Global Trade Alert

On 10 February 2015 Order 194-p was approved. It authorised the allocation in 2015 of subsidies to 84 subjects of the Russian Federation (the constituent entities or the top-level political divisions according to the Constitution of Russia) for reimbursement of the costs to agricultural producers related to the payment of insurance premiums for agricultural insurance. The total amount of the subsidy is 6'422'000'000 Russian Roubles (approximately 103'363'914 USD as per the current exchange rate).

This state measure is in line with the 2012 statement of the President of the Russian Federation, Mr Vladimir Putin, that the interests of the economic sectors, agriculture included, who meet the most intensive competition from abroad after the WTO accession, will be considered.

Furthermore, in the Annual Presidential Address to the Federal Assembly held on 12 December 2013, Mr. Putin declared: "Companies, registered in foreign jurisdictions, must not benefit from state support, including from Vnesheconombank and state guarantees. Their access to contracts for state orders and for contracts with structures with state participation must be eliminated". In conclusion, although the end beneficiaries of the allocated subsidies to the subjects of the Russian Federation cannot be directly identified, it can be expected that they will be Russian.

The GTA includes state guarantees and other financial incentives that are likely to affect the restructuring and performance of firms facing international competition, whether from imports, in export markets, and from foreign subsidiaries.