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Country Commercial Guides for FY 2000: Russia Report prepared by U.S. Embassy Moscow, Released July, 1999 Note*

VI. TRADE REGULATIONS AND STANDARDS

Trade Barriers

Since 1996, Russia's import duties (on a trade-weighted basis) have averaged around 14 percent. A three-percentage point tariff surcharge on all imports dating from July 1998 was revoked effective March 1, 1999. Products for which Russian import duties are particular obstacles include automobiles (where calculation based on engine displacement disadvantages many larger U.S. vehicles) and aircraft.

Besides tariffs, there are two other types of charges applied to imports: excise tax and value-added-tax (VAT). Excise tax applies to a number of luxury goods, alcohol, cigarettes and autos, and varies from 20 percent to 570 percent on a price- exclusive basis. The VAT rate is now 20 percent, with the exception of foodstuffs (for which VAT is 10 percent), and is applied to the import price plus tariff plus excise tax.

Customs Valuation

Customs duties are payable on the customs value of goods in hard currency or rubles at the current exchange rate. The customs value is generally considered to be the CIF price of the goods imported. A customs processing fee of 0.15 percent of the goods' actual cost is also levied. According to customs regulations, customs processing should take no longer than one month. If goods are refused by Russian Customs, regulations call for their return to the country of origin.

Import Licenses

Import licenses are required for importation of various goods, including ethyl alcohol and vodka, 14-, 21- and 25-inch color TVs, combat and sporting weapons, self-defense articles, explosives, military and ciphering equipment, radioactive materials and waste including uranium, strong poisons and narcotics, and precious metals, alloys and stones. Import licenses are issued by the Russian Ministry of Trade or its regional branches, and controlled by the State Customs Committee. Licenses for sporting weapons and self-defense articles are issued by the Interior Ministry.

Russian Export Controls

Weapons, military equipment and dual-use materials and technology continue to require Russian export licenses if sold from Russia. Oil exports are controlled through the Ministry of Fuels and Energy's granting of access to export pipelines.

United States Export Controls

Certain high-technology or dual-use (civilian and military) products, such as weapons, high-speed computers and other goods, are subject to United States Government export restrictions, possibly including requirements for pre-license checks and/or post-shipment verifications. In the United States has banned U.S. exports to ten Russian enterprises suspected of collaboration with Iran in development of ballistic missile and/or nuclear weapons capabilities. Exporters with questions are advised to contact the Export Counselling Division of the U.S. Department of Commerce's Bureau of Export Administration (see Chapter XI for contact information) for guidance.

Import/Export Documentation

Importers are required to complete a Russian customs freight declaration for every item imported. Certificates of origin and conformity (see "Product Standards" below) should also be presented at customs. Exporters are required to complete an export declaration and, if necessary, present the appropriate export license at customs. In addition, currency control authorities require issuance of a "passport" for both exports and imports to ensure that hard currency earnings are remitted to Russia and transfers of hard currency payments for imports are for goods actually received and properly valued.

Temporary Entry

Temporary imports by foreign companies which are accredited with Russian government authorities are exempt from customs duties. This applies to goods imported only for company use and for one year only. Companies not accredited with Russian government authorities are charged 3 percent of the total cost of the product on a monthly basis. In this case, total cost equals original product price plus all import taxes.

Product Standards

Many products imported for sale into the Russian Federation are required to have a certificate of conformity issued by the Russian State Standards Committee (Gosstandart). GOSSTANDART tests and certifies products according to Russian Government standards, rather than other widely-accepted international standards (e.g., the ISO-9000 system). GOSSTANDART and its authorized agents are the chief sources for certification in Russia. However, other agencies are involved in certification of certain products, including the Ministry of Agriculture (food products), the Ministry of Health (medical devices and pharmaceuticals), the State Communications Committee (telecommunications equipment and services), the State Mining and Industrial Inspectorate GOSGORTECHNADZOR (equipment for the mining, oil and gas industries) and others.

Testing protocols from the IECEE (electrical equipment) and the IECQ (electrical components), both of which fall under the International Electrotechnical Commission, from Underwriters Laboratories, and from other bodies are accepted by GOSSTANDART and help to expedite certification by the Russian agency. The certificate of conformity is valid for 3 years and must accompany every shipment. Copies of the certificate are acceptable if original seals of the U.S. company holding the original certificate accompany the copy. Russian retailers are obliged to have on hand certificates for all imported products sold in their stores; violation of this requirement can bring penalties of up to the equivalent of $10,000.

Product Labeling

New regulations on labeling for non-food products came into force on July 1, 1998, augmenting food labelling requirements which took effect previously. Companies are advised to check their compliance with these requirements before shipping products. Regulations can be obtained from Gosstandart (see contact information in Chapter XI).

Free Trade Zones/Warehouses

There are no actual free trade zones in Russia. There are some free economic zones designed to encourage investments in specific areas, as well as free customs zones and free warehouses. Federal legislation on the development of free economic zones (FEZs) is no longer a Russian priority, despite the periodic resurfacing of draft bills. In 1997, a bill attempting to unify tax holidays and other concessions for FEZs across Russia passed parliament only to be vetoed by the president. Previously-established FEZs, including the high profile Kaliningrad FEZ, have generated little new investment.

More recently, with the onset of the financial crisis and the government's emphasis on improving revenue collection, the concept of FEZs has been criticized as a threat to federal budget revenues. The government has turned to the model of smaller-scale, more controlled, "free customs warehouses" as a possible alternative, as in the case of the 1998 Automobile Industry Decree (#135). Customs duties do not apply in free customs zones and free warehouses. Some production and wholesale transactions can take place within these zones, but not retail sales. The storage period is not limited. Free customs zones and free warehouses are located in customs areas (airports, seaports, railway and truck terminals) and, according to Decree 135, selected automobile factories.

Membership in Free Trade Arrangements

Russia currently participates in a free trade arrangement with the CIS. Russia has an association agreement with the European Union (effective December 1997), proposes to join the World Trade Organization, and currently receives MFN treatment and GSP status from the United States. A customs union with Belarus, Kazakhstan, Kyrgyzstan and Tajikistan has been formed on paper, but is not currently operational.