The representative of the Russian Federation stated that from 1 July 2010, the Russian Federation applied rules of origin to imports pursuant to Chapter 7 of the CU Customs Code and Chapter 10 of the Federal Law on Customs Regulation (No. 311-FZ of 27 November 2010). Non-preferential rules of origin and their application were governed by the provisions of the Agreement on Common Rules for Determining the Country of Origin of Goods of 25 January 2008, including the Rules of Determination of the Country of Origin (hereafter: CU Agreement on Rules of Origin), the CU Customs Code, and the Federal Law on Customs Regulation. These instruments closely followed the work of the World Customs Organization (WCO) and the WTO regarding the application and harmonization of non-preferential rules of origin. The principles for determining the country of origin of goods were based on international practices and implemented the recommendations of the revised Kyoto Convention, which came into force in 2006. Article 58.3 of the CU Customs Code provided that the determination of the country of origin must be carried out in accordance with international treaties of the Member States of the Customs Union, which defined the procedure of determining the country of origin of goods. He further stated that the determination of the origin of goods originating from developing countries and eligible for the system of preferences maintained by the Russian Federation was governed by the Agreement on Rules of the Origin of Goods, Originating from Developing and Least-developed Countries of 12 December 2008, including the Rules Determining the Origin of Goods from Developing and Least-developed Countries (hereafter: CU Agreement on Rules of Origin for Developing and Least-developed Countries (LDCs)). The customs procedures for determining the country of origin of goods established pursuant to the CU Customs Code replaced those contained in the Customs Code of the Russian Federation (Federal Law No. 61-FZ of 28 May 2003). The relevant provisions of Law of the Russian Federation No. 5003-1 of May 1993 "On Customs Tariff" were superseded, with the exception of Articles 3 and 36, which remained in effect in respect of application of MFN customs duties rates and provision of tariff preferences, respectively.
Members of the Working Party sought to ensure that the CU Agreements and Customs Code and the Federal Law on Customs Regulation provided for rules of origin that complied with the WTO Agreement on Rules of Origin. Several Members requested further information and clarification from the representative of the Russian Federation on how these measures established preferential and non-preferential rules of origin. Members also expressed the view that the requirement of the Russian Federation that imports of non-MFN origin were subject to twice the MFN tariff rate, if MFN origin could not be initially proven, was unduly burdensome, given that after the accession of the Russian Federation to the WTO, goods originating in a only a small number of countries could originate from non-MFN trading partners. These Members sought a commitment from the Russian Federation that it would assess the MFN rate on all goods originating from countries enjoying MFN duty rate from the date of the accession to the WTO of the Russian Federation. They also noted that goods, whose origin had not been clearly established, were cleared through customs only after payment of customs duties at a double MFN rate of the customs tariff. Some Members asked the Russian Federation to clarify whether in such cases it was possible to submit a certificate of origin or other proof subsequent to customs clearance and, if origin was subsequently satisfactorily established, whether excess duties were then refunded. Some Members also expressed concerns about the consistency with the WTO Agreement on Rules of Origin of the provisions of the CU Customs Code and the CU Agreement on Rules of Origin providing that "the country of origin could also be understood to mean a group of countries, region or part of a country, if this was necessary to identify them, with a view to determining the origin of goods." They observed that the WTO Agreement referred to a "country" of origin, not to groups of countries or regions, or part of a country and they requested a clarification of the meaning of these provisions and specific examples of how and under what circumstances the origin of a good could be ascribed to a region or part of a country. These Members requested confirmation from the Russian Federation that these provisions would be applied in full conformity with the WTO Agreement.
In response, the representative of the Russian Federation informed Members that the option of specifying a region or part of a country was applied in cases where it was necessary to define the origin of the goods as such. So far it had been applied within the procedure of implementation of trade defence measures.
The representative of the Russian Federation explained that, pursuant to Article 58 of the CU Customs Code, goods were recognised as originating from a specific country, if they were wholly made in that country or substantially transformed in accordance with criteria set-forth in the CU Agreement on Rules of Origin and CU Commission decisions. The country of origin of goods could also be a group of countries, a customs union, a region, or a part of a country, if the exact country of origin within the group of countries was difficult or could not be determined. Under those circumstances, the relevant group of countries, customs union, or, if necessary to identify origin, a region or part of a country could be considered as the country of origin of the goods. The basic criterion for substantial transformation for non-preferential goods was the shift in the tariff classification of the good on the level of at least one of the first four digits, as prescribed by paragraph 4 of the Rules of Determination of the Country of Origin annexed to the CU Agreement on Rules of Origin. Paragraph 2 of the Rules of Determination of the Country of Origin supplied an exhaustive list of the kinds of goods which could be produced wholly in a country. Paragraph 5 included an illustrative list of operations which did not satisfy the criteria for production of a good within a country. Other criteria of sufficient transformation could be established exclusively by the CU Commission, as set-out in paragraph 6.
The representative of the Russian Federation also explained that, in the event that goods were supplied in a dismantled or unassembled state over several shipments - when it was impossible to deliver the whole lot at one time due to production or transportation problems or when the lot of goods had, by mistake, been divided into parts - paragraphs 8 and 9 of the CU Rules of Determination of the Country of Origin established a number of specific rules to assist in determining the country of origin of goods (e.g., the indicated goods could, at the discretion of the importer, be considered as one shipment).
The representative of the Russian Federation further explained that, in accordance with Article 62 of the CU Customs Code, when goods were brought into the customs territory of the Customs Union, a document must be shown to confirm the country of origin of the goods, if the Russian Federation (or other CU Party) granted preferential tariffs to the country of origin of the goods under the Protocol on Common System of Tariff Preferences of Customs Union, signed on 28 January 2008, or other international treaties and agreements of the Russian Federation (or other CU Party) or the legislation of the Russian Federation. The CU Customs Code also established cases where certificates of origin were mandatory or where the customs authorities had the authority to require that a certificate of origin be provided. This authority existed when there was reasonable basis to believe that the information initially provided on the country of origin of the relevant goods was false. Currently, a certificate of origin (either the "A" Document attached to the Annex to the Agreement on Rules of Origin of Goods from Developing and Least-developed Countries or, for CIS preferences, the ST-1 document) was required. Goods were considered as originating from a developing or least-developed country subject to tariff preferential treatment when they were fully produced in such a country. He added that Part III of Annex I of the Agreement on Rules of Origin of Goods from Developing and Least-developed Countries provided that CU Parties could establish a procedure for the application of criteria of substantial transformation for countries eligible for tariff preferences, based on the determination that the value of inputs used in the production process originating from countries not covered by preferential treatment or of unknown origin did not exceed 50 per cent of the total declared value. He also noted that Part VI of Annex I provided the terms for application of the rules of direct purchase and direct shipping for granting preferential tariffs. He further informed Members that the provisions of Article 111 of the Law "On Customs Regulation", which stipulated the procedure for issuance of the assessment of origin of goods, was, in his view, in full conformity with Article 2(h) of the WTO Agreement on Rules of Origin and Article 3 (d) to (f) of Annex II to the said Agreement, and that the provisions of Article 3(g) of the Annex were reflected in Articles 8 and 10 of the CU Customs Code.
He added that, pursuant to Article 63 of the CU Customs Code, MFN treatment was granted, if the country of origin was declared and accepted as being a country receiving MFN tariff treatment. For MFN treatment no certificate of origin was required. Where MFN treatment existed in respect of the country of origin, customs duties were charged at the MFN rates. The CU Customs Code also provided that customs duties were charged at the double rate only when the customs authorities actually had evidence that the goods at issue had originated from a country in respect of which the Russian Federation did not apply MFN treatment. These goods could enter the Customs Union, but a security would have to be provided for the payment of customs duties at the double MFN rates, until the origin of the goods could be established.
He stated that when the certificate of origin or other proof was accepted, MFN treatment would be applied for one year after release of the goods and the importer could recover the difference in the duties paid. Customs duties were reimbursed within one year from the date of over-payment of customs duties upon the submission, by the payer, of a request, as provided for in Chapter 13 of the CU Customs Code. Such a request had to be submitted to the customs office to which duties had been paid.
He further noted that, pursuant to Article 63.1 of the CU Customs Code, if the customs authorities had no indication that a good was originating from a country in respect of which the Russian Federation did not apply MFN treatment, customs duties would be charged at the MFN tariff rate irrespective of the availability or absence of a certificate of origin.
The representative of the Russian Federation added that, pursuant to Article 61 of the CU Customs Code, the certificate of origin of goods constituted documentary proof of the country of origin of goods issued by the competent body or organization of a given country or of the country of exportation of the said goods, if the country of exportation issued such certificates based on the information obtained from the country of origin of such goods. According to Article 62 of the CU Customs Code the certificate was required only in cases where tariff preferences were claimed. The certificate of origin was to be submitted with the customs declaration and other documents presented for customs clearance. If the certificate of origin of goods>
As for the rules of origin for goods traded within the Customs Union and/or goods covered by Free Trade Agreements between the Russian Federation and other CIS Members, the representative of the Russian Federation explained that the Russian Federation applied the "Rules of Origin of Goods" approved by the Council of Heads of CIS Governments on 30 November 2000 (hereafter: Decision of 30 November 2000) and the Agreement of the CIS States of 12 April 1996 "On Rules of Origin of Goods Originating from Developing Countries for the Purposes of Tariff Preferences under the General Preferences System". These rules had been developed pursuant to the international practice for determination of origin. Additional criteria of direct purchase were used, along with requirements that the exporter be established legally in a Party to the CIS Free Trade Agreement (as originally provided for in the Decision of the Heads of Government of other CIS Countries of 18 October 1996). Currently, there were no other arrangements for the determination of the country of origin of goods within the framework of the Customs Union, the Eurasian Economic Community, or the CIS. This situation would change when the Agreement of the CIS States of 20 November 2009 on the Rules of Origin in the CIS entered into force and replaced the rules of origin established earlier by the Decision of 30 November 2000 for all CIS Members.
Concerning Free Trade Arrangements of the Russian Federation with Serbia and Montenegro (and in the future, with any other countries not Members of the CIS), he noted that the rules of origin for these preferential arrangements were contained in the Free Trade Agreements themselves.
Members sought clarification of the requirement that the exporter be a legally established resident in a Party to a CIS Free Trade Agreement, and asked, if corporate registration would satisfy that requirement, or whether there were other criteria that must be satisfied.
In response to the request for additional information, the representative of the Russian Federation stated that, as for the requirement that the exporter be legally established in a Party to the CIS Agreement there were not any other criteria apart from registration.
Several Members also requested information on the right to request an origin determination prior to shipment, and requested a commitment that these provisions be applied in line with the requirements of Article 2(h) and Annex II, paragraph 3(d) of the WTO Agreement on Rules of Origin. They sought information on where these provisions could be found in the Agreements of the Customs Union that governed the application of the rules of origin and the customs legislation of the Russian Federation. They also indicated that the preferential rules of origin for CIS countries and other preferential trade agreements to which the Russian Federation belonged should fully reflect the interim rules of Annex II of the WTO Agreement on Rules of Origin. In this regard, these Members requested clarification of whether the Decision of the Council of the Governments of the Commonwealth of Independent States on the Rules of Origin of Goods of 30 November 2000 or the provisions of the CU Agreements on Rules of Origin and on Rules of Origin for Developing Countries and LDCs met these requirements, and sought a commitment as to their implementation in accordance with the WTO Agreement on Rules of Origin upon the accession to the WTO of the Russian Federation. Some Members also asked for a clarification of whether customs procedures included any guarantee system which allowed release of goods pending determination of preferential origin and how any associated rectification procedure (subsequent refund or recovery of customs duties) actually operated. These Members further inquired whether provisions existed in the customs laws of the Russian Federation for the protection of confidential information supplied for the purpose of application of the rules of origin.
In response, the representative of the Russian Federation stated that, pursuant to Article 111 of the Federal Law "On Customs Regulation" (No. 311-FZ of 27 November 2010), the Federal Customs Service could make a preliminary decision on the country of origin of goods. He informed Members that information on guarantee systems was in the "Customs Valuation" and "Customs Regulations and Procedures" Sections of the Report. As for confidentiality of information, he explained that Article 8 of the CU Customs Code established confidentiality requirements for all information presented by declarants for customs purposes. That Article provided that the customs authorities "…shall not disclose, use for personal purposes or transfer the information containing state, commercial, banking, tax, or other legally protected secrets, and other confidential information to third parties, including public authorities, except in cases stipulated by this Code and/or the laws of the Member States of the Customs Union." Specific provisions on confidentiality of data were contained in Article 13 of Federal Law No. 98-FZ of 29 July 2004 "On Commercial Secrets", which obligated Government authorities and bodies in the Russian Federation to ensure the protection of confidential information presented to them by legal persons or individual entrepreneurs. He stated that, in his view, the CU Customs Code, other international agreements and the national legislation of the Russian Federation described in this Section contained provisions to fully reflect the requirements of the WTO Agreement on Rules of Origin.
Members of the Working Party thanked the representative of the Russian Federation for this information, but noted that neither the CU Customs Code nor the CU Agreements and Rules providing for the application of rules of origin appeared to provide for a time period of no later than 150 days after a request for issuing a preliminary decision on the origin of a product had been submitted, provided that all required information had been submitted. They requested that the representative of the Russian Federation identify the requirements implementing Article 2(h) and Annex II, paragraph 3(d) of the WTO Agreement on Rules of Origin be identified in CU Agreements or decisions and the customs legislation of the Russian Federation. Those Members also requested information on whether Custom Union and the preferential rules of origin for the FTAs of the Russian Federation with CIS, EAEC, the Single Economic Space, or other such Agreements, reflected the interim rules of the WTO Agreement in Annex II of the Agreement on Rules of Origin.
Concerning the requirements of Article 2(h) and Annex II, paragraph 3(d) of the WTO Agreement on Rules of Origin, the representative of the Russian Federation explained that, in accordance with Article 58 of the CU Customs Code, customs authorities of a CU Party had the authority to make preliminary decisions in respect of country of origin in the order stipulated by its national legislation. In the Russian Federation, these requirements currently were reflected in FCS Order No. 906 of 23 July 2008 "On the Approval of the Regulations on the Procedure for Provision by the FCS of the State Service of Taking Preliminary Decisions on the Classification of a Commodity in Accordance with Commodity Classification of Foreign Economic Activity and on the Country of Origin of a Commodity". In addition, preliminary decisions on the origin of a product had to be taken within 90 days from the date of receipt of a request by an interested party by the customs body, in accordance with the Article 111 of the Federal Law "On Customs Regulation", No. 311-FZ of 27 November 2010, which became effective on 27 December 2010. The request needed to contain information sufficient to make such a decision. Preliminary decisions were valid for three years unless they were changed, withdrawn or terminated. After the entry into force of the Federal Law on Customs Regulation, a new FCS order for making a preliminary decision in respect of country of origin in line with the provisions of Article 111 would be developed and applied.
One Member reiterated that the Orders of the State Customs Committee (SCC) of the Russian Federation No. 961-r of 4 October 2001 and No. 1002 of 19 October 2001 ran counter to the provisions of the Constitution of the Russian Federation, particularly, Article 15 which stated that "if an international treaty to which the Russian Federation is party provides for other rules than those set-forth by Russian Federation domestic law, the rules of the international treaty should apply". That Member was of the view that those Orders of the State Customs Committee violated the provisions of the bilateral agreement between this Member and the Russian Federation on Customs Check Points, and should immediately be eliminated to ensure the consistency with the requirements of that bilateral agreement.
In response, the representative of the Russian Federation noted that the Orders of the State Customs Committee of the Russian Federation No. 961-r of 4 October 2001 and No. 1002 of 19 October 2001 had been abolished.
The representative of the Russian Federation confirmed that from the date of accession, measures on rules of origin, whether adopted by the Russian Federation or the competent bodies of the CU, would be applied in the Russian Federation in conformity with the provisions of the WTO Agreement on Rules of Origin, and would reflect the interim rules in Annex II to that Agreement, including the provisions for transparency, right of appeal, and notifications to the WTO Committee on Rules of Origin. He further confirmed that, consistent with the requirements of Article 2(h) and of Annex II, paragraph 3(d), both for non-preferential and preferential rules of origin, customs authorities would provide an assessment of the origin of goods subject to import upon the request of an exporter, importer or any person with a justifiable cause and issue the assessment no later than 150 days after a request provided that all necessary elements had been submitted. According to the provisions of the WTO Agreement on Rules of Origin, any request for such an assessment would be accepted before trade in the goods concerned had begun, and any such assessment would be valid for three years provided that the facts and conditions, including the rules of origin, under which they had been made remain comparable. He further confirmed that the practice of using "double MFN" rates as the default tariff rates for imports of undeterminable origin had been eliminated. The Working Party took note of these commitments.
