U.S. companies face several tariffs and non-tariff trade barriers when exporting to Russia. According to Article 12 of the Federal Law of December 8, 2003, No. 164-FZ “On the Foundations of State Regulation of Foreign Trade Activity,”, state regulation of foreign trade is carried out by:
- Customs and tariff regulations
- Non-tariff regulations
- Prohibitions and restrictions on foreign trade in services and intellectual property
More detailed information may be found in the federal law adopted in June 2018 that allows the imposition of bans and restrictions on imports to Russia of certain goods (products or raw materials) that originate from unfriendly foreign states (Federal Law No. 127-FZ dated 4 June 2018 On Retaliation Measures (Counteraction) to unfriendly actions of the United States of America and other foreign states). Currently, the regulation is connected with the need to introduce the marking of goods with control identification tags (informally called the “track & trace system”). There is a list of product groups required to be marked with such tags. Such goods include:
- Tobacco products
- Apparel and light industry products
- Tires and tire casing
- Perfumery products
- Photographic equipment
- Dairy products
The Agreement on the marking of goods with identification tags entered into force on March 29, 2019 and continues to expand to cover other categories of goods The goal of product marking with identification tags is to counteract the manufacture and turnover of counterfeit and adulterated products. This system makes it possible to track a product from the production facility to a specific end-user.
On June 29, 2020, two new Bureau of Industry and Security (BIS) rules of the U.S. Department of Commerce came into force, which further restrict the export of sensitive technologies to Russia.
The first rule, Elimination of License Exception Civil End Users (CIV), cancels the exception for American exporters, who previously could supply a wide range of goods to Russia without a license if they are intended for civilian use by civilian consumers. The cancellation affects bearings, semiconductors, computers, and other goods. Now, even if these goods are intended for civilian use, the exporter will have to obtain a special export license from the Bureau of Industry and Security (BIS).
The second rule, Expansion of Export, Reexport, and Transfer (in-Country) Controls for Military End-Use or Military End Users in the People’s Republic of China, Russia, or Venezuela (MEU), expands the definition of “military use” of goods. It will reduce the ability of the Russian defense sector to purchase American goods, technology, and software. “Military end-user” means the military, police, national guard, intelligence services, and “any person or organization whose actions or functions are intended to support the military use” of the product. Generators for use in nuclear power plants, sensors, and lasers, propulsion systems, certain equipment for sea vessels, acoustic equipment for detecting underwater objects, etc., have been added to the list of goods that can no longer be supplied to military users.
U.S. companies cite technical regulations and related product testing and certification requirements for a range of imported goods. Russian authorities require product testing and certification as key elements of the product approval process for a variety of products, and only an entity registered and residing in Russia can apply for the necessary documentation for those product approvals. Testing and certification should be performed by competent bodies in Russia. A “Supplier’s Declaration of Conformity” is meant to confirm the safety of products for the environment and the health of people and animals.
Russian Government Resolution No. 1236, in effect since the start of 2016, requires Russian government agencies to give priority to Russian software based on a registry published and updated by the Russian Communications Ministry. Government agencies may only buy foreign software when a suitable domestic substitute is not available. Moreover, on July 21, 2014, President Putin signed the Personal Data Localization Law 242-FZ that requires companies to store the personal data of Russian citizens only on servers physically located within Russia.
Russia developed a global navigation positioning technology called Global Navigation Satellite System (GLONASS) as an alternative to the U.S. Global Positioning System (GPS) system. Russia’s Ministry of Transport issued a rule in March 2012 requiring that GLONASS compatible satellite navigation equipment be installed on all Russian-manufactured aircraft, with varying deadlines depending on the use, age, and size of the aircraft, but in all circumstances no later than January 2016. In addition, any foreign-manufactured aircraft listed on a Russian airline’s Air Operator Certificate was required to have GLONASS or GLONASS/GPS compatible satellite navigation equipment installed by January 1, 2018, or earlier, depending on the size of the aircraft, requiring modifications to non-GLONASS-configured aircraft to meet this rule. The same issue applies to cars imported into the Russian Federation: all vehicles, both new and used, that are imported should be equipped with a GLONASS system. Any vehicle without GLONASS-capable equipment cannot be imported into Russia, as established in technical regulation TR TS 018-2011 of January 1, 2017.
There is a single list of goods (http://www.eurasiancommission.org/ru/act/trade/catr/nontariff/Pages/ep.new.aspx ) in which measures that regulate trade are applied.