Part I – Russia's Accession to the WTO
Expected Impact on the Russian Economy
Alexey Aronov
ITCF's International Symposium
Amsterdam, 16 April 2013
Three Main Driving Forces of the
International Trade Improvement in Russia
1. Russia's accession to the WTO on 22 August 2012.
2. Recent establishment of the Customs Union with Belarus
and Kazakhstan followed by the forming of Free Economic
Space and creation of common markets for goods, services,
capitals, and labor.
3. The implementation of package of local initiatives aimed at
improving Russia's ranking for global trade.
16 April 2013
WTO Impact (1)
 All necessary changes to Russian legislation were made
during the preparation stage, which lasted 18 years. Owing to
this reason no significant changes to Russian law are
anticipated as a result of Russia's accession to the WTO.
 Further development is expected primarily in the law
enforcement sphere. The main question is now is how Russia
intends to meet the WTO requirements documented in the
accession package.
 Leading economists think that 5 -7 years are necessary before
we see the first effects of the accession.
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WTO Impact (2)
 Russia will have to discontinue its protectionist policy, where
high import customs duties and tough restrictions and
limitations are often applied to protect local manufacturers in
various sector of economy.
 Average weighted rate of import customs duty will be gradually
reduced from the current 10.3% to 5.3% by 2018.
 The tariff escalation principle shall remain as the main rule:
higher rates of import customs duty apply to finished products;
lower import tariffs apply to raw materials, parts and
 Most production equipment remains to be subject to zero
import customs duty.
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Customs Union Impact (1)
 Stage 1 - The Customs Union was established on 1 July 2010
between Russia, Belarus and Kazakhstan (common market for
 Stage 2 – The Common Economic Space was created on 1
January 2012 (common markets for capital, IP, services and
 Stage 3 – Eurasian Economic Community (EvrAzEC) is
planned to be formed on 1 January 2015 (further integration
with Kyrgyzstan, Tajikistan, Uzbekistan, Armenia, Moldova and
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Customs Union Impact (2)
Unification of technical regulations
 14 common technical regulations of the Customs Union are
already effective and 17 more have been adopted but will only
become effective in two years. Many more are expected.
 Mutual recognition of CU Certificates on the whole territory of
the Customs Union. Recognition of European certificates is not
planed, however European protocols of tests will be
acceptable provided that the same or similar regulations apply
in the EU and the Customs Union.
Codification of Legislation in Future
 Current legislation of the Customs Union consists of 64
treaties, 911 resolutions of the CU commission, over 500
legislative acts of the Eurasian Economic Commission.
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Local Initiatives Aimed at Improving
Russia's Ranking for Global Trade (1)
 On June 2012 the Russian Government introduced an
ambitious plan aimed at improving regulation in the sphere of
international trade and customs - the "Road Map".
 The Ministry of Economic Development was appointed to be
responsible for the Road Map's implementation.
 The Road Map consists of 40 measures which must be taken.
 The measures are aimed at the reduction of bureaucracy and
the quantity of documents required for customs clearance,
shortening timeframes for customs operations and converting
to electronic documentation.
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Local Initiatives Aimed at Improving
Russia's Ranking for Global Trade (2)
Actual (2013)
Target (2018)
Number of documents
required for customs
Average number of days
required to prepare all
necessary documents
96 hours
4 hours
Average time required
for customs clearance
from the moment of a
cargo's arrival
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Local Initiatives Aimed at Improving
Russia's Ranking for Global Trade (3)
An independent measurement criteria will be officially used to
assess the performance of the adopted measures – the "Doing
Business" rating of the World Bank, specifically the "International
Trade" index.
Started at 2012
Target for 2015
Target for 2018
16 April 2013
Part II – Authorized Economic Operator –
Runway to Customs Simplifications
Alexey Aronov
ITCF's International Symposium
Amsterdam, 16 April 2013
WCO Background
On 2005 the WCO approved the first edition of the SAFE Framework of Standards
to Secure and Facilitate Global Trade ("SAFE Framework").
This was subsequently amended in 2007, 2010 and 2012. In doing so EU member
states developed a regime that will enhance the security and facilitation of
international trade. The aim was to establish a set of international customs
standards developed by the WCO that do not duplicate or contradict other
intergovernmental requirements.
Two pillars of the SAFE Framework are:
 Customs to customs network (including automated exchange of information
aimed at controlling only a limited amount of cargo before it arrives).
 Customs to business partnership (each customs administration will establish a
partnership with the private sector to ensure the safety and security of the
international trade supply chain).
Each pillar involves a set of standards.
It is unreasonable to expect that every administration will be able to implement the
Safe Framework immediately. A phased approach will be required. The EU was
first in that respect.
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European Background
 The concept of AEO was introduced as one of the main
elements of the security amendments in the Community
Customs Code ("CCC") in 2005.
 Detailed provisions were laid down in the amendment of the
Customs Code Implementing Provisions ("CCIP") in 2006.
 An AEO is defined as an economic operator who is deemed
reliable in the context of its customs related operations and
therefore is entitled to enjoy benefits throughout the EU.
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Who Can Become an AEO?
In the European Union:
A person who, in the course of his
business, is involved in the activities
covered by customs legislation
(Article 1, Point 12 of CCIP)
Legal entities
(Article 4 (1) of CCC)
Manufacturers, exporters, customs
brokers, agents, freight forwarders,
carriers, consolidators, port operators,
warehouse operators, importers etc.
In Russia:
A legal entity registered under Russian
law which imports goods in connection
with its production or other commercial
activity and exports goods from Russia
(Article 85 of the Law on customs
Russian legal entity only
Importers / Exporters only
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European Union:
The international supply chain is
viewed as a single process
Focus on a discrete identifiable entity:
Russian importer or exporter
When a group of companies apply, all
subsidiaries must submit applications in
their countries, although the
questionnaire may be completed by the
parent company
A group of companies is not envisaged
at all
Mutual recognition of AEO status in all
EU Member States
Russian AEO status is not recognized
in other CU Member States. European
AEOs are not recognized in Russia
AEO programs are opened for small
and medium size enterprises
Significant cost of "entry ticket"
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Types of AEO Certificates
European Union:
Three types of AEO certificates:
A single type of AEO certificate
AEO C – fewer customs controls
except those related to security and
safety; their status is not recognized in
third countries outside of the EU
AEO S – fewer customs controls
including those related to security and
safety when goods move from/to
outside of the EU
AEO F – is entitled to all benefits
available to AEO C and AEO S
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Proof of Financial Solvency
European Union:
The applicant is not subject to
insolvency proceedings
The applicant has provided security for
The applicant has fulfilled his
obligations regarding the payment of all customs payments to the customs
import/export duties and taxes within
three years
The applicant can demonstrate
sufficient financial resources to meet
The applicant has no negative assets
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Customs Simplifications Available for
an AEO in Russia
 Temporary storage of goods in the premises or territories of an
AEO (without obtaining the status of a bonded temporary
storage warehouse).
 Release of goods before submitting a customs declaration in
accordance with Article 197 of the CU Customs Code.
 Local customs clearance in premises or territories of an AEO,
including closing the transit procedure for imported goods.
 Other simplifications including a 'preliminary declaration' with
the further periodical submission of a summary declaration.
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Customs Simplifications Recommended to a
Manufacturing Company
 Local customs clearance in the factory's warehouse.
 Immediate release of goods upon each truck or container arriving at
the factory's warehouse, before submitting a customs declaration.
 Periodical filing of a summary customs declaration for all goods
delivered at the factory's warehouse.
 Raw materials, parts, components: All the abovementioned
simplifications apply to materials imported for production purposes.
 Finished products: Importer will not be able to bill clients (issue
factura-invoices) for finished products before obtaining a customs
declaration number. Nevertheless such products can be resold and
can physically leave the AEO's warehouse before the periodic
declaration is filed.
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Benefits for Manufacturing Company
Direct benefits
 No need to deliver imported goods to a customs terminal – they go directly to
the AEO's warehouse (the AEO will save time and logistical expenses).
 Immediate release of goods upon their arrival which may enable the importer
to reduce its trade stocks by switching to the 'just in time' supply model.
 Reduction of man-hours and, as a result, customs brokerage fees owing to
filing a periodic declaration once a few days later, replacing a number of
regular declarations each day.
 Regulations that establish places of customs clearance for certain categories
of goods do not apply to the AEO.
Indirect benefit
 Obtaining AEO status will increase the customs rating of the company which
may result in the appliance of fewer physical and document-based controls
for imported shipments.
16 April 2013
How Much Is the Security for Customs
Duties and Taxes for an AEO in Russia
 EUR 150,000 - for an AEO involved in the production or
export of goods
 EUR 1,000,000 – for all other AEOs
An AEO is deemed 'involved in production' if such AEO (i) has
production facilities (either owned or rented or in operation) or (ii)
performs manufacturing activities itself.
An AEO is deemed 'involved in export' if (i) its annual export
volume is at least EUR 500,000, and its annual number of export
operations exceeds 12 (excluding goods subject to export
customs duties).
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How Can Customs Duties Be Secured
in Russia?
 By a cash deposit.
 By a pledge of property (except foreign property, stocks, and
certain other categories of property); this is currently not
possible in practice, as the customs authorities do not sign
pledge agreements.
 By a non-returnable bank guarantee issued by a Russian bank
included in the register of banks (Order of the FTS 2117 of 19
October 2012), whose guarantees are acceptable for the
Russian customs authorities (maximum 36 months).
 By a third party guarantee – on the basis of a guarantee
(suretyship) agreement; this is currently not possible in
practice as the Russian government has not established the
criteria for a guarantor, as required by Article 146 (4) of the
Law on Customs Regulation.
16 April 2013
Other Requirements for an Applicant
An applicant must have:
 More than a year's experience in international trade.
 No debt in respect of customs duties, taxes, or late penalties.
 A clear record regarding administrative offences in the
customs sphere (no administrative offences related to a
violation of customs law for one year prior to the application).
 A satisfactory system of managing commercial, accounting
and transport records which allows appropriate customs
 No criminal records in respect of the AEO head and
employees involved in customs operations.
 Premises and territories owned, rented or in operational
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Customs stamp for
completion of the transit
AEO consignee
AEO notifies the customs 3
hours prior to the goods' arrival
unloading is only forbidden if the customs
authority wishes to inspect the goods
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Steps for Obtaining AEO Status
 Step 1.
Internal customs audit as preparation for the field check by the customs authorities (30
days, can be done in parallel with Step 2).
 Step 2.
Preparing an application and collecting supporting documents (in practice approximately
60 days).
 Step 3.
Submitting the application and supporting documents to the Federal Customs Service.
 Step 4.
The FTS delegates the performance of a field check to the local customs authority (10
from the date the application is received by the FTS).
 Step 5.
The local customs authority issues a decision regarding a field audit of the applicant (in
practice approximately 30 days from step 4).
 Step 6.
Field Check (60 days plus an optional 30 days to eliminate incompliances).
 Step 7.
The local customs authority issues an act upon the results of the field checks and sends it
by mail to the FTS.
 Step 8.
The applicant and the local customs authority make necessary arrangements regarding
cooperation procedure, documents turnover, negotiate a draft of cooperation agreement.
 Step 9.
The FTS takes a preliminary decision and notifies the applicant accordingly.
 Step 10. Within 30 days the applicant provides the FTS with documents evidencing the security for
customs payments.
 Step 11. The FTS enters the applicant in the AEO Register and issues a certificate.
 Step 12. The applicant and the customs authority sign the cooperation agreement specified in Step 8.
 Step 13. The AEO certificate enters into force 10 days after its date of issue.
16 April 2013
Cooperation Agreement with the
Customs Authority
 The standard form of the cooperation agreement is established
by Order No. 1914 of Federal Customs Service of 20
September 2011. The final text is negotiable.
 Termination of the cooperation agreement will result in the
suspension of the AEO certificate.
 The termination provisions of the standard form refers to a
closed list of situations where the customs authorities may
unilaterally terminate the agreement.
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Indirect Benefits of Obtaining AEO Status
 The Federal Customs Service shall introduce a
"trustworthiness rating" which will be assigned to each
 Such rating will depend on many factors, each of them will
amount to a certain 'score'.
 It is expected that obtaining AEO status will increase such
rating significantly.
 Fewer physical and document-based controls will be applied to
those importers/exporter with a high rating.
16 April 2013
DLA Piper - Facts and Figures
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16 April 2013
Contact Information
Alexey Aronov
Legal Director
T: +7 495 221 4403
DLA Piper Rus Limited
Leontievsky pereulok, 25
Moscow, 125009, Russia
T: +7 495 221 4400
F: +7 495 221 4401
16 April 2013