Russia - Trade Barriers Russia – Trade Barriers
U.S. companies face a number of tariff and non-tariff trade barriers when exporting to Russia. For example, for importers of alcoholic products there is a long-standing requirement that all Customs duties, excise taxes, and value-added taxes on alcohol be paid in advance using a bank guarantee and deposit, for which the reimbursement process is very slow. U.S. industry is concerned that the assessment and licensing procedures administered by different Russian government agencies and the EEC (Eurasian Economic Commission, the executive body of the Eurasian Economic Union, a.k.a. EAEU) add an unnecessary level of complexity leading to increased costs and delays.
Nearly all U.S. food and agricultural exports were banned by the Russian government in August 2014, in reaction to the imposition of sanctions against Russia.
U.S. companies also cite technical regulations and related product testing and certification requirements as major obstacles 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. Opportunities for testing and certification performed by competent bodies outside Russia are limited.
Additionally, U.S. companies have observed that the procedures associated with Russia’s requirement to have a “supplier’s declaration of conformity” are unnecessarily burdensome. This document is meant to confirm the safety of products for the environment and the health of people and animals. Manufacturers of telecommunications equipment, oil and gas equipment, and construction materials and equipment, in particular, have reported serious difficulties in obtaining product approvals within Russia. Other member countries of the EAEU are in the process of adopting a similar system.
Laws governing the information technology (IT) sector have made it more difficult for U.S. technology companies to provide/export goods and services to the Russian market. For example, 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. The law of the Ministry of Telecom and Mass Communications of the Russian Federation envisioned a transition to the use of domestic office software by federal executive agencies and state extra-budgetary funds from 2016-2018.
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 personal data of Russian citizens only on servers physically located within Russia. This law made it more difficult for companies to select cloud-based IT solutions. After this law entered into force on September 1, 2015, the Russian Federal Service for Supervision in the Sphere of Telecom, Information Technologies and Mass Communications (ROSKOMNADZOR) was given authority to fine companies that violate the law and restrict access to their websites. The Ministry of Telecommunications and Mass Communications of the Russian Federation later published explanatory notes about the law at http://minsvyaz.ru/ru/personaldata/#1438548218895
The “Yarovaya” package of anti-terrorism amendments which President Putin signed into law in 2016 include provisions requiring telecommunication service providers to furnish encryption keys to law enforcement agencies upon request. Among its provisions, the legislation mandated that as of July 2018, domestic telecoms and Internet service providers (ISPs) store all customers’ telephonic and electronic content for six months. These amendments also require ISPs to keep records of all transmitted communications for one year (three years for telecom companies).
New regulations in the auto and aviation sectors could make it more difficult to sell U.S. products in Russia. For example, 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 new 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.