Russia: Implications for Mode 3 of new Russian (domestic) Trade Law.
Description
A new Trade Bill has been proposed by the Russian Government. Mr. Putin said that the goal of the draft law is balance relations along the entire supply chain from producer to retailer and to bring order to such a sensitive area as food trade. Paragraph 4 of the Article 1 of the draft law states that the law does not apply to the international trade activity, however, this bill could be relevant to the international commerce through Mode 3 (commercial presence in the territory of another country) in retail services. Foreign companies could be also interested in the implications for the profitability of investments into the agricultural sector, because the current law improves the producer selling conditions and clarifies the relationship between producer and retailer.
The bill contains four matters of potential interest. The first is a proposed clarification of state regulation in trade activity. The draft law includes a list of the ways the government is allowed to regulate trade activity in Russia such as anti-trust regulation, technical regulation, the state is the information provider carrying monitoring, surveillance functions, etc. The bill states that other forms of state regulation are not allowed. The draft law also prohibits the implementation any additional trade regulation by any state (inside Russia) which could limit and worsen the conditions of trade activity (Article 17). The draft law also defines the competence of the federal, state and municipal levels in regulation of trade activity in Russia. At the same time the draft law limits the government control over the trade activities by 'notifying the authorities rather than obtaining their permission'.
The second important improvement is that the law specifies the period of time during which the payment has to be made for food supplies and imposes direct ban on the use of unfair practices by buyers such as discriminating against specific producers. It is important to recall that the large gap between the prices received by agricultural producers and the prices of the food etc paid by customers in shops provided the political justification for this new "fairer" trade regulation.
Another important step up is anti-monopoly regulation included in the draft law. It contains some norms which prevent retail chains from obtaining a dominant position at the Russian retail market, which might give some space to the foreign retail networks to gain a share of the Russian market.
Fourth, an interesting point is the description of the allowed commerce promoting activities by municipal, state and federal levels. The draft law includes such forms of trade stimulation as the support of the investment projects targeted on the development of the domestic trade infrastructure as well as the government support of activities and events which stimulate domestic trade.
The law was expected to be implemented in September 2009.
The bill was adopted by the State Duma on 18 December 2009, by the Council of the Federarion on 25 December 2009 and finally was signed by the Russian President on 28 December 2009. The law enters into force on 1 February 2010.
Any Evidence-Based Deliberation:
| Question | Result |
|---|---|
| Is there anything in the public record to suggest that evidence of the effectiveness of the proposed measure was considered during official deliberations? | Don't know |
| Is there any evidence that alternatives to the proposed measure were considered? | Don't Know |
| Is there anything in the public record that suggests that empirical evidence informed the comparison across the alternatives available to government? | Don't Know |
| Was such evidence identified? | Don't Know |
| Is such evidence publicly available? | Don't Know |
| Did the official decision-maker in question provide an explanation as to why a chosen measure was favoured over alternatives? | Don't Know |
| Is there any evidence to suggest that potentially affected trading partners were consulted before the measures were taken? | Don't Know |
| Is there any evidence that safeguards have been put in place to ensure that implementation of the initiative is transparent and non-discriminatory? | Don't Know |
| Did the government state its intention to review the measure within one year of implementation? | Don't Know |
Date Discovered:
Implemented: Yes
Date of inception: 1 Feb 2010
GTA Evaluation: Green
Source:
The text of the new trade bill is avaliable from the official webcite of the Ministry of Industry and Trade of the Russian Federation < http://www.minprom.gov.ru/docs/projects/3 >.
The Federal Law from 28 December 2009 # 381-FZ. Avaliable from < http://www.rg.ru/2009/12/30/torgovlya-dok.html >
Government Response:
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