RUSSIA JOINS THE WTO BENEFITS FOR EU EXPORTERS FACT SHEET

Following a long period of negotiations, the WTO recently agreed on Russias terms of membership to the WTO. After domestic ratification, it is expected that Russia will become a fully fledged WTO member by mid-summer 2012. . Accession to the WTO of Russia is expected to give the EU economy as biggest trading partner of Russia a significant boost. In 2010, the EU imported for almost 160 billion Euros worth of goods while exporting to Russia for over 86 billion Euros worth of machinery, automobiles and farming products. The EU export value to Russia is expected to increase quickly with over 5 billion Euros worth of goods. Below are some key elements with respect to the export of goods to Russia after its accession to the WTO. Import tariff reduction Import tariffs on many products will be reduced due to the WTO accession of Russia. However, the import tariff reductions are sometimes covered by lengthy periods. The average import tariffs will gradually be reduced from 10 % to 7.8% (e.g. on agricultural products from 15.6% to 11.2% and on industrial products from 9.3% to 6.4%). The import tariff reduction schedule may vary depending on the product concerned. Some reductions will take place with immediate effect, whilst others will take effect after a 3 or 7 year period. The impact on certain key industrial sectors is as follows follows: Automotive The import tariff for particular cars will be reduced from 30% to 25% (e.g. light vehicles from 30% to 25%; used refurbished light vehicles aged from 3 to 7 years from 30 to 20%) with immediate effect. In time, the import tariff on cars will gradually be reduced to a 12% average while the average import tariff on auto parts will be bound at 6.9 %. Chemicals Russias average import tariff on chemicals is currently 10% and go as high as 20%. Russia will with immediate effect bind 71% of its tariffs on chemical products at 5% or less leading to an average import tariff on chemicals of 6.5%. Information technology Products (ITA) Russia will join the Information Technology Agreement (ITA). This means that products covered by this agreement will enjoy a duty free treatment (the current import tariffs range from 5% to 10 %).

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RUSSIA JOINS THE WTO BENEFITS FOR EU EXPORTERS FACT SHEET

Machinery Russia committed to bind 64% of its import tariff rates on machinery products at 5% or less with an average import tariff rate after full implementation for machinery of 6.4%. Decrease of import formalities Upon accession, Russia is obliged to harmonize its import procedures to meet WTO standards. This will result in predictability and transparency to Russias import licensing regime and other related procedures (e.g. what documents and information can be required of applicants to obtain an import license, the procedures that must be followed, including maximum timeframes for issuing a license, and protections for traders from discriminatory procedures and excessive delays). Russian Decree 166 and Decree 566 As from 2005, the Russian government has maintained an Automotive Regime of Industrial Assembly, which allows for lower import tariffs (from 0% to 5%) on the import of automotive parts, which are used in the production of vehicles that contain a certain level of Russian content. These so-called Decrees 166 (for car manufacturers) and 566 (for automotive parts manufacturers) focus on promoting domestic vehicle production. The requirements for these industrial assembly programs i.e. to locally produce goods are considered inconsistent with the WTO Agreement on Trade-Related Investment Measures (TRIMs). Russia has committed to eliminate the elements of the Decrees 166 and 566, which are inconsistent with the TRIMs, by July 2018 (i.e. the industrial assembly regime will be effective till July 2018). Conclusion Once a fully fledged WTO member, Russia presents itself as an even more interesting business partner. The Russian WTO accession will positively impact the export activities of many EU companies and create new business opportunities opportunities.
With years of experience in Russian Trade & Customs matters, the tax lawyers of KPMG Meijburg & Co and its Russian desk are fully equipped to inform your company on the impact and possibilities of the above for your business.
Contact T. Hesselink T: +31 (0)20 656 1656 www.meijburg.com

M. Komarov T: +74 95514 1304

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