- theliquidation ofthelegalentity holding thetrademark; and
- thetrademark holder 'srenunciation oftheregistration.
(a) Copyrights
161. According toinformation received, anewdraftCivil Code isbeing examined bytheDuma.
ThenewCode could havetheeffect ofreducing therights granted bytheLawNo.5351-1 OnCopyright
andRelated Rights, ofJuly9,1993, referred tobytheRussian Federation initsmemorandum. Could
theRussian delegation provide further information onthedraftanditscurrent status withregard to
adoption?
Answer: Intheopinion oftheRussian Government, theCivil Code should notcontain any
provisions which would repeat orrevise anyprinciples andprovisions ofsuchFederal lawsasthePatent
Law, theLawonTrademarks, Service Marks andAppellations ofOrigin, theLawonCopyrights and
Related Rights, theLawontheLegal Protection ofComputer Programs andDatabases, andtheLaw
ontheLegal Protection ofLayout-Designs ofIntegrated Circuits, butshould instead setforth only
general provisions onICRprotection, aswellasspecific provisions onthose assets (business names,
know-how) which arenotregulated byseparate laws. Parts IandIIoftheRussian Civil Code have
already beenadopted. Drafting work isnowunder wayontheCivil Code'sPartIII.
(b) trademarks, including service marks
162. Arewell-known trademarks, including forgoods andservices which arenotsimilar, protected
inRussia against allunauthorized useasestablished inArticle 16(3) oftheTRIPS Agreement?
Answer: Inaccordance withtheRussian LawNo.3520-1 OnTrademarks, Service Marks and
Appellations ofOrigin, ofSeptember 23,1992 ,theprovisions ontheprotection ofwell-known
trademarks forgoods andservices arecurrently applied onthebasisofaliteral interpretation ofArticle
6bisoftheParis Convention. Upon application oftheTRIPS Agreement intheRussian Federation,
theTRIPS Agreement will,inaccordance withRussian legislation, come toform partandparcel of
Russia 'slegal system andtheabove provisions willthenbeapplied onthebasis ofabroader
interpretation.
163. Before theregistration ofatrade mark iscancelled fornon-use, cantheowner invoke
circumstances arising independently ofhiswilltoavoid cancellation, asprovided forinArticle 19(1)
oftheTRIPS Agreement?
Answer: Inaccordance withParagraph 3ofArticle 22oftheRussian LawNo.3520-1 On
Trademarks, Service Marks, Appellations ofOrigin, ofSeptember 23,1992, dueaccount istaken,
when considering theearlytermination ofatrademark registration fornon-use, oftheevidence presented
bythetrademark holder toprove thatthetrademark hasnotbeenusedduetocircumstances arising
independently ofhiswill.WT/ACC/RUS/9
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(c)Geographical indications, including appellations oforigin (p.10-11 RUS/7)
164. Istheredomestic lawintheRussian Federation which ensures theprotection forgeographical
indications forwines andspirits asprovided forinArticle 23oftheTRIPS Agreement?
Answer: Inaccordance withtheRussian LawNo.3520-1 OnTrademarks, Service Marks,
Appellation ofOrigin, ofSeptember 23,1992, thelegalprotection given toanygoods (including wines
andspirits) extends totheirappellation oforigin -thename ofacountry, populated locality, area,
orother geographical indication
165. According tothedocument, intheRussian Federation geographical indications areprotected
bythelegislation onunfair competition andconsumer protection andthelawontrade marks. Which
provision ofthelegislation specifies thatatrade mark forwines which contains orconsists ofa
geographical indication identifying wines could berefused orinvalidated withrespect tosuchwines
nothaving thisorigin? Thesame question applies, mutatis mutandis ,toatrade mark forspirits.
(Application ofTRIPS Article 23(2)).
Answer: Under Article 10oftheRussian LawonCompetition andontheLimitation of
Monopolistic Activities onCommodity Markets, ofMarch 22,1991 asamended consumers maynot
bemisled astothenature, method, place oforigin, consumer properties, orquality ofaproduct. Under
Article 10oftheRussian LawonConsumer Protection, amanufacturer (seller) isobliged toprovide
suchtimely andaccurate information about hisgoods asmaybenecessary toensure thepossibility
oftheircorrect choosing.
Article6oftheRussianLawNo.3520-1OnTrademarks,ServiceMarks,AppellationsofOrigin,
ofSeptember 23,1992, prohibits, withrespect toanygoods, theregistration astrademarks ortheir
components ofanysigns which arefalse ormaymislead aconsumer astothese goods ortheir
manufacturer. According tothegeneral ruleestablished forallgoods byArticle 40oftheLaw, those
persons whodonothaveproper registration certificates maynotuseageographical indication, even
iftheirproducts dohavethisorigin, including theuseofanappellation oforigin inacombination
withsuchwords as"kind," "type," or"imitation".
166. Since theLawNo.3520-1 OnTrade Marks andAppellations ofOrigin came intoforce, how
many applications forregistration ofappellations oforigin hasROSPATENT received? Has
ROSPATENT processed anyregistration applications from foreign operators?
Answer: In1992-95,thePatentAgencyreceived54applicationsfortheregistrationofappellations
oforigin (allfromRussian applicants) andissued 17registration certificates. During thefirsttwomonths
of1996, itreceived 7suchregistration applications, including 5from foreign operators.
(d)Industrial designs (p.12 RUS/7)
167. Thememorandum saysthat"Anapplication forapatent must beintheRussian language".
Areapplications written inaforeign language (e.g.English) accepted? Iftheapplication iswritten
inaforeign language, andifitsRussian translation isnotattached, istheapplication accepted? Or
willitnotbeaccepted untilthetranslation issubmitted?
Answer: Among thedocuments tobesubmitted byanapplicant forapatent inaccordance with
theRussian LawNo.3517-1 “OnPatents ”ofSeptember 23,1992, hisapplication forapatent isthe
onlydocument required tobeintheRussian language. Theother documents maybesubmitted either
inRussian orinanyother language. Ifsuchother documents arenotintheRussian language, theirWT/ACC/RUS/9
Page69
translations intoRussian musteither beattached totheapplication orprovided subsequently, butno
laterthantwomonths afterthefiling oftheapplication withthePatent Agency.
168. What istheRospatent? Please explain itsstructure andmandate indetail, including answers
tothefollowing questions.
Answer: Rospatent -theRussian Committee onPatents andTrademarks acting pursuant toits
Statute, asapproved bytheDecree ofthePresident No.223“OnState Committee forPatents and
Trademarks ”ofFebruary 12,1993, -isthefederal executive agency incharge oftheintegrated
government patenting service, including organizations subordinate toRospatent andresponsible for
thedirect performance ofindividual functions assigned toRospatent bynational legislation. Rospatent 's
mandate alsoincludes theimplementation ofuniform government policies onindustrial property
protection,includingtheprotectionofrightstoinventions,utilitymodels,industrialdesigns,trademarks,
servicemarks,andappellationsoforigin,aswellasthelegalprotectionofcomputerprograms,databases,
andlayout-designs ofintegrated circuits.
Oneofthemore important tasks ofRospatent inaccordance withitspowers istowork out
andrealize proposals forupdating Russian legislation onindustrial property protection andthelegal
protection ofcomputer programs, databases, andlayout-designs ofintegrated circuits.
Rospatent makes policies regarding information andpublishing activities, international
cooperation, andpersonnel training inthefieldofindustrial property protection.
Thestructure ofRospatent, including itsheadoffice andsubordinate organizations, follows
below:
Head Office
CHAIRMAN
DEPUTY CHAIRMEN
Legal Directorate
Department forCopyrights and
Nonconventional Industrial Property Assets
Legal Consulting Department
Department forIndustrial Property and
Legal Support forExpert Assessments
Directorate forInformation, Licences, andState
Registrations
Department fortheComprehensive
Automation oftheIntegrated Government
Patenting ServiceWT/ACC/RUS/9
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Department ofLicences andContractual
Relations
Department fortheState Registration of
Industrial Property Assets
Directorate forLong-term Planning andInternational
Cooperation
Long-term Planning Department
International Cooperation Department
Department forRegional Cooperation in
Intellectual Property Matters
Personnel andBusiness Administration Directorate*
Finance Directorate*
Subordinate Organizations
Russian Institute of
Governmental Patent
Expert StudiesRussian Institute of
Intellectual PropertyRussian Technical
Patent Library
Russian Agency fortheLegal
Protection ofComputer Programs
andLayout-Designs ofIntegrated
CircuitsChamber ofAppeals
Centres forPatent-Related
Information Services. Production
companies, etc.Russian Research Institute of
Patent-Related Information
* Shown herewithout theirinternal structures.WT/ACC/RUS/9
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Patent Law
169. IsthePatent Lawconsistent withtheprovisions ofArticle 27ofTRIPS withregard to
non-discrimination between imported andlocally-produced products?
Answer: Russian patent legislation doesnotsetanyconditions orrestrictions fortheexercise
ofrights based onRussian patents depending onthetypeofproduct, theplace ofitsinvention, the
sphere ofitsapplications, ortheplace ofitsproduction. Theconclusion, therefore, isthatRussian
patent legislation isconsistent withtheprovisions ofArticle 27ofTRIPS.
170. Thedocument provided bytheRussian Federation details therequirements applying to
compulsory licences forselection attainments (plant varieties andanimal breeds). Butwhich provisions
applytocompulsorylicensingforotherinventionpatents?AretheseprovisionsconsistentwithArticle31
oftheTRIPS Agreement?
Answer: Theprovisions oftheRussian LawNo.3517-1 “OnPatents ”ofSeptember 23,1992
establishing compulsory (forcible) licensing procedures during thenon-use orinadequate useofan
industrial property assetunder adecision oftheHigher Patent Chamber (Paragraph 4ofArticle 10)
contain conditions which aregenerally consistent withArticle 31oftheTRIPS Agreement.
(h) Protection ofconfidential information
171. Inthedocument under examination theRussian Federation recognizes theinadequacies ofits
legislation onconfidential information interms ofbothprotection andthemeans ofenforcement. When
doesitenvisage adopting alawontrade secrecy?
Answer: Procedures forthetreatment ofconfidential information andmethods forprotecting
commercialsecretsarecurrentlyestablishedbytheRussianCivilCode(Article139ofPartI,andArticles
727and771ofPartIIoftheCivil Code). Adraftfederal billontrade secrecy isbeing examined by
theFederal Assembly oftheRussian Federation which willprovide more specific protection.
4. Enforcement (p.24-29 RUS/7)
172. Describe anyintellectual property subject matter ofenforcement procedures inrelation towhich
Russia doesnotnowaccord toforeign nationals treatment nolessfavourable thanRussia accords to
itsownnationals.
Answer: TheRussian Federation accords national treatment inmatters ofintellectual property
enforcement procedures toforeign nationals. Under Russian legislation, individuals residing outside
Russia, foreign legalentities, ortheirpatent agents obtain andmaintain patents forinventions, utility
models, andindustrial designs, andregister trademarks andappellations oforigin through patent agents
registered withtheRussian Patent Agency.
173. What isthecurrent situation intheRussian Federation regarding enforcement andprotection
ofICR?
Answer: Russian legislation onICRprotection atpresent islargely consistent withtheprinciples
ofcorresponding international agreements, including TRIPS requirements. Based ontheaccumulated
experience ofenforcing theRussian Patent LawandLawonTrademarks, amendments arecurrently
being prepared tothese Laws inorder to,inter alia,increase civilliability forinfringements ofWT/ACC/RUS/9
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trademarks, industrial designs, inventions, andutility models byanalogy withcomparable liability for
infringements ofcopyright andrelated rights.
Thepractical experience ofenforcement regarding selection attainments andtrade secrecy is
stillminimal.
174. What isthenumber ofinfringements, andcivilandcriminal cases related totheinfringement
ofICR?
Answer: According todatasupplied bytheRussian Ministry ofJustice, courts ofgeneral
jurisdiction accepted 251cases related toICRinfringements in1993, 348suchcases in1994, and415
suchcases in1996. According tothesame data, about 90percentofthese cases werecompleted in
those years, withtheshare ofcases triedforlonger periods thanstipulated byRussian civilprocedural
legislation standing atlessthan50percent.
Arbitration courts, under theRussian Code ofArbitral Procedure, haveuptotwomonths to
resolve aneconomic dispute. According tooperational datafromtheRussian Higher Arbitration Court,
thenumber ofICR-related cases isinsignificant.
175. Wehavebeenreceiving reports thatthere areICRinfringements relating tocopyrights and
neighbouring rights ofCD's,video software, computer software, andinfringements oftrademarks.
Iseffective enforcement actually ensured regarding ICR?
Answer: ProvidedthattheholdersofrightsofficiallyexercisetheremediesavailableunderRussian
legislation, theenforcement arrangements inplace aresufficiently effective toreinstate violated rights.
(a) Civil judicial procedures andremedies, general litigation procedure
176. Areremedies different depending onvarious ICR's?
Answer: Russian legislation provides fordifferent types ofliability (civil-law, administrative,
andcriminal liability), anddifferent penalties forICRinfringements depending onthetypeofintellectual
property concerned. Detailed information onrelated matters canbefound inWT/ACC/Rus/7 onpp.
25-26.
177. Does theRussian Federation havetheprovisions initslawsandregulations which enforce not
onlytheprovision ofArticle 44(injunctions) andArticle 45(damages), butalsoArticle 46(other
remedies) oftheTRIPS Agreement?
Answer: TheRussianLawNo.5351-1OnCopyrightandRelatedRightsofJuly9,1993expressly
provides therightacourt ofjustice, ajudge athisowndiscretion oranarbitration court toorder the
seizure oftocounterfeit copies ofworks andphonograms, aswellasmaterials andequipment used
tomanufacture andreproduce counterfeit copies. Amendments arecurrently being contemplated to
addsimilar provisions totheRussian LawNo.3520-1 OnTrademarks, Service Marks, Appellations
ofOrigin ofSeptember 23,1992. Under civil,criminal, andarbitral procedure legislation, thetemporary
withdrawal fromcommerce ofgoods bearing counterfeit trademarks, andanyother goods infringing
therights andinterests oflawful owners, maybeordered byacourt byinvoking theobligation tosubmit
toitscustody material evidence untiltheduedisposition ofsuchproperty aftertherespective court
ruling goesintoforce.WT/ACC/RUS/9
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(d) Border Measures
178. Please explain theexisting border measures oftheRussian Federation. How isthecontent
oftheprovisions ofArticles 51through Article 60oftheTRIPS Agreement implemented?
Answer: Seeanswer to143herein.
179. What isexactly meant by"One option currently under consideration isthepossible
implementation ofanadministrative procedure forsuspending therelease intofreecirculation ofgoods
whose importation willinfringe intellectual property rights" mentioned inthememorandum?
Answer: Seeanswer 143herein.
Thequotation citedinthememorandum relates tothedecision which isbeing intheprocess
ofconsideration which would empower thecustoms bodies towithhold andconfiscate goods witha
forged trade mark orwhich isillegal withrespect tothecopyright orrelated rights.
180. Inthedocument WT/ACC/RUS/7 onpage28itisstated that"Russian legislation doesnot
provide anyspecial administrative orother procedures forsuspending therelease intofreecirculation
ofthose goods whose importation willinfringe intellectual property rights". Please elaborate whether
inthefuture Russian Government intends tointroduce border measures aimed atcontrolling importation
ofabove-mentioned goods? Aresome"internal" administrative procedures foreseen tobeimplemented?
Answer: Seeanswer to143herein.
Answer: Atthemeeting heldinJune1995, theGovernment ofRussia drafted acomplex of
measures directed toconsolidate theprotection ofintellectual property; italsoplanned tostudy the
issues related tothecreation ofacustoms system ofcontrol overthemovement across thecustoms
border oftheRussian Federation ofintellectual property.
Furthermore, inaccordance withResolutions oftheGovernment oftheRussian Federation
No.228“OntheCreationofanInterdepartmentalCommissionforEnsuringtheProtectionoftheObjects
ofIntellectual Property ”ofMarch 7,1995 andNo.912“OntheInterdepartmental Commission
forensuring theprotection ofObjects ofIntellectual Property ”ofSeptember 9,1995, an
interdepartmental commission ontheissues ofprotection ofintellectual property wasestablished. The
chairman oftheState Customs Committee ofRussia isamember ofthiscommission. Atthispoint
intime, thecompetent ministries anddepartments areworking onthedrafts ofregulatory actswith
respect totheissues relating totheprotection ofintellectual property, which, among other things,
would regulate customs procedures allowing prohibitions ofexports andimports ofcounterfeit goods
andillegal useofitems subject toofcopyright andrelated rights.
(e) Criminal Procedures
181. Whatarethecontentsof"thenewCriminalCode"?Isitnotnecessarytohavepenaltyprovisions
which willhavesufficient deterrence against IPRinfringements?
Answer: ThedraftnewCriminal Code oftheRussian Federation, following adoption bythe
StateDuma inJuly1995, wasrejected bytheFederation Council, butwaslateradopted bytheState
Duma again byatwo-thirds 'majority voteandsentforsigning tothePresident. Ithassince been
returned totheStateDuma forreview. Since there isuncertainty about when thenewCriminal Code
willbeapproved andtakeeffect, afederal billhasbeendrafted tomake changes andadditions tothe
existing Criminal Code concerning liability forinfringements ofexclusive rights, inparticular, forWT/ACC/RUS/9
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unlawful usesofproperty covered bycopyright andrelated rights, patents, andtrademarks. Thebill
provides forsubstantially harsher penalties forthese infringements, including heavy fines, corrective
labour foruptotwoyears, andimprisonment foruptofiveyears.
5. Others
182. What istheschedule foramending domestic lawsandregulations onIPR,inconnection with
implementing theTRIPS Agreement?
Answer: SeeAnswer to145herein.
Document WT/ACC/RUS/7 onTrade-Related Aspects ofIntellectual Property Rights prompts
thefollowing questions:
Criminal procedures
183. How longdocriminal andcivilproceedings lastincases concerning intellectual property?
Answer: Seeanswer to174herein.
184. Arecourt decisions officially published?
Answer: Iftheyhaveinstructive value from thestandpoint oflegalpractice, decisions ofthe
higher judicial authorities -theSupreme Court andtheHigher Arbitration Court -arepublished intheir
respectiveofficialnewsletters.ThenewsletteroftheRussianSupremeCourtalsocarriessomeresolutions
passedbythePresidiumsoftheSupremeCourtsofconstituentrepublicsandcourtsofgeneraljurisdiction
attheregional level.
185. What stage hasthedraftofthenewCriminal Code oftheRussian Federation reached?
Answer: Seeanswers to144and181herein.
186. What isthedifference between courts ofgeneral jurisdiction andarbitration courts? Do
arbitration courts havethepowers listed inArticle 50ofTRIPS?
Answer: Courts ofgeneral jurisdiction, justasarbitration courts, willhear lawsuitsfrom
interested parties regarding civilrights infringements within theirjurisdiction depending ontheidentity
ofparties tothedispute. Arbitration courts arecompetent todealwithdisputes involving legalentities
and/or individuals whohavethestatus ofself-employed entrepreneurs. Ifatleastoneparty toadispute
isanindividual whoisnotaself-employed entrepreneur, thecasegoestoacourtofgeneral jurisdiction.
Thepowersofcourtsofgeneraljurisdictionandarbitrationcourtsarevirtuallyidenticalandareconsistent
withArticle 50ofTRIPS.
187. ReA.Q. 454: With respect totheproblems identified intheanswer, doesRussia expect to
haveTRIPS-consistent measures inplace intimefortheJanuary 1,2000deadline forimplementation
bydeveloping countries andeconomies intransition.
Answer: Seeanswer 145herein.WT/ACC/RUS/9
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Comments onSpecific Questions
188. A.Q. 488bandc:"(...) weareprepared todiscuss thismatter ingreater detail during bilateral
consultations withinterested parties". InCanada 'sview, these questions areofinterest toallWP
members andthusmayneedtobeaddressed inthecontext oftheWP.
Answer: While theRussian Federation isprepared todiscuss anyaspect ofIPRprotection with
theWorking Party, itwould facilitate discussions toknow more precisely whatparticular information
onIPRprotection intheRussian Federation isrequired bytheWTO member countries.
Regarding Article 65oftheTRIPS Agreement:
189. Does theRussian Federation intend tobecome amember oftheWTO asanadvanced country
andapply theprovisions oftheTRIPS Agreement immediately after1January 1996, orasacountry
which isintheprocess oftransformation from acentrally-planned intoamarket, free-enterprise
economy?
Answer: Seeanswer 145herein.
190. IftheRussian Federation intends tobecome amember oftheWTO asanation which inthe
process oftransformation fromacentrally-planned intoamarket, free-enterprise economy, howlong
doestheRussianFederationintendtopostponetheapplicationoftheprovisionsoftheTRIPSAgreement?
Answer: Seeanswer 145herein.
Policies Affecting Trade inServices
A.General description ofthemarket
191. How willtheRussian Federation ensure transparency andlegalsecurity withrespect tothe
regulatory framework affecting thesupply ofservices (given thatmany fields arenotregulated yet
andaresubject toaprocess offrequent adaption ofthelaw)?
Answer : RussiaintendstoimplementArticleIIIontransparencyandinthiscontextitwillestablish
enquiry points toprovide specific information inaccordance withArticle III:4oftheGATS. Moreover,
access toinformation oncurrent regulatory measures affecting trade inservices isprovided through
various governmental andprivate databases.
192. Togainmoreclarity onthesituation forforeign service suppliers itwould behelpful, ifachapter
"Definitions" could beadded tothedocument WT/ACC/RUS/6. Such achapter could forexample
foresee precise descriptions ofterms usedinthedocument like"foreign company" (incorporation of
control principle?), "state company", "non-state company" etc.
Answer : Thetextofthememorandum onservices (WT/ACC/RUS/6) cannotbetreated asa
legaltext.Explanations ofthemeaning oftheterms usedmaybeprovided during thecourse ofthe
discussions oftheWorking Party.
(i)Evolution ofLegal regulations, rules, procedures, administrative provision influencing trade
inservices:
193. When "new lawscoexist witholder norms" (p.1B.(i)par.1),which areapplied withpriority?WT/ACC/RUS/9
Page76
Answer : Newlawshavepriority. Oldnorms areapplied totheextent, theyarenotcovered
bynewlawsand/or notcontradict thenewlaws.
194. Please specify "service sectors which were notprovided onacommercial basis norsubject
toregulation under theprevious economic system" (p.2par.1).
Answer : Under theprevious economic system alldomestically provided services weresupplied
onnon-commercial basis since prices forservices werefixed bythestateanddidnotalways reflect
therealcostoftheservice rendered. Only inalimited number ofservices, e.g.some professional
services, weretherepreviously elements offreeestablishment ofprices. Some sectors/subsectors were
represented byservice providers withmonopolistic rights (telecommunications, transportation, rental
banking, insurance etc.).
195. Howlong"theregulatory framework oftheRussian Federation governing theservices sector"
(p.2par.2) described inthefirstsentence isexpected tobemaintained, anddoestheFederation have
anyplantofacilitate suchatransition?
Answer : TheRussian Federation intends tofurther improve theregulatory framework governing
theservices sector, following theregulatory practice widely usedbyGATS members being atsimilar
stage ofdevelopment oftheirrespective sectors andeconomies asawhole. Inthiscontext, itshould
benoted thattheGATS Preamble recognizes therightofMembers toregulate, andtointroduce new
regulations, onthesupply ofservices within theirterritories inorder tomeetnational policy objectives
given asymmetries existing withrespect tothedegree ofdevelopment ofservices regulations indifferent
countries.
(ii)"Horizontal" Legislation
196. Please describe theprocedure forthespecific quotas fortheemployment offoreign nationals
asawhole orbygroups ofprofession (p.2(ii)par.3).
Answer : Matters related totheestablishment ofspecific quotas fortheemployment offoreign
nationals whomaybeservice providers arewithin thecompetence oftheRussian Federal Migration
Service which approves quotas, andareregulated byRussian Presidential Decree No.2146, dated
December 16,1993. Proposals forquotas aresubmitted bysub-federal authorities totheabove service
based onlabour market needs.
Thequotas andtheprofessional composition oftheforeign labour forceattracted totheRussian
Federation areestablished notatthefederal, butattheregional levels.
Employers whoarewilling toattract foreign labour arerequired togetarelevant permission
andreceive aspecial decision oftheadministration ofthesubject oftheRussian Federation onwhose
territory suchlabour isplanned tobeused.
Theadministration, when preparing suchadecision aimstoobserve theprinciple ofthepriority
rightoftheRussian citizens tooccupy vacant jobplaces onthelabour market. Itcoordinates itsdecision
withtheemployment service andproceeds onthebasisofeconomic needtoattract thenecessary number
offoreign workers toexecute certain work andprovide services.
197. Itisnoted thattheissuance ofpermits aresubject to"aneconomic needs test"(p.2(ii)par.4).
Does thisrelate tothe"quotas" mentioned above?
Answer : Seeanswer 196herein.WT/ACC/RUS/9
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198. How much isthefeeforanadditional termofpermit (p.2(ii)par.4)? What istheprinciple
fordeciding thefee?
Answer : Acertainpaymentintheamountofminimalmonthlywagesestablishedbythelegislation
ischarged from theemployer fortheextension ofthetermofthepermit foreachforeign worker.
Theamount received goestothebudget oftheregional administration oftheRussian Federation on
whose territory theforeign worker isused, andthemoney willbeusedatthediscretion ofthelocal
administration. Theamount ofthefeeisestablished tocompensate localadministrations fortheuse
byforeign employees oflocalinfrastructure, municipal transport, social services andculture which
arefinanced from localbudgets.
199. Please explain theapproval procedure of"highly skilled intracorporate transferees" (p.2(ii)
par.5).
Answer : There isnospecially established procedure fordetermining thiscategory ofemployees.
TheRussian Migration Service, when considering theissuance ofawork permit toaforeign citizen
whoisworking atsuchanenterprise require thathebeinthesenior management oftheenterprise
(General Director, Deputy General Director, Chief Accountant, headofanindependent unit,senior
manager, etc.).
200. Please explain theintergovernmental agreements onthereciprocal employment ofcitizens with
CISmember States, Germany, Poland, Slovakia, Switzerland, Finland andChina (p.2(ii)par.6).
Answer : 1. Bilateral agreements between theRussian Federation andcertain CISstates
cover labour activity andsocial protection ofcitizens. Thetextsofallsuchagreements aresimilar.
Suchagreements weresigned withtheUkraine onJanuary 14,1993, Belarus onSeptember 24,1993,
Moldova onMay27,1993, andArmenia onJuly19,1994.
Thesaidagreementsprovidefortheprocedureforemploymentinconformitywiththelegislation
ofthecountry ofemployment, recognition oftheemployment period forpurposes ofpensions and
other benefits, recognition ofprofessional qualifications andtraining, andequal social rights inlabour
relations withcitizens ofthestateofemployment.
2. Amultilateral agreement between theCISstates oncooperation inthefieldoflabour
migrationandsocialprotectionofApril15,1994includesprovisionsthatareintheby-lateralagreements
between theRussian Federation andtheCISstates.
3. TheRussian-Swiss agreement ofSeptember 1993 andaRussian-Finnish Protocol of
March 1992ontheExchange ofTrainees provide forannual quotas, basicemployment principles with
theindication oftheagelimits andestablish measures ofsocial protection oftrainees. Thedocuments
alsoprovide fortheemployment oftrainees inthespecialty areasandalsoforprofessional andlanguage
training.
4. TheRussian-German agreement ofMay17,1993 andRussian-Slovak agreement of
February 13,1995 provide arrangements pertaining toemployment ofthose working foremployers
other thanthemselves, mutual employment ofcitizens, andemployment under contract. Theyestablish
theannualquotas,determinebasicrequirementsforcandidatesandprovideforsocialprotectionmeasures
foremployees under thehostcountry 'slegislation.
5. TheRussian-Polish agreement ofMarch 1,1994 onbasic principles governing work
activities ofcitizens intheterritories ofthesignatories, provide fornoquotas andestablish basicWT/ACC/RUS/9
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requirementsforpotentialemployees.Theyalsoprovideforsocialprotectionmeasuresforthoseworking
inbothcountries.
6. TheAgreementonCooperationinEnsuringEmploymentofStudentsDuringVacations,
signed bytheRussian Federal Migration Service andtheGerman Federal Labour Department 'sCentral
Office ofEmployment onDecember 22,1993, establishes anannual quota formutual employment
ofstudents, setsforth procedures fortheiremployment andtheprovision ofsocial protection under
thehostcountry 'slegislation.
7. TheRussian-Chinese Agreement ofSeptember 29,1992onprinciples ofemployment
andworking conditions ofChinese citizens inRussian enterprises, production associations and
organizations. There isalsoanAgreement ondispatching technical specialists tothePeople 'sRepublic
ofChina ofDecember 18,1992providing animplementation mechanism fortheagreements andsocial
protection measures forcitizens under existing contracts andthelegislation ofthehostcountry.
(iii)Licensing
201. Please explain thecriteria forapproval andtheprocedure stipulated in"OnLicensing Specific
Types ofActivities" (p.3(iii)par.2).
Answer : Inaccordance with Resolution No.1418 "OntheLicensing ofIndividual Types of
Activity" ofDecember 24,1994, theRussian Government issued follow-up Resolution No.344"On
theApproval ofaRegulation onLicensing PaidLegal Services," dated April 15,1995.
TheRegulation provides forlicensing theactivities offoreign legalentities andnationals, as
wellasRussian legalentities whose participants include foreign nationals. Licences tothemareissued
bythefederal Ministry ofJustice. Theprocedures fortheissuance andregistration ofsuchlicences
aresetforth intheRegulation indetail, andarethesame forbothforeign andRussian legalentities
andnationals.
202. Arethereanydifferences between licensing requirements tobefulfilled byforeign companies
andforeign citizens incomparison toRussian ones?
Answer: Under Resolution oftheGovernment oftheRussian Federation No.1418 “On
Licensing ”,there arenodifferences between licensing requirements tobefulfilled byforeign legal
entities andcitizens incomparison withRussian legalentities andcitizens. Seealsoanswer 82herein.
203. Arethere anysectors, inwhich licences to"foreign companies" ortoforeign natural persons
arenotissued?
Answer: Sectors, where foreign companies orforeign natural persons cannotobtain licences
include, insurance services, security andrelated services, space launching andrelated services.
204. Dothere existanylimitations onthenumber oflicences issued forcompanies withforeign
participation, foreign juridical ornatural persons?
Answer : Pending .
(v)Qualification Requirements andProcedures, Technical Standards, Licence and/or Registration
Requirements inRegard toRendering Services.
205. How could Transparency besecured intheprocess of"standardization andcertification of
services" (p.4(v)par.1)?WT/ACC/RUS/9
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Answer: Standardization andcertification rules andprocedures areroutinely published. The
drafts ofstandards andrelated information areexpected tobepublished inthefuture.
(viii) Provisions Relating toInternational Transfers andCurrent Payments inServices
206. Itisnoted thattherearenolimitations oncurrent currency transactions made byresidents (p.5
(viii)par.1). What about non-residents? Forexample, arethereanylimitations inpayment andtransfer
when services aresupplied intheform ofMode 4(through thepresence ofnatural persons)?
206. Answer: Pending .
(ix)Provisions Relating toCapital Transactions Affecting Supply ofServices
207. Isthereanyquantitative limitation ontransactions related tomovement ofcapital byresidents
(p.5(ix)par.1)?
Answer: Pending .
208. Could theRussian Federation provide information ontherespective competencies ofthe
Federation andtheStates inthefieldofservices?
Answer: Thecompetence toregulate capital transactions affecting supply ofservices belong
exclusively tofederal authorities
209. Could theRussian Federation provide information ontheadoption ofthefollowing draftlaws:
"Concerning theintroduction ofAmendments andAdditions totheLawoftheRSFSR Concerning
foreign investments intheRSFSR", "Concerning FreeEconomic Zones", "Concerning Concession
Agreements concluded with Russian andForeign Investors", "Concerning Production Sharing
Agreements". Towhatextent dothese draftlawsaffect trade inservices?
Answer: Seeanswers 65,67,70,85,87,88and90herein.
Page 4.B(v)Qualification Requirements:
210. Could theRussian Federation provide more detailed information asregards thepreparatory
work onstandardisation andcertification ofbanking andinsurance services?
Answer: Inthefieldofbanking andinsurance services, Russia isintheprocess ofdrafting a
policy document on"Standardization andCertification inBanking Activities."
211. Canyouelaborate ontheefforts made toprevent thatstandards andqualifications impose new
trade barriers fortrade inservices?
Answer: Inorder tofacilitate trade inservices tothemaximum extent, allrequirements which
mayposebarriers totrade inservices aresubject toreview byGosstandart prior totheiradoption and
areremoved from these drafts.
(vi)Provisions Regulating Existence andActivity ofMonopolies andServices Suppliers with
Exclusive RightsWT/ACC/RUS/9
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212. Twolawsarementioned inthedocument: oneconcerning thefunctioning ofmonopolies or
exclusive suppliers, theotherconcerning theactivity ofnatural monopolies. Could youplease elaborate
more onthebasic regulation principles anddifferences between those laws?
Answer: Thepurposes oftheRSFSR Federal Law"OnCompetition andontheLimitation of
Monopolistic Activities onCommodity Markets" ofMarch 22,1991 (asamended onMay25,1995)
aretopromote competition andtorestrict orprevent theabuse ofmonopolistic positions inthemarket
byindividual enterprises, including exclusive suppliers. Forfurther details onthislawsee
WT/ACC/RUS/4, A.Q. 35-37(page 18).
However allcountries havesectors where market-based pricesetting maynotbethebestchoice.
Some ofthese sectors comprise, mostnotably, natural monopolies, i.e.those segments ofthemarket
where thepromotion ofcompetition iseither technologically impossible oreconomically ineffective.
Theprincipal objective ofthelegislation withrespect tosuchnatural monopolies -istoexercise control
overthose actions which mayinfringe theinterests ofconsumers ofproducts subject toregulation,
ortoregulate thetransformation ofaspecific natural-monopoly market intoacompetitive market.
Thatistherational basis fortheFederal LawOnNatural Monopolies.
213. There aresomeareasmentioned which arecovered bynatural monopolies (forexample pipeline
transportation ofoiletc.). Could youplease complete thislistbyadding allareas where there exist
monopolies orexclusive suppliers? Arethere plans toabolish anyofthese monopoly rights inthe
nearfuture?
Answer: TheRussian Federal Law#147-FZ"OnNatural Monopolies" ofAugust 17,1995
establishes thelegalbasis ofFederal policies onnatural monopolies intheRussian Federation. The
Law aimstobalance theinterests ofconsumers andnatural monopolists inamanner ensuring the
affordability forconsumers ofthemonopoly 'sproducts andservices, aswellasthecontinued effective
operation ofthemonopolies.
Thelawprovides adefinition, anddescribes theattributes of,anatural monopoly. Itisinline
withthisdefinition andbyagreement withfederal ministries andagencies responsible forspecific
economic sectors thatnatural monopolies arepermitted tooperate incertain areas.
According toArticle 4oftheabove Lawthese areas include: thetransportation ofoilandoil
products bytrunk pipelines; thegastransmission; thetransmission ofelectric power andthermal energy;
carriage byrail;theservices oftransport terminals, ports, andairports; andgenerally available
telecommunications andmailservices.
Thelawassigns thefunctions ofregulating andsupervising theactivities ofnatural monopolists
tonewly-created federal executive agencies fortheregulation ofnatural monopolies. Itdefines the
procedure fortheestablishment, operation, andliquidation ofsuchagencies, aswellastheirpowers
andfunctions. Inlinewiththese requirements, aprofessional andstable regulatory system isbeing
created, which should facilitate aninflow ofinvestment intotherespective sectors andtheirfurther
development.
There arenoplans toabolish natural monopoly rights inthenearfuture.
(vii)Provisions Relating toInternational Transfers andCurrent Payments inServices
214. Itisstated thatthere arenolimitations oncurrent account transactions andtransfers made by
residents. Does thismean, thattherearelimitations oncurrent account transactions andtransfers made
bynon-residents? Ifsuchlimitations exist, could youplease specify them?WT/ACC/RUS/9
Page81
Answer: Pending
Page 5.B(ix)provisions relating toCapital transactions affecting supply ofservices:
215. Amore detailed outline ofthebasic provisions andmaintained restrictions withrespect tothe
inward andoutward movement ofcapital would behelpful, particularly asregards thefollowing issues:
conditions andrestrictions applying tothegranting oflicences required foreffecting currency
transactions related tomovement ofcapital;
arenon-residents guaranteed non-discriminatory treatment?;
which particular restrictions oncapital outflow (e.g.transfer ofdividends) aremaintained?
Answer: Pending
216. IntheDocument WT/ACC/RUS/6 onpage5isclearly stated that"there arenolimitations
oncurrent currency transactions made byresidents." Suchoperations include settlement ofpayments
onexport/import ofgoods andservices. Russian Federation inthedocument WT/ACC/RUS/4 on
page183intheanswer toquestion 458states thatsecuring itsobligation under Article XIofGATS
requires clarifications. Weareinterested whatkindofproblems theRussian authorities haveinmind.
Answer: Pending .
217. Inrelation toCapital Transactions andthesystem oflicences affecting currency transactions
inthisareawewould liketoknow whether thereisageneral system oflicensing withautomatic licensing
ofsome kindoftransactions orwhether thissystem isadiscretionary one.
Answer: Licences forcurrency transactions related tocapital movements areissued bytheBank
ofRussia forresidents subject tothesubmission ofallrequired documents andnon-violation offoreign
exchange andtaxlegislation ofRussia. There maybeexceptions totheabove general ruleintroduced
bytheBank ofRussia.
Specific Sectors
C.Information onSpecific Sectors
218. Togainmore clarity onthebusiness opportunities offoreign economic actors intheRussian
Federation, please listforeachservice sector described themarket access andnational treatment
limitations pertaining toeachmode ofsupply.
Answer : Thisquestion willbeaddressed inadraftschedule ofcommitments tobeprepared
byRussia induecourse.
(a)Professional Services
(i)Legal Services
219. Could youplease citetheconditions attached tolicences forpaidlegalservices? Arethere
differences between theconditions tobemetbyforeign legalfirms andlawyers andthose tobemet
byRussian lawyers andlegalfirms?WT/ACC/RUS/9
Page82
Answer: Theconditions attached tolicences forpaidlegal services arethesame forforeign
lawfirms andforRussian lawfirms.
Self-employed lawyers andlawyers included bylawfirms onthelistsofpersons directly
providing paidlegal services must meet twoprincipal criteria: tohave higher legal education
qualifications andtohave worked inthelegal profession foratleastthree years. Therespective
supporting documents issued byappropriate foreign authorities mustbeaccompanied bytheircertified
translations intotheRussian language andbelegalized, unless otherwise stipulated bycorresponding
international agreements.
220. Inthecaseofarefusal togrant alicence, doesthere existanappealing procedure?
Answer: Decisions andadministrative actsbythelicensing authorities maybechallenged in
court inaccordance withtheestablished procedure.
221. Have there already beenanylicences issued forforeign legalfirms andlawyers?
Answer: AsofApril 1,1996, theRussian Ministry ofJustice issued 11licences toforeign law
firms, 2licences toforeign lawyers, and19licences toRussian legalentities withforeign involvement.
222. Itisoftenstated inthedocumentation provided thatappeals against rulings maybemade through
thecourts. Arecourts being provided withappropriate expertise ineconomics, trade law,andan
understanding oftheprovisions oftheWTO?
Answer: Under thepresent procedures, thecourts areentitled tohaverecourse toindependent
expertise onallissues ofthekinddescribed inthequestion.
223. What are"thejuridical organs ofthesubjects oftheRussian Federation" (p.6(i)par.1)? Are
thereanydifferences inlicensing procedure and/or requirement between "theMinistry ofJustice" and
"thejuridical organs"?
Answer: Thelicensing procedures andrequirements atboththefederal Ministry ofJustice and
atthejustice authorities oftheRussian Federation 'sterritorial subjects arethesame. Thedifference
isinthegeographical coverage oflicences issued bythem. While licences issued bythefederal Ministry
ofJustice arevalidthroughout theentire territory oftheRussian Federation orwithin theboundaries
ofitsseveral territorial subjects (asrequested byapplicants), licences granted byregional justice
authorities arevalid onlywithin theterritory oftherespective regional authority.
Inaddition, onlythefederal Ministry ofJustice isempowered tolicence foreign lawfirms
andlawyers, aswellasRussian lawfirms withforeign participation.
224. Arethe"certain types oflegalactivities" (p.6(i)par.2) mentioned inthesecond sentence part
ofthelegalservices provided within thestructure ofenterprises, forwhich licensing isnotrequired?
What isthe"specific procedure oflicensing"? Forwhatkinds oflegalactivities other thannotarial
activities require suchprocedure?
Answer: Theactivities oflegaldepartments within thestructure ofenterprises, regardless of
theircorporate form, arenotsubject tolicensing. Lawyers atsuchadepartment provide legalsupport
services totheparticular enterprise itselfinorder toensure thatitsoperations areinaccordance with
law.Butthelegaldepartment ofanenterprise maynotactasanindependent juridical person toprovide
services tooutside organizations ortoitsenterprise 'sclients.WT/ACC/RUS/9
Page83
Thespecial procedure forlicensing legalservices iscurrently inplaceonlyfornotarial activities.
225. Concerning thelicences (p.6(i)par.3) forforeign lawfirms andforeign lawyers described
inthefirstsentence, howcould theobligations ofArticle II(MFN) andVI(Domestic Regulation in
reasonable, objective andimpartial manner) ofGATS besecured? Howabout theobligation ofArticle
XVI(Market Access, e.g.numerical quotas)?
Answer: Theobligations provided forinArticle XVI(market access) aresubject tonegotiations
andwillbereflected inRussia ’snational schedule ofcommitments which willbeanintegral partof
theProtocol ofAccession totheWTO. Thedraftschedule ofcommitments willbepresented tothe
WTO Members induecourse.
Theobligations provided forinArticle II(MFN) willbefulfilled afterRussia ’saccession to
theWTO. Russia isundertaking areview todetermine inwhich areaitwould require exemptions
fromMFN treatment, thesubstance ofwhich willbereflected inthedraftschedule ofcommitments.
Inparticular, suchexemptions maybemade withrespect tosome sectors orsubsectors ofservices
andmodes ofsupply covered byrespective agreements oftheRussian Federation withthirdcountries.
Theobligations ofArticle VI(Domestic Regulation) areensured bythepresent legislative
framework, inparticular, byChapter 1oftheCivil Code oftheRussian Federation. Furthermore,
theCivil Code oftheRussian Federation (Article 7)andrespective provisions oftheConstitution of
theRussian Federation establish thatinternational treaties oftheRussian Federation constitute anintegral
partofthelegalsystem oftheRussian Federation. Iftheinternational treaty provides forimplementation
ofrulesotherthanthoseprovided forbyRussian legislation, therulesofthatinternational treaty prevail.
Since theGATS, including Article VI,together withtheProtocol ofAccession oftheRussian Federation
totheWTO willbeconsidered asaninternational treaty oftheRussian Federation, Article VIofthe
GATS willhaveforce oflaw.
226. Please specify thescope ofthelegal services which licensed foreign lawyers arepermitted
toprovide (p.6(i)par.3). Arethere anymeasures which restrict orrequire specific types oflegal
entity orjointventure through which foreign lawfirms orlawyers supply legalservices?
Answer: Aperson whohasobtained adiploma from aforeign stateinhigher legaleducation
hastherighttorender paidlegalservices inrespect ofthelawofthestatethatissued thediploma.
There arenomeasures thatrestrict orotherwise require thatforeign lawfirms orforeign lawyers supply
legalservices through specific types oflegalentity orjointventure.
227. Arethere anyrestrictions orrequirements fortheestablishment offoreign lawfirms orthe
licensing offoreign lawyers other than"adiploma fromaforeign stateinhigher legaleducation" (p.6
(i)par.3)? Ifso,please provide detailed information.
Answer: Thefollowing aretherequirements forthelicensing offoreign lawfirms orindividual
foreign lawyers: three years ofpractice inthisfield, residence intheterritory ofRussia, registration
withthetaxation authorities andregistration asanentrepreneur.
228. Please provide abreak down ofthe300licences issued bytheMinistry ofJustice (p.6(i)par.4).
Answer: Thebreakdown of300licences isasfollows:
1. legalentities 212
including: branches offoreign firms 2
Russian firms withforeign investment 7
2. natural persons 88WT/ACC/RUS/9
Page84
AsofApril 1,1996, theMinistry ofJustice ofRussia issued atotalof586licences.
229. Could theRussian Federation specify thecriteria necessary forobtaining alicence tosupply
legal services? Could theRussian Federation confirm thatthese criteria arenon-discriminatory as
between Russian nationals andforeigners andasbetween different foreign suppliers?
Answer: TheMinistry ofJustice ofRussia confirms thatthecriteria forobtaining licences are
non-discriminatory asbetween Russian nationals andforeigners andasbetween different foreign
suppliers. Seealsoanswers 219,226,and227herein.
230. Could theRussian Federation explain thescope ofactivities thatforeign lawyers areallowed
toundertake? Does itinclude legaladvice oninternational law?
Answer: Inaccordance withthelicence issued bytheMinistry ofJustice, foreign lawyers are
allowed torender paidlegalservices onlegislation ofthestatethatissued thehigher leveldiploma.
Thepossibility ofrendering legaladvice oninternational lawisnotmentioned inthelicences.
231. Istheestablishment ofacommercial presence permitted?
Answer: Theestablishment ofcommercial presence ispermitted.
Page 6.C.(a)(ii)Accounting, auditing andbookkeeping services
232. Could theRussian Federation specify thecriteria necessary forobtaining alicence tosupply
auditing services? Could theRussian Federation confirm thatthese criteria arenon-discriminatory
asbetween Russian nationals andforeigners andasbetween different foreigners?
Answer : Criteria, necessary forobtaining alicence tosupply services arelisted inResolution
oftheRussian Government No.482dated May6,1994, which willbeprovided totheSecretariat.
These criteria arenon-discriminatory.
233. Could theRussian Federation confirm thatforeign firms aregranted national treatment?
Answer: Foreign firms, which aregranted commercial presence inRussia, receive national
treatment.
234. Istheestablishment ofawholly-owned subsidiary orabranch permitted?
Answer: Establishment ofawholly-owned subsidiary ispermitted.
235. Concerning thelicences forforeign service suppliers described inthefirstsentence, howcould
theobligations ofArticle II(MFN) andVI(Domestic Regulation inreasonable, objective andimpartial
manner) ofGATS besecured? Howabout theobligation ofArticle XVI(Market Access, e.g.numerical
quotas)? (p.6(ii)par.2)
Answer: Seeanswer 225herein.
236. Please provide information on"Rosstrakh" (p.6(ii)par.2)
Answer: “Rosstrakhnadzor ”istheFederal supervision agency oninsurance activity.
Page 6.C.(a)(iii)Architectural services:WT/ACC/RUS/9
Page85
237. Could theRussian Federation clarify thesituation asregards foreign natural persons? Arethey
permitted tosupply architectural services inRussia?
Answer: Inaccordance withArticle 10oftheFederal Law"OnArchitectural Activities inthe
Russian Federation," "foreign nationals, stateless persons, andforeign legalentities shallengage in
architectural activities onanequal footing withnationals andlegalentities oftheRussian Federation
ifthisisstipulated byaninternational agreement towhich theRussian Federation isaparty."
TheArticle saysfurther: "Intheabsence ofarespective international agreement towhich the
Russian Federation isaparty, foreign nationals, stateless persons, andforeign legal entities may
participate inarchitectural activities intheRussian Federation onlytogether withlicensed architects -
nationals orlegalentities oftheRussian Federation."
Thoselicencestosupplyarchitecturalserviceswhichwereobtainedbyforeignnationals,stateless
persons, andforeign legalentities prior totheentry intoforce oftheabove-referenced lawmaynot
beinvalidated asfailing tocorrespond tointernational laworpractice, ortoRussian legislation.
238. Could theRussian Federation clarify whether therearerestrictions onmarket access forforeign
firms? What aretheconditions forregistration asa"Russian juridical person"? Does thiscondition
ofregistration exclude establishment intheform ofbranches?
Answer: There arenorestrictions onmarket access forforeign firms wishing toregister as
"Russian juridical persons." Seealsoanswer 237herein.
239. Concerning thelicences (p.6(iii)par.1) forforeign service suppliers described inthethird
sentence, howcould theobligations ofArticle II(MFN) andVI(Domestic Regulation inreasonable,
objective andimpartial manner) ofGATS besecured? Howabout theobligation ofArticle XVI(Market
Access, e.g.numerical quotas)?
Answer: Seeanswer 225herein.
240. What istheUnion ofArchitects (p.6(iii)par.1), andhowisitinvolved inthelicensing
procedure?
Answer: TheNational Union ofArchitects isavoluntary non-governmental organization of
architects. Inexceptional cases, italsoadmits members ofother professions whohavespecial merits
incontributing tothedevelopment ofarchitecture andtownplanning. TheRussian Union ofArchitects
hasanetwork ofregional branches andadvises thefederal Ministry ofConstruction onproposals for
updating theregulatory legalbasis forlicensing architectural activities.
Seealsoanswer 244herein.
241. Please elaborate ontheconditions tobemettoberegistered asaRussian juridical person.
Answer: Toregister asaRussian juridical person, anapplicant hastosubmit thefollowing
documents totheRegistration Chamber:
- legalized statement from thetrade register oftheapplicant 'scountry (along witha
notarized translation intoRussian);
- aletter ofgoodstanding fromtheapplicant 'sbank(along withitsnotarized translation
intoRussian);
- application (produced bycompleting astandard form);
- foundation documents forcorporation orpassport details incaseofindividual;
- completed standard registration questionnaire;
- twonotarized copies ofthebylaws oftheforeign company 'sRussian branch;
- letter ofguarantee toprovide alegaladdress forthisbranch;WT/ACC/RUS/9
Page86
- documents establishing theforeign company 'sdecision toopenitsbranch inRussia
(along withanotarized translation ofthisdecision intotheRussian language); and
- certificate ofaccreditation fortheforeign representative, iftheforeign company is
registering arepresentative office. Therepresentative office additionally must be
registered withtheStateRegistration Chamber attheMinistry ofEconomics, andwith
theChamber ofCommerce andIndustry.
Seealsoanswer 90.
C.(a)(iv) Urban Planning andLandscape Architecture
242. Please enumerate theconditions attached tothelicences required fortheprovision oftheservices
listed. Isthenational treatment provided?
Answer: Pending
243. Concerning thelicences (p.7(iv)par.1) forforeign service suppliers described inthesecond
sentence, howcould theobligations ofArticle II(MFN) andVI(Domestic Regulation inreasonable,
objective andimpartial manner) ofGATS besecured? Howabout theobligation ofArticle XVI(Market
Access, e.g.numerical quotas)?
Answer : Seeanswer 225herein.
244. Could theRussian Federation specify thecriteria necessary forobtaining alicence tosupply
suchservices?CouldtheRussianFederationconfirmthatthesecriteriaarenon-discriminatoryasbetween
Russian nationals andforeigners andasbetween different foreigners?
Answer : Thelicensing ofactivities inthissector issubject toprovisions ofResolution ofthe
Government oftheRussian Federation No.1418“OnLicensing ofSpecific Types ofActivities ”dated
December 24,1994. Atthemoment, special rules onlicensing ofactivities inthissector arebeing
elaborated. National treatment forforeign companies isprovided.
Page 7.C.(a)(v)Research andDevelopment Services:
245. Same question asforC.(a)(iv),i.e.could theRussian Federation specify thecriteria necessary
forobtaining alicence tosupply suchservices? Could theRussian Federation confirm thatthesecriteria
arenon-discriminatory asbetween Russian nationals andforeigners andasbetween different foreigners?.
Answer : Presently, research anddevelopment services arenotsubject tolicensing except cases
referred toinWT/ACC/RUS/6 section C(a)(v).
246. Concerning thelicences (p.7(iv)par.1) forforeign service suppliers described inthefirst
sentence, howcould theobligations ofArticle II(MFN) andVI(domestic Regulation inreasonable,
objective andimpartial manner) ofGATS besecured? Howabout theobligation ofArticle XVI(Market
Access, e.g.numerical quotas)?
Answer: Seeanswer 225herein..
C.(a)(vi)Services Relating toRealEstate
247. Concerning thelicences (p.7(vi)par.1) forforeign service suppliers described inthesecond
sentence, howcould theobligations ofArticle II(MFN) andVI(Domestic Regulation inreasonable,WT/ACC/RUS/9
Page87
objective andimpartial manner) ofGATS besecured? Howabout theobligation ofArticle XVI(Market
Access, e.g.numerical quotas)?
Answer: Seeanswer 225herein.
248. Same question asforC.(a)(iv),i.e.could theRussian Federation specify thecriteria necessary
forobtaining alicence tosupply suchservices? Could theRussian Federation confirm thatthesecriteria
arenon-discriminatory asbetween Russian nationals andforeigners andasbetween different foreigners?.
Answer: Pending .
249. Could theRussian Federation explain itsregime asregards acquisition ofrealestate andthe
consequences fortherealestate services?
Answer: Pending .
Page 7.C.(a)(vii)Rental/leasing services without operators:
250. Same question asforC.(a)(iv)i.e.could theRussian Federation specify thecriteria necessary
forobtaining alicence tosupply suchservices? Could theRussian Federation confirm thatthesecriteria
arenon-discriminatory asbetween Russian nationals andforeigners andasbetween different foreigners?.
Answer: Pending .
251. Concerning thelicences (p.7(xii)par.1) forforeign service suppliers described inthesecond
sentence, howcould theobligations ofArticle II(MFN) andVI(Domestic Regulation inreasonable,
objective andimpartial manner) ofGATS besecured? Howabout theobligation ofArticle XVI(Market
Access, e.g.numerical quotas)?
Answer: Seeanswer 225herein.
Page 8.C.(b)(i)Advertising Services:
252. Could theRussian Federation confirm thatnorestrictions tomarket access apply inthisarea?
Doforeign firms benefit from national treatment?
Answer: Pending .
253. Concerning Advertising Services (p.8(b)(i)),howcould theobligations ofArticle II(MFN)
andArticle XVI(Market Access, e.g.numerical quotas)?
Answer: Seeanswer 225herein.
Page 8/9.C.(b)(ii)Services relating tomining industry
254. Same question asforC(a)(iv)i.e.could theRussian Federation specify thecriteria necessary
forobtaining alicence tosupply suchservices? Could theRussian Federation confirm thatthesecriteria
arenon-discriminatory asbetween Russian nationals andforeigners andasbetween different foreigners?.
254. Answer: Pending .WT/ACC/RUS/9
Page88
255. Concerning thelicences forforeign service suppliers described inthesecond sentence (p.8
(iii)par.1),howcould theobligations ofArticle II(MFN) andVI(Domestic Regulation inreasonable,
objective andimpartial manner) ofGATS besecured? Howabout theobligation ofArticle XVI(Market
Access, e.g.numerical quotas)?
Answer: Seeanswer 225herein.
C.(b).(iii) Maintenance andRepair ofEquipment
256. Concerning thelicences forforeign service suppliers described inthesecond sentence (p.8
(iii)par.1), howcould theobligations ofArticle II(MFN) andVI.(Domestic Regulation isreasonable,
objective andimpartial manner) ofGATS besecured? Howabout theobligation ofArticle XVI(Market
Access, e.g.numerical quotas)?
Answer: Seeanswer 225herein.
257. Canforeign companies andcitizens obtain aservice licence inthissector? Please citethe
conditions tobemet.
Answer : Seeanswer 82herein forinformation ongeneral licensing requirements.
Licencesforthemaintenanceandrepairofmotorvehiclesareissuedforafixedperiod(3months,
1year, or5years) byregional branches andaffiliates oftheRussian Transport Inspection Service.
Inaddition tomeeting general requirements, anapplicant must present datatoprove thathehasthe
maintenance andrepair service outlets, aswellasother fixed assets, required topursue theactivity
forwhich thelicence isbeing sought. Applicants seeking licences foranyoftheother types of
maintenance andrepair service arelikewise required tohaveadequate facilities (equipment, etc.)in
place toengage intheactivity being licensed.
Section (iii),Maintenance andRepair ofEquipment, inWT/ACC/RUS/6 (p.8)listssome
equipment maintenance andrepair services subject tolicensing. Thefollowing isafuller listofsuch
services, along withtheagencies authorized togrant respective licences andwithanindication asto
whether there areanybansorrestrictions intherelevant service sectors applying toforeign suppliers.
Ministry ofFuelandPower Development oftheRussian Federation:
Themounting, adjustment, andrepair ofpower installations, including power engineering
facilities, heatengineering facilities (with theexception ofwater heaters andboilers under thecontrol
oftheFederal Mining andIndustrial Safety Supervision Service), andconsumers 'ownpower
installations.
(Russian Government Resolution No.1001 "OnApproval oftheRegulation onLicensing in
thePower Industry," dated October 12,1995.)
Ministry ofPublic Health andMedical Industry oftheRussian Federation:
Themanufacture, sale,andmaintenance ofmedical equipment.
Ministry ofTransport oftheRussian Federation:
Themaintenance andrepair ofmotor vehicles.
(Russian Government Resolutions No.372"OnApproval oftheRegulation onLicensing in
theField ofTransportation," dated April 23,1994, andNo.118ofFebruary 26,1992.)
Russian Space Agency (access offoreign service suppliers islimited):
Space-related activities, including thetesting, manufacture, storage, pre-launch conditioning,
andlaunching ofspacecraft, aswellasspace mission control.
FederalGovernmentCommunicationsandInformationAgencyunderthePresidentoftheRussian
Federation (closed toforeign service suppliers):
Theservicing ofencryption facilities.
State Committee onDefense Industries oftheRussian Federation (access offoreign service
suppliers islimited):WT/ACC/RUS/9
Page89
Thedevelopment andmanufacture ofarmaments, military equipment, andammunition, and
theirdisposal.
(Russian Government Resolution No.841"OnApproval oftheRegulation ontheLicensing
bytheRussian Federation Defense Ministry ofIndividual Types ofActivity (Work, Service)," dated
August 26,1995.)
(iv)Services Relating toInvestigation andSecurity
258. Concerning thelicences forforeign suppliers described inthesecond sentence (p.8(iv)par.1),
howcould theobligations ofArticle II(MFN) andVI(Domestic Regulation inreasonable, objective
andimpartial manner) ofGATS besecured? Howabout theobligation ofArticle XVI(Market Access,
e.g.numerical quotas)?
Answer: Seeanswer 225herein.
(v)Services Relating toHuman Resource Management
259. Concerning thelicences forforeign service suppliers described inthesecond sentence (p.9
(v)par.1), howcould theobligations ofArticle II(MFN) andVI(Domestic Regulation inreasonable,
objective andimpartial manner) ofGATS besecured? Howabout theobligation ofArticle XVI(Market
Access, e.g.numerical quotas)?
Answer: Seeanswer 225herein.
(vi)Services Relating toPhotography, Packaging, Printing andPublishing
260. Concerning thelicences forforeign service suppliers described inthesecond sentence (p.9
(vi)par.1), howcould theobligations ofArticle II(MFN) andVI(Domestic Regulation inreasonable,
objective andimpartial manner) ofGATS besecured? Howabout theobligation ofArticle XVI(Market
Access, e.g.numerical quotas)?
Answer: Seeanswer 225herein.
Page 9.C.(b)Other services relating tobusiness activity: Communication services:
261. Could theRussian Federation provide responses tothequestionnaire onBasic
Telecommunications (ref.: TS/NGBT/W/3 dated 15July1994)?
Answer : Theresponses tothequestionnaire onBasic Telecommunications (ref.:TS/NGBT/W/3,
dated July15,1994) arebeing prepared andwillbesubmitted totheWTO Secretariat astheyare
completed.
262. Please provide information on"Gossvyaznadzor" (p.9(b)par.1) which grants licences to
communication services suppliers.
Answer: Inaccordance withtheStatute oftheGovernment Service forSupervision over
Communications intheRussian Federation (No.1156, dated November 15,1993), thisservice consists
oftheMain Department forGovernment Supervision OverCommunications intheRussian Federation
("Glavgossvyaznadzor") anditsregional branches anddivisions. Thisservice isanintegrated network
ofagencies monitoring thecondition oftelecommunications andmailservice networks andfacilities,
ensuring thatcommunications services areonlysupplied bylicensed operators inaccordance with
establishedqualityrequirements,andawardingoperatingfrequenciestoradioelectronicservicesuppliers.WT/ACC/RUS/9
Page90
Licences tocommunications service suppliers inRussia aregranted bytheFederal Ministry
ofCommunications inaccordance withtheFederal Law"OnCommunications" andwiththeprocedure
approved byRussian Government Resolutions No.642"Regulation onLicensing intheField of
Communications intheRussian Federation," dated June5,1994, andNo.1379 "OntheLicensing
ofTelevision andRadio Broadcasting, andCommunications Activities intheFields ofTelevision and
Radio Broadcasting intheRussian Federation," dated December 7,1995.
263. Towhatextent isforeign capital participation permitted (p.9(b)par.2)?
Answer: TheFederal Law"OnCommunications" doesnotsetanyrestrictions onforeign capital
participation fornewly-established operators andfornewcomers totheRussian communications market.
Astoexisting operators -jointstockcompanies established through theprivatization offormerly
wholly state-owned enterprises, controlling stakes inthemmust, under aRussian Government decision,
remain infederal ownership forthree years.
Seealsoanswer to67herein.
264. How isinterconnection offoreign services suppliers todomestic basic telecommunication
networks granted "oncase-by-case basis" (p.10 par.1), andwhat arethespecific criteria forthe
interconnections?
Answer: TheRussian Government Resolution mentioned inanswer 263herein, provides for
thenon-discriminatory treatment ofdomestic andforeign operators, withtheexception oftheprovision
ofcommunications services withaccess tonetworks ingeneral use.
265. Could youpossibly give some more information ontheeconomic structure ofthe
telecommunications market (forexample thenumber ofexisting suppliers, existence ofmonopoly and
exclusive rights)?
Answer: TheRussian Ministry ofCommunications hasbynowissued 1,278 licences toservice
suppliers, regardless oftheirownership status, including 812television andradiobroadcasting licences,
913telecommunications licences, and46mailservice licences.
There isevidence ofrealcompetition inthefields ofglobal mobile personal satellite
communications,datatransmission,andmobilecellularphone,telematic,andothervalue-addedservices.
There isnocompetition inrural andurban network telephone services, butthere islimited
competition ininternational telephone communications andlineleasing.
Asinmostcountries, restrictions oninternational telephone communications willcontinue in
effect foracertain timeforpublic network operators.
266. Canforeign suppliers provide telecommunications services onlythrough thelegalform ofa
jointventure between Russia andforeign organizations orcitizens?
Answer: TheFederal Law"OnCommunications" doesnotsetrestrictions ontheestablishment
ofcommunications service ventures andontheextent offoreign investor participation insuchventures.
267. Aretheservices listed theonlyonesopentoprovision byforeign suppliers?
Answer: Foreign suppliers mayprovide communications services viapublic networks subject
tothose limitations which areestablished ontheprovision ofinternational telephone services forparties
subscribing togeneral-use network services.WT/ACC/RUS/9
Page91
(c)Audiovisual Services
(i)Services inRadio Broadcasting andTelevision
268. Concerning licences granted toforeign service suppliers ofradio broadcasting andtelevision
services (p.10 (i)par.2), howcould theobligations ofArticle II(MFN) andVI(Domestic Regulation
inreasonable, objective andimpartial manner) ofGATS besecured?
Answer: Seeanswer 225herein.
(ii)Services Relating toProduction andDistribution ofCinema andVideo Films
269. ConcerningtheRegulationdescribedinthesecondsentence(p.10(ii)),howcouldtheobligations
ofArticle II(MFN) andArticle XVI(Market Access, e.g.numerical quotas)?
269. Answer: Seeanswer 225herein.
(d)Distribution Services
270. Concerning thelicences forforeign service suppliers described inthethirdsentence (p.10 (d)
par.1), howcould theobligations ofArticle II(MFN) andVI(Domestic Regulation inreasonable,
objective andimpartial manner) ofGATS besecured? Howabout theobligation ofArticle XVI(Market
Access, e.g.numerical quotas)?
Answer: SeeAnswer 225herein.
(f)Financial Services
(i)Insurance
271. Concerningthelicencesforforeignservicesuppliersdescribedinthethirdsentence(p.12par.2),
howcould theobligations ofArticle II(MFN) andVI(Domestic Regulation inreasonable, objective
andimpartial manner) ofGATS besecured? Howabout theobligation ofArticle XVI(Market Access,
e.g.numerical quotas)?
Answer: SeeAnswer 225herein.
272. Wehaveheard ofaproposal tocreate anewstate-owned Russian national reinsuarnce company;
could Russia confirm whether thisinformation isaccurate?
Answer : The Russian Ministry oftheEconomy, theInsurance Supervision Service
(Rosstrakhnadzor),andtheFinanceMinistry,actinginaccordancewithparagraph5.2oftheGovernment
Program "Economic Reform andDevelopment in1995-97," haveprepared proposals fordeveloping
thenational reinsurance market, including theestablishment ofprivate federal reinsurance companies
using government guarantees forinsurance obligations under certain conditions.
Theresulting draftofaRussian Government resolution (tentatively entitled "OnMeasures to
Establish aSystem fortheInsurance Protection ofInvestors 'Property Interests intheRussian
Federation") provides forthecreation ofinsurance pools -special-purpose associations ofinsurance
organizations onthebasis ofanagreement among them, which willinsure corporate risks, andfor
theestablishment offederal reinsurance companies -open jointstock companies. Each company is
tohaveasubstantial charter capital equal toatleast100billion roubles, inorder toreinsure insuranceWT/ACC/RUS/9
Page92
poolrisksusing government guarantees forinsurance obligations, which theywillbeabletouseunder
specified conditions.
ThedraftoftheGovernment Resolution provides fortheestablishment ofseveral suchfederal
reinsurance companies, which areneeded toprevent monopolistic behaviour onthereinsurance market.
Such reinsurance organizations maybecreated withtheparticipation offoreign capital, andrelated
negotiations arecurrently under waywiththeWorld Bank andtheEuropean Bank forReconstruction
andDevelopment.
273. Does thenewlawoninsurance (passed on14July1995) include aprovision thatincreases
theminimum capital requirements forinsurance companies?
Answer : TheFederal LawNo.4015-1 "OnInsurance," dated November 27,1992, isinfull
force andeffect.
Itwastobeamended under abillwhose Article 27.2required insurers applying foralicence
afterthebill'senactment tohaveapaid-in charter capital equal toatleast25,000 minimum statutory
monthly wages. Hadthisminimum capitalization requirement beensigned intolaw,newly created
companies would bediscriminated against compared withthe"oldcompanies" which would beable
tocontinue inbusiness withacharter capital ofonly 2million roubles.
Itisforthisandother reasons, thatthePresident onDecember 31,1995, onceagain vetoed
thesaidbill,which hadbeenapproved bythelower house oftheRussian Parliament, andsentitback
forreview. Thisreview should takedueaccount ofhiscomments andsuggestions onanumber of
keyissues.
274. Arethere anyrestrictions ontheestablishment offoreign jointventure insurance companies
(including interms oflimitations oncapital participation)?
Answer: Restrictions ontheestablishment ofinsurance jointventures doexistintheform of
a49-percent limitontheforeign investors 'aggregate ownership interest inthecharter capital ofsuch
acompany, aswellasintheformofalimited choice ofbusiness forms which suchjointventures may
assume. Under federal legislation (Article 6oftheLaw"OnInsurance," andtheSupreme Soviet
Resolution "OntheBringing IntoForce oftheRussian Federation LawonInsurance," dated November
27,1992), foreign legalentities andindividuals havetherighttoparticipate intheestablishment of
insurance organizations inRussian territory onlyintheform oflimited liability companies orjoint
stock companies.
Another restriction imposed byinsurance legislation isabanonintermediary activities pursued
inRussian territory onbehalf offoreign insurance organizations.
275. Arelicensing rules andprocedures thesame forforeign insurers asfornational entities?
Answer : Seeanswer 274herein.
276. IntheSupplement totheMemorandum ontheForeign Trade Regime, Russia indicated that
"thesaleofinsurance services isnotpermitted onacross-border basis". Could Russia bemore specific
onthetypeoflimitations involved?
Answer: ForeigninsurersmayprovideinsuranceservicesontheterritoryoftheRussianFederation
onlythrough thecommercial presence mode ofsupply.
Page 11.C. (f)Financial services (i)insurance:WT/ACC/RUS/9
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277. Could theRussian Federation provide further details concerning theamendments tothelaw
"OnInsurance" which wereadopted bytheUpper House oftheRussian Parliament inmid-October?
Answer: Theamendments totheLaw"OnInsurance," approved bytheFederation Council -
theupper house oftheRussian Parliament, havebeenvetoed bythePresident.
278. Willthecompulsory separation oflifeandnon-life insurance companies bemaintained orare
there anyprospects ofliberalisation inthenearfuture?
Answer: Existing legislation doesnotcurrently provide legalgrounds forsuchseparation.
279. Isthedirect branching offoreign companies intoRussia permitted?
Answer: Thedirect branching offoreign companies intoRussia ispermitted, butnotforthe
purpose ofdoing insurance business.
280. Canforeign companies acquire shares inexisting localcompanies? Ifso,issuchanacquisition
subject toamaximum ceiling of49percent?
Answer: Foreign companies mayacquire shares inexisting localinsurance companies, butsuch
acquisitions aresubject toamaximum ceiling of49percentinthelocalinsurance venture 'scapital.
281. Willforeign companies bepermitted toparticipate intheprivatisation ofstate-owned domestic
insurancecompanies(suchasforexample"Rosgosstrakh"),andifso,willanylimitationsbemaintained?
Answer: Theprocedure fortheparticipation offoreign legalentities inprivatization isestablished
byDecree ofthePresident No.1535 ofJuly22,1994 which doesnotenvisage prohibitions on
participation offoreign companies orprivatizations involving theinsurance sector.
282. Areforeign companies granted access tothelocal reinsurance market, andifso,arethey
guaranteed non-discriminatory treatment withrespect totheiroperations?
Answer: Foreign companies arefreetooperate ontheRussian reinsurance market, provided
thattheyabide bytherequirements ofRussian legislation oninsurance, aswellasoncurrency regulation
andcurrency control.
283. Thecrossborder supply ofinsurance services iscurrently notpermitted. Arethereanyprospects
forfurther liberalisation ofthissector, atleastasregards theeconomically important activities ofMAT
insurance andreinsurance?
Answer: Alonger listofinsurance services supplied inthecross-border trademode isstipulated
bythepartnership agreement between theRussian Federation andtheEC(which hasnotyetentered
intoforce).
Thislistcoversreinsurance,retrocession,andotherancillaryinsuranceservices,riskassessments,
thesettlement ofdisputes andclaims, etc.
284. Which obligatory insurance issubject toexclusive rights oftheRussian State Company?
Answer: TheRussianStateInsuranceCompanycurrentlyhasexclusiverightstoprovideobligatory
freepersonal insurance toindividuals whohavesuffered from theChernobyl accident orhavebeenWT/ACC/RUS/9
Page94
seconded toradiation riskareas (inaccordance withUSSR Council ofMinisters Resolution No.961,
dated October 2,1991).
Therighttoprovide other types ofobligatory insurance isgranted toinsurance organizations
licensed tosupply suchobligatory insurance service andoperating intheterritory oftheRussian
Federation.
285. Isnational treatment granted withrespect tooperations ofcompanies withforeign equity
participation? Ifnot,could theRussian Federation explain existing limitations?
Answer: National treatment isgranted toinsurance companies withforeign equity participation,
provided thattheyareregistered inaccordance withapplicable Russian legislation.
286. Does present Russian legislation contain reciprocity measures intheinsurance sectors?
Answer: Reciprocity measures intheinsurance sector areestablished bybilateral andmultilateral
agreements concluded byRussia.
287. Itisnotclear whether foreign banks canestablish asubsidiary; please clarify.
Answer: ForeignbanksareentitledtoestablishsubsidiariesintheRussianFederationinaccordance
withArticle 18oftheFederal Law"OnBanks andBanking Activity."
288. DoRussian authorities plantoremove thereciprocity provision withrespect tothelicensing
offoreign andjointventure banks?
Answer: There arenoimmediate plans toremove thereciprocity provision, which isstipulated
byArticle 18oftheFederal Law"OnBanks andBanking Activity." TheBank ofRussia mayimpose
limitations ontheperformance ofbanking transactions byagreement withtheFederal Government
ifthecorresponding foreign countries arerestricting theestablishment andoperation ofbanks with
Russian investment, andbranches ofRussian banks. However, inthisregard, Russia willtakeinto
account theresults ofthefuture WTO negotiations onfinancial services.
289. Foreign capital participation inthebanking sector iscurrently limited to12percentofthe
totalcapital heldbyRussian banks. DotheRussian authorities intend toincrease thisceiling? Isthe
information regarding thetotalcapital heldbyRussian banks made easily available topotential foreign
investors (i.e.transparency)? What arethecurrent statistics inthisregard? HastheBank ofRussia
everceased theissuance ofabanking licence because thelimithasbeenreached and,ifthathasbeen
thecase, forhowlong?
Answer: Since foreign capital participation intheRussian banking sector hasnever exceeded
6percent, there hasbeennoconsideration given toraising the12-percent ceiling setin1993.
TheinformationrequestedregardingthetotalcapitalheldbyRussianbanksispublishedmonthly
intheBank ofRussia 'snewsletter.
Page 12.C.(f)(ii)Banking andother financial services:
290. Isthegranting ofalicence toopenaforeign bankbranch ofjointventure subject toan"economic
needs" test?
Answer: Thegranting ofalicence toopenaforeign bankbranch orjointventure bankissubject
tocase-by-case examination. Seealsoanswer 289herein.WT/ACC/RUS/9
Page95
291. WilltheRussian authorities remove thelimitations onforeign banks andjointventures banks
(setbythePresidential Decree no.1924) asexpected on1January 1996?
Answer: Those limitations onbanks withforeign investment andbranches ofnonresident banks
which were setbyPresidential Decree No.1924 havebeenremoved asofJanuary 1,1996.
292. Does Russia intend tofurther improve itsbanking, accounting andauditing practices ona
widespread basis across thesector toconform withinternational standards?
Answer: Russia intends tocontinue improving itsbanking, accounting, andauditing practices.
In1995-96, thenewFederal Laws "OntheCentral Bank oftheRussian Federation (Bank ofRussia),"
and"OnBanks andBanking Activity" haveentered intoforce. Another newfederal billcurrently being
debated bytheStateDuma deals withbookkeeping andaccounting, andafederal billonauditing also
hasalready beendrafted.
293. Arethere anyapplicable ceilings onforeign ownership onlocally established banks?
Answer: There arenosuchceilings. Banks withforeign equity participation, including wholly
owned foreign banks, maybeestablished intheRussian territory.
294. DoestheRussianFederationenvisagepermittingdirectbranchingwithoutthepriorestablishment
ofasubsidiary?
Answer: Inaccordance withArticle 2oftheFederal Law"OnBanks andBanking Activity,"
theRussianbankingsystemcomprisestheBankofRussia,domesticlendinginstitutions,andthebranches
andrepresentative offices offoreign banks. Direct branching intoRussia ispermitted toonlythose
nonresident banks which haveastrong financial standing andanunblemished business reputation.
Preference isgiven tothose nonresident banks whose short-term liabilities havearating notlower than
AAorprime-1 according totheIBCA, Moody 's,orStandard andPoorclassifications.
295. Which conditions/restrictions apply withrespect tothegranting oflicences fornewsubsidiaries,
aswellasforbranches oflocally established banks? Doanylimitations apply tothenumber ofbranches?
Doesthelawdifferentiate between foreign-owned anddomestic banks inthatcontext? Between different
foreign-owned banks?
Answer: TheBankofRussia maycease issuing banking licences tobanks withforeign investment
afterthestatutory ceiling (presently 12percentonforeign capital participation inthebanking sector)
isreached.
TheBank ofRussia mayimpose restrictions ontheperformance ofbanking transactions by
lending institutions withforeign equity participation, andforeign bankbranches byagreement with
theFederal Government iftherespective foreign countries arerestricting theestablishment andoperation
ofbanks withRussian investment andRussian bankbranches.
Whenever asubsidiary bankwishes toopenabranch inRussian, itmustobtain aseparate licence
from theBank ofRussia.
296. Areforeign banks allowed toprovide thewhole range ofbanking activities (seethelistcontained
intheAnnex onFinancial Services)?
Answer: TheBankofRussia mayimpose restrictions ontheperformance ofbanking transactions
bylending institutions withforeign equity participation andforeign bankbranches byagreement with
thefederal Government iftherespective foreign countries arerestricting theestablishment andoperation
ofbanks withRussian investment andRussian bankbranches.WT/ACC/RUS/9
Page96
Thepossibility oftheRussian Federation applying additional restrictive measures withrespect
tooperations ofbanks withforeign equity participation is,therefore, notexcluded.
297. Willthetemporary moratorium imposed onforeign banks andtheiraffiliates byPresidential
Decree No.1924 of17November 1993 fullyexpire by1January 1996? Ifnot,could theRussian
Federation describe inmore detail restrictive measures which willpersist, andthenumber offoreign
banks affected bysuchlimitations?
Answer: Seeanswer 291herein.
298. Isnational treatment granted withrespect tooperations ofbanks withforeign participation?
Ifnot,could theRussian Federation listexisting limitations?
Answer: There arecurrently noacross-the-board restrictions onoperations ofbanks withforeign
equity participation andforeign bankbranches.
ButtheBank ofRussia may,byagreement withtheFederal government, restrict theirbanking
operations iftherespective foreign countries areimposing limitations ontheestablishment andactivities
ofbanks withRussian investment andRussian bankbranches.
TheBank ofRussia mayestablish additional prudential requirements, aswellasadditional
requirements regarding procedures forthesubmission ofreports andtheapproval ofgoverning bodies,
listsofauthorized banking transactions, andminimum capitalization requirements fornewly-registered
banks andforeign bankbranches.
299. Weunderstand thattheRussian Federation currently applies reciprocity measures withrespect
tothegranting oflicences toforeign banks andjointventure banks. Could theRussian Federation
confirm thatitwillprovide forMFN treatment among Members 'service suppliers?
Answer: Seeanswer 288herein.
300. Willforeign companies bepermitted toparticipate intheprivatisation ofState-owned domestic
banks?
Answer : Presidential Decree No.1535 “OnBasic Provisions oftheState Programme forthe
Privatization ofState- andMunicipally-owned Enterprises intheRussian Federation ”dated July22,
1994,doesnotprohibittheparticipationofforeigncompaniesintheprivatizationofstate-owneddomestic
banks.
301. Pleaseelaborate"theCentralBankofRussiamayimposeadditionalrequirementstojointventure
banks, withthepurpose ofensuring equal opportunities forcompetition forallbanks". What arethe
specific criteria forthe"equal opportunities forcompetition forallbanks" (p.12 par.3)?
Answer: When admitting foreign capital intotheRussian banking sector, theBank ofRussia
isguided bytwobasicprinciples. Theyare,ontheonehand, theprinciple ofpromoting andsupporting
competition onthemarket ofbanking services inorder toensure theirdiversification andbetter quality
and,ontheother, theprinciple ofprotecting thedomestic banking system byapplying prudential
regulations onoperations ofbanks withforeign equity participation which arestipulated byinternational
agreements andfederal laws.
Since theRussian banking system isstillinadeveloping stateandRussian banks donotalways
haveequal experience ascompared toforeign banks, theycannot beregarded ascompeting onanequal
footing intheRussian market.WT/ACC/RUS/9
Page97
ThisiswhytheFederal Law"OntheCentral BankoftheRussian Federation (Bank ofRussia)"
empowerstheBankofRussiatosetconditionsregardingaccessforforeigncapitaltothenationalbanking
system inaccordance withFederal legislation inorder toprotect thedomestic banking sector.
TheBank ofRussia mayestablish additional prudential requirements, aswellasadditional
requirements regarding procedures forthesubmission ofreports andtheapproval ofgoverning bodies,
listsofauthorized banking transactions, andminimum capitalization requirements fornewly-registered
banks andforeign bankbranches.
302. Please elaborate "a12percentlimitoftheshare forforeign capital inthebanking system of
theRussian Federation" (p.13 par.2). Howdoesthisrelate toforeign capital restriction forindividual
banks?
Answer: Thelimitforforeign capital participation intheRussian banking sector iscalculated
astherelation ofthetotalcharter capital heldbynonresidents inlending institutions withforeign equity
participation plusthecharter capital heldbyforeign bankbranches ascompared tothecombined charter
capital ofalllending institutions registered intheterritory oftheRussian Federation. Seealsoanswer
293herein.
303. What isthestatutory basis forthe"licences issued according totheprinciple ofreciprocity"
(p.13 par.4)?
Answer: Seeanswer 288herein.
Page 13.C.(f)(ii)1.Securities:
304. Could theRussian Federation provide further information relating tothedraftfederal law"On
Stock Market intheRussian Federation", inparticular asregards theenvisaged treatment offoreign
companies andtheexpected dateofentry intoforce ofthislaw?
Answer: ThedraftFederal Law“OnStock Markets ”intheRussian Federation wasvetoed by
thePresident andisnowintheprocess ofbeing reconsidered within theframework ofaspecial
commission established byadecree oftheFederation Council (upper chamber) oftheFederal Assembly.
Noforecasts regarding itsfinalcontent andtiming ofadoption canbemade bytheRussian Government.
305. Inparticular, could theRussian Federation statewhether thepresent situation, i.e.nolimitation
ontheparticipation ofnon-residents intheRussian securities market, willbemaintained?
Answer: Seeanswer 304herein.
306. Does thedraftlawcontain provisions allowing fortheapplication ofreciprocity measures?
Answer: Seeanswer 304herein.
307. What isthesituation oftheFederal Law"OnStock Market intheRussian Federation", and
when thelawisexpected topasstheFederal Assembly (p.13 par.1)?
Answer: Seeanswer 304herein.
308. Aretherelimitationsontheparticipationofforeignfinancialinstitutionsonthesecuritiesmarket?
Answer: Theoperations offoreign financial institutions ontheRussian securities market are
currently subject tothesamerequirements ofRussian lawwhich apply totheother nonresidents withoutWT/ACC/RUS/9
Page98
anyadditional limitations ineffect forthem. Theprincipal legalactsregulating transactions involving
nonresidents include, among others:
RussianFederationLaw"OnForeignInvestmentintheRSFSR,"datedJuly4,1991(asamended
onDecember 24,1993, andonJune19,1995);
Russian Federation LawNo.3615-1 "OnCurrency Regulation andCurrency Control," dated
October 9,1992;
Bank ofRussia Instruction No.16"OntheProcedure fortheOpening andMaintenance by
Authorized Banks ofNonresidents 'Accounts intheCurrency oftheRussian Federation," dated July
16,1993;
USSR State Bank Letter No.352"Basic Provisions onForeign Exchange Regulation inthe
Territory oftheUSSR," dated May24,1991;
BankofRussia Letter No.12-86 "OnCertain Matters Pertaining totheApplication ofCurrency
Legislation oftheRussian Federation," dated February 24,1995;
Russian StateTaxService Instruction No.34"OntheProfit andIncome Taxation ofForeign
Legal Entities," dated June16,1995; and
Russian State TaxService Letter No.YuU-6-06/308 "OnRates ofTaxonIndividual Types
ofIncome Established inAgreements ontheAvoidance ofDouble Taxation," dated May31,1995.
309. Arefinancial institutions allowed totrade directly onthesecurities market? Aretherulesthe
same forforeign financial institutions?
Answer: Existing Russian legislation doesnotstipulate anyrestrictions oneither Russian or
foreign financial institutions asfarastheirdirect trading onthesecurities market isconcerned.
Seealsoanswer 308herein.
(g)Services inHealth Care andSocial Services
310. Concerning thelicences forforeign service suppliers described inthelastsentence, howcould
theobligations ofArticle II(MFN) andVI(Domestic Regulation inreasonable, objective andimpartial
manner) ofGATS besecured? Howabout theobligation ofArticle XVI(Market Access, e.g.numerical
quotas)?
Answer: SeeAnswer 225herein.
(h)Tourism andTravel-Related Services
311. What isthedefinition of"international tourist activity" (p.14 (h)par.1)? Please provide concrete
examples ofsuchactivity?
Answer : Pending .
312. What is"obligatory licensing" anditsspecific criteria? (p.14 (h)par.1)
Answer : RussianGovernmentResolutionNo.1222datedDecember12,1995listedthefollowing
criteria forobtaining licences fortravel agencies from theState Committee onPhysical Culture and
Tourism:
-requirement toprovide information onthedestinations ofatourist;
-atleastonestaffmember should havespecial tourism-related education oratleast3years
experience inthefield;
-services should berendered onlyonacontractual basis inwritten form; and
-fullinformation onservice providers should beprovided totheconsumer.WT/ACC/RUS/9
Page99
313. Please provide thenumber ofcompanies with100percentforeign capital among the186foreign
services suppliers. (p.15 par.1)
Answer : AsofDecember 31,1996, 20percentof220jointventures acting inthefieldwere
established with100percentforeign capital
314. Arethere anyrestrictions on"tourist guide services"?
Answer : There arenorestrictions ontourist guide services intheRussian Federation, except
forservices relating toalpine tourism.
Page 15.C.(h)Tourism andTravel-Related Services
(i)Transportation services:
315. Does theRussian Federation intend toparticipate inthework ofNGMTS? Could theRussian
Federation provide responses tothequestionnaire onmaritime transport services (ref.: S/NGMTS/W/2
dated 21October 1994)?
Answer: Beginningwiththe4thmeetingoftheNegotiatingGrouponMaritimeTransportServices,
theRussian Federation hasparticipated initswork asanobserver, astatus granted toitinFebruary
1995. TheRussian Ministry ofTransport hasbeencarefully monitoring theactivities ofNGMTS and
seeks totaketheprogress andresults ofitswork dulyintoaccount innegotiations onRussia 'saccession
totheWTO.
316. Please specify restrictions, ifany,onthree sub-sectors ofairtransport services, i.e.aircraft
repair andmaintenance services, theselling andmarketing ofairtransport services andCRSservices,
towhich theGATS isapplied. (p.15 (i)par.2)
Answer: Asfarasaircraft repair andmaintenance services areconcerned, inRussia there is
anetwork ofrepair andmaintenance companies fortheoverhaul andservicing ofaircraft, engines,
andaccessories. There isinterest intheestablishment ofjointventures performing suchjobswiththe
participation ofRussian specialists. There arecurrently norestrictions ontheprovision ofthistype
ofservice.
Astotheselling andmarketing ofairtransport services, existing bilateral agreements onair
traffic services regulate traffic routes, thevolume oftransportation, andflight regularity, andensure
therequired balance ofinterests oftheRussian andforeign sides. Rights toselltransportation services
intheterritories ofcontracting parties under suchagreements aregranted toonlythose carriers which
havebeendesignated tosupply these services.
Under theexisting Russian AirCode, foreign airlines intheRussian Federation maynot:
- accept passengers, luggage, freight, ormailings onboard theiraircraft inRussian
territory inorder toflythem toother countries, unless thisisstipulated byairtraffic
agreements orpermitted byspecial authorizations tomake one-time flights; and
- accept passengers, luggage, freight, ormailings onboard theiraircraft inRussian
territory inorder toflythem elsewhere inRussian territory.
TheRussian Federation isnotaparty tothe1944 multilateral agreement oninternational air
transit, which entitles thesignatories tofreely transit overeachother'sterritories.
When providing services topassengers intending touseinternational flights inRussia, useis
made ofthecomputer reservation system Gabriel (Atlanta, USA) which stores allthenecessary data
about flight schedules, theavailability oftickets andrates, andmeets international standards ofair
passenger services.WT/ACC/RUS/9
Page100
317. Please specify maritime andinland waterway transportation andavariety ofancillary services
which require specific licences.
Answer : Inland waterway transportation. Inaccordance withtheCharter ofInland Waterways
Transport(Article 5),foreign vessels cannotsailoninland waterways ofRussia. Theactivities subject
tolicensing include:
- freight transportation;
- passenger transportation;
- towing ofrafts, ships, andother floating craft;
- cargo handling;
- warehousing;
- forwarding services;
- pilotage; and
- technical (simulator) training ofinland waterway transport personnel.
Maritime transportation. Theservices subject tolicensing include:
- passenger transportation;
- towing ofships, andother floating craft;
- agent services forships;
- supply services;
- cargo handling;
- passenger services onportgrounds, including water areas androads;
- pilotage;
- technical training oftraffic controllers;
- surveyor services;
- warehousing;
- forwarding services; and
- brokerage inalltypes offreightage tocarry cargoes andpassengers ininternational
seatraffic.
318. What arethecriteria forgranting suchlicences?
Answer : Theprincipal requirement onanycompany seeking alicence tooperate ontheRussian
transportation market isthat:
1. theapplicant hasaproper certificate (which confirms thatheisprofessionally suitable toact
asacarrier orforwarder, aswellasthenecessary equipment, communications facilities, and
computerhardwareandsoftware,anefficientserviceorganization,adequateancillaryequipment,
guarantees ofpossible interaction withother transportation agents inRussia, andinsurance
reserves).
2. theapplicant must haveanapproved listofservices supplied tothemarket.
3. theapplicant mustalsohaveguarantees ofprotection forconsumer rights (including property,
material, andpecuniary rights) intheevent thattransported cargo islostordamaged orthat
thedelivery schedule isdisrupted.
4. inaddition, theapplicant must beaccessible totransportation service users.
5. theapplicant must alsoagree toextensively inform thepopulation andother users oftheir
activities.
Licensing requirements arenon-discriminatory withrespect tobothdomestic andforeign
companies.
319. Please provide, foreachservice, thenumber ofLicence holders, theforeign services suppliers
andtheforeign services suppliers with100percentforeign capital.WT/ACC/RUS/9
Page101
Answer :
Inland waterway transportation.
Wholly-owned foreign licence holders:
- freight carriers -2;and
- forwarders -1.
Road transportation.
Passenger transportation licence holders -46,191, including 661jointventures; and
Freight transportation licence holders -139,716, including 969jointventures.
Maritime transportation.
AsofJanuary 1996, there were 1,632 licence holders, including 226freight carriers, 38
passengercarriers,44towageoperators,243agents,161shipchandlers,73surveyors,282warehousers,
96cargo handlers, 26passenger service suppliers, 24pilotage operators, 359maintenance companies,
and220chartering brokers. TheMinistry ofTransport doesnotmaintain statistics astothenumber
oflicences issued tocompanies withforeign investment.
320. Please specify "preferential treatment ofvessel taxation". Isthere anydifferential treatment
between national-flag ships andforeign-flag ships?
Answer : Thevessels meant inthiscaseareships flying thenational flags ofthose countries
withwhich Russia hasconcluded respective bilateral agreements which accord suchships national
treatment and/or MFN treatment, andcharging duesatpreferential rates.
321. Does "maritime trade agreements" include thetreaty ofcommerce andnavigation between
Japan andtheSoviet Union?
Answer: The"maritime trade agreements" include the1957 Treaty ofCommerce between the
USSR andJapan.
322. Arerational andnon-discriminatory access toanduseofportfacilities secured toforeign service
suppliers? How about portcharge, e.g.pilotage andtagassistance fee?
Answer :
Maritime transportation. Foreign service suppliers from countries withwhich Russia hasconcluded
bilateral agreements aregranted non-discriminatory access touseofportfacilities.
Portcharges arecollected atRussian merchant seaports, regardless oftheirlegal form or
ownership status, fromnational-flag andforeign-flag ships andother floating craftatthose rateswhich
areapproved bytheFederal Ministry ofEconomy. Pilotage fees,which areamong regulated portdues,
arecharged onanon-discriminatory basis. Towage feesarefixed onacommercial basis byport
authorities.
Inland waterway transportation. Foreign service suppliers withalicence aregranted non-
discriminatory access toanduseofportfacilities. Theratesofregulated portcharges (shipdues, canal
tolls, berthage, roadstead, andpilotage fees)arethesame forRussian ships supplying international
transportationservicesandforeignshipsflyingtheflagsofthosecountrieswithwhichRussiahasbilateral
shipping agreements.
Apart fromregulated portdues, Russian inland waterway ports charge feesfortheprovision
ofthefullrange ofshipservices, including mooring, garbage andwaste water collection, drinkingWT/ACC/RUS/9
Page102
water supplies, useoftugsandother ancillary boats, victual andbunker supplies, andagency services,
allofwhich aresupplied upon requests totheships.
323. Arethere anymeasures oncargo reservation orunilateral sanctions against foreign services
suppliers?
Answer : Therearenomeasuresoncargoreservationorunilateralsanctionsagainstforeignservices
suppliers.
324. Please provide definitions andspecific descriptions of(a)urban, suburban, interurban,
interrepublican andinternational transportation ofcargoes andpassengers; (b)forwarding services;
(c)maintenance andtechnical services. What arethecriteria forgranting licences concerning theabove
services suppliers? Please provide, foreachservice, thenumber oflicence holders, theforeign services
suppliers andtheforeign services suppliers with100percentforeign capital.
Answer:
Road transport. Inaccordance withtheexisting Statute onRoad Transport, thetransportation of
passengers byroadfallsintourban, suburban, interurban, andinternational operations.
Urban transportation covers services supplied within thebounds ofacity(oranother populated
locality). Suburban transportation covers carriage beyond citylimits forupto50kilometres inclusive.
Interurban transportation covers carriage formore than50kilometres beyond citylimits. International
operations cover carriage beyond Russian territory.
Cargo transportation comprises:
- urban services, meaning thehaulage offreight within thebounds ofacity;
- suburban operations, meaning thehaulage offreight beyond citylimits forupto50
kilometres;
- interurban services, meaning thehaulage offreight formorethan50kilometres beyond
citylimits;
- international services, meaning thecarriage offreight across thestateborder ofthe
Russian Federation; and
- forwarding services meaning theservices offorwarding companies which involve the
carriage offreight byonetypeoftransport orbyacombination oftwoormore types
oftransport, in-storage andtransit movements ofcargoes, thechoice ofthetypeor
types oftransport, andthedelivery offreight withorwithout transfers.
Thesystem ofmaintenance andtechnical services forroadtransport intheRussian Federation
includes:
1. Maintenance facilities atmajor andmedium-sized roadtransport enterprises toservice andrepair
theirownvehicles and,possibly, toprovide suchservices tooutside organizations, including
foreign service suppliers.
2. Auto-makers 'chain stations providing maintenance andtechnical services.
Inorder toprotect thelivesandhealth ofconsumers, aswellastheenvironment, andtoprevent
damage toconsumers 'property, maintenance andtechnical services forautomobiles intheRussian
Federation aresubject tomandatory certification inaccordance withtheFederal Laws "OntheProtection
oftheConsumers 'Rights," "OntheCertification ofProducts andServices," and"OnRoad Traffic
Safety." These services maynotbesupplied without aconformity certificate.WT/ACC/RUS/9
Page103
Thecreation ofanappropriate nation-wide licensing system isnowbeing completed, withmore
than120conformity assessment bodies accredited invirtually allofthecountry 'sregions.
TheRussian Ministry ofTransport andtheState Committee onStandards haveapproved a
System fortheCertification ofServices inPassenger Transportation byRoad. According toRussian
Government Resolutions No.118,dated February 26,1992, andNo.372,dated April 23,1994, the
licensing arrangements forroadtransport areasfollows:
1. Licences mustbeobtained byallenterprises, institutions, andorganizations, regardless oftheir
corporate formanddepartmental affiliation, aswellasself-employed entrepreneurs supplying:
(a) urban, suburban, interurban, interrepublican, andinternational freight andpassenger
transportation services;
(b) forwarding services forlegalentities andindividuals;
(c) maintenance andtechnical services forroadvehicles onacommercial basis.
2. Alltypes oflicences areissued forafixed period (3months, 1year, or5years) byregional
branchesandaffiliatesoftheRussianTransportInspectionService,withtheexceptionoflicences
forinternational services andrelated forwarding services which areissued bytheFederal
Ministry ofTransport orinaccordance withtheprocedure established byit.
3. Inorder toobtain alicence, enterprises, organizations, institutions, andself-employed
entrepreneurs must submit:
(a) anapplication according totheformestablished bytheMinistry ofTransport andindicating
thetype, geographical coverage, andvalidity period ofalicence;
(b) copyofadocument certifying thestateregistration oftheapplying enterprise orself-employed
entrepreneur or,inthecaseoforganizations andinstitutions, acopyoftheirdulyapproved
charters orstatutes;
(c) thenumber ofroadvehicles atthedisposal ofanapplicant seeking acarriage licence, orthe
number ofmaintenance andtechnical service outlets atthedisposal ofanapplicant seeking
amaintenance licence;
(d) adescription oftheapplicant 'sother fixed assets supporting theactivity tobelicensed;
(e) acopy ofadocument confirming theprofessional suitability ofthedirector oftheapplying
enterprise, organization, orinstitution, self-employed entrepreneur, orpersons authorized by
them tomanage theactivity being licensed (graduation certificate confirming training ata
specialized educational establishment oradocument confirming atleastfiveyears ofwork
inthegiven field). Ifsuchdocuments arenotavailable, therespective persons aretopassa
professional fitness exam. Theprocedure fortaking such examinations andthebody of
knowledge being tested inthiswayareestablished bytheMinistry ofTransport; and
(f) documents certifying vehicles asbeing technically fitforthecarriage ofspecific types of
hazardous cargo ifthelicence sought isforthetrucking ofsuchfreight.
Inland waterway transport. Depending onthelength oftravel itineraries, thetypes ofservice onoffer,
andonother factors, passenger linesaredivided intotransportation, tourist, andexcursion-and-leisure
lines.
Transport linesfallintotransit (interregional andintraregional), suburban, urban, andferry
services.Transitservicesaresuppliedtocarrypassengerswithinanadministrativeregionandconstituent
republics.WT/ACC/RUS/9
Page104
Suburban lineslinkaparticular cityandlocations around it,which arenotmore than100
kilometres away.
Urban linesaremeant tocarry passengers within citylimits.
Ferry linesaremeant toshippassengers between locations ontheopposite banks ofthesame
river.
Freight transportation fallsintolocalandtransit services.
Transit services arethose provided byshipping companies foranydistance.
Local services areprovided byports within theirareas ofresponsibility.
Forwarding services include those services related tothecarriage offreight which arestipulated
under aparticular contract. Thiscontract mayoblige aforwarder toarrange forthetransportation of
cargo, conclude agreements onitscarriage onbehalf oftheclient oronbehalf oftheforwarder 'sown
name, ensure theshipping andreceipt ofthecargo, andperform other duties connected withfreight
transportation.
Technical andmaintenance services forships cover apackage ofmeasures to:
- keepships andother floating craftingood repair ensuring safesailing; and
- prevent abnormal wear toaship'shullandother assemblies, aswellasfailures of
mechanisms andelectrical equipment.
Oninland waterway transport, maintenance andtechnical services areperformed atshipowners '
facilities andatspecialized shipyards.
These services include scheduled maintenance work onmain andauxiliary engines, boilers,
andothershipsystems(involvingtheiradjustment,oilchange,thereplacementofindividualcomponents,
etc.),onthehull(welding,docking,painting,etc.),andelectricalequipment,thereplacementofworn-out
parts, andservice toelectric motors. These services alsoinclude scheduled ship-repairing.
Themain criterion tobemetwhen seeking forwarding licences istheapplicant 'sability to
provide thefullrange ofquality services ontimeinkeeping withthose rules andnorms which are
established bytheState.
Forthenumber oflicence holders intheabove services seeanswer 319herein.
325. Inrelation toparagraph 5onpage15,What arethecriteria forgranting thelicences? Please
provide, foreachservice, thenumber oflicence holders, theforeign suppliers andtheforeign services
suppliers with100percentforeign capital.
Answer : Seeanswers 319and324herein.WT/ACC/RUS/9
Page105
SUPPLEMENTARY QUESTIONS
Services
326. Another question concerns legal status ofbranches andrepresentative offices offoreign
companies. Istheappropriate legal framework developed intheRussian Federation ready tocope
withbranches andrepresentative offices?
Answer : TheLaw"OnForeign Investments" establishes legal status ofbranches offoreign
companies inRussia. Asregards representative offices, theirlegalstatus isestablished bytheDecision
oftheCouncil ofMinisters oftheUSSR of1989 "OnRepresentation ofForeign ompanies inthe
USSR". Questions concerning taxation areregulated byspecial instructions issued bytheMinistry of
Finance.
327. Some companies inform usofdifferent treatment incharging costofsome goods, services,
orrights (forexample rents, charges etc.). Suchpractices mayeffect thecompetitive position offoreign
services suppliers. Theproblem relates notonlytothelegalframework buttothepattern ofpractice
aswell.
Answer : Please clarify thequestion, inparticular, asregards subjects ofdifferent treatment:
aretheyservices (rights) provided byrespectively domestic andforeign companies, orconsumers of
these services/rights, inrespect oftheirnationality?
328. Some further clarification isneeded asfarascertification ofservices andlicensing procedures
areconcerned. Areprocedures notdiscriminatory? Aretheybased onobjective criteria orisitbased
ondiscretionary procedures aswell? What about effective enforcement? Arenorms andstandards
mandatory andfixed bystateorarealsosome voluntary standards andnorms? Arestandards and
norms aimed atassuring safety ofservices oraretheyalsoaimed atassuring quality ofservice products?
Answer: Themandatory certification ofservices iscarried outinaccordance withtheLaws No.
2-FZ"OntheProtectionofConsumers'Rights"ofJanuary9,1996andNo.5151-1"OntheCertification
ofProducts andServices" ofJune10,1993. Thelicensing ofservices iscarried outinaccordance
withRussian Government Resolution No.1418 "OntheLicensing ofIndividual Types ofActivity,"
dated December 24,1994.
Themandatory certification ofservices involves checks ontheirconformity withrequirements
fixed bystandards andrules.
Therules andprocedures forthemandatory certification ofservices donotinfringe onthe
rightsofeitherconsumersorsuppliersofservices.Theydonotcontainanydiscriminatoryrequirements.
Theeffectiveness ofenforcement inmany cases isconfirmed bythedesire ofservice suppliers
themselves tosubject theirservices tocertification procedures inorder toconfirm theirconformity
withtherequirements ofsafety forthelifeandhealth ofconsumers.
Therequirements setforth inregulatory documents usedforthemandatory certification of
services aredefined byfederal agencies, andmaynotbediscretionary.
Astothequality ofservices, itisassured bytheirsuppliers voluntarily submitting them to
certification(conformityassessment)procedurestocheckwhetherthequalityofsuchservicesisconsistent
withinternational standards ISO9000.WT/ACC/RUS/9
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329. Areservices animportant partoftheagreements reached among CIScountries? Dosuch
agreements cover substantially allservices andallmodes ofdelivery. WilltheRussian Federation
seekcoverage ofArticle Vforthese agreements?
Answer: Russia hasnumerous agreements withCIScountries covering tradeinservices. Taking
intoaccount thecharacter ofthose agreements andtheircoverage, Russia intends todraftitsschedule
ofcommitments andMFN exemptions inaccordance withtherelevant provisions oftheGATS. See
alsoWT/ACC/RUS/2 AQs360to373(pp.143 to148)andWT/ACC/RUS/4 AQ436 (p.176) and440
(p.177).
330. Kaliningrad Region isseenasaspecial zoneintheareaofimports ofgoods. Isthesame true
asfarasservice trade isconcerned andparticularly whether there areregulations affecting trade in
services among other intheform ofcommercial presence.
Answer: Inaccordance withparagraph 3ofArticle 4ofFederal LawNo.13-FZ "OntheSpecial
Economic Zone oftheKaliningrad Region," dated January 22,1996, theadministration ofthespecial
economic zone(SEZ) isempowered toauthorize foreign legalentities toopentheirrepresentative offices
andbranches inSEZterritory inkeeping withrequirements setforth byFederal law.
Under paragraph 5ofArticle 3ofthesame law,licensing procedures intheSEZarethesame
asareineffect throughout theRussian territory, except thatthepowers offederal authorities tolicence
individualtypesofactivitymay,byagreement,bedelegatedtotheSEZadministration(withtheexception
ofthose services which arelisted inthisArticle andwhich include services inthefields of"transport
andcommunications," and"mass media, movie distribution, andthemotion picture industry").
According toArticle 17oftheabove Federal law,foreign insurers arepermitted tooperate
inSEZanddoalltypes ofinsurance business inRussian andforeign currency, including export risk
insurance. Inorder tobeabletosupply suchservices, anaspiring foreign business mustfirstobtain
alicence toprovide insurance cover intheRussian Federation inaccordance withRussian legislation.
There arenoother exceptions from thegeneral conditions ofservice trade.
331. IntherecentlycirculateddocumentRegimeofRegulationofTradeinServices(WT/ACC/RUS/6)
itisstated that"theregulatory framework oftheRussian Federation governing theservices sector will,
forsome time, besubject toaprocess offrequent adaptation andimprovement inlightofexperience
andofprogress inbuilding anational capacity tosupply services onacompetitive basis." Willthe
changing regulatory framework andthestated objective ofbuilding anational capacity tosupply services
permit Russia tomake market access andnational treatment commitments inkeyservices sectors such
asprofessional andbusiness services, computer andrelated services, enhanced telecommunications
services, construction services, environmental services, financial services andtransportation services?
Answer : TheAnswer tothisquestion willbegiven inadraftSchedule ofcommitments tobe
prepared induetime. Seealsoanswer 195herein.
332. Russia hasstated thathighly skilled intracorporate transferees canbeemployed byforeign or
jointventure enterprises without having apermit. Dobusiness visitors require apermit fortemporary
entry intoRussia?
Answer: ForentryintoRussia,businessvisitorsneed,inaccordancewiththeapplicableprocedure,
toobtain anentry-and-exit visawhich isissued byRussia 'sembassies andconsulates abroad upon
presentation oftherequired documents.WT/ACC/RUS/9
Page107
333. Russia hasstated thatitwillbefollowing thework carried outunder Article XVoftheGATS
before providing aresponse ontheissue ofsubsidies. Wewould liketonotethatwhile disciplines
onsubsidies maybedeveloped intheGATS, theexisting structure willrequire Russia tostateinits
GATS schedule whether there areanyaid,grant, subsidy, taxincentive orpromotions scheme which
would limitnational treatment offoreign services
Answer : Russia willtakenoteofthisclarification onsubsidies inpreparing itsdraftSchedule
ofcommitments.
State Trading
334. AQ.27 Weappreciate Russia ’sresponse onstatetrading, however westillseekconfirmation
thatRussia issaying thatthere arenoenterprises within Russia which havebeengranted exclusive
orspecial rights orprivileges, including statutory orconstitutional powers, intheexercise ofwhich
theyinfluence through theirpurchase orsalesthelevelordirection ofimports orexports.
Answer: SeeAnswer 12herein.
Price Liberalisation
335. AQ.100. Weacknowledge theresponse toourquestion astohowprices canbedetermined
bythemarket andatthesame timebeguaranteed. However, wealsotakenoteoftheresponse to
AQ99andseekelucidationoftheFederation’sresponseonthispoint.Appreciatingthat"theGovernment
takes ahardlineonsuchpractices andtheirincidence isdeclining..." canRussia clarify whatsteps
itistaking to(a)ensure thatgovernment andpolicy andlegislation become concurrent and(b)provide
some timeframe within which itaimstoachieve this? Isuniformity ofapplication ongovernment
lawsawidespread problem?
Answer: Because ofinaccurate translation, theimpression wasgiven thattheanswer toAQ
99deals withprocurement prices applicable toagricultural producers. Inactual fact,however, the
answer states thatinsome regions retail prices forcertain consumer goods continue toberegulated
incontravention oftheResolution oftheGovernment oftheRussian Federation No.239"OnMeasures
toStreamline StateRegulation ofPrices" ofMarch 7,1995. Thegoods towhich suchregulation applies
include fooditems which arenotlisted intheabove resolution assubject tostateregulation.
Agriculture
336. AQ113Wewould appreciate more details onthedistribution process ofproducts, quantities,
disposal arrangements andalistoftheproducts included intheFederal stockpile.
Answer: SeeAnswer 10herein.
337. AQ115. Appreciating thatpreferential credits havebeendiscontinued asofNovember 1993,
istheRussian Federation considering theirreintroduction inanyformasaconsequence ofexperiencing
itsworst evergrain season?
Answer: SeeAnswer 45herein.
338.TheRussian Federation hasadvised thatitsresponse regarding specific details ofdomestic support
measures inrelation tothedairyindustry is"pending" (Answer 187ofWT/ACC/RUS/4 of1November
1995 refers). Wemaintain aninterest inthisissue andlookforward toaresponse induecourse.WT/ACC/RUS/9
Page108
Answer: SeeAQ187atp.4ofWT/ACC/RUS/4/Add.1.
339.Westillseekmoreinformation onthenature ofsupport toRussian agriculture, inparticular details
onhowmuch fallsunder the"green box" category.
339. Answer: SeeAnswer 34herein.
Taxation
340. AQ158. Weappreciate theresponse toourquestion onhowtaxation measures andprivileges
andtheircalculations differ intheagro-industrial sector from other sectors andtherationale behind
suchdifferences. Weaccept thatRussia hasstated thatitisassessing various options. Wecontinue
toseekareply onhowtheRussian Federation proposes tojustify thisinrelation toaccession tothe
WTO.
Answer: Thetaxbenefits related tothetaxation oftheprofit fromthesaleofagricultural products
havebeenestablished byparagraph 6oftheFederal LawoftheRussian Federation No.227"On
Introducing Changes andAdditions intheLawoftheRussian Federation "OntheProfit Taxfrom
Enterprises andOrganizations" ofDecember 31,1995andcorrespond tothegeneral policy ofsupport
foragriculture thatispursued bytheGovernment oftheRussian Federation. Inouropinion, differences
intaxation inindividual sectors donotcontravene WTO rules anddisciplines.
341.AQ160andAQ161.Wewelcome Russia ’sresponse toourtwoquestions. Weseekclarification
onatimeframe forfinalisation ofthedraftTaxCode anditsexpected implementation date. Willany
measures taketheplace ofthese various taxes?
Answer: Thedraftofthegeneral provisions oftheTaxCode oftheRussian Federation, approved
bytheGovernment oftheRussian Federation, wassubmitted totheState Duma andthePresident 's
Administration oftheRussian Federation inFebruary, 1996. Thenextstepinadoption ofthedraft
TaxCode isreview andapproval bytheStateDuma, theFederation Council andthePresident ofthe
Russian Federation. Thedraft general provisions oftheTaxCode contain definitions, outline
administrative procedures, provide forliability forbreach oftaxlaws, andprovide fortax-related
proceedings.
Draft general provisions oftheTaxCode, regardless oftheother threepartsoftheCode (which
regulate specific taxesandlevies) maytakeeffect starting onJanuary 1,1997, provided theyareenacted
before theendofthecurrent year.
Draft versions oftheother three parts oftheTaxCode areexpected tobesubmitted tothe
Government oftheRussian Federation inApril, 1996. Iftheyarereviewed andapproved promptly
before theendof1996, theymayalsobecome effective onJanuary 1,1997.
Foreign Trade Regime
342. Wehavebeenunable tolocate theresponse tothefollowing question within WT/ACC/RUS/4
andwould appreciate clarification. Weunderstand thattheRussian Government recently imposed a
21.5percentVAT onallimported fooditems, except some foodstuffs which attract theconcessional
rateof11.5percent. HowdoestheRussian Federation balance thisfederal law(63-FZ) withArticle
IIIoftheGATT onthenational treatment ofinternal taxation andregulation?
Answer: SeeAnswer 51herein.WT/ACC/RUS/9
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343. AQ261. Acknowledging theresponse given toourquestion seeking therationale behind the
recently increased tariffs onfoodstuffs andconsumer goods, wewould simply notethatwewould like
toseethetrend reversed.
Answer: Thecomment isnoted.
344. AQ262andAQ263. Aremore details available ontheoperation oftheCommission andthe
instructions under which itoperates?
Answer: TheCommission oftheGovernment oftheRussian Federation onCustoms andTariff Issues
isestablished inconformity withtheResolution oftheGovernment oftheRussian Federation No.436
“OntheCommission oftheGovernment oftheRussian Federation forCustoms andTariff Questions ”
ofApril 28,1995. TheCommission ischarged withthepreparation ofproposals fortheGovernment
oftheRussian Federation inthefieldoftariff measures forregulating commodities import toand
commoditiesexportfromtheterritoryoftheRussianFederation.TheCommissionexercisesitsfunctions
onthebasis ofitsowninternal rules.
345.AQ264.Welookforward tonegotiating withRussia inbilateral consultations onthedevelopment
ofadraft tariff protocol. However, themandate oftheWorking Party covers thegeneral level of
commitment tobegiven byRussia ontariffs andwetherefore askifRussia willbeprepared tobind
itstariffs onallagricultural products (inlinewithallother WTO members) andtobindmost ofits
industrial tariffs?
Answer: RecognizingtheobligationsoftheAgreementonAgriculture,marketaccessinagriculture
andother market access issues ingoods willbefurther addressed inthecourse ofthenegotiations.
346. AQ265. Canweclarify thatnodiscretion isexercised inthegranting ofimport licences? Are
there noinstances where applications arerejected?
Answer: Appropriategovernmentagenciesissueapprovalswithrespecttoapplicationsforimport
licences fullyinlinewiththeprovisions ofArticle XXofGATT 1994 andtheWTO Agreement on
theApplication oftheSanitary andPhytosanitary Measures. Those agencies listed inthetableonpage
115ofWT/ACC/RUS/2 (specifically, theMinistry ofNature, Ministry ofHealth CareandMedical
Industry andMinistry ofAgriculture andFoodstuffs) maynaturally reject some applications inthe
event theimport ofsuchapplied goods threatens tocause damage tohuman health oranimals orplants.
347. AQ325. Please confirm thattheRussian Federation hasnotimposed anti-dumping duties,
countervailing duties orsafeguard measures. Isthisposition likely tochange?
Answer: TheRussian Federation hasnotimposed antidumping duties, countervailing duties,
orsafeguard measures todate. Intheinterest offulldisclosure, theRussian Federation hasinitiated
aninvestigation, tobeconducted inconformity withtheprovisions ofArticle XIXGATT 1994, and
theWTO Agreement onSafeguards, inorder todetermine whether increased imports arecausing serious
injury totheposition ofaspecific industry.
348. AQ335. Could theRussian Federation confirm itsclaim thatitsimport licensing procedures
donotinvolve quantitative elements? Russia claims (AQ240,page103)thatin1994lessthan1percent
byvalue ofRussian imports require licensing orother authorization. Thisappears tobeincreasing
substantially(7,8percent)in1stquarter1995).CanRussiaindicatewhetherimportlicensingprocedures
willbeextended? Weareconfused byearlier Russian claims thatimport licensing wasabolished in
199(AQ241,page103).WT/ACC/RUS/9
Page110
Answer: TheRussian Federation confirms thatimport licensing procedures inRussia donot
involve quantitative elements. SeealsoAnswer 346and105herein.
With respect tosubquestion 2,itshould bepointed outthatin1994 lessthan1percentof
thevalue oftheRussian imports required licensing. Essentially thefigure for1995 isthesame.
Asforthefigure of7.8percentwerequest thatyoureread AQ240ofWT/ACC/RUS/4
(p.103). Literally itsays:"As forthefirstquarter of1995, 7.8percentofthevalue oftheRussian
exports needed licensing inaddition totheexport duties". Thus, thefigure of7.8percentrelates to
exports, notimports.
Thisfigure alsorelates onlytothegoods subject toaspecial procedure ofexport thatfully
conforms toArticles XXandXXI(e.g.narcotics, weaponry, dual-purpose goods etc).Fordetails see
Answers 226and267ofWT/ACC/RUS/2 andAdditional Answers 339, 340and341of
WT/ACC/RUS/4.
Itisnotplanned toextend thelistofgoods subject toimport licensing, which atthispoint
intimeincludes onlythreelines: chemical products forplantprotection, industrial wastes andmedicine
(p.115 ofWT/ACC/RUS/2).
349. AQ207. Purchases ofstock, equity stakes orproperty byforeign investors canbebanned by
theRussian Federation Government following transactions. Hasthispower beenexercised inRussia,
andifso,under whatconditions? Hasthispower beenexercised inRussia, andifitso,under what
conditions? HastheRussian Government given consideration toremoving thispower?
Answer: Pending .
350. AQ230. Please elaborate onthesugar import arrangements, including whythere arecontrols
onsome imports, howthecontrols operate andtheireffect ontheoverall imports ofsugar. Isthere
anoverall quantitative limitonsugar imports?
Answer: Itseems thatA.Q.239 rather thanA.Q.230 needs clarification withrespect torawsugar
imports
Itshould bepointed outthatexcept forthecertificates ofconformity there isnotanycontrol
oversugar imports and/or overimport ofother foodstuffs. Moreover, there arenoquantitative
restrictions onimports inRussia atall.
Themainprovision ofthefederal tender inquestion wasthatthewinner (orthewinners) must
sell480,000 mtofsugar tothegovernment atafixed price toprovide withsugar thearmy, prisons
andcertain other federal financed institutions. Accordingly, therawsugar tender andtherelevant deal
were infactgovernment procurement contracts.
Currency Regulation
351.AQ430andfollowing .Wehavedifficulty inlocating theresponse toourquestions within these
answers. Therefore, wewould appreciate more information ontheframework fora"payments union"
(WT/RUS/ACC/2Q370).Howdotheseconceptsfitintothe"roublecurrencyzone"?(WT/ACC/RUS/2
Q371).
Answer: Though theagreements onthepayments union andtherouble currency zonementioned
inAnswer 370and371ofWT/ACC/RUS/2 arestillinforce, thework onitsimplementation isatWT/ACC/RUS/9
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averyearly stage. Therefore itisimpossible tospeak about theexistence ofthepayment union or
therouble currency zonewithin theCIS.Allforeign trade transactions ofthose countries arerealized
innational currency orinhardcurrency. Thespecific formofthetransaction isdefined bythecontract.
352. AQ420andAQ435. Wethank theRussian Federation foritsresponses tothese questions
pertaining tothelistofgoods towhich thefreetrade regime doesnotrelate; andthecriteria usedin
defining theagreed listofgoods thatareexcluded from freetrade treatment. However, wearestill
unclear astothecriteria usedindefining thislist.Anyfurther clarification would beappreciated.
Answer: Theagreed listofthegoods thatareexcluded fromfreetradetreatment between Russia
andtheCIScountries consists of:
-specific goods excluded forreasons ofprotection ofcertain rarenatural resources (therelevant
Russian listisonp.113ofWT/ACC/RUS/2);
-goods andservices theexport andimport ofwhich isrealized under aspecial procedure for
national security reasons (therelevant Russian listisonp.p.114-115 ofWT/ACC/RUS/2);
-goods theexport andimport ofwhich isthesubject oftheinternational agreement (inthe
caseofRussia thatistextile products, steelrollproducts andsilicone carbide totheEU;
-goods theexport ofwhich fallsunder thequantitative restriction inarespective country (e.g.
export quotas havebeencompletely abolished byRussia, butstillexistinsome other CIScountries).
Industry
353. AQ63.Thisrelates totheprivatisation ofstate-owned enterprises. Does themanagement of
enterprises notyetprivatised havecomplete freedom overpurchase ofimports forprocessing orfor
capital acquisition (whether sourced domestically orfrom imports)?
Answer: Theenterprises, which arenotyetprivatized, arefreetopurchase imports, provided
thattheyhaveenough financial resources oftheirowntodoso.
354. AQ46.Thisnotes thatnon-privatised enterprises actinaccordance withnormal commercial
considerations. What criteria areusedforproviding governmental financial support tosuchenterprises,
andissuchfinancial support shown intheenterprises ’balance sheet orstatement ofprofit/loss? How
dothese enterprises repay government support thathasbeenprovided?
Answer: Government financial support isprovided intheform ofsubsidies (compensations,
etc.). Itisshown inprofit andlossstatements, andistaken intoaccount during taxation.
Financial relief inthewake ofnatural calamities is,asarule,provided gratis onthebasis of
aconclusion bytheregional Commission onEmergencies, provided thatlocalenterprises andthelocal
budget lacktheirownfunds todealwiththeeffects oftherespective disasters. Thiskindofaidis
narrowly targeted andmustbespent strictly asdesignated (toconduct rescue, repair, andreconstruction
work, restore thebasic herd, compensate expenses forcropre-sowing, etc.), andisshown inthe
beneficiary companies 'financial statements.
355. AQ87andAQ101. These questions relate topricecontrols. Inthiscontext, howareprecious
metals defined, andwhatdotheyinclude? Mention ismade of"state regulation of...precious metals;
rolled stock, industrial products, anddental products fromprecious metals, related scrap andwaste".
What ismeant by"rolled stock andindustrial products" inthissense?
Answer: Inthecontext ofAQs87and101ofWT/ACC/RUS/4 theterm"rolled stock, industrial
products anddental products fromprecious metals, related scrap andwastes" means theabove itemsWT/ACC/RUS/9
Page112
- made ofpureprecious metals (silver, gold, platinum);
- orwiththeconcentration ofprecious metals sohighthatthese items aremarked with
aspecial brand oftheMarking Chamber oftheRussian Federation;
- orwiththeconcentration ofprecious metals highenough toexceed thespecific level
defined bytheState Committee oftheRussian Federation onPrecious Stones and
Precious Metals. Those specific levels arepublished officially.
356. AQ162. What progress hasRussia made inthetaxtreatment ofadvertising, business tripsand
interest payments forforeign enterprises inRussia?
Answer: InthedraftoftheTaxCode oftheRussian Federation which isunder discussion it
isproposed toexclude from taxable profit:
- expenses foradvertisements (proceeding from actual expenses);
- expenses forbusiness trips(within established limits);
- expenses related tothepayment ofinterest oncredits (upto15percentofannual
interest related tocredits inforeign currencies).
Theabove-mentioned provisions would enterintoforcewiththeadoption ofthesecond (Special)
partoftheTaxCode oftheRussian Federation. SeealsoAnswer 341herein.
357. AQ167. Russia isminimizing export subsidies tobereplaced by"market-based instruments",
including insurance guarantees andpromotion ofR&Dforscience andtechnology. Please provide
more details from Russia onthese market-based instruments. What isthetime-frame forsubsidy
reductions?
Answer: Theassertionthat"Russiaisminimizingexportsubsidiestobereplacedby'market-based
instruments ',including insurance guarantees andpromotion ofR&D forscience andtechnology" is
erroneous. Russia atpresent doesnotprovide anyexport subsidies, which areseenasamethod of
unfair competition, andtheplanned measures forpromoting andencouraging exports (including the
Federal Export Promotion Program, brought intoeffect byRussian Government Resolution No.123
ofFebruary 8,1996) donotprovide fortheuseofexport subsidies inthefuture aswell.
Seealsoanswers 41and44herein.
358. AQ180.Relating toforest products, whataretheterms under which "reimbursable loans" for
inter-seasonal production resources areallocated? Aresuchloans made onanon-going basis? What
isthepolicy regarding suchloans toforest industry enterprises which donotmeet theirterms of
reimbursement? Howwilltheseloans affect thedomestic priceofforestry products? WilltheRussian
Government atfederal orother levels place limits on,orotherwise fix,thedomestic prices offorestry
products?
Answer: Reimbursableloansareprovidedtoforestindustryenterprisestomakeseasonalpurchases
ofrawmaterials andother resources based onthefollowing conditions:
- theborrowers must present guarantees from commercial banks orlocal financial
authorities;
- loans arenotgranted onapermanent basis;
- rigorousstatecontrolisexercisedoverthespendingoftheseloansdirectlyasdesignated;
and
- priority goestoso-called town-forming enterprises, i.e.enterprises whose staffaccounts
forthelarger partofthepopulation living inthegiven populated locality.WT/ACC/RUS/9
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Therepayment andservicing ofsuchloansareequated topayments intothegovernment budget,
i.e.setoffagainst taxpayments.
359. AQ184,191,193.Please provide further detail about thecoalandcoaltransportation subsidy
regime, forexample percentHowisitapplied? What istherateofsubsidy? Whoiseligible? What
areplans forclosing down uneconomic mines?
Answer: Federal LawNo.228-FZ "OntheFederal Budget for1996," dated December 31,1995,
provides forfederal financial support forthecoal-mining industry intheamount of7.4trillion roubles.
Themoney goestomaintain social services andamenities, closedown unprofitable mines, andrelocate
redundant workers. Ofthese funds, 1.55 trillion roubles aredirected tocover expenses forthe
reorganization andrehabilitation ofloss-making underground andstripcoalmines. Themoney ismade
available tocoal-mining enterprises onagratis basisafteracareful analysis oftheirfinancial positions,
anditsuseismonitored bytheRosugol company andtheMinistry ofFinance. Rosugol iscompleting
thedrafting ofaplantoshutdown uneconomical mines, thefinaldecision onwhich willbetaken by
theRussian Government.
Since August 1,1995, theRussian Government hasintroduced aschedule ofrailfreight rates
differentiated bythecategories ofcargo, which provides forlowering theexisting levelofratesfor
carrying rawmaterials andother bulkcargoes (first tariff category), including coal, attheexpense
ofincreases inratesforthetransportation ofothertypes offreight. Transportation ratesprovided depend
onmileage.
360. AQ182.HasRussia made progress onitslegislative orregulatory approach tocompatibility
withtheWTO Agreement onSubsidies andCountervailing Measures?
Answer : SeeAnswer 38herein.
361. AQ225. Russia hasseasonal duties onlyonexports. Areseasonal import duties contemplated
byRussia? Does alegislative orregulatory basis currently existunder which suchseasonal import
duties could belevied?
Answer: Inconformity withtheprovisions oftheLawoftheRussia Federation No.5003-1
“OnCustoms Tariff ”ofMay211993 asamended. Section II“Seasonal andSpecial Duties ”to
operatively regulate theimport andexport ofcommodities theGovernment oftheRussian Federation
mayestablish seasonal duties. Thetermforestablishing seasonal duties maynotexceed sixmonth in
ayear.
362. AQ260. Issales taxonmotor vehicles levied onbothimported anddomestically produced
vehicles? Does itcover allsalestransactions eg.newaswellasusedvehicles? While noting thesocial
considerations thatgaverisetothehighrateofthistax,isRussia aware ofthepossible long-term effect
ofthetaxontheefficiency ofdomestic manufacturers? Isadecrease intherateoftaxonmotor vehicles
contemplated?
Answer: Thetaxonthesaleofcarsisalocaltaxandisestablished bythelocalauthorities of
thecities andregions. Thesaidtaxhasbeenestablished bytheArticle 21oftheLawoftheRussian
Federation No.2118-1 "OntheBasic Principles oftheTaxSystem oftheRussian Federation" of
December 27,1991. Thetaxispaidbyjuridical andphysical persons inaccordance withtheratenot
exceeding 10percentofthesumofthetransaction. Itisproposed toabolish thistaxinthedraftTax
Code oftheRussian Federation which isatpresent under discussion.WT/ACC/RUS/9
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363. AQ260. Weareconcerned bythetariffs andtaxes applied toimported carsandthenational
treatment aspect ofthisandwould appreciate clarification ofRussia ’sfuture intentions inthisregard.
Answer: Theexcise taxes onimported carsatpresent areestablished bytheFederal Lawof
theRussian Federation No.23-F3 “OnStateDuties ”ofMarch 7,1995. Theplanned changes ofexcise
ratesshould result intheiruniformity andintheestablishment ofanexcise ratefordomestically made
andimported carsamounting to5percent. SeeAnswer 102herein.
364.AQ291andAQ296.IsRussia aware thatlevying acustoms processing feebased onapercentage
ofthecustoms valuation isnotWTO compatible? Weunderstand thatRussia isaware oftheconcept
ofacustoms feelimited inamount totheapproximate costofcustoms services provided, andiscurrently
examining thepractices ofother countries. What progress hasRussia made inthiscontext?
Answer: Wearefullyaware ofthisinconsistency which willrequire appropriate amendments
tothecurrent Federal Law(theCustoms Code oftheRussian Federation No.5221-1 ofJune18,1993).
365. AQ312andAQ123.Wenotethatdifferentials existintherateofexcise dutyimposed on
some imported products asopposed tosimilar domestically produced products. Russia should beaware
that,under Article IIIofGATT 1994, WTO members maynotaccept suchdifferentials inexcise rates.
Moreover, WTO members maynotconsider relevant theconcept oftaxable turnover withrespect to
excises already incorporated intheex-works price ofdomestic price. What progress hasbeenmade
inRussia inrespect ofdecreasing theexcise ratesonimported motor vehicles.
Answer: SeeAnswers to53,102and363herein.
366. AQ317.Itappears fromthedocumentation thatadifferential inVAT ratesforfoodstuffs may
exist, whereby imported products faceahigher ratethandomestic products. Wequestion Russia ’s
assertion thatitspractice inthisregard isinconformity withGATT Article III.What progress isRussia
making onthismatter?
Answer: Currently uniform ratesarebeing introduced, including preferential rates, VAT, that
istheratesareapplied onanequal basis bothtotheimported goods andtosimilar foods produced
inRussia.
367. AQ317.Please provide more detailed information onaproduct byproduct basisontherecently
imposed 21,5percentVAT onallimported fooditems, except some foodstuffs which attract arate
of11,5percent.
Answer: SeeAnswer 50and51herein.
TRIMS
368. Russia hassigned butnotratified theEnergy Charter Treaty. Under Article 5ofthetreaty "a
Contracting Party shallnotapply anytrade-related investment measure thatisinconsistent withthe
provisions ofArticle IIIorXI(national treatment andquantitative restrictions) oftheGATT".
Russia ’snote(WT/ACC/RUS/5 of27October) saysthatRussia hasneither legislative nor
administrative regulations oninvestment measures thatwould place restrictions ontrade ingoods and
conflict withtheprovisions ofArticles IIIandXIoftheGATT 1994 ortheTRIMS Agreement,
respectively. From thisitwould seemthattheRussian Federation doesnotmaintain WTO- inconsistent
TRIMS, though wehavelittleevidence toverify this.WT/ACC/RUS/9
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While notnecessarily aGATT-inconsistent TRIM, restrictions onnon-resident transactions within the
currency market oftheRussian Federation mayimpact adversely onability totrade andaretherefore
aconcern. Itwould beuseful ifRussia could outline anindicative timetable forcurrency market reform.
Answer: SeeAnswers 75,77,and78herein.
Services (GATS)
369. AreanyofRussia 'sservice sectors closed completely toforeign suppliers? Forexample, can
realestate brokerage, massmedia services andservices relating toinvestigation andsecurity beprovided
byforeign suppliers?
Answer: Seeanswer 203herein.
370. Areanysectors open toforeigners onlyiftheyform ajointventure withRussian-owned
companies? Forexample, weunderstand thatjointventure requirements apply toinsurance, banking
andcommunications operations.
Answer: Seeanswers 237and274herein.
371. Arethereanysectorssubjecttorestrictionsonmodesofsupply(cross-bordersupply,commercial
presence, etc)? Forexample, weunderstand thatthecross-border provision ofinsurance services is
notpermitted.
Answer: Cross-boarder provision ofinsurance services isnotpermitted.
372. Arethere anysectors forwhich entity requirements apply tocommercial establishment? For
example, weunderstand thatforeign banks must establish jointventures orbranches.
373. Arethere anysectors apart frombanking forwhich theshare ofactivity provided byforeign
services suppliers isrestricted?
374. IsRussia partytoanyagreements concerning themutual recognition ofqualifications ofservice
providers?
375.Which ofthebilateral economic, technical cooperation andtradeagreements signed byRussia
cover trade inservices? Doanyofthese agreements confer preferred orreciprocal supplier status
oncompanies from signatory countries?
376. Forlegalservices,areforeignlegalfirmsandlawyersabletoprovideconsultationsonlegislation
other thanthatoftheirhome state?
377. Arethere anyoperating restrictions onforeign accounting firms?
378.Forinsurance services, apartfrommedical insurance, arethereanyother obligatory insurance
services reserved forthe“Russian State Company ”?
Banking Services
379. What aretheadditional capital requirements thatapply tojointventure banks?WT/ACC/RUS/9
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380. What arethetemporary limitations thathavebeenimposed onbanking operations? Inthis
context, wewould liketoemphasise theneedfortransparency andpredictability ofregulatory regimes
intheservices sector.
Communications services (WT/ACC/RUS/6, pages, 9,10,15,16)
381. Inrelation tolicensing ofdomestic orinternational express maildelivery, whatarethelicensing
criteria? Aredifferent criteria applied tojointventures withforeign organisations thanareapplied
todomestic firms? Arethesectors opentoforeigners onlyiftheyformajointventure withRussian-
owned companies?
382. Inrelation totelecommunications, areforeign owned telecommunications companies permitted
toprovide services withaccess tothepublic switched network? Ifso,whatconditions apply?
383. Inrelation toother types oftelecommunications forwhich jointventures arepermitted, what
arethelicensing criteria? Aredifferent criteria applied tojointventures withforeign organisations
thanareapplied todomestic firms? Arethesectors opentoforeigners onlyiftheyformajointventure
withRussian-owned companies?
Audio-visual services
384. Doanytariffs, orother charges apply toforeign films, videos andother audio-visual products,
suchasmusic recordings?
385. InregardtotheRussianFederalLawonCommunications,andtheLawoftheRussianFederation
onMass Media:
- arethere anyminimum localcontent requirements, and
- arethere anynon-quantitative limitations onforeign content?
386. Inregard tothegranting oflicences forbroadcasting onRussian territory bytheFederal Service
onTelevision andRadio Broadcasting (FSTR) andtheapproving ofsuchlicences bytheMinistry of
Communications:
- arethere anyminimum localcontent requirements;
- arethere anynon-quantitative limitations onforeign content; and
- arethere anynon-quantitative limitations ontheparticipation offoreign investors in
broadcasting companies?
387. IfRussian legislation doesnotcurrently impose quantitative limitations onthebroadcast of
foreign programs, orontheparticipation offoreign investors inbroadcasting companies, isthere the
potential todosoatanother timeunder thelegislation orregulations?
388. IfRussian legislation doesnotcurrently impose screen timequotas relating tocinema films
orvideos, doanyauthorities currently havethediscretion toimpose suchquotas?
Transportation services
389. Inrelation toairtransport services, areforeign airlines permitted toflypassengers orfreight
within theRussian Federation?WT/ACC/RUS/9
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390. Inrelation tolicensing ofaviation-related commercial services, suchastransfer ofpassengers
andcargoes, maintenance ofaircraft, andservicing ofpassengers andcargoes inairports, etc,are
thesectors opentoforeigners onlyiftheyformajointventure withRussian-owned companies? What
arethelicensing criteria? Aredifferent criteria applied tojointventures withforeign organisations
thanareapplied todomestic firms?
391. Inrelation toroadtransport, areforeign-owned companies permitted tocarry cargoes and
passengers within theRussian Federation andacross itsnational borders? What licensing conditions
apply?
NOTE: Answers 372-391arepending .
TRIPS
392. Howandwithin whattime-frame doesRussia propose toimplement itsobligations under the
Agreement onTrade-Related Aspects ofIntellectual Property Rights (TRIPS)?
Answer: SeeAnswer 145herein.
393. Does Russia consider thecurrent domestic legalframework tobesufficient fortheadequate
andeffective protection ofintellectual property rights? How does Russia propose tocover any
deficiencies?
Answer: SeeAnswer 145herein.
394. What steps willRussia takeinregard toobligations under theTRIPS Agreement relating to
enforcement ofintellectual property rights inRussia?
Answer: SeeAnswer 145herein.