Ukrainian beef is sold on the Russian market at prices close to those of domestic producers and the quota for 2003 is planned to make 315 thousand metric tons. The almost threefold increase in respective imports may prejudice the interests of Russia’s national producers.
In April of 2003, almost four years after the first reading, the State Duma approved the new Customs Code.
The major controversy was caused by Article 182, which defined the temporary import arrangements for goods transferred to the Russia’s territory. There was offered an amendment stipulating the payment of export customs duties on products of processing transferred outside the Russia’s territory in the case of “change in the classification code of the commodity classification of the external economic activities at the level of any of the four first digits.” In fact, the amendment abolished the concessional taxation of tolling schemes actively used by aluminum and textile enterprises, typographies, etc.
The amendment was approved by the respective Duma committee, however, the reaction on the part of the Duma at large and businesspersons was sharply negative. In the result of the discussion, the amendment failed and tolling was retained.
The stipulations and terms used in the Customs Code has been brought in conformity with Russia’s legislative acts adopted in 1994 through 2001. The major objective of the new Customs Code is to regulate the customs functions in the RF, therefore, the stipulations concerning administrative offences and responsibility for infringement upon customs regulations have been removed from the draft Code.
Administrative offences are regulated only by the RF Code of Administrative Offences, while customs crimes are subject to the Penal Code. The stipulations concerning service in customs agencies have been excluded from the draft Code, since they are reflected in the federal law “On service in tax agencies of the Russian Federation.” In compliance with the Kyoto Convention, the new Customs Code has revised the economic substance of a number of customs regimes, in particular, of processing, free warehouse, re-export, and re-import procedures. The new Code sets forth shorter terms of customs formalities and defines procedures permitting to simplify and accelerate customs clearance. The time of customs clearance becomes three times shorter.
For instance, the term of registration of the customs declaration may be decreased from 10 to 3 days.
Besides, the Code envisages clearance of goods before they enter the customs due to the introduction of modern systems and technologies. Necessary procedures should be carried out while the shipment is on the way to the border.
Besides, the Code stipulates the procedure governing the application of technologies of analysis and risk management in the course of customs clearance of excisable goods and goods subject to high customs duties (for instance, household appliances, cars, foodstuffs, etc.) by the RF customs authorities. According to the Code, there shall be monitored primarily the “budget-forming” goods.
A key WTO requirement implemented in the Code is a more fair system of collection of customs fees, the amount of which shall correspond to the services actually rendered by the customs. At present, the customs fee still makes uniform 0.15 % of the value of goods thus forming inadequately high customs profits. The new Code stipulates that the Government shall be vested with the right to determine concrete amounts of fees, however, these fees may not exceed the estimated costs borne by customs authorities in relation to conduct of customs operations.
Yet another principal novation is that numerous references to departmental bylaws issued by the RF State Customs Committee, which permitted customs officers to act at their discretion. The new RF Customs Code includes a maximal number of direct action articles, what is of the principal importance. From the draft Customs Code there were removed all formulations like “to discretion of customs authorities,” however, there are several references to the “discretion of the Government.” Nevertheless, the Customs Code provides a wide field for departmental rule-making. 146 articles vest the settlement of various issues with the RF State Customs Committee.
The Code in detail defines relations between the RF State Customs Committee and companies engaged in customs operations, i.e. customs brokers and, for instance, expert organizations. At present, as these relations are regulated by the RF State Customs Committee, it results in the fact that certain companies are in the privileged situation in comparison with others.
In the period when the Customs Code was elaborated, its articles dedicated to the customs control became more detailed. Now the Customs Code includes an exhaustive list of the forms of the customs control.
Certain novations were included in the list, for instance, control based on audit methods or clearly defined mechanisms of expert examination and research.
Besides, new articles and sections have been introduced in the Customs Code. For instance, there was introduced a section stipulating the protection of intellectual property rights by customs agencies, what has always been a sphere of WTO interest. According to this novation, customs shall keep a register of objects of intellectual property and apply a special regime of clearance and control in relation to such objects thus facilitating detection of contrafact counterfeit products. The new Code also sets forth more strict measures as concerns responsibility of customs agencies for their actions. Therefore, the new Customs Code shall significantly decrease the corruption component in the regulatory acts of the customs legislation.
The new Customs Code shall be enacted on January 1, 2004. The terms of previously issued licenses and permits concerning application of customs regimes of processing in the customs territory, under customs control, outside of the customs territory, temporary import arrangements shall remain in force until their respective dates of expiration in the case these terms do not contradict the requirements set forth in the Code.
The licenses for establishment of duty free shops shall be terminated on January 1, 2004.
N. Volovik N. Leonova On the progress of reforms in March and april of In March and April of 2003, the Government of the Russian Federation discussed, alongside with the new key guidelines of the tax reform, issues relating to the development of the natural gas market, and other problems, the draft of the new medium term program worked out by the Ministry of Economic Development.
The draft was submitted to the Government on April 16 of this year. The draft is the further elaboration of the initial “mix” of a brief conceptual document prepared by the Ministry of Economic Development in November of 2002 and the current medium term program for 2002 - 2004, for the first time discussed at the meeting of the Government, which took place on February 20, 2003. The program has considerably changed since that time, what appears to be a result of its March discussion at the Center of Strategic Research. There were discussed both individual sections of the program (financial markets, HPU, new economy, AIC, etc.), and the program at large (joint discussions with representatives of business circles conducted by G. O. Gref, the Minister of Economic Development and Trade).
As a result, several new sections (“Implementation mechanisms,” “Policies concerning tariffs on services of natural monopolies,” and a number of others) were introduced in the draft, what has seriously changed the program. The provisions of the sections became more concrete (what had already resulted in a number of differences of opinion with executive authorities). A significant novation was the introduction of indicators intended to demonstrate if the policies implemented in different spheres were successful. A serious stride towards the improvement of the program was that responsible executors (ministries and agencies) were designated to control the implementation of each measure set forth by the program, what should result in its better implementation. At the same time, the ideology of the program was maintained without change. The draft is primarily focused on the implementation of the “accelerated diversification” policy aimed at the changing of the structure of the economy in order to overcome its dependence on raw materials. The program formulates a package of measures (grouped as “horizontal” and “vertical”) allowing to achieve the desired outcomes. The most important novation of the program, as compared with the current one, is the introduction of an additional section dealing with the administrative reform. Exactly the lack of progress in this sphere significantly constraints the potential progress of reforms and prevents the development of business activity.
It is already clear that the draft will give rise to heated debates. First, as it has already been noted, it already is opposed by a number of ministries and agencies referring to the fact that it is too concretized.
Second, the time of its discussion is not very suitable, since the draft was submitted before the annual Presidential Address and long before the start of the Presidential election campaign. This means that, first, the program should be at least once adjusted (after the Presidential Address), and, second, a new program meeting the requirements of the pre-election period will probably have to be worked out in the end of the year.
Alongside with the most important item submitted for Governmental discussion – the draft of the new medium term program, there may be also singled out a number of measures being of importance for the progress of economic reforms.
Modernization of economy In the framework of the reform of public service, in April of 2003 the State Duma of the Federal Assembly of the Russian Federation passed in the third reading the draft federal law “On the system of public service in the Russian Federation.” The bill sets forth the legal and organizational principles of the system of public service in the Russian Federation.
There was carried out active work on enhancement of effectiveness of management of state property, including elaboration of measures aimed at classification of federal state owned unitary enterprises and organizations in those necessary for exercise of state powers and those having ceased to perform such functions (these measures are aimed to diminish the number of such enterprises and organizations). The respective draft Resolution of the Government of the Russian Federation was submitted for approval of federal executive authorities in March of 2003.
In April of 2003, the Government of the Russian Federation issued its Resolution approving the Principles of state policy in the sphere of utilization of mineral raw materials and development of mineral wealth setting forth the measures, principles, and objectives of state regulation of respective types of activities, as well as guidelines for improvement of the system of management of the mineral and raw materials complex and the state fund of mineral wealth of Russia.
As concerns the sphere of the reform of the taxation system, in April of 2003 the Government of the Russian Federation submitted to the State Duma of the Federal Assembly of the Russian Federation the draft federal laws “On the abolishment of provisions of RF legislative acts concerning tax control over expenditures of individuals” and “On amendments to Article 220 of the RF Tax Code.” The Government of the Russian Federation submitted to the State Duma of the Federal Assembly of the Russian Federation the draft federal law “On transfer of property owned by citizens and legal entities into ownership of the Russian Federation (nationalization)” aimed to guarantee the interests of the owners, clearly define the cases where property may be nationalized, ensure advance and adequate compensation of the value of the property and other losses of the owners inflicted as the result of nationalization.
The Interdepartmental Commission on the accounting and financial reporting reform approved the action plan for 2003 aimed to prepare the economy to the transition to international standards of financial reporting at its meeting, which took place in March of 2003.
The successful implementation of reforms in other spheres of the economy in many aspects depends on the pace and outcomes of the reform of infrastructure monopolies. A significant progress has been achieved in the formation of the legislative base of the reform of power engineering and railroad transport.
In April of 2003, the Government of the Russian Federation submitted to the State Duma of the Federal Assembly of the Russian Federation the draft federal law “On railroad transport in the Russian Federation” and “On amendments to the RF federal law ‘On the transport charter of the railroad transport of the Russian Federation.’” The bills are aimed to eliminate unjustified expenditures of the federal budget and ensure the interests of the Russian Federation as concerns national defense and security of the state, as well as to define more precisely certain stipulations of these federal laws.
In April of 2003, the Federation Council of the Federal Assembly of the Russian Federation approved the draft federal law “On amendments to the law of the Russian Federation ‘On the basic principles of federal housing policy’ and other legislative acts of the Russian Federation as concerns the improvement of the system of payments for housing and public utility services.” In March of 2003, the Concept of creation and development of the guarantee system for support of the export of industrial products was submitted to the Government of the Russian Federation.
In April of 2003, the State Duma of the Federal Assembly of the Russian Federation in the third reading the draft Customs Code of the Russian Federation.
In March of 2003, the State Duma of the Federal Assembly of the Russian Federation in the third reading the draft federal laws submitted by the Government of the Russian Federation: “On foreign currency regulation and foreign currency control” (new version), aimed at further liberalization of this sphere; “On special protective, anti-dumping, and countervailing measures concerning commodity imports,” which fully harmonized measures protecting Russia’s producers from imports to WTO rules and regulations.