WT/ACC/SPEC/RUS/25/Rev.3
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Organization / RESTRICTED
WT/ACC/SPEC/RUS/25/Rev.3
15 October 2004
(04-4350)
Working Party on the Accession
of the Russian Federation
DRAFT REPORT OF THE WORKING PARTY ON THE
ACCESSION OF THE RUSSIAN FEDERATION
TO THE WORLD TRADE ORGANIZATION
Revision
______
Members of the Working Party on the Accession of the Russian Federation to the WTO
Attached is the Secretariat's third revision of the Draft Report of the Working Party on the Accession of the Russian Federation to the WTO.
This document reflects the current state of play. As before, it is intended to provide focus to members of the Working Party for further multilateral work in developing consensus towards agreeing the terms of entry of the Russian Federation to the WTO. The text will necessarily evolve in line with future negotiations, as well as ongoing work on pending legislation in specific areas.
Commitments have not been taken up for discussion in the Working Party. The square bracketed commitment paragraphs contained in the text reflect proposals made earlier by WTO Members or included in this Revision at the request of the Russian Federation.
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WT/ACC/SPEC/RUS/25/Rev.3
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TABLE OF CONTENTS
Introduction
Documentation Provided
Introductory Statements
ECONOMY, ECONOMIC POLICIES AND FOREIGN TRADE
Fiscal and Monetary Policies
Foreign Exchange and Payments System
Investment Regime
State Ownership and Privatization
Pricing Policies
Competition Policy
FRAMEWORK FOR MAKING AND ENFORCING POLICIES
Powers of executive, legislative and judicial branches of government
Government entities responsible for making and implementing policies affecting foreign trade; Right of Appeal
Division of authority between central and sub-central governments
POLICIES AFFECTING TRADE IN GOODS
Registration requirements for import/export operations
-Alcoholic beverages
-Pharmaceuticals
-Precious stones and metals
-Other licensing requirements
1.Import Regulations
Customs Regulations and Customs Tariff
Ordinary Customs Duties
Tariff Quotas
Tariff Exemptions
Other Duties and Charges
Fees and Charges for Services Rendered
Other Fees
Application of Internal Taxes on Imports
...... Excise Taxes
-Value Added Tax
Quantitative Import Restrictions, including Prohibitions and Quotas
Import Licensing Systems
-Sugar
-Alcoholic beverages and Alcohol-Containing Products
-Pharmaceuticals
-Polycarbonates
-Technology Products
Customs Valuation
Rules of Origin
Other Customs Formalities
Preshipment Inspection
Balance of payments
Anti-dumping, countervailing and safeguard measures
2.Export Regulations
Export Duties
Quantitative Export Restrictions, Including Prohibitions and Quotas
-Precious stones and metals
Export Licensing Procedures
Other Customs Export Formalities
3.Internal Policies Affecting Foreign Trade in Goods
Industrial policy, including subsidy policies
Technical Barriers to Trade
Sanitary and Phytosanitary Measures
Traderelated Investment Measures (TRIMs)
-Production Sharing Agreements
-Domestic car-industry
-Aircraft area
Statetrading enterprises
Free Zones and Special Economic Zones
Government Procurement
Regulation of Trade in Transit
Policies Affecting Foreign Trade in Agricultural Products
Trade in Civil Aircraft
Textiles
TRADERELATED INTELLECTUAL PROPERTY REGIME (TRIPS)
1.General
Fees and duties
2.Substantive standards of protection, including procedures for the acquisition and maintenance of intellectual property rights
Copyright and Related Rights
Trademarks
Geographical Indications
Inventions and Industrial Designs
Plant Variety and Animal Breed Protection
Layout Designs of Integrated Circuits
Requirements on undisclosed information, including trade secrets and test data
3.Enforcement
Criminal Measures
Criminal Procedures
Border Measures
Civil and Administrative Procedures and Remedies
POLICIES AFFECTING TRADE IN SERVICES
TRANSPARENCY
Publication of Information on Trade
Notifications
FREE TRADE AND CUSTOMS UNION AGREEMENTS
CONCLUSIONS
ANNEX ITables 1-18...... 201
ANNEX IIList of Laws and Regulations available to the Working Party...... 239
ANNEX IIIList of Laws and Regulations pertaining to
Standardization, Metrology and Certification...... 240
ANNEX IVDraft Decision and Protocol...... 242
WT/ACC/SPEC/RUS/25/Rev.3
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Introduction
- The Government of the Russian Federation applied for accession to the General Agreement on Tariffs and Trade (GATT 1947) in June 1993. At its meeting on 8 July 1993, the GATT Council of Representatives established a Working Party to examine the application of the Government of the Russian Federation to accede to the GATT 1947 under Article XXXIII of the General Agreement. Following the entry into force of the WTO Agreement on 1 January 1995, and in pursuance of the decision adopted by the WTO General Council on 31 January 1995, the GATT 1947 Working Party was transformed into a WTO Accession Working Party under Article XII of the Marrakesh Agreement Establishing the WTO. The terms of reference and the membership of the Working Party are reproduced in document WT/ACC/RUS/1/Rev.[…].
- The Working Party met on 1719 July 1995, 46 December 1995, 3031 May 1996, 15October 1996, 15 April 1997, 2223July 1997, 911 December 1997, 29 July 1998, 1617December 1998, and 25 May 2000 under the Chairmanship of H.E. Mr. W. Rossier (Switzerland), on 18December2000, 2627June2001, 2324 January 2002, 25 April 2002, 20June2002, 18 December 2002, 30 January 2003, 6 March 2003, 10 April 2003, 10 July 2003 and 30 October 2003 under the Chairmanship of H.E. Mr. K. Bryn (Norway), and on 5 February 2004, 2April 2004, 16 July 2004 and [...] under the Chairmanship of H.E. Mr. S. Jóhannesson (Iceland).
Documentation Provided
- The Working Party had before it, to serve as a basis for its discussions, a Memorandum on the Foreign Trade Regime of the Russian Federation (L/7410), supplements to the Memorandum on the regime in the areas of Trade-Related Investment Measures (WT/ACC/RUS/5), Trade in Services (WT/ACC/RUS/6), Trade-Related Aspects Of Intellectual Property Rights (WT/ACC/RUS/7), as well as questions submitted by Working Party members on the foreign trade regime of the Russian Federation together with replies thereto and other information provided by the Russian authorities listed in document WT/ACC/RUS/11/Rev[…] and legislative texts and other documentation listed in Annex I.
Introductory Statements
- The representative of the Russian Federation recalled that his Government had been an observer to GATT1947 since January 1992 when the Russian Federation continued the former USSR observer status. In this capacity, the Russian Federation had witnessed the successful conclusion of the UruguayRound and followed its implementation.
- In this context, he noted that his Government was confronted with a number of important tasks in the social, institutional, macroeconomic and investment fields. In particular, the Russian Federation had to overcome the decline in the standards of living of its population resulting from the economic and financial crisis of 1998. This could be only achieved through policies aimed at stimulating growth in the country's GDP by improving economic productivity, and expanding sources of investments. In his Government's view, this would also require the maintenance of a set of policies which could adequately develop competitive domestic markets for goods, services and capitals and enhance the role of smaller and medium size enterprises. Accordingly, since requesting accession to the GATT and afterwards to the WTO, the Russian Federation had undertaken an unprecedented process of reform of its economy progressively adopting laws and regulations consistent with WTO multilateral rules and disciplines. This process was primarily aimed at establishing the conditions for a dynamic market economy in the Russian Federation based on a stable and predictable legislative framework capable of sustaining long term economic growth and ensuring improvements in the standards of living and welfare of the Russian population as well as in the modernization of the Russian Federation's production capacity, and its international competitiveness. The government of the Russian Federation had set a clear list of programs, policies and priorities that had as their central goal rendering the Russian Federation a better, more competitive and rewarding place in which to work and do business. It was clear that the growing interdependence of national economies, global integration of markets and linkage between trade flows and investment required the Russian Federation to adjust its trade, financial and investment legislation to WTO rules and disciplines.
- Members of the Working Party welcomed the Russian Federation's application for accession to the WTO and underscored the importance of a rapid integration of the Russian Federation into the multilateral trading system, both for the benefit of the Russian Federation and the world trading system as a whole. To this end, members considered that the enactment of relevant legislation consistent with WTO requirements and of provisions for its implementation was essential to the accession of the Russian Federation to the WTO, in order to ensure that Russia could be an effective participant in the WTO from the first day of its membership. Members of the Working Party equally stressed the need for completing the negotiations on commercially viable terms which should be mutually beneficial to the Russian Federation and WTO Members.
- The Working Party reviewed the economic policies and foreign trade regime of the Russian Federation and the terms of a draft Protocol of Accession to the WTO. The views expressed by members of the Working Party on the various aspects of the Russian Federation's foreign trade regime, and on the terms and conditions of the Russian Federation's accession to the WTO are summarized below in paragraphs 8 to […].
ECONOMY, ECONOMIC POLICIES AND FOREIGN TRADE
Fiscal and Monetary Policies
- Members of the Working Party requested that the Russian Federation provide information on its fiscal and monetary policies, taxation system, developments in the State budget and plans for further changes and reform.
- In response, the representative of the Russian Federation stated that current economic policies in the Russian Federation were aimed, inter alia, at "de-bureaucratization" of the economy, including elimination of unnecessary and burdensome administrative barriers, improvement of competition and investment attractiveness of the country, as well as at the achievement of its fiscal and monetary stability. In particular, the representative of the Russian Federation stated that current monetary policy was aimed at creating favourable preconditions for sustainable long-term economic development. This objective was being achieved by reducing inflation to the projected level as the fundamental monetary policy target and implementing policy of managed floating exchange rate of the national currency. All these activities were accompanied by measures to liberalize foreign exchange regulations.
- Noting the above statement, some members of the Working Party considered that the Central Bank of the Russian Federation (CBR) in its conduct of monetary policy continued to rely unduly on management of the exchange rate and foreign reserves and on depository operations rather than on more standard monetary instruments, such as refinancing and interest rate management. These members asked the Russian Federation to further comment on these issues.
- In response, the representative of the Russian Federation noted that the CBR used all available monetary instruments and methods apart from (exact meaning) those mentioned by some members. To achieve the monetary policy objectives and to respond more quickly and effectively to any changes in money and credit, including interbank interest rates fluctuations, the CBR actively used market instruments, combining operations to provide liquidity to banks with the operations of medium and long term sterilisation of temporarily free funds which helped the CBR to maintain balanced and relatively stable conditions on the money market. Principles for developing the monetary instruments system and its main elements had been established in 2002-2003. The diversity of monetary instruments implemented by the CBR was determined by the different needs of the credit institutions and combined standing facilities and regular market-based auctions. Monetary instruments and methods were adjusted depending on the economic situation in compliance with the legal framework. In accordance with Federal Law No.86-FZ of 10 July 2002 "On the Central Bank of the Russian Federation (CBR)" (as amended), the principal instruments and methods of the CBR’s monetary policy were the following:
-interest rates on the CBR’s operations;
-ratios of the required reserves deposited with the CBR (the reserve requirements);
-open market operations;
-refinancing of credit institutions;
-currency interventions;
-the issue of bonds on its own behalf;
-setting targets for money supply growth.
- Taking into consideration the situation of liquidity in the banking sector in the first half of 2004, the CBR had reduced required reserves ratios and brought them to the required reserves ratios of the European Central Bank. Moreover, the CBR had allowed use of averaging provisions for the part of the required reserves (the part of required reserves was held on an average daily basis on the correspondent (current) credit institutions’ account over a one-month reserve maintenance period). To absorb liquidity, the CBR had held, in 2003-2004, regular deposit auctions to attract funds from credit institutions for four weeks to three months and reverse repo auctions to sell federal government bonds (OFZ) with an obligation of reverse repurchase for terms from 28 days to six months. To absorb free funds of credit organizations for a relatively long period and broaden the range of financial instruments, the CBR had restarted to issue its own bonds for a term of more than one year. For the purpose of absorbing excess of liquidity, the CBR had also used outright sales of government bonds from its portfolio at market yields without an obligation of reverse repurchase.
- In addition to using market instruments to sterilize liquidity, the CBR preserved permanent access windows for credit institutions to place their free funds on deposit with the CBR. The CBR conducted deposit operations on standard terms and conditions at a fixed interest rate through the Reuters Dealing System and MICEX (Moscow Interbank Currency Exchange) System of electronic lot trading (SELT). At the same time, the CBR continued to provide funds to credit institutions through direct repo and Lombard auctions. Such operations were conducted for terms ranging from one day to 90 days. In addition, the CBR extended to banks intraday and overnight settlement loans, backed by federal government and local governments securities, mortgage bonds and CBR obligations (OBR). Credit institutions also had the opportunity to receive liquidity through foreign exchange swaps arranged with the CBR. An important monetary policy instrument used by the CBR was currency interventions (foreign exchange outright sales and purchases) in the exchange and over-the-counter segment of the domestic foreign exchange market.
- Under the Federal Law "On the Central Bank of the Russian Federation (the Bank of Russia)" the CBR was required to annually submit to the State Duma draft "Guidelines for the Single State Monetary Policy" for the coming year no later than 26 August and "Guidelines for the Single State Monetary Policy" for the coming year no later than 1 December. He added that pursuant to “The Guidelines for the Single State Monetary Policy for 2004” (The Monetary Policy Guidelines) the ultimate aim of the monetary policy implemented by the CBR was the reduction of inflation. The CBR had developed a monetary program with the objective to monitor monetary indicators on their compliance with the projected inflation level. The Monetary Policy Guidelines for 2004 could be found on the CBR’s web-site (
- He noted that general budgetary policy was described in Resolution of the Government of the Russian Federation No. 910-r of 7 July 2001 "On the Program of Social and Economic Development of the Russian Federation with a View to the Medium-Term Perspective". Key policy objectives were: improvement and measuring of the effectiveness of expenditure-based budgetary policy; creation of a system for management of state assets and liabilities to add flexibility to current policy and properly control debt; improving the transparency of the budgetary procedures; and the reform of the tax system to improve equitability, transparency and lower the tax burden on businesses.
- Concerning the tax system of the Russian Federation, the representative of the Russian Federation noted that the current forms of taxation in the Russian Federation were established by Law of the Russian Federation No. 2118-1 of 27 December 1991 "On the Basic Principles of the Taxation System in the Russian Federation". That Law distinguished between federal taxes, regional taxes, and local taxes. He noted, that Federal taxes comprised: the value-added tax, excise tax, uniform social tax, securities transaction tax, customs duty, royalty tax for use of natural resources and extraction of minerals, profit tax imposed on legal persons, income tax imposed on natural persons, state duties, succession and gift tax, tax on the use of the words "Russia", "the Russian Federation", gambling tax, water use tax.
- The representative of the Russian Federation further mentioned that his country’s monetary policy was undergoing a process of gradual changes in line with systemic economic and social reforms. The basic direction of such evolution was to achieve a balanced monetary system free of unnecessary restrictions and constraints for domestic and foreign economic operators. In this context, he described the basic elements of the evolving foreign exchange and payments system in the following section.
Foreign Exchange and Payments System